Oil was flat yesterday and the Dow was up 105.
Then tensions from Nigeria, Brazil, Israel attacking Iran, and technical trading sent oil higher by $5 and the DOW down 125 points. Those fears have spilled over this morning.
Based on this highly childish math $200 oil equals 9000 DOW with added capitulation.
Despite the childish math oil and equities are tied, married, ball and chained together.
Message to Congress: START DRILLING THE NORTH SLOPE OF ALASKA AND RELEASE THE STRATEGIC OIL RESEVES. SAVE TAX PAYER DOLLARS ON BAILOUTS AND USE THE MONEY TO SOLVE THE ENERGY CRISIS. OH YEAH TAKE A PAY CUT FOR YOUR GROSS FOLLIES OF ERROR. HOW ABOUT $1….
If oil continues to book higher we will not have an economy to speak of.
Seriously folks, concerns of [[FNM]] and [[FRE]] are rattling the markets.
Why are Bush, Paulson, Bernanke, and even McCain saying nothing is to large to fail? FNM and FRE are backed by Uncle Sam. They can not be talking of LEH…they are not considered large by any stretch.
Here is my prediction. No one will be able to raise the colossal sum of money to save these companies from having a minimum of 1.5% cash balance against their portfolio of 40% of all mortgages in the country. Were talking over $75 billion dollars or more.
So, Uncle Sam will take control and divide the companies up amongst the inner circle of Federal Reserve banks to spread the risk and to create liquidity for these banks. Existing shareholders of FNM and FRE will not be completely blown up since they will receive stock from JPM, C, BAC, etc.
At the same time you prevent systemic failure and allow the other banks who are hurting with no future earning’s prospects to get more cash flow onto the books.
The other alternative is too take them completely onto Uncle Sam’s books and royaly screw shareholders and go back to the printing press on the Greenback.
We have already seen what dilution of the dollar has created. Can we really afford to dilute the dollar any further? I do not think so. Because this would send oil to $200 plus and the market along with your 401k and pension plan into the garbage.
This is something we can not afford. Just my guess at this point.
In other news GE beat the revenue side and came in line on their EPS. Interestingly their global infrastructure revenues were up 24%….
Yesterday I stopped out of some issues and for now I am considering some short sales in COF and some of the FLY’s “reverse horseman,” but for the most part I’m going to “hang out on the bench.”
GLT
by GW
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