Wednesday, April 23, 2008

Wabbitt Season

Might as well be, because it's sure not earnings season. Our old friend Ambac was out today with a mere loss of almost $12/share. UPS said the economy stinks and guided lower. Drugmakers are getting hammered as Schering-Plough and Glaxo earnings diminished significantly. Delta lost $6 billion dollars. Yahoo made a whole 11 cents. RBS and NCC had to raise $24 billion and $7 billion respectively to stay afloat, diluting their shareholder value to 0. The Brits are following our lead by allowing banks to swap out crummy MBSs for treasuries. Aside from Google, can anyone point to earnings anywhere? Yet financials continue to weather and homebuilders are returning a huge profit so far this year. Makes sense. No one can borrow money or sell a house.

COF has gotten bashed this week as there is some realization that their business is in trouble. My sometimes friend, sometimes mortal enemy of, Doug Kass, who likes to tell you what he did the day after the market moves, wrote that he shorted the RTH yesterday heavily. This index is very similar to XLY.
In case you missed it, another Ag boomer hit the market yesterday, Intrepid Potash. What makes fertilizer intrepid I'll never know, but pegged to debut at $32, it finished the day over $50. The ball is rolling fast now with new solar ETFs and fertilizer companies making the best IPO debuts of the year. I just spoke with Claymore today to find out when options might begin trading on Tan. They told me as early as tomorrow. Giddyup! I am getting closer to pulling the trigger on a hedge strategy of buying TAN now and shorting some of its components 6-12 months from now. I will search for an equivalent Ag strategy and let you know.
In an interesting note, Canada lowered their interest rates yesterday. The EBS has been fighting this for months, but the BoE recently capitulated. Nobody wants to see our dollar go to zero. They'll start their printing presses as well to keep that from happening. Should be fun....
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