Well, the thing is that there is way too much negativity about relatively insignificant amounts of capital. LEH has no real importance left with a market cap of $3 billion. Same with WM. If anything bad happens to Lehman, it will be absorbed.
Outside of the panic discussion about LEH, every sector is starting to shape up pretty damn good. Banks, real estate, homebuilders, consumer and healthcare are all leading the way. Tech, materials, and energy are starting to turn the corner.
How much more blood can the shorts get out of Lehman? Do the hedge funds really want to put all the brokers out of business? If Lehman can actually find a successful deal without the help of the FED or Treasury, I think it would be a huge reversal for all of the naysayers. I couldn't pull the trigger on the trade, but I hope they can find someone to buy them and carve up the pieces.
Now, it looks like we'll be able to get past the FED meeting without another rate cut. I think the market responded favorable to the fact that no one tapped the FED discount window too. Yesterday, I still felt pretty emotionally drained from the capitulation on Tuesday. It seemed like the market was setting us up for the trade report. Now, we closed the gap from the FNM bailout, retested the lows, put Lehman so low they can't hurt anyone, and managed a complete reversal.
Actually, that makes a lot of sense since the inflation numbers and trade numbers are going to be much more bullish for the market this fall when we see the impact of lower commodity prices in August and September. The destruction of stock prices away from Lehman has exceeded all measure. I'm feeling much better about the sector trends doing much better from here. |
