CAPS players told you so / Moody's is a joke / No job losses here / Man, it's going to be expensive to stock my bunker /
May 21, 2008
– Comments (11) |
RELATED TICKERS: MCO
Anyone who has been reading the blogs of the top CAPS players will not be shocked by the following headline: Fed sees slower growth, higher unemployment in '08. We've been telling you that the economy is not in as good a shape as the manipulated government statistics and annoying uberbulls like Larry Kudlow have been saying. The markets got crushed today, even many of my beloved oil stocks (with oil sitting at a mind-blowing $133.50). Mr. Market definitely did not like the Federal Reserve confirming what the smart CAPS players already knew...that the economy is slowing and that unemployment is going to rise. For good measure, the Fed added that it is unlikely that they cut rates again. We'll see about that, but at the very least the Federal Funds rate is going to sit here on the bottom at 2% for much longer than the Fed Fund Futures were guessing just last week, a 50% chance of a cut before the November election. HAHAHAHA. I wish I knew how to make that bet. We all better hope that the Fed doesn't raise rates that soon, or the economy is really going to hit the fan.
For those of you interested in the specific forecast by the Fed, they lowered their projected growth for the year to 0.3%-1.2% from 1.3%-2.0% and raised their expected unemployment rate to 5.5%-5.7% from 5.3%.
I'm glad that have slowly started to give up my unwritten rule about not shorting companies and dipped my toe into the real-world water for the first time in a long while this morning. I am actively looking for consumer discretionary short plays and I would love some suggestions.
-----------------------------------------------------------------------------------------------------------------------
Here's a great one. The company that brought us the AAA rated garbage that has been partially responsible for the current credit mess has one upped itself, this time using a buggy computer model to mistakenly rate risky debt AAA and then proceeding to sweep its mistake under the rug. According to a report in yesterday's Financial Times (see article: Moody’s error gave top ratings to debt products) Moody's (MCO) supposedly even went as far as to alter its models to enable the billions of dollars of debt that was mistakenly rated too high to retain its rating until it made a massive downgrade in early 2008. How on Earth does this company have any credibility left? I wouldn't trust a word they say.
-----------------------------------------------------------------------------------------------------------------------
Despite all of the doom and gloom that has been in the news today and the Fed's forecast of a rise in the unemployment rate, there is one field that is booming...repo men (see article: Economic Tide is Rising for Repo Man). Apparently, reposessing boats from people who have defaulted on their loans is a booming business. I wonder if there are any banks that specialize, or at least have a large portfolio of boat loans. That would be a good short. If you think that filling up your car is expensive with $4 gas, try dropping a G on filling up a boat.
-----------------------------------------------------------------------------------------------------------------------
Not even those end of the world wackos who are digging their bunkers and filling them with canned food and guns are immune from the rampant inflation that we are experiencing: U.S. shooters feel pinch as ammo costs soar. The spike in metal prices that we have seen recently have caused the prices of ammo for many popular guns to more than triple over the past three years. Perhaps it's all of the demand that has been created by the current warmonger administration.
Deej
No position in MCO
RSS Headlines
Fool UK