THURS. SEP. 18- Is This Capitalism?

There are arguments as to exactly where the phrase was derived, but most etymologists agree that the saying “May you live in interesting times” is not a wish for prosperous times, but rather it is a Chinese curse. Seriously. Well, these are certainly interesting times. These are historic days for modern finance as we know it much less ‘capitalism.’ We use that word “capitalism” loosely following what happened with AIG. As discussed in detail in this space two weeks ago, there have been a number of bailouts of major American companies and industries. But the whole face of America’s ‘laissez faire’ policy toward business was turned upside down on Tuesday night. For we actually finally did come across one company that is truly too big to fail in AIG. Few people realize the repercussions a full-fledged bankruptcy of AIG would have had on the world’s markets. People in Singapore were standing in lines for goodness sakes to retrieve their policies overnight before the Feds came in and stopped it. The portfolio of arcane and arguably worthless financial instruments on AIG’s books is literally unknowable right now. An attempt to unleash these positions combined with an inability to attain cash could have been catastrophic to the point where the markets may not have been able to open yesterday. As for day traders, what it does for us is make us all realize that anyone can be next. Do not let anything surprise you as you trade these days- good or bad- because anything truly is possible- at movement speeds several times normal delta.

Overnight, markets in Asia was ravaged early, but came back amid reports that there seems to be some plan for foreign banks to pump dollars into their systems. This led Hong Kong back from a 7% decline to close flat. In Europe, stocks are up. It’d seem like the markets in the US are poised for an oversold bounce. Look for a sharply higher open. After that, there will likely be some sort of sell-off as people are programmed to sell into any strength. But if the initial sell-off holds, it will likely be a major A-B-A2 to the upside today on a rash of short covering amid the Draconian short covering measures passed by the SEC last night.


Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified

Good-

MS- all sorts of rumors about capital infusion/buyout. Stock could move anywhere yet if it opens down and it gets some short covering in a good market, buy thru unch and then look to buy new highs all day…and vice versa for that matter if the opposite scenario plays out.

WB- rumored to be involved with MS. Needs to hold early strength; if so, A-B-A2 to upside…if not, short thru unch.

Bad-

NLY- mortgage entity; very weak…if it opens higher and market begins selling off, short thru yesterday’s low of 12.85.

HUN- seems like takeover was botched. Looking to short through yesterday’s 9.53 low if market is weak.

PLD –warned on earnings.

MEA- has denied anything is wrong yet stock keeps falling. If market weak, looking to short thru 4.90.

PL,ALL,TRV,MET,AINV,AMP,FII- among others, insurance/investment entities that are weak. Worries over counterparty risk…looking to short thru yesterday’s lows in bad market or A-B-A2 to upside if market strong on short covering

NRG, FE, AYE, ESV- among others, these energies were weak yesterday despite oil being way up. Looking to short thru new lows in case they follow in CEG’s footsteps amid liquidity concerns or A-B-A2 to upside if they fail to break in first half hour or so post-open of market.

Earnings-

THURS SEP 18 BEFORE

CCL 1.58/4.84B .37/3.49B 2.75/14.73B 2.72/15.78B

FDX .95/9.88B 1.27/10.27B 4.98/40.56B 6.00/43.35B

PIR -.22/327M .09/365M -.18/1.43B .18/1.47B

THURS SEP 18 AFTER

CAG .24/2.83B .45/3.15B 1.49/12.41B 1.65/13.00B

CTAS .52/1.01B .55/1.03B 2.25/4.14B 2.47/4.40B

I.HS .48/214M .54/228M 1.94/847M 2.38/956M

LEH -5.21/286M -.76/2.38B -10.46/3.02B 2.29/14.97B

ORCL .27/5.45B .35/6.25B 1.50/26.13B 1.73/29.01B

PALM -.18/323M -.13/362M -.41/1.44B .07/1.79B


Good luck today.

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