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Random Thoughts: Playing Poker With Hank Paulson

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Paulson is playing with OPM and the world is watching...

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  • I'm hearing a lot of "Don't fight the Fed" chatter out there. Been there, done that (and got smoked) but please remember that if the credit card maxes out, the hunter will become the hunted.

  • I thought I bought a snivlet of Goldman puts into the opening lift "just to be there." Problem is, I was so slammed that I entered the wrong symbol and found out ($3 lower) that I didn't get a fill.

  • My initial reaction was to put corks on my forks and let out a muffled scream. Then I remembered one of the Ten Trading Commandments-opportunities are made up easier than losses-and took a deep breath. Sure 'nuff, the stock popped and I snuck in my Todd-lot.

  • Am I nuts? I mean, this is Goldman, the King of Steers! No worries (or emotion) as I've set a tight stop on the other side of $214 and, as we've learned, setting stops removes emotion.

  • Is anyone else excited that play-off baseball is around the corner?

  • What do you think Hank and Ben whisper to each other during bathroom breaks?

  • Over in Tellsville, market breadth is 3:2 negative, FedEx is off 2% (after cutting its forecast citing the "economic environment"), the semis hang tough despite the KLAC draggage, the homies are back to their old tricks (rolling over) and metals have taken the leadership baton back from the energy patch.

  • My Morgan Stanley put position now looks like half of what it did yesterday at this time.

  • 12/7.

  • Minyan Peter informed me last night that the amount of liquidity injected into the system over the last month ($270-odd billion) would effectively be the 5th largest bank in the US. That's nuttier than Austin Powers' coffee!

  • Other themes from the Stephanie Pomboy-Minyan Peter-Mr. Practical mindmeld? The "shell game" in the financial system, from the banks to the Fed to (the love-hate relationship with) Fannie to foreign central banks. These are indeed some of the most interesting times in the history of the world (and those are some seriously smart folks).

  • Does anyone else feel like they're playing poker against Hank Paulson and, if he doesn't like the card he draws, he'll just keep pulling until he finds a card (collateral) that fits his hand? Hey, if I sold all of my Goldman stock tax-free (as he did when he took the government job), I'd have alotta chips too. The thing is, he's playing with OPM and the world is watching.

  • Oh come on, I'm not being saucy. The beauty of this country, among other things, is the notion that free markets grease the wheels of capitalism. And as Americans, it's not only our right to question our leaders, it's our obligation. We have no agenda other than unearthing the truth such that we, the Minyans, can make better and more informed financial choices, both for the day and for our future.

  • With that said, check out the action in the dollar (DXY -80 bips) and gold (+$13). Again, as discussed earlier this week, this could be "asset class positive" (or, put another way, the only way equities can rally, in my view, is in the context of a weaker dollar). Foreign holders of those dollar-denominated assets---what say ye? That answer will dictate our financial fortunes.

  • My two favorite football teams are the Raiders and anyone playing the Broncos. I'm still smarting about last week's loss but, just as bad times define good friends, bad seasons define good fans.

  • Hit 'em hard Minyans and remember that no one, and I mean no one, comes into our house and pushes us around.


R.P.

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