Sunday, March 29, 2009

Fool's Gold

Multiple Choice, Fool's Gold is:


A. The mineral pyrite
B. Perhaps the 3rd worst movie ever made, starring Matthew McConaughey shirtless and with a bad perm in every scene, behind only the two post-apocalyptic Kevin Costner movies, The Postman and Waterworld
C. The recent 23% rally in stocks largely based on Geithner's probably illegal/unconstitutional TALF extenison to leverage govt. money into hedge fund loans
D. All of the above


D is correct. Lest we forget, this rally has buoyed world stocks, and this even puts European losers like EWU and VGK back on the table as potential shorts. We still face two short-term headwinds. The return of the uptick rule and the possible initial success of the public-private partnership in dumping toxic-assets. Markman puts a six-week window on this charade, with the best of the worst going quickly, leaving a big pile of junk that no one will touch even with 9-1 leverage from the government. So keep some cash ready. TM approaches $70, and banks have rallied like crazy. April should get very interesting.

http://articles.moneycentral.msn.com/Investing/SuperModels/bank-plan-buys-time-but-thats-all.aspx

5 comments:

Tiger Coach said...

Ax...
We had the misfortune of actually paying money to see The Postman... then, later Speed II... If I recall correctly, I walked out on one movie only to walk into another sleeper...

As far as TALF goes, that will be a work in progress... and there is considerable backlash coming from Main Street. This will make wonderful political fodder...

7 states at 10%+ unemployment... 8 other will join those ranks by May...

AX said...

Unemployment numbers combined with a GM bankruptcy can end this rally as quickly as it started. We'll see how tainted the numbers are though...but Pandit and Dimon have already admitted March has not been a great month.

Anonymous said...

Ax... Did they really fire the head of GM, but not any of the bank executives who have been the source if this debacle? Amazing!!!

BD

AX said...

Yeah, there will be a show of tough talk and action right before Geithner asks for another $500 bill and we're told without this money our system will collapse.

Tiger Coach said...

Ax... I wonder if we can forgo the next bailout if BAC and GS give all their money back. I think that would equal close to 90 billion...