Market Observations 02/22/08 & The Ambac Bailout
Resistance: DJIA 12550 (450DMA); SP500 1365 (650DMA); NAZ 2355 (700DMA); NDX 1810 (500DMA)
Support: DJIA 12130 (600DMA); SP500 1320 (850DMA); NAZ 2300 (850DMA); NDX 1755 (700DMA)
SP500 gap up 1342 to open 1344, plunge to 1327, surge to close 1353.
NDX gap up 1766 to open 1772, plunge to 1739, surge to close 1773.
Much like the last week, support rope holding at SP500 1350 & NDX 1750 - 1775.
A lick & a promise... DJIA down 125, then boom, a 240 point surge in the closing 30 minutes...
on a report that a bailout for guarantor Ambac is imminent.
Next week PPI, 2 & 5 year bond auctions, new home sales, all bad news. Despite the lick & a promise,
we still smell smoke, the rope is getting shorter. Why? Someone is playing with fire...
Eight days ago, MBIA & Ambac dismissed a bailout and told CNBC that they were in position to weather the storm.
Not that the "patient" should be telling the "Doctor" how to administer the "cure", but let me splain something Lucy...
According to the WSJ: 54% of the debt backed by Ambac is public finance and municipal debt, while another 33% involves structured finance.
The structured finance category includes about $67 billion of complex debt securities called collateralized debt obligations,
many of which are backed by mortgages and which are considered the most at risk of default.
The structured finance category also includes about $13.8 billion in insured debt backed
by auto-finance and credit-cared receivables as well as manufactured-housing loans.
In addition, Ambac has exposure to $50.3 billion in residential mortgage debt, including high-quality home loans that are less risky than CDOs.
Incest is best, only if you keep it in the family...
the imminent bailout involves Citigroup, Wachovia and UBS. Let me guess, Ambac would raise the capital by selling shares to the existing investors, at a discount?
This is like Moe, Larry & Curly carrying bottles of vodka to rescue Schemp, who is already in an alcoholic stupor.
You mean the big three on the verge of invsolvency themselves are going to rescue the #2 guarantor from BK?
You mean the three creditors that Ambac already owes BIG?
You mean the three that can't scrape enough capital together to keep their own reserves at a minimum?
You mean the three who are facing even larger writedowns to come, are going to throw more money after bad? Get real.
Given the anemia of the playas, this "rescue" could backfire into a disaster of larger proportion or be rapidly disbanded.
Either way, the market gets disappointed. Anyone wanna bet...
the price of Ambac, UBS, Citigroup and Wachovia credit default swaps jumps, bond yields go down and the market tanks if this rescue blows up?
Often wrong, but never in doubt, this is the Nattering Naybob and you're not.
Support: DJIA 12130 (600DMA); SP500 1320 (850DMA); NAZ 2300 (850DMA); NDX 1755 (700DMA)
SP500 gap up 1342 to open 1344, plunge to 1327, surge to close 1353.
NDX gap up 1766 to open 1772, plunge to 1739, surge to close 1773.
Much like the last week, support rope holding at SP500 1350 & NDX 1750 - 1775.
A lick & a promise... DJIA down 125, then boom, a 240 point surge in the closing 30 minutes...
on a report that a bailout for guarantor Ambac is imminent.
Next week PPI, 2 & 5 year bond auctions, new home sales, all bad news. Despite the lick & a promise,
we still smell smoke, the rope is getting shorter. Why? Someone is playing with fire...
Eight days ago, MBIA & Ambac dismissed a bailout and told CNBC that they were in position to weather the storm.
Not that the "patient" should be telling the "Doctor" how to administer the "cure", but let me splain something Lucy...
According to the WSJ: 54% of the debt backed by Ambac is public finance and municipal debt, while another 33% involves structured finance.
The structured finance category includes about $67 billion of complex debt securities called collateralized debt obligations,
many of which are backed by mortgages and which are considered the most at risk of default.
The structured finance category also includes about $13.8 billion in insured debt backed
by auto-finance and credit-cared receivables as well as manufactured-housing loans.
In addition, Ambac has exposure to $50.3 billion in residential mortgage debt, including high-quality home loans that are less risky than CDOs.
Incest is best, only if you keep it in the family...
the imminent bailout involves Citigroup, Wachovia and UBS. Let me guess, Ambac would raise the capital by selling shares to the existing investors, at a discount?
This is like Moe, Larry & Curly carrying bottles of vodka to rescue Schemp, who is already in an alcoholic stupor.
You mean the big three on the verge of invsolvency themselves are going to rescue the #2 guarantor from BK?
You mean the three creditors that Ambac already owes BIG?
You mean the three that can't scrape enough capital together to keep their own reserves at a minimum?
You mean the three who are facing even larger writedowns to come, are going to throw more money after bad? Get real.
Given the anemia of the playas, this "rescue" could backfire into a disaster of larger proportion or be rapidly disbanded.
Either way, the market gets disappointed. Anyone wanna bet...
the price of Ambac, UBS, Citigroup and Wachovia credit default swaps jumps, bond yields go down and the market tanks if this rescue blows up?
Often wrong, but never in doubt, this is the Nattering Naybob and you're not.
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