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Trading > The Amish Connection

Out Of The Woods?

Thomas Yoder | Tue, 03/18/2008 - 9:19am | F, Financial, Inflation, Volatility |  Add a comment

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The big move in the financials the past two days more than likely caught stubborn,  not so well funded ,shorts...well....maybe wishing they had covered. And perhaps we have seen the end of this cycle even though the volatility in the sector has left almost no base building at this point, unless you count the huge volume, say, in Lehman as the base. So is the "deleveraging" over with the Federal Reserve stepping into to monetize the private debt no matter what the presumed future cost in terms of inflation? The financials have circled the wagons and with good cause. Let's take a look at the debt to equity ratios of some of the contenders and pretenders.

Company< /u>                                 Debt/Equity* From Tradestaion research highlights.

MF Global (MF)                     2,518.0

Lehman  (LEH)                       702.0

Bear Stearns (BSC)                 679.0

Merril Lynch (MER)                1,824.0

UBS                                        1,746.0

Countrywide (CFC)                 663.0

Thornburg Mortgage (TMA)    1943.0* Not long ago this was 1400.

What can the Federal Reserve do to prevent the continuing devaluation of the housing stock which acts to increase the leverage?  Is inflation our friend?

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