Macro Tsimmis

intelligently hedged investment

BUY TO COVER Bank of America (BAC), Goldman Sachs (GS), HSBC (HBC) & Wells Fargo (WFC)

Posted by intelledgement on Tue, 16 Dec 08

OK, as we stated in our IMSIP post announcing we are selling off the financials and real estate reverse ETFs, we still think the odds favor a long and deep recession and a secular decline here. But for now, we can’t fight city hall. The Fed and the Treasury are firing all the guns at once here, and the combination of today’s shock and awe decision to reduce the discount rate to 0%—free money for the banks!—and purchase mortgage-backed securities combined with the promise of a massive stimulus package to be named later by the incoming Obama administration has broken the gloom-and-doom psychology of the market. We will go up here so long as folks believe Obama can plug the holes in the dyke.

He can’t and he shouldn’t be trying, but he is and it could take a while for everyone to realize that resistance to the laws of economics is futile. Sooner or later, that will happen and when it does, we will go short again.

Previous banking company short-related posts:

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