Saturday, June 7, 2008

The Broken Record and $8 Gas

As we closed yesterday with another 800 point downswing over the last 2 weeks and oil made another all-time high, the rhetoric seems to be playing over and over on this broken record. Lehman blaming rumors and short-sellers, dollar bulls blaming oil speculators and gold bugs, and bond insurers blaming ratings agencies. $4.34 for premium gas yesterday is what I paid, and I don't live in Cali....

As you now know, I'm short Lehman. Let's look at two articles that put it's current panic state in perspective. "Deutsche Bank AG analyst Michael Mayo's counsel to purchase New York-based Lehman Brothers Holdings Inc. lost 59 percent (over the last year)." Mayo was recently quoted as saying "Lehman is a steal" at current prices. No kidding? After leading your clients to slaughter, you still have the gall to pitch LEH as a great idea to cover your arse? Beware analyst ratings....

Another article details how some banks have decided to pick up their marbles and go home, rather than risk playing with LEH. Einhorn made another stellar appearance on CNBC as LEH continued to plunge. Furthermore, LEH has been discussing "pre-announcing" earnings and yet another capital infusion just to get the carnage over with.

Scarier than the LEH story was Citi's revealing of possible accounting changes that would force $5,000 billion of bad debt back onto balance sheets. That's no typo. This would force banks to raise billions more in additional capital to support balance sheets and dilute shareholders down to nil'.

Unemployment jarred the markets yesterday as we are now at 5.5%, if you believe that number. Let's not include all the people who have given up or were forced to take paycuts, lose hours, or lose benefits in this market at financial and homebuilding firms. That would add a few workers would be my guess.

My NCC strangle is back in play. Along with the crash yesterday, NCC is being probed. As a medical practitioner, I can tell you it's never good to be probed. I'm waiting for the stock to drop another dollar or two before cashing my puts and then I'll hold onto my calls for dear life hoping to make a nickel or dime back.

Correction from last column. Mortgage delinquencies rose above 6%, not foreclosures. Those were about 2%. By the way, bond insurers officially got downgraded Thursday. Wasn't that supposed to be the end-all? Guess we have a few more problems than the monolines.

Interesting intro and battle about "Black Swans" on iTulip this week...,Authorised=false.html?

1 comment:

Tiger Coach said...

NCC... Why the @#$% would Corsair give the capital infusion to a firm that is in dire straits? That's just CRAZY! I just hope Cleveland doesn't lose this bank...

I'm looking for a bit more of an up-tick in LEH next KO to hit the Schwab acct....and the Tiger Coach may pounce on a couple of these.

Watch STI... I have a proposition...maybe one of us should keep an eye on Asian markets...the other on Europe... not too much of an eye...just an eye.