Wednesday, March 19, 2008

The Day After

Quite the day yesterday wasn't it. Wild and wolley, full of volatility ! Yet this is what the prognosticators believe is how a bottom will be formed following the grandest speculative credit orgy/ponzi scheme mankind has even seen!

I would think not. Yesterday I heard that Pimco wants the Fed to buy mortgages, yes buy mortgages. I am not surprised that the largest bond fund manager in the world wants government support of its position. Tis human nature to want any and all support of their position.

We have a generation of financial managers who believe intervention of any sort is the be all end all. That the Fed can ride to the rescue and save the day. Recessions, loan losses, etc are all a thing of the past. Case in point Bear Stearns, which I hear has some directors blaming poor ol' Mr. Bernanke. What no mention of the King bartender of credit Mr. Greenspan? Bernanke is not blameless for sure but he inherited much of the mess we are in. I laugh at Bear Stearn lack of self examination. It certainly had nothing to do with their drunken participation in the orgy. I can guarantee their were skeptics at Bear Stearns who were counselling caution of the path Bear was taking, were the proverbial stick in the mud at director meetings warning of the perils of such leverage being employed. I can also guarantee that these people were ridiculed, derided, and ostracised by their colleagues. The same colleagues whom are now blaming others. The psychologists and sociologists could write paper after book on this for sure.

As painful as yesterday was I still view it as short covering. In examining the tracking stocks of the major indices I did not see a massive increase in volume the bulls should be looking for. Everyone wants a bottom, is praying for a bottom, and quite frankly is desperate for one. Believe me I am short and am on the definite lookout for one.

News this morning is the easing of capital requirements on Fannie and Freddie. Yes, that will solve everything. More liquor for the alcoholic. What a wonderful reward for a company, Fannie, that took years to get the books in order so they could deliver their financials to the market. Future generations will read books about this credit debacle, in particular about decisions like this with Fannie and ridicule how gallactically ignorant we were, just as we do with decisions of 1928-1932.

Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stop at $80.80
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

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