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Buying The Geithner Package

It's buy the rumor on the stimulus package, the Geithner package, and hopes that mark-to-market will be modified.

Never mind that we do not know the final outlines of the stimulus, are not clear on what Geithner will be proposing (expand TALF, bad bank or no bad bank), and eliminating mark-to-market is still a long shot.

It's buy the rumor:

1) Sell safety, buy beta. Safe stocks like Exxon are lagging higher beta stocks like Potash and Google this week.

In fact, techs have been notable out-performers this week, with the NASDAQ up 6.5 percent vs. 2.7 percent for the Dow. It is very rare for the NASDAQ to outperform the Dow by 4 percentage points.

2) Chinese stocks at the highest level since October on hopes that stimulus (in U.S. and elsewhere) will help demand globally;

3) Retailers stronger on short covering. Retailers have been heavily shorted, in fact too many investors have used retail to short and hedge the market. That is reversing, at least today. A surprising number of companies raised guidance or said they would exceed previous guidance (Ross Stores, Aeropostale, Hot Topic, Macy's, Kohls, Gap, Gymboree).


4) Regional banks are strong today on assumptions that any aid will help stabilize them; Bank of America up 10 percent as Ladenburg's Dick Bove says the current fears about the bank (that it will fail and be nationalized) "make no sense whatsoever."

    • Obama: Job Losses Prove Stimulus Needed Now



Questions? Comments? tradertalk@cnbc.com

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