Grandma Goldman arrived at this morning's profit party, beating estimates and saying good things about the global economy.
We're not gonna take it!
NO! We ain't gonna take it!
We're not gonna take it, anymore...
Yesterday, as we peeked past the Gold Rush, we spoke about the losses at a Bear Stearns credit fund and the suspension of redemptions. This morning, there's news that Bear will be liquidating that fund and is in the process of trying to sell roughly $4 billion in bonds to raise redemptions and prepare for likely margin calls.
Don't matter, you say? Yesterday's action in the financials (and ergo, the tape) would surely support that vibe. However, according to an estimate by PIMCO, bond holders stand to lose as much as $75 billion on mortgage-backed securities.
$75 bananas is a small bunch in the broader lunch, unless of course it manifests into the $370 trillion worth of outstanding derivatives. We spoke about this potential at our Minyans in Manhattan Charity Benefit in December, with a respectful nod that options aren't evil, they're simply a potential exacerbation of risk gone awry.
Hey, too bearish? Here's something for Hoofy to hang his hat on. Yesterday's jump set up a potential double bottom for the S&P (right at the 50-day no less). This "W" formation would kick in above S&P 1517.
Grandma Goldman arrived at this morning's profit party, beating estimates and saying good things about the global economy. It's best in breed, we know, but we'll again muse that earnings are rear-view and stocks are forward looking. Indeed, despite the stellar stats, early morning traders seem to be singing the same song.
Watch the 10-year. It (along with 2:1 market breadth either way) is the tell until proven otherwise.
Gonna hop and hobble over to the Buzz. If you're not reading those real-time vibes, give 'em a shot. It's the steadiest stream of consciousness in the entire city of critters!
Good luck Minyans!
Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at firstname.lastname@example.org.
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