Thursday, August 23, 2007

Thursday Thoughts

I caught the interview of Countrywide's Mozilo on CNBC earlier. Maria did not disappoint with her softball questions though I will give Maria the benefit of the doubt and bet dollars to doughnuts his massive stock sales were an 'interview breaker', she cannot be that shallow.(can she?) As for the irresponsible Merrill Lynch analyst, well, the only thing irresponsible was his waiting this long to move to a sell. My gut tells me he wanted to some time ago but politics and profits at a place like Merrill trump sound analysis and ethics every time. Regarding Mozilo's comments that the Merrill analyst's baseless comments affected thousands of Countrywide employees' lives is a joke. What affected their lives was the absolutely garbage loans he and his loan jockeys pumped out at a dizzying pace. Now the piper has arrived for payment and he is surprised. This deal only delays the inevitable, bankruptcy. You depositors at Countrywide bank, do you hear that? Please govern yourself accordingly.


Coventree could not sell about $400 million in commercial paper. Does this mean the liquidity injections are not working ? Maybe they should double the dosage. But remember Hank Paulsen told us everything is okay and the global economy is fine, so go buy stocks !


I am telling you that the psychology of this market is now broken and it is not going to be repaired without a major cleansing. Wall Street made of mockery of our securities markets with the toxic CDO's and mortgage paper and The 2 handle on short term paper is a sign of MASSIVE problems. The debt guys are much smarter than the equity guys, now what do they see that the equity guys don't. DO NOT DISCOUNT THE CONCERN OF THE DEBT TRADERS. It is real and it portends major problems that sooner rather than later the equity markets will wake up to . The volume on the ride down was enormous and on this rally off the bottom very light. This is not how bull markets act but rather this is the clue that this is a bear market rally which is quickly running out of steam. Bear markets drop on volume rally on substantially less and repeat forming lower lows and lower highs all the way. The opposite of the bull.


If the story today by Bloomberg's Jonathon Weil detailing Wells Fargo accounting doesn't wake you up to what is going on out there then nothing will. The fact that it took a cat from Bloomberg and not one of the myriad number of analysts on Wall Street to uncover this shows you how little 'analysis' is occurring at the brokerage firms. Just cheerleaders for their respective investment banking departments, nothing more. Good trading to you all.

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