The S&P 500 FINANCIALS INDEX had been up 6 points at its high, continuing strong after last week. Again at midday, it slumped badly closing down 2. The Alerian MLP index was up 3, but off from an 8 point gain at its high. REITs were weak & sold off badly in the PM (down 8) while junk bond funds were flattish. VIX was up 2 to the 44s (the mirror image of the other averages).
The headline below (first of 3 links) is scary. It's hard to feel sorry for the AIG guys who are responsible for giving us their enormous mess. But at the bigger picture level, it represents a war between the administration (& gov in general) vs the stock market. Obama uses the words "recklessness and greed" & I don't want to argue about applying the words to AIG guys, but the next time the situation will be different. The attorney general of NY, Andrew Cuomo, is demanding the names of bonus people at AIG & will issue subpoenas (2nd link) if he doesn't get the info by market close today. This represents war on Wall Street (which already is seen by many as being so low it would have to climb a flight of steps to get to the basement). Long term implications of all this questioning is not good. The daily Dow chart in the Bigcharts widget on the right shows the market broke badly after the announcement was reported. But AIG stock had a great day. Starting at 50¢, it rose 33¢ where it remained thru the PM (even touched $1 once) despite being under fire by about everybody in gov. I've added a 3rd link on AIG, this story is getting VERY big. Wed those guys will have to testify to Congress & they will earn every penny of that bonus money.
Obama to Geithner: Pursue Every Legal Avenue to Block AIG Bonuses- AP
•AIG Discloses Counterparties as Obama, Cuomo Assail Employee Retention Pay
I got heady after calling a low in Citi, saying it was OK to invest in the call @ 1. The chart below shows how well that worked out. Maybe it could can get to 4 or 5. But the latest rally (Dow & Citi) topped out today. Citi, still had a good day, up 55¢ to close at 2.33. However, it should be a fair bet that the call can carry higher, with the potential to double. But again, this is a Las Vegas kind of bet & is only for the very brave. I'm not, never even been to Las Vegas.
Citigroup ---- 2 weeks
The markets had been on a nice streak & tried to extend the winning streak to 5. But it hit a brick wall in the middle of the day & never recovered. Optimism is still very fragile.
Dow Jones Industrials --- 1 week
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