MON. OCT. 13- Interbank Loans? Yes, Please.

Posting this early in case anyone wants to do a little homework over this particular weekend. Will update Monday morning.

There are really no words. And that is the point of this blog entry. We witnessed the worst week in the history of the stock market last week for every major average. The credit crisis has reached a fever pitch. What needs to be done this weekend is that every major nation of the world must get together and agree to allow for interbank loaning to be supported by the backing of the governments. There is no more ‘free market’, no more ‘communist,’ no more ‘socialist’ in this new world order. This is an absolute clarion call to take action. Entities like Morgan Stanley and Goldman Sachs could simply fail because they will not have access to capital. And things can continue to spiral out of control after that; will it happen? Who knows? And that is scary. What if Pepsi cannot fund its operations? Or Exxon cannot get access money from its banks to send oil to suppliers? Or grocery stores cannot get shipments of food because there is no funding for delivery? It is literally possible that this can happen. Not likely, but possible. Thus, the stock market should follow this- the instant that the credit markets free up, we’ll be OK. Treasury Secretary Paulson announced late Friday that the U.S. government may nationalize on a minority basis some banks by taking minority stakes. This means next to nothing because the stocks can still go down, but it shows how desperate the world’s governments are to do something to fix this…but equity stakes won’t do the jobs; telling the world that the government will back interbank loans will do the trick in all likelihood as is occurring in Britain. We will not be off to the races per se as a lot of damage has been done, but the worst will be behind us as the stock market is wagging the tail of the credit markets. Already, there are some good signs; LIBOR eased on Friday and the dollar strengthened against the yen. But oil continues a monumental decline and MS approaches dangerous levels. With this all in mind, the Dow rallied over 1000 points on Friday on the simple hopes that something will be done this weekend. So, again, listen to that ‘interbank loan’ extraordinary move because if it does not happen, it will get even more dicey in the next few days as the credit markets are pleading for this action. And again, it does not matter anymore what is ‘right’, what is ‘capitalist,’ what is ‘free market’ as long as the right thing is done because if it isn’t, there are going to be problems. Thus, take your cues as day traders from the action on the credit front.


Updating-
Basically, the world's governments have agreed to do 'everything possible' to alleviate the situation. In Britiain, this means nationalizing the banks (which may be what every major government ends up doing). However, there were no specifics and the credit markets are still almost as tight as they were on Friday. So, even though the Asian and Euorpean bourses are up sharply, realize they are playing catch up to Friday's rally state-side and use extreme caution this morning. Look for selected pockets to short (i.e. the REIT's below), but if the market does not break, use a weak A-B-A2 to upside.

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 specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified


Good-

JEF- closed on high…in decent tape, A-B-A2 thru new high

FR- a small REIT which closed on its high; same story as JEF.

VNO/SPG- closed near highs; looking for A-B-A2 to upside in good tape and a sell off in both if markets retreat

JPM, C, PNC, other big banks- led market higher on Friday; will continue higher in a good tape

CHK- announced CEO had to involuntarily sell all of his stock to meet margin calls, decreasing Capital expenditures, and looking to sell part of its operations.

UA- closed on its absolute high

FMER, CRBC, GRC, FVE- a myriad of smaller stocks closed on their exact highs; watching for A-B-A2 to upside if the open up or a buy thru unch if they open down

DDR, LXP, PNX, HCN, O, CUZ, NCT, VTR, FRT, LRY, BDN, LHO ,VNO, WRI, RYN, NHP, CFR, FR, CLI, RAS- Many many many REIT’s jumped on the close in finishing on their highs. If they open higher, look to short thru unch especially if market weakens. If they open down, buy thru unch as they should not trade a lot higher very fast due to the extraordinary movement at close else A-B-A2 to downside.

Bad-

MS- still waiting on Mitsubishi deal as of this writing; will be nervewracking all day

GS- filed mixed securities shelf

PBCT- bank which defied the trend and closed near a low; would short below 14.75

OIS- particularly weak; if it opens higher, looking to short below 18

DISH- weak on Friday; would look to short 13.40



Earnings-

MON OCT 13 BEF

FAST .51/624M .45/590M 1.92/2.38B 2.17/2.71B

MON OCT 13 AFT

None

Good luck today.
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