Random Thoughts: The Bar Bill Was Passed. But to Whom?
Economy may undergo unintended consequences.
Editor's Note: The following was posted in real time on our premium Buzz & Banter. It's being shared here for the benefit of the Minyanville community. See also Hank Paulson: The End of the World As We Know It? and Navigating a Critical Crossroad.
Equity markets continue their trek higher as the bailout permeates the collective psyche. We've spoken about the potential ramifications and unintended consequences of this effort--as well as what would have happen if nothing was done--and offered our humble views on what we need to see included in the plan to protect tax-payers, limit moral hazard and stay true to the foundational elements of democracy.
Some Random Thoughts as we chew through this freaky fray:
- Critical crossroads? I would say so (and I did).
- Equities are the thermometer but credit is the backbone. As some credit derivatives were used as vehicles for short side exposure, they have shown some improvement today.
- However, credit as a whole--as I write this--has deteriorated today as credit investors sense this bill isn't a panacea for the credit crisis.
- I don't profess to know how long this bounce will last (or how far it will go) but I will offer that if credit doesn't uptick appreciably, equities are extremely vulnerable.
The oddest things on my screen today? The dollar, which is up 35 bips against a basket of currencies, and gold (-$16), which would seemingly benefit from the mere specter of hyperinflation.
- Washington Mutual (WM) (-20%) remains a problem, child. So does Merrill Lynch (MER), which can't seem to find a bid despite the stormy green seas.
- On the other side of that ride--and we always strive to see both sides--General Electric (GE) messed the bed this morning and the stock is 4% higher. Reaction to news is always more important than the news itself.
- Is anyone else looking forward to this week's edition of the Friday Night Faceplant?
- In two quick housekeeping items, please remember to lock your spot to the Festivus trot (Thursday December 4th) and, if you're comfy, take ten seconds to help us spread word of the Minyanville mission by clicking here and clicking on the up arrow).
I'm juggling more balls than a teenage Larry Bird. Lemme hop, Minyans, and remember to breath.
Did you know the doors to Festivus 2008 are officially open? Have you yet locked your spot for the critter trot as last year's soiree sold out? (This is our annual event to commingle our professors, partners and Minyans while chowing down and listening to live music. The very best part? It's for the kids in the good name of my grandfather.)
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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