Today’s Call: Bank of America (BAC) to rise. Currently $10.83
Rationale: Banks, of which Bank of America, being the largest consumer bank, is an indicator, had some very bad press today as far at their prospects. While we believe that in the long run these stocks are nearly worthless, B of A is likely to rise in the face of such negative sentiment.
Result of Call for June 1, 2011: Greek 5-YR Sovereign Credit Default Swap to fall. Was 1608.50, Currently 1390.97. Good Call.
Calls to Date: Good Calls: 25, Bad Calls: 18, Batting .581
Today’s Call: 10yr Bond Yield to fall (price to rise). Currently 3.064%
Rationale – Duplicating our call from three days ago for a different reason. Moody’s today threatened today to downgrade the US Government’s Debt rating citing their inability to act on the debt ceiling. Not surprisingly, Moody’s simultaneously warned some of the largest domestic holders of US Government Debt, namely Bank of America, Wells Fargo, and Citi of possible downgrades of their debt as well. In the absence of another round of quantitative easing, the FED is now using a scare tactic to push money out of the Treasury markets and into riskier assets. It will fail as the flight to safety that is to come will overwhelm it.
Result of Call for May 27, 2011: 10yr Bond Yield to fall (price to rise). Was 3.064%, Currently 3.03%. Good Call.
Calls to Date: Good Calls: 24, Bad Calls: 17, Batting .585