Sunday, April 18, 2010

Bobbing and Weaving...

Jimmy Braddock was a scrapper and a survivor...

Market Watch
This week should bring a curious turn of financial fortunes. Two economic stories could have a significant impact on Wall street. 1.  SEC charges against Goldman Sachs. and 2.  Bank Regulations

The markets took GS news with fear and trembling, sending the market down over 100 points, and punishing the entire financial industry. GS itself gave up nearly 13% of its value. Today, Tim Geithner's interview on Meet the Press echoed hard ball Obama style. I don't think punish is the right word, but there is definitely an air of yanking the dog's chain. Geithner said it best. "You've had eight and a half million Americans lose their jobs. You had millions of Americans lose their house. Tens of thousands of businesses fail. Worst financial crisis in generations. That is a powerful case for reform. And, again, that's why I'm so confident we're gonna see Americans come together and pass reform."  

However, readers of megatrends have been around long enough to realize there is a significant difference between wants v.s. needs. The Obama administration has a strong desire to put Wall Street on some type of chain. To demonstrate that in some way shape or form that Wall Street's importance to the economic system is such that financiers cannot be given free-reign to regulate themselves. That left unchecked, Wall Street caused a financial meltdown that was so serious that it almost threw the entire world into an economic depression.

Wall Street by far is the most cunning and manipulative body this country has ever seen. That is why I believe there is little to no chance that the financial reforms that are passed will have any real teeth. We are reminded that the best and the brightest go to Wall Street seeking the highest compensation possible. And, the knowledge and wit can easily out-pace those who attempt to regulate them. Should things get too sticky, a couple days of a market sell-off will sober Washington, Congress, and Obama up a bit. And let's face it mid-term elections are coming up soon and no one wants to rock that boat.

By the way here is a link of Earnings (note that C and Zion will be stock to watch) this week, and a link to the Economic Calendar:

My heart goes out to each and every American that is currently out of work, or under-employed. The true gauge of prosperity isn't how Wall Street is doing, it is how Main Street is doing.  I am growing more and more concerned about the number of unemployed is this country. Off the top of my head, I can name a half-dozen people who are unemployed. An electrical engineering, a project manager, vice-president of a food company, electrical design, commercial real estate, and truck equipment sales.  

There is no such thing as recovery until these people who want to work and provide for their families can rally back and regain some of the zip that has been beaten out of them by this recession. I am all for extending unemployment benefits to those who need relief, and even modifying home mortgages for those who are unemployed. Most of these folks would rather be working and paying their bills, and will more than likely step it up once they get back on their feet.

I do not really buy the official government number of 9.7% unemployment, and surely do not believe there are 22% of unemployed or underemployed Americans. However, that 16% figure looks and feels about right. 

My lovely wife and I settled down to watch Cinderella Man last night...again.  I was reminded again and again that the Crash in 1929 didn't really hit Main Street until 1932. Sure 2008-2009 are much different. The market has rallied back considerably as well. All that I do know is there are a lot of people suffering out there and I don't like it!

Neop continued to roll along picking up .07 cents last week.

C calls are now 45 and 15 percent winners (as of now)... the contracts run until September...  Bove believes C will crush earnings...  I am just hopeful that good numbers are not lost in the malestrom of regulation and GS bashing.

I liquidated the potion of WMT, and long term hold which over the course of the last year earned somewhere in the area of 25%. The time seemed right and the getting was still good. 

D this is a channeling stock to be sure. I am looking for the company to increase dividends significantly, or initiate a larger stock-buy back plan.

Eyes on DRYS, AMBK, ZION, SRS (did you see that jump last week), and a few other to be disclosed at a later date.

No comments: