time to buy Dryships?

David White give a great reason: he believes that DRYS will spin off their RIG holdings before diluting the company's equity base by selling up to $500 million in new equity.

There are two other strong reasons: first of all, companies that survive near-death experiences tend to come out stronger than ever. Second, the Baltic Dry Index is finally bouncing back to profitable levels.

Sudden Debt has a great blog post today. He explains why many AAA 'super senior' MBS bonds may even have a negative real value. His suggestion is that the government guarantee a price of $0. But I don't think that Geithner has this in mind. So, what are the implications of the Treasury giving free put options to investors who buy depressed loans from banks? This will obviously increase the value of bank shares, MBS, CDO's, and anything else that is subsidized. But what will decrease in value? How do you hedge against these assets? These are the questions I need to answer. A possible implication would involve a redistribution of institutional money from "good" MBS with no guarantee to "bad" MBS with a guarantee. This might push up mortgage rates. The best way to hedge would be to lower the price below the government guarantee. This may or may not involve collusion between buyers and sellers at the expense of the Treasury.

And Merrill's Rosenberg says it's time to buy 30-yr. Treasuries again, based on collapse in demand for credit.

Credit contraction has continued into 2009

Meanwhile, we can see below that the contraction in credit (is it supply,
or supply AND demand?) has continued into 2009 – bank credit declined $55 billion in the week ending January 28th on top of a $40 billion slide the week before. So far this year, bank credit outstanding has plunged at an 18% annual rate and by a record 11% on a 13-week basis. Not exactly an
environment conducive to a sustained increase in bond yields.

Let's see, $50 bil./wk comes to a $2.5 trillion annual rate. Is the stimulus enough? Is it too much? Will it sink Treasuries and possibly the dollar as well?

Hard to tell. I'd like to pick up some DRYS here at about $6.50. If the market recovers, they'll probably beat it by a mile. I'm going to think about this some more.