Market Recap 06/19/08

Initial Unemployment Claims down by 5K - OK, a drop is a drop. However, to put this in perspective, it's a 1.4% drop. The 4 week moving average hovers around 370K. Today's number was 381K. Next week's number could potentially be important as it may indicate the beginning of a downward trend (doubtful).

Paulson Asks Congress a power grab - Finally says something semi intelligent to back himself. - "Our nation has come to expect the Federal Reserve to step in to avert events that pose unacceptable systemic risk but ... the Fed has neither the clear statutory authority nor the mandate to anticipate and deal with risks across our entire financial system," I agree, sorta. The administration seems to think overspending and expecting the reserve to clean up the mess is an acceptable "solution." Or, that no oversight then calling a bubble correction a crisis is acceptable. To be clear...congress doing anything - especially giving Paulson more power - will most likely just prolong this deflation and generally be a bad idea.

Citi announces it may make "substantial" future markdowns - Oh?

Oil - Falling (~3.3%) on China increasing fuel costs. "The increases represent a 17 percent gain for gasoline and 18 percent for diesel." Yesterday the U.S. pushed the market up and the world brought it back down. Today we got that drop in the USO I mentioned yesterday. Oil price volatility will probably remain subdued in the run up to the 06/22 Saudi announcement. A brave man might even think about buying an options position straddling oil...because I think we're in for some chop. Remember if the Saudis go big, they're shooting themselves in the foot because they'll get less $ per barrel.

The Dollar - Is going to be interesting soon. After testing support yesterday, it fell through after hours, was brought back to life pre-market, and is currently sitting on a short term support line (73.4).

Gold Up Slightly (~1%) - If the dollar breaks through lower support expect a surge in gold.

"Big Oil" returns to Iraq (Via NYT): "Exxon, Shell, Total and BP — the original partners in the Iraq Petroleum Company — along with Chevron and a number of smaller oil companies, are in talks with Iraq's Oil Ministry for no-bid contracts to service Iraq's largest fields" and "The no-bid contracts are unusual for the industry, and the offers prevailed over others by more than 40 companies, including companies in Russia, China and India." (closes his eyes and waits for backlash)

Cool new wind ETF (FAN) Launched yesterday. - "The index is a modified market capitalization weighted index of publicly traded companies throughout the world that are active in the wind energy industry based on analysis of the products and services offered by those companies."

Two former Bear Stearns fund managers arrested for fraud - Well...someone has to be the scapegoat. Because in that case, Mozilo is the first on my lynch list. The feds also charged about 400 people with mortgage fraud in "Operation Malicious Mortgage." I guess they've never heard the expression; Too Little Too Late.

Lastly, there were some major whipsaws in the market today. My S&P put options paid off then got stopped out (thankfully).