Yet another Thursday rally!
The last time we had a down day on a Thursday was March 27th, an awful week where the market fell 300 points to 12,200. What caused the decline on March 27th? It was a collapse of the financials brought on by some outrageous statements by Meredith Whitney that we have not yet seen the bottom of the crisis!
We made a lot of money betting against Whitney and her pack of roving hyenas and we thought that was going to be a one-time opportunity, yet here she is on TV again, bottoming out the financials for us to close out Q2 ahead of their earnings, when she will once again be proven spectacularly wrong. I'm sure it's just coincidence that she steps up these attacks right when the banks go into their quiet period pre-earnings…
Last time Ms. Whitney was able to talk C all the way down to $17.76 when we did a BUYBUYBUY back in March and the bank was back at $27 just a month later as they beat earnings estimates by 23.4% on 4/17. Still, undaunted by the fact that she told investors to short a stock that went up 52% four weeks later based on fundamentals she clearly doesn't understand, Meredith is back to spook the markets and NOT ONE person interviewing her now that I have seen has brought up the fact that she was totally wrong about the exact same thing just 3 months ago.
THIS IS BLATANT MARKET MANIPULATION PEOPLE! You are being stampeded out of the financials ahead of earnings AGAIN. Cramer is telling you to get out as well, what more evidence could you need to tell you there's something fishy going on around here? If you can figure out Jim's actual position on the financials, please let me know.
My position is the same as it was 3 months ago so you can just re-read the above links, this is ridiculous and I said as much in last night's post, where I laid out my bullish premise for the markets despite the day's action. I LIKED the Beige Book yesterday, don't blame me if the market didn't. We get Retail Sales this morning but we already got the preliminaries last week. Me and my new buddy, Mohammed Al Hameli, told the oil speculators they are crazy and the new Wall Street Journal poll pretty much says the same thing about Bush, his policies and his supporters so, as I said yesterday morning – Change is in the air and change is going to be good!
Change is in the air at the NYMEX as the regulators close in and the Saudis and others line up on the short side of oil, putting their Billions up against the Billions the speculators have already committed. The Saudis are calling an oil conference on June 22nd but the money is already moving into the short side and the roaches will be shocked to find there is no easy exit from the energy motel as the Trillions of dollars that are now tied up in the drillers and service companies that Jimbo (true to form) was putting his sheep into just last night, are going to be very, very hard to unwind on the way down. As I said last night – it's going to be much like Trading Places, only Eddie Murphy and Dan Ackroyd will be wearing keffiyehs….
We got a little more aggressive with our oil shorts yesterday as we got rid of our XOM calls and picked up the USO July $116 puts when oil hit $137 yesterday, it looks like we're getting a rare pre-market drop this morning with oil already back at $134 (8 am). On our equity plays, we went in and out of some quick day trades yesterday and took out more callers but I called the bottom right on the nose at 10:48 when I said the Dow would hold 12,100 and by 12:24 I said: "A lot of money coming out of bonds – this is interesting, maybe some bargain hunting to come. If I were running a fund and we were at lunch now, I’d be staging some money for the afternoon…"
We didn't get the immediate reversal I expected after the Beige Book but we didn't lose too much ground either. There were so many negative rumors floating around – About Jobs having cancer, about Google not monetizing YouTube, about the Financials… that it just seemed that someone was determined to force a bottom. One late day bargain we did grab was MGM, who somehow fell all the way to $42, dropping the p/e to 8, the first time in two years we've gotten such a good sale on my favorite gaming company. We're in the July $45s at $2.10 but, after sleeping on it, I wish we'd bought more.
Nobody was buying more in Asia this morning as the Nikkei dropped another 2% (294 points), down 800 points from last Friday's high. That means it's time to buy TM and SNE again. The Hang Seng dropped 303 points and inflation continues to be the main concern over there. The Shanghai Composite dropped another 1.83%, with "A" shares falling to 3,102, down more than 50% from their November highs.
European markets are up about a point, breaking a six-session losing streak and Bush is set to meet with Italian Premier Silvio Berlusconi, a day after antiwar activists and hundreds of other demonstrators marched through the Italian capital to protest the President's visit. The EU is threatening anti-trust action against E.On and Gaz de France over allegations the two colluded to avoid selling natural gas in each other's home markets but, as CNBC will tell you – no one is manipulating the energy markets!
The very big news in Europe today is that Irish voters may veto an EU treaty, which is meant to give the EU their first president. The treaty makes changes to the EU's mechanics that supporters say would help the expanding bloc, now 27 countries, run more smoothly and command greater influence in world affairs. As someone on the BBC rightly put it – This is Plan B (plan a failed in 2005) and there is no Plan C… Concern is growing that an Irish no vote could again send Brussels into paralysis, condemn the EU to weakness as a global player and halt the bloc's eastward expansion. In short – the US may look very much less sucky tomorrow if this vote fails!
Our markets are looking pretty good ahead of the open but not as good as they were before LEH canned their CFO and COO. I don't think holding people accountable for losing Billions of dollars is a bad thing so I'm going to ignore that and focus on oil, which should be retesting $132.50 again this morning.
The retail numbers were better than expected but it's boosted by stimulus checks so I'm not going to get too excited by a 1% gain. It was double what analysts expected and that's no news to anyone who pays attention to the track record of these fools. We'll do a Big Chart in tonights wrap-up and I'll be looking for us to get at least halfway back to last Thursday's open so up about 150 on the Dow, let's say 12,300, would make me happy today.
In last night's comments I posted my strategy for playing Apple through the news cycle, please check there as that one is going to be a tough call today!
Bonus footage: Check out this hillarious (in a sad but true kind of way) video of Keith Olberman's video response to the White House's request that NBC clean up their "deceptively edited version" of Bush's outrageously inappropriate comments that he made in Israel. I think Dennis Kucinich may be onto something by impeaching Bush now, even cutting a couple of months off his term could be a great help!
