The [[RKH]] is way too high, considering Lehman Brothers Holdings Inc. [[LEH]] is half dead. The very notion that the banks have bottomed is laughable at a minimum, violently vomiting with craze at a maximum.
Remember, many of the regionals got “rear ended” by Paulson. Many of them were long Fannie and Freddie preferred, even common stock.
The easy short cut is to sell short RKH.
To execute like a highly trained ninja, who has sharp swords and ample supply of smoke bombs, sell the following too:
Sovereign Bancorp, Inc. [[SOV]]
[[FED]]
PacWest Bancorp [[PACW]]
Marshall & Ilsley Corporation [[Mi]]
CapitalSource, Inc. [[CSE]]
Pzena Investment Management, Inc. [[PZN]]
Legg Mason, Inc. [[LM]]
KeyCorp [[KEY]]
East West Bancorp, Inc. [[EWBC]]
Synovus Financial Corp. [[SNV]]
That’s my list and I’m sticking to it.
As an aside, it’s rather amusing to see the home wreckers aka casino stocks getting the knife to gut treatment. Unfortunately, I am no longer short Las Vegas Sands Corp. [[LVS]] . However, I wish I were.
In that space, Wynn Resorts, Limited [[WYNN]] , Boyd Gaming Corporation [[BYD]] , MGM MIRAGE [[MGM]] and LVS are my favorite ways to bet against legalized crime.
On the long side, the commodity related stocks have bottomed, ahead of the actual commodities. This is an early tell, God willing.
Again, the quick short cut is to own [[DIG]] , [[IEO]] and [[UNG]] . However, if you’re into individual equities, take a closer look at National-Oilwell Varco, Inc. [[NOV]] , EOG Resources, Inc. [[EOG]] , United States Steel Corporation [[X]] , Potash Corp./Saskatchewan (USA) [[POT]] , Arena Resources, Inc. [[ARD]] and Freeport-McMoRan Copper & Gold Inc. [[FCX]]
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yes Fly….odd that gold stocks are up with gold down 28 bucks.
hmmmmmm
A few quick notes:
The stock market is one itchy finger away from blowing a hole through the cranium. Take it to the bank.
The stock market is going to rollover inferior fucks, who think they know what they’re doing. I swear by it.
In the mean time, I continue to bank coin at unimaginable amounts. Lately, I have become almost like The Fly … I win almost all the time.
Anyone here watching the JCG action over the past couple days?
Glad you dropped that MOS rec.
Everything I’ve got is screaming “Sell that biatch, now.”
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What are your thoughts on these consternating refiners? I hate it when you and Chivas force my hand like this…
(joke! it was a joke!)
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how about short CFFN ?
Ruh-Roh!
Not that it’s going to be a picnic for anyone who’s POTUS in the next four years, but some bad news for the Messiah Campaign just rolled out of the “market based” polling firm, In-Trade:
Obama Contracts Trade Below McCain Contracts for the First Time in 2008 Race!
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I was looking at the components of RKH, KRE and comparing it to you list of regional banks you like so much.
RKH contains BAC, JPM, USB, WB, WFC (collectively more than 50% wieghting of RKH) which I believe are mostly already in SKF.
KRE seems to contain more regional banks. The ones which presumably will get run over by the frannie mace mess.
What do you think of KRE instead?
http://www.ssgafunds.com/etf/fund/holdings/holdings_KRE.html
KRE may be better.
RKH suffices too.
THIS TIME YOU ARE 100% WRONG FLY. FINANCIALS AND LEH WILL FLY
LOL.
Nothing like the “all caps” for saying, “craaayzzzeeee!”
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With the information hotline that GS seems to have – what happens if they crush?
My vote is the pop & drop trade on the sector.
If GS does not crush?
Game over and thanks for playing.
Donny,
You getting almost every trade to go your way usually means a good time to book profits and start with clean slate…
Blow me ALBERT.
Now I’m gonna sing a song for you:
FTK could have a strong bounce.
I would also add to this list NCC. Their exposure was slammed earlier this year, but there’s probably more to come.
Fly, or one of your subordinates
Can someone shed some light for a newcomer, why 1) if the financials are going to continue to implode 2) It would seem to follow that the dollar is likewise going to fall sooner or later 3) why is not gold, slv. etc. getting a bid?
Thanks from behind the gallery.
Thanks “Fat Albert,” for bringing the nostalgia bus.
Bill Cosby’s a good man, for a number of reasons (some for which he’s been pilloried), but I always loved that show as a kid, and I wish there was something of its equivalent for my kids today.
__
You’re welcome Jake.
I’ve been hipping my son to all the classic stuff.
Have you seen the Veggie Tales series? It’s faith based moral lessons. Very well done.
We watch Ben 10 Alien Force a lot too. No moral lessons, but a great cartoon.
Bennet Sedacca
01:22:28 PM
Position in LEH options
Other stuff I am watching…
I’m watching the sneaky bid to GDX and XLE that my firm owns from earlier, despite the commodities being lower. This is positive divergence and bodes well for the commodities.
Lehman (LEH) 2 year paper trading 1000 bps wider than yesterday in ‘integer’ markets. This, to me, makes me believe that LEH will indeed get taken over/under, very soon. And I believe that the market is saying they don’t think that bondholders will get 100. This is also negative for other financials and the preferred/hybrid market.
Add Washington Mutual (WM) to this and we could have yet another entertaining market.
Once last thing, My firm has been sellers of mortgages into the recent strength, but the bidders have ‘balance sheet issues’. And this is VERY generic round lot stuff, folks.
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Jason Goepfert
12:53:03 PM
No positions in stocks mentioned.
Body Count Priced In?
A follow-up on Bennet’s mention of the 18-month paper in Washington Mutual (WM). Seven of the top ten holders of that paper are life insurance companies, with a combined holding of about 20% of the outstanding. The value of the paper has almost been cut in half over the past three months.
When you see “safe” investments getting hit hard, someone, somewhere is taking major losses in unexpected places. Even the relatively staid Wells Fargo (WFC) just took a $400 million write-down from losses on preferred stock (due to Fannie (FNM) and Freddie (FRE)).
Look at some of the ETFs that hold preferred shares. PFF was down more than 10% over the past few days, another -2.5% today… and it doesn’t even hold any meaningful position in Fannie or Freddie paper. Who are the largest holders of PFF? Merrill Lynch (MER), Fifth Third (FITB), Wachovia (WB), Genworth (GNW) and Citigroup (C).
These are negligible positions for them, but it highlights the circular nature of the trouble. Some of the largest issuers of preferred stock are banks, and banks are also some of the largest holders of other banks’ preferred shares, and preferred shares in general. This is the problem with the Fannie/Freddie debacle – there is a trickle-down effect, firms are taking (or about to take) major losses, and it doesn’t seem to have been fully considered in some of these out-of-the-way investments that are currently tanking.
Over the next few weeks, more bodies will be floating to the surface, and I just don’t think that has been priced in yet.
====================
Bennet Sedacca
12:12:53 PM
No positions in stocks mentioned.
What I Am Watching
18 month paper just traded on a 58% yield. I guess the market has voted if Washington Mutual (WM) is a going concern.
AIG (AIG). This is the company I am most concerned about and am watching the most closely. If the stock turns red and stays red, i will be concerned.
Preferred issues of other deals and banks. They are selling off hard in sympathy (maybe, maybe not?) with Lehman (LEH).
Wachovia (WB) yesterday said “We believe we are liquid’. This comment made it on to my wall of shame right next to a quote from Citi’s (C) CFO in August saying ‘we are marking our CDO’s to a ‘reasonable stab’.
The curious bid in e-minis. Again.
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Jason Goepfert
12:01:33 PM
No positions in stocks mentioned.
That Crazy Oil Market
With the DOE reporting a fairly large draw on Oil inventories, it seems odd that the commodity itself is down on the day.
Going back to 2003, there were 67 weekly DOE releases that showed an inventory draw of 2 million or more barrels like today. Of those, Oil declined on the day only 34% of the time, so it’s safe to say today’s decline (should it hold) is unusual.
But we’re more interested in something that’s predictive, not just descriptive, right? And when something can’t rally on “good” news, then that should be bearish, right?
Looking at the instances when Oil dropped on a 2 million or larger inventory draw, the next week it was positive 59% of the time and showed an average return of +1.4%. Over the next month, it was up 73% of the time with an average return of +6.5%.
When Oil did as it should and rose on the day of those reports, then over the next week it was up 66% of the time with an average of +1.0% and over the next month 61% of the time with an average of +2.0%.
So when Oil didn’t do as it was supposed to do, it was actually up more often a month later, and with a much greater average return, than when it behaved itself. It’s a nutty market, and care should be taken before trading on an “obvious” negative.
Boomer,
I’ve seen the Veggie Tales, but I have a low threshold for “sacharrin.”
My kids’ favorite show (the older ones at least) is Jimmy Neutron, which I find to be almost as funny as Seinfeld. True “high comedy” without the naughty bits.
Not easy, by any stretch.
___
JakeGint,
Gone are the days of shows that more or less cater to the masses. Shows these days are all about splintered groups.
I recall Gigantor.
http://www.youtube.com/watch?v=ZlWaTAZUxUQ
Kimba
http://www.youtube.com/watch?v=Nur_fWvG4MM
Speed racer.
http://www.youtube.com/watch?v=ALzDcMDhf2o
We can include sitcomes too.
Chuck, you must be a bit older than me, ’cause I don’t remember any of those, save “Speed Racer” which was on in re-runs forever…
LowBidder,
Think of it as a supply and demand situation for dollars. What are banks (and other businesses) desperate for? Dollars! So their value increases relative to other assets, in particular the monetary metals. Gold and silver will be great after the apocalypse, but it’s not legal tender.
So the dollar should gain strength in a deflation, which is what we are facing. Having said that, the dollar is due for a bit of a pullback to consolidate. Another reason for a long trade in commodities now.
Thanks for response Hilbilly. If I understand, it is only a matter of time until the gold and silver has its turn.
Again, thanks.