Cara's Commentary & Community Chat, Thurs., Feb. 5, 2009

[7:17am ET] The Bernard Madoff scandal will focus the eyes of the world on the reality of Wall Street, the same one I have been writing about here for almost five years.

The performance audit of the Madoff Fund was done only by Madoff’s brother,


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aucourant
aucourant
February 9, 2009 1:10 am

A very interesting take on how the corruption in high places will prevent the American people from buying into plans to bail us out of the mess were in. Same with the UK. Basically Obama’s efforts will fail because people don’t trust the government and mistrust the efforts of those who got us into this mess in the first place.

http://tinyurl.com/dk4942

Johnny
Johnny
February 6, 2009 4:02 pm

So far I couldn’t have been more wrong on the day. Hope everyone is on the right side and making money.

swissrobinson
swissrobinson
February 6, 2009 12:11 pm
Ron Sen
Ron Sen
February 6, 2009 11:37 am

http://tinyurl.com/crqk3s

We know what Katie’s talkin’ about.

NYUGrad
NYUGrad
February 6, 2009 6:56 am
Mackinaw
Mackinaw
February 6, 2009 3:13 am

This rankles my cackles. Obama, citing a preoccupation with U.S. domestic concerns, wants a short and sweet trip to Ottawa, without an address to the Canadian Parliament. O.k., fine. Shrug off your largest trading partner, also the LARGEST international trading relationship on the planet, and, potentially, the saviour of your short-term energy problems. Why the hell do we, Canadians, put up with this nonchalant US behaviour? Fine we’ll build a pipeline to the west, and sell our oil to Asia! Oh, I forgot, Canada was bought and paid for long ago, as noted in George Grant’s “Lament for a Nation”,… Read more »

FranSix
FranSix
Reply to  Mackinaw
February 6, 2009 3:26 am

Canadians should be happy that a normal person wants to come here in winter.

Johnny
Johnny
February 6, 2009 2:19 am
Johnny
Johnny
February 6, 2009 2:16 am

“Michael Steele has requested the resignations of the entire RNC staff and signaled a dramatic turnover at the party organization.” http://tinyurl.com/awdckt

sammas
sammas
February 6, 2009 12:37 am

Found a couple articles that may be of interest regarding the Dow and Rohm & Haas deal:

http://tinyurl.com/cl3r7e

http://tinyurl.com/bgc99r

Also, OptionMonster reports heavy DOW Feb 12.40 call buying with lots as large as 2448.

http://www.thestreet.com/story/10462263/1/dow-chem

Grym
Grym
February 6, 2009 12:33 am

So true, Bill.

It is sad to lose a good friend, but perhaps even sadder that so many are too young to have ever known him when in his prime.

Let’s hope there is a bit of DNA available and we may see him cloned and exerting his influence once again.

Grym
Grym
February 6, 2009 12:35 am
Dboy
Dboy
February 6, 2009 12:10 am

So it turns out Bank of America was pressured by fedgov into buying Merrill after they started having big doubts about the deal. I have suspected this for a long time as I don’t think Ken Lewis is the idiot that this situation is making him look like. Now that we know this, one could say that the fedgov now “owes” BofA. Wonder what the payoff will be ? (disclosure: ex-BofA employee, neither long nor short).

dboy

Chickenpookie
Chickenpookie
February 5, 2009 11:53 pm

Reuters – “NEW YORK, Feb 5 (Reuters) – U.S. stocks extended gains on Thursday as shares of financial services companies sharply cut losses on talk that Washington’s rescue plan for banks may include suspension of a key accounting rule, traders said.

“The market suspects there maybe a suspension of mark-to-market accounting as part of the plan coming out of Washington to shore up the financial system,” said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. “It would be very impactful.”

http://www.reuters.com/article/marketsNews/idUSN05

Johnny
Johnny
Reply to  Chickenpookie
February 6, 2009 12:58 am

CP, the only problem with any of these shell games, is that all the players aka, banks, business’, creditors, stockholders, traders, investors, borrowers, governments and even some of the ignorant commoners, will still know “the emperor has no clothes”.

They can call the near worthless assets anything they want, but they still junk to you and me!

vinod
vinod
February 5, 2009 11:58 pm
aucourant
aucourant
Reply to  vinod
February 6, 2009 2:44 am

I remember the big run-up of gold to $850 a few decades ago. The story at that time was that gold was a good hedge against inflation. However, it soon became apparent that gold went up because people believed the story that gold was a good hedge against inflation. So it arced up parabolically and then, just as quickly, came crashing down. That really left me with the impression that it is the story, and people’s belief in the story, that is important. Of course a good story is always based on something true. But somehow it gets ahead of… Read more »

Mackinaw
Mackinaw
Reply to  vinod
February 6, 2009 1:49 am

vinod, I love your posts, generally, but I really want to take exception to part of this one: “and we are going to bring every one out of the ditch”. I disagree. Study the charts, post the Nov. 21 debacle. Fact is that it’s China and other emerging markets (ex- Putin) that is leading us out of this. Albeit, they were the first to tank so it reasons that they should have been the first to emerge. But it goes beyond that: favourable demographics. My macro-take on things is that US investors bailed on the planet like a bunch of… Read more »

vinod
vinod
Reply to  Mackinaw
February 6, 2009 3:25 am
Dr. Strangelove
Dr. Strangelove
Reply to  vinod
February 6, 2009 12:06 am

vinod-
I’m warming up to your contrarian view. But as we de-lever, deflate, default, deny, and devalue expect a skirmish and escallation somewhere. Hope hope hope it isn’t here in the U.S. but when we/they hit the streets it may get it all rolling again. Just impossible to predict when/where/why. It’s human nature and history always repeats. Beware the big black swan.

Cheers.

NotNekkidYet
NotNekkidYet
February 5, 2009 11:42 pm
Chickenpookie
Chickenpookie
Reply to  NotNekkidYet
February 6, 2009 12:12 am

Meanwhile back at the ranch, corporate federal tax proceeds have fallen 45%…

dberryclan
dberryclan
February 5, 2009 11:33 pm

Ain’t that how it is, CP. When you are no longer in it, it zooms! Waiting to see how the market breaks……if I was to bet it would be down, but it would be a guess. What jobs number would spark this market to move up??? Surely, with all the layoffs, the jobs #’s will stink the next few months!! All I can see with my limited market glasses are: 1. A billion tons of treasuries diluting the bond market going forward. 2. PM’s becoming more valuable over the next year. I really like reading Bills daily report and weekly… Read more »

bigmother
bigmother
February 5, 2009 11:00 pm

If you back out the charges the EPS is -.07. I read this as beating the numbers.

David
David
February 5, 2009 10:55 pm

I am listening to the ESLR webcast and I don’t hear anything that really threatens their future. Things will be tough for the first half of 2009, but once they quadruple their current output by mid-2009 at Devons, things will get better for ESLR. So, if one holds a long-term view, then I think they should enjoy a large cashflow in the future. Therefore, I just bought 500 more shares of ESLR at $2.00 after hours and placed a sell limit order for these shares at $2.8.

number2son
number2son
Reply to  David
February 6, 2009 4:08 am

Earnings did come in below the guidance provided in their Q3 report. They gave a range of $13-19 million for their net loss and it came in at negative $23 million. This was due primarily to the reduction in average sale price and the stronger dollar versus the euro. They have fared no worse than other companies facing “challenging” economic times. Management has wisely chosen not to provide future guidance given the uncertain economic times we live in. They have no control over prices, but they have been hoeing a close row when it comes to meeting their goals for… Read more »

swissrobinson
swissrobinson
Reply to  number2son
February 6, 2009 8:12 am

>If the stock opens down substantially in early trading tomorrow morning I’ll be opening a collar on the Jan ’10 2.50 options. Yes I noted those options as well. Could be missing out on substantial gains there but ESLR after hours at 2.04 with a call premium of .95 makes for a low entry point and compelling buy. Over 100% profit is nothing to sneeze at. Pity there’s no puts underlying this price! I’m convinced/I’ve convinced myself that there’s gotta be another drop before a substantial rally occurs, otherwise this has been one hell of a wussy bear market compared… Read more »

Bill Cara
Bill Cara
February 5, 2009 10:49 pm

I received this death notice from a mutual friend: ‘Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as: Knowing when to come in out of the rain; why the early bird gets the worm; Life isn’t always fair; and maybe it was my fault. Common Sense lived by simple, sound financial policies (don’t spend more than you… Read more »

swissrobinson
swissrobinson
Reply to  Bill Cara
February 6, 2009 8:02 am

>Common Sense lost the will to live… I disagree. Common sense was murdered! *play dramatic music* *Voice of reporter* Detectives on the case reasoned that suspect A, capitalism, an old hand at the game and looking for new profits, got into bed with suspect B, legalism, in order to plunder new depths of depravity. Detectives suggest that the suspects’ actions show sufficient motivation for the murder of common sense and an APB has been put out to all units for their arrest. Although detectives have their suspicions that there was a mastermind behind this nefarious plot, due to insufficient evidence… Read more »

sammas
sammas
Reply to  Bill Cara
February 6, 2009 12:26 am

Old news, Bill. 😉

Philip K. Howard (b. 1948), a lawyer in New York, is perhaps best known as the author of the book The Death of Common Sense (1995), which chronicles the effects of modern law acts like central planning.

http://en.wikipedia.org/wiki/Philip_K._Howard_(author)

I actually own the book…

Johnny
Johnny
Reply to  Bill Cara
February 5, 2009 11:24 pm

That’s a classic Bill. I copied it, saved a copy and printed one to post on my wall.

Dboy
Dboy
Reply to  Bill Cara
February 5, 2009 11:11 pm

“Common Sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault.” This is thankfully not the way it works here in Texas. You know the hunter in the cartoon “Southpark” who get’s away with poaching by yelling “He’s coming right for us!”…he then kills the deer “in self defense”. It’s basically the same in Texas. Intruder breaks in, you give him a few .45ACP center body mass. When the cops show up you simply state “I felt threatened. He came at me in an aggressive manner”.… Read more »

Chickenpookie
Chickenpookie
Reply to  Dboy
February 5, 2009 11:14 pm

“When the cops show up you simply state “I felt threatened. He came at me in an aggressive manner”. That’s all you have to say. The robber is no longer around to sue you, nor can he provide testimony against you. Case closed.”

That’s what some call administering a 9mm coronary bypass.

Craig
Craig
February 5, 2009 10:44 pm

In time the $USD will tank, but ST, like tomorrow, it may strengthen on the *awesome* employment number.

Then again we could rally like monkeys on crappy news to leave the most traders on the platform at the station. If it weren’t for the strong AH prices on financials I would think they ran them up for profit taking tomorrow AM. Oh wait…..:>)

Finger Lakes
Finger Lakes
February 5, 2009 10:39 pm

SLW closed up today on marginally higher volume. Rising volume as it climbs now would be a great sign.

Would it be too easy to expect the dollar to tank and commodities to rise after Tarp II passes?

If I’m thinking about it, most people must expect it.

Rob.

Craig
Craig
February 5, 2009 10:14 pm

What if the rest of the world was doing the same…..and we are hoping they will pull the curtain back on the Wizard…..but they can’t for fear they will be exposed too?

I need a drink. This one’s to Kaimu.

Finger Lakes
Finger Lakes
Reply to  Craig
February 5, 2009 10:36 pm

Wow! Wouldn’t that be the king of all Ponzi Schemes? How is Europe’s public debt level compared to ours?

Resource countries like Canada and Australia should be in better shape I would think.

We definitely could use some Kaimu currency wisdom right now.

Cheers everyone!

Rob.

NYUGrad
NYUGrad
February 5, 2009 10:03 pm

Daily is screaming a buy.

What’s a novice trader to do?

EDIT:
My thinking today is, financials may rally on any stim news, briefly. people will come back into usd/equities, prec metals will base some more. so thinking about short term play on financials, then sell quick and roll into TOG as people realize even this stim pack may not work.

Again, i am all cash now. just flushing out my planning outloud with you guys.

David
David
February 5, 2009 9:49 pm

I just called ProShares to see if they agree with me about UCO moving up next week, and they corrected my reasoning by saying that the Dow Jones-AIG Crude Oil Sub-Index (^DJAIGCL) tracks the *daily* returns in whatever futures they are tracking. So next week they will simply roll gradually from tracking the daily return in March futures to that of May futures. So I guess I’ll have to sell the UCO I have accumulated “the normal way.” That is, I am placing a sell limit order at $10.50 for the shares I picked up at $9.50 and at $10.90… Read more »

Finger Lakes
Finger Lakes
Reply to  David
February 5, 2009 10:01 pm

That’s too bad. It sounded like such a great plan. Too good to be true I guess.

Rob.

davefairtex
davefairtex
February 5, 2009 9:40 pm

The salary cap limits don’t apply retroactively. They only apply to any new recipient of “exceptional federal aid.”

http://tinyurl.com/b3jvc8