Wednesday, October 13, 2010

Panic Room

Short on time this evening so a few notes.

Silver Moves Higher, no Regrets
Silver hit my upside target of $24 today. Do I regret selling a little while ago? Nope, not at all. If you are going to trade you have to have targets to the upside and downside and you have to stick with them. I felt $22 was very attainable and $24 was the top of the resolution. I got about $23. No worries here. Besides, I have plenty of physical silver sitting pretty to enjoy the ride.

Minyanville has what they call the "Mr. T Gold Top Indicator" and the big guy was on Bloomberg TV today touting gold! Usually a reliable top marker, but with animal spirits running wild on the promise of QE2 you never know. More in another section.

Mortgage Mess to End in Five Weeks. Six tops.
JP Morgan (JPM) had earning s today and if you allow that they played with loss reserves they "beat" estimates for the 20 thousandth time since 800 B.C. What was amazing was how smug and glib the CEO was about the whole process. Calculated Risk has a partial transcript up. Some examples:
-"As a result of these actions, we're reviewing 115,000, plus or minus, loan files that are currently in the foreclosure process"
-"It's going to take several weeks to go through the files and make sure and correct any errors that are in there. The underlying stuff is all accurate. So that's the key substance. Obviously we know there's a lot of state AGs and we have conversations with them. We're hoping [to get back to] the normal process -- for us, the sooner the better for everybody involved."
-"Again, I hope -- this is a hope. This is not a knowledge. Is that when people take a deep, sigh breath, go back to the right, look to the substance underlying the files and go back to modifying, foreclosing and doing the right thing, all told, it could be a blip. Talking about three or four weeks it will be a blip in the housing market. If it went on for a long period of time it will have a lot of consequences, most of which would be adverse on everybody."
Now I would ask how they can review almost 120 thousand files so fast? How many people are doing the work? How come nobody asked how realistic this is? It is clear the CEO either does not think anything will come of this or he is seriously full of it. Worth watching but I have already written how this all ends.

Panic Room
Stocks. Grains. Gold. Silver. Oil. Bonds. You name it and it has been panic buying for a little while now. If QE 1.0 resulted in a year long melt up, QE 2.0 induced blow off tops might be done in another week! This kind of rush buying is not healthy.

The Evil Speculator notes the FED POMO schedule for the rest of the year and submits:
Anyway – the market, right. Bottom line: The bear case is done until early January – at least in equities. Bonds look like they’re ready to reverse but in a market where equities, gold, and bonds all move up I am not willing to entertain any big bets.
Another 2 plus months of panic buying? That might get interesting!

I have no idea what is going on right now. The orgasmic euphoria out there is stronger than late 2007. Potato Sack and Boom Boom Bernanke have ignited a scorched earth policy of incinerating cash and savings to get a conflagration of equity and commodity prices. It looks like people want to play. Big time.

While the FED ponders how to get unemployment down, I have a better idea. If they keep this stuff up, why not just roll all the super-extended unemployment benefits checks into AAPL, NFLX, and BIDU and let that ride the wave to 100% gains! Then hand out the checks, or have people re-invest in the unemployment triple bull favorite stock ETF ( ticker: NOJOBBUTONFIRE) so they can get ahead in this tough economy? Geez, that was easy!

Being a wet blanket I would caution there is some headline risk out there with things like currency wars brewing, the mentioned foreclosure mess meaning losses at the banks, and just exhaustion of buyers but why worry about a 5% move down when you can move up 5X that in a month! Missing out is worse than death these days.

At the current average of .5% moves up every day we could be at all time highs by January, December if we get rid of those pesky red days of -0.002%! The law of big numbers should get in the way, but that is what QE 3-10 is for after all. How many shares of AAPL will it take to buy a loaf of bread or grab a can of corn to heat over your remaining cash that is better used as fire fuel? I have no idea, but it should go over well with all the idiots that pulled so much money out of the equity market over the last year. But that is cash on the sidelines, right? Rock on through the night!

More Fun
If you like biting wit, sarcasm, pictures of eye candy, and a general great time you should stop on over at When Genius Prevailed as the author has a great mix of great insight and a fun format. If you say I sent you you will get a discount on the page loading time. Kidding!

Have a good night.


GawainsGhost said...

This mortgage mess is not going to end soon. We're talking about document fraud here.

It's going to take years to sort it all out. Meanwhile, credit has tightened, lending has slowed to a crawl, sales have slumped, title companies are refusing to insure properties.

What does it all mean? That prices are falling. And that anyone who buys a house without title insurance is a total fool.

On the home front, we finally got in touch with our CPA. Yeah, he's still doing tax returns. But we had to pay him up front, because he's on the verge of losing his house.

Day traders, sheesh.

getyourselfconnected said...

what should I believe, 6 weeks or years? Hee hee.

GawainsGhost said...

The thing that people need to understand is established real estate law. It varies from state to state, but stands uncontested.

If a borrower is delinquent on a loan, the note holder has the right to foreclose. The question is, who is the note holder?

If not properly transferred, that is with wet signatures, the investor or buyer of the note has no legal standing in court.

What's going on is that the banks and securitizers are trying to paper over their mistakes with forged documents. That isn't going to work. So it's going to be a long time before this mess is sorted out.

The banks are looking at major losses here, which is why they spend so much money on political campaigns. Ultimately, however, this is not a federal issue--it's a matter of state law.

All 50 state attorneys general have joined in the lawsuits. None of this will end well.

However, foreclosure sales are final. If the debtor has a complaint, it's with the bank, not the buyer of the property.

By the way, I told our CPA that I would hate to be the one to deliver a foreclosure notice to his home. But a man has to do what a man has to do.

scharfy said...

Awesome post. I laughed out loud on rolling AAPL and BIDU profits into a Triple long ETF.. Fucking great!!

Anyway I think this forclosuregate may have legs. As the previous poster noted, this is old state law, and one needs wet ink to transfer title - no matter what the MERS docu-signer says. And Congress just can't willy nilly pass a laws to override state real estate law to appease the banks, without WWIII breaking out.

That being said, this could get messy, which isn't good for anyone. And god forbid that Goldman or Citi securitized a MBS without clear titles - can the security be forced back to them at par?

Could the banks survive the 2008 crisis, and then be blown out because they forgot to dot the i's and cross the t's in title transfer?

Would that not be the ultimate irony?

This is a clusterfuck of the highest order...

insanity shelter said...

>but with animal spirits running wild on the promise of QE2 you never know.

Good Line.