If you are wondering why the market is down so much, look no further than American International Group, Inc. [[AIG]] . American capitalism, best known for its entrepreneurial spirit and industrious work ethic is dead, thanks to assholes in florescent green jump suits, who underwrote cdo’s and other egregious investment vehicles. Hence, U.S. equities no longer deserve premium multiples. Instead, they are being priced for death, rightly so.
Karl Marx predicted this would happen to the most overzealous capitalists, where greed and lack of proper oversight can lead to anarchy and extreme socialism. In one year, wall street has morphed itself from high powered brokers, doing deals, into fucktarded asshats with a box full of their belongings—because they’re out of a job.
While it’s true, there will be signs of light and glimpses of hope, things will never be the same. The gilded era of decadence for asshole ibankers is over, while the age of “The Fly” has only just begun.
I understand the market looks extremely oversold here. After all, the vix is at historical levels. But, understand the gravity of the situation and come to grips with the fact that silly homos in florescent green jump suits are about to get stomped the fuck out, yet again.
Top pick: short Legg Mason, Inc. [[LM]]
NOTE: I was up 14.5% today.
UPDATE: Bank Stocks in the danger zone include:
Allied Irish Banks, plc. (ADR) [[AIB]] , Morgan Stanley [[MS]] , Goldman Sachs Group, Inc. [[GS]] , UBS AG (USA) [[UBS]] , Banco Macro SA (ADR) [[BMA]] , Nomura Holdings, Inc. (ADR) [[NMR]] , Sovereign Bancorp, Inc. [[SOV]] , Wachovia Corporation [[WB]] , Och-Ziff Capital Management Group LLC [[OZM]] , [[LM]], Interactive Brokers Group, Inc. [[IBKR]] , Affiliated Managers Group, Inc. [[AMG]] , AllianceBernstein Holding LP [[AB]] , American Express Company [[AXP]] , Pzena Investment Management, Inc. [[PZN]] , [[DSL]] and Washington Mutual, Inc. [[WM]] [youtube:http://www.youtube.com/watch?v=kqtAzRNhTTY 450 300]
UPDATE: Via former Fed Governor, Wayne Angel, who is also an idiot, “The Fed’s balance sheet is infinite.” Wonderful. In other words, these assholes are just printing money at will. Our leaders are complete imbeciles. Shocker to see gold up nearly $100, no?
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My futures account is loaded up and ready to buy, let’s crash this bitch 🙁
Behold! The “COX” man will ban shorting stocks…
“I’m hearing that Hedge fund managers are putting money to work” Maria Bartiromo
I am not kidding, I actually believed her…
Fly, you still holding your shorts across the board? I got out of everything except for egregiously large holdings in an unnamed west coast acquisition target.
Figure there has to be a bounce tomorrow after two 400+ down days out of 3.
FCX follows copper in lock step. So what your purpose?
Fly..
Did you take any profits?
Hello Mr. Fly,
Hope you and the missus are doing well.
I saw the very first “sold” sign on a house the other day. Haven’t seen one in over 4 months now.
Well, bottoms up to you!
Up 14.5 ?? TODAY or Year to date???
I did not cover any shorts, not one share.
I added to them.
up 14.5% today, more than 60% ytd.
http://www.businesspundit.com/sub-prime/
Its a funny recap of the events that lead to this (using stick figures and such), if you have the time to waste.
Today might have been my biggest day ever.
Señor Tropicanico RULES !
Nice job man sans appendix.
btw, what would you think of HSBC for MS?
If you were up 14.5% that is not a good thing, congrats but man your models are a little skewed. Who am I to tell you that but just seems pretty far biased. I was up 1.4% today and loving it, closed out the gay trade on GS that I so made fun of Fly for, dumb me. Anyway we are on our way to 10,000. Don’t buy until then unless its SRS.
Okay fuckers, I just sold (right before the close) all my ultra-short positions, and bought 4,000 UYG.
Dicata … I almost ALWAYS win!
My biggest day ever too
TG – HBC is a mini AIG regarding derivative exposure. I’m short them & if they go for MS, I’ll double short them.
Like I said many times before–
The Fly is God
Thanks for the advice, God.
Kept me out of much trouble.
Nice play, Fly.
Gapping:
I posted earlier that I was taking off my hedges. Sometimes, when I am certain of a direction, cushioned by big profits, I push the envelope.
Hence, I win again.
The 11% move in gold is scary. That 1929 style is panic.
Fly, Thank you to you and all of the other iBC’ers [sic] Danny, AD, RC, Wood. I banked egregious coin today. (I don’t have the % right now). Still all short for tomorrow. Time to get some pickinic baskets. Thanks again.
Congrats Fly!
VIX close above 36, first time since 2001.
nncoc: I believe people are seeing this thing with the Treasury buffing up the Fed’s balance sheet as inflationary, plus a flight to safety perhaps. I may even consider shorting it if it jumps again.
Smell the GLD? I recommend buying the delicious taste of alchemy – even after this move.
Consider MS or GS.
Just think of how much he’d be up with the Appendix!
___
Not sure if this was my “best day ever,” but probably BDE in the “non-fucktarded dot com era, era.”
___
Congrats on the big day, Senor Fly – it coulda been even more if you just went with SKFie and left SRS alone. Donny or you will be wrong in the morning – I think Donny loses.
Fly congrats. Also why isn’t COF getting kneecapped?
Fuck you, you’re dead.
Wats up with the Fed’s Balance Sheet?
WOW, just noticed FXP +30.00.
isn’t that your stock of the year? FLy wins again.
CNBC guest sezs: “Bounce-back is due tomorrow. These prices are too low.”
How do they find all of these asshats?
NYC lost its place as Money Center of the world today, it was a nice run…As Springsteen sings “Everything must die- baby thats a fact, maybe everything that dies some day comes back”
The good news? There’s now room for a 1000 pt rally, right Fly?
Nice day, Fly.
-DT
Who was that fucker who told “The Fly” fucking Broker A
that he needed to take a day off?
The Fly Never Sleeps!
+10
Fly, what affect, if any, will the SEC short rule have on your plans to kill the banks?
Rally?
Whats the catalyst?
GE AXP cheap?
Edoss, that’s why they are going crash this thing after hours/pre market.
Wamu on the auction block.
1) LM printed some beautiful coin for me today. So did WB
2) For anyone without a sense of history: The VIX can easily go up to 60. Did that in 98, in 01 and 02. And probably will do so in 08.
Have fun chaps – the bears are just getting started.
BTW up 40% today – 120% YTD. Sorry Fly 😉
Yeah but you manage like 2 grand. Piker.
A little bit more, but yeah, probably not a 1/10 of what you’re shuffling around. You’re the only man I enjoy getting abused by.
1+
Vix can, but probably won’t hit 60. You’re starting to sound like the summer oil bulls who said oil to 200.
Forget about oil to $200.
Vix to 200.
It’s all the rage.
Expect a Fed pre-open surprise in the AM. Just a guess.
The ‘Commodity King’ Dennis Fartman is a fucking idiot.
Molecool, did they have inverse ETF’s back then?
Who da fuck is dis Fartman guy trying to move in on my rackets?
CubsRock – a few I think but we’ve had a proliferation of inverse ETFs lately. Check out the plethora of Rydex ETFs we’re able to enjoy these days.
I can’t decide which I like more for The Fly: Musca Rex or Caesarius Musca. His pick.
The inverse etfs only showed up a few years ago. No internet in 1987 and one had to use a landline (no cells either) to call in an order.
I used something called a Quotetreck (from E Signal) back in the mid-90s that looked like a calculator (with a big antenna) that ran quotes in a loop (about 1 minute behind) and worked off radio waves.
Fun days.
!!!!
radio waves! That is just awesome.
“I got a 12 CRT with FNN, my ham radio tuned the DJ newswire, and my bunny ears — time to get in the turret.”
The PPT will come in tomorrow when the market is down another 500 and put the poolaxe to all the shorts all the crap to merge with all the good – hence shoring up the fin system and they will back it with their infinite b/s.
Well that or I’ll be less wealthy again tomorrow.
The difference between Argentina, Germany and Zimbabwe is this is fucking America god dammit! If we get fucked, so does everyone else.
You call that a crash?
Hey, fellow IBCers. I’m selling some swag on behalf of an ebay illiterate family member being let go by AIG if anyone is interested in any crap from this P.O.S. company. Fly, congrats on an awesome day!!! Hope everyone is hanging in there alright.
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=190252857593&_trksid=p3907.m32&_trkparms=tab%3DSelling
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=190252863478&_trksid=p3907.m32&_trkparms=tab%3DSelling
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=190252870128&_trksid=p3907.m32&_trkparms=tab%3DSelling
I had to take a screen shot of the a/d line today for memory road.
http://img115.imageshack.us/my.php?image=september172008ge1.png
What a day. Discipline dictated selling some September puts and ultrashort etf calls at the close, but besides that I am still gung-ho on the short side, with a few exceptions in my recently bulging IRA accounts.
The main show is yet to come; I can handle a PPT rally. Muhahahahaha.
Cubs, I just noticed from your screenshot that VMW is at 27. I may be forced to pick some up.
Yeah Ragin,I grabbed some today and got scared. Took $1.80 but I wanted it for a long term hold. Will be getting right back in it.
Fly, thanks for the clarification and yes it does make sense. Just my thoughts but WM gets bought by JPM, mark it on your calendar.
Man, that’s balls! On a capitulation day like today, Fly?
You not only didn’t cover your shorts; you added to them???
What are you expecting tomorrow? 1987?
Yee-haw! Wall Street’s gone baby
Mark Haines: “Live from Charlotte North Carolina the nineth biggest money center in the world, it’s CNBC” (banjos start playing)
Maria Bartiromo “Hey y’all markets are closed do you know where your Waffle House coupons are?”
Faber reports China Dev Bank looking to buy MS. And then there was 1.
The VIX did hit 1500+ in ’87.
Damn that Denninger guy just brought me down…
But he’s right.
Meanwhile, fuck Larry “Pink Tie” Kudlow.
-DT
Shit, have you guys gone to the ATM recently? Try to, fuckers.
Lines are friggen long!
That Denninger guy even scared ME!
Here is something I am pondering. Yes the Fed’s balance sheet looks crappy. Yes the treasury borrowed lots of money today … but they did it at the best possible time. This is not the same as printing money. Rates are practically zero. This was the best time for the treasury to start borrowing; i.e. when all the money in the world is looking for safety.
The movement in gold, IMHO, was more short covering and trading, with a tad of ma’s mattress money thrown in, than the continuation of gold’s bull market. Gold bulls are about to get fleeced with rusty shears.
These guys in NY and DC are gangsters when it comes to money; they haven’t started up the printing presses (yet). And even when and if they do, it won’t matter because by then we will be in a deflationary depression. Lots of people think the Fed’s actions so far have been inflationary, but all these transactions have been sterilized to some degree or another. No printing there either. And I’m sure the smart ones here know why M3 shot so high this year, so hopefully there’s no need to get into that. Incidentally, many of their actions will have deflationary effects.
Just to be clear, I am no fan of the Fed. I think it should be abolished. I have forgotten more conspiracy theories than most people will ever know. But I have to tip my hat in respect to the Fed and Treasury for a masterful execution of their extremely fucked up bullshit. So far.
I think the Fly’s warnings are spot on. Technical indicators, by definition, won’t work in a market crash.
Soon we’ll be hearing that it’s all the fault of the “Al-Qaeda Capital” hedge fund.
+ 14% TODAY? WHAT WOULD GEPPETO SAY?
Ride of the Valkyries
I’m going to take a slightly different tack in today’s column. Rather than focusing on the market action, I’ll try to put into perspective the events of the last 24 hours, which have been significant, to say the least. When you look at them, together with the government’s action in the last 10 days, I think you can say that this has been one of the most extraordinary periods in U.S. financial history.
Beginning with the AIG bailout, it is good news and bad news. (More about the bad news below.) I believe it’s good news in the sense that the government figured out a way to punish the shareholders, while at the same time, not allowing the policyholders, annuity holders, etc. to be crushed, thereby forcing the country to deal with the knock-on effect of all that. (One might argue that the policyholders should have been more careful, but that is certainly an argument for another day.)
It is important to understand that the problems that we are facing built up over the 20-year reign of Greenspan, which the present crew is now trying to clean up. So, while I’m sure we all find these bailouts repugnant, I believe we are making progress — in that risk is being reintroduced into the equation.
I never liked the way Bear Stearns was handled. However, I was fairly comfortable with the way Fannie Mae and Freddie Mac were handled, given that there’d been an implied backing by the government all along. As for Lehman, I think that was handled the way it should have been.
2, 4, 6, 8, Who Do They Like to Excoriate?
While I’m on the subject of Lehman, much has been made about the notion that shortsellers doing in financial companies. I continue to see arguments that shortsellers and the no-uptick rule can ruin companies. Lehman is a perfect example of how that is not the case. Lehman’s books were shown to virtually everybody on the planet over the age of 16 with more than 50 bucks in their pocket, and nobody wanted it. They didn’t want it because it was essentially a bankrupt entity (once its assets and liabilities were netted out).
To suggest that shortsellers made that happen is just ludicrous. If shortsellers were so stupid as to drive a viable, valuable company down below where it was worth, buyers around the world would have leapt at that that choice. I know that’s a bit of a digression, but I’m sick and tired of hearing the wrong people blamed.
Every financial company that’s now in trouble got there because they took too much risk and acted like fools. They were so busy trying to “make the number” that they pulled any levers they wanted to. And, oh by the way, isn’t it interesting how all of these financial companies that always met or “beat the number” are the ones which are not just collapsing but vaporizing.
Which brings me to bad part of the government’s recent bailouts. Where will they stop? Will they bail out Washington Mutual, Chrysler, Wachovia, GE (which sports massive leverage in its financial arm), Morgan Stanley, the airlines, other insurance companies and other banks? I think some companies on that list, judging by recent actions, would be allowed to go bankrupt. It will be interesting to see where the line gets drawn.
It still appears to me, as I was saying yesterday, that the Greenspan put has died. But it’s going to be a while before the mess that was created by him (and by the folks who believed what he said) will be cleaned up. The scope of the problems and the rot are just too enormous to think that they could go away quickly.
The Buck Broke Here
A good example of the knock-on effect of Lehman: The Primary Fund, run by the Reserve Group — which launched the first money-market fund in 1970 — broke the buck yesterday due to exposure to Lehman paper. Other money-market funds will probably find themselves in this situation. Which is exactly why I spent so much time in “Ask Fleck” talking about Treasury-only money funds many months ago.
Another problem that needs to be addressed is the fact that financial statements in this country don’t mean anything, because the accounting rules are so absurd. Last night Morgan Stanley was initially cheered because they “beat the number.” One reason was because they were allowed to record as profit the fact that their debt is sinking in value. (I have covered this before, so I’m not going to get into the details. Suffice to say, it’s just another absurdity.) We need financial statements that accurately represent the financial state of the business and that are simple to understand — not financial statements that are allowed to mean whatever the executive in charge wants them to mean, to increase the value of his stock options.
In any case, the sum of all these problems — and the ones still germinating — finally caused Ben Bernanke to gas up the helicopters. This morning it was announced that Treasury plans a special series of bill auctions to help the Fed expand its balance sheet. Read: The Fed is going to print money to buy Treasurys so that Treasury can lend money to all these institutions. In other words, the printing presses are setting about monetizing all of our problems.
Of course, this will lead to other problems. Which is the outcome that I’d always assumed would occur, and now it’s here. I believe that as we go through this process of sorting through and enduring the implosion of the U.S. (and potentially the world’s) financial system and its economic consequences, we’re going to find government actions that we like, and a lot of things that we don’t like. The most important point is that we somehow start pursing policies that make sense prospectively.
The Dollar As Pariah
And, foreigners are finally watching. Last night, China’s “People’s Daily” said that the world was “threatened by a financial tsunami.” In essence, said the paper, countries needed to consider building a new financial and currency order that was not dependent on the United States and the dollar. (After all, who wants to lend money to somebody who uses a printing press to pay you back? Obviously, the script you get paid in can easily be worthless.)
Events continue to move fast and furiously, and I doubt that we’ve seen the last of startling outcomes. Hopefully, Rap readers have been prepared for some of these events and are in a position to avoid being hurt, such that someday they can capitalize on a return to normalcy, which I expect will be brought about by a vicious bear market and recession.
As I was saying the other day, the folks who’ve been trained by the risk-suppression policies of the Greenspan era don’t have any real knowledge of how markets work and what can really happen. Hence, their disregard for risk, as we have seen across so many fronts. That will change, and as it does, risk will get priced into “risk” assets like stocks and bonds. True investors will have a great chance to buy real businesses, at fair (if not cheap) prices somewhere down the road in the next couple years.
As far as the market action, last night we had an upside explosion initially when it was learned that AIG would be bailed out. Then the futures began to leak. Interestingly enough, post Bennie’s notice to gas up the helicopters, the market was lower by 2%. By midday, the indices were down by 4%, plus or minus.
T-Bills Tell the Story
Financial institutions were being destroyed. (Now we have wiped out 20 years of excesses in a few weeks’ time.) Credit-default swaps on firms like GE, Goldman Sachs, Morgan Stanley were exploding at the same time that companies like Citigroup and Washington Mutual were being pounded. It was a scene of serious destruction. Similarly, one-month T-bills traded at a negative yield. I believe it’s the first time that has happened in this country since the Depression. And, 90-day bills were seen yielding between 3 and 7 basis points. That is not a typo.
Anyway, the market bounced off the lows in the early afternoon as a screaming 2% move in S&P futures went flying through the pit and dragged many stocks higher. I only bring that up to point out the fact that to my eye, there was still an amazingly small amount of fear (away from financial stocks). I saw many companies that are connected to all these problems hardly being dented. Not least of which was IBM, which, with about an hour to go, was down a little better than 1%. (Thirty percent of its customers are financial institutions, and IBM has levered its balance sheet mightily.) Of course, its financial statements are quite suspect, in my opinion. I could give many other examples, but that is a big, glaring one. In any case, the last hour saw the Spoos jam job fall apart and we closed on the lows. The trap door is opening.
Yellow Dog KOs Johannes Gutenberg
Away from stocks, let’s lead off with Freddy Krueger and Sid Vicious, i.e., gold and silver. My view had been that when the big lightbulb went off about where the U.S. was headed, gold and silver would open up at prices where no one would feel safe buying them. It didn’t turn out quite that way. But in the space of 30 minutes this morning — as the launching-of-the-helicopter news hit the tape — gold exploded for roughly $30 and silver rocketed for about 60 cents. By day’s end, Freddy rallied a stunning 10%, with Sid galloping 12% higher.
In an unbelievably lucky stroke, last night I actually purchased some gold, thinking that an enormous amount of bad news had been thrown at the precious-metals markets — including the liquidation of ETS, hedge funds, as well as many things we probably can’t know — and that they had withstood the pressure pretty well. Thus, I was hopeful that maybe precious metals could work higher. As soon as I made my purchase, gold immediately dropped $4 and I felt like a dope. But as it turns out, I got lucky.
My reason for bring that up: I thought that after having endured so much selling, gold might try to dig in (as I noted yesterday). I think that today’s action means that there is an extremely high probability that we have seen the lows. But folks should remember that the lows could be retested. What we don’t know is whether gold becomes the new go-to asset for folks who are worried about the safety of where their dollars are stored and the safety of the dollar itself. Speaking of which, the dollar was weak, though not as weak as one might have guessed. (Then again, currencies are all battles of wits amongst unarmed opponents.) Treasurys were higher with the thought of the printing presses revving up, at least for now, as they were higher across the board. Lastly, oil gained 6%.
Positions in stocks mentioned: Short IBM and long IBM puts.
VIX hit 172 in 1987.
Have a nice day.
I owe you 10 Francs FLY, but I hope you took some profits today as your SKF hit 140 again….it gave you another chance. The government, some joe, Cramer, your Romanian donkey you keep in the bedroom….somebody is going to do something to fuck the shorts….I can feel it brewing.
Good luck to all on both sides of the fence.
Many thanks Juice, he makes so much sense.
Don’t you people think its funny that the cum guzzlers at CNBC find it necessary to call it an historic crisis and run non-stop coverage on down days yet last night it was business as usual and they ran the lame old gayness. What the fuck is wrong with these people other than being owned by the bisexual men at NBC? Fuck, for fucks sake.
AU: Give The Fly (God) one good reason to cover his shorts besides “it’s oversold and it’s due for a bounce.”
Fly in all honesty, do you think SRS will ever see a new high or even the 100’s again?
Zombie,
Read my post….it’s in Engwish.
AU: The govt? What can they possibly do to help at this point? Cramer? Please. You got anything real besides a hunch?
Fleck,
Great Post. I enjoyed reading your thoughts.
Thanks for taking the time to post them.
The Fly, I applaud your short selling abuse of Joe Fucktard.
-cdi, “It’s like the 1930’s all over again.”
Looking forward to reading your blog from now on. WOuld be nice if you mentioned something about the Lisbon Treaty and how world government via the UN is in the works, thanks to the CFR and other thinktanks. Understanding the global political agenda is necessary for understanding the setup that is causing socialism in the US. What happened the last two weeks is part of the long-term plan of the international central banking families. Replace the republic with socialism and remove the middle class…. paves the way for regional world government under the UN.
Hey Fly, I reverse engineered your posted trades and your TA system is similar to mine. You may want to enhance your trades though, by using the weekly chart signal instead of the daily signal. It’s more accurate and you will make more money over time. Do the backtesting and you will see.
Teddy:
Go fuck yourself, with all due respect.
“The Fly” doesn’t use charts. He uses his balls.
Technical analysis is investing for the lazy and ignorant.
The Fly is a modern-day phrenologist, except he uses balls.
Don’t make me go off on the scroticator tangent.
I just have one fucking question tonight:
Is Barry Ritholz allowing Keith Olbermann to write his blog?
I mean FUCK MAN can you say from hero to zero?
Barry, if you are reading this take off your empty suit and take a fucking vacation dude, shit.
This Youtube guy speaks like a Ron Paul Republican. Makes perfect sense to me. I like him.
Fly….I have been a “Fly” (no pun intended) on the wall for a while here. Congrats on your trading. I appreciate that I can read all about the horrible future for our children and somehow still laugh out loud! Keep up the good work.
Karl and Teddy, which one of you can tell us who really killed Kennedy?
p.s. in the movie, which one of you plays Scully?
fuck fuck fuck fuck!!! I told you so mother fuckers!
You think shit is bad now? Fuck you ain’t seen nothing!
We’re powerless to these stupid power freak mother fuckers who got us by the balls, with a twist and shit!
You better get used to bending over for a full cavity search in name of “protection” from terrosim and all the other bullshit they’ll pull for their sick twisted pleasure because they have everything in the world and they’re still no happy so they take it out on whoever they can just for the fuck of it!
We are fucked
“fuckers!” … if you did not sound like such an ignorant guy I’d take your F-bomb X 10 comment as a sign of a tradeable bottom. but the loser crowd is wrong 100% of the time, so no signal.
as is i just want to send you a Hooked on Phonics education free of charge. are you behind on your subprime mortgage and thus leading this downfall ?
i fucking kid you, but man please add something reasonably useful when you post. with a twist.