Market Bottom at Dow 9.5K

Although a retest may come, it looks like 2008 lows might have been booked. Although the insurance companies remain subject to more stock price drops, the overall market may have adjusted. The largest risk to US stocks now comes from the overseas banking and currency crisis unfolding. We are now long several names, including options on stocks such as AAPL and more.

With so much news coming out in the last few weeks, probably the most signficant is what is coming in the housing industry.

Reducing the principal on pay-option adjustable-rate mortgages so as to restore
equity that the borrowers have lost.
B of A said Countrywide wouldn't charge
the borrowers any fees to modify the loans, and it will waive prepayment
penalties for subprime and pay-option ARM loans.
The bank also will lay out
$150 million to help Countrywide customers who are already in foreclosure or are
at serious risk of foreclosure. And it will pay as much as $70 million to help
Countrywide customers who've lost their homes to make the transition to other
living arrangements.

I guess help is on the way. Also, the large exchanges are now moving forward to help create a way to move the CDS price discovery mechanism forward.

The credit derivatives markets will on Monday set the price tag for settling up
to $500bn of contracts related to Fannie Mae and Freddie Mac, the US mortgage
lenders whose seizure by the US government had the unexpected knock-on effect of
triggering defaults on derivatives deals.
This price – called the recovery
value – will in turn determine the payouts that have to be made by insurers and
banks that offered credit cover on the mortgage financiers in recent months.

Stay tuned... the street sweepers are now coming.

Type rest of the post here

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