Oh, just get it over with!

The market is schizo. S&P fading downward, financials and builders are up. Day after day. For the past year+ that has meant one thing and one thing alone, hedge funds are blowing up. They are forced to unwind – buying back their financial/builder shorts, and selling their oil/commodity longs (energy now being the biggest part of the S&P). Hence you get the nutty effect noted above. And you can imagine what eventually happens.

We are once again getting dangerously close to closing below 1260 (1257 to be safe) – but we’ve seen this before and the market shot up to 1300. 1300 seems to be impenetrable to the upside though. For those playing the home version - If you see it again, I’d up those short positions to 50% of your intended stake. But at the rate the world economy is decelerating on a daily basis, seeing those levels would probably take trickery. I’m not giving up on 1320 (but most are), but each passing day makes it tougher to see happening. But make sure we close below 1257, I'm nearly certain we will test this 1260'ish area again and bounce up - the question is how high?

Regardless, we're about to break one way or the other soon. Simply because this last 2 weeks has been ridiculous and non-sensical to even the experts.

But what do you I know? This picture sums it up.
http://tinyurl.com/3daqnu


FDIC troubled banks list just jumped from 90 to 117. Assets at those banks jumped from $26B to $78B. IN ONE QUARTER. As for the usefulness of said lists, Indymac was not on them. I'll let you pick the multiplier to apply to theses numbers to get the real answer. Hint: Your number was too low.


Before I get to the links, something to keep in mind from Bloomberg:

The Standard & Poor's 500 Index, which had the worst first half since 2002, added 0.2 percent this quarter, the only gain among the world's 10 biggest markets in dollar terms. Shares in the benchmark index for American equity climbed to an average 25.8 times reported profits, the highest valuation in five years. The last time that happened, the S&P 500 fell 38 percent.

And now for the links:

Couple of interesting charts. Nice feat indeed.
http://tinyurl.com/6coud9


This video is WAY too funny
http://tinyurl.com/6caavp


This is why the housing downtrun won't end for YEARS. Whoever is allowing this sh*t to happen needs to be tarred and feathered TONIGHT.
http://tinyurl.com/5frvqm


Chart of the S&P since 1971. Raise your hand if you think that trendline holds us up yet again?
http://tinyurl.com/69q489


I got on her once upon a time, but she is coming around - great work getting on Greenspan like he deserves!
http://tinyurl.com/6qt66l


Putting the pieces together. Great summary with some great charts (Decline in Mortage Lending Standards was the most shocking to me). Consumer, RIP.
http://tinyurl.com/6mk7x7


"Large bank may fail" (not my words)
http://tinyurl.com/5rwdxh


Nice work IndyMac. Nice job regulators. Good estimates of value to both of you.
http://tinyurl.com/5u6b73




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Items of "lessor" importance


How can you not include anything that mentions "BenSteinery". (Todd, how could you have breakfast with him and not give me warning?!) #7 is spot-on too.
http://tinyurl.com/5a662y

Prime defaulting faster than subprime now - yep, well "contained" dill-holes. Didn't see that coming [/sarcasm]
http://tinyurl.com/58sdog

Final update on the WaMu pool of complete crap:
http://tinyurl.com/5qamkb

His comments always make these articles even more interesting as well as easier to understand.
http://tinyurl.com/5u9xfr

Companies on the edge
http://tinyurl.com/6kdqky



And for your reading pleasure to close the Replay - a take on the DAILY rumors we are hearing about Lehman (tick, tick, tick...)

Breaking News: Lehman To Be Acquired by Tooth Fairy

The market responded with enthusiasm to reports that the Tooth Fairy has agreed to acquire Lehman. The purchase price has not yet been determined and will be set by Dick Fuld wishing upon a star, clicking his heels three times, and being transported back to that magical place where Lehman still sells for over $70 per share.

In related news, Lehman has agreed to sell all of its level III capital, including CDOs, ABSs, pet rocks, baseball cards, slightly used condoms, and credit default swaps written by MBIA and Ambac. Lehman’s level III capital will be acquired for 150% of its face value by Tinkerbell, who will carry it off to Neverland to be fed to a crocodile. Lehman is financing 90% of the acquisition at an interest rate that has not been announced; Tinkerbell’s up-front payment consists of a handful of pixie dust, three crickets, and a bullfrog. Analyst Dick Bove estimates that the bullfrog could eventually be transformed into three princes and a pumpkin coach. The deal gives Lehman no recourse to any of Tinkerbell’s assets other than the Level III capital. If Tinkerbell defaults, Lehman’s successor entity will stick its hand down the crocodile’s throat and attempt to get it to regurgitate. The firm’s historical value-at-risk analysis shows that sticking your hand down a crocodile’s throat is completely safe.

Treasury Secretary Hank Paulson issued a statement: “I am delighted that SWFs (Sovereign Wealth Fairies) continue to express confidence in the terrific values represented by American financial institutions. As I have been saying since August of 2007, this shows that the crisis is now over.”

Meanwhile, the SEC has announced an investigation of mean, evil, bad short-seller David Einhorn. While out for a beer with a friend, Einhorn reportedly suggested that the Tooth Fairy does not exist and that wishing upon a star is not a wholly reliable price discovery mechanism. Christopher Cox, chairman of the SEC, said, “Vicious rumors attacking the Tooth Fairy will not be tolerated. Our entire financial system and indeed the American way of life depend on the Tooth Fairy and wishing upon a star. How else could one value level III capital appropriately?” The SEC is reportedly planning to set up re-education camps for short-sellers.