Monday, August 08, 2011

Lookout below

It's really hard to keep up with the volume of info hitting the markets today. The US downgrade is playing a role and as predicted the NASDAQ is taking the brunt of the abuse today.

The more shocking news is really coming out of the financial sector where giants like Bank of America (remember they bought up all of the pieces of Merrill Lynch and Countrywide after financial crisis Part 1), AIG - a stock that is now down 60% in the last 8 mths - and Citigroup are tumbling.

As someone said this morning - "It appears as though AIG is making an effort to collapse the global economy for a second time as they filed a $10 billion lawsuit against Bank of America". The insurance against a Bank of America bankruptcy is skyrocketing today and there are some rumors (much like the old days of Lehman) that the big B word is being floated at BofA.

This is all gathering steam and the market looks terrible right now but I'll be watching for a ridiculous snapback rally at some point if we don't dip another 5%. If we breakdown from here the program trades will go crazy chasing the market back toward 2009 and maybe even 2008 levels if we're unlucky. If, however, we hang right in here the computers could take that as buy signal and there is the remote possibility of another TARP style bank bailout (however, I can't imagine Congress signing off on that given the current climate in Congress) and/or news leaking of further Fed interventions to prop up the market.

Wild times to be sure.

Watch my twitter feed for info as it breaks @ grindstone_fin.

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