Friday, June 6, 2008

Market Meltdown, June 6th Edition

Weather looks like it be OK for a shot at fishing tomorrow. I have to pack up gear and make lunch tonight, so blogging may be a little short. I have not watched NBA basketball in years (since the last days of the Partrick Ewing Knicks) but I did watch game 1 of the title match last night between the LA Lakers and Boston Celtics. Great game, with plenty of great players. It was actually enjoyable.

While I Was Watching LEH, Washington Mutual Has Almost Failed
I am now convinced that LEH is not going to go bust. Why? Because while all the talk and focus has been on them, another good sized bank Washington Mutual (WM) has had back to back 10% plus down days and the stock now sits at lows not seen since the early 1990's! Downside volume has been enormous, and this has all the markings of a bank run. Also pay notice that unlike BSC and LEH, WM is totally silent right now. They must really be up against it to not even try to lie about their position. I would expect some kind of news out on WM next week.

Market Meltdown, June 6th Edition
So what happened today to cause such a stir to the downside? The DOW was down almost 400 points and closed on the lows of the day. Why today? Lets recap some data points:

Unemployment Numbers: The BLS showed about 50k jobs lost, and a bump in the unemployment rate to 5.5% from 5%; a 10% jump most in 22 years. So what? Estimates were for even more job losses, so why the reaction? Maybe the jump in unemployment is spooking the markets because if that number goes over 6%, the average joe and jane on the street is going to get upset. Very upset.

Oil Running Away: After a rest yesterday, Oil was a running bull today closing up almost 11 dollars at $139 a barrel. We have been told that high oil and gas prices will not hurt the consumer, so it is strange that this action would scare the street. Maybe that nugget of thought got put to rest today.

So in short, I do not think anything data wise was the culprit today. It is my position that those "in the know" have been unloading their stock holdings to those "not well informed" over the past few months. I imagine there may not be much support under the market at all. All those calls to "buy financials" or "buy stocks now while they are cheap" worked to setup the suckers to foot the bill for today's big move down. Tough times indeed.

Today had a scary feel to it. While I am very bearish on the US economy and the banks in general, the runaway free fall that stocks had at the close and the vicious upswing in oil prices had a feel of helplessness that I found a bit alarming. The problem with a broken system that is filled with so much bad data, bad analysis, and a general lack of understanding as to the severity of the credit crisis makes days like today both possible and likely to repeat. Suddenly someone gets a clue and dumps, then all hell breaks loose.

Monday is a big test. With a full weekend to digest the monoline insurance rating change, oil prices, unemployment numbers, and possible bank failures we will get an idea how people feel about stocks. Should be a good time.

I would never have a Friday without the entertainment section of the blog! I enjoy the Friday night fun stuff and I hope you do too.

Funny Picture
Sometimes a lobster comes from the wrong side of the tracks and resorts to violence to survive:
more cat pictures

Film Recommendation
If you have not see the original "Escape from New York" with Kurt Russel, you need to. It is a true classic. Check out the scene where Snake is made an offer:

Rock Blogging
An old school MTV video of the J. Geils Band and their tune "Freeze Frame":

One of my favorite ladies, check out Joan Jett And The Blackhearts with "I Hate Myself For Loving You":

Take a listen to Ozzy Osbourne with "Killer of Giants". Great tune and good words to boot:

Have a good night.


Anonymous said...

That was fun Daddy! Can we do it again?
Gap on SPY at 1338 will act like a magnet.

Anonymous said...

Hey All!

Yeah nice day for metals too! :)
You know I was just wondering when the S.H.T.F. and I am pretty sure it will, what will you blog about? Will I can has cheeseburger do a funny pic or maybe there will be a preselected video/music for that day? Did the squirrels meet daisy yet or were the cats from I can has cheeseburger let loose? And in your opinion how far will the current admins and CEOs lef this game continue to play?

Soon.... during the elections... or sometime after and let it land in the next guys lap?


PS: Have a great weekend everyone and remember the good old days of $4.00/gal gas and $18/oz silver.

Anonymous said...

Soon.... during the elections... or sometime after and let it land in the next guys lap?

I can here it now:

Sir your overdrawn.

But I still have checks, I can't be overdrawn!

This country is in serious trouble and the more the 536 ass wipes on DC along with the Benny and the boneheads do the worse this will get.


watchtower said...

I guess everyone here seen where they were talking about more stimulus yesterday?

Does anyone here know if we hit an "up lock limit" on oil yesterday?

I'm with GYSC, Monday could be a big test.(now that I've written that expect a HUGE rally)

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