The Market's ether!

It's nice to be right when you're wrong! I thought Ben would cut the Fed funds rate; instead Bush and Ben delivered with their speeches, the market gapped and we pick up 5 smackers apiece on MA and GS. I'll take that any day! They didn't cut, but we still got the move.

But you could of listened to Lehman brothers, who cut MER, BSC, GS and MS yesterday, and at their lows they traded at 71.08, 104.31, 169.79, and 59.55. Their highs today were 74.46, 110.59, 178.10, and 62.87. Could you of made any money doing the opposite of what they said? Of course you could, but you would have to pay for it. That's why I highlighted their nonsense.

Instead, I touted FRE at 60.11, since it was down pi or 3.14 on the day. It added pi at it's high from it's low. Could you have made any money doing what I said? Of course you could, and you wouldn't have to pay for it!

But I probably should of consulted the rabbis instead of the physicists when I was "under the ether." Here's what Ramban Nachmanides had to say in 1250 about Genesis and creation. Ramban said, "The Holy One, blessed be he, created all things from non existence. Now we have no expression in the sacred language of bringing forth something from nothing other than the word bara (created). Instead He brought forth from total and absolute nothing a very thin substance devoid of corporeality but having a power of potency, fit to assume form and to proceed from potentiality into reality. This was the primary matter created by G-d."

We know creation's big bang produced such incomprehensibly powerful pure energy- light rays, gamma rays, X-rays, microwave (all of where time doesn't exist) into matter where time takes hold. Time started in the tiniest fraction of a second after creation, when this pure cosmic energy, cooled and was able to turn into matter. It's as Ramban described. But who wants his description? Wall Street wants formulas, gravitons, mesons and anti-matter, Boltzmann and Planck, with mesons and hadrons and leptons in one grand unified theories, with a dash of quark confinement after the threshold temperature. I prefer the simpler version. It's easier to explain, and I don't have to type the formulas.

And like Michelson, I may have the wrong reason, but I get the right result!

Let there be light!

Lone Star offers 8.50 for LEND!

What happened to all those shorts betting that LEND was going BK? Those that picked it up at 6, can now walk away with 50% on their money and let the arbs have the rest of the play, as the stock is trading above 9 now.

Did Bush and Ben coordinate their speeches?

At 10 ET you have Bernanke's speech.

At 11 ET you have Bush's speech on a housing, and the start of a bailout with FHA stepping up to the plate. Did Bush read Pimco's latest missive from Bill Gross? For those that missed it:

Get with it Mr. President and Mr. Treasury Secretary. This is your moment to one-up Barney Frank and the Democrats. Reestablish not the RFC or the RTC, but create an RMC – Reconstruction Mortgage Corporation. If not, make some modifications in the existing FHA program, long discarded as ineffective. Write some checks, bail ‘em out, prevent a destructive housing deflation that Ben Bernanke is unable to do. After all “W”, you’re “the Decider,” aren’t you?

Now if we can just get the Fed to move..

Let there be Light!

The Fed's ether!

Steve Liesman, of CNBC said today that the Fed wasn't doing anything in a vacuum. Tomorrow morning, at 10:00 EST Ben Bernanke gives his speech on Housing, Housing Finance and Monetary Policy. Could we have a rate cut before the speech?

Wall Street has been saying the financials are opaque, so they've been sold on any rumor. A rate cut before the speech would alleviate some of the opaqueness of the Fed, and shed light on a Fed that is not just data-dependent, (which is that which has already happened) to forecast-dependent (to that which could happen). That would be a welcome change, because in this age of instant information, markets move on bits of data. And data dependency keeps the Fed decidedly behind the curve. So consider this.

In 1657 Von Guericke placed a clapping bell in a jar, and then the air was vacuumed. You could see the bell ringing, but there was no sound. So it was apparent that sound couldn't travel through a vacuum. But light? It would pass thru! Thus light could pass thru nothing-so physicists created ether.

This luminiferous ether that light passed thru couldn't be seen or found, but physicists raved over it. Lord Kelvin thought it was the least dense but most rigid substance in the universe. It wasn't until 1887, that Albert Michelson, the first winner of the Nobel prize in physics in 1907, disapproved this ether in the Michelson-Morley experiment in which he tried to prove it. Thus his greatest success was that of which he disproved that of which he was trying to prove. Data dependent? Let the Fed be forecast-dependent!

Maybe I'm under the ether, but I think the Fed cuts rates before the open tomorrow. Or at least, that's what the market needs! And if I'm wrong, I'll find solace in quoting Banesh Hoffman:

First we had the luminiferous ether,
Then we had the electromagnetic ether
And now, we haven't e(i)ther.

PS My brother is a genius physicist, tho his business is different. His college thesis was so good it was impounded by the Government. He says that sometimes when I think about things I "get under the ether."

Fast Freddie

Army snipers will know what this means, but Freddie Mac (FRE 60.11) is down pi or 3.14 today because of losses on new mortgages. Take this stock in your sites now; when the Fed cuts, the sellers today will be buyers.

Lehman cuts Investment banks estimates

They cut MER, BSC, GS, and MS citing dislocation in the credit and mortgage markets. So we had cuts on them yesterday, and now today. These stocks should be your tells. Will the downgrades stick? It's not like they are giving us any new information. It's already known. And the stocks have been hammered. But you need these stocks to trade down, and then trade up on these estimate cuts. That will tell you this old information is already in the price of these stocks, along with the emotional response.

HR Block said that mortgage lending today was the worst since the 30's. Is that a factual or an emotional statement? Or a factual statement (morgtage lending is down) mixed with an emotional assessment? (worst since the 30's)

The point is, without an emotional response, most won't sell stock at these prices, unless they are panicked into it. The FT had an article this morning about a possible fire sale of $43 billion in "conduit" assets, because these financial companies need short term money.

So why hasn't the Fed cut the funds rate?

Bear Market? Dump your wife-NY Mag

The shaky stock market and subprime disaster have some divorce attorneys advising their clients to pull out of marriages (now!) as a way to cut losses on future payouts. “I was talking with one of my clients the other day, and I told him, ‘You don’t need to ride the market and your wife...’
http://nymag.com/news/intelligencer/36582/

Does this happen at bottoms or tops?

Bernanke's speech one year ago

Now I am an economic policy maker, and I sit in a nice office in Washington looking at reports and tables of data and following the fluctuations of the financial markets. However, I try not to forget what underlies all those data: millions of Americans working hard, trying to better themselves economically, struggling to manage their family finances, and worrying about the price of gas and college tuition. I take my work extremely seriously because I know that, if my colleagues at the Federal Reserve and I do our jobs right, we will help our economy prosper and give more people the economic opportunities they seek.
http://www.federalreserve.gov/boarddocs/speeches/2006/20060901/default.htm

Just a friendly reminder.

Screaming Eagle anecdote

Just got some email of a list of bargain bottles from Screaming Eagle Winery-from $1499-$7999 a bottle. I thought that these wonderful vintages were only sold through death, debt or divorce. Maybe the leveraged hedge fund boys are crying "uncle"?

The question for you to answer is simply this: Does this happen at the top or the bottom of a market?

Now go and make some money.

Another bottom?

UNG (34.79), the natural gas ETF, looks like it has been making a bottom here. Oil hit it's lows last week, and gasoline went up today, and the refiners have caught a bid. The market is saying we've seen the lows in this complex. Natural gas still scares traders, as no-one seems to have a handle on how it trades.

This ETF is designed to track how natural gas trades on the futures market. Is it making a bottom? Who knows. But the option premiums in the calls indicate upside. You've probably had some hedge funds puking up their positions, and now could be the time to make some money off of their losses. And it's a nice way to trade gas.

Where's the market heading now?

You had bells ringing at the bottom, with "Chicken Little" piping in. Now it's not the time to be subtle: Charging Bull!

The sculptor, Arturo Di Modica, on December 15, 1989, placed the 7,000 pound bull next to the Christmas tree outside the stock exchange. The NYSE promptly hauled it away. The NY Post had these headlines the next day.

Bah, Humbug

NY Stock exchange grinches can't bear Christmas-gift bull.

Five days later, and after a $5,000 fine, Charging Bull was back.

Today they are giving stocks away, negativity and fear abound with a record amount of short interest. Looks like the buyers of stocks today are as short sighted as those executives that turned down Di Modica's wonderful gift eighteen years ago. Wall St Bull!

Time to bring out the first team

The working group on financial markets? The Plunge protection team? Jawboning by administration and market watchers? No. It's time to bring out the spokesman for the market, Chicken Little.

It's easier to spread fear than facts.

Is State Street Straight?

We won't tap dance around the issue like Senator Craig, but the bears are growling about the $28.81 billion in credit lines to four asset backed commercial paper conduits. Why the panic? Here's why.

State Street's (STT 61.16) $3 billion Limited Duration Bond Fund was down 37% in August. That scares people. Secondly, State Street has been pushing "leveraged funds" that are "market neutral"-Long 130%, short 30%. Nobody likes leverage today, and if it's market neutral, why bother. Is this just another quant product? State Street's net interest margin also increased from 1.2%, to 1.64%. How did they do this? From their SEC filings for the last quarter:

At June 30, 2007, our investment securities portfolio included a consistent percentage of floating-rate, asset-backed securities (36% of our average investment portfolio for the second quarter of 2007 compared to 37% a year earlier), a higher percentage of collateralized mortgage obligations (19% compared to 11%), and a lower percentage of direct obligations from U.S. Treasury and federal agencies (9% compared to 16%). We continue to invest conservatively in AAA and AA rated securities. AAA and AA rated securities comprised approximately 94% of our investment securities portfolio at June 30, 2007, with approximately 87% AAA rated.

Their floating rate asset-backed securities increased, they cut their Treasury or agency obligations to just 9%, and increased their CMO exposure by 80% to 19% of their $100 billion portfolio. This of course increased their net interest margin. It's also what got some banks in Europe in trouble. Throw in whispers of short selling stock loans tricks and you have a recipe for a takedown by the bears.

Bernanke the "academic" and Tobin Q

It seems people (or just me) are frustrated because the Fed has been so slow to cut the federal funds rate. But here's Bernanke's reports from Princeton, and it will help market participants understand his mindset. (Tho the Fed does watch the stock prices of banks!) Here's the title and a blurb.

Should Central Banks Respond to Movements in Asset Prices?

Changes in asset prices should affect monetary policy only to the extent that they affect the central bank’s forecast of inflation. To a first approximation, once the predictive content of asset prices for inflation has been accounted for, there should be no additional response of monetary policy to asset-price fluctuations.

http://www.princeton.edu/~bernanke/currentpapers.htm

Now Bernanke is a believer in Tobin's q. Tobin's q states this: that if the value of a company's assets, on a stock exchange, are worth more, than the company's assets, they will invest more. For those who like a formula:

Tobin's q=market value/replacement or asset value.

Here's what it means. If I invest in a project, will my stock price go up by more than the investment? Does the market see the value of the investment? It does in casinos, but it doesn't in refineries. So refineries aren't built, but casinos are. (See that's the trouble with ascribing formulas as prescriptive. They are in fact descriptive of events, but academics like a predictive component.)

In the real world, the 14th richest person, Sheldon Adelson, of Las Vegas Sands (LVS 97.61) whose Venetian Macau opened today had this to say interview yesterday with Reuters about his new casino: "You think I'm spending 12 billion dollars because I'm a wild-eyed, blue-skied craps shooter?" In a Bloomberg interview last January he said, "You can't make a better match than bringing casinos to Asians." No mention of Tobin q anywhere in his "textbook" talk.

So I had to use the obvious to make my point. More casinos need to be built to bring in more money for shareholders. Less refineries keep the margins high. Isn't that just good business?

So Bernanke's reluctance to cut could be as simple as an academics input in the basic formula above. If you cut interest rates, it will increase the present value of capital. And that causes Tobin's q to increase. Thus you have to cut, not in response to falling asset prices, but inflation. Unless it's a bank or financial asset, which the Fed at least watches.

So how did falling housing prices not become deflationary? When 2/3 of the CPI component for shelter is made up of "owners equivalent rent!" But that's an academic argument!

That's why those that trade, who want a cut in the fed funds now, are dismissive of all this academic talk. Maybe it's time for the academics to open their eyes, and shut their textbooks!

The Fed's minutes

Notice this gem in the Fed minutes...in discussing the stock market, the Fed said:

Share prices of financial firms fell especially sharply, reportedly a reflection, in part, of concerns about exposures to subprime mortgages and about the effect of a potential slowdown in merger activity on operating profits.

So we know the Fed doesn't care about housing, but they care about bank stock prices. Boy is that rich! At least they have some perspiration on their brow.

Anyone want to bet that Ben's underarms will be soaked in Jackson Hole?

An inter-meeting Fed cut?

The release of the FOMC minutes should put an inter-meeting cut in the cards. Why? Either, they will appear to be too sanguine in their assessment of the economy, thus looking like idiots, or they will express concern, thus indicating a willingness to cut.

They'll probably look clueless, so then they'll have to show they are not. The only way to show they've gotten religion is to cut, and do it inter-meeting.

Think about that when they release the minutes at 2:00 EST today.

I'd put the over/under on a rate cute by this weekend.

And make it a nice vacation.

The Fed fiddles while housing burns

After messing with 1 day, 3 day, 14 day, and 30 day paper, and persuading the banks to borrow at the punitive rate from the discount window; and then accepting various forms of paper for their IOUs, and changing collateral for banks and brokerages, then easing the collateral that the NY Fed will accept, so somebody will take some mortgage paper, the erudite Fed thought they could buy themselves 30 days.

They were wrong.

Now the financials trade heavy; worries abound in housing, and the Fed and it's governors are looking at the data for any spillover weakness in the economy.

It's obvious to anyone outside of the government what's wrong; but the abc's of fed policy is really wrapped up in the ECB. That is: Will the ECB leave rates unchanged on September 6th? That's the cover the Fed is looking for, as any good governmental employee does; to observe protocol and make the cut September 20th at the regularly scheduled meeting.

So the over/under on the cut in the cheese is 24 days. Place your bets at the fed futures. But the economy is already starting to stink, and the smell isn't Limburger cheese.

What does that mean? Well in a previous post I said Bernanke, has to quit snaking around, be a mouse, and take the sliver out of the paw of the lion, and cut rates. But he's done everything but cut the federal funds rate. Why?

What's Mighty Mouse's only weakness?

Limburger cheese!

Mortgage resets

Here, in billions is the amount of ARM resets coming due. This is important because the "teaser" rates along with the "teaser" payments of deferring interest will no longer be available to the homeowner. Using this data it indicates that the second half of next year is when the housing market should start it's recovery, as resets finally start to wane.

Ben Bernanke's headline speech in the annual fed conference at Jackson Hole, Wyoming this Friday will be entitled, "Housing, Housing Finance, and Monetary Policy."

Should be interesting.

iphone hack here!

George Hotz, hacked the iphone so it works on another network. Should help Apple run! And you can buy the phone on eBay. That's a smart kid!

http://iphonejtag.blogspot.com/

ebay link here:

http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=230164884672

Pimco's Bill Gross new Investment Outlook

Why is it possible to rescue corrupt S&L buccaneers in the early 1990s and provide guidance to levered Wall Street investment bankers during the 1998 LTCM crisis, yet throw 2,000,000 homeowners to the wolves in 2007? If we can bail out Chrysler, why can’t we support the American homeowner? The time has come to acknowledge that there are precedents aplenty in the long and even recent history of American policy making. This rescue, which admittedly might bail out speculators who deserve much worse, would support millions of hard working Americans whose recent hours have become ones of frantic desperation. And for those who would still have them eat some Wall Street cake as opposed to Midwest meat & potatoes (The Wall Street Journal editorial page suggested they should get darn good and used to renting once again) look at it this way: your stocks and risk-oriented levered investments will spring to life like the wild flowers in Death Valley after a flash flood.

http://www.pimco.com/LeftNav/Featured+Market+Commentary
/IO/2007/IO+September+2007.htm

Bail out for the refiners?

CFC gets $2 billion from Bank of America and it helps the refiners? Yup. Sorry, you may not like the logic, but it's Wall Street's logic, and if you want to make money, you need to play by Wall Street's rules. Here's why it works.

The borrowing at the discount window shows that the financials are no longer toast, and cannot be rumored downed by the shills on the street. The Fed, bailed out CFC, with Bank of America's help. So why does this help the refiners?

Did you watch the steel and material stocks the last few days? US Steel (X 92.73) tacked on 18 points from it's low last week, and FCX (85.59) also added 18 points from it's low. This indicates that the economy is on the mend. And now the refiners, which have been accumulated the last week, can now be bought aggressively as they are now ready to move.

Why?

Because when the financials were shorted and rumored, the play was to buy crude and short the financials. The cost of the goods for the refiners is the cost of oil. This trade is being unwound. The financials will have a tsunami of buying, as they reverse their positions. A pullback in the price of crude, will help the margins of the refiners.

What happens if crude doesn't pull back? Who cares. The pyschology on the trade is broken. Gasoline inventories were drawn down a ton, and if the material and steel stocks are rallying, which indicates strength in the economy, then the price of gasoline is done going down, right here, and the refiners go up. You also have the analysts in the wings getting ready to upgrade the group, after they've been already downgraded. Don't believe that? Well, wasn't it Merrill Lynch that just downgraded CFC last week? How smart does that look now? The analysts will learn from that, and now, if they upgrade they'll get to use the closing prices of today as their price, and with the futures up, I'll take that bet. I just wanted it into print, before it happens.

Now the best plays, that I see are Western Refining (WNR 49.50) and Tesoro (TSO 49.04), as both stocks were off 18 points intra day from their all time highs just a short while ago. Tack on 9 points apiece and you get 18.

Chai!

Where are the Countrywide Shorts?

In over their head! Bank of America puts in 2 billion, and the (CFC 21.82) trades above 26 in the afterhours. Just last week the stock was 15!! What happened to the Cassandras crying, and declaring sub-prime was the end of the world? Where are the shorts on Washington Mutual (WM 37.40)? They'll be toast also.

Another play will be Merrill Lynch (MER 76.44). I advertised this last week at 72; the Fed is cutting and why hasn't this stock moved? That answer is tomorrow. Look for that to go to 80. And Goldman Sachs (GS 177.89)? Remember the Goldman egregious opportunity fund? At the time of the investment, Wall Street was so scared, they didn't understand Goldman was stealing their money. Tomorrow they reward that stock, and the shorts get pummeled.

Once again, the bell was ringing, but it was tolling for the brave, and not the timid. Then the only brave were the shorts, piling on the stocks, blinded by greed. Tomorrow, the shorts won't only be timid, they are on the way to toast.

Why Wall Street wants you to Panic

This morning we have two perfect examples. E-Trade (ETFC 15.62) sold down to under 10!!! last week on "concerns" regarding their mortgage unit. You had one of the fast money boys advertising the purchase of the puts and emphatically "warning" us that what the smart money in the options pit were doing. It looks like they were just making some fast money of the public, as ETFC this morning said they were in merger discussions with Ameritrade. Who sold in the 10's? Those that listened to the shills.

Example two is MGM (74.32) which sold down to under 64! last Thursday. The story floated by Reuters was that financing for Vegas was drying up, and then the Wall Street Journal had an article Friday titled, "Credit Crunch Plays Vegas, Stalling Some Construction." And MGM was spending $7.4 billion to construct City Center.

What happened?

Today MGM announced a $5 billion dollar investment by Dubai-28 million shares at $84, and $2.7 billion for a stake in City Center. So the really rich paid over $20 a share more than where the stock was less than a week ago, as they coveted this strategic asset, while someone else gave it away last week. Now the stock can see triple digits. So those that can't think for themselves sold MGM, and left a fast 20 points on the table.

Something to think about next time you want to panic.

Buffett smacks his lips

Secretary of Treasury Paulson gave a woeful pep talk on CNBC this morning, while finally admitting their were problems in the market. A bit later Senator Dodd met with him and Bernanke to discuss the tools the Fed was prepared to use to get rid of the tightness in the credit markets. Even to the most Pollyanna, it's obvious the Fed is too restrictive. They opened the spigots from 1 to 3 to 14 to 30 day paper, then cut the discount rate, and then cut the loan charge rate by 1/2 a percent also. What's next? The cut in the fed funds rate. And thus the can can Fed appear "measured" in it's response.

But the moves in the stocks are incredible. Last Thursday, RIMM traded under 185, today it closed at a split adjusted 245! GRMN Thursday was 86 1/2, it closed at 102.50 today, and WYNN added 20 points from it's low. So it's obvious that the selling in the growth stocks has already run it's course; today they ran the steel stocks. The selling was so bad that even Microsoft (MSFT 28.07) is now a buy. That stock was used for redemption money, by those that had to liquidate. The funds who sold their commercial paper rushed to buy T-bills and get 2% for a year. Now you can buy Mr. Softee and get 6% in a week. Whatever happened to the efficient market theory?

But a great acting stock that most people missed was the performance of Berkshire Hathaway. It added 10,000 points in the last week to top $120,000 a share! Shareholders probably took it to heart when WEB had this to say, "I can spend money faster than Imelda Marcos when things are right."

You should follow his lead.

Bernanke Beats the Bears

Bernanke showed he could play poker with the best of them, while building his reputation as he handled his first crisis with aplomb. Importantly the cut in the discount rate changed market psychology-from what could go wrong to what could go right.

Benjamin "means son of my right hand." Today Mr. Bernanke played the right hand, and we can finally say Hallelujah for the relief.

http://www.youtube.com/watch?v=mmbQEQltOwM&mode=related&search=

Fed cuts discount rate .50 basis points

To promote the restoration of orderly conditions in financial markets, the Federal Reserve Board approved temporary changes to its primary credit discount window facility. The Board approved a 50 basis point reduction in the primary credit rate to 5-3/4 percent, to narrow the spread between the primary credit rate and the Federal Open Market Committee's target federal funds rate to 50 basis points. The Board is also announcing a change to the Reserve Banks' usual practices to allow the provision of term financing for as long as 30 days, renewable by the borrower. These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially. These changes are designed to provide depositories with greater assurance about the cost and availability of funding. The Federal Reserve will continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets. Existing collateral margins will be maintained. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York and San Francisco.

Countrywide draws down $11.5 billion credit line

So CFC plays poker. It draws on a line that is unsecured, and 70% of it is over 4 years. They will now fund their loans from CFC's bank, and do loans entirely through their bank come September.

Now the banks are on the hook for another $11.5, have a little more skin in the game. Do you think these banks will bellyache a little louder to the Federal Reserve?

Is Poole Magoo??

OK I wanted a headline, but here's what the Fed governor, William Poole said last night:

"I don't see any impact as yet on the real economy or on the inflation rate...Obviously, there could be an impact, but we have to rely on some real evidence.''

This credit crunch is impacting Wall Street and housing, and housing prices, and mortgages and mortgage prices, and credit and credit availability, and banking and loan availability, and crushing bonds and stocks.

And this is worldwide!

Mr. William Poole, a fed governor says he doesn't see any impact as yet on the real economy.

Unlike Poole, I don't have an MBA or PHD or an honorary law degree but it seems to me that when housing and your stock portfolio goes into the tank while credit dries up the real economy is impacted and lives are affected.

It looks like there's only six degrees of separation between these two characters. Mr. Magoo made his first appearance in an UPA short in 1949, entitled Ragtime Bear.

Maybe Mr. Poole needs to re-read the Federal Reserve Act, and quit his.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a262SkG0p8A0&refer=home

Financials ring investor's bells

Ouch!

3 month paper at 4.08%, Fed funds at 5.25%, and they don't cut? I assumed Bernanke and the Fed governors had a modicum of foresight and predictive ability.

I was wrong.

I also assumed the Fed would cut rates 50 basis points inter meeting and do it now. Maybe they are on a 360 day calendar, and the Gregorian calendar isn't used on 20th and Constitution.

By injecting cash and liquidity into the system, the Fed is attempting to cure the liquidity problems, and they are failing. The market is selling off because the market is discounting the value of homes in the future, and assuming the banks will own these discounted homes. Liquidity needs to go to the homeowner; and the relief has to be lower rates. You cannot refinance your home, thus the ARM rate has to be lowered. The market is screaming at the Fed to recognize this. That's what's causing the selloff.

The market is roaring like the lion with the sliver in his paw, and Bernanke, (tho being born in 1953-the year of the snake) is acting like a rat by not cutting rates. He needs to be the mouse, and go and take the sliver out of the paw of the lion, instead of trying to feed him.

And then the lion quits roaring.

Bells ringing again on the retest of lows

Just in case you missed the first bottom in the market, now you can catch the retest.

The financials should be buys right here. So you've already been given the bottom in the oils, the bottom in the market, and now the lows in the financials.

If you need names, start with the NY Investment banks now. (GS 171.58) (MER 72.03) (BSC 106.77). The rest is up to you.

And the bell? The world's largest in Russia. If you need courage, take a shot of vodka and make your trades. And celebrate next week with some caviar.

Top ten reasons you know things are "Contained"

1) You can't value your money fund.
2) You can't get a mortgage.
3) You can't close an announced buyout.
4) Your NY Bank cannot resell your LBO loans.
5) Your stocks cannot rally more than 12 minutes.
6) Your REIT cannot finance his projects.
7) You can't roll over your commercial paper.
8) Your market stabilizing speech destabilizes the market.
9) The Bush administrations cheerleaders disappear.
10) Your central banker wears long white sleeves.

Ben's Blunder Blossoms Act II

By not cutting rates, "helicopter" Ben, believes he is showing the markets his mettle. He's just showing intransigence, as the market cries out for permanent liquidity, not to be on the beck and call of the Fed.

So Thornburg mortgage is on the verge of blowing up, as funding gets cut off to this prime lender, and dislocations still abound. Money market problems exist with Sentinel, and the credit rating agencies are sold heavily. In retail, earnings slow at Walmart, and retail sales show bumps on the 15th and 30th of each month, indicating more paycheck to paycheck living.

Fed officials think they have time to act. They don't. Time will only make them look stupid.

And the market will force Ben, and his minions to act.

Goldman's GEO Quant Fund

GEO Global Equities Opportunities Fund is down over 30%. What do you do next? Just what Goldman did. But first let's rename it. I have a suggestion.

Goldman's Egregious Opportunity Fund.

Since you've already sold billions of stock and bonds in the fund, the prices of the assets are already crushed. It looks "prudent" because you've decreased the leverage from 8X to 3.5X, but you've sold without regard to price. Now put in $3 billion of new money, with $2 billion from the firm, and another billion from your billionaire clients, at these depressed prices in the Global Equity Opportunities Fund. Now you get all the upside on the rebound, without suffering the losses your strategy caused.

And you look like a gentleman.

Bernanke's Bet/Blunder

After being blindsided by the weakness in the markets, and the non containment of the sub-prime contagion, the Fed has decided to pump some money into the system, to alleviate some of the pain. The bet is that this salve will solve the liquidity crisis.

And if it doesn't?

The Fed can save face by lowering rates because they'll be able to use the excuse of lowered inflation expectations with the tame CPI's numbers due this week. Lower gas prices will help. Then the Fed can pretend they aren't beholden to the market, or Cramer, or admit to themselves that they totally misread housing, the economy, or the consumer, at their last Fed meeting.

That's their bet.

Hells Bells

Whoops-not quite the bell that AC/DC had in mind; this is the Bell of the Chapelle Saint-Antoine; if you've been reading this blog, you'll get the connection. If not, you'll have to go back and read about the Fed Chairmen. But for those that say they don't ring a bell at the bottom, I beg to differ. It was advertised before the opening of the market Friday.

At the bottom.

Last week the market was alternating hot and cold, as the margined quant funds that were blowing up, had to sell their good stocks to raise cash, and buy their bad stocks (cover their shorts) to close out positions to keep the margin clerk away. So now the world's coming to an end and we're supposed to sell.

Sorry. I'll take Revelation's version and discard Wall Street's.

The central bankers are worried, and pumping liquidity so the game is over for the bears. The choristers singing "Hells Bells" were just a bit premature.

I'm rolling thunder, pouring rain
I'm coming on like a hurricane.....
I won't take no prisoners won't spare no lives
Nobody's putting up a fight
I got my bell I'm gonna take you to hell
I'm gonna get ya, satan get ya
Hells bells Hells bells,
you got me ringing Hells bells....

The only problem is that they forgot to look at the album cover. Last I remember, "Hells Bells" was in the album, "Back in Black."

And that's where we are going.

Citigroup's Chuck Prince gets hustled.

Van McCoy, you may not remember, but his music you do. Especially those who danced in the 70s, as his "Do the Hustle" ushered in the disco era.

He also produced, "I'm still dancing" sung by the Presidents. Keep this in your mind when we read when Citi's chairman, Chuck Prince, spoke his.

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” (spoken July 1oth)

Today the Financial Times reported that in the last 30, days Citi lost $700 million in sub-prime loans or "structured credit." Someone got hustled.

Maybe I should send him my record.

What you may not know, however, is that Van McCoy's back-up singers in "The Hustle" were Faith, Hope, and Charity. I wonder why Citi's stockholders are so charitable to Prince. The stock hasn't moved in 4 years.

Will his words "we're still dancing" be the catalyst to usher in a new era at Citigroup? Doubtful. But the dictionary of financial lexicon definitely has a new term!

"We're still dancing!"

http://www.ft.com/cms/s/d7c72226-476b-11dc-9096-0000779fd2ac.html

Devotions Upon Emergent Occasions

"No man is an island, entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less, France is even lessor, as well as if a promontory were, as well as if a manor of thy friend's or of thine own were; any man's death diminishes me, because I am involved in mankind, and therefore never send to know for whom the bell tolls; it tolls for thee." Meditation XVII John Donne 1624

We've heard the expression, no man is an island, but what's interesting is this is where Hemingway got the title for his 1940 novel, For Whom the Bells Toll.

What's that have to do with the market? Sometimes, you need to read something profound, when everyone around you is losing their heads. And let you see bells in your subconscious mind.

Why's that?

Because they say "they don't ring a bell at the bottom."
Maybe you just have to read about them.

Mark to market, mark to model

The WSJ reported how the SEC is looking at Investment banks, and the "marks" for their sub-prime loans on their own portfolios. Here's why.

Many hedge funds are being taken out and shot, as these investment banks, that have lent to them, are now asking for more cash for their leveraged positions. Most can recognize, that if the central banks start pumping liquidity into the system, those who are buying here, should do well.

But you need someone to sell, especially at these artificially low prices. So send in the margin clerk, and force some of these players to puke up their positions, as they are marked to the market, not some esoteric model.

Now I'm sure some are complaining about the abuse. I suppose a big client, who did a ton of commission business with these banks would feel he was entitled to some relief.

But that's not how Wall Street works. I can imagine them thinking of all the commission revenue they will miss from hedge fund X, who is closing. So give him a bad mark, take his positions, and make it on a principal transaction, as you buy his marked down merchandise.

But if you mark it down for him, don't you have to mark it down for yourself? That's what the SEC wants to know. Why don't they have losses when everyone else is having them? At least that's probably what the disgruntled fund said to the SEC.

Do you think I'm making this stuff up? Does anyone remember listening to JP Morgan's third quarter conference call last year crowing about the $750 million they made for buying Aramanth's energy portfolio of natural gas positions, when they had "margin calls" and were forced to liquidate? Who was their prime broker that gave Aramanth the margin call that forced the liquidation?

It was JP Morgan, who were able to buy this "distressed" merchandise and sell it two weeks later to Citadel for almost a billion dollars of profit.

So the SEC is on top of this. I'm relieved. The suspense was killing me. But I'll just wait for the investment banks next earnings report.

ECB's injecting money for 3 days.

Yesterday it was for one day, today it is for three days, and the next move is to cut. The central banks have taken out too much liquidity in a low rate world. Europe, Japan and Canada already recognize that. The growth in France, the US domestic economy and Japan is inadequate. The US Federal Reserve, kicking and screaming, now recognizes it also. So the cutting starts. And Japan? Interest rate increases are now over.

Take a look at wikipedia's entry for Chairman Ben Bernanke. Click on the 12th link. It's Cramer, blasting the Fed, and blasting Poole, saying, "they have no idea, they have no idea!"

http://en.wikipedia.org/wiki/Ben_Bernanke

The academic is getting schooled by the market.

Greenspan, despite his errors, understood the pulse of the market. So he was nicknamed "Maestro" by Woodward for how he conducted policy. Maestro comes from maestro di cappella "master of the chapel." Appropriate, since Greider's classic on the Fed, penned in 1989 was Secrets of the Temple: How the Federal Reserve runs the Country.

Chapel, or temple, the traders are praying for liquidity. And finally, the money gods oblige.

Black Swans, Black Boxes and Six Sigma

You'll here all of these terms the next few days as the models of the computer quants didn't work.

Six Sigma events happen once every 294,000 occurrences. Six Sigma market? Not gonna cut it.

Black Swans. The definition of a black swan is a) unpredictable b) massive impact c) afterwards we justify this event by an explanation that makes it appear more predictable. Black Swan? Not this market.

Black Boxes. It's phony math, that Wall Street quants dress up as science, with rocket scientists and Phd's. But emotions can't be modeled, and here's a real life example that will affect trading tomorrow. So let me start with yesterday.

That's when President Bush said housing was heading to a soft landing. Does anyone in America believe that? Tonight, Countrywide Credit (CFC 28.66) wrote off $200 million on a billion worth of sub-prime loans, and said conditions have markedly worsened-"unprecedented disruptions". Last week they said they had $50 billion of available credit. Now it's $46.2 billion, and conditions have deteriorated farther . Haven't we seen this movie before?

So think like Wall St. If you can't believe the president, or the chairman of the Fed who says sub-prime is contained, or Secretary Paulson, or any bank big wig, what will they do with CFC? Are these people are lying, idiots or just being foolish with forecasts? But if you're frustrated, you can't sell them, you can only sell stocks. Is this in the quant's model? I didn't think so.

Mozilla sells millions of CFC stock every week. But SEC filings show CFC holds another $70 billion of loans in their portfolio for investment.

Now think like Wall Street again.

If they wrote off 20% of a billion in sub-primes, why not write off 20% on their $70 billion of loans held for investment? If they are holding them for investment, they are not liquid, so they need to be marked down. That's $14 billion.

Rational? No. Believable now? Yes. They'll crush it tomorrow. Is that in the quant's model?

Credit is tight, fear is everywhere, and the angst is palatable. Behind closed doors, even the cheerleaders will doubt themselves. So it's time for the Central bankers to move. And they will.

Because if they don't open their doors, the business will shut theirs.

ECB injects 95 billion euros into the money market..

and said it would provide liquidity. Now besides sweating sub-prime, junk bonds, LBO loans, and CDOs the credit markets are now sweating money market funds.

Didn't those bankers just say there was "no contagion" and sub prime is "contained"?

What's causing this run?

BNP Paribas halted withdrawals in two billion worth of funds because they couldn't calculate the value, while just 8 days ago, the chairman of BNP didn't see any problems in their funds "yet".

Maybe he's been having lunch with Chairman Bernanke.

Great Scott!

Probably would of thought I'd say "holy Moses" but then I needed a title that you could read between the lines. Especially since yesterday I mentioned Bonds, I'd thought about checking out the "manna" scoreboard today. It's almost like "back to the future." Wait-didn't someone have the sports almanac ahead of time?

So here's the Wall Street scoreboard from the last few days of the stocks mentioned.

NMX, mentioned 121.46, gapped to 125, ended today at 137.25. +12.25 pts.

MA, mentioned with Invictus at 125.88 Monday, ended today at 148.02. +22.14 pts.

WCI at 6, mentioned twice Monday, ended at 9.90. 65%!! in two days.

These oil stocks were mentioned Monday when Oppenheimer's said sell in their "value added research?" call, which I promised we'd check out in a few days. Ouch! Maybe their call wasn't value added?

TSO 43.30, closed at 48.62 +5.32
VLO 60.77, closed at 67.36 +6.59
XOM 81.15, closed at 87.45 +6.30

Great Scott! Who went back to the future and grabbed the Wall Street Journal?

LEND update.

LEND, mentioned at 6, ran to 8.64, and now is back to 6.

What's going on? It's apples to oranges but try and follow me.

There are still worries about the deal going through; highlighted because FNM and FRE may, according to some reports, increase the cap on the mortgages they buy. If Fannie or Freddie buys your mortgage, they only can spend $417,000K, on a "conforming" loan. Why does this matter? The rate on a prime conforming 30 year is about 6.6%. A non-conforming (ie non Fannie or Freddie) is 7.44%. So that makes housing more affordable.

What's that have to do with LEND? It could be argued, if this passes, (or so the street says), that that would be a substantial change in the mortgage market, and a (MAE) "material adverse effect." Whose arguing that? The buyers of Sallie Mae (SLM 50.08); who are JC Flowers, JPMorgan, and Bank of America. The takeover price is $60, and it's a $25 billion dollar deal. That 20% is the price of uncertainty, though SLM adamantly states the deal must go forward.

So if the cap gets raises, (as a couple powerful people in Congress want) then the buyers of SLM will try and back out of the deal. So the reasoning on the street is-if they back out on that deal, what's to prevent Lone Star from backing out on their deal with LEND? That's your apples to oranges.

Lone Star's deal for LEND is much smaller, only $400 million, and not subject to financing and according to some is iron clad. And it's also a small deal for Lone Star to do. And OFTHEO (Office of Federal Housing Enterprise Oversight) would have to give the OK to change the mortgage cap, and who knows what else. Even if passed, it is in the area of prime mortgages not subprime. But the market is still queasy, and despite any logical arguments, the market is more fixated on the stock price than details in documents.

So you make the call. But that's what the street is saying.

756 for Barry!

With congratulations also from 44, Hank Aaron on the jumbo-screen! Barry showed some emotion tonight! Hit a 3-2 pitch outta here! And who pitched to Barry? Mike Bacsik. from the Washington Generals. Number 37. (you'll understand that number later!) And Barry? Left the game with 3 at bats, with 3 hits, 3 runs, and a RBI, with 7 total bases.

Nymex sale??

Nymex (NMX 121.46) was reportedly in discussions to sell their building, according to the NYPost. That would make sense if they were engaging in other discussions-a buy-out- by the NYSE. No matter what happens, at least at this price NMX deserves a look. The stock is at the bottom of it's trading range, and could sell for 160+.

Steal this stock

Notice how US Steel (X 91.95) got hit today; but rebounded to close up? Look at all the metals- they trade as a group. Today Wall St. was sweating a recession for a few hours; tomorrow it will be something new.

So they sell oil off in the futures pit because no-one going to drive a car again, hit the bids in the cyclicals, and chase the financials on a Fed ease or bailout of housing by the GSE's FNM or FRE. They can't make up their minds, but X is off 40 points from it's high, or about a share of HD. That stock's getting a tender. How about X?

Who knows, but remember two months ago on June 8, when the "Russians" were rumoured to buy X? The stock traded in a range from 113.24 to 127.26, as the option writers furiously pumped the calls.

No there's huge open interest in the August puts. Is someone going to cash that, or would the option sellers like to have that premium back? They whispered stocks down last week when it helped them, could they whisper it up now that the shorts are jumpy?

Home Depot tender

Home Depot (HD 36.89) is doing a self-tender for 250 million shares in a dutch auction at prices between $39-44. Why is the stock less than 37? Because Wall street is run by chickens.

Here's the scoop. Home Depot, when they announced the tender, said that a material adverse change was a 10% decline in it's stock price or the market. In other words, that would allow them to cut the price of the tender. HD, on the terms, before the offer on July 9th was 40.23. A 10% haircut brings you $36.21. The stock traded as low as $35.70 today.

So Wall St. wants you to be "worried" about this offer. Maybe I'm supposed to. I'm not. HD's vilified ex CEO Bob Nardelli was hired by Cerebus today to run Chrysler. Do you think Home Depot wants to tick off Wall St. again? That's your answer to the "complicated" tender. Wall St. just wants your money. Take some from them.

Wynn in Macau!

Wynn Resorts hit it out of the park tonight (WYNN 107.39); it traded up 7 today and up another 10 to 118 in afterhours! I'm sure you'll get some analyst upgrades tomorrow because they'll use today's closing price of 107.39 for their research. The key to WYNN's success is their wonderful properties. Gambling's secret is knowing when to fold, or walk away. Gamblers play longer at Wynn, because the casinos are so spectacular. So the "hold" is larger. Estimates came in at .53, adjusted earnings came in at .92!

So how do you play Macau? Look at Melco (MPEL 12.69). It's a pure play on Macau, and Wynn's conference call will make the Macau bears shudder, so wall street will look for the "derivative" play.

They have a couple of casinos up and running now, and their Crown Macau is six -star gambling, with plenty of VIP play. They are also building the "City of Dreams" an underwater themed casino. Hyatt, Hard Rock and Cirque du Solei will be there in a spectacular fashion.

What we do know for tomorrow is this: the shorts in Macau-they'll be definitely under water.

And if you haven't looked at what's going on in Macau, start with the Wynn Macau link below.

http://www.wynnmacau.com/index.jsp

WCI update..

There are rumours in the marketplace that RAIT financial has some exposure to WCI via loans. I don't know anything about rumours, but I do reed SEC filings. Today (RAS) traded up over 2 and change to 8.69. The news: SEC filings of insider buys after the close. Insiders Betsey Cohen picked up 90K shares, Daniel Cohen picked up 100K, and a bunch of other insiders picked up stock, including 2500 shares by the secretary. In other words, they're throwing money at RAS, of which, is supposedly exposed to WCI. Exposed? Maybe not.

Invictus

Since Wall St. seems sick, we should remember what William Henley wrote from his hospital bed.

Invictus.

Out of the night that covers me
Black as the Pit from pole to pole
I thank whatever gods may be
For my unconquerable soul
In the fell clutch of circumstance
I have not winced or cried aloud
Under the bludgeonings of chance
My head is bloody, but unbowed
Beyond this place of wrath and tears
Looms but the horror of the shade
And yet the menace of the years
Finds, and shall find, me unafraid
It matters not how strait the gate
How charged with punishments the scroll
I am the master of my fate
I am the captain of my soul

What's this have to do with Wall Street? Master your emotions my friends. And then take a look at at Mastercard (MA 125.88), down 50 points from it's high.

Value added research???

For those who say Wall Street doesn't ring a bell at the bottom, Oppenheimer this a.m. just cut Valero (VLO 60.77, down from 78.68) Exxon (XOM 81.15, down from 93.62) and Tesoro (TSO 43.30, down from 64.56), from Outperform to Neutral.

Thought it would be good to post this "timely" call, so we can check back on it a few months (or even a few weeks/days) from now. We'll see if it's "value-added" or "value destruction."

I'll bet on the latter. But Wall Street may not want to hear that!

Where there's smoke there's fire..

Except for some notable exceptions...but I'll get into that story later...

But did anyone check out what has happened to the refiners lately?

They've been crushed. The story is the crack spread has gotten crushed. So it has. But that's not the real story.

These stocks have been used as a source of liquidity by the leverage players in the market who have had a gigantic margin call.

Marathon (MRO 49.81) has gotten crushed as last week it announced it is going to pick up Western Oil Sands of Canada. Tesoro (TSO 45.42) reports earnings tomorrow and it's down 20 points from its high.

My questions for the doom and gloomers is: When was the last refiner built in the US? Try 30 years ago. And secondly, did anyone notice that the refiners announced Friday that they don't have to run at 93-95% of capacity? Here's the point. Operating at a lower capacity increases margins, because they consume less oil, and the price of crude comes down. It's not a one way ticket as the sellers or shorts would believe.

They are worth a look.

Where's Carl? Where's Stuart?

WCI shareholders are probably more than a little miffed. First, WCI turned down $22 from Carl Ichan. Then the stock promptly crashed to less than six. To add insult to injury, today's online WSJ had this to say:

"Analysts say luxury-condo developer WCI Communities Inc. could also face cash-flow problems, because they expect a growing number of buyers to cancel contracts to buy condos.

As of March 31, WCI had the smallest net-worth "cushion" before it tripped its debt limit, according to Moody's, which recently downgraded its credit rating of the builder."

Let's look at these conclusions. WCI had $305 million of customer deposits as of their last filings and inventory of $1.9 billion. And two of their condo developments in South FL are sold out.

Some of WCI's properties are spectacular. That's what attracted Ichan to it in the first place. But with that developmental flair, comes a more aggressive business plan. Meanwhile, it's FL counterpart, Lennar has cash, a better balance sheet, and does about 10X WCI's billion in revenue.

Jerry Starkey of WCI, didn't like taking Carl's calls. Maybe he should call Stuart Miller of Lennar. They might make a good mix. And Stuart? He'd probably be able to offer less than half of what Carl did, and use some stock. You make the call.

Can you Lend me $15.10?

OFFER TO PURCHASE FOR CASH

ALL OF THE OUTSTANDING SHARES OF COMMON STOCK

OF

ACCREDITED HOME LENDERS HOLDING CO.

AT

$15.10 NET PER SHARE

BY

LSF5 ACCREDITED MERGER CO., INC.

A WHOLLY-OWNED SUBSIDIARY OF

LSF5 ACCREDITED INVESTMENTS, LLC

Anyone notice the strange action in Accredited Home (LEND 6.94)? They have a cash tender offer bid on the table of $15.10 by Lone Star Funds. The August 3rd SEC filing by LEND indicates that they expect a third quarter closing of the tender offer. So who is Lone Star? From the filings:

"Lone Star is a leading U.S. private equity firm. Since 1995, the principals of Lone Star have organized private equity funds totaling more than $13.3 billion to invest globally in corporate secured and unsecured debt instruments, real estate related assets and select corporate opportunities. Additional information may be found at www.lonestarfunds.com."

and from Lone Star Funds website regarding Lone Star Fund V

http://www.lonestarfunds.com/En/lonestarfunds_v.htm

Lone Star Fund V (U.S.), L.P. and Lone Star Fund V (Bermuda), L.P. (collectively, Lone Star Fund V) were organized in September 2004 with $5.0 billion in combined capital commitments. Lone Star Fund V is targeting financial and real estate assets on a global basis, focusing on investments in secured and corporate unsecured debt, portfolios of distressed real estate and financially-oriented operating companies.

According to Cramer, (and he had training as a lawyer) he says the merger agreement is iron clad. He even put a video out on it. I read the document; and it seems tight to me, but I'm not a lawyer.

Does Lone Star know what they are getting into?

Well, in October of 2003, in the depths of the Korean crisis, they put $1.4 Billion for 50.5% of Korea Exchange Bank. It tripled. Now people are saying Lone Star undervalued the stake in the Korean bank when they bought it. So they know what they are doing, and they know what they are getting into.

Maybe Wall Street doesn't and LEND deserves another look.

Where are the sub-prime bodies?

It used to be a trick question. Not anymore. Let's go through last week. AHM went from 10 to .70 cents, and probably to BK this Monday. Homebuilders and mortgage insures got crushed. The insurers are still pretending there isn't any bodies hidden; PMI thinks the best use of their capital is still buying back their stock-at least Bear Stearns has the sense to save their cash for the situation on hand. What's a buyback do anyway? Are there any long term holders in this market? It just gives the margined funds a bid. The piece on ACA by Barron's this weekend will probably cause that number to blow up. And now we see, ex whiz kid, Devaney, and his yacht "positive carry" is on the block for 23.5 million, after his United Capital horizon funds, were down about 30% in June and more than that in July. Redemptions have been halted, and the only sharks swimming next to the yacht are the lawyers.

This past Friday it was Bear Stearns; it's stock cratered after it's conference call. After blowing through two hedge funds of $900 and $600 million, and halting redemptions on a third, BSC tried to assuage the market Friday with a conference call; but it seemed it's CEO, James E Cayne was more concerned about his c.y.a. than the money investors put in their funds. So the bodies are appearing everywhere--and also overseas. Macquaire Bank Ltd of Australia Fortress Investment two high yield funds lost 25% of their value in July, and the German govt. came in to guarantee about $11 billion of loans and debt of IKB; the lenders putting in $4.8 billion to secure them. So they are saying those loans and debt are worth 53 cents on the dollar. So this crisis of confidence caused Jim Cramer to have this rant, which was a thing of beauty. Here's the youtube link!

http://www.youtube.com/watch?v=rOVXh4xM-Ww

Now despite Bernanke statements that "subprime is contained" and that to the best of their estimations it was a "$50-100 billion" problem, it's even obvious to any administration cheerleader who pimped themselves last week on CNBC, including Treasury Secretary Paulson that it's more! These problems are not contained and that the contagion is spreading like a Montana fire. On Wall Street you may euphemestically call it "an increase of risk premiums" but anyone watching a portfolio of the investment banks, moneycenters, and anything remotely related to the finacing economy is just getting killed.

Now before we blame the homeowner for getting teaser rates to buy a new home, remember it was Greenspan who said "many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages" on February 23, 2004; he also opinioned on July 20, 2004 at the Federal Reserve Board’s semiannual monetary policy report to Congress before the Senate Banking Committee that high energy prices where "transitory!" Will Bernanke blink on Tuesday? It took Pharaoh ten times, and he didn't blink until it was the death of all the firstborn! But in the circle of The Federal Reserve, their firstborn are the investment and moneycenter banks, and they are looking pretty sick, probably how Pharaoh felt after the 8th or 9th plague. It looks like the Fed can finally come full circle.