Archive - Jul 2009

The big story today was how the O-Team decided to unleash another 2 billion for the Cash for Clunkers program after the first round ran out in a matter of days.

4 down as of 6:30 pm

• Integrity Bank, Jupiter, Florida
• First BankAmericano, Elizabeth, New Jersey
• First State Bank of Altus, Altus, Oklahoma
• Peoples Community Bank, West Chester, Ohio

"A buy and hold strategy has been bad advice for the past 10 years. The S&P is
down 45% from its peak in early 2000. The investment world is likely to remain very
unstable in the face of the difficult longer-run problems discussed above. Investors,
whether they like it or not, are in the forecasting game and forecasting is all about time
lags. The exceptional circumstances of the current environment make any assessment
of time lags extraordinarily difficult and mistakes will continue to be costly. For that
reason, holding well above average liquidity, in spite of the paltry returns, is sensible for
most people who don’t have deep enough pockets to absorb another hit to their net
worth. They are in the unfortunate position of having to wait until the air clears a bit and
more aggressive action can be taken with higher confidence. Warren Buffet has
properly reminded us on numerous occasions that a price has to be paid for waiting for
such a time, but then most of us aren’t as rich as he is."

Regrettably, we now have an unfair playing field for investors. This
leaves us with, in effect, two financial markets: one for powerful
insiders, who use high-speed computers and privileged access to
information to exploit loopholes for profit, and another for the
average investor, who must play by the rules and whose orders are
filled almost as an afterthought. This situation simply cannot
continue. It is the financial equivalent of "separate and unequal."

- Senator Kaufman

As expected, dark pool operators have responded, getting concerned that after the recent escalation in the Flash trade scandal, they are the next natural target. And what surprise that their only retort, as per this WSJ article, is that they provide liquidity, and make stock trading cheaper. Right down to the generic script. At least they haven't used the mutual assured destruction defense clause quite yet.

The VIX just went parabolic

It seems these days any time a pundit is cornered by facts indicating the deplorable state of the economy, the traditional fall back is "...but the tons of money on the sidelines is just waiting for a 0.003% pullback to pour back in."

It makes sense to consider this argument.

What's Another $2 Billion More?

Ahead of the FDIC's Failure Friday all is normal at the Fed - the policy to destroy the dollar is working, keeping equities cheap and generating a ripfest in bonds (that bonds and equities are both going to the moon is nonsensical, matters not). For some reason WOPR hasn't confused what the VIX is supposed to do, and it is tracking the market 1:1.

Retail investors confuse the dollar weakness with stock strength and are buying a few hundred shares here and there, only to be promptly front run by the fine folks at the southernmost tip of Manhattan.

Let the CRE sales begin.

Developing story: Hartford Courant newspaper says Sen. Dodd diagnosed with early stage prostate cancer.

WOPR has blown a vacuum tube.

The rampaging deflation in Europe and Japan has to be giddy about this development. Bernanke is sitting in a windowless, telephoneless office, and is not answering any press queries about his repeated statements to keep the dollar strong.

Fetch VWAP, WOPR, Fetch!

Much was made of Rosenberg "turning the corner" on the recession. Alas, like in the Roubini case, somewhat misunderstood. From Rosie' morning piece: "It is amazing that anyone would go long an equity market with a reported P/E multiple of 700x but that is indeed what we have on our hands."