Wednesday, March 18, 2009

God Help Us All !

So the Fed stands at the ready to buy the bond market. The Fed has now become the buyer of last resort in a 'guaranteed to fail' stab at lowering rates to help the housing and credit markets. Whom might I ask do you think is going to hit this taxpayer led bid by the Fed in the bond market? God forbid they let them correct (housing/credit) of their own accord, instead they will gamble our nations survival ala AIG. These actions are no different than what AIG did writing policies they could not make good on. The implications of this disaster in waiting are almost too scary to consider. You would never know it by the bail me out of my positions crowd on Wall St.

Rumors have been making the rounds and Bloomberg is reporting that major brokers are calling in loaned shares for Citigoup (ticker C) used for short sales at the behest of the Fed, Treasury and the large brokerages. Anyone want to bet the over or the under on whether
the financials rally is just pulling a Volkswagen on us? Remember that short squeeze for the ages? If not I suggest you familiarize yourself quickly.

Just bear in mind that you can massage and manipulate, intervene and cajole but you cannot change the inevitable outcome, no matter how many shenanigans are deployed. Facts are facts and medicine that must be taken cannot be avoided.

I am not complaining in any way given I was short and the move has been against me but just don't be surprised as liquidity continues to dry up as players continue to pack their bags and leave a market whose principals have been long ago discarded. The same shenanigans by the same scoundrels that produced the mess we find ourselves in are being played again by the same vipers yet again.

Notice how all the interviews today are with the stock jockeys and very little input from bond and currency players. I would humbly suggest you watch the dollar and the bond market because a dislocation there will make what has happened in the stock market look like a day at the park.

P.S. You might want to pay some attention to Eastern Europe and all it's credit problems for they have not gone away no matter how much spin the financial media puts on this rally and no matter how many accolades the patronizing zombies on CNBC throw at Bernanke. Deja vu Greenspan anyone?

This bold move that the Fed is embarking on is being done at the a time when the Fed is in its most financially vulnerable position ever. It is like Fannie Mae right here and right now expanding its leverage 10 fold. The lunacy of this position will be revealed in the passage of time. The problem is that you and I are going to pay for it in ways many out there refuse to even consider.

Today is an enormous day, a huge day, a watershed day but not in the way most out there anticipate. I truly pray that I am wrong but I fear a massive U.S. government bond market dislocation lay directly ahead. Today you have irrefutable evidence that the Fed, the Treasury and the Administration are completely clueless.

Housekeeping notes;


I was stopped out of my long SDS position at $85.35 for a loss of just over 4pts on 1 unit.

I was stopped out of my long SKF position at $132.80 for a loss of almost 4pts on 1 unit.

This morning,

I was stopped out of my long SRS position at $58.60 for a loss of just over 4pts on 1 unit long

I was stopped out of my long AAPL position at $100.15 for a gain of almost 2pts on 1 unit short.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Short 1 unit Apollo Group ticker APOL @ $82.95 stop @ $72.54
Short 1 unit Microsoft ticker MSFT @ $19.20 stop @ $19.20


Raj said...

Yes, God help us all. We are at the precipice of an epic bond market dislocation. Just look at what is happening to the English pound with their Quantitative Easing. Time to stock up on food and fuel. Always appreciate your thoughts, HD. You have been writing about this for two years yet nobody in power has a clue.

Harleydog said...


thx for reading and dropping a note. They keep saying no one saw this coming yet we all know of numerous bloggers who did.

forewarned is forearmed. plan for the worst and hope for the best.

be well,