Random Thoughts: The Bailout Bounce or Ursine Trounce?
By Todd Harrison Feb 02, 2009 12:50 pm
Will the specter of government aid prop the markets before the deal is announced?
- As fantastic as last year's David Tyree-inspired Giant victory was, this may have been the Super Bowl I've ever seen (not to mention a rocking performance by the Boss). It's nice to know that in our uncertain world, there are certain elements of normalcy we can rely upon.
- With a conscious nod that the path of maximum frustration is typically littered with false breaks and empty promises, please keep half an eye peeled to INDU 7875. Through a broader lens, S&P 800 also remains a level of lore.
- Well the first days are the hardest days and the best fades are the toughest trades.
- After paring some exposure late Friday, I again dipped my wick on the long side this morning-discussed real-time on the Buzz & Banter-adding Mother Morgan (MS), Wells Fargo (WFC), the juiced S&P (SSO) and Bank of America (BAC) into the abyss.
- The mechanics of the swing trump the result of the at-bat. As such, as I "caught fades" (read: at lower prices) on the opening, I've slapped trailing stops on that incremental exposure at my entry points and will trail them as a function of price.
- Might as well face it I'm addicted to cusps! For years, as the financials were at all-time highs, I took the "other side" for a trade.
- Now, with the entire industry being fitted for toe tags, I'm playing the mirror image or that scrimmage. Many of these names may indeed be nationalized, I simply don't foresee it happening right out of the West Wing gate.
- Early eyes? "N's over S's' (semis and beta over banks and industrials).
- As discussed, expected and on par for the course, there are glitches and twitches with the new and improved Minyanville. Please give us a few days to bang 'em out.
- Wasn't it Jeff Saut who said at Ojai that the next World War would be fought over water rather than oil?
- The Great Debate in the marketplace these days seems to center on where mark-to-markets will be, uh, marked when they're transferred from private hands to the government balance sheet.
- Given this is a "bail out," my sense is they should be marked in the ballpark of where they can currently be sold. Appreciation from these levels should have a claw back for the banks but, ultimately, benefit the taxpayers whose money is at risk.
- You'll never catch a clean fish in dirty water.
- Goldman (GS) came out on Friday saying that the market is 'dead money' until a comprehensive plan was passed. I would counter that the market, as a forward-looking discounting mechanism, will rally ahead of a perceived catalyst. Considering that everyone now believes these plans are futile-and they well might be, with time-the notion of a sticky lift increases in kind.
- Note the relative traction in the master beta complex -- Amazon (AMZN), Google (GOOG), Research in Motion (RIMM) and Apple (AAPL) -- all trade with a decent bid. It's early-and NYSE internals are 2:1 negative-but it's a data point worth noting through the lens of "N's over S's."
- Speaking with a friend of mine who works with a "best in breed" NYC hotel, I'm told that occupancy rates are at all-time lows near 25%. Not a shocker, perhaps, but it speaks to the ripple effect of our new world order and the "reverse industrial revolution" that is forcing every sector of the economy to rethink their model.
- Without doubt, this is one of the greatest tributes ever assembled. Rock on, Stevie Ray!
- I wonder if Sally Struthers, er, Suzanne Somers would approve?
Positions in WFC, MS, SSO, C, BAC
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