Freaky Friday Potpourri: Bank of America Does Some More Buying
Between MBNA and Countrywide, Bank of America is officially the consumer proxy play of choice.
It's been hectic this morning so in the interest of communicative liquidity, I'm gonna once again invoke my literary license and share fare as it flows through my fingertips.
Now You's Can't Leave!
The smartest cookie I know on the Street was selling "140 vol" in Countrywide Financial (CFC) options late yesterday. Within the context of a huge position, he was laying into the January 7.5 calls--you know, the ones that go out next week--for $1.40.
Why do I share this? Option volatility is the one subjective variable in the pricing mechanism and, when vols are fat, you can be right (takeover) and still lose money. Those calls, so you know, will be down more than the stock.
- Why does American Express (AXP) "matter?" Unlike subprime, this is a hit to the "haves," which have thus far enjoyed the lifestyles of the rich rather than a struggle to exist.
- Ditto Tiffany (TIF), and I'm not talking about the red headed teen singer. I'm talking about the bling thing.
- Merrill Lynch (MER) is GREEN in the face of reports of an additional $15 billion write-down. This is bullish action, Minyans, keep your eyes peeled.
- And watch Bear Stearns (BSC) as well. I'm not hearing anything but this is trading like "takeover bait."
- Further transfer of wealth in 2008? We spoke about it in ten themes and, in the case of Citigroup (C) and Merrill Lynch, it seems to be already Telegraphed.
- Dentyne Check! NYSE breadth is 3:1 negative. It's early but that's not what Hoofy wants to see.
- The American Association of Individual Investors reports that bearish sentiment among respondents to its sentiment survey rose for the fourth consecutive week to 58.9%, the fifth-highest level in the past twenty years. The only four weeks in the past two decades that bearish sentiment was higher than it is now were from August 1990 through October 1990. So you see it.
- Just be yourself sir. No matter what happens, they can't take that away from you.
- VXO 26 doesn't jibe with this high anxiety but, as volatility is the opposite of liquidity, the depressed levels of implied vols could be a function of the massive liquidity that's being injected into the market by global central banks.
- Hey, didn't Big Ben catch flack for not 'warning' the market that he was gonna cut last time? Along those lines, was yesterday's text an official heads up?
- For years, Succo and I talked about how mutual funds would buy--not sell--large holdings when they reported bad news because they were bigger than the market. I'm not sure why I thought of that when I noodle BofA-CFC.
- Look at me, the S&P? The S-car can go up to 1480 and still be in a distinctive pattern of lower highs. Not saying it does, just providing another lens.
- There's nothing wrong with a little Stevie Ray on our time!
- Jeezums!!!! Angelo Mozilo is entitled to $115,000,000 severance? If he had half of a conscious, he would donate that money to the help domicile some of the folks Countrywide sent to the street.
- Hoofy and Boo weigh in with their thoughts.
- Big Ben said that the housing market would be better if it weren't for developments in the sub-prime space.
- In other news, I would be in much better shape if I didn't eat chocolate and pizza.
- We saw SIZE buyers of the EEM (emerging markets) yesterday. Hand over fist types.
- So, my buddy hooked me up for tickets to A Bronx Tale on Broadway next week with an opportunity to step back stage and shake Chazz's hand. Noice.
- Pepe Depew: The Best Read on the Street.
- January, 2001. Ya dig?
- That's not to say that we can't lift first but rate cuts are Band-Aids on a broken bone. Make 'em to take 'em both ways, if you can, but keep your eyes peeled and your head up.
- Sorta like surfing. My initial mistakes were looking at the board or the waves. As soon as my instructor told me to keep my head up and focus on the horizon, I didn't fall. OK, I didn't fall as quickly.
- Gerbil fur? Call me a bleeding heart tree hugger if you want but I simply can't stand fur coats or trophy game hunting. If you wanna call it a sport, give Bambi a Glock and even the playing field. Otherwise, leave… the critters… alone.
- Bulls, bears and pigs? Yeah, it all comes down to the shakin' bacon. They act like they wanna boogie higher---BSC, C, MER, others--and if they can, it'll turn the tide. If they can't, we should run and hide.
- Between MBNA and Countrywide, BofA is officially the consumer proxy play of choice.
- Hey Betty, what's the soup?
- Deep breaths, Yo, and let's put a big green bow on our weekly P&L.
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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