3/20/09 (Automakers Buy/Sell, 90% Taxes!, Stupidity)

Traders,

After the market rally on Wednesday from Bernanke’s Rambo Style printing run of $1 trillion – the market stopped and took a deep breath and realized – what a CRAP DEAL that was and proceeded to sell off. The dollar has had a two day clobber against global currencies. The moves in currencies over the last couple of days is massive – just think what it COULD be like. Waking up in a Iceland type situation is not that unrealistic (regardless of how low the probability is). It may be improbable, but not impossible.

I think Mr. Creatura (Manger of Federated Investors Inc. - $400 billion) put it best in his interview on Bloomberg: “With one hand the government is issuing debt, and with the other it’s repurchasing it using paper that it is printing. This is a shell game that’s not going to be overlooked by global investors.”

We have moved beyond faith and need political leadership, accountability, responsibility, and LIABILITY. This is getting old and they only thing they are doing is seriously putting our currency and economy further at risk. If our Congress members are going to give away OUR money they need to be responsible and accountable and LIABLE. How far does it have to go before it breaks or the people (we the people) say STOP?

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Automakers Buy / Sell

Ford (F) has been moving up off the lows, being out of the limelight, unlike GM and Chrysler (indicating they may NOT need the big bailout dollars) is giving them a slight edge – enough so that UBS rated them a BUY. The stock is UP in the pre-market

GM on the other hand has been having significant problems and like Chrysler may need significantly more money – with government taking a bigger role – UBS rated them a SELL and said “shareholders face a significant risk of dilution”

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TALF PLAN – the latest, but not greatest.

The government seems to have a flavor of the week plan – but the problem is twofold:

First the money in many of these plans is used to finance other government money. If you give a company money to help them with toxic assets and THEN you give someone else money to buy that toxic assets from the first company you gave money too – at some point you create a massive circle. These plans have become so confusing as to who gets the money and what it is suppose to be spent on.

Second is the rules keep changing. We already heard Goldman and others want to return the money (that some were forced to accept by the government under the guise of helping the economy) – they don’t want the money, or need the money – especially as the rules change.

Julian Man (manager of First Pacific Advisors) put it best when he said to Bloomberg “Given the daily, evolving nature of congressional tampering with established contracts, it’s difficult to imagine how a fiduciary could prudently deploy capital into these instruments that appear to be heavily subject to ex post facto modifications.”


Part of those changes are the recent legislation to raise taxes. Everyone is mad at AIG bonuses, and rightly so. But now Congress is micro managing and creating legislation to JUSTIFY taxing people 90% - let me repeat that – they have legislation to RAISE taxes on those making OVER $250,000 to 90%. They don’t even know WHO got the bonuses – so now EVERYONE will get punished. Of course this is for companies that receive government aid. Talk about a great incentive to go work for a company! <- note that is sarcasm.


The point I am making – which is VERY IMPORTANT – if you can JUSTIFY raising taxed to 90% - what next. We just opened the door.

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Futures Pre-market


The futures were off coming into the morning – but are now up slightly. The spreads are narrow so expect a mixed opening.

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Support / Resistance

We came off but in some cases still well into those resistances.

INDU 7000 / 7500 (Just below the 7500 level – could we move back up and close there?)

NDX 1200! (We closed about 1200 – I wouldn’t put this in the support column yet – because expiration could cause some pin risk issues – so let’s look ahead.)

SPX 750 / 800 (The SPX pulled off the most yesterday – is 800 in the cards – sure there is some heavy OI on that line so we could see a rally to pin.)

RUT 400! (We stayed about 400 – a pin there is not out of the question.)

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Gold 950? (We rallied 50 points from 900 to 950 – is that now the support?)

Silver 13+ (We made a good move up)

OIL 50! (We rallied over 50 – does that become support?)

Commodities made a huge run as the FED dumped $1 trillion (Printed money ) into the system. ______________________________________________________
Conclusion

Little Friday Rant – skip if you don’t want to hear it…

Didn’t Obama just say yesterday, “Going forward in the future, we're not going to find ourselves in these kinds of terrible positions again!” about Companies spending money of Exec’s and CEOs. (like John Thain (Ex-CEO of Merrill) spending $1 million on an office or AIG bonuses).

SURPRISE – CITIGROUP (receiver last week of $45 BILLION) is adding in a $10 million office for CEO Pandit. http://www.bloomberg.com/apps/news?pid=20601109&sid=a6s3AjDJAs_Y&refer=home

Come on – is Congress and our administration that STUPID – get on the BALL. You can’t keep giving OUR money away (printing more money) and put the entire currency and economy at risk and wing it. Our government (Congress, Fed, Treasury) is handing money out like candy and they have NO IDEA what these companies are doing. Then they get mad after the fact? Come on – this is getting just stupid silly.

Government gives money to GM and Chrysler (TWICE). Government ASSURES us they have done their due diligence – SURPRISE! GM and Chrysler need Billions MORE!

Government gives money to AIG (3 times). Buys 80% of the company – you would THINK they would KNOW what is going on – SURPRISE! Biggest single quarter loss in the history of the world – they need more money and a bonus!

Government leverages up Freddie and Fannie – gives them more money. Nationalizes both companies. You would THINK they would KNOW what is going on – SURPRISE! They need another $200 billion!

Government gives out TARP money to Citigroup. Buys warrants, converts to 40% ownership. You would THINK they would KNOW what is going on – SURPRISE! They need MORE money and are building a $10 million office!

A retail investor is not that blind. A broker and financial advisor does more due diligence on a $1000 investment then our Congress. My 4 year old son isn’t that DUMB.

Come on – how many times can Congress look this stupid and then give the same companies MORE MONEY. This is getting seriously stupid, SERIOUSLY! It’s like they have run AMOK – completely. They KEEP giving away OUR money, the Companies keep giving bonuses and spending as they see fit, and the risk is still uncertain. And Obama thinks we are not going to find ourselves in these positions again. I can TELL him how we will not find ourselves in these positions – STOP GIVING THEM MONEY!

Who is the more foolish – The government for giving the money, or the companies spending the money? Let me rephrase that – who is the more foolish, the government for giving the money, or WE the people letting the government give away our money?

Of course we could continue to print money to pay for more bailouts.

Sorry about the rant – I am just waiting for Congress to get all freaked out about the Citigroup $10 million offices and act like they didn’t know that either and watch another hearing so they can publicly b*tch slap another CEO (totally useless) – as if Congress has a handle on it. I think Reid and Frank need a stiff talking too.