Yesterday, AIG (61.79) was rumored down on writeoff worries, but the market came to it's senses but not after some hapless souls sold stock at 58.46! Jim Cramer of CNBC adding gasoline to the fire by saying that the mortgage insurers PMI (16.02) and MGIC (MTG 17.90) were going out of business.
He's wrong. Completely.
The Fed wouldn't allow that to happen. If Microsoft didn't have blow out earnings last night, I think the Fed was prepared to cut the discount rate 50 basis points before the market's open. Now Mr. Softee broke the back of the idiotic shorts and sellers of stock. The Fed, will cut 50 basis points on Wednesday, and will cut more until the financial stocks weakened balance sheets are revitalized.
When Mother Merrill calls Wachovia for a lifeline, the street is panicked. Secretary Paulson has been meeting with Bernanke weekly. Do you think they don't know what is going on? Have we heard from the Fed buffoon Poole? He's been silenced. Moral hazard? Not a peep. Fear is back into the system, which means we have the winds of the Fed on our back, and the market, led by the NASDAQ, follows the script I advertised here a week ago Wednesday.
And now, the shorts have to cover their bets on the financials, fueling the fire to the upside!
How ironic is that?