Thursday, July 26, 2007

Somebody's got to pay for it...... .and it ain't gonna be me.

HUD chief Alphonso Jackson went to China to ask (re: beg) them to buy mortgage securities. Correct me if I am wrong but did we not tell the Chinese to buzz off when they wanted to buy Unocal a while back? Now all we need to do is ask Dubai (remember the ports?) to buy this toxic sludge and we have covered all our bases. This goes in the hypocrisy folder which gets thicker by the day. Is the housing credit problem spreading to corporate ? Bill Gross of Pimco thinks so but you can decide for yourself. This problem is not contained, in fact it is spreading. It is global and you ignore it at SIGNIFICANT risk to you financial health !

Wow, did Panera Bread get whacked yesterday, as if the gap down back in early June wasn't enough. It sure is a great place to eat but the chart is another story.

Regarding these hundred point up mornings, reverse, down afternoon, reverse up. My take is that this volatility is not the hallmark of a market bottom but instead of a market fighting with itself and forming a top of some significance. Tops are made amidst euphoric cheering and fanfare while bottoms are made quietly, amidst disdain and frustration. Govern yourself accordingly !

I said before that "if ze Germans cant't fix Chrysler what makes Snow, Quayle, et al. think they can. Well hubris of course !! Doesn't Merriam-Webster define hubris as; keenness and depth of perception, discernment, or discrimination especially in practical matters. Ooops, I am sorry, that was the definition for acumen.

Now we get news that syndicating banks cannot find buyers and will have to eat the deal.(this eating of loans is a MAJOR LEAGUE big deal, and mark my works, the talking heads on pom pom TV will spin it that this crap ( sorry, ultra high yield securities) is really a great investment for the bank. Do not believe it! Makes me think of the movie Wall Street again, remember the sales manager talking to Bud Fox when the customer wouldn't pay and he closes out the account, " somebody's got to pay for it and it ain't going to be me. And you wonder why the financials are tanking, well here is your news which as Jesse Livermore always implored, "news conforms to the tape!"

Here is the one way you can incorporate your insatiable desire for news to trade. Yesterday we got relatively bearish inventory figures for crude and crude went up. When a market goes up consistently on bad news think buy and when it goes down on good news think sell. You're looking for a market to 'buy the dips' ? I would humbly suggest the energy arena. Remember I have called energy the 2x4 to the forehead of this market, please don't forget that contrary to what dumb and dumber say on CNBC (Ratigan and Pisani). No offence fellas, your comments speak for themselves.

A friend told me he saw Michael Jackson from Autonation on CNBC this morning and he said that "he cringes every time he sees some specialist on TV crowing about how the housing spillover is contained." Now why would someone want to listen to someone who lives on the front lines every day surveying the battlefield.

While on the topic of analysis, years and years ago analysts lived on the road covering their sector. There was no replacement for being there and getting a feel for what the pulse of the business was. Today that has been replaced with teleconference calls and industry conventions conducted in locales thousands of miles from the front lines of the actual business. Just something to consider when a Wall St. shill tells you everything is fine(remember that word) or the Fed official who travels, eats, and breathes on the government chit, and yet has the gall to tell you inflation is muted. Hang on, thats not entirely true, they do reach into their wallet when visited one of Heidi Fleiss' establishments, but I digress. Good luck and good trading.

No comments: