The durable goods numbers were plain awful, particularly for machine tools. Businesses are not spending like the do-gooders think they are.
Keep your eye on dollar weakness versus the yen, via [[FXY]]. So far, the move to the downside is significant. Should it continue, I will be buying more gold, via [[DGP]].
One thing to keep in mind: municipalities who plan for construction projects, by raising money via bonds, are in for a giant surprise. In their infinite wisdom, they peg expenses to the CPI index, which, as you know, is utter bullshit. Inflation in construction, which includes steel, concrete, copper etc, is running at a 9% clip per annum— up 50% since 2003.
What does this mean?
For one, it means municipalities will be forced to raise more money to finance construction of infrastructure projects (bridges, tunnels, roads) or be forced to cancel them.
Possible short plays off this dilemma include:
[[TEX]], [[VMC]] and [[GVA]].As for today’s trading:
Look out for the asshole dip buyer. He’s back in town, with his stupid mustache and bag of depreciating dollars.
I really like [[SMN]] here, which is down due to gold strength. Again, long both DGP and SMN is a good pair trade.
Finally, it appears [[C]] is in the middle of all sorts of problems. Today, they settled an ancient Enron claim, for close to 2 billion dollars.
You have to be kidding me.
And, they own a truckload of [[CCU]] debt.
Top pick: [[SKF]]
UPDATE: Paulson says Bear Stearns ‘found itself facing bankruptcy
Yeah, instead they ended up getting 10 bucks per share, which in my book, is a fucking bailout. The deal was NEVER structured for $2. They used that $2 shit for public relations, in order to say: “see it’s not a bailout.”
Fast forward one week, they upped the buyout to $10. Plus, [[JPM]] is paying out the nose to retain Bear brokers, all with Fed money aka tax payers dollars.
Keep in mind, in bankruptcy, [[BSC]] goes to zero.
29 billion @ 2.5% for 10 years.
Not a bad deal for Dimon and Co.
Federal Reserve equals U.S. Sovereign Wealth Fund.
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Alias: BPOE
FLY
I have been looking for elevator music to play in this market. I have an elevator fan but can’t find music. You know you have to feel the market in the true art of trading.
How is it that DUG and DIG are both down?
I’m starting to wonder if DUG is a legit play.
Ben —
You’re not supposed to have any exposure to the market.
(I hate this “breaking the fourth wall” shit)
I am going through this Durable goods report…
– Computer and electronics products…DOWN 10.3%…biggest ever drop since data first started.
Wow, I am going to Best Buy and haggle for a new computer… “Listen kid, you better give me some foreclosure type discounts…Looking at the numbers here (showing him the durable numbers), things must suck ass for you. I’m helping you guys out”
LEH IS A FUCKING ATM MACHINE.
Back to work.
SugarBear News:
I was just checking out my $TRAN charts and for those of you who remember when and why I went bearish in November, it was a “Dow Theory” call (for which I was ridiculed by certain sugar seeking insects, ahem).
Well, the $TRAN chart has just warmed by bearish heart a little more this morning.
I will post an update to the PG.
I got some LEH July puts… LEH under $35 within a month?
Fly, please go punch the eyebrows off SRS. Something is not right with it.
Fly, VMI also works in your play on municipalities with their segment that makes traffic lights and signs. Also looks like it’s starting to roll over on the recent run up.
cubsrock,
i think it has something to do with sentiment regarding to the rally in CMBS spreads the last few days. they came in 100 bps.
SRS will rise, soon
Fly, don’t forget the effects of the housing bubble popping regarding municipalities as well. During the hip-hopping period where houses were appreciating 20% a year, property tax revenues were exploding as well.
As we revert back to historical norms over the next few years, remaining homeowners will be protesting their tax bills year after year further eroding the tax base.
Quite the dilemma, we need to prop up housing with artificially high prices for the “machine” to continue to work… but no one can afford these prices much less meet historical borrowing standards (love that negative savings rate).
Nice. I’ll add VCI to post.
Keep it coming.
Have they finally taken the refiners low enough? Is that big drawdown in RBOB the turning point?
People, we could win a lotto-ticket if the government or financial system increases leverage requirement on Commodities…that is if you long SMN…
Thanks Gunners, It was just very weird how it ran up big at 11:00 yesterday and doing nothing today.
Well we finally broke 1340 on the s&p 🙂
Dick Bove:
IS C still a “buy of a lifetime”?
VMI not VCI,sorry for the fuck up.
Fuck you Grandpa.
VMI is primarily in Ag.
Go play with your false teeth.
So true, Bernanke is using the Fed as the US Sovereign Wealth Fund, with the implicit guarantee of the US Gov behind him. I hate being at the mercy of one man’s ideas like that, he might be a mad brilliant genius, but what if he’s just crazy and this totally screws everything up for years in the US financial system. No wonder GLD and SLV are going right back up from their recent correction.
Fly,
Since your shorting LEH, are you shorting MER as well? People are much more pessimistic on MER than LEH. Also, MER is much more expensive relative to book value than LEH.
I have started building a position already…
Fly,
Having trouble with the size of my Transports chart on the PG… any suggestions on how to shrink it to fit?
Looking at BBY puts.
No idea Jake.
Maybe someone on this board can help.
Jeremy is God of all technical issues.
No MER for me.
Just LEH, WM and MS.
But MER is bad too.
I said segment fuck lips.
While you’re eyeing over the financials once again, I must throw out a shameless pitch to continue to hammer Fannie (FNM) and Freddie (FRE).
They were just at sub-20 levels a couple weeks ago and this “good news” of raising their spending limits is nothing but a death sentence for them as stocks. They are being setup to take on more and more toxic paper because it really doesn’t matter to the gov’t if these entitities lose billions and billions more. Someone needs to be the bagholder and i’m thinking it’s FNM & FRE.
I have some MER lotto tickets. I bought some april $30 puts, just in case they blow up.
Fly, my call that the big banks are the buy of a lifetime isn’t banking me any coin. That’s why I’m broadening my horizons into an area I know even less about than the banks: refiners.
When do I get my $29 Billion @ 2.5%?!
I’m still short financials, but I’m buying here.
The 50 day is being defended on the SPY.
I’m getting small positions on all the indexes.
As long as we stay above the 50 day, you want to think long, except of course for financials. Fuck them.
Gunners,
You and thousands other people are holding that bet…You’ve seen the put activity…
I’m just wondering if John Thain or some insiders has some puts there as well…
You heard speculation that people made hundreds of millions doing EXACTLY the right moves when it came to BEAR shares (no doubt insiders).
“Blue Oyster loves Anacot Steel”
Jake, put your chart in photo editor and reduce it to somewhere around 600×900, then try it again. Keep reducing it until it fits, but that size should work.
The Fed will “bailout” any and all comers with the same bullshit like Bear. They avoid the moral hazard issue by simply smoking the shareholders and making it look like Bear (or any other future degenerating financial) is paying for their sins.
The counter party risk is just too great (so the arguement goes) if there’s a bankruptcy. Frozen assets do not bode well in a liquidity crisis.
In the end, Hank Paulson stands ready to step in with a treasure chest of goodies, should the Fed run out of resources via stuff like MBS collateral going to zero.
We are looking at a different financial system going forward. Old rules may not apply in the not too distant future.
Oh yeah,… and finally, Ben Bernanke and Hank Paulson will get the Nobel Prize for Economics. It’s built in to their contracts.
Thanks Wood, I think I have it now… cheggitout.
Fly, please do not gloat today at least not before the market closes. I am making money today and your gloating has a habit of screwing that up.
Raider:
Say that again and I will post the most egregious form of gloating on the front page.
For you bottom fishers, ARUN, FTK, IAR, PRFT looking decent, bucking today’s market action.
SIRF and SOLF looking ready to pop up.
William F. Buckley said in his last Charlie Rose interview before he died that when he founded The National Review in 1955 to espouse the virtues of conservatism it was a very radical idea. That’s because in the 30 years after the Depression, Roosevelt took a far left turn with the New Deal which had been happily accepted by the mainstream. So his conservative ideals were actually very radical. The movement gained steam with Goldwater, and became widely accepted during Reagan’s administration. (Since Reagan The Republican Party has fucked it all up, but that’s another story).
Anyway, Buckley observed that for someone to come on the scene today with an ideaology as radical as his conservative movement was in 1955, it would be a socialist.
It’s interesting that an astute social and political observer like Buckley didn’t recognize we’re already there. Society is going to bailout retarded homeowners for taking out loans they knew they could never repay, the “investors” who made those retarded loans, and the retarded investment banks who trade and originate them.
As Rick Santelli says, let’s just go all the way and have a constitutional amendment to change the stars and stripes on the flag to a hammer and sickle.
I am buying on dips, my dollars will appreciate soon….. How about a late day rally?
NASDAQ is staying above the 50 day as well. If ORCL beats after the close today which seems likley we could have a nice jump. Just got long QLD.