I am not a frequent NY Times reader but thought this article was a pretty good description of how events unfolded last week...
"If we don't do this,we may not have an economy on Monday." Ben Bernanke
"Panic can cause a prudent person to do rational things that can contribute to the failure of an institution." -- William A. Ackman of the hedge fund Pershing Square Capital Management.
Credit markets are completely frozen, fear is everywhere, but selling is so irrationally uniform that I am starting to feel like a "kid in a candy store with his dad's wallet"...
I'll post my new buys tomorrow but anything that has large hedge funds as investors is being sold off for redemptions just as I expected- agriculture, commodities and other "quant" picks... Bank stocks have held up quite well and preferred stocks seem to have bottomed as well- I can't post the names yet as I am still buying but will give specifics over the weekend...It is now virtually guaranteed that we are in recession but with a "rescue plan" going through tomorrow and possible rate cut to go with it we might just get enough positives to offset the possible "upset" with job numbers tomorrow...
Look for a lot more choppy trading and multiple bankruptcies over the weekend...
US Fed Discount Window Borrowing Continues To Hit New Highs
The Fed on Thursday said total borrowing at the discount window, including both depository institutions and primary dealers, rose more than 50% to $409.52 billion Wednesday from $262.34 billion in the prior week. Total average daily borrowing also jumped to $367.80 billion in the week of Oct. 1 from a previous record $187.75 billion in the prior week.
Lending through the primary credit facility, used by commercial banks, Wednesday rose to a record $49.52 billion, from $39.32 billion set last week. Average daily lending through the primary credit facility also continued to soar, climbing to $44.46 billion from a prior record $39.36 billion in the previous week, the report said.
VIX is once again flashing a temporary "buy" signal... But be very cautious - I am personally buying only on big down days for now- until we have 3 solid up days in a row- we are officially in the "bear territory"
