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.