AIG, CNBC, General Hospital and Not Taking the Bait

AIG has become a soap opera directed by the folks at CNBC. We are pounded with “breaking news” every five minutes and we are nowhere closer to finality.It was a taxing day and I made some money but I stopped trading the financials both from the long and short side after the 600th breaking news report, and moved over to the the rally in the commodities. I played MEE and APC for a nice trade on the long side and am going home flat.

My personal view is that as bad as the AIG situation is, it is not nearly as bad as what the media is saying it is. I closely monitored the comments from counter parties today, and from what saw, about 90% of them said their counter party risk to AIG was negligible. The have forgotten more than I will know with all this but I do know the media and they do love to exaggerate. If Gasparino’s ego was any bigger they would barley fit it into the Garden.

With that said, I still think the market and the financials are going much lower. Goldman Sachs, the fortunate son, is now being traded as the red headed step child. Morgan Stanley reports a good number and it’s just who cares. The skeptics want to know “what’s really there?”

With sub prime vaporized, no mergers and acquisitions, no IPO market and tight credit, the revenue models that the financials have been living on have also vaporized. Back to four times earnings for the financials.

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