Thursday, February 12, 2009

Stop Whining!

Man can you hear the whining around the trading pits tonight.

"Damn Obama sticking his nose in the markets. Socialism! How am I suppose to trade when they intervene every month!"

If you didn't see this coming or weren't prepared for a 3:30 news flash on a technical break day - you shouldn't be trading. Do you remember the Geithner announcement in November when we were sitting at the 2002 low? We aren't the only ones who read the charts. They know exactly where things stand and frankly they hold some serious cards at this point. Between the repeal of the uptick rule, the purposely ambiguous bank rescue plan to changes in mark-to-market accounting - get ready for some more whipsaw and stop your whining. There's no crying in baseball.

Perhaps these information catalysts will only have fleeting effects in supporting the markets - or perhaps they will turn the tide favorably away from these rocky shoals. At these levels with so much riding on the precarious technical framework of the market - you have to be prepared for it. Remember most technicians and elliot wave theorists were flabbergasted with the bull market that sprang from the 2002 lows. Greed seeps into bulls and bears alike and never discriminates.

Wednesday, February 11, 2009

Obama's Telling Posture?

Here is a little verbiage from Obama last night on Nightline.

Obama: Nationalization "Wouldn't Make Sense"
By Zachary Roth - February 10, 2009, 6:57PM
In the wake of Tim Geithner's speech this morning, laying out the Treasury's plan, such as it is, for Bailout 3.0, most smart observers have concluded that the Obama administration has at least left the door open for a possible nationalization of failed banks at some point, if it decides circumstances warrant that step.

But in an interview with ABC News' Nighline, set to air tonight, the president seemed to all but rule out that idea. He told ABC:
[Sweden"] took over the banks, nationalized them, got rid of the bad assets, resold the banks and a couple years later, they were going again. So you'd think looking at it, Sweden looks like a good model. Here's the problem -- Sweden had like five banks," he said, laughing. "We've got thousands of banks. You know, the scale of the U.S. economy and the capital markets are so vast and the, the problems in terms of managing and overseeing anything of that scale, I think, would -- our assessment was that it wouldn't make sense. And we also have different traditions in this country.
True, Obama, like Geithner, has always seemed skeptical of nationalization. But his answer to ABC would appear to go further than he yet has in declaring that he'll avoid adopting any version of that approach.

Of course, things might look different once we get done with these "stress tests," and find out how many major banks are truly insolvent. But as of now, the president seems dead set against even short term nationalization.

At this point, with the Republic in ruins - take the hard road, it will lead to another term. His problem is in the Senate and the House and people like Dodd.

Poll shows Rell rates, Dodd down


HARTFORD — New Quinnipiac University polls show a growing distrust of Sen. Christopher J. Dodd but soaring popularity for Gov. M. Jodi Rell.

The poll reported that 54 percent of state voters aren't satisfied with Dodd's explanation of sweetheart loans he got from a failed mortgage lender. Worse, 51 percent of voters aren't inclined to vote to re-elect Dodd should the Democratic senator choose to run next year.

"The numbers are bad news for Senator Dodd. He is in real trouble. Clearly, he is vulnerable," said Douglas Schwartz, director of the Quinnipiac University poll.

Republicans in Connecticut and Washington, D.C. also see vulnerability and sense Dodd's time may be up after 28 years in the U.S. Senate.

Christopher Healy, state chairman of the Republican Party, declared that new Quinnipiac poll shows Dodd is on "life support."

A spokesman said Dodd is preparing for a vigorous re-election campaign. The senator continues to enjoy strong support among Democrats in this Democrat-leaning state.

Dodd doesn't appear to have helped himself concerning controversial allegations that he received special rates from Countrywide Financial Corp. when he refinanced two home loans in 2003.

Schwartz said Dodd's poll numbers have been steadily sliding since the mortgage controversy broke last June. The senator's job approval rating dropped 10 percentage points in the last year to 41 percent in the Quinnipiac poll and his disapproval rating increased 20 percentage points.

Healy said several Republicans are considering challenging Dodd and some others have been mentioned as possible candidates.

Meanwhile, the Quinnipiac poll suggests Rell has ideally positioned herself politically a little more than 18 months before the next election for governor. She isn't saying what her election plans are yet, but Healy said he expects Rell will seek a second full term in 2010.

Rell received an approval rating of 75 percent one week after she delivered a grim budget message to lawmakers. Even Democrats approve of their Republican governor, 67 percent to 26 percent.

Welcome to trading and investing through Washington. The center of the capital universe has moved a few hundred miles south of NYC. God help us all.

Monday, February 9, 2009

Cash In That Ticket

If you bought a few lottery tickets (bank stocks) a few days ago I would rush to cash them in before the bank goes bust. If you bought some of the more beaten down names such as Bank Of America and Wells Fargo - you probably pulled between 30 to 50%. Let's not get greedy. I think the market is trading the exact opposite as I had hoped for and may be telegraphing some tough love in the days and weeks to come.

The rumor stream has been a consistently slow bleed of various plans coming out of the Treasury and out of the Congress. By all measures the market is trading in a "buy the rumor sell the news scenario". This morning a pretty heavy hitter weighed in on the mark-to-market accounting rumor swirling around.

Feb. 9 (Bloomberg) -- Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said the financial industry shouldn’t abandon the “mark-to-market” accounting rules that some banks blame for aggravating global economic woes.

The rules, which require banks to book profits or losses when asset values rise or fall, should be even more rigorous, Blankfein wrote in an op-ed piece published yesterday on the Financial Times’s Web site. New York-based Goldman’s adherence to the practice “was a key contributor to our decision to reduce risk relatively early” in the credit crisis, he wrote.

“This process can be difficult, and sometimes painful, but I believe it is a discipline that should define financial institutions,” wrote Blankfein, 54. “If more institutions had properly valued their positions and commitments at the outset, they would have been in a much better position to reduce their exposures.”

It's anyones guess as to which direction the Treasury will follow, but one thing is for certain the market is primed to be disappointed if they don't deliver ALL of the line items and rumors many on the Street were hoping for.