Win Some, Lose Some

I recently wrote that BAC (Bank of America) would be a good buy. Errr uhm, oops. Down 3% today on bad earnings due in large part to mortgage issues. I am still bullish on it long term and holding on to what I got. I also said BAC would be the better choice of banks compared to Wamu or Wells Fargo. In the past month BAC is down 2%, the others down 4-6%, so realtively speaking BAC is doing OK.

Gold and Silver are both up nicely today yet again. They are definite BUY for me as I wrote here a few times. Past month both are up about 5%.

Buy Banks, Buy Metals

The jobs number came in this morning at 110,000. Not bad I suppose. Not too high not too low but low enough that the Fed can use it as an excuse to raise rates once again and kill the $US a little faster. As I have said before is despicable that Wall St says jump and the fed says how high? Despite what CNBC will tell you price stability is the Fed's #1 concern, not Wall St bonuses.

What really annoys me is the double sided mouth of the CNBC gang. On the one hand they say all is well in the economy. The they say a rate cut is a must? HUH? Either things are OK or they're not. What in the hell do you need a rate cut for if the economy is humming along just well? Mr.Kudlow? Any comment? Bueller? Fry? Simone? Anyone?

Anyway: seeing how Ben Bernake has become the Wall St poodle, we have to assume he will cut again at the next meeting.

And when he cuts you want banking stocks and you want metals. I own Bank of America and I own SLV. Both have been doing very well lately. SLV took a bit of a hit this week, but bounced back. BofA is steadily climbing up. I am buying some more of both. I would still stay away from WaMu and Wachovia though.

60% Off at Citi

Citigroup announced earnings will be 60% lower as it take a $3 Billion write down on mortgage related losses.

Everyone just take a second and absorb what that says.

$3B loss in mortgages. What does that tell you about the housing crash? Does that sound like there is a bottom out there? Does that sound like it will be a good time to buy anytime in the near future?

I believe the answers are Hell No, no way, not a chance in hell and are you ******* me? Unless you are buying at significant, and I mean significant discounts, do not buy.

What I am doing is waiting for the $3B in losses to be converted to $3B worth of homes going on the market at pennies on the dollar. The lenders are holding foreclosed homes. They are hoping against hope that magically the homes on which they lent all these billions will be sold at 2005 prices.

Well they can hope and wish all they want, it isn't happening. At some point they will capitulate and sell the things for whatever they can get. And in the meantime expect more headlines like these from WaMu and Wells Fargo. WaMu went subprime LOCO and will be as bad, if not worse.

The rate cuts will offset some of that so I'm still cautiously bullish on banks as a whole.