Saturday, February 21, 2009

You, You, and You Panic, We'll Stay Calm

Did you know that Meredith Whitney is married to a professional wrestler? Surprising yes, but maybe part of the willingness to look outside the norm when analyzing banks that are a senator's breath away from nationalization....

One of my co-workers asked me this week if S&P were initials for 2 names of doodee. While that may seem to be the case, S&P just retrumped Obama yesterday after he attempted to retrump Dodd after the White House already tried to retrump Rick Santelli. First, Santelli went apenuts and essentially called the housing plan insane. Then Dodd said we might need a "temporary" nationalization of our banks. Obama and Geithner cringed, then put out a statement saying banks are better left in private hands. This quickly negated a 200-point Dow loss. But that rebound quickly faded and after the bell, S&P said, oh by the way, this may only be the beginning of this credit mess. Owweee.

But again, don't be fooled by this mild triple digit drop. The Dow as I mentioned before, is now stuffed with stocks under $10. This limits the downside to the Dow even if those stocks get hammered percentage wise.

Gold. Do I like it at $1K? Yep, still like it. I won't be alarmed if we return into the $800s, but I think as the financial and political carnage continue (we're now seeing entire governments resign), there will be a flight to non-fiat safety.

Oil. How long can Russia and Venezuela stay in business if oil remains below $40 a barrel? Not indefinitely, not even a few years. After a 75% plunge in their stock market last year, Russia has lost another 10% (of course, so have we). Concerns about their ability to stay solvent may evolve into political catastrophe, forcing gas and oil tariffs on their Eastern European neighbors. That's why I like it and I think 2 years is a good time frame to see some major volatility to the upside.

As my brother wrote to me this week, what the hell happened to Jim Jubak? While not quite as dire as fellow MSN Money columnist John Markman, Jubak usually shows critical analysis of the market and our politicians. Recently, he's become strangely bullish and that has me concerned that sales of his book are slow, prompting a Cramer like pumping of stocks. Sad.

We'll continue to monitor some of the European ETFs, but I fear one more death surge in the form of large stimulus packages across the world. Saks is fighting sudden death as well. Sold my BBW March contracts and will roll them into later dated ones. Jan. 10 contracts are up 25%.


Tiger Coach said...

Hey Ax... How long would it take for you to preform a "stress-test" on your financial well-being???

Is this some type of a stand-up comedy routine? These are publicly held institutions that should be reporting their asset values to the public and SEC quarterly... So what gives? Are they really going to come clean?

9000 earmarks for pork barrel sounds like Congress will never really change until it HURTS!!!

AX said...

Good question, TC, about 5 minutes. I believe "asset values" are the sticking point as these banks would like their assets to be worth x and they're really worth 0. Geithner knows it, Obama knows it. But watching Congress interview Bernanke, I don't think that they know it. These are really simple-minded guys who never think to ask the right questions.

I noticed CNBC quickly went to commercial when Ron Paul started asking questions...

Tiger Coach said...