Friday, July 11, 2008

Back at the Con.

I returned home from the breathtakingly beautiful state of Colorado. If you are fortunate enough to have the opportunity to visit I highly recommend it. Also when you are returning back to Denver for your flight home I suggess you detour via Dillon and take 6 East through the Loveland Pass, which is part of the Continental Divide. At an elevation of just shy of 12,000 feet it is aweinspiring. Truly magnificent. Wonderful people, wonderful views, just plain wonderful.

Now on to the markets, the developments are coming fast and furious. I will not get into the GSE's Fannie/Freddie saga but suffice to say entities with 80 billion in equity supporting $5.2 billion in paper. For those without a calculator that is 1.538% equity. Talk about the King and Queen of the "no skin in the game" charade. They make the closet hedge funds, more familiarily known as Wall St. brokerages, use of leverage look tame in comparison. Remember now, GSE stands for Government Sponsored Entity.

I want to address the bail em' out crowd on pom pom TV. Instead of looking at what they are saying, ask why they are saying it. This should yield more clues to us. Example, you are a pundit with the majority of your net worth tied up in the markets. Ya think you might want Uncle Ben to bail the mess out. Sometimes it is that simple. Like I have repeated ad nauseum, genius capitalist's when they win, whining pansies when they lose. Pathetic absolutely pathetic.

I want to bring your attention to something Karl Denniger over at the great blog Market Ticker ,wrote the other day in his post Skeletor Wednesday . Regarding what is transpiring in the credit markets and specifically to Fannie/Freddie and the toxic paper the banks are holding.

The bottom line: The bad debt must be "ringfenced" and the losses forced to be taken. Government must not contaminate itself with this trash, as it is entirely possible for an expanding default bubble to engender even more defaults and down this road lies the potential destabilization of our currency and government.
We must have some adults show up at this drunken creditfest and remove the tap from the damn keg! This situation will not get better on its own accord nor can it be fixed through "bailouts" or "handouts."

Here, here Karl !

I recommend you read his post in its entirety for it is well worth your time.

I will DEFINITELY have some charts for you to peruse in short order.

Housekeeping notes;

I am raising my stop on SKF to $169.79/161.72 if for no other reason than to protect profits from meddling Fed governors, treasury secretaries, and dim witted congressional committee heads.

Good speculating to you all and always remember that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 3 units Ultrashort Dow DXD@ $50.12 stops $62.22/60.49/58.62
Long 2 units Ultrashort Financials SKF @ $103.90 stops $169.79/161.72
Long 3 units Currencyshares Swiss Franc ticker FXF @ $97.35 stop at $93.82
Long 1 units Ultrashort ReEstate ticker SRS @ $88.95 stop $92.72
Long 1 unit Ultrashort QQQ ticker QID @ $37.05 stop at $41.91
Long 1 unit Ultrashort S&P ticker SDS @ $57.20 stop $61.57
Long 2 units Hecla Mining ticker HL @ $8.50 stop at $7.16
Long 2 units Kinross Gold ticker KGC @ $18.93 stop at $17.56
Short 1 unit Daimler AG ticker DAI @ $86.20 stop at $65.94
Short 2 units Brinker Int'al ticker EAT @ $20.07 stop at $19.64
Short 2 units Darden ticker DRI @ $36.35 stop at $35.36
Short 1 unit Lehman ticker LEH @ $43.70 stop at $24.43
Short 2 units Deutsche Bank ticker DB @ $117.03 stops at $93.37/88.34
Short 1 unit of Visa ticker V @ $86.25 stop at $80.16
Short 1 unit HSBC ticker HBC @ $83.23 stop at $80.53
Short 2 units of Netflix ticker NFLX @ $30.35 stop at $29.43
Short 1 unit of IBM ticker IBM @ $122.80 stop at $126.14

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