Wednesday, August 22, 2007

Market Recap

Strong gains in the Dow, S&P and Nasdaq all closing up better than 1%. Basic materials lead the way with big gains in steel, nonferrous metals and heavy construction. Water, consumer electronics and automobiles lagged. Big gains in NFI BCSI AVCI PLX SVT BYI ACH while the losers on the day included TWB TOA MSNQ Some notable outperformers included AMZN AAPL BIDU GOOG SPWR FFIV RVBD MRVL NVDA IBKR MGM AA TIE CRS FWLT JEC JASO .

Dubai Worlds disclosure of a $5 billion stake in MGM Mirage had a positive effect on casino stocks today with good size gains in MGM LVS WYNN MPEL BYD.

More subprime fallout as Lehman, HSBC, Accredited and H&R Block trim their mortgage businesses. Atleast the market is taking the news in stride. Announcements like this a week or 2 ago and the market would have dropped like a rock.

Another hedge fund bites the dust. The global credit crunch will continue to claim victims especially among the hedge fund industry as non-correlated and quant stratagies are not as air tight as thought. Strategies are only non-correlated until they are correlated and stuff blows up. Funny how the finance world works.

The FEDs decision to inject liquidity into the market appears to be working for now and big banks such as BofA,Wachovia, Citi and JP Morgan are tapping the discount window. However this liquidity injection is more like a bandage over a bullet wound and the problems beneath the surface remains. The bigger the liquidity bubble grows , the worse the eventual outcome. Wall Street screwed up and now they deserve to pay the price. The Fed can always say it intervened to save the average American but the truth is they intervened on behalf of the big swinging dicks of Wall Street. We all know who the Fed really works for. Its about time a few big Wall Street banks and other major banks went out of business for their poor lending and investment practices. Funny how the big boys are trying to take Countrywide Financial under when CFC has been the most prudent player in the mortgage industry.

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