Saturday, January 10, 2009

We Need a Z-Pak

Many times when I ask my patients what brings them in or how they're feeling, they simply answer me by saying, "I need a Z-pak." Runny nose, sore throat, ear pain, doesn't really matter. Give me a Z-pak. This is usually followed by "How long before I'm feeling better, a day or two?" This analogy is very reflective of our current financial crisis. Give me the magic pill and fix me quick. I don't know who has done better marketing over the last 20 years, pharmaceutical companies or Wall St.

But as we're finding out, there is no quick fix for the excesses of years of living poorly. Like the chronic smoker who never expects to get a respiratory infection, Americans are quickly finding out what it's like to be really sick. And we don't want to take the real medicine of time and a decreased standard of living. We want it all back. Take for example, real estate speculators. They're back. Scooping us foreclosed homes in hopes that the market will return in a year or two and they can go back to their flipping glory. “We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve,” said Stiglitz, a Columbia University professor of economics. “We could see a double-dip in the housing recession if that happens.”

Look at the TARP. Banks simply aren't lending any of the money Paulson convinced us they needed to survive. Their Tier 1 ratios are through the roof while 25K people a day are losing their jobs (many more if you use any standard of workers who have given up hope). But that was supposed to juice our economy, even as LIBOR has essentially dropped to zero.

We may have found our Dick Bove of 2009. Bob Doll, BlackRock's global chief investment officer, predicts double-digit returns this year and is calling a market bottom. That's great, Bob, now let's review some recos from last year. On August 11 on CNBC he recommended Express Scripts, then at $72, today at $52 and McKesson, then at $57, today at $40. On May 27, he told CNBC viewers, "Strategic M&A should be alive and well. Stock prices relative to interest rates are fairly low, in our opinion, and therefore companies will be looking down the street to say, 'Who can help us do a better job at addressing our marketplace?' and that will spur further consolidation and M&A activity." Great call, Bob, worst year for M&A ever.

But that's what we should expect when we have fund managers and investment banks offering us advice. Even Bill Gross has become disingenuous as his performance continues to suffer and he now recommends the very bonds the government has asked him to consult about. Just when it seemed like there was a glimmer of hope, the market got rocked this week. But be wary, even if 4th quarter numbers are even worse than imaginable (and that's pretty bad given the retail numbers that even WalMart couldn't sustain), a fool's rally is never far away.

On a separate note, anybody think either of those teams could've scored a point on USC the other night? Those teams looked awful. If TBow can't throw to his first option, he shouldn't throw because it takes him about 8 minutes to get off of his first read. And why didn't Stoops throw a pass from the 1 yd line to the TE? He's like 8 feet tall and wasn't covered all night. Alas, we'll never know. Over/under on round TBow is drafted? 3rd. Place your bets.

Still following simply USO and BAC. USO has been destroyed over the last week, waiting for it to crash back through $30.

http://www.bloomberg.com/apps/news?pid=20601087&sid=apFMheiIZtPo&refer=home

http://www.cnbc.com/id/24794349/site/14081545

http://www.cnbc.com/id/26134224/site/14081545

1 comment:

Tiger Coach said...

Ax...

Interesting that people are always ready for the quick fix... Are we a nation of the short-sighted... Thank God that Our Founding Fathers had such high degree of foresight...

I like Al Franken as the new Senator from MN. I think his term could do a lot to re-define political parties...

I believe we should place XNG on the radar screen as well.

Please be sure to comment on:
wallstreetlies.blogspot.com
Let us add XNG to our watch list...