Mark-to-Model

Trade

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+100 FAZ @ 17.02

Positions

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+100 GS @ 114.34 vs. cost @ 74.79

+2000 UYG @ 2.89 vs. cost @ 2.00

Markets

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Changes to mark-to-market accounting rules have caused another big rally with breadth. Nasdaq turns positive for the year and Jim Cramer calls the end of the depression. Mark-to-market accounting rules have required toxic assets to be valued at less than 20 cents on the dollar even if the holder was planning on holding-to-maturity. Nonetheless, the relaxing of the rules gave a big boost to financials as the Tier-1 Capital ratio becomes relevant again. US factory orders rose for the first time in 7 months as well. With great exception to the labor market, we have seem many positive economic data indicators (existing/new home sales, pending home sales, durable goods orders, construction spending, factory orders). 

So this seems like a perfect time to get short financials. FAZ is a 3x leveraged financial short and I believe that financials still have a rocky road ahead. If I am wrong, the position will be overpowered by my long positions in GS and UYG. Markets are paring some gains, but all indices are up greater than 2%.

Live from the turn

TM