Play it Safe

The news is too toxic right now. On one hand, there is a possibility for some staggering downside here. On the other, there is a chance for a classic asshole dip buyers rally.

Bottom line: If you are short, you may want to cover. If you are long, you may want to hedge. Going into the weekend, you do not want to have too much risk on the books.

NOTE: I will be busy trading all morning. Just know, I will be balancing out to reduce risk.

UPDATE: I took profits on SRS, north of $100 and ERY, north of $41.50.

UPDATE II: I added to my CBL position. And, I sold out of some of my FAZ, which was bought in the mid 30’s.

UPDATE III: I balanced out the remainder of my FAZ with some FAS, with a slight bear bias. However, I may sell the FAS on an intra-day bounce. I sold out the remainder of my TNA. And, I sold out of my BDK. Essentially, I took profits, hedged my portfolio to almost neutral again and have a ton of cash on hand, ready to put it to work. I also sold half of the ERY I bought yesterday.

Today you fuckers will learn, once again, never to fuck with the guy in the time machine.

Developing…

Talking to my consultant contacts (some high up guys), they tell me their clients (Goldman Sachs, Smith Barney, Merrill Lynch) are being gutted. They tell me, JPM is way overstaffed and need to feel the ax, in a pretty egregious way. Mind you, these are the guys that would tell the guys at JPM to put the hammer down on the work force.

If you live in NYC, prepare for some pretty dicey shit. Now, I’m not talking ordinary pullback, walk in the park, get a quick blow job, type of recession. I’m talking investment bankers becoming cab drivers, renting a studio in Hell’s Kitchen amongst the rats, type of hardship.

If NY State gets 31% of their revenue from banks and insurance firms, tell me, where will they generate revenue in 2009-2010? The garment industry?

This Madoff scandal is going to leave a serious dent. Who has exposure? Who is going to eat the large sausage on this one?

Then we have the GM crisis. The GOP has nothing to lose. They are going to shoot this fucking bailout down, in an effort to appeal to the current “fuck the bailouts” mentality that is sweeping the country.

You know, I heard a staggering stat the other day. If you count all of the money the government has doled out during this crisis, it equals approximately $100,000 per U.S. citizen. Call me fucknuts, but I think sending 100k to every American would have stimulated the fuck out of this bitch, as opposed to just giving it away to some asshole CEO, who will horde the cash and/or dump it into treasuries.

Bottom line: There is NO FUCKING WAY this market starts goose stepping higher, in 2009. This is not a one year, recession is over, ha-ha funny, sort of situation. The cycle we find ourselves in will last a long, long time. Earnings will continue to slump and equity prices will underperform for years to come.

Low ball estimates on the S&P for 2009 were at around $65 p/s, when oil was trading at $75. Let me tell you, at $45 per barrel, you can look for earnings for the S&P to register in around $50 for ’09. We need to bottom out at 10x earnings.

You do the math.

[youtube:http://www.youtube.com/watch?v=eg-HAGgAybE&feature=channel_page 450 300]

You fucking clowns are simply vomiting on yourselves right now, long in the tooth, following a classic bear market rally. What did you think, we’d go up forever?

As discussed early this morning, “The Fly” nailed the top in the oils, selling his ERX into the fervor and buying ERY into the fire. As a result, he (“The Fly”) is now roaming around his office, fully robed, egregiously sandaled.

My largest position, FAZ, is sprinting higher, as well as my other inverse etf’s, namely SRS. My feelings, as always, is to murder all of the bulls, stuff them in a back of a caddy, then bury them somewhere upstate NY—goodfella’ style.

See folks, life is not about being herded with dumb people then winning. Life is all about taking the high ground, then mechanically sniping fucktards who are traveling in the herd below.

Top picks: FAZ, ERY, UNH

Here is a clip of the CEO of JPM, Jamie Dimon, demonstrating to officials at the Treasury what he will do with TARP funds. Truly enlightening.

I bought 5,000 ERY, sub $35.

Disclaimer: If you buy ERY because of this post, in the year of the pig, menacing armies from the east will afflict irreversible damage to your nations treasury, amidst the black smoke, you will choke. And, you may lose money.

I sold 20,000 TNA, north of $31.

The banks are not having a bad day. Instead, they are having a horrendous day, with out sized losses in WFC, JPM, MS, USB and most of the REITS. As you know, my largest position is FAZ, which is deep in the red, following last weeks torture melt. However, it’s only a matter of time before our favorite banks start warning and raising capital again.

Some pacific coast banks that should trade lower, include: PACW, WABC, ZION, EWBC and PCBC. I would throw FED in there, but that fucker is already $2 bucks.

In the short term, the market is going to follow the money. If desperate hedge fund managers want to jack up the market, in order to “save their year,” they will. Eventually, the masses will come to their senses and bid down stocks, much to the chagrin of pigeon brained asset managers, like Bill Miller.

Today’s theme is “fuck the dollar,” with t-bills selling off to boot. In the short term, money flowing out of t-bills is great for stocks. However, looking down the road, if we see the dollar continue to weaken, coupled with yields going up in t-bills, that can be seen as a vote of no confidence from other governments to fund our deficit. That is something to look for, down the road.

Oil is sprinting here. Without the outperformance in oil stocks, today would be a bear parade. There is abundant weakness in a variety of sectors, particularly in the banks. If you are 100% short this market, your fucking brains must be swollen by now, with all the mindless rallies this market is producing.

After this mornings data, coupled with earnings warnings, you’d think we “clown dive” a little bit and begin a new leg down. No. The Magic Jack lovers are here to save the day. They have their nets and they are willing to buy any stock, no matter how bad the news is.

Sometime soon, my guess, research houses will downgrade oil/gar stocks, based upon reality. The reality is: oil/gas are fucking inexpensive. Thus, with cheap oil/gas, stocks like XOM or CVX are expensive. Taking a gander at some of the oil/gas names, you’d think oil was at $150 again.

Unreal.

Sometime today, I will sell me ERX position and buy ERY.