Less Dogma, More Money

Ok, after a morning of intellectual puking, have to get back to the market.

Rev Shark over at Realmoney.com - one of my favorite web authors said it best today; so I will just follow this credo and ignore the revulsion at what is going on

In addition to the very dovish Federal Reserve, the Treasury Secretary is strong arming banks into foregoing any action to deal with defaulting sub-prime mortgages. Even if you aren't appalled by this gross governmental meddling in the free enterprise system you have to wonder if we are simply delaying the Day of Reckoning and making the eventual pain even worse.

Even though there are some serious doubts about whether this government intrusion into the mortgage mess makes business sense, the market's immediate reaction is positive. With the Fed cutting rates and people being allowed to not pay their legal debts, we have an increase in liquidity and that is enough of a band-aid to hold us up and even bring in buyers who want to ride the wave of short-term optimism.

I find the whole idea of the government (and a Republican administration nonetheless!) telling banks how to deal with sub-prime loans sickening, short-sighted and a bad precedent, but our job here isn't to discuss political philosophy. Our job is to try to make some money and the market is having a positive reason to the news this morning. The question we have to ponder is whether this news is going to give us some legs into the Fed meeting that is scheduled for Dec. 11.

Back in August we ran hot and heavy into, and out of, the Fed meeting as the market seized on the belief that the Fed cut was the salve the market needed. For a while the market seemed to have lost confidence that the Fed could solve all our problems, but in the last few days belief in the Fed as our savior seems to have been restored.

So let's revisit all the 'good things' in a purely market standpoint

1. All branches of government (save judicial?) will do whatever it takes going into an election year to keep any slowdown contained to a bare minimum
2. We have a literal printing press shoveling an avalanche of money into the lending system. This is helping the banks prop up balance sheets, and one day they might even lend this money out to people but for now all that matters is they prop up their balance sheets.
3. What we cannot print, foreigners who we have been sending trillions of dollars to the past decade, will buy from us and place a floor below all major assets (aside from homebuilders I believe)
4. Speculation is now officially back judging by the stocks popping the past 48 hours - worst of breed is rising tremendously which means risk appetites are already back (it only took 1 day of rallying off Monday's low to bring them back) Amazing resiliency.
5. Every time we drop 10% (Feb 2007, August 2007, November 2007) we pop up magnificently like clockwork. 10% correction seems to be the number that the computers that run 70% of trading on the Street go off historic models and funnel oodles of cash back into the market.
   
6. The Fed will be meeting Dec 11th and a chorus will now raise for 50 basis point cuts
7. Santa Claus rally is always in the cards
8. Despite all the problems in the world we are 4% away from all time highs on some indexes
9. Where else are you going to put your money? Treasury rates have fallen off a cliff and real estate is non starter.

There, I found 9 great things that if I only focus on, you have to be an unabashed bull. Now I just have to stare at those and ignore everything else....

Short all political parties at this point