Wednesday, July 23, 2008

Morning Comments

Regarding the recent spate of bank and broker earnings announcements, the bulls can spin this any way they want, but the fact remains that the consumer is on the ropes and the housing market is in a shambles. I would counsel that other than for a short term trade, the smart money is selling into this rally.

One need only look at Jamie Dimon of JP Morgan and Ken Chenault of American Express and their comments regarding deterioration in prime mortgages and surging noncollectable debt respectively and you have ample fundamental evidence. Remember now these are best of breed in their respective sectors.

We continue to see the short bus riding equity crowd rewarding banks that claim they have no need to raise equity capital. They never learn.

Financial Potpourri

I read yesterday that SunTrust Bank (STI) sold their stake in Coca Cola (KO) in an attempt to raise cash and shore up their balance sheet. This is a position SunTrust has held since 1919. Sell your winners, keep your losers, that is a sure fire formula to the poor house. You disagree? Pull your flowers and water your weeds and see what your garden looks like.

I would counsel the management of SunTrust to maybe ditch the money losing division that makes garbage loans on overpriced real estate to people who cannot make the payments rather than dumping an enormously profitable enterprise. SunTrust is selling their winner (Coke) and buying averaging down into a loser banking.

Regarding Wachovia, I only have 2 words to say to the bulls...... GoldenWest Financial.

Wells Fargo beat street numbers last week only because it is now writing off home equity loans after 180 days instead of 120 days

Housekeeping notes;

I was filled on a 2nd unit short of FDX at $78.95 as it did penetrate the $79 level now giving me 2 units short

I was stopped out of my long SDS position at $66.85 for a gain of just over 9.5 pts.

I am adjusting my stop on HL upwards to $8.09

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 Currencyshare Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Dow DXD@ $50.12 stops $60.49/58.62
Long 4 units Currencyshares Swiss Franc ticker FXF @ $97.70 stop at $93.82
Long 1 unit Ultrashort QQQ ticker QID @ $37.05 stop at $42.87
Long 2 units Hecla Mining ticker HL @ $8.50 stop at $8.09
Long 2 units Kinross Gold ticker KGC @ $18.93 stop at $21.24
Long 2 units Ultrashort 20yr Treasury ticker TBT @ $67.85 stops at $69.24/68.32
Long 1 unit SPDR Gold trust ticker GLD @ $94.95 stop at $91.84
Short 2 units Brinker Int'al ticker EAT @ $20.07 stop at $19.64
Short 2 units Darden ticker DRI @ $36.35 stop at $33.16
Short 1 unit Deutsche Bank ticker DB @ $117.03 stops at $93.37
Short 1 unit of Visa ticker V @ $86.25 stop at $76.32
Short 2 units of Netflix ticker NFLX @ $30.35 stop at $29.43
Short 2 units of Fedex ticker FDX @ $79.05 stop at $81.32

No comments: