Hurricane Fuld Lashes NYC

Hurricane Fuld, a.k.a Hurricane Dick, strengthened to category 5 and made landfall in New York City Saturday. Barclay’s is leading a European relief effort, but hopes of avoiding widespread damage are fading.

The scenario:

1) Bernanke and Paulson are up to their eyeballs in bad mortgage paper and don’t want any more. After the Bear Stearns and Fan-Fred deals, they are saying: “no mas.”

2) So, a Long Term Capital type of rescue is being attempted, but banks are balking at buying a slice each of Lehman’s toxic waste. The would-be rescuing banks are weak themselves, and adding to their toxic waste stockpiles would weaken them further.

3) There are banks that want to buy the good parts of Lehman, but the bids don’t seem to be high enough to keep the rest of Lehman from going down.

4) So, in addition to the rescue attempt, Lehman is preparing a bankruptcy filing, and CDS traders have been called into their offices to try and unwind their business with Lehman.

5) As the simultaneous plans of rescue, bankruptcy, and liquidation are advancing, everybody seems to be waiting for the Feds to blink and buy Lehman’s toxic waste.

Will Bernanke/Paulson blink? We will see, however the Fed has been discussing the topic of “liquidating a large i-bank” for several weeks now. And by “i-bank” we know that they meant “Lehman”. Maybe it has all been a bluff to force Wall Street to do the bailout itself. But as we are seeing, if Bernanke/Paulson don’t draw the bailout line somewhere, there will be no end to it.

I think that the Fed is prepared to liquidate Lehman.

134 Responses to “Hurricane Fuld Lashes NYC”

  1. eli says:

    David
    That’s one hellava drop! But I agree, if it gets there in one day, go long.

  2. admin says:

    Yerk,

    I took the URL off of your comment at 6:26pm. When I clicked it, I got a warning from FireFox that Google had found malicious software on the site recently.

    Matt

  3. Paul says:

    Danny,

    Would your guess for last Monday (post-GSE bailout) have been 300 points up premarket, then lose the whole gain by noon? All the general public remembers about last Monday is 300 points up. Bad, but not the negative response that really occurred.

    You can be sure that the public will take notice of 400-500 pts down. A slow, steady descent is OK, but a sharp drop is not allowed. Even the big boys can’t stop us reaching 1200, but they will have a say over what comes next.

  4. K says:

    Matt the link is fine even though firefox says that.

  5. admin says:

    Of course, technical patterns don’t always complete. The bear pennant that I mentioned above looks strong because both the technicals and fundamentals are aligned. The market was very overbought on Friday, and we just got horrific fundamental news. However, we have the July low at 1200, so perhaps the pattern will be stopped there since the first approach to a support area usually produces a bounce.

    OTOH, we have recently seen the Q’s slice through major support areas without so much as a pause. That sort of thing can happen when hedge funds blow up, it’s the margin clerks doing all the selling, etc.

    If the masses wake up to the “Bloody Sunday” headlines, there could be a tidal wave of panic selling that could cause the market to slice through the July low on the first try.

  6. admin says:

    K,

    How can you tell? Google says that it crawled the site and found bad stuff recently.

    Matt

  7. Danny says:

    Paul, I reccomended shorting the expletive out of that bump. I don’t pretend to know what will happen in the future, but I nailed that call.

    http://tinyurl.com/6nngdg

    I warn you though that the blog is getting so much traffic right now that it is egregiously slow to load.

  8. Zen says:

    I had clicked on the link and had some ad malware/spyware running. I tried to paste into Excel and got some windowsxp-privacy.com link posting instead. The solution I found was simply to close my browser. I ran a full virus scan after that and just had a tracking cookie; evidently (from what I have read) this is just an ad scam.

  9. K says:

    Matt the link is straight to the pdf file.
    The website itself might host a few das that might have recently seemed to host exploits to google but thats it.

    if people open the pdf they’ll be fine.
    it;s your decision but i had no problems after clicking ignore.
    (I have tech experience so i know when things are fishy )

    and in case you want to add it back here’s the link http://www.thelongwaveanalyst.ca/pdf/07_12_04_News.pdf

    if not just delete this comment. Best of Luck tomorrow everyone.

  10. K says:

    I just read Zen’s post. that’s weird. i guess you could go ahead delete my last comment then./ Nothing in my computer but i could try uploading the pdf somewhere and paste the link here.

  11. Rich says:

    Danny, thanks. I’ll mark you down as too young to know better, i.e., naive, too trusting, i.e., again, naive, or self-delusional, which makes you perfectly human and likely the only future we have.

    Put next to my name “hopelessly cynical” and “misanthropic”, which I will concede and which renders most of what I present here worth about as much as BAC and LEH execs saying, “No problems here; keep moving.”

    For the quantitatively challenged, the grand total of value add is “nil”.

    All the more reason to pull out the pork rinds and Bud, pop in the DVD with the NASCAR reruns, crank up some Toby Keith, cock your eyebrow at the tattoo on the shoulder, elbow, ankle, or pubic mound of your Britney Spears- and Hannah Montana-like girlfriend, daughter, niece, or mother (???), clean up the oil leak on the garage floor from the pick-’em-up truck or SUV in the garage of the sawdust-board suburban ant and roach trap.

    And remind yourself that Iraq had WMD; the War of Terror is for the survival of western civilization (whatever that is); Saddam Hussein was funding al Qaeda, because we created al Qaeda via the Muslim Brotherhood and funded them AND Hussein; Osama bin Laden is Satan incarnate; the End Times are upon us; Israal is worth dying for; we’re not an empire (no, never); Fox News is “fair and balanced”; and pigs don’t just fly, they quote scripture and the administration’s talking points out their human-like anuses.

    To Matt and anyone else whom I might have offended, my sincere apologies.

    Ok, on to SPX 1120s-80s and a short-term capitulation bottom and rally before another bearish setup to SPX 900s-1000s in Oct.-Nov.

    Good luck.

  12. K says:

    here you go uploaded on my site for now as a short twerm solution
    http://tinyurl.com/5nd9uh

  13. Zen says:

    Rich:

    “And remind yourself that Iraq had WMD; the War of Terror is for the survival of western civilization (whatever that is); Saddam Hussein was funding al Qaeda, because we created al Qaeda via the Muslim Brotherhood and funded them AND Hussein; Osama bin Laden is Satan incarnate; the End Times are upon us; Israal is worth dying for; we’re not an empire (no, never); Fox News is “fair and balanced”; and pigs don’t just fly, they quote scripture and the administration’s talking points out their human-like anuses.”

    Okay yes I know quite a few folks like that heh!

  14. Zen says:

    K,

    It may have been a different link from another poster, however. I’ve had my browser up all day with various tabs, etc.

  15. David says:

    that Ferrari looks really cool. I think I’ll buy one with my put gians from tomorrow. LOL

  16. Zen says:

    Anyone know where the futures can be watched real time? I don’t think StockCharts has things like E-Minis, etc.

  17. K says:

    i think you have to pay for real time.
    http://www.ino.com/ to the right you can see the futures 20 mins but still -335 for dow 20 mins ago is bad :P

  18. Paul says:

    Zen,

    If your not actually trading futures, then you may as well go here for 10-minute delays (like watchin a horror film):
    http://money.cnn.com/data/markets/

    You can also watch foreign markets (Aus open and down 2%) and currencies. Also, if you aren’t trading futures, sleep ain’t a bad idea.

  19. Zen says:

    LEH’s got 40 minutes left to figure something out. Why don’t they just ask the Chinese government? The rest of the US economy has been doing that for some time now…

  20. Zen says:

    Sorry guys I meant on charts. I use CNBC.com for futures prices, but tracking their movement is what I’m interested in.

  21. Zen says:

    “if you aren’t trading futures, sleep ain’t a bad idea.”

    I’m already up doing homework for my graduate studies. Plus I want to see the… wait a minute! It’s already past midnight EST. I’m CST… doing too much finance homework will mush the brain…

  22. K says:

    Zen i’m up waiting for it too but i guess i should sleep. 8am classes eastern

  23. Zen says:

    SO WAIT!

    Did LEH not file? I’m not at a tube.

  24. Pooch says:

    Rich,we need you around for hte next bear rally

  25. admin says:

    Rich,

    I have some Toby Keith on my iPod. It’s really very good.

    Matt

  26. Rich says:

    http://www.hussmanfunds.com/wmc/wmc080915.htm

    Hussman is among the smartest guys I have ever known, but he hasn’t made money for his shareholders in 4-5 years. Still, his weekly commentary should not be missed.

  27. admin says:

    The “Monday’s Trading” post is up. I got it in before K started complaining about the mobile. ;-)

  28. Zen says:

    Rich for the record too I want to say that your TA is great. I really appreciate it.

  29. Kailash says:

    Gold just leapt $20 in Asia — http://www.kitco.com/charts/livegold.html — a reflex reaction to spooky markets. With Lehman’s bankruptcy, we’re moving from “too big to fail” to “too big to rescue” and it’s clear the troubles are not, never were, and cannot be contained. It’s unlikely these giants, like icebergs calving, can fall without pulling the market down with them; the worst of it is we still have no view of the end of the losses. The uncertainty alone will drive money out of the market.

    Interestingly the Chinese don’t appear to have purchased the really toxic stuff — bailing out F&F keeps their shoes somewhat dry.

  30. David says:

    well, hopefully, one day we will move to “too big a bunch of liars to not be tarred and feathered”

  31. Zen says:

    Here comes the filing…

  32. Yerk says:

    Rich, your comment about Hussman is spot on.

  33. EDF says:

    Rich,

    I think you’re unfair to Hussman. He produces results over a full bull/bear (long) cycle. His Stock Fund (HSGFX) is aimed at preserving capital and providing some return. For most of us, that’s a noble goal. Incidentally, as of last Friday, HSGFX was up 4.50% YTD. He’s the perfect antidote to those who swing for the bleachers and, when things go wrong, comfort themselves by thinking that “the market always comes back.”

    Perhaps I’m too pessimistic, but I suspect “the market” won’t “come back” in the lifetimes of most of us who read this blog.