Bears are back?

Positions
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+100 GS @ 100.45 vs. cost @ 74.79
+2000 UYG @ 2.47 vs. cost @ 2.00

Markets
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Markets closed off their intraday lows, but still fell approximately 3% across the board as automaker/bank woes resurfaced. The Fed's PPIP (Public-Private Investment Program), announced last week, combined with better than expected economic data (existing/new home sales, durable goods orders) added to a global market rally last week. Enthusiasm faded on Friday and markets across the globe fell on Monday.

The Pee-PIP, as it is so elegantly know in Washington, is a great idea in theory, but fails to address a primary concern. First of all - I ask how this is any different than the idea that Hank Paulson's team came up with at the onset of the TARP (Troubled Asset Relief Fund Program). The idea is great. Remove toxic asset from the banks' balance sheet and the banks will lend! The challenge is going to be pricing. Is the government (taxpayer) going to overpay for the assets relative to the private sector? Will banks sell assets they believe may recover in value for such fire-sale prices? No one truly knows how to value these assets and we hope the bids match the offers.

Regardless, we have seen sharp declines in equity markets over the past 2 sessions, but equity futures are pointing to small gains. Asian markets are generally higher after their woodshed beating on Monday. Is this the start of a bigger downtrend? Let's see how the economic data plays out. We have data tomorrow on nationwide home prices, Chicago area manufacturing, and consumer confidence. Friday's labor market report is expected to show continued large losses (-660k jobs) and a surging unemployment rate of 8.5%.

Hard to think happy thoughts,
TM