State Of Denial:Relaxing Mark To Market Rules

Posted by Kris | Monday, March 09, 2009 | | 0 comments »

I totally don't believe that relaxing this rule can help DJIA bounce upwards. IT  is a state of denial. Just wishing the bad assets away by not calculating it is like, not accepting a 90% paper loss on a trade. There is a real reason why prices of assets drop aka consumer demand drop, debt growing but certainly not because of accounting rules.

Btw, DJIA is on an uptrend. I am now watching HIG & MET. Don't think they can go up that far. Higher volume that expected. I have shorted HIG twice. Hopefully, there is a third time. The weak will always get weaker. I will not chase after the huge upward bounce, but instead to wait for the plunge downward.

Shorting MET would be much better choice but i don't follow much the company and also the option volume is quite low before its big plunge to the USD10++ region from the 20s. Besides,MET is one of the largest US insurers out there.

On CNBC’s “Closing Bell” FM contributor Jon Najarian told Dylan Ratigan he sees a catalyst out there that could lift banks [XLF 6.40    0.22  (+3.56%)   ] as much as 100% - and as soon as next week.

The catalyst involves mark-to-market accounting; which has been blamed for forcing banks to record billions of dollars in writedowns.

According to Reuters, a U.S. House Financial Services subcommittee is expected to hold a hearing on mark-to-market accounting rules as soon as March 12. The SEC's chief accountant and the chairman of the Financial Accounting Standards Board, will be asked to testify, the report said.

If that meeting results in the government relaxing mark-to-market rules, Najarian thinks the stock market could explode. 

He says, “if the government relaxes mark-to-market for 12 to 18 months you could see financials move 100% in a matter of hours.”

And he goes on to say, “In fact, I hope you’ll replay the soundbite because if the government relaxes mark-to-market accounting a number of banks stocks will be unbelievable values at these levels.”

But that's not all. Najarian thinks the move could not only light a fire under banks, but the entire market. “If that Reuters report above is right there’s a very good chance the entire market will get a big lift.”

Again, the date to watch is March 12th.

Anime Pic: Tactics