An “October Surprise” awaits us all.
Though the following is nothing less than sheer conjecture on my part, it does dovetail nicely into my earlier prognostication regarding the announcement of a settlement – for all classes – at the November 1st Omnibus. I reaffirm that prognostication, with the addendum that trading will be halted sometime during the week of October 25th – October 29th. But that’s not the “October Surprise”.
Please consider:
Why the sudden upward movement in the price of the preferreds (and even some lively movement in the common)? We’re still two long weeks away from an Examiner’s report (one that evidently – and very annoyingly - will be drafted without having needed to obtain critical documents or testimony by way of subpoena (not even from the FDIC for goodness sake!!!)). Moreover, Rosen has very recently, and very clearly shown, with the filing of yet another vile DS/POR that he’s not been rattled at all by the Examiner’s probings, but is instead sticking to his initial conviction that there will be virtually no payout to equity.
How does either of those two factors fuel the recent upsurge in price I ask you? If anything, they should have had the OPPOSITE effect on price. Lastly, if a settlement were going to be announced on November 1st -- and again, I think it will -- why would the MMs do ANYTHING to draw attention to WAMU? Why not simply continue to let it drift along, listless and ignored (like it’s done for all these many months)? Why suddenly stimulate the interest of day traders, institutional buyers and hedge funds with yesterday’s attention-getting-23%-price-movement? And why such a huge price movement on such very tepid (at best) volume? It’s almost as if the MMs were following some sort of prearranged PLAN, despite what the overall market thinks about WAMU. Why would those depraved souls now want us to be gladdened and confident going into November 1st and the single, most critical hearing of the entire bankruptcy proceeding? Have they simply given up and are only now letting it “run”? Volume certainly doesn’t support such a happy conclusion. Nor does it evidence that any significant leak has taken place. And even more tellingly, the so-called “smart money” is still not ‘in the house’.
No. There’s something very dark in the works, and it's heading retail's way. One last awful surprise: an “October Surprise”.
The “Surprise” is that Rosen’s going to make a very skilled, determined, AND SUCCESSFUL run at the DS hurdle on October 22nd (not the 18th … as he wants additional time for the drama and suspense (not to mention additional purchases of WAMU stock) to build up)):
"Based upon a recently reached compromise and the resulting modifications to the Plan and Disclosure Statement," the hearing on this matter has been continued to a date to be determined in the immediate near future, but in no event later than the Omnibus hearing scheduled for October 22, 2010 and 10:30 am."
It’s important to note that Rosen's statement is backward (not forward) looking. The “compromise” has already been reached and the “resulting modifications” have already been incorporated into the DS and Plan that was very recently filed. That simple statement on his part conveys an almost palpable sense of anticipation and conviction. He’s maning-up for this. He actually thinks he can do this. You can almost see his upraised middle finger pointing at you. Rosen is saying to retail: “What-you-see-is-what-you-get. Nothing more is going to take place. And on top of that bad news, I’m gonna ram a disclosure statement down your throat”.
But it’s not meant to win … only to frighten:
On October 22nd, just scant days prior to the Examiner finally wrapping up his work and consulting with all parties, Rosen is going to attempt to show that the DS meets the “reasonableness” standard. It’s not that high a hurdle to overcome. First crafted back in April, and amended several times now, he’s thoroughly convinced that he can leap with it as currently drafted. I for one don’t for a second underestimate his extraordinary courtroom abilities and must assume that he will indeed prevail at the October 22nd hearing, and that the DS will be approved, ushering in the “October Surprise”. And it, coupled with a flurry of follow-on articles over the wire services that day (the hearing will take place at 10:30am) will quickly wreck the PPS of all classes. Expect a sell-off on that day which will conjure up all the bitter psychological memories of March 13th. It will take a very stalwart trader/investor to suffer through that ‘red agony’ again. And that, coupled with feeling suddenly and utterly ‘betrayed’, ‘sold-out’ , ‘screwed’, and even worse by Judge Walrath might very well cause a further mass exodus from WAMU stock. Just days away from the Examiner’s report may well find all classes trading at pre-December ’09 levels: a true (and awful) ‘surprise’.
But that will only have been part of a sinister PLAN … one last go of it to frighten and demoralize the devil out of equity. The stock-manipulation-CLINIC that the MMs have put on for all these many months comes to a screeching halt on November 1st. They know it; and are saving their worst for last. So begin to mentally prepare yourself for their antics now … as something very ugly is already brewing and will come to a head on that day, just a week or so away from the big-money settlement.
AI
