Feels Bubbly in Here

The market has been going nuts. GE is up 17% this week. Remember Genworth, a stock that fell from over $30 to .60? Yeah, back up to almost $14. GS at 52-week highs. Daily back pats from Obama and Bernanke about the recession ending and a jobless recovery. Capital One, whose CEO said credit cards are a no growth business yesterday is back near $40. As Obama half-heartedly bangs for reform, we know the truth is that as stock prices go up, nobody, especially Wall St., cares.


Putting a time frame on this charade has been difficult. But gold has finally cracked $1k and I think will go much higher. Oil still hovers over $70. A WSJ article yesterday evaluated the impact of government intervention to date by saying, "Incoming data will reveal more in coming months, but the data available so far tell us that the government transfers and rebates have not stimulated consumption at all..." We lost $21 billion in consumer credit last month. Simon Property Group, our largest mall owner, said best case CRE prices would be an increase to 2004 levels.


But in the meantime, the market goes up on a daily basis. I have successfully hedged JPM with BAC 3x and will look to do it again today before close. Shorter-term, SPY calls appear to be a good hedge against any shorts you may have.


On the football front, USC disappointed me by not covering against a sluggish OSU team coached by "let's not lose until the last 2 minutes" Tressel. The Bengals, fresh off the worst loss of all-time, will get destroyed on the road by GB (-.8.5) and I don't expect the Colts to lose to a team that let Matt Ryan pick them apart last week (-2.5).


http://online.wsj.com/article/SB10001424052970204731804574385233867030644.html