Tuesday, January 6, 2009

Free Money!!!

The stock market giveth, the bond market taketh away, blessed be the speculators!
Free Money 1:1

Free money-It's there for the taking or it's there for those who want to read! Yesterday I said that it looked like the buyers of RIMM where ready to buy it aggressively. Today they took it up 3 1/2 points.

My weekend play was Freeport-McMoran, and I touted the stock and the calls on this number:

I say you get 10 points in 10 days. And a 37 dollar number by January option expiration.The January 30 calls are cheap at 60 cents, and the February 35's are only 77 cents. For less than a buck and a half, you can get action for two months. And that's diversification for a hedge fund manager!

Let's check out the action here. The January 30 calls traded at $2.65 today, and the February 35's traded at $2.22. 400% and 300% in a couple of days! That's free money!

The Fed is determined to give away free money. They were in buying another $5 billion of MBS again today, desperately prodding the street to take down mortgage rates. At 2:00 today, when the bid-to-cover ratio came in at 3.7, bonds rallied hard, before sellers came in and hit them again. The free money isn't in bonds, it's in stocks, and this rally, despite all the protestations of those not involved, still has legs.

The Fed is finally scared to death, so stock buyers shouldn't be. Did anyone check out the minutes of the December FOMC meeting today?

Unemployment numbers come out Friday. The rate should jump to 7.1%, because we won't have the fantasy jobs created by the birth death model, but the BLS always assumes that the average unemployed worker just becomes too discouraged when he can't find a job, so they don't bother to count them, so who really knows with Government math! But do the Fed minutes and unemployment rates really matter now? Not to stock buyers, because we are still in the honeymoon period. So enjoy the honeymoon, we aren't even yet in the barrell overlooking Niagra Falls!

Take the free money when they give it to you!

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