Believe it or not, for the last hour I’ve been screening on The PPT for buys. I know my commentary is bearish as shit and I believe, fervently, we are going lower. However, I am also keen to the fact that things don’t always work as planned. Therefore, it would be wise for me to have a few “go to” stocks on the front burner, for my easy consumption.
Also, the strength in the Euro has me thinking about a reflex rally, perhaps as early as tomorrow.
My strength lies in my oversized, large cocked, cash position, now more than 40%. Without it, I’d be forced to trade without error, or like a 100% hedged retarded monkey. With my personal money, I sold off a little TZA, in order to make room for ERY. Should BP go to $20, then $10, as I think it will, I want a piece of that Armageddon action. Remember, should BP get fucked, everyone gets fucked, from CDS players— all the way down to those stock monkeys long large quantities of BP in their pensions.
If you are confused about the market and need guidance, go fuck yourself. I’m not here to make you rich. I’m here to brag about my wins and random acts of violence.
Tip: X is today’s tell.
NOTE: If I am going to buy anything, it will be done on close.
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Excellent disclaimer.
X is making new lows here.
My prediction: BP will rocket to 30 before it goes to 20. You can take that to the car wash.
You’re On!
The way that we are most like Japan is that we have poor legal processing of foreclosures/loan defaults. The Japanese had very poor land transfer and bankruptcy laws in place during their deflationary spiral and these sluggish procedures only extend the deflation. Look no further than the average number of days people have been able to get away without ANY servicing of their mortgage- it’s doubled since 2008.
Also check out the headline today that 200,000 (!) people could lose out on their $8000 homebuyer tax credit. The issues at hand include willingness of the lender to forgive the remaining debt (further bank writedown overhang) and the obvious problem of appraisal for foreclosed homes, which are obviously not maintained.
Couldn’t banks restructure the mortgages of delinquent mortgage owners by taking the new lower sale price (assuming there is a buyer for the property), applying that to the existing mortgage, and then establishing a new mortgage that represents the original mortgage less the new sale price of the home? The delinquent homeowner would have a debt obligation that is a fraction of what they owed before but would “hopefully” be able to service it and pare down their housing expenses by renting.
Banks leverage their real estate portfolios and also sell mortgages to other banks. I think part of the problem banks are having is that renegotiation with the borrower (homeowner) means having to renegotiate their own leverage on said portfolio. I remember a situation in 2008 at my previous firm where a client had a $2MM collateralized loan @ 6% for 5 years, which was tapped out, and they wanted to renegotiate for a lower rate. The firm’s answer in a nutshell was; When they borrowed that $2MM, we resold the loan to lock in a thin profit on the spread. Therefore, we can’t renegotiate. I imagine the same is true with mortgages.
OK, I see what you’re saying here but the risk of ownership for MBS purchasers is prepayment. To extend their duration they would buy lower in coupon therefore assuming less prepayment risk and obtain lower yield. If the mortgages in the MBS/CMO were made whole less the new lower principal wouldn’t that just be like a portion of it being called. I don’t know enough about collateralized instruments but it seems logical that the prepayment risk would be assumed by the current MBS holder.
short X looks great
My parents dropped theor BP stock monday
BP might not go down for exactly the reasons Fly outlined. BP’s coercive drowning would be like having unprotected sex in Africa–enticing, but filled with risk. And, although British bankruptcy laws favor creditors, in this case the biggest creditor is US & A, which means BP would rather apply for Chapter 11 protection of its US branch than sacrifice the future of British retirees.
“BP’s coercive drowning would be like having unprotected sex in Africa–enticing, but filled with risk”
You’re assuming that there is a plan of sorts or concern for consequences. There is not.
Al Gore tried to do a forced trade in 2006.
http://www.thesmokinggun.com/archive/years/2010/0624101gore1.html
Since march 2009 is, we never really got that blow off top. We never had that moment where the sideline money was able to pile on the long side. This should keep declines choppy. We might not get a real parabolic blow off top, and market crash, until the November republican victory.We should see a slow downward grind, with numerous small bounces.
Of course, if a hurricane or further oil well rupture hits, were gapping to dow 5k. That’s also true if Iran sucker punches Israel. But, i actually think the oil leak will PREVENT israel from making a move. They needed US/NATO strategic oil reserves to be in place for a 1 year shutdown of the Hormuz straight. Those reserves are now in serious danger. We could have handled oil at 180. We cant handle oil at 300. Even Israel isnt bold enough to try and survive through that.
I figured I had too much GS (1000 shares) — thinking of flipping some and picking up something stable like a Canadian bank ie CM.
Fly, I checked your positions in PPT and see you’re still holding GS. I had them pegged for 160 despite the gloom out there. Of course there are a few analysts calling for 200+ and some traders predicting them to tank.