Strength continues in Financials at the expensive of Commodities

It seems like alot of money is flowing out of commodities and into financials. I actually favor the correction in commodities, its very much needed. I see this trend continuing for a week or maybe two. Today I took a stab at the Tawian ETF - EWT. Ahead of the elections this weekend, my bet is that the more-china-friendly opposition party will win. But who knows.

But 400 shares EWT at 15.73

Financials Rally

The shocking news of Bear selling out for 2 bucks is still reverberating in my head and on wall street. Financials are rallying hard today, I do see a short term bottom in these stocks. I will be looking for another good entry point to short these suckers :)

Ripe's Big Ass Jerk Rib Eye Steak Recipe

Since this is my blog, I can write about anything I want and that includes non financial stuff like recipes :)

I saw this recipe on the Food Network (my favorite channel to Idle on). I haven't tried this but it sure looks damn goooood.

http://www.riperestaurant.com/articles/article/4398027/84567.htm



RECIPE FOR RIPE'S "BIG ASS" RIB EYE JERK STEAK

At the restaurant, we use the "Choice" grade cut-feel free to use
"Select" or "Prime" for this recipe.
1 16oz cut of boneless or bone-in Rib-Eye Steak.
Ingredients for jerk paste:
1tsp Nutmeg
2tsp White Pepper
¼ C Black Pepper
½ C Kosher salt
¾ C freshly ground Allspice
¾ C Brown Sugar
¾ C Orange Juice
1 whole Scotch Bonnet pepper
1 bunch Jamaican Thyme
8 whole Garlic cloves
¾ C chopped Scallions (green onions)
2 cups whole Ajicito pepper (flavorful but not hot)
METHOD:
Put ajicito peppers, scotch bonnet pepper, garlic cloves, thyme and scallions in food processor and pulse until it forms a paste. Then add the remaining ingredients except for the orange juice and blend. Slowly stream OJ into the processor. (Jerk paste keeps for approximately 1 week in the refrigerator). Smear paste over one side of steak and season the other side with salt and pepper. Marinate for 1 hour or up to 48 hours. Place steak on a hot grill and cook to desired doneness.
NOTE:
Ajicito peppers can be found in most Latin markets. It is also called "seasoning peppers" in Caribbean circles. It looks and smells just like a Scotch Bonnet pepper, but without the heat. It is used in the recipe to increase that scotch bonnet flavor, but can be omitted if it can't be easily sourced. Just add a bit more green onions and scotch bonnet (if you can handle the additional heat).
Jamaican thyme is a little more "earthy" than the regular stuff found in grocery stores, but can be substituted with the regular stuff if necessary.
After letting this rub sit for a couple of days, the heat mellows out significantly anyway, so make a large batch by doubling or tripling the recipe. You won't be disappointed, and it lasts for weeks in the fridge.

The Bear Sterns Bear Trap

I knew those puts volume leading to the collaspe of Bear Stearns today was the weather forecast telling me it's raining, rather heavily, on Bear today :). What I found interesting was not too long ago (in fact, 48 hours ago.. the CEO of Bear went on CNBC to reassure everything was A-OK). Fast forward 48 hours and Bear needs liquidity. I expect S&P and Moodys to come with a downgrade rather sooner than later. The Vix spiked to 32+ so I took my SKF position off the table. I sense capitulation in the financials today. Then there's Mr Ben the Bail Out man, who's running the printing presses today to save Bear.

Positions Closed: SKF +35% Gain

More Hedge Fund Hemorrhage..

Drake Managment who runs the Global Opportunites sent a letter to its shareholder detailing the plans for the future of its fund. Its considering either winding down the fund, invest in a new fund, or wait for the market to turn around. The guys over at Drake Managment no armatures, they churned out 41% in returns in 2005. This is how bad things are right now and in my opinion..its only going to get worst. The more I think about the 200 billion dollar Ben is jamming into the market, I wonder what FED will do when these M.B.S. are valued so low they lose significant amounts of money on them.... will they run hit the "print money" button causing more pain on the dollar? I continue to be caution of the dollar .. those currency ETFs will be a place I will park extra money.

As I watch CNBC's Fast Money tonight, most of the traders (except for one) were bearish on the Financials. The night before, all of them were bullish... talk about being fickle. Then there was this other gentlemen that says most of the buying done yesterday was "real buying" as opposed to short covering... hog wash!! ... Until I see 33+ on the vix, we ain't see the bottom yet..

A surprise move from the fed

I was surprised by the move the Fed took , being on the short side and all. Yesterday was the best market up days we've seen in 5 years. From my understanding, banks can trade in their mortgage backed securities that are mysteriously valued in exchange for treasuries. Will this be a good long term solution? Who knows but it's sure better than devaluing our dollar via rate cuts. Can we rally higher ? Very quite possible. But are we still in a bear market, you bet ya.

I didn't get a chance to take off some SKF so I'll continue to hold it. My main target is to find a sweet exit point for MSFT.

Oversold? Maybe..

Although the Vix didn't spike or gap up to 30+ , we were pretty damn close. More bad news from Lehman, BearStearns , Carlyle, BlackStone, pressured the market. Its the same old story. Althought we didnt see the capitualtion I would have liked to see, I feel the market will be set up for a short term oversold rally. Weak after hour earnings report from the homebuilders is pretty much expected so I don't expect the market to move downwards solely based on this piece of news. I will start covering (selling in this case) my SKF position as it has been quite profitably.

I am also looking at the commodities in general on bigger pullback.... in particular UNG and DBA...

Long term I am still bearish but short term I expect a bounce. Strength should be sold into and I will be looking for a good exit point in my MSFT position.

On the topic of Elliot Spitzer being investigated for being linked to a prostitution ring, I can bet you Dick Grasso is celebrating tonight :)

Ring Ring, Margin Call...

Stories have been told in the past credit crunch crisises that margin calls to Merril were so frequent, that they stopped picking up the phone for three to four hours. You'll get a margin call when the clearinghouse (lender) you owe money to requires raise and fork up more capital to better secure the debt you have. That debt could be "leveraged" against anything, in Thornburg / and Carlyle Captial's case, it could be in the form of mortgage backed securities which is only fortune tellers could only value. Word is that others (Anworth Mortgage Asset, MFA Mortgage Investments, Annaly Capital Management, and Capstead Mortgage) are next on the list to default. As expected, volatility exploded with the DOW down more than ~214 points. Reverse ETFS were the only thing on my screens that was green. Technically, we have taken out the Jan lows on the S&P.





If tomorrow's job numbers are bad, hold on to your seats because "Captain we are going down!". I hope to see a panic tomorrow, wash out the weak holders. If I feel panic is in the air, I will certainly a little bit of profits off the table with SKF (currently up 25%)

South Africa's government announcement of easing miners to work at 95% capacity took Platinum and Palladium stocks (PAL and SWC) down today. It is a matter of time until they these problems happen again. I continue to hold PAL

Thornburg faces chance of bankruptcy?

After hours news: Analyst says Thornburg faces chance of bankruptcy as its failure to meet a $28 million margin call from JPMorgan Chase has triggered a series of defaults on various lending agreements.

Reaction: What a big surprise.. uhhhh NOT!.. and did anyone notice the big Ambak bailout news that was and reported on CNBC's by charlie Garsprone two days ago ? In case you haven't heard, AMBAK's going to raise capital not via capital infusion but at the cost of existing shareholders by diluting its stock through raising $1.5 billion in public securities. I am shocked that the market didn't sell off today. Maybe the recovery in the commodities group held the market up. Now all I need is for Ambak and a few others to go bankrupt and that will give me a good reason to close out my short in Financials. I am still waiting for more blood to shed in the next two weeks as financials report their earnings..... I mean write downs....

Oil jumped on bigger drawdowns, I believe oil is breaking out and I wouldnt be surprise to see Oil Futures trade near $120 in the next two-three months...

As Ben continuously devalues my hard earn USD, I am thinking of buying foreign currency ETFs (FX [a]/[e]/[c] or [p]). The only reason being that I think GOLD is a bit toppy here for my taste

Holdings: See below... nothing new

Band-Aid Ben

This was shocking when I read the following in the Wall Street Journal today..

"Federal Reserve Chairman Ben Bernanke, raising the level of urgency in dealing with the nation's housing crisis, called on lenders to aid struggling homeowners by reducing their principal -- the sum of money they borrowed -- to lessen the likelihood of foreclosure, and endorsed a bigger role for the federal government in backing such mortgages."

Ben needs to stop putting band aids on an ill infected wound. Let the financial system clean it self out, let a few big banks go bankrupt. Historically, a "soft landing" remedy by the government has never worked.

This emotional market is great for trading. I heard what saved the market was that CNBC had reported another update on AMBAC that the bail out is making lots of progress. If only CNBC can us from a bear market hahah.. My prediction is that DOW 1100 will come within this month :)

Long Postions: PBR, POT, PAL,MSFT
Short Positions: SKF

Closed Position: Drys Put options [+70% gain]

Grain correction on the horizon?

This year's best performing ETFs have been all commodities related (DBA, USG, USO, GLD, SLV. Wheat and soy have been trading at parabolic levels and it sure smells like a bubble is near. I am no hero to call a top here, the demand and supply is SOLID and I still long POT and RJA but I am starting to get worry. But then again, I just have to look at how many times my local chinese restaurant have "redesigned" their menus along with increasing their price to see that this commodity boom is real.

Financials are again the soft spot as more bad news come from TMA. The market did handle this bit of news pretty well reversing all of todays gains. However I expect more blood to shed, I am sure the DOW will way to 1200 this month.

Long Positions: MSFT (waiting for a good exit point.. sigh), POT, RJA, PAL
Bearish Position: Drys [via put options] , SKF