Did anyone think this wasn't going to happen? Apparently, most of the shorts didn't, as Ambac and MBIA's ratings were both affirmed by S&P, and the markets promptly took off. The bears will intellectualize the move, and say it is ridiculous. How can an insurer, get money from the banks, of which it holds products, that the insurer is insuring?
But that degree of rigour isn't the issue. The issue is that the stocks have been beaten down, by the crowded shorts and cowed bears. There isn't anyone that doesn't know the bears' story, or who hasn't heard of Meredith Whitney. They have already reacted (sold and shorted) on this news. And the stock prices, have already discounted any news that the bears can throw at it.
Good grief, the bears have been given prices on a silver platter, but they are so damn greedy they can't see that times are changing, and that stock prices have already bottomed. My only question is: Why haven't they covered? Because now they believe the Kool-aid that the investment banks drank!
They will be taken out in their foolishness and stubbornness, quoting prices on indexes on bonds and credit reflecting default rates that will never happen, that the equity bulls refuse to acknowledge. The bulls don't acknowledge it, because much of theses prices are fiction! So the bears, like the shorts in Take Two, will learn their lesson when it is to late.
So tomorrow, we'll here of some inadvertent write-downs by Merrill Lynch, with stories of more chickens coming home to roost, but market players won't give a hoot about that. They'll be more concerned with the Citi's Mr. Pandit's meet and greet with analysts over cocktails. Regulation FD be damned, they'll come back with a wink and a nod, and a penchant to be Pollyanna.
And then go out and buy the futures.
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