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Todd Harrison: "He Said, She Said"

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Todd Harrison: "He Said, She Said"

por Ulisses Pereira » 24/4/2009 15:02

"Freaky Friday Potpourri: He Said, She Said"
Todd Harrison
Apr 24, 2009 9:30 am



" Moral hazard manifests in the financial fabric.



“It's 106 miles to Chicago , we got a full tank of gas, half a pack of cigarettes, it's dark, and we're wearing sunglasses.” --Elwood Blues

I used to think traveling was sexy, hopping from city to city and seeing the world. Following a strenuous stretch of five trips in as many weeks, I can share with confidence that there’s no place like home.

Don’t get me wrong, these jaunts were all consistent with the greater good—including yesterday’s two-step turnaround to sprinkle some Minyan Magic on the Midwest—but I’ve missed the ‘Ville and the attendant thrill.

As I touched down in the wee hours of this Freaky Friday (not to mention some incessant preparation for a 9:30 AM conference call), I’m gonna invoke my literary license and share some far as I flows through my fingertips.


The story of the day yesterday was that Bank America (BAC) CEO Ken Lewis had his arm twisted by Hank Paulson to swallow his tongue alongside Merrill Lynch. Are you really that surprised?


What would the reaction be when we learn that a similar, albeit perhaps not as overt, nudge took place when they swallowed CountryWide Financial?


We’ve been talking about moral hazard for years and this is yet another example of how it continues to percolate.


THE question—which is also something we’ve had on our radar—is one of the credibility of government officials, faith in the system and psychology surrounding the capital market construct.


Social mood... and risk appetites. We’ll keep saying it because it’s really that important.


As discussed earlier this week, my sense is that when the dust settles on 2009, the chart will feature Twin Bleaks. In other words, now that we’ve seen our first 20%+ plus rally of the year, I expect a stern downside test (perhaps towards the lows) before a second similar lift later this year.


The question, quite naturally, is whether the S&P needs to qualify the breakout above S&P 875 before this potential script plays out. My gut is that it doesn’t but I most certainly respect that if it does, the “other side” of our ride could include a measured move towards S&P 975.


The Morgan Stanley (MS) CFO actually said that if you take out the write-offs, the quarter really wasn’t that bad. That’s like me saying if I took out pizza and chocolate, I’d be in pretty good shape. I mean seriously, isn’t honesty, trust and respect the only sustainable construct that will put us back on a profitable path?


Minyan Kyle asks me why I trade FAS and FAZ financial crack and the honest answer is because crack is addictive. The more professional response is that my exposure in those vehicles is with very short-term horizons and I try not to carry them on my books for more than a few days at a clip.


Still, while we’re talking about the Ten Crack Commandments, I’ll note that two set-ups remain in play. The first is the upside gap in the FAS ($8.25 to $9.75) and the second is the FAZ $8.5 support level (numerous lows the last few weeks). See both sides, Minyans, while remembering that technical analysis is a better context than catalyst.


Good luck today, friends. Let’s stick the landing on the final fifth of this freaky week!

R.P."

(in www.minyanville.com)
"Acreditar é possuir antes de ter..."

Ulisses Pereira

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