Wow, I always forget how long those LTP reviews take me.
I think I know what I want to do but then once I get around to analyzing each position I end up looking at layer after layer and chasing things around, pobably about a half hour for each position and all you end up seeing is "I think I'll go naked on this one!" Anyway, so I'm miles behind but please put the comments here while I write a short morning post.
So, on the whole, I think I see more risk to the upside (as far as us selling callers) than the downside but that is a statement coming from an 85% cash position anxious to buy more if we get another nice dip. ORCL gave us a big boost last night with fantastic numbers (and congrats to all who played the $20s yesterday!) but Oracle is unique, not a typical software company. ATVI raising outlook is more significant but someone said last night that perhaps games are popular over the lingering fear of accidentally giving lead poisoning for Xmas with a Chinese toy.
China (the Shanghai Composite) was up 2% today but that was quite the suckers rally as the government raised the lending rates for the 6th time this year after the close. Gee, booming economy and raising rates? We'd better send Greenspan over there to teach those commies how to properly screw up an economy! The PBOC raised rates to 7.47% as they are attempting to curb a 6.9% CPI in order "to prevent the economy from overheating and the structural price rises from evolving into evident inflation." The Central Bank is also raising the DEPOSIT rate to 4.14% to ENCOURAGE savings. Why, those godless fiends – when will the madness end?!?
From the WSJ: "Just months ago, the one-year U.S.-dollar London Interbank Offered Rate was as much as 3.0 percentage points above the one-year deposit rate in China. Now, the one-year Chinese deposit rate is nearly even with the one-year Libor, which means it almost costs nothing to borrow U.S. dollars and bet them in China. While China's strict capital controls mean that getting money in and out of the country isn't always easy, the incentive is great: virtually everyone expects the yuan to continue appreciating against the U.S. dollar in the coming year."
Asian markets on the whole were generally flat, mirroring our dull day yesterday. Japan lowered it's GDP for this year to 1.3%, totally offsetting China's gains on the global balance and the net effect of Paulson's visit to China was for us to cave in on regulations regarding Sovereign Wealth Funds and (and this is REALLY funny) a statement from the Treasury saying China's "heavy intervention doesn't meet the legal definition for currency manipulation." That's right Bush and Pauson – kneel before your Chinese masters!!!
Adding insult to injury, Japans banks said they will not be participating in the US sub-prime bailout fund – this caused a nice rally in the banking sector in Japan! Europe is zooming on the US pre-market which is also flying and that's all I have time for today but I'm not buying into a rally that can't take us over 13,300 so please be careful out there!
