Monday, November 24, 2008

Snot Field

Dear Vikram Pandit,
It has come to our attention that your company, Citigroup, required a government bailout because your predecessor, Chuck Prince, was focusing on everything but banking during his tenure. Your company created $20 billion worth of Citi stock (out of mid air) to sell to the taxpayers of the United States. Considering there are 140,000,000 taxpayers in the U.S., we will each be paying $143 to help save your ass. Unfortunately, we had previously set aside this money for a present for our child to assure him a happy holiday season. Now that he will not be receiving a present, could you please rename Citi Field after our family? He would greatly appreciate the gesture in lieu of a gift.
By the way, what were you doing building a stadium again? Oh, nevermind, just please name it after us. Thanks, Snotwheel

26 comments:

Kay said...

Had you seen this article about whether Citi should cancel there $400,000,000.00 sponsorship of this Snotfield Stadium before you wrote this, Snot? Link: http://www.newsweek.com/id/170692?from=rss

Here's the best part of an article completely full of totally outrageous ways for a failing firm to spend ridiculous amounts of money: " Citigroup would also be well advised to save a few tens of millions of dollars by zeroing out compensation for the top executives over the next several years, especially for CEO Vikram Pandit. Pandit joined Citigroup when the bank bought his hedge fund in April 2007 for a price reported to be $800 million in cash. Within a year, the unit exploded and was folded, thus contributing to Citi's many losses. Shareholders shouldn't have to pay anything to "Mr. Vikram," as Saudi investor Prince Al-Waleed Bin Talal referred to Pandit in an unintentionally hilarious interview with Maria Bartiromo. (With the horses behind him, the brown scarf, the worry beads, and the retro hair-style, the Prince looks, as a colleague noted, like a cross between Guido Sarducci and Frank Zappa circa 1979.)"

Everytime I read yet another of these articles exposing the conspicuous consumption even AFTER being bailed out, I am becoming more and more peeved. I think our politicians all fell out of some turnip truck on their heads. That's how much wisdom they're showing in allowing these bailouts without any apparent regulation regarding how an ailing company should spend money after it's been dumped in the doorway.

I object!!!!!!!!!

agr8gem57

Snotwheel said...

Hadn't seen the article, but it's pretty funny seeing as how we're not the only ones who wants to rename the stadium. Just struck us as being odd that a bank would be dabbling in such a thing. Whatever happened to the days when banks stuck to banking? Everyone from the automakers to the banks to Harvard have given up their day jobs to focus on trading credit default swaps. Guess this is just how severely disassociated with reality an economy with paper currency can get. It's pretty scary stuff, actually.
We don't object with these bailouts because they're needed right now to stabilize the market and the economy over the short term. The problem with this country is that nothing will change. Once we get over this hump, we'll completely forget that any of this happened, and will enter a new era of even higher leverage, higher CEO compensation packages (regardless of performance of course), and far more complex, riskier derivatives.
Now that CEO's know that Uncle Sam has their back, there really isn't any reason to even show up anymore. Without accountability, there is no responsibility, and hence no reason to show up in the morning. Gotta love capitalism when it reaches these levels, huh?

Unknown said...

-HK22 Field -
Sounds more interesting :-)

Also, Interesting day, but it will be more interesting in the days ahead :-)

Unknown said...

Nissan now is pulling out of Detroit Auto Show.
So did Mitsubishi weeks ago.
following by Suzuki Motor Corp., Ferrari, Land Rover and Bayerische Motoren Werke AG’s Rolls-Royce. Porsche pulled out in 2007.

Looks like GM/Ford/Chrysler are going to be left alone in the Zombie-Motor City.
Less money for Detroit, at this point I'm surprised the city hasn't gone "bankrupt".

And thats nothing compared to the food lines that you are about to read/see:

http://www.news10.net/news/local/story.aspx?storyid=51014

http://www.recordnet.com/apps/pbcs.dll/article?AID=/20081124/A_NEWS/81124007/-1/RSS02

http://cosmos.bcst.yahoo.com/up/player/popup/?rn=4226712&cl=10794850&src=news


Sad stuff people.

Anonymous said...

Icon, any possible buy signal today?

Anonymous said...

anyone going short?

thebat

Anonymous said...

Anyone think CSUN is a GREAT short candidate?

j

Iconoclast421 said...

nope. My best guess is we close today at 830.

Despite the huge rally we had yesterday, the FXP I bought early yesterday morning is not doing so bad. Not sure why. I've been adding to it today.

Anonymous said...

FXP appears to be returning to the lower volatility it was given to prior to the past three months.

Some upcoming dividend plays for your research and consideration:

MCD, KO, PEP, PM, WMT.

(signed)
Anonymous

Anonymous said...

The market is going up because of news. I wonder when the fed run out of new news then market will be what? I think it will tank to 5000 for DOW. It is kind of late for the fed come out and support consumers and busines lending. Now there is nobody want to borrow because we have no job...

Anonymous said...

Time to buy SKF...

Unknown said...

wow,
Quick downturn

Bought Some FAS at 22.8

Selling at 26.

Damn
I'm becoming a trader/gambler :-)


I wouldn't buy SKF yet.

We are still in an uptrend.
And SKF is a downtrend.
I do have a buy order for FAZ at 50(which may get adjusted of course)

Anonymous said...

Icon:
When a buy or sell signal is generated, what is the typical time frame to hold that position? Are we looking at 1-2 days, 1-2 weeks, or what? From reading some of the other posts, its evident that some people trade as short as a matter of hours, others hold for weeks. Where do you usually fit in?

Snot:
The banking system has gotten as arcane at Attic Greek. I would wager that there are fewer than 10 people in the States who truly know every nuance. Does it need to be this complicated? What we need is another Alexander to swipe through the Gordian Knot of funny money financing.

Stadium:
How about The People's Stadium. May as well cut to the truth about where we are headed.

hk22:
Can you seriously be dabbling in 3x stuff? Don't come unglued on us, mon.

End of day will be a predictor for me whether or not to buy.

Anonymous said...

Where is Obama news market rally? May be he run out of bullet too...Time to buy some SKF...

Iconoclast421 said...

The last few buy signals generated from SPX have been followed by rallies of 5% the next day. These rallies usually dont even last through the day. What I do in general is buy when I get the signal and sell half after a 5% gain. In the case of SSO, I would sell some after 5% gain, and the rest after 10% gain. But it all depends on where the next orange line is. If I see the price approaching the next highest orange line, that's where I set my target sell price. For example, if SPX closes at around 860 today, that will generate a third buy signal, and the next highest point of resistance is around 890-900. I would start selling at 890.

Iconoclast421 said...

Here is the chart that illustrates the scenario I just mentioned:

http://i468.photobucket.com/albums/rr44/iconoclast421/SPX-11-25.jpg

That chart was taken earlier today. IF it can hold around that level then we should be ok till about 890 when we hit the top orange line.

But here's an alternative scenario, where we end down today:

http://i468.photobucket.com/albums/rr44/iconoclast421/SPX-11-25-down.jpg

Because we've rallied so far without a pullback, this is the scenario I am expecting. I would be short till we hit the bottom orange line.

Unknown said...

Well.
Sold the FAS shares that I bought in the morning at 22.90 at 23.90.
It doesnt look like 26 is a realistic target today.


Sbbuilder
I'm done gambling today :-)
I have to admitt that I like doing these quick swaps once in a while.
Maybe too much esspreso in the morning :-)
Although I still have shares in NCC and some UYG.
Today looks like a healthy day.

Are you still 100% cash?

Unknown said...

and of course FAS reaches 26,
Remind me to turn the monitor off next time :-)

Iconoclast421 said...

THS has broken down today, as expected:

http://i468.photobucket.com/albums/rr44/iconoclast421/THS-11-25.jpg

That's probably going to put your chimp in the red. But it looks like its going to bounce off of 23 quite nicely.

Iconoclast421 said...

EBS remains to be one of the prettiest charts of 2008:

http://i468.photobucket.com/albums/rr44/iconoclast421/EBS-11-25.jpg

Unfortunately it failed to make a new high today, similar to MTL back in may. EBS could finally be succumbing to the curse of 2008.

Snotwheel said...

Icon,
THS was downgraded today by Credit Suisse. Gary is not immune to these things, nor is he allowed to sell anything. In Gary version2, we'll have to give him the ability to switch to a different stock when one breaks out of trend.
XOM is not going his way, either.

Snotwheel said...

Already there is talk on CNBC that the market has hit a bottom. It's amazing how quick people start calling for that. We could spend the next three months rallying all the way back to the 200dma, sucking in thousands of investors, and then plummet to Dow 5,000 in a matter of weeks when commercial paper defaults and Goldman finally announces that they, too, need a bailout.
We aren't adding any longs here because we generally don't chase anything. But for all those who wondered what we were doing averaging down into DDM and SSO, the basic concept is that if you don't commit to doing it on the way down, it becomes much harder to do it on the way up.
Back in the dotcom bust, we made the mistake of waiting for the bottom. When the bottom finally came, it didn't feel like the bottom because the news was still terrible, and the market only went up a small amount each day. We watched it for weeks going up little by little until before we knew it, it was substantially off the bottom. Pullbacks offered little ability to get in, because we thought they might just be the next leg down, so we held off.
Now we buy on the way down instead, and consider the expense of "getting in" part of the cost of doing business.
We have no intention of selling anything right now. If it goes up, then we profit. If it goes back down, we've got dry powder. As far as we're concerned, that 33% of our account that is in DDM and SSO is locked up.
With the other 67%, we'd be interested in some fun trades to pass the time until Dow 12,000, whether it be in a few months from now, or a few years.
Anyone see any good trades out there? The toughest part about finding a good trade is that now the market is in neutral territory once again. Can't buy it 1,000 points off the bottom, and can't short it knowing that people are now in "buy the dips" mode.
We wouldn't mind nibbling on SRS or SKF, but they would have to drop a bit further.

Anonymous said...

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit

http://www.bloomberg.com/apps/news?pid=20601109&sid=an3k2rZMNgDw&refer=home

They should re-release news that Geithner is Secretary of State for another 500 point pop like last Fri.

I have 100% confidence the DOW will test 5000 sometime next year.

Unknown said...

For all of you interested to know what derivatives are and what they can do please read:

http://www.marketoracle.co.uk/Article7487.html


Quote:

"Here's the key: For the most part, the global derivatives market has no brokerage, no exchange, and no equivalent enforcement mechanism. In fact, among the $181.2 trillion in derivative bets held by U.S. banks at mid-year 2008, only $8.2 trillion, or 4.5%, was regulated by an exchange. The balance — $173.9 trillion, or 95.5% — was bets placed directly between buyer and seller (called “over the counter”). And among the $596 trillion in global derivatives tracked by the BIS at year-end 2007, 100% were over the counter. No exchanges. No overarching enforcement mechanism."

Snotwheel said...

Those numbers are just staggering, hk22. $181 trillion in derivative bets by U.S. banks alone, compared to a $700B bailout. The bailout is just 0.4% of the total.
What a dangerously fragile system we have. Fortunately, GS and the Fed control CNBC, and we'll be getting a positive spin for a while now so these firms have a chance to play catch-up. Unfortunately, when it's time to reverse the trade, the Fed will only alert GS and CNBC, not us.
Imagine playing roulette on a wheel that's completely black? GS could tell you what it's like.

Conorsh said...

Unfortunately snot it dosen't work like that, even for Goldman. All they can do right no is pray as there is no way out if it goes against them.

The thing about those derivatives is that the numbers are so ridiculously high because the leverage was so high. People bought swaps to hedge a worst case scenario, total failure of a holding. This failure had a certain percentage chance of happening for any given stock, but when applied to the market as a whole the odds were close to nil. As a result you could buy a CDS on a billion worth of debt for a few hundred grand, or in balance sheet terms near nothing. Companies like AIG could hold 5 Trillion in liabilities because using the law of large numbers they knew that they could only get called on an infinitesimal percentage of that at any one time. They took in tiny amounts in premiums in comparison to the liabilities possible so none of these trillions we read about are real money. The problem is that now that every debt is defaulting simultaneously those numbers are rapidly becoming real. They will never get paid of course, because the money dosen't exist. All the money in america only amounts to to about 3 trillon (bank accounts, stocks, cash everything) so paying even 1% is impossible. What will happen is that every company on the hook will go bankrupt, the holders lose out, the govt that guaranteed the debt will have to default (Nice move Bush) and in the end we will probably have to do away with all debt and just start from scratch with a new currency. Thanks for the free house, wanna swap this chair for a loaf of bread....