MonkeyBusinessBlog

Our Man Jon Weil And The Goldman "Doomsday Device"!!

Sorry I haven't gotten to this.  I made a round trip to today North Carolina to pick two of my sons up from sleepaway camp.  Neither wanted to come home!  I guess that's good...in a way.

Anyway, I am late posting this great video of our man Jon Weil on Bloomberg TV yesterday, speaking to the global manhunt to recapture Goldman Sachs rapid fire, market manipulating (in the wrong hands of course) program trading "thingee".  

Check out the tone of Jon's interviewer!  In the "Post-Taibbi Article" world everybody want's a piece of Goldman's ass.  Splendid!  Enjoy and have a nice weekend.

Recovery My Arse

My shoulders hurt from laughing so much with Pete Domenick and Matt Taibbi yesterday evening on the Sirius/XM POTUS Channel. My head a little bit too. But I was able to read my charts this morning nice and clear. Oh, how is the ticker SRS doing when I told you to buy it at 21.79 yesterday? Says on my screen 23.15. As Rosemary Clooney, used to say, "that'sah nice!" Today we're doing some more.

On March 30, the charts sent out a signal to sell UltraShort S&P 500 ProShares (ticker: SDS) at around $80. Today it trades around $60. Well $59.94 to be exact 'cause I just bought some. This stock represents "the daily investment results of 2 times the opposite of the daily performance of the S&P 500 Index". Key word being opposite. As in, if the market goes down, we win twice as much. How do you like them apples? To say I don't like things right now might be an understatement. BUY SDS.

Now I'm going in to take a nap. Good luck.

Hey Good Morning Congress!! How Was Your Nap? If You Get a Chance Go Over to The White House and Wake Them Up Too!

From Bloomberg News;

 The $3.5 trillion commercial real estate market is a ticking “time bomb” that could lead to a second wave of losses at large U.S. banks, congressional Joint Economic Committee Chairwoman Carolyn Maloney said.

About $700 billion in commercial mortgages will need to be refinanced before the end of next year and “doing nothing is not an option,” Maloney, a New York Democrat, said in a statement at a committee hearing today.

This “looming crisis” in commercial real estate lending could lead to significant losses for banks, force shopping center and hotel owners into bankruptcy, push real estate prices down and impede economic recovery, she said.

Umm, the bomb ain't ticking anymore.  It's already exploded.  Wait till Secretary Geithner has to tell President Obama this one.  It should go something like this;

Tim: "Mr. President, it appears that we're going to need another TARP."

President Obama: "Why is that Tim?  I thought we fixed the banking problem in March?  I distinctly remember making three speeches, signing off on program to get rid of bad assets and a program to stop foreclosures.  David (Axelrod) isn't that right?"

Axelrod:  "That's correct Mr. President.  According to my check list we solved the banking crisis back in March, right after the stimulus and right before global warming and naming the new puppy."

Tim:  "Those are both excellent points and you both are correct.  However, as Vice President Biden so aptly put it this past weekend, this crisis that we inherited has gotten worse than anyone could have imagined.

President Obama: "David, have the faux Greek columns arrived yet to put behind my desk?  Oh...Tim, I'm sorry.  You were saying the banking system needs another bailout?  Last month we were fighting with them about their desire to give the money back!  That's odd.  David, what do you think?

Axelrod: "Well, we certainly can't go back to Congress.  Tim, can't we just create another one of those facilities, or stick it in Fannie or Freddie?

Tim: "Afraid, not David.  We used just about every 4 and 5 letter acronym with regard to the various facilities, the poor Fed just can't keep up.  And with regard to Freddie and Fannie we're getting close to using up the full $400 billion.

Axelrod: "Perhaps....just perhaps....The new omnibus spending bill will be here before we know it.  We can probably get at least $100 billion there.  And between health care and the second stimulus we could probably squeeze out another $100 billion without anyone noticing.  Would that work Tim?"

Tim: "It just might David, it just might!"

President Obama: "Splendid!  Ok David, what's next, cold fusion?"

 

Ok, Ok... We'll Buy Something

As you have noticed lately, I got very bearish on the markets. Today looked like we might get a nice repreive as the markets were up nicely prior to the 9:30 a.m. eastern time open in New York. It's fallen a bit since then and is merely unchanged now. This is what happens when the markets are weak. Another long time mutual fund holding I've had? The Janus Fund (ticker: JANSX). Not no more. Dumped it this a.m. If you own it, you should SELL it too.

Since our sale of ConocoPhillips (ticker: COP), it has dropped 5% more. The "Monkey Business Roth IRA" has remained silent since then just hanging in cash. Well that ends today. We are buying a stock. But it's a bet that things are gonna get worse. Particularly real estate. Its the UltraShort Real Estate ProShares (ticker:SRS). It is twice the opposite of the daily performance of the Dow Jones Real Estate Index. We just bought 225 shares at 21.79 for an amount of $4,902.75 plus $12.95 in trading commissions for a total of $4,915.70. This leaves us with $233 in cash leftover.

Some might say, "but Richie, you talk a lot about how real estate is getting better. Why buy this stock that benefits only when real estate gets worse?" Well folks, when you play the chart game, there is no emotion just robotics. When things were really bad in November this SRS traded at $295.72. We just bought it at $21.79. Has real estate gotten THAT much better in the last 8 months? Me thinks not. BUY SRS.

Stay tuned tomorrow as we buy and sell some more nifty stuff. Happy trails.

North Korean Cyber-Attack!! Hmmm.

Wow, did you see this in the Financial Times today Powerful Cyber-Attack Against US and South Korea Blamed on Pyongyang.

US officials publicly played down the attacks on the White House, state department, Treasury and other federal sites, noting that so-called denial-of-service attacks were a perpetual problem and an inconvenience rather than a threat to security. They refused to comment on any link to the Korean attacks or to identify suspects.

Officials acknowledged privately that the assaults, which began over the July 4 holiday in the US, were among the longest and most effective to date. The site of the Federal Trade Commission, which recently shut down a California service provider for internet criminals, recovered from the first attack but crashed yesterday under a new barrage, said monitoring firm Keynote Systems.

"For US government sites to go down so hard for so long is almost unprecedented," said an outside expert assisting federal investigator.

Come on now, this has to be an urban legend.  Next thing they are going to tell us is that a major Wall Street firm used top secret computer programs to get access codes to the New York Stock Exchange and acquire trade data that allowed them to step in front of trades micro seconds before NYSE trade commit time!  Crazy man, crazy. 

Richie....Eric....Pete Dominick and Matt Taibbi On Sirius/XM Today!! Send Lawyers Guns and Money!!!!

Oh, today is going to be a special day kids.  Today, Richie and I are going to be on our pal Pete Dominck's "Stand Up With Pete Dominick" on XM (130)/Sirius (110) POTUS Channel, with Rolling Stone's Matt Taibbi.  As many of you know, Matt has written two scorching and hilarious pieces in Rolling Stone this year.  "The Big Takeover" and "The Great American Bubble Machine".  

I believe the first article, The Big Takeover  will go down as the seminal piece on just what the hell has happened in this county the last decade.  The second, The Great American Bubble Machine takes apart our dear friends at Goldman Sachs.

This should be fun.  We will be wearing our tin foil hats and broadcasting from an undisclosed location!  So tune in at 4pm today!!!  XM(130)/Sirius(110)  The POTUS Channel!!

Another Great Technical

Once upon a time investor sentiment used have a time line that looked something like this;

       Normal                        Greedy           Scared-Sh*tless      Wary       Normal

<------------------------------------------------------------------------------------------------------------------------------>

0                      24 months                     48 months    56 months     60 months    72 months             

Now it looks something like this;

 Scared     Scared Sh*tless   Greedy       Suicidal      Lustful       Apocalyptic 

<------------------------------------------------------------------------------------------------------------------------------>

0        3 months      6 months      8 months    10 months        12 months     14 months

Just a few weeks ago, stocks were closing in on one of their best quarters ever, analysts were climbing over one another to highlight his or her favorite "green shoot", and investors seemed to be waving in as much risk as they could with both hands.  I, being the cynical bastard that I am, didn't buy into it.  I also didn't buy stocks which means I missed out on the great big rally.  Luckily I have Richie, who stopped me from getting short in any significant way while his charts made him some nice coin.

Now?  Except for CNBC's Dennis Kneale (We are still waiting for our invite to debate you on the air Dennis) no one is talking much about green shoots.  The reality of job loss and housing horror is quickly taking hold, just like it did WAAAAAAAAAAAAAY back....four months ago!  Investors have become like Faye Dunaway in "Chinatown".

"I'm happy." {SLAP!}

"I'm terrified." {SLAP}

"I'm happy." {SLAP SLAP}

"I Just soiled myself!"....   

You want proof?  The Treasury Department just auctioned $19 billion ten year notes today, not to be confused with the $19 billion they auctioned off last month...or the $19 billion they will auction next month.  Guess what?  It was the best auction Treasury EVER HAD!  The amount of bids the Treasury got were 328% more than the amount of notes that were offered!!  Just a month ago the 10-year yield was 4%.  Now, with supply seemingly bottomless, we had a record auction with the yield at 3.30%!!  Can you say, "Flight to quality."?

It's a real bad technical when investors get really confused because eventually they just curl up into a ball and hide.  Bad things are coming and unfortunately Sheriff Obama and Deputy Larry and Tim used up all their bullets playing cowboys and indians.  Rig the ship for heavy weather.

Why Exactly Are S&P and Moody's Still Around? And Why Are They Getting Paid to Rate ANYTHING?

Bloomberg News has the following article out today Morgan Stanley Plans to Turn Downgraded Loan CDO Into AAA Rated Bonds 

Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind, said two people familiar with the sale.

Morgan Stanley is selling $87.1 million of securities that it expects to receive top AAA ratings and $42.9 million of notes graded Baa2, the second-lowest investment grade by Moody’s Investors Service, according to marketing documents obtained by Bloomberg News. The bonds were created from Greywolf CLO I Ltd., a CDO arranged in January 2007 by Goldman Sachs Group Inc. and managed by Greywolf Capital Management LP, an investment firm based in Purchase, New York.

As far as we are concerned, God bless.  Structuring in and of itself isn't a bad thing.  It's only when "credit magic" is applied, like the kind that blew us a trillion new orifices, that we have a problem with.  Although I have to say, this quote is a bit alarming;

A lot of banks and insurers “cannot buy anything but AAA,” said Sylvain Raynes, a principal at R&R Consulting in New York and co-author of “Elements of Structured Finance,” which is due to be published in November by Oxford University Press. “You’re manufacturing AAA out of not AAA, therefore allowing those people who have AAA written on their forehead to buy.”

Sylvain.....Buddy!!  That's so 2006!  Obviously you were speaking with your "thinking voice" by accident.  

Anyway, I'm sure these repacks or re-REMICs are done well and the AAA is really AAA.  Seriously. The best bonds get made now and I'm sure the default and loss severity numbers reflect reality.  What really bothers me is why and the hell should S&P or Moody's get a dime for rating these bonds?  Why are these f**kers still even around?  Nobody in their right mind is going to buy these bonds BASED on these Fredos stamp that they are true AAA right?  If they do then they do not belong in this game.  With all the regulatory reform that gets talked about, if insurance companies, banks and pension funds are still renting their brains out to S&P and Moody's, then they need to get put in the box for a long time.  If anything, the buyer should be calling in someone like Egan-Jones to independently verify the credit and paying them to do it, or split the cost with the issuer.

Some may be alarmed that the Street is back to structuring.  That's not what gets me.  What gets me is S&P and Moody's are still getting paid by the issuer to rate the bonds like none their craven and asinine behavior ever happened.