Sunday, September 14, 2008
First, did I call extraordinary events? Come on, did I? Did anyone think "Asian Overflow" was about pendulous breasts?
Back from Disneyland. Much to the chagrin of Mrs. Dawg I watched the world financial industry crumble to the tunes of "It's A Small World..." on my iPhone.
• BofA merger (stock swap) with Merrill. Circle the wagons.
• LEH officially filing bankruptcy. Make no mistake. The participants wanted to do a deal and the Fed and Treasury were ready to facilitate any deal. What happened is so bad they won't even talk about it. Barkclays and BofA looked at the books. There was no good bank part. So bad they must have told Paulson "you don't have enough money."
• Quadruple witching Friday.
• Somebody is going to do an index P/E calculation going forward. IMO over 40 by their methods, over 50 by mine. I eliminate survivors bias.
I am revising my call for Dow Industrials 9600 lower. At least 8800. Remember I've been talking about all the trends of the next few quarters starting with stairstep events. What the first step.
I reiterate my call for an emergency rate cut of 50bp. That means my WaMu HELOC goes to 4.5%. That'll help them, not.
• The glod and sliver pops are fear and something interesting. Call it a physical squeeze. Lots of people want to hold the coin and the dealers have gotten a bit sloppy in actually having the metal on hand. I'm not talking illegal; just in the mail, in process, awaiting customs, awaiting assay, in transit, any number of excuses as to why "I want my bullion" is being met with "Sorry, there will be a delay." And behind the scenes there is chicanery. Their sources are undoubtably juggling a small physical supply amongst multiple customers. Hedging, leveraging and arbitrage.
I doubt the markets will open under normal rules. Perhaps the uptick rule, but I don't expect the computer trades to be sidetracked until all the fast money is long gone then stranding the poor retail investor. We will hit at least the first circuit breaker, possibly in the first 20 minutes.
Cramer will be available all day to calm the skittish sheep... err... people. You can bet he'll be in suit and tie.
And people laughed at my call for ^HGX in the 80s.
Oh, and the picture? Buffett talked about swimming naked. This is about skydiving naked.