Friday, August 17, 2007

opex date...

I just realized the Fed cut premarket on opex date.... excellent -- classic move -- and some participants already knew ahead of time...

All those put options that were deep in the money got blown out and maximized the effect of the cut. If they did this on any other day the reaction would have been half...

These are the moves you've got to anticipate.

Appears the shorts are putting back on their positions though. This was just a brief surprise attack and does not throw the bear market off except for perhaps a day or two, if that.

Let's understand one thing: The housing market IS the U.S. economy. It's not even about the jobs and business homebuilding creates -- it's about the wealth creation / equity extraction that allowed spending to remain in the skies.

The entire U.S. economy -- with home prices plummeting and inventory rising up the wazoo -- is a cripple. The effects are going to hit like mortars that keep dropping...

home prices dropping
job layoffs (construction, banking, Home Depot)
consumer spending (the big one) drops by the month, every month, for years...

The ATM machine has closed.

This was Bernanke's insight -- but he can't stop it now. The expansion in home prices is 40 years long. You can't push a string.

Everyone living with massive debt loads -- which is most of America -- has put themselves in grave danger.

Endgame tactics are exactly as you see: Destroy the dollar to provide one more boost of extractions/refis.

Where can people with money go? They can't keep it in cash -- inflation eats it up. You can't enter the markets without extreme risk.

Stock prices hardly factor in a new world without the U.S. as the engine.

But they will.

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