Bookkeeping: Closing Mastercard (MA)

I am going to close Mastercard (MA) because it, at this moment, essentially goes against just about all my thesis for the next 8-12 months. I still like the name long term as the world turns from cash to plastic. But less people with jobs equal less spending via cards in the US and Europe. We restarted this Oct 10th in the $152s, so we're exiting the last 0.2% with a loss right near $140. We took most of this position off at $146s so no major skin off the nose.

Here is the irony right now - the rally is being led by retailers, financials, and homebuilders; the power of thesis tops the power of reality. Remember, the current thesis is 4.5% mortgage rates will allow everything to return back to America circa 2006. [The 'Consumer is Back' Trade is... Back] Nevermind the lack of jobs - low gas prices and home flipping will bring back the era of excess - even for the jobless. I'm not going to argue with it because the hedge funds have done this thesis at least 4x in the past 12 months, and each time was worth some huge moves. When they leave, these trades collapse. But it can work for a few days to a few weeks each time, and that's what the trade has been the past 3 days. (the irony is Mastercard should benefit from that thesis as well) About 4-5 months before the economy bottoms, this actually will be the right trade... but for now it's the trade for the "2nd half 2009 recovery" crowd. Which appears to be almost everyone (except me) ;)

I'm playing the thesis with egregious exposure (4.5-5.25% each) of Ultra Financial (UYG) and Ultra Real Estate (URE) - party like its 2005. So that's about 10% pure Kool Aid exposure for us. Again, the stock market is not the economy and technicians will be slobbering over each other watching 4 days of bad news pretty much ignored aside for that last hour or two of selloff yesterday. Hence the ball is in the bulls court. Not only has S&P 840 been regained but S&P currently sits over the other resistance that we keep pointing to -> 870. (still have 15 minutes so we'll see if that one holds) So we go with the flow and drink Kool Aid. But we'll use the ETFs rather than some of these individual stocks - if we can get another week of financial rally I'll probably exit some of these bank stocks and just use the financial ETF since everything trades in 1 monolith.

I don't want to sound like a party pooper but these last hour moves are now becoming so obvious it is getting long in the tooth - very rarely does anything so explicit last long on Wall Street and one of these times by buying the last hour direction and riding it for 59 minutes and 30 seconds it is going to blow up a lot of people in a large way. It hasn't yet but it is setting up this way soon. And I say that as the host of the casino.... we've truly jumped the shark on this one. But for now, all is well - malls teaming, homes flying off shelves and banks lending. Good times. Or so the stocks in these sectors imply will be coming "in 6 months". See you back at Ceasers New York 3 PM Monday.

Long Ultra Financial and Real Estate in fund and personal account