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A Weekend Ahead. What Will Next Week Bring?

It is always dicey to try to guess what the weekend ahead–and then the next trading week will bring us, but I always try–usually unsuccessfully.

Markets are pretty calm today–of course the employment report was bad, but everyone knew it would be and it will pale when it is compared with what is to come next month.

Logic would seem to tell one that the equity markets will sell off this afternoon, but that may be completely wrong–maybe they will skyrocket late in the day–maybe they will close unchanged since no one knows anything at all.

Markets have moved higher on days when they expected bailout bills to be passed–but then they settle back when reality sets in. There is always a lot of loose talk on how fast money will be sent from bailouts and unemployment–then reality sets in–well maybe a few folks will get something fast, but 75% of the folks will be waiting weeks if not months.

In Minnesota the director of employment services popped off a number of times about how many unemployment claims they were processing. Well the fact of the matter is only 15% of the claims were being processed while the other 85% couldn’t be processed because the state didn’t have data on the applicants (i.e. incomes). Honestly the system is a train wreck—of course I would expect a system under this much stress to break—but don’t BS the people how great things are going.

Today I see that many of the mREIT preferreds have been taken out and beaten. 1st they dropped like a rock a few weeks ago–then many of them bounced and then today they are being beaten. Of course I thought I was smart buying a part position in New Residential Investment perpetual (NRZ-B) at a low price–NOT–cheap gets cheaper–the lesson is simply patience.

I did take a modest sized position in Proshares Ultrashort SP500 (SDS) late Wednesday which is easing the pain from yesterday and today. I don’t want to get carried away with this position as shares can pivot quick and hammer you hard.

At this point I think that using bunches of patience will pay off–there will be lots of time to buy at low prices and this economic damage will be with us for a long while–and shares are not likely to head higher until we can have more definition on the total damage.

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