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Random Thoughts: Multi-Year Lows in Financials


Hold, and we gotta double bottom. Fail, and we gotta hold on for dear life.

  • This guy has "trader" written all over him!

  • Last week, Macy's (M) talked about pushing out its billion-dollar buyback due to credit conditions. Today, Swiss Re reported a billion dollar write-down, making it the first reinsurer to suffer a direct hit from the sub-prime crisis.

  • Now that we all agree that this situation isn't contained, can we please respect the risks associated with further contagion?

  • Particularly with $500 trillion in derivatives?

  • Especially given that the consumer is 70% of GDP?

  • With regard to the collective confidence in the powers that be?

  • I'll be honest, I felt much more comfortable talking about these issues when they weren't so LOUD and indices were at all-time highs. While markets tend to move much more than people anticipate (both ways), the mainstream press bodes well for a contrarian upside press.

  • I'm not that brave (read: I'm trading 'em from the short side) but the "easy" (cough cough) trade is behind us.

  • With that said, the following Buzz appeared between 11:09 AM

    There's something happening here.
    What it is ain't exactly clear…

    Please toss this in the "For what it's worth" file but I'm covering up the last morsels of my short side tries as we edge deeper into the abyss. While I would normally employ trailing stops, the looming holiday illiquidity (on top of the recent thinness) makes for vacuum gaps (both ways).

    To each their own, natch, and given my stick and move M.O., I'm happy to make 'em to take 'em.


  • Over in Tealeavesville, the critter compass reads south by south as the banks (BKX -3%, XBD -4%) and breadth (4:1 negative) both trade bunk. I will also note the laggy action in commodity land as the dollar edges into the green.

  • The Cliff Branch? Beta, which is trying to hang tough as an option for the Snake. Amazon (AMZN), Research in Motion (RIMM), Apple (AAPL) and Yahoo (YHOO) all trade relatively dry.

  • I can't decide if I love Vegas or hate Vegas. I just know that I can only take it for a few days at a time.

  • What's the reward for the risk at Merrill (MER)? John Thain's will receive an immediate $15 mln cash payment to compensate him for assets given up by leaving the NYSE Euronext (NYX). His base pay is $750,000 annually and he will get a separate bonus of 500,000 shares (currently valued at about $28 million) and 1.8 million options tied to any rise in Merrill's share price. Must be nice.

  • Wow, there's even societal acrimony amongst critters.

  • Speaking of the financials, watch the BKX as it flirts with fresh multi-year lows. Right here and right now. Hold, and we gotta double bottom (potentially bullish). Fail, and we gotta hold on for dear life.

  • Remember, in a finance-based economy, General Motors (GM) is General Electric (GE) is Ford (F). They are the second and third tier dominoes given their finance based operations and given the action in the first tier...

  • You betcha! Jeff Saut, the savvy soothsaying sommelier is on FOX Business right now highlighting the benefits of General Electric (dividend yield and water business). Grrr... I hate being on the other side of his mind!

  • But I DO look forward to talking about this, along with other tape topics, at the Festivus with Jeff and the entire spectrum of professorship. Good things tend to happen when alotta smart, good people gather in a central place.

  • While there's a LOT of trading left in this session (week, year), I'm entirely alright with my balanced posture as I watch the BKX push, poke and prod this important level.

  • I've cooled on energy and metals in the near-term as a function of my dollar bounce vibage.

  • Where to go? Healthcare and pharma are intuitive "slowing economy" plays but it needs to be stressed that these are relative bets. Sorta like banking on a drunk aunt embarrassing herself at Thanksgiving dinner.

  • This is nuts!


Holiday Festivus is here! Come join us and support the Ruby Peck Foundation For Children's Education at an old-fashioned Southern-style hoe-down in the heart of New York City on December 7th. Click the image below to learn more!

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