After reading the news today about the consortium of banks that the Treasury is rounding up to bail out SIV's, you will want to visit this site and create your own evil clown to represent any player in this saga. Just click on the face and you will be transported to Scott's Mind. You'll have fun. It would be fun for kids too!
In case you have not read the story, you can read it here.
Please remember the TH's that said that the worst was behind us. No, the TRUTH was ahead of us--the day of reckoning when the crap that was brought to the FED window as collateral had to be repurchased back by the banks was always looming ahead. This story is about the banks--what about all of the hedge fund participants who levered up to buy into this stuff?
I sometimes think that what you DON't hear about is what you should be worried about. That the government is facilitating this consortium means to me that the problem was always greater than was exposed to us. I think that is just prudent thinking rather conspiracy theorizing. I'm not sure if it is a good or bad thing. I think that their facilitation is a good thing if it is to prevent a collapse--but I'm NOT in favor of losses being obliterated. This move, then, would be the poster child for moral hazard.
Now, if I were an evil hedge fund clown trying to make up for a y-t-d dismal performance, what would I do? I'd start short selling an creating a bit of a scare in a few high flying names? Why? The journey down is a lot quicker than the journey up. There are only 75 days to make 2007 count. Getting a 10-25% return on short profits by spooking the market would be very efficacious. How done--just start selling stock at bid. A lot of these stocks are in weak hands having bought at the top. That's just my surmising--but I wouldn't rule it out. Fear and greed are powerful motivators. Powerful, indeed.
And our friend, Fraidey Cat, doesn't like the market internals. You know the saying, don't look a gift cat in the mouth. Oh well, it goes *something* like that!
7 comments:
Put money where my meow was at open. Now up 38%. We'll see.
Fraidy Cat
After seeing some of the ABX charts, I think I'll hang on to this (IWM short) and see what happens.
F/C
Sold it and will reload.
F/C
Charts look like they are rolling over don't they? And even MW says a pullback is here. Hmmm.
Anyway, I don't like options expiry so I decided to wait for the pop then re-enter. Let's see if I gamed this correctly.
Didja see the Fed footprints this morning when gold decided to break free? All of a sudden $USD caught a bid.
Cheshire Cat
CC-The happy post close earnings stories from IBM, INTC, YHOO will buoey market tomorrow! Casinos were strong today too. There's always a bull and bear market somewhere!
Yes, I 've been looking for longs to "cover" my IWM shorts in a paired trade. I do not like naked shorting but pulled it off the last two days for a nice return.
The charts say there is more to this on the downside but , as you know, they don't go in straight lines. Trading in and out violates some people's disciplines on this but today I was very uncomfortable holding it while the day before I was not.The RUT felt very sticky too and GOOG and AAPL were not trading poorly at all. A bit of your spidey sense.
My read of the ABX charts , this stupid SIV bailout, and Paulson's rhetoric tells me there's considerable smoke out there and a fire or two. So count me in the camp that this is not garden variety consolidation.
Thanks for the Dimson article.
Cat Waiting to Pounce
Took a partial position on the pop.
F/C
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