Is this unexpected?
Oil is real. Gold is real. Paper assets can be eviscerated. If our government can take over FRE, FNM, and AIG and wipe out shareholders, and if LEH can go bankrupt, who is to say that our government won't allow our dollar to collapse?
Isn't this an international economy? Do you think the Russian or Chines really trust us? Why is it that PIMCO had to buy their GSE paper?
We have rating agencies that completely missed the credit crisis, by rating structured investments AAA. Now these same rating agencies, are telling these corporations that they have days to raise capital. And the rating agencies become enlightened when the price of the stock falls and then need to cut ratings!
Do any of these rating agencies know what is on the banks Level 3 assets?
Does anybody really know the extent and breadth of the CDS market or the marks that are affecting their viewpoints?
But does anybody even have a clear head?
Is anybody even sleeping at night?
Japan opens at 8, Asia at 10, and London at 3. If you're a bull, are you sleeping through these times? I doubt it!
Come on, Treasury rates went negative today, and Vangaurd, Fidelity and Legg Mason had conference calls discussing their money markets.
But who wants to listen? In a panic, he who panics first wins. Did the first $20 billion that was yanked from Reserve Primary Fund suffer the 3% haircut?
But here's one more number to consider. One of the sacred cows, Goldman Sachs, finally got pole-axed today, trading under $100, it's supposed book value. But I saw someone take 7 million shares of Goldman at 100 between 12:30 and 2:00, and later today we heard that Lloyd Blankfien, Goldman's chairman, made a call again to the SEC complaining about abusive short selling. We heard that more rules on shorting can come around again tomorrow morning, to complement the new ones we heard today. Here's the link on that press release:
Another sacred cow, State Street (STT 64.75) was down $7 today. One of their big sources of income is facilitating short selling. From their latest 10Q:
The increase in securities finance revenue was primarily driven by wider average credit spreads, which were partly offset by lower volumes of securities on loan.
How much did their securities finance revenue grow last quarter? 117% to 352 million. They made more here than with management fees!
Anyone think a ban on shortselling will affect their business?
Pole-axe this sacred cow, and we get a trading bottom!