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Random Thoughts: The Spread of Subprime


Credit issues have pervaded the market.

  • You can learn a lot just by watching! We spied Bear Stearns this morning (BSC) as a dry eye in the crimson sky and the stock has since tacked on seven percent.

  • I haven't heard a catalyst but I wouldn't be shocked if takeout chatter follows the stock higher. I was playing this pup from the short side but covered into yesterday's muck as a function of discipline. Better lucky than smart, eh?

  • There is an uber-important Minyan Mailbag nestled in my Freaky Friday Potpourri. It speaks to widespread perception of invisible bids in seemingly safe bond funds.

  • Are matzah balls fattening? Not like I care, I mean, I'm a guy. It's just that, er, I was curious.

  • How does a problem such as subprime spread to everything from student loans to corporate bonds, auto loans and credit cards? Simple, derivatives, in the context of an eye-popping credit expansion.

  • We've been talking about this for years--yes, years--and caught a fair amount of flack from certain circles. This is the thing, though, it's cumulative. The timing or catalyst (subprime) was unknowable but understanding the risk, as opposed to chasing reward, was lucid and intelligent. That remains the case regardless of however the next 5% shake out.

  • By the way, at dinner last night, I asked the savvy seer what his odds were, on a scale of 1-10, that we're entering a 1970's or 1930's type of environment. His response? "8 and 4, respectively."

  • The last time we got the Duran Duran vibe going, it stuck like white on rice. In that vein, I suppose we should Save A Prayer for the morning after Valentine's Day.

  • Pharma and consumer non-durables trade relatively dry, as you might expect in a slowing economy.

  • I failed to take my own advice about dipping my wick in a teenage Schering (SGP). The question I'm weighing now is whether I'm being penny wise and Plough foolish.

  • Pork bellies, which are used to make bacon. As you might find in a bacon, lettuce and tomato sandwich.

  • I've been pinging back and forth with Snoop Tony Dwyer, who pulled his horns January 7th. I told him that I'm in a "pure trading" mode, two-sided and opportunistic, with dry powder at the ready. That's my bailiwick, whatever that means.

  • Bigger picture, I'm firmly in the capital preservation, debt reduction and financial intelligence camp.

  • The ability to affect positive change is a powerful platform in a much-needed time.

  • Do you think the folks at FOX Business sing "M,m,m,my Shibani!"?

  • Readers of the Buzz know that I tried a snivlet of Apple (AAPL) calls this morning and was subsequently stopped out for a small loss. I share this because 1) there's no hiding in the 'Ville, 2) discipline must always trump conviction and 3) the only difference between a lesson and mistake is the ability to learn from it.

  • Is anyone else psyched that Lost is back?

  • Breadth doesn't support Snapper but remember, in a futures led market, internals will lag the broader tape (both ways).

  • Can you believe that Hoofy and Boo have filmed 70 episodes? If you wanna crack a smile during your day, hang with the critters and take a deep breath. A little levity goes a mighty long way.

  • Think positive Yo. It begins within.


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