Hope You Had A Good Friday

I myself took the day off, electing instead to file paperwork with the state to clear access to carry a concealed firearm, than to sit and watch the ticks of the day after such a horrendous down move.

Coming into the close, I see I made the right choice. I staved off boredom and simultaneously procured the means to fight off ravenous hordes of homeless folks when all of modern banking collapses and people’s life savings are gone.

Of course, after the United States of America collapses, I won’t care about paperwork, but let’s not get hung up on technicalities.

My portfolio remains unchanged for the day, although my broker and I were having some misunderstandings about my TMF position. To simplify the issues, I covered the short for a loss (it will likely go higher anyway), am looking to reinitiate later on down the road, and am brooding about funneling money out of my accounts, in protest.

They are on thin fucking ice.

Have a good weekend, folks. Meltdown 2.0 commences next week.

As the value of Saskatchewan oil sands potash and Alberta oil sands evaporates to $0, I just want to have a hardy chuckle at all of you who were trying to save your net worth by barreling into Canadian dollars. Today, I see the USD trading at a solid $1.03 CAD.

Please inform the 2 million tax evading U.S. citizens living amongst you that they are losing, as is proper.

We’re back on top and we aim to stay that way, Canadians. I’ll be swinging by in a week or two to buy your foreclosed homes from under you, and gallivant across your country’s finest sights and establishments.

Please return to your selling.

I had been operating under the assumption that central banks pumping hundreds of billions of dollars into European banks, through cooperative policy, would effectively take the “mass liquidation Exodus” off the table.

I was obviously mistaken.

What we are seeing here is the sort of indiscriminate selling that marks a liquidity crisis. The worth or potential of assets is not in question, as what is really important is “how much selling can the market take” and “who is willing to buy.”

Thus, after the bank stocks get decimated, the sellers, still desperate for cash, will turn their sights on the next worse position, working their way through their portfolios, desperate to raise as much as they can without collapsing their own books of business.

Of course, any of them playing with margin are thereby fueling their own demise. Each sell order pummels their market value, which in turn requires them to raise more, until either they cross that threshold, or go bust.

I will be taking it to the teeth two ways then. First, even my sterling positions, like AEC and CLP, will be crushed mercilessly, as fund managers sell across the board. Second, I cut my UCO hedge in half, so although it’s already down more than 10% before the open, much of my cushion has been removed.

The sweet, hard pavement below the 9th floor invites me, as I gave orders to some homeless guy just days ago to “remove those unsightly mattresses at once!”

TMF and all treasuries are going higher, so that position is going to be utterly destroyed, but again I said it could double on me if we got a credit event in Europe. Well, we got a credit event in Europe. Just remember, “2% of assets,” then move on.

My plan is to avoid selling anything. I raised some more cash yesterday with a sale of AWK shares, and have slimmed down positions in AEC and CLP over the last weeks. Sadly, I still hold much CCJ, including added positioning, and the same goes for BG. But, it’s under control.

My cash position is 20%. My short in oil comprises 10% of assets at the moment, and I will add on bounces to maintain that exposure, going as high as 15-20% more. I am not looking to go short this market, although I salute those of you who made the call.

Let my positions fall in value; they are my positions and I stand by them. It is more important to me that these businesses; AEC, CLP, BG, CCJ, and AWK; continue doing what they’re doing. Expanding, growing, managing their assets wisely, and paying off liabilities. That is the main reason I cut MGM; bad liabilities. And AEC, CLP, BG, CCJ, and AWK have all increased their operations over the last two years, in a controlled but still aggressive manner.

If they do that, I can more than double my stakes in them closer to the bottom, and through a rebound. If they control themselves, I’ll figure out a way to profit from it.

AEC and CLP just shit the bed. CCJ breaking down also. BG following.

Let’s ignore CCJ and BG; the fact that AEC and CLP are bleeding out like so scares the shit out of me. Both should benefit from lower interest rates, as they are using cheap mortage rates to fund expansion. These are small names here; are we back to forced liquidation territory?

I figured when I took the stake shorting TMF that it might be a little premature, which is why I kept it small. Still, it’s crazy watching the longer end maturities crank higher on the Fed announcement of rollover. TMF is up more than 7% right now, like a scorpion nestled cozily between my fingers.

As you’ll recall, I stipulated this outcome exactly under the bullet “Things Cain is Afraid Of.”

So now the Fed, by attempting to turn over short end maturities into longer term debt, is socking the short end bonds and setting the 10 year plus material on fire.

I’m hearing their goal is to aid housing. Come on, I mean…if the last round of easing didn’t aid housing, this isn’t going to either. I think we all know the bigger issue at hand is the state of the consumer, and not the finance rate on a mortgage. I’ve talked about this issue previously, showing how the median household still needs to deleverage and build up savings before they’ll be able to partake in the home market again.

There’s a bigger, unspoken issue here, which is most likely the intended beneficiary of Bernanke’s announcement.

Here’s the thing; the Treasury is in deep for short term maturing paper. Way too much debt is coming due in the next 5 years. So my gut reaction is that the main buyer of the short term paper is going to be Treasury itself. Then they’ll re-issue 30 year bonds to fund themselves to the Fed, who will of course be paying them with their own cash.

This is likely a net neutral move, where the dollar is concerned. Stimulus for government, if you will…

This does nothing for the economy, the European crisis, or my nerves. Many, many people just got let down, if this is all that today has in store.

After treasuries and TMF settle down a bit, I’ll be looking to add to my short in another small, equal sized block.