Super Market is back in action. Faster than an accellerating debt crisis, more powerful than the Wall Street bears, able to leap rational skepticism in a single bound.
Unfortunately, that S on the maket’s chest stands for the dollar, which is down 1% today in foreign trading as a .25 Fed cut seems to be a sure thing and many bets are being placed on .50 OR MORE as the United States seeks to become this decade’s Brazil, where the market looked like a really great investment too, right up until it collapsed.
But there’s no sense in dwelling on that now or on the $93 oil or the dollar at 76 (all-time low) or the Euro’s all-time high or the possible unwinding of the carry trade or gold punching through $800 or the fact that earnings (with 57% of the S&P reporting) show shocking weakness in the US that is being offset by foreign growth. Nope, we’re not going to talk about any of that as it’s time to party like it’s Jan 13th 2000 (5 days before the collapse). This is kind of like 11:45 on New Year’s eve when we’re all a little tired (those of us who are parents that is) but we pull it together for the big event (in this case the Fed on Wednesday) but, once that ball drops and the band goes home, that party ends really fast!
No, today is a day for investing in YHOO (got ‘em) and seeing what else gets a good run on a day when the markets should gain a full point based solely on the decline of the dollar. Even Warren Buffett left the country last week to spend his money before it became worthless. Buffett also said to CNBC that the chance of us heading into a recession at this point is "fairly significant," something that has been ignored by the MSM so far.
Well what does Buffett know? We’ve got stocks to buy! The Hang Seng flew up almost 4% today (mainly a gap up) led by financials who rejoiced on the good news by CFC that the mortgage crisis is over. Sure it’s BS but. just like any good party, anything is an excuse for another toast! The Hang Seng ended the day at 31,586, up 50% in 60 days and the Nikkei rose 1%, up 192 to 16,698 – still well off it’s July high of 18,282 despite good earnings from heavy industry and financials. Energy stock led China higher with CEO adding 9% and PTR up 3.2%.
I made a mistake in the Weekly Wrap-Up, I said we had 20 naked puts and 9 naked calls. That would be bad! As Willie Wonka liked to say: "scratch that, reverse it." I think we’ll be really please with that mix this morning but, if we don’t make 1% gains against a week dollar, I’ll be either covering or simply taking things off the table ahead of the Fed, concentrating our firepower on the Dow strangle, which should be lots of fun this week.
I still don’t trust the brokers, we dumped our naked GS calls and BSC is well covered and, if I’m right about them you can move the doomsday calendar forward to January 15th, 2000 but we’ll continue to party like it’s the 13th until we get a good reason to switch to light beer. Toshiba’s net profit jumped 18% with nuclear power leading their growth with a 100% increase – very good for our CCJ positions long-term!
Over in Europe, they are ignoring UBS’ forecast of a $600M loss as it’s "only" as bad as expected. EU steel makers are attempting to get tariffs placed on Chinese imports, something that will be good for MT and many of our own steel companies, including our AKS play, where we have our Dec $55s.
I have nothing positive to say about the US markets except that they are going up. This is not a reason for us to commit additional capital but let’s enjoy the ride while we can while, at all times, being aware of the nearest emergency exit. We are absolutely going to continue putting 30% of our gains into focus puts and I’ll have a couple of new ones later and this week but WYNN is moving into contention at $168 and XOM is giving us another cheap shot at the puts so those are my major contenders until I get a good look at China stocks.
Let’s have fun but, as always, let’s be careful out there!