Wednesday, August 12, 2009

Lots Of Stuff Happening After-Hours; My Thoughts On Banks, Houses, Etc.

As a free-market capitalist, it's hard to watch investors, Bill Gross included, bully the Fed into keeping the intervention going to support securities prices. But that's the world we live in.

Assets drop, Fed intervenes, assets recover, Fed does nothing.

Greenspan first, now Bernanke. Asymmetrical intervention. It's what caused the debt/risk bubble in the first place. The Fed is giving banks/brokers/investors a license to speculate with leverage. That's what caused the crisis in the first place.

"The Fed can't do anything to rile the financial markets" is the refrain. Decent recovery, world-record junk rally. Employment lagging indicator. No matter. Can't remove QE till we get back to 15,000 on Dow, 6% junk, and home prices up double digits.

This "stupid Fed tricks" mentality created the mother of all leverage problems. It got us the bubble, it will cause the meltdown in the dollar and T-bonds.

The Fed needs to start implementing the vaunted "exit strategy."

On housing, Robert Toll just said the U.S. should do Cash For Clunkers for houses. What a disaster that would be!!!!!!!!!

I feel like I just gave birth to a pineapple.

On banks - Bank shorts are plentiful and I believe that WFC could get squeezed higher...I also have to believe that at a certain point Buffett becomes a buyer again and am amazed that he hasn't bought any yet....I really like the banks here, from Citigroup to BAC and Wells and back again!

More on BAC - The Paulson buy I think really moves the stock. I also liked the buying in Citigroup today....This group has recharged. BAC should have been up more today....

long C; BAC

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