In baseball only an elite number of players were able to end the season with a .400 average. Names like Ty Cobb, Joe Jackson, Ted Williams, and Rogers Hornby belong to that elite list. Of the 12 times the magic .400 number was breached, two players (Rogers Hornsby and Ty Cobb) finished the season above this benchmark number on three separate occasions. In recent history Tony Gwynn finished the season at .394, George Brett at .390 in 1980, and Rod Carew .388 in 1978. (1)
Similar to the magic .400 number, it appears that Wall Street has drawn a line in the sand at the magic 8,000 number. This number has been tested on several occasions. November 19, 2008 stands as a key date. (2) That was a day when housing starts reached the lowest level since 1959,and the CPI marked its largest one-month decline since 1947. Since then, inter-day losses have crossed the 8,000 mark on several occasions, but the mark is always reset within a 24 hour period.
Let's face it, the news has not gotten better... and many feel it has actually gotten progressively worse. Sure the government intervened with TARP, the Big 3 bridge-loan, Obama's election, and release of the second half of TARP have all figured into the equation. Still though a steady flow of bad news should have sent this market lower. Now this mess sits squarely in Obama's lap. The issue of government transparency will be raised once again. Like Roosevelt against the back-drop of bank runs, Obama's administration may well be served to have a formal "banking holiday." (3) While FDR's plan was meant to stop bank runs, Obama's holiday would allow the banks to come clean once and for all. Obama's political capital cup is over-flowing. This is the time to make a big move. And banks need to finally come clean with bad loans, bad collateral, and faulty accounting methods. His approval rating will allow Obama to practically anything...
The Treasury and Fed, which appear to be in no way shape or form accountable to the American people must called to the carpet. The Treasury's mis-use of the original TARP funds to re-capitalize banks is the first place to start... The TARP in its original form was created to combat the mortgage and foreclosure crisis. Instead, Bush and friends exhausted their last bit of political shenanigans for a last laugh at Congress' expense. It could be that Thomas Jefferson was right. He was fearful of a class of financiers who would become so rich and powerful that they could actually manipulate the entire financial system. As mentioned before, this is the principle reason that Andrew Jackson "Killed the Bank." We have long-since blown through reporting the amount of money the Fed has printed. (4) However, the public... Congress... and the world economy for that matter is entitled to know the names of institutions which have received "additional loans" from the Fed. Furthermore, it is a necessity to find out the "true value" of the collateral that was received in those loans!!! The day that happens, could well be the last day any entity is interested in purchasing T-Bills from the U.S. government. Bloomberg's lawsuit inquiring about these loans is as much a national security issue as much as it is a question about the basic institution of democracy itself. Should that suit be denied, as Lincoln once said "When it comes to this I should prefer emigrating to some country where they make no pretence of loving liberty -- to Russia, for instance, where despotism can be taken pure, and without the base alloy of hypocrisy." (5)
Shays Rebellion Revisited...
In the past, I have alluded to Shays Rebellion. In American History, a farmer by the name of Daniel Shays took out loan, but could not repay it. Like many states immediately after the American Revolution, Massachusetts had a tremendous amount of pressure placed on it by the debtors to increase money supply, thus allowing debtors to repay their loans with inflated dollars. The creditors preferred a tight money supply. State governments were owned by the creditors. When massive numbers of farms went into foreclosure, Shays and other Revolutionary War veterans led a rebellion against banks... Kind of scary if you think about it...
What is different now it that banks are just as broke as the debtors who borrowed the money. While Treasury ad Fed have made several attempts to re-capitalize lending institutions... then beg them to lend, the credit market has become the X variable int he equation. And I would not loan a cent to ANYONE rated below a 650 credit score.
Stock Watch
Added NEOP traded on the OTC... This little dandy out of Dublin, OH is a pure speculation play which could bring a 300-500% return, or could lose 20% of my investment. We'll know more by late February. Price .70 cents a share...
SRS showing sings of a major breakout this week as retailers are showing weakness... and demand for commercial real estate diminishes.
SCC Consumer discretionary spending tends to rise during income tax season. With unemployment, and massive amounts of debt, the consumer in spite of Obama's tax cuts will be storing money under their mattress and shopping discounts!!!
EFU Significant movement from the ECB is making this an immediate winner. I own common shares. Unless the EURO becomes the world's reserve currency tomorrow, I believe we will see continued erosion in the buying power, coupled with liquidity injections.
Continued 6/115s on British Pound Sterling...
CNK I have sell orders in at 3.8. The options are currently trading at 3.2 for March. I am pushing for an extra 20% return on premium... o.k. I'm a pig at times!!!
RYL, MDC, MLHR, FXI, WYNN Puts are still in rally mode...
MCRI... June/5s puts still looking a bit shaky... We will see what their earnings look like... remember, this company gets its revenue from Nevada... ouch!!!
*Natural Gas is looking interesting...
Economic Calendar
Monday Jan 26 Tuesday Jan 27 Wednesday Jan 28 Thursday Jan 29 Friday Jan 30
Market Focus »
Existing Home Sales
[Report][djStar]10:00 AM ET
Leading Indicators
[Report][Bullet10:00 AM ET
4-Week Bill Announcement
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3-Month Bill Auction
[Bullet11:30 AM ET
6-Month Bill Auction
[Bullet11:30 AM ET
20-Yr TIPS Auction
[Bullet1:00 PM ET
FOMC Meeting Begins
ICSC-Goldman Store Sales
[Bullet7:45 AM ET
Redbook
[Bullet8:55 AM ET
S&P Case-Shiller HPI
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Consumer Confidence
[Report][djStar]10:00 AM ET
4-Week Bill Auction
[Bullet1:00 PM ET
2-Yr Note Auction
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Bank Reserve Settlement
MBA Purchase Applications
[Bullet7:00 AM ET
EIA Petroleum Status Report
[djStar]10:30 AM ET
FOMC Meeting Announcement
[Report][Star]2:15 PM ET
Weekly Bill Settlement
Durable Goods Orders
[Report][Star]8:30 AM ET
Jobless Claims
[Report][djStar]8:30 AM ET
New Home Sales
[Report][djStar]10:00 AM ET
EIA Natural Gas Report
[djStar]10:30 AM ET
3-Month Bill Announcement
[Bullet11:00 AM ET
6-Month Bill Announcement
[Bullet11:00 AM ET
5-Yr Note Auction
[Bullet1:00 PM ET
Money Supply
[Bullet4:30 PM ET
20-Yr TIPS Settlement
GDP
[Report][Star]8:30 AM ET
Employment Cost Index
[Report][Bullet8:30 AM ET
NAPM-Chicago
[Report][Bullet9:45 AM ET
Consumer Sentiment
[Report][djStar]9:55 AM ET
Farm Prices
[Bullet3:00 PM E
Seally Mattresses Stink... We have gone through Three... 3 of them in a 24 month period!!! All have developed the same material defect... Finally, we are getting a refund!!!
Sources Referenced
1. http://findarticles.com/p/articles/mi_m0FCI/is_/ai_67831640
2. http://www.bizjournals.com/atlanta/stories/2008/11/17/daily64.html
3. http://search.yahoo.com/search?fr=ytff1-&p=FDR%20Bank%20Holiday%20wiki&ei=UTF-8&type=
4. http://www.slate.com/id/2205574/
5. http://showcase.netins.net/web/creative/lincoln/speeches/quotes.htm
