Thanks to Kevin, Watchtower and Lisa for the kind words on my promotion. How I get so much work done and write this blog at night really is just that I am passionate about my work, and I am excited to write this blog and know folks out there like it.
Citigroup Whines Like a Baby
I had seen the banner headline today that Citigroup wanted the SEC to jump back in and ban short sellers. Recall how the financials did so well (sarcasm) with the ban in place. I had it in mind to write a section about this, but Mish beat me to it. I imagine his post is a bit more well written than mine would have been, but with less snarkiness! Anyways, check it out:
Key take away point: Only 2.7% of C stock is short right now. If about 3% short selling is killing you, well, I guess it cannot. Check out Mish's coverage of C's shadow assets and you may figure out why C is getting clobbered.
The Bottom That Never Was Meets the New tradable Bottom
Last night I had a piece on the silliness of technical analysis at inflection points such as this one. Today all the markets crashed through all lows since 2003. No "bottom" call held, not even the panic bottom from a while back.
While we all like to make fun of the FED and the Treasury for pursuing bad ideas and expecting good outcomes, many market watchers/players do the same type of thing. Today there were new thoughts about a "tradable bottom" being established. Whatever, I have said my piece on this stuff.
The issue with the markets right now is that there is almost no real value in it. The perceived value of stocks relies heavily on whatever bailouts may come from the government. All the financials are zeroes unless they have massive government intervention. Many retailers, homebuilders, and home improvement companies are not far behind. Charts and trends make no difference when perception is the key parameter for the market. See GM today. Up over 30% when pro bailout congress people prematurely said a compromise was reached, then gave it all back when that was shown to be untrue. Was GM really worth 30%more at any point today? Only with a ton of cash from the taxpayer. Otherwise, nope. Sick really. People buying a stock because it is so bad off it is going to get bailed out. OK. It has been a winning strategy in the financial stocks so far.
My last thought about a "bottom" is this:
A long term bottom is reached when nobody wants to buy any stocks. None. A bottom is not reached when half the market wants to make sure they do not miss a possible move up. That's it. That's all.
Democrats Do Exactly the Right Thing
When I saw the UAW guy giving his speech today around noon on CNN (I was in the lunch room) I was disgusted at the craven fear mongering that was going on. The guy really said that Congress must act "Now, Today" on a bailout. About an hour later a headline flashed on Yahoo Finance that a compromise bill had been reached. Naturally I was mad that the congress would take their marching orders from some guy at a press conference, but not surprised really.
I was surprised at what happened next. The Democrat leadership came out and said "What a minute there CNBC! No deal has been reached." And this would have been good enough for me, but they even went further! In what can only be termed as an act of clarity and sheer brilliance, the Democrats withstood the bullying tactics that got the TARP passed and made a simple, reasonable, and badly needed request:
Present a plan to the Congress on how the taxpayer money will be used to save and reform the auto industry.
I was blown away. This is just what the doctor ordered. No ore being rushed into passing bills and handing out money with no thought, no debate, no real plan of action. Take some time and think about what is going on. Three cheers for the Congress today, they earned it.
Now the hard part. By the powers of reality the US automaker cannot present a plan where cash alone will save them. They are powerless to get out of their crushing obligation debts, and cannot go on without the kind of restructuring that only bankruptcy protection can provide them. This is a fact. This will not change in 2 weeks.
The next question for me is whether the great move by Congress today was just that, a move to get cover to pass a bailout in 2 weeks that stinks, or are they really going to look at the auto plan and judge it on it's merits?
At this point I want to stay hopeful and so will not offer a prediction. I am excited that maybe the Congress may become addicted to this thinking thing and want to keep doing it. I am hopeful that getting burned by the TARP they have learned a lesson. I HAVE HOPE! This should make all the readers very nervous.
We will see what happens, but for one night I am giving the Congress a free pass and the Democrat Leadership in particular a high five. Let's keep it up and maybe you can recapture a tiny fraction of trust. A sliver. A nanotube. But that would be a start.
One of the small articles on the Wikipedia Main Page this week was about a ship, the SS Central America. I was fascinated by the story. The 30,000 pounds of gold that was lost when the ship sunk helped to touch off "The Panic of 1857". Back when money was tied to gold, all that missing bullion made a dent! Maybe we could sink the Federal Reserve? Anyways, a salvage company researched the ship exhaustively and was able to locate it! An operation was performed and over 150 million dollars in gold was recovered, including an 80 pound gold brick! SWEET! I have ordered a book written about the entire search and recovery. Can't wait to get it. Here is the Wiki entry:
Have a good night.