MARKET COMMENT
March 14, 2007
The following graphic outlines Treasury lending activity.
As you can see it has been pretty quiet there
for over a month.
Today however, they tossed
in some serious money to their primary dealer network as the markets were
declining today.
I’ll admit not knowing “when”
this action was done but I did look about an hour after the market opened and
didn’t note any activity.
In any event,
a rally followed.
Coincidence?
Well, B still follows A in my book.
The Fed was also active again as well.
Let’s see that would make $27.75 billion to the primary
dealers in one day from both the Fed and the Treasury.
Money talks folks.
Other charts that seem to matter in my opinion more than
just broad sectors follow.
Let me post something a little unusual that investors should
remember about gold and gold stocks.
During the market crash of 1987 gold prices rose; however, gold stocks
collapsed hard along with other stocks.
I’m not speculating that we’re going to crash here, it’s just important
to remember that if you want to own gold for safety, buy gold and not gold
stocks.
The quote of the day comes to us courtesy of Greg Newton, Naked
Shorts fame here.
And, don’t be too lazy and not read his post because
like all his comments they’re pretty funny.
But just in case you’re lazy, here’s the quote:
“The loans themselves
are not problematic.
It’s who they were
sold to and how they were used.”
Angelo Mozilo
Chairman and CEO
Countrywide
Financial Corp.
Meanwhile overseas ETFs trading in
the US
put in a nice recovery despite having shall we say a “difficult” trading period
overnight.
The above charts don’t cover every sector or global market,
but they’re still the markets that count in my opinion.
That’s why we feature them despite other sectors
that may also be appealing.
Senator Dodd [D, Ct and one of the zillions running for
president] was a good panderer today arguing that the government should bail
out the subprime mortgage holders.
This might cost $150 billion or so he
figures.
Does he know how much that
would actually cost I wonder?
It’s
reported today that CDOs [Collateralized Debt
Obligations] “last year alone” which are one of the primary vehicles funding subprime mortgages were over $500 billion.
But, it makes for good campaign chatter and
is designed to tell the little guys out there that he’s on their side.
More impressive was the down payment [$27.5 billion] on such
a bail out courtesy of the Fed and Treasury at perhaps a key moment today
triggering some buy programs.
And, by
the way, where’s the contemporary program trading data from the NYSE?
Five will get you ten they can’t figure out
the mess of two weeks ago.
The bottom line may be don’t mess with Hammerin’
Hank Paulson & Gang.
It’s not just
coincidental in my book that lending activity occurred when it did after over a
month’s absence.
I don’t mean to be too
cynical but shorting against the powers that be is a dangerous game.
It also has been frightful being long the
market these past two weeks.
We still have inflation data and what should be an
interesting options expiry ahead.
It’s not very productive when investing becomes a spectator
sport, but that’s sometimes the way things are.
Open a cold one and watch!
Have a pleasant evening.
Disclaimer:
Among
other issues, the ETF Digest maintains positions in: GLD, IEF, EWJ and EWA.