Morning Audibles 5.11.10 - Red, Blue, or "Chill"?

Despite the heightened volatility in the markets these past 3 trading days or so (which included two weekend days), your humble blog host, CV, has been uncannily subdued in mood... Want answers? Well basically, I've decided that instead of taking one of these...

Blue Pill - Red Pill

I'd just take one of these (and be content to watch the fireworks for a bit)...



I was very, very, very lucky to be able to do this... CV had an SPXU position on (basically since March 5th, when the SPX took out the FIBO retrace back to 1150 after the January dip)... With two months of incessant grinding, it was my idea that that position might end up in the dumpster along with everyones SRS & FAZ positions from '09... Alas, in a 'miracle moment' during last Thursdays FLASH CRASH, that position (which had been 'deeply' red), flashed green to the tune of $800 semolians (beer money, I know, but it's better than losing for a thirsty boy like me)... Anyway, I somehow managed to get out of that position right then and there (which was a miracle in of itself)... The SPX was around 1074 at the time (which is even MORE a miracle as it was near the lows for the day)...

Anyway, since that time I've put on no new positions (on either side)... I still have some short SPY positions, but a lot of cash as well... So I've just been "chillin'"... But that doesn't mean things aren't on my mind... This is a short list:

- The FLASH CRASH... We're fairly confident now that it wasn't "fat fingered". But the media reporting did its work well, and I'd say most of the Johnny's out there are still convinced that that's what it was. Since they have the attention spans of the gnat population, they've already clicked the remote back to the regularly scheduled programming. Wrap it up and put it to bed. The "fat finger" is now in the dumpster along with JFK assassination & Area 51... Question is, could "the squid" have triggered this in a way to deflect attention from themselves...Did they Did they?

- $972B is just a "down payment" for bailing out the Euro Zone (trust me)... Consider your appetites "whetted"... They're just conditioning us for what's to come... As we all know, once you throw good money after bad, there is more to follow...

- I'm sure nobody needs convincing of that last bullet point, but if you do, I'll simply nominate the "latest"... Fannie Mae, the mortgage-finance company operating under federal conservatorship, said it will seek $8.4 billion in aid from the U.S. Treasury Department after reporting its 11th-straight quarterly loss... Need I go further?

- Lest anyone get TOO COMFY with all these ideas, let me remind you... Governments bailed the banks out (using taxpayer money), now the banks are bailing the governments (who are insolvent largely because of the bank bailouts) - The banks themselves will net 1.5 billion a year in fees... More bonuses for bankers... Also, The IMF's piece of this thing is allegedly €286 billion... The US is 17% of that (or about $50 billion)... In order for that money to be "appropriated", it has to be "appropriated" (by Congress)... Expect "things" to be tacked on to that "Appropriations Bill"... GET READY TO BE HANDED THE TAX BILL FOR ALL OF THE ABOVE...

- Goldman Sachs, which makes more money from trading than any other Wall Street firm, also disclosed that its traders generated $100 million or more on 35 days during the first quarter and lost money on no days... DO I NEED TO COMMENT ON THIS?

- Warren Buffett Has "No Comment" On His Sale Of $30MM In MCO Shares Just After Moody's Wells Notice Receipt... Hmmm...

- On the subject of "comments", I thought both Bernanke and Geithner had said the crisis was behind us? (I'm too lazy to look these quotes up, but if someone has the right combination of boredom and "bloodhound" in them, they might look it up for extra credit)... Those quotes WILL come in handy some day...

- I kind of 'secretly' hope that the SPX makes it WAAAAY up there on a retest of the highs (personally - I have it pegged for around 1190 at the moment - but that's just a 'crude' guess)... In any case, it would make a HUGE sideways wedge (from 1044)... That's about a 180 point S&P range... Perhaps 'annoying', but hell, for TECHNICAL TRADERS, it might be a dream...

- World Cup is coming in a few weeks to South Africa... I've heard that 40,000 "prostitutes" have descended on the country... Gee - I suppose that that means that Wall St. has effectively SHUT DOWN until the end of July & will be working down there for pay... THE ALGOS REALLY ARE IN CHARGE! Good luck trading against them!

Oh, and finally... In my "browsing", I came across this "click pay" ad the other day...


LOL - All I can say is, something about it seems, well... APPROPRIATE...

259 comments:

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mcHAPPY said...

I have been taken out behind the woodshed and violated on TZA today.

BinT said...

Ben,

They passed a one time audit only...we'll see. I always wonder little nagging thoughts like,"If it was worth auditing once, why not be able to do it again?"

McFearless said...

One time audit?

That in itself seems a bit suspect to me. I'll have to read up on it tonight. Sounds likely something will be "missed" in this one time audit. Probably a big show like the stress tests were.

I-Man said...

A close below today's open would catch alot of us off guard I think...

DL said...

CV @ 2:28

I agree with your points. But that's a very different issue from that of the granting of a few leases in the Gulf.

(Or the prospect of a few more windmills)

I-Man said...

And EURUSD is looking pretty shabby right here...

BinT said...

http://online.wsj.com/article/SB10001424052748703880304575236030191182938.html?mod=rss_whats_news_us_business

"Fannie Mae asked the U.S. government for an additional $8.4 billion in aid after posting an $11.5 billion net loss for the first quarter, the latest sign that the bailout of the mortgage investor and its main rival, Freddie Mac, is likely to be the most expensive legacy of the U.S. housing-market bust.

Fannie's losses reflected continuing weakness in the housing market and would have been worse without accounting changes that reduced its deficit. The quarterly loss was an improvement from the $23.5 billion loss for the year-ago quarter and marked the 11th consecutive quarterly loss for the Washington-based firm.

Fannie's capital hole would have risen by $3.3 billion without NEW ACCOUNTING RULES that took effect Jan. 1. The firm's losses were driven by deterioration in its $3 trillion book of loan guarantees, which accounted for a $12.5 billion loss."


...Did I put new accounting rules in capital letters...maybe I did...

DL said...

I-Man,

I'm short TWO S&P contracts. I'm either going to make money in the next couple of days, or get taken to the cleaners.

Nic said...


JPM had perfect trading quarter too


sigh

72bat said...

someone posted a quote (or paraphrase) the other day of greenspan speaking in an fomc meeting back in the 90s(?).... to the effect that it was necessary to keep the public in the dark about the fed's true actions, that only the enlightened ones actually could undertand the intricacies of what they do. anyone have the exact quote and a source for it?

McFearless said...

I,

it would me actually, if we closed lower like that. I'm not really sure what the market has in store for us the rest of the week.

too many people counting that move off the top as five waves again, it looks more like 3 to me.

big "news" day on Friday....

I-Man said...

2?!

Living dangerously I see...
(I'm being serious, btw)

mcHAPPY said...

@DL,

On your way to the cleaners, can we share a cab?

karen said...

bat, i remember that.. it was actually covered on a number of sites.. maybe even TBP..

McFearless said...

"that only the enlightened ones actually could undertand the intricacies of what they do."


BWAHAHAHAHAHAHAHAHAHAHAHAHAH!!!!!!!!

Yeah, following the bond market to determine interest rate policy and missing the easiest bubble to see ever, among many other things, is the stuff of the superior IQ's only. What a tool.

DL said...

McHappy @ 2:45

You still in FAZ...?

McFearless said...

DL,

If you are on the right side those 2 contracts you are going to make you good money. If this in fact is wave 2, which I'm suspect of, you are going to catch pretty much all of 3 down and it should be sharp and violent. don't sell too early, you only need to count to five.

good luck man. I closed those puts out I put on late yesterday this morning for a small gain.

I-Man said...

Be nice, boys...

We cant all be perfect traders like the smart guys at Goldman and Morgan.

mcHAPPY said...

DL,

Still in FAZ.

DL said...

McF @ 2:53

Win or lose, I'll be out by Friday, and probably sooner.

BinT said...

http://www.nytimes.com/2010/05/12/business/12regulate.html?partner=rss&emc=rss

Senate Backs One-Time Audit of Fed’s Bailout Role

McFearless said...

this seems to be a new "strategy", just blame it on someone else:

Headline:

BP, Transocean and Halliburton blame each other for Deepwater Horizon spill

DL said...

McF @ 2:58

That was also the strategy last Thursday, between the exchanges.

72bat said...

it was "a general observation from Chairman Greenspan on limits to transparency. Specifically, he said, 'We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand.'"
from a huffpo "debunking" of an assertion that the comment was directly referencing "the minutes to the specific mention of housing prices 45 pages (and four hours in real time) earlier."
still, the "process that only we fully understand" speaks volumes in itself for the prevailing mindset. arrogant bastards.

McFearless said...

DL,

it's everyone's strategy anymore I think.

"Not my fault"

the only three words you need to know to get ahead.

CV said...

@I-Man

"And EURUSD is looking pretty shabby right here..."

POS EURUSD :-)

CV said...

@72bat

"someone posted a quote (or paraphrase) the other day of greenspan speaking in an fomc meeting back in the 90s(?).... to the effect that it was necessary to keep the public in the dark about the fed's true actions, that only the enlightened ones actually could undertand the intricacies of what they do. anyone have the exact quote and a source for it?

Yeah - here I found it...

"Let them eat cake"!

CV said...

@McF

"Yeah, following the bond market to determine interest rate policy and missing the easiest bubble to see ever, among many other things, is the stuff of the superior IQ's only. What a tool."

You just called Greenspan a tool... and besides - he's ugly...

YOU'RE a SEXIST DAMMIT!

CV said...

@MCF

BP, Transocean and Halliburton blame each other for Deepwater Horizon spill

I put a link to that article up earlier...

Besides - what a bunch of DUMBASSES (more "sexist" remarks)... They could all have just gotten together and BLAMED IT ON BUSH!

We all know - Bush is at fault for ALL of this...

DL said...

Greenspan was a master obfuscator, I'll give him that.

DL said...

CV

All problems in the world are Bush's fault.

Next issue.

McFearless said...

Which Bush though?

DL said...

McF

#43

CV said...

@DL

I wish you luck with those PUTS... Hope you don't become the latest "bearchop"

DL said...

CV,

Seems like I'm the bear on the next 3 trading sessions. You're the bull (or at least a "sheep").

karen said...

bat, thanks for reposting that.. i was so taken aback by the arrogance, myself.. and clearly he was UNQUALIFIED for the job!

McFearless said...

oh boy, we need some AT. This could also still be 4 wrapping up or we are headed down in 5. That count is better I think than calling the move down last thursday the bottom of 5.

4's prices never went into wave 1 so no rule violation.

Bruce in Tennessee said...

CV:

Kidding aside, this just looks like the inevitable conclusion to worldwide overspending. I have read articles by hard-core Keynesians who seem to honestly believe that you can't overspend too much, and that deficits don't really matter. But it appears to me that the world, including China, are all going to try to aggressively get closer to balanced budgets (or else get the Greek waterboard treatment) and this should mean very limited global GDP growth...thoughts?

karen said...

look at gold!! wow! not quite the $100 I wanted but better than nothing!

CV said...

@DL

More like a lamb(CHOP)...

CV said...

@DL

I'm going with the FIBO DAYS thesis...

We're on DAY 11... I've got my chips on DAY 13 being the wave peak (and thus - forgetting about levels)...

Nic said...

1150 really needs to hold for the bulls to have hope I think

CV said...

@DL

Then we can beat this market down with an UGLY stick...

Or, as karen would politely phrase it... An "UNQUALIFIED" stick... :-)

Nic said...


Bob Janjuah in the flesh - good video

CV said...

@Bruce

Keynesians who seem to honestly believe that you can't overspend too much

It's all about EXTRACTION of PERCEIVED EQUITY...

If people "think" the emperor has clothes, HE DOES, and some will place a value on that...

Then, they'll take the next step of EXTRACTING and MONETIZING that value & lever it to ridiculous integers...

Keynesian philosophy works well in situations where a temporary "hiccup" in any started process needs to be "degaussed"...

It FAILS in the end game (as there is only one conclusion to a PONZI game)...

I'll be in STOCKHOLM this fall to pick up my Nobel Prize (I won't be in Oslo - for the "Peace Prize" - though because I have the terrible habit of using the word UGLY)...

karen said...

Excellent video, thanks Nic..

DL said...

Where exactly does the term "FUGLY" stand on the scale of political incorrectness?

DL said...

Thankfully, the market is now closed.

Can finally get some work done.

wing nut said...

In the one corner-

Keynesians who seem to honestly believe that you can't overspend too much

In the other-

The chicago school who seem to believe that even rampant fraud cannot upset the holy Market.

72bat said...

somehow the msm seem to miss the noo-auntz of such as this second sentence below (from nic's suggested link ttps://gm.bankofny.com/Research/MorningUpdate/Article.aspx?Type=0&ContentManagerID=24535 thanks nic):
The IMF’s John Lipsky said: “This is a potentially important measure of addressing the architectural ambiguity of monetary union, and in that sense, is an important step in strengthening that architecture”. He added that the IMF’s EUR 250 Bn contribution cited by the EU was “illustrative” and a “hypothetical”, noting that “We haven't made any blanket commitments”.
vapor funds?

CV said...

@DL

"FUGLY" only applies to some of LB's golf shots...

CV said...

@72bat

"He added that the IMF’s EUR 250 Bn contribution cited by the EU was “illustrative” and a “hypothetical”, noting that “We haven't made any blanket commitments”.

That's the NEXT STEP to buy time...

"Don't worry people... We PROMISE you that the IOU's we're thinking about sending you are in the mail"...

BinT said...

wing nut:

you have a very good point. however they tell me Ron Paul can't be president and also take up all the chairs in the senate and house. and if you don't like Ronny, then we got no one to sit anywhere....

AmenRa said...

wing nut

and the Austrian school is the swat team entering the ring to break up the party.

BinT said...

And besides, Greenspan was appointed by Reagan in 1987, so go figure. It appears that whatever your motivation, once in a position of power, you think like the rest of the money thinks...

Nic said...

Guys
If you want to see the movie floored
you better watch it here quick cos I think it will get taken down.
http://www.babelgum.com/5003507/floored-episode-1.html
click on episode two at bottom tab for part 2

BinT said...

http://online.barrons.com/public/article/SB120917419049046805.html?mod=mktw#articleTabs_panel_article%3D2%26articleTabs%3Darticle

Looking at Greenspan's Long-Lost Thesis
By JIM MCTAGUE |

Barron's gets a rare glimpse at the Maestro's long-lost NYU doctoral thesis, and his long-ago view of, yes, a housing debacle.

I-Man said...

How has the I not heard of this "Floored"?!

Hope its still up by the time I get back to the crib... gotta check dat.

CV said...

NEW THREAD UP

Nice link Nic... Thanks!

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