One Word

Can make all the difference.

But that won’t stop the financial media from throwing a tantrum.

Santelli and the anchor cow at CNBC just got done reading the headline that Germany was going to ban naked short selling of certain stocks and bonds, and they couldn’t scream loud enough about how that was terrible for the markets.

Matrix Market

Last weekend I fielded several calls from friends asking my opinion of what was going on in the stock market after the “Flash Crash.”

Some had heard there was a big order mistakenly entered (n0t true), and others had heard that there was some kind of computer program glitch (also not true).

After the first couple of calls, I settled on using the analogy of the cyberstential movie series The Matrix.  As if they were reading my mind, the Turner Classic Movie cable channel featured the first in that series as a “classic” over the weekend.

Good Bots, Bad Bots

Over the next few days I’ll be introducing you to some software that makes decisions about money and trading.

Unlike Cliff’s benign bots that use our group cyber consciousness (the web) to project how the human family will be faring in the future, some bots are designed to emulate, or even exploit, human investment choices.  They aren’t all good bots.

Wow!

Take my eyes off the screens for a couple of hours, and look what happens!

IOC printed a trade at $50.50 today when I wasn’t looking, and then managed a rally to $59 into the close.  That’s still a few dollars under where it was trading when I left to do some errands and then came back to watch C-SPAN follies.

They were debating an amendment to add a measure of consumer protection to the financial reform bill, and I was struck by the series of speeches I heard, every single one of which said they supported consumer protection from financial misdeeds.

Round 1 to Wall Street

From Washington comes the news that the Minority has won their first major amendment to the Dodd financial reform bill.

And once again,

We, the People, lose.

The next crisis will give us a choice of hitting the taxpayers (again), or precipitating a depression deeper than the 1930′s.  Nice going.

The silly part is that the amendment that would really work, the Brown-Kaufman SAFE Banking Act, is not even part of the discussion. 

Shifted Long on IOC

IOC hit my downside target of $60 today, and as it bounced back, I lifted two legs of my 4-part option position.  Sold the $65 puts and bought in the $70 calls.

I suppose I could have saved myself a lot of trouble by putting on the original trade (selling the $60-$70 put/call strangle) and just letting it ride.

But if you’re watching, why not do something?  My Zen Master would disapprove.

Scary Chart

This chart from Housingwire.com scares me even more than the Annaly stock chart on the previous post.

Delinquencies in CMBS tracked by Trepp

As you may notice, the chart begins with April of 2009, roughly when the REIT index began its extraordinary run to the stratosphere.  At that time, commercial mortgages in CMBS (give or take about half the loans out there) were sporting a 2.45% delinquency rate.

Bad Call

That could mean many things.  For example, my recent purchase of NLY at just over $17 a share.

While that was close to the book value, and nothing in the economy says to me that the yield curve will flatten or invert any time soon, they did have a conference call coming up.

That call happened at 10 AM today.