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Financials Aided by Divine Intervention?


A strong GDP report sent stocks higher.

Yesterday seemed to be about divine intervention from Wall Street to Denver, Colorado. The phrase deus ex machina came from the technique in Greek plays when divine intervention was represented by an actor being lowered onto stage via a pulley (machina or machine) to save the day. Just when circumstances seemed hopeless, there would be dramatic reversals of fortune for besieged characters unable to resolve their problems on their own.

Later the saying took on the meaning of a contrived conclusion to a play (and these days most movies) that saw an unexplained and sudden solution to an impossible situation. Without a doubt this applied to shareholders in any number of stocks yesterday including Ambac (ABK), MBIA (MBI), Fannie Mae (FNM) and Freddie Mac (FRE). Less than a week ago last rites were being prepared for many those financial companies, along with Lehman Brothers (LEH), too.

So could it be that something more powerful than a shift in opinions and increased speculation about the survival of these entities saved the day? Surely, the bears have to be nervous. Consider the news in Fannie wasn't that great and higher oil prices out of the gate should have been a negative for equities. But that super strong Gross Domestic Product report was a real catalyst.

I find it interesting that Senator Obama used a classic Greek temple as the backdrop for accepting his party's nomination. Considering how closely linked such architecture is to Wall Street where numerous buildings including Federal Hall National Memorial (built from 1833 to 1842) are based on Greek revival architecture. Moreover, it was a little grandiose. It would have been perfect for me (I drive a car with 22-inch chrome rims) but doesn't jibe with the message of being an ordinary person. And most people look at my wedding band and think "gaudy". Still, his speech lived up to advanced billing and I could swear the audience looked like they were being lifted into the air, perhaps by pulleys or maybe it really was divine intervention.

Speaking of divine intervention, this hurricane season is becoming worrisome and we may need answers to prayers.

On the third anniversary of Hurricane Katrina the country is facing a storm with resolve. Hurricane Gustav is living up to its name (staff of the Gods) and at this point most experts expect damage in the Gulf coast area but crude oil prices failed to maintain an early rally and finished well off the highs of the session. Already Gustav has killed 59 people (51 in Haiti) and may take more lives. Add to the mix the emergence of tropical storm Hanna and there is as much angst about hurricanes as we've had in a long time. The good news is that the last three years have been largely peaceful with respect to harsh weather.

The experts claimed Katrina would be just the tip of the iceberg, the beginning of a wave of disastrous hurricane seasons caused by global warming. It has been a blessing that things have been relatively tranquil.

No positions in stocks mentioned.
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