M. Ramsey King Securities, Inc. Friday June 13, 2008 – Issue 3892 "Independent View of the News"
Bernanke proved on Thursday, by providing $32B of repos and $24.997B of TSLF juicing that he is trying to bs the markets with tough talk while he floods the system with credit because key financial firms are having ‘difficulties’. Some analysts might mitigate Ben’s Thursday repos by saying $33B of repos were expiring, but Thursday repos have been under $30B the past several weeks.
More importantly Ben did $31B of repos on Tuesday when only $9B was expected. So there was already a $22B repo ‘overhang’ in the market. Now add $32B of Thursday repos and $25B in TSLF (Notice that the Fed, like wily retailers that mark items at $1.99, kept the TSLF from a 25 handle) and you have $88B of credit in 3 days…MZM (+26% y/y) hit a new high.
We must, until evidence proves otherwise, conclude that Ben began talking tough last week, because he had to hit the credit accelerator about three weeks ago due to a new round of system duress. And fearing inflation, or rather recriminations from other central bankers, including his brethren at the Fed, he’s trying to euchre the markets. So far he’s had mixed results – dollar up, bonds & stocks down, oil pausing. But some part of the dollar rally the best weekly gain since 2004 is due to today and tomorrow’s G8 soiree.
Ben’s repo madness generated an explosive stock market rally from the open. Unfortunately, the rally, like most recent rallies, could not hold. As we’ve stated, there are few real orders these days. And if not for the usual late SPU (Sept. now the front month) manipulation stocks would’ve posted negative results. This would’ve pushed technicals even more negative and frightened equity traders and possibly investors into a sickening Friday-Monday decline sequence.
While most people, particularly the media are transfixed on Lehman, they are missing possibly a bigger problem – Bank of America. The stock has tanked for 6 weeks. Bank officials keep asserting that they are committed to the Countrywide acquisition, but shareholders are punishing that stock.
We’d guess that there is deterioration in Countrywide’s financial condition or BAC has discovered things that were not easily apparent during early due diligence. Nevertheless, if BAC walks away from the CFC acquisition, all hell could break loose in the financial markets.
Over the past few months, astute operators have whispered among themselves and to confidants that if BAC walks away from Countrywide, look out! Solons know this, and that is why BAC officials keep surfacing to assuage the markets.
While major banks are threatening to breach their L’affaire Bear lows in March, BAC exploded is now substantially below its ‘almost Armageddon’ low and its January low.
================================================== * Note how these crooks have reduced Debt. Playing 3 card monti with your $$$, yes l'm pssted!! imho but link back....see for your self & that's T's Not B's.
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