Sunday, August 9, 2009


I was at Spago's in Beverly Hills last night for dinner, with a banker friend and his actress wife "Coco" and Wolfgang came by the table and suggested that we try the almond upside down cake for desert. I said I already wrote about the world upside down so he'd have to suggest something different.

He said, "Go with the Kaiserschmarn" which was a creme souffle pancake with McGrath farm seascape strawberries.

And as I'm eating desert, I thought about Jim Cramer's explanation of when the short sellers would circle a stock to break it, buy the puts and credit default swaps on the company, and then attack it relentlessly with massive sales and naked shorts pounding the stock down, with some side buying of the financial downside ETF the SKF, and some rumors on the side.

Cramer had his own term for it:


The battle of encirclement.

This morning, I wake up to the NY Times, with another article about ex Treasury Secretary Paulson and his communication when Goldman was undergoing it's own kesselschlacht.

On calls from Paulson's Treasury's phone alone to Lloyd Blankfein, excluding home and cell phone records, Paulson called the CEO of Goldman Sachs 24 times from September 16-21.

Anyone think Paulson was instrumental in helping Goldman in their battle with kesselschlacht?

But that's all we now hear from the shortsellers. The government has effectively neutered them, and the markets ramp higher because only the bulls have balls.

And now the shorts, have a new word in their lexicon to replace kesselschlacht.


Because they are getting eaten by the bulls.

With a side of seascape strawberries!


Anonymous said...

yes but for how long?

Palmoni said...

Until we lose the market skeptics--and that'll still take some work on the upside!

Anonymous said...

So does that mean you're open to the possibility that the bears are correct, just way off in their timing?

S&P 1440 by June 10
S&P 600 by Jan 11


Palmoni said...

No not open to that at all--but open to 1440 10--The momentum is building so fast in this market, that we could start having a melt up....

I mean what's the difference between 1100 and 1200? Hardly anything on the charts.

You could make the argument that all the pre-forclosure homeowners are living on a sugar high not paying their mortgage and spending that check on the economy or saving it to downsize..and that those on the unemployment rolls will soon fall off and then we head lower because of all this built in problems that are being papered over...

but then we would have to ignore the pricing that is coming back into homes that first happened on those under 250K, and now it is in those homes at 400K or thereabouts.

Business is smoking in those price ranges, but the high end is still sloppy.

So I think some of the supply in homes that are caused by those angling for a better deal on their mortgage will soon get pulled from the market as things stabilize..

so i see the argument but i don't think it's valid

we need to go higher in order to have any bit of a pullback..and i think 999 is all we'll get from up here