Johnny Venom's blog

Hillary : "The Patient is not well"

Senator Clinton is on CNBC right now, she just met with the Fed.  She's wanting to resurrect or bring about a new version of the Home Owners Loan Corporation (HOLC). The fact that all existing mortgages could not be renegotiated to make them more affordable makes her uncomfortable in regards to support for the Paulson plan.  She wants that in the plan or at least an accompanying legislation passed at the same time.

When asked about Representative Barney Frank's statement about executive compensation.  She also came in favor of curbing CEO's of financial companies' bonuses and pay.  So long as we're providing tax dollars, she says, then they can't get their old rewards. 

" We shouldn't be running a long-term bail out program."

Short squeeze going on in oil

The front month crude oil contract that ends trading this week is up over 10% today.  Why, was there some big event?  Did terrorist blow up a pipe line or something?  Nope, what you got here is a classic short squeeze. The November contract is trading at $109, while this one in question is at $116.  You see, a lot of these traders were riding the recent downtrend in oil.  In fact, so many were figuring that oil would continue to go down, that open interest (that is all the trades that are still open and have yet to be closed) increased even on Friday!  But then, all of a sudden, the November contract wasn't moving downward as much.  The traders smelled something odd and soon realized all their compatriots were still short this morning on the week of expiration.  So what you have is one group of traders taking advantage of another group of traders.  

Goldman now a "regular"Bank

So is this really a ticket for them to do business as usual?  I'm reading on the Wall Street Journal this morning that Goldman Sachs and Morgan Stanley will be converted into regular banking holding companies.  So now they are to be like Citibank and Wachovia and Washington Mutual?

For sure, this will pair them down a lot.  The days of 40-1 leverage are over for them.  The boys and girls at the trading desks at Goldman might be hitting that aged whiskey a little more tonight.  No more being capitalist cowboys for them. 

UPDATE 5: NEWSFLASH: RTC/RFC proposal, also new FDIC for MMFs

This just in, Treasury Secretary Paulson now confirming that the government is pursuing a plan similar to what happened to the savings and loan.

While the exact details haven't been released. I will be updating this as more news comes out. For those who aren't aware of what a Resolution Trust Corporation or RTC is, basically it's an outfit that buys the bad loans from failing banks to supply capital. Well, it's a lot more complicated than that. I will be posting a primer on this tonight. Anyways, below is an excerpt from CNBC's site.

Treasury Secretary Henry Paulson is working on a plan that would set up a government facility to take on bad debts from financial institutions, preventing a worsening of the global credit crisis, Wall Street sources have told CNBC.

The facility would be similar to the Resolution Trust Corporation, which was set up in the late 1980s to take on all the failed thrift assets during the savings and loan crisis, these sources said.

Why I'm a little worried about the drop in oil

Can't sleep, been thinking about the price of oil, worrying about it to be honest. Now you may be thinking "Venom, what are you crazy? A putz? A drop in the price of oil is a good thing!" And I would reply, yes, under normal circumstances it is. But these days, things ain't so normal. Actually, right now, oil is up since yesterday, but it's been in a slide for the past week or so.
A prophetic lunch

A couple years ago, I had lunch with a trading friend/mentor of mine at Hackney's on Harms Road. He was an older gentleman, made his money in options, in fact was one of the first to trade at the CBOE back in the 1970s. We had just gotten back from one of those sales seminars from Equis, a company that makes a product called Metastock. While gobbling down on Hackney's infamous onion loaf and later cheeseburgers, topics ranging from the software to commodities came up. This was around 2002, and Enron was still in the headlines.

Updated: NEWSFLASH: Gov't to offer "loan" to AIG

Not all the details have been released, so I will update this as new things come forth.
Bottom line, the government is going to offer American International Group (AIG) a bridge loan. The amount of the loan will be to the tune of $85 billion. In return, from what we know now, AIG will begin to sell assets ASAP to serve as collateral for the loan. Also, the company will grant the government Warrants.

Manufacturing Monday: Ok..things not looking so hot

(Editor's note: My sincerest apologies, I had planned to post this thing up this morning. But alas, my hard drive with the notes ended up saying it would mimic John McCain's economic plan, and collapse on me. Several hours later looking for a hard drive and attempting to reinstall Vista, I'm up and running. So this is an abbreviated version of what I had planned. Once again, sorry, rest assured I will make up for this. )

Right now, you probably have heard that Lehman Brothers is no more, and the Merrill Lynch is now a vassal of Bank of America. Well things on the manufacturing side ain't looking that great.

By the numbers

Tankergate UPDATE: It's dead, John McCain must be happy

Today the Pentagon announced that is terminating the competition for a new airborne refueling tanker.

The tanker deal that tanked.

Bottom line, the politics of the whole thing got too hot for them. As many know, European Aerospace Defense System (EADS) subsidiary Airbus beat out Boeing for the contract; a bid that also included US-based Northrop Grumman. Everyone expected the Chicago/Seattle-based aerospace maker to land the contract, but the EDS product proved more appealing to the Pentagon. You see, the plane that Airbus had submitted was much larger than the one Boeing had proposed.

Sign of the times: $.99 says they can't sell for under a buck!

While Larry Kudlow and the rest of the neo-con Kudlowites are telling you the economy is Goldilocks, reality is trying to remind us that things aren't so golden.

Sure oil is now almost at under $100, and that gas in some places now cost less than a discounted haircut. The grain complex has come off its seasonal highs, with the talk of a "crash." Hell, even the price of homes has come down to the point where folks are beginning to say the end of this deflation could end soon!

Yet, in light of all this, the general consensus is that prices in general are still on the upside. Costs across the board are still going up. And today, one of the hallmarks of cheap goods is now saying they can't even live up to their name's sake!

Pages