Daily Update

Should've sold AIG. It was down 11% from Wednesday's close. However, I didn't want to take on too much Wed. because I sold C short, and on Thursday, it had already dropped 5% and didn't recover as the day progressed. I decided I didn't want to be greedy.

The Yen just hit 3-year highs against the dollar, and shows no sign of stopping. Gold is up to 973. The Fed is flooding the market with liquidity to hold down short-term rates as the Treasury borrows $76B in 3-6 month notes. The Fed's afraid that the banks won't buy the notes if they don't finance the spread for the banks.

The scary thing here is that the stock market was not able to do much better than tread water the last couple of weeks. What will happen if the Fed starts tightening up after Monday's final Treasury auction?

The Big, Big, Big, Big picture: Everything that has happened over the past two years can be viewed as a giant margin call on the carry trade.