Archive for August, 2011

I just found out that a giant in the financial industry — at least a giant to me — passed.

Seems like Bob Lessin was either chairman or vice-chairman of every major investment bank on Wall Street at one point or another.

I had the great pleasure to work closely with Bob about a decade ago… he was an early investor in… and his vote of confidence meant the world to me.

What I loved about Bob was his sheer, honest, infectious enthusiasm… you could tell he loved what he was doing!

Bob was a force… always gracious, helpful, responsive, and especially supportive.

He had such a wonderful energy.

56 is waaay too young, especially for one of the good guys.


To quote the phrase that absolutely everyone is using:  We are indeed in uncharted territory.

The U.S. got downgraded yesterday after the markets closed… from AAA to AA+.

Everyone is expecting a blood bath on Monday.

Everyone is also blasting S&P for the downgrade… for a lot of really good reasons.

But in reading through the many, many rebuttals to the S&P on this… again, many with perfectly fine logic… I’m struck by the surprised, defensive tone.

Let’s call a spade a spade:  Everyone blasted S&P for blowing it during the 2008 meltdown.  This time around, S&P got their rating-agency act together and was crystal clear about what it thought would be a responsible response.  Other than Obama, who took the S&P threat serious from Day 1 and was constantly reminding the American pubic we needed to avoid a downgrade, our collective politicians simply didn’t take S&P serious.

And now that S&P is doing exactly what they said they were going to do, the politicians are crying about it?

Give me a break.

What’s going to happen on Monday?

Everyone believes the markets are going to get creamed (on top of the crashing they did last week).

This is never a comfortable position to take — in fact, it’s downright uncomfortable! — but whenever everyone thinks one way, it usually ends up the other.

The market has a way of pricing itself based on what it sees in the future… the deficit is out of control… spending is out of control… maybe this downgrade is exactly the slap that the U.S. — and by extension, the world — needed?

The market may just, in fact, kinda like that.

At least, for now…

… because while we may not get creamed on Monday… it does feel like there’s just a lot broken with the world right now.

So, will we be up?  down?

I think we’re in for a gut-wrenching rollercoaster ride that will ultimately take us into the 10,000’s on the Dow… right between a crash and record close… right where we should be:  The world isn’t ending (unless oil spikes!)… but we have a lot of fixin’ to do.

I’d like to think I’m a simple guy.

Right now, however, there is way too much going on… too many moving parts… too many interdependencies… too many complexities.

So — no surprise to those that follow this blog — it helps me when I simplify the analysis.

And my favorite question?

What’s oil doing?

Months ago, it misbehaved… jumping from the $70’s and $80’s and threatening to spike to $120 seemingly overnight.

We are now seeing the shock of that rippling through the world economy.

Where is oil now?

Mid $80’s… with the feeling that it may be heading back to the $70’s.

That’s better than all the stimulus in the world… even better if we see a 6 handle.

And I’m sorry to say something so cruel — but that would be better than even the employment picture turning around.

Good to know that we’ll be ok as long as oil behaves itself.