"MBIA vs. ORCL"

by Larry Levin


Up and down and up she goes, which way she stops - nobody knows. Today was another rollercoaster ride in the markets as investors and traders alike wondered which was more important; Oracle's blowout numbers, or MBIA's latest gut-wrenching revelation.

Oracle's stock exploded over 7% today after reporting a 35% rise in fiscal second-quarter profit, topping Wall Street's expectations. Of course, this ignited a fire under the NASDAQ index. But the Yin to Oracle's Yang was MBIA, which disclosed $8.14 billion of exposure to complex credit products known as CDO squareds. A CDO squared, eh? Does this mean that one must possess twice as much ignorance to invest in such a vehicle? Or does it mean twice as much obfuscation happened when these "Franken-investments" were sold? Or perhaps a CDO squared investment loaned money to those who were twice as likely to default? Oh well, any way you slice it, it wouldn't have passed my smell test. But then again I'm just a floor trader and not a highfalutin "Quant" that surely invented this type of scam...excuse me, investment.

There was a lot of other news to consider today. First up was the GDP figure that was reported at 4.9%, inline with expectations. This report, however, is old news; like looking into a rear view mirror to see the Brooklyn Bridge that someone just sold you. The balance of the reports was worse than expected; jobless claims were 11,000 higher, the LEI was twice as bad as expected at -.4%, and the Philly Fed was just horrendous at -5.7 when expectations were +6.0.

When the last of these reports were released, the Philly Fed at 11am central, the market hammered out a bottom. Shortly thereafter, however, in the face of this bad news, it EXPLODED and never looked back. While in the pit I asked a few runners if there was another announcement of foreign investments into our banking system. After all, Bear Stearns posted its first-ever quarterly loss as the company's mortgage-related write-down grew to $1.9 billion. This would be a perfect time for another foreign government or group to step in. Was the Khmer Rouge back in power, dabbling in capitalism by snapping up shares of BSC like its big brother China had done with Morgan Stanley? I never found out, but the market took off like rocket.

The final tidbit of news worthy of today's missive came from FedEx. I can't understand how this happened, but FedEx fell 1.2% after it reported a 6% profit fall, hit by rising fuel costs and weakness in the U.S. economy, and issued murky third-quarter guidance. RISING FUEL COSTS? Wait, wait, wait, the Federal Reserve says fuel costs don't matter, like food costs - they aren't worth counting. Ignore them we are told. FedEx should make like those three cute little monkeys; see no evil, hear no evil, speak no evil and all its problems will go away. (HA! Only if it resided in Economist-land.)

Real Time Trading Signals*for

Trade Date: 12/20/07

E-Mini S&P Trades*
(before fees and commissions):



10:13 FT Sell 62.50 = -1.50 all

10:23 ID VA Sell 61.25 = -.75 all

10:50 VA Sell 60.50 = +.75, +2.25, b/e

1:13 ENG BUy 62.25 = +.75,+3.25, +2.50

1:44 VA Buy 70.75 = -1.50 all

1:57 FT Buy 68.00 = +.75, b/e

2:07 ID VA Sell 68.75 = -1.50 all

2:19 FT Buy 68.25 = +.75, +.25, b/e

E-Mini Russell Trades*
(before fees and commissions):
1) Buy @ 8:59am at 763.1 = +.5 & +.5

2) Sell @ 9:07am at 763.5 = +.4, +1.5, +3.2

3) Sell @ 9:22am at 761.1 = +1.0 (1 lot)

4) Sell @ 9:58am at 760.8 = b/e, +.5, +1.2

5) Buy @ 12:40pm at 756.9 = +.5 & +1.9

6) Buy @ 1:48pm at 765.4 = -1.0 & -1.0

7) Buy @ 2:27pm at 763.8 = -.9 & -.9

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