Rally HO
Investment Research for Online Investors

by John Dalt

02/06/09

Financials are enjoying a surge in buying, in anticipation of the treasuries plan to be announced on Monday.  Remember, The U.K took a 70% ownership stake in Royal Bank of Scotland (RBS).  Does this portend the ‘new plan’ that will come out of treasury?  I do not pretend to know, but the best news would be ‘mark to market’ accounting rules being dumped.  This would have an immediate impact on banks’ balance sheets.   Never the less, I am running tight stops on our positions, this may be a case of buy the rumor and sell the news.  So far, the treasury has not been punitive in the equity stake it has demanded for the funds provided to Citi (C) and Bank of America (BAC).  This may change under the current administration.  OH! Bama’s rhetoric the past week concerning executive pay, and denials of ‘nationalization’ from congressmen may hint at a more aggressive treasury.  OH! Bama needs someone to vilify and be the ‘enemy of the people’.  The more problems you can find, the more regulations you can justify.

Yesterday I mentioned a play on TBT as interest rates inevitably rise to attract buyers for treasuries.  We have played this twice on the Swing Trader service, but a lot of the sweet spot on this is gone, so be careful, nothing moves in a straight line. That is except a bubble that is about to be popped.

The stimulus bill grew overnight again; it is now up to $937,000,000,000.00  Those guys need to quite staying up at night!   Oops, make that $940,000,000,000.00

The Federal budget deficit is now expected to be $1.19 trillion for this year ending in September; this is before any stimulus plan.  In one year, we will go from $300 billion to $2 trillion budget deficit!  Make sure you hold hard assets that will appreciate in value with inflation.

The Federal Reserve has increased its balance sheet since September; it was $894 billion, now at $2 trillion.  Bush commented he thought that Wall Street had gotten drunk leading up to the crisis.  Now I wonder about Washington, what are they drinking?  You can see the Fed’s ledger sheet here.

I found a great website today that will save you a little money.  You buy a certificate at a discounted price for a restaurant in your neighborhood, take it to the restaurant and get the stated discount.  Try it out here.

I am off to see my daughters at Kansas University, and see some old friends.  You know the old saying “Christmas comes but twice a year!”

The market ignored the jobless report this morning.  When the market ignores bad news…  With the rally today, I feel like looking around the corner.  Where is the bogyman?   Every time we get a little bear market rally, something slaps us.  Hold on tight, take your profits when you can.

I came across this picture of a congressman.  Grade school kids recognize a child at play.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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