Pick Your Poison

We had more dismal news reports out today. First off was the the unemployment rate and jobs report. The United States lost 533,000 jobs last month and the unemployment rate is at 6.7%. Most economists were expecting unemployment to come in at 6.8%, so that didn't come as much of a surprise. The number of lay-offs definitely did.

Next up we have home loan delinquencies and foreclosures hitting record levels. It's now approximated that one in ten Americans is behind by at least one month on their mortgage. The Fed is working on a program to buy more home loans in the form of mortgage backed securities, in the hopes of dropping borrowing rates to 4.5%. The problem is not with rates, it's with banks unwillingness to lend money and Americans inability to meet stricter credit standards that include a large down payment. We need the housing market to stabilize naturally, unless the government actually buys houses on the market, they're not helping much. Until we see a bottom in the housing market, the economy will continue to tumble.

Auto makers were back on the Hill this week pleading for government assistance so they can continue to do horrible business. Congress is still torn over the terms of any kind of bailout and Chrysler has already hired bankruptcy lawyers. This really shows their optimism for the bailout and the business in general. Meanwhile, General Motors is laying off more people, a necessary step but one that does not help our economic condition.

With all this bad news, Wall St, in it's continued bouts of optimism rallied hoping the government would step up bail out efforts and flush more money in to the system. The Dow ended the day up 259 points at 8,635.42, the S&P 500 up 30 points to end at 876.07, and the winner for the day the Nasdaq was up 63 points (4.41%) to close at 1,509. The government will be forced to do more but what remains to be seen is whether or not it will help things. We should give pull back next week, although any spin on bad news, or actual good news will send up sky-rocketing higher.

I bought more puts on Chesapeake Energy today at a 10 dollar strike price. Natural gas continued to sell off but CHK didn't drop as much because of the broader market rally. My puts on DRYS got hammered today, continuing the trend in this stock of no news is good news. I'm not worried and I'm going to stick to what I believe: the company has limited options and a huge sell off is coming. Just have to wait patiently.

This was a great week for me and my partner, The Revolver closed a HOT real estate deal this week. So, we both getting ARAB MONEY...haha.

Hope you guys have a brilliant weekend. It's time for Bully Bank to get it's celebration on!

Werd :)

-Nik