This Is Where People Get Ripped Off

The so called stress tests are accounting for 8.9 percent unemployment for 2009. To cap unemployment at 8.9 percent we would need to only lay off 300k people per month. We have been laying off about 500k people per month in the United States. Everyone is starting to get really excited by the 30 percent rally we have had in the last 7 weeks. Be very very carefull about buying at this time, you could be buying at a big top.
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Have To Be Long

The feds have been way too meticulous in planning the announcement of the stress tests. I have to be long Citigroup going into tomorrow.
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Why I Agree With Paul Volcker

Paul Volcker stated the other day that the future unemployment rates could stabilize at 7-10%. I agree whole heartily with his assessment. There is one major reason for this...Retirement. More than 40% of workers over 50 years of age have saved less than $25,000. Pension plans have multi billion dollar shortfalls and will either have to get the money from somewhere...hehe...or bridge the gap by negotiating pension benefits to the down side. Beyond that, since the government is spending to their limits, inflation will be very very prevalent. By the time this market reaches negative credit crunch returns of 80-90% within the next few years, most people will be holed up in a cash bunker. Their fear and emotions will keep them from investing and miss out on the coming recovery rallies. As they sit in cash, inflation will start to go haywire and they will be losing inflation minus their money market rates. example: 18% inflation minus 7% money market is a net loss of 11% per year. Long story short, retail investors will not be able to buy a bucket and many will remain in the workforce well past the ever retreating age of retirement.

Right In Step

I Like Pfizer

I am really liking health stocks right now. The health czar will be announcing where 19 billion will be going "very soon". I wouldn't be suprised if that happened to be on Thursday with the stress tests. GE is also coming out with a big announcement Thursday...what a coincidence!
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Why Keep Pushing the Stress Tests Back?

The government stress tests have been pushed back several times in the last month. Why do they keep pushing them back when we keep getting snippets of "light at the end of the tunnel" from various veteran news sources? The previous administration would leak bad news just after the close on Friday afternoons. The current Obama administration has trended toward releasing small parts of bad news, and letting the news pick them apart. Then after the "snippets have been reported to death, the real news is released, watered down and accompanied by several dovish Fed chief speeches. Here are my theories as to the reasons of delay for the stress tests...

1. They want the markets to slowly digest the horrible news as to not start a panic.

2. They want low volume markets to allow for easier and less expensive market manipulation. (See previous posts)

3. Banks need more time to enter massive insider trades in various derivatives markets that will give financial institutions more record earnings Q2. We are seeing some big activity in CDS trading as of late.

4. They want more time to disinterest the viewing public in current financial events. I.E. Swine Flu, Afghanistan, and Iraq, and pirates.
All of this is a smoke screen. The fact that they have reason to delay test results at all speaks volumes.

Nevertheless, markets continue to rally on very low volume. Many traders are hesitant to short as the market vector is following Washington and their lies and manipulation. If this type of government communism continues, it's not if there will be a revolt, it's when. The people of the United States are starting to reach their boiling points. How many years till it boils over?
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Get It?

Geithner "The vast majority of U.S. Banks have more capital than regulatory guidelines indicate". Ken Lewis "We absolutely don't need more capital". Citigroup "Regulatory capital base is strong"....and then the story from bloomberg this morning..."At least 6 banks require additional capital, according to preliminary results of Government stress tests".
So on one hand, the feds think that regulatory capital standards are great, but on the other hand, they don't. The private institutions don't seem to think they need more capital, but the feds have blatantly threatened to fire private CEO's if they don't.

Long story short, estimates put banks at another 1.1 trillion in losses and shortfall, and Bank of America at 60-70 billion. The government is at this point, politically unable to give more money away. Bank of America could convert 27 billion from preferred shares to common. However, where then does the at least 33 billion dollar shortfall come from for BAC, and where does the trillion come from for the rest of the industry?

Where will it come from? Lies. That's where it has been coming from for the last 6 weeks anyway.
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Black Gold

Should have a decent day in the energy sector tomorrow.
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All Hail The Feds!

Who will be meeting on wednesday. Yesterday the futures were down 165 points pre-market, and yet the markets only managed to drop 48 points. Usually when the futures have moved pre-market more than 120 or so points or so, the day will be very directional. This morning the futures are down a little over 100 points but I think the markets will end up relatively flat today as well in light of upcoming announcements. The markets are really looking for a reason to sell at this point, but the volume has been light so far. Watch for one or two more punches to the upside courtesy of the feds this Wednesday and this Monday. Monday, May 4th is shaping up to be a pretty big day for "selling the news".
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Stress Tests

Who wants to bet that the government stress tests will beat expectations today. Aacording to "their" stress tests all 19 of the big financial institutions will be in great shape under the worst of possibilities. It will be interesting to see if the markets decide to wave the bull crap flag on that one and sell into it.

There was no news the last 10 minutes of trading yesterday to cause the massive jump we had. Whoever put the massive order in, put it in at the market. Most institutional trades are worked in using trading algorithims and programs. The buying yesterday near the close was dropped on the market. Either they knew something no one else did, or they wanted to have a green day, or both. Either way, this market is giving me the creepers.
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No Rationale

I am telling the banks and the government are mixing it up with investors. I have not seen indicators denoting short plays as obvious in a long time. Yesterday General Motors defaulted on 1 billion dollars in notes. The IMF came out and said we are in a deep recession not seen since the 30's. Bad news is being completely ignored and snippets of good news are put on a pedestal. Volume is really low. People aren't trading because the market rally's on bearish technical and fundamental plays. Everything is drastically overbought and overdone on the buy side. The markets are no longer free. The financial power houses and the government are manipulating this market.
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No Head Fake Here!

Well, so much for the head fake before continuing down. This market wants to rally so...I'm not going to get in the way of tha freight train. Amazing how resiliant capitalism is regardless of the corruption and fundamentals!
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Whew! That Stinks!

Something smells really really bad. David Kellermann, the acting CEO of Mortgage giant Freddie Mac, was found dead on Wednesday in his home. The death was "unintended" said a Fairfax County Officer. In light of all the corruption and blatent lying to the public as of late, I wonder if there wasn't something that he knew...and wanted to come clean with....(Twilight Music in background) dodododododododoooooo.....
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Head Fake

Rally this morning is a head fake. I would like to see more volume in this sell off though. The fact that volume has thus far been relatively low supports the assumption that we are forming a "head and shoulders" bottom pattern. This means that we could see an upside starting at around 740-760 on the SPX. The next leg up would probably carry the markets to the 40-60 percent rally targets I mentioned in earlier posts.
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Nationalization Of Banks

I woke up this morning and realized that our banks have been nationalized for quite some time. A government official said this morning that they will need to "determine whether repayment (of TARP funds) is in the nation's economic interest".

I realize that this will shed more light on bad banks...good. Let the markets and the American people take this problem head on. My grandparents fought in WW2 and suffered through the great depression, we are borrowing our children's money to avoid the consequences of our own actions. Capitalism is the best way by far to improve the overall quality of life for a nation. Over the past decade we have witnessed crony capitalism. Congress and the senate accept monies from constituancies and then provide political favors in return. Our government is broken as a purely democratic institution.
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Where Is The Volume Going?

The trin, an indicator which tracks directional volume in stocks has been denoting a bearish attitude in stocks for about the past week. A sell off is coming soon. I don't know when but it is still a good idea to hedge your positions with covered calls.
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Up, Down....Up Down Up Down...Ahhhhh!

Credit Derivatives Research came out with a report today. Here are some interesting quotes I gleamed from it....

"The recent U.S. Stock rally has been sustained by small trades pushing up prices, rather than large block trades that have traditionally supported share moves"

"This equity rally has manipulative activity fingerprints all over it"

"Most of the momentum pushing shares prices higher has been made in small, after hours trading"

"Without these trades the S and P index, for example, would be around 60 points lower"

"What this means is that marginal market participants, such as mutual and pension funds, and retail investors who are really just beneficiaries of the liquidity chain, are about to get a very rude awakening"

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The Status Quo Has Changed

The attitude toward financial stocks changed today. Goldman Sachs came out of the gate early with their earnings just as Wells Fargo did. However, the market was more prepared for sky high earnings and, what's more important, had a general consensus as to why (see previous posts). There is now talk of federal investigations into Goldman Sachs and their dealings with AIG. There is also talk of investigating former Treasury Secretary Henry Paulson about possible conflicts of interest he may have had with the firm he was formerly CEO of (Goldman Sachs). All I can say is puts on Morgan Stanley and Goldman never looked better.
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Sell Calls

Sell calls on most of your long positions. The market is preparing for a decent retracement to the downside.
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That Was A Close One!

Financials were all set to sell off big time with fears of commercial real estate write offs potentially being worse than the residential CDO's were. Out of no where the CEO of Wells Fargo made an appearance on CNBC disclosing their quarterly profits 2 weeks early! Financials are now protruding a classic breakout to the upside. They should continue to show more strength as more financial institutions release their earnings. I wouldn't be suprised if more of these types of suprise anouncements surface pre-earnings for this quarter. All in all one might say we have begun the second bullish leg of a massive bear market rally. With financials however, don't forget the commercial real estate and swap exposure. Tread financials careful once the rally puckers out.

On a side note, shorting treasuries and the dollar are both plays that we can rely on long term. I picked up some TBT and some UDN as medium to long term holdings the other day.
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