Friday, June 13, 2008

Friday Night Ramblings

Friday has arrived yet again. Some weeks fly by, while others grind away. This week went by pretty fast. Tons of yard work to do tomorrow. I wanted to say a special thanks to the Boston Celtics. Thanks for sucking me into watching the entire game last night. Great comeback and they now sit at the edge of a championship. Hopefully they will finish the series soon because these midnight bedtimes and 5am wake ups are rough stuff.

We Have Lost Tim Russert
Tim Russert has died today. The longtime "Meet The Press" host was the epitome of integrity and class. I remember stating up all night during the election of 2000 and Tim was up all night as well going over the dry erase board with various election scenarios. His unbiased hard questions were the best in the business. If a politician would not go on Russert's show, that politician was dead in the water. Regardless of your political affiliation, losing Mr. Russert is severe loss for the entire political analysis side of television. He was a true journalist, and I think the readers here understand how rare real journalists are these days. A huge loss.

Banks and Housing Stocks Whistling Past the Graveyard
LEH was on fire today, and homebuilder stocks have been on a tear. Does the market know a turnaround is at hand? Is this the long awaited "bottom" that everyone has been dreaming of?

Probably not. Here is a list of today's headlines that shot the markets up big today:
-US foreclosure filings surge 48 percent in May
-Inflation jumps by biggest amount in 6 months
-Corn jumps to record for 6th day on Midwest floods

The new bullish mantra goes something like this;
The FED will raise rates in August or September. This will push UP the dollar and CRUSH the price of oil. This will allow gas prices to go down. This will in turn reignite both the consumer and housing purchases.
Sounds pretty good. Almost makes a type of linear thinking sense even. What is the "monkey in the wrench"? If you guessed that the FED cannot raise rates you are a big winner! All this crapola about the FED getting tough on inflation would be funny if it was not so sad. With Oil over $130 a barrel, gas over $4 a gallon and the dollar still near all time lows, the idea that the FED has now seen enough is comedy. While I do not give stock recommendations here, today's big run up was the move I wanted to see before I put some cash to work in SKF and SRS, two short funds that specialize in banks and real estate. With gold taking a pounding, the miners are starting to look attractive to me as well.

Bank Dead Pool Guesses
Seeing that management cannot be trusted, Level III assets have no known quantification, loans are going bad so fast no models can predict losses, and so on the banking industry today is capable of imploding any day. Or maybe never. While I cannot be sure of bank failures, nobody can be sure bank X has no issues, there is no way to tell.

So I will start my own banking dead pool. You can name yours in the comments section, and vote on likely candidates in the new poll. My dead pool players are:
-Indymac bank (IMB)
-Lehman Brothers (LEH)
-Washington Mutual (WM)
This means I predict these firms will not make it out of 2008 as independent firms. They will either:
-Go bust and close
-Go bust and get a FED bailout
-Get forced down some big banks throat as a merger
Make your own list!

Friday Night Entertainment
Time to unwind and get into the weekend frame of mind.

Comic Relief
Keep your eyes where they belong!
more cat pictures

Film Recommendation
One of my all time favorite films was "Excalibur". This film had many of the best actors of the day in the film (a young Helen Mirren included) as well as the great sword plunged into stone scene. Here is a trailer put together by a fan:

Musical Interludes
Everybody knows the song "Eye of the Tiger" by Survivor featured in the film Rocky III. The question is have you ever seen the terrible original video for the song?:

The all star group The Highwaymen with their great song "Highwayman":

I love the band Heart, and their later songs were still good, especially the vocals. Check out "Alone":

Have a good night.


watchtower said...

Now this is one of the many reasons why I love this blog, I had forgotten about "Heart" till I seen the video at the bottom of the page.
Now I plan on digging out two of my favorite "Heart" songs (There's the Girl and I Want You So Bad from the Bad Animals album) and syncing them to my MP3 player for my next mountain bike ride.
Thanks GYSC!

As far as which bank(s) won't make it out of 2008 you must not have heard, the credit crisis is fading behind us like a child waking up from a bad dream..."It's all good!"

Anonymous said...

Like I wrote on the last post there are a couple of reasons a hike in rates would help the FED,

1 prop up dollar
2 reignite the YEN carry trade to hold up equities
3 bring the long end of the curve down to help housing
4 they could claim they are fighting inflation
5 may bring some commodity prices down gold and silver being two of them in particular. Not sure about oil though.

The only little problem with that is the banks would get a hosing on the lending spreads.

If there is one bank I would like to see come down like a ton of crap that would be Goldman Suks. Not that I think they will but they certainly deserve it.