Friday Outlook: T.G.I.F. 10 comments
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I really can’t post intelligently right now. Sometimes you need to back away for more input before just yakking away in a knee-jerk manner. The week ends today thankfully.
I will only note the following:
- Within the VIX chart posted yesterday, it was noted that any spike to the 40s would spell the end, if only temporarily, of the downturn. And that happened yesterday.
- With the McClellan Oscillator at negative 80, it too pointed to severely oversold conditions.
- Central Banks around the globe injected $247 billion into the system [US Fed tossed-in a measly $180 billion]. Much of this money 'can' be used by trading desks [dba, the government’s special agents] to prop up stocks.
- London’s FSA restricted short-selling of any financial company shares.
- The SEC re-instituted naked short sales for financials.
- The NY State Attorney General threatened short sellers with law suits.
- Jim Cramer called short sellers “financial terrorists” on CNBC forgetting his own past activities and conflicted short selling restrictions. Cramer can’t short in his own words. [Scroll down to the applicable comment from 5/15/2006] It goes like this: “Jim Cramer: First of all, I am not allowed to short stocks per my deal with CNBC, the station that airs my Mad Money show.”
- Rumors swirl about banning short selling, period.
- A leak [trial balloon?] on CNBC stated that Paulson and the Treasury were contemplating a Resolution Trust Corp. 2.0 agency which would be the recipient of all the junk mortgages, securities and foreclosed property that the Street created. These would then be resold at a later date where possible, with the taxpayer on the hook for the rest.
- Oh, and did I mention its quad-witching tomorrow? That should cause even more short-covering intraday as Da Boyz in the options pits seek and destroy strike prices.
Given that the taxpayers would backstop 'everything', what risks do stock traders have to buy? Let’s rock n’ roll! So buy programs kicked-in and this house of cards was saved for another day. Moral Hazard be damned!
The most manipulated US market in history.
Surrender Dorothy? More like Surrender Freedom.
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This article has 10 comments:
The tax payers are being protected from systemic Armagedden which would have prevailed globally if the irrational"mega" selling(short) was not addressed.
The rescue of the FRE and FNM benefits the taxpayers
as the agencies provide mortgage financing to the average American.
Share holders(common stock) were the only segment that had paid the price for the mismanegement sins as their holdings were decimated.
AIG was not a charity case either.The shorts and the rumors distoring the facts could have imploded the financial sector globally.
AIG is paying usurios rates for the loan ,LIbor +850bps.
In addition ,theAIG had "pledged"79.9% of the common shares outstanding as a loan collateral to the government-although the 79.9% temporary "custody" will revert back once the loan is repaid.
This is purely a profitable business arrangement which will benefit the taxpayers immensely.
What we have seen yesterday was a minor short covering .
Major rally lies ahead as the record short open interest suggest major short covering.
For myself ,I am sick and tired reading about the major sacrifices by the tax payers.
In fact everything that is being done is for the benefit of the taxpayers and the economicstability.
It is precisely the unjustifiable short selling which is engaged in rape and pillage of the taxpayers.
Sadly, jail time will never happen. I wonder if there's any point in being a US taxpayer/citizen anymore, since you can get forced to take on the debt obligations for Wall Street scumbags and borrower dirtbags who couldn't pay their mortgages anyway. Nice to see Thain et. al. will walk away with millions. And, hey what the hell, they'll just do it to you again in a few decades. Where are the jail sentences?!!! I think I'll move to Switzerland.
Sorry - rant over.
This will end the same way as the wicked witch did, with the government dissolving into a steaming, screaming puddle.
Of course, in America the government IS the people.
Chill out, preserve your health and sanity. Don't have a stroke over this.
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Please tell your friends (and even better, your enemies) about this exciting offer.
I was inclined to end the comment with something like 'glad I'm not a US taxpayer'. Aside from being in bad taste, that kind of overlooks the capacity of the UK government to play these games. My money's on a guarantee scheme for newly repackaged mortgages to get the housing market going again before the 2010 election. Phone tapping, arrest without charge, CCTVs on every street corner, manipulated markets, crony capitalism - you gotta love democracy.