Guest View
User: Pass: | become a member
Archive for 2008

Auction Rate Securities

Michael Steinberg at Click Broker commenting on Auction Rate Securities and the buyback by UBS, MER and C. 

Auction Rate Securities: Who’s to Blame?

The Wall Street Journal “UBS to Pay $19 Billion As Auction Mess Hits Wall Street” reports on state attorneys general entering into settlements with banks on auction rate securities (ARS). UBS (UBS), Merrill Lynch (MER) and Citigroup (C) have agreed to buyback more than $36B as well as pay fines. The process will start with individuals and charities in October and institutional clients in mid 2010. Over 100K individuals were included in the more than $330B sold.

The basis of the complaint is that investors were misled about the safety and liquidity of ARS. While the market was drying up, the banks temporarily stepped in to support the auctions. This gave the illusion of liquidity as the bank tried to unload their inventory through their retail channels. Commissions for the product were increased at many firms, and a Merrill Lynch analyst’s dire warning was enhanced to say only ARS offered “higher returns in exchange for less liquidity.” Apparently, even this subtle warning was buried so deep in Frances Constable’s report that no one found it. Merrill Lynch even categorized ARS as “other cash” on clients’ brokerage statements.

In "Auction Rate Bonds are not Cash Equivalents" and "Retail Investors stuck with Auction Rate Securities", I wrote about how investors should have known that they actually purchased long term bonds. And in "Mechanics of Auction Rate Securities", I explained the convoluted market for ARS almost guarantees liquidity crunches from time to time. So how were so many smart people lolled into complacency? I think the answers are greed and laziness.

Sure the banks consciously tried to hide the liquidity risks, and the reduced monoline ratings accentuated the problems. But, investors should have understood the maturity of the bonds they purchased, and the market for trading them. Retail investors, charities, and small and medium sized business are very lucky to be bailed out. It is difficult to know how large businesses will fare. Those being helped should keep in mind that the only reason they are being helped is the desecration the ARS caused public finance. The attorneys general had little sympathy for investors.

This scandal reminds me of the analysts’ scandal emanating from…
continue reading





“The Dictator’s Approach to Electoral Patterns”

This is a disturbing analysis of Stalin’s "repression and elimination of massive numbers of ordinary citizens," that I read while looking for interesting subjects. It may be peripherally related to other weekend topics in the sense that gaining support and silencing others can be accomplished by means other than killing dissenters, such as lies and fear tactics.  Courtesy of Mark Thoma, Economist’s View.

"The Dictator’s Approach to Electoral Patterns"

Were Stalin’s mass killings a "rational" attempt to avoid losing power in a revolution rather than the acts of a deranged dictator?:

The dictator’s approach to electoral patterns, by Konstantin Sonin, Vox EU: While the people of the developed world are fascinated by electoral campaigns, more than a half of the world’s population does not have a chance to participate in elections. Yet any dictator needs some popular support; the difference is that he can trim his constituency, eliminating those who do not support him.

For democratic politics, Glaeser and Shleifer (2005) described how politicians use policy leverage to force some social groups out of their districts. In non-democracies, examples abound. Fidel Castro in Cuba and Robert Mugabe in Zimbabwe pushed thousands of “undesirables” into emigration, increasing the share of supporters among those who remained. “Ethnic cleansing”, as ugly as ubiquitous a means of boosting support for the government in times of war, is another example of trimming the constituency. Dictators in the former Soviet Union countries such as Alexander Lukashenko of Belarus or Islom Karimov of Uzbekistan rely upon open borders to force out those who disagree with their leadership. In totalitarian countries, the dictator can – in extreme cases – physically eliminate those who would not have voted for him in open elections.

One approach to understand the structure of dictatorial behaviour is to study the strategy of the most famous of them, Joseph Stalin of Soviet Russia. Twentieth century dictators, from communist leaders to Saddam Hussein, have claimed to be his disciples in the science of power.

Stalin’s mass terror campaigns

Stalin’s killing and imprisonment of millions of Soviet citizens are cited as irrational acts attributed by psychiatrists to paranoia or worse mental illness (Rancour-Lafferiere, 2004), to his violent Caucasus upbringing (Baberowski, 2005), or to other idiosyncratic factors that render the deaths of millions a "historical accident." If dictatorial behaviour, such as this, is the consequence of personality quirks, historical accidents, or mental illness, further economic investigation


continue reading





Mission creep at the Fed

Here’s an excerpt from an interesting article in The Econonist on the Federal Reserve.

Mission creep at the Fed

Excerpt:  "In a special section marking the anniversary of the credit crunch, we start with the Federal Reserve. Its creative response to the crisis may have staved off catastrophe, but may also have put its independence at risk

 

Getty Images

WHEN he was still in academia, Ben Bernanke once argued that Franklin Roosevelt’s greatest contribution to ending the Great Depression was not a specific policy, but his “willingness to be aggressive and to experiment…to do whatever it took to get the country moving again.” That would fairly describe how Mr Bernanke has battled perhaps the biggest financial crisis since FDR’s time, which erupted one year ago this week.

The chairman of the Federal Reserve has cast aside any notion that central bankers should be boring. He has slashed interest rates; rolled out a dizzying array of new lending programmes; backed the debt of Bear Stearns, a failing investment bank; agreed to lend to Fannie Mae and Freddie Mac, America’s troubled, quasi-private mortgage agencies; argued for fiscal stimulus and mortgage write-downs; and proposed an expansion of the Fed’s regulatory domain.

 

The Fed did not seek its bigger role, but acted because no one else could. Mr Bernanke is now consumed with responsibilities he never imagined when he became chairman in early 2006. Since the crisis broke, he has been at his desk seven days a week, fuelled by cans of Diet Dr Pepper from a small refrigerator in his office. Even if his aggression and experimentation do not prevent a recession, they have softened the impact of falling house prices, rising default rates and the credit squeeze on America’s economy. But they have also created new political risks for the Fed.

The central bank is lending to private companies on an unprecedented scale and is thus making decisions it long sought to avoid about the allocation of credit. It is also acquiring new powers of oversight. Politicians could chafe at the Fed’s power: why, they might ask, should unelected officials choose who benefits from taxpayers’ money? And they might press the central bank to pursue political ends—such as propping up favoured borrowers—that interfere with monetary policy.

Events beyond the Fed’s control magnify these risks. Unemployment and inflation are likely to remain uncomfortably high for the next…
continue reading





Weekend Reading – Always in Progress!

I have a lot of catching up to do so this may get long

First off, we have a fantastic graphic from a site Barry Ritholtz found called Oil Change USA, which tracks the dirty dealing of the energy industry.  It’s not very surprising to see who’s in the center of the campaign money train this year – Mr. DRILLDRILLDRILL himself, Johnny McSame, who’s already gotten $971,418 in direct contributions and we haven’t even had the convention yet – that’s astounding!

I don’t know if the copy of the image will work but if you go to the web-site, you can mouse over each barrel of oil and see where the money is oozing in from.  Note that these figures do NOT include the money funneled into McCain, the Senator or from "Leadership PACs" as that’s a whole separate barrel of slime… 

Of course the oil companies have no actual principles and they are hedging their bets and Barack got $345K for his campaign but no money at all from PACs, who tend to expect direct favors for their money so they gravitate towards the most pliable candidates.  Also great on the site is the "Vote Tracker" which show’s you just what an oil company can buy when it spends it’s money wisely like the perfect voting records on oil legistlation of Robert Bennett (R – UT), Michael Crapo (R – ID), Dick Shelby (R – AL, was a Democrat until the Republicans gained a majority in 1994, then switched so you know he’s got real principles!), Ted Stevens (R – AK, indicted), John Cronyn (R – TX), David Vitter (R – LA), James Inhofe (R – OK), Trent Lott (R – MS, brother in-law indicted – he resigned),  Elizabeth Dole (R – NC), Mitch McConnell (R – KY), Lisa Murkowski (R – AL), John Isakson (R – GA), C. Saxby Chambliss (R – GA) (that’s 2 from GA so guess who’s getting offshore drilling for XMas!), Jim DeMint (R – SC), George Voinvich (R – OH), Jefferson Sessions (R – AL), Wayne Allard (R – CO), Orin Hatch (R – UT), Pat Roberts (R – KS), Christopher Bond (R – MO), Larry Craig (R – ID), Jim Bunning (R – KY), Thad Cochran (R – MS), Charles Grassley (R – IA), Charles Hagel (R – NE), Samuel Brownback (R –…
continue reading





Water

Here’s an article by Graham Summers on the tightening supplies of fresh H2O.  

Opportunities in the Real Crisis: Water

We’ve got a water problem.

The amount of water on this planet hasn’t really changed in the last million years. However, today there are over six billion humans drinking and bathing in the stuff. And while the world’s population has doubled in the last 60 years, water consumption has more than tripled over the same time period.

And supplies are starting to get tight.

Less than 2% of the world’s water supplies is fresh. Even less is easily accessible. According to the Financial Times, about a quarter of the world’s population already lives in an area of physical water shortage— a place where water simply doesn’t exist in abundance. An additional billion people live in areas of economic water shortage— areas where water exists but there is not the necessary infrastructure to extract and distribute it.

This issue affects the whole world, not just developing countries.

At Goldman Sach’s “Top Five Risks” conference earlier in June, the investment bank announced that water was the “petroleum for the next century.” According to the presentations at the conference, the US alone needs to invest over $1 trillion in new piping and waste water plants in the next 12 years alone.

Legal skirmishes over water rights are already showing up in the headlines. However, currently they are more about making money than survival.

BusinessWeek recently ran a cover story on billionaire T. Boone Pickens’ efforts to acquire water rights from Texas landowners in order to transport the stuff to Dallas and other thirsty, fast-growing Texas cities. Similar issues are showing up in Egypt where the government has threatened military attack against any country that draws water from the Nile without a contract.

However, the area where water shortages are most acute is China.

China comprises 21% of the world’s population, but controls only 7% its water supply. And its rapidly expanding population is requiring larger and larger food supplies as consumers adopt a more western, protein heavy diet.

It takes 1.5 cubic meters of water to produce 1 kg of corn. In contrast it takes six cubic meters to produce a 1 kg of poultry and 15 cubic meters to produce a 1 kg of beef. And Chinese meat consumption
continue reading





Decaying Infrastructure

Mish discusses the troubling state of our infrastructure (noting that money spent in Iraq could have been used for rebuilding our country). - Ilene

Rebuilding America’s Decaying Infrastructure

It’s no secret that US infrastructure is in decay. Roads, bridges, and leaking dams are just some of the problems.

Popular Mechanics has written a special report on

Rebuilding America : How to Fix U.S. Infrastructure. Inquiring minds will want to take a look.

Americans need to face the sobering reality that the country’s infrastructure is in trouble. Most of it was built in the 20th century, during the greatest age of construction the world has seen. The continent was wired for electricity and phone service, and colossal projects, including the Hoover Dam, the Golden Gate Bridge and the interstate highway system, were completed—along with thousands of smaller bridges, water tunnels and more. We are living off an inheritance of steel-and-concrete wonders, grander than anything built by Rome, constructed by everyday giants bearing trowels, welding torches and rivet guns.

To fix our infrastructure, from dilapidated levees to congested roadways and ports, the American Society of Civil Engineers (ASCE) has estimated that the country needs to spend $1.6 trillion over five years. Only $1 trillion of that, the organization says, has been allocated or promised. Accepting those numbers, we need an additional $600 billion to reverse the slide of infrastructure, a figure that seems as difficult to produce as it is to comprehend.

Or is it? Spread over five years, ASCE is calling for $120 billion per year. The economic stimulus package signed into law in February is sending $168 billion out to individuals to spend, in a best-case scenario, on new TVs and restaurant meals. That money could have bought a lot of concrete. While more funds are needed, how they’re spent is equally important. New information technology, fresh engineering and advanced materials can help us not just restore, but improve our infrastructure in the coming century. Planned and managed properly, next-gen projects can be smarter and more resilient than what came before. Engineers and construction workers know how to get the job done. But first, we must gather the national will.

Infrastructure Race Against Time

Click Here To Play Video

Expensive Problems

Instead of invading Iraq, a country that did not attack us and was certainly no


continue reading





Presidential Term Cycle

The article below compares the average behavior of the stock market over the typcial presidential term to the current cycle.  Generally, this Y4 is unusually weak, we should be seeing moderate gains. Courtesy of Steve LeCompte of the CXO Advisory Group LLC.

Visualization of the Stock Market Across the Typical Presidential Term

Taking the same approach as used for the calendar year at Trading Calendar, what is the typical cumulative return profile for the U.S. stock market over the four-year presidential term?  Using monthly closing levels of the S&P 500 index from December 1951 through July 2008 (13+ presidential terms), we find that:

The following chart plots the average cumulative return of the S&P 500 index across the four years of the presidential term (Y1-Y4) for the entire sample period based on monthly data (M12=December). The return profile indicates that all of Y1 and most of Y2 are approximately flat. Strong gains follow from late in Y2 to two-thirds through Y3. Moderate gains ensue through the end of the term.

For comparison, the chart includes a plot of the cumulative return of the S&P 500 index for the 2005-2008 presidential term through July 2008. This current term is roughly typical until Y4.

Is the average behavior persistent over time?

One way to test persistence of a pattern is to break the sample into subsamples to see whether the subsamples are consistent. The next chart shows the average cumulative return of the S&P 500 index across the four years of the presidential term for two subsamples of approximately equal duration (about seven terms each), 1953-1980 and 1981-2008, again based on monthly data. The shapes of the two profiles appear similar enough to warrant a cautious belief in some persistence.

 

 In summary, there is some evidence to support a belief in three phases of the U.S. stock market across the typical presidential term: (1) flat at the beginning; (2) strongly advancing in middle; and, (3) moderately advancing at the end. However, the data span a small sample of presidential terms, so confidence in this view is low.

For related research, see Blog Synthesis: Politics and the Stock Market and Blog Synthesis: Calendar Effects. See especially our blog entries of 1/4/08 and 6/16/08 for other aspects of the relationship between the presidential election cycle and stock market behavior.

 





Weekend Wrap-Up

That was much better!

We noted the other day that, while this was a "nice" recovery from our perspective, it was a spectacular recovery from an international perspective as the rising dollar coinciding with rising US equities gives our markets a very nice, booming V bottom from our July 15th low.  The S&P priced in Euros is up 15% from the bottom in less than a month yet remains 25% off it’s highs of last May, where the market peaked on a currency-adjusted basis (see lower, weekly chart).

It’s good to review my Weekly Wrap-Up of July 13th, where I did, in fact call the bottom and gave an extensive overview of my reasons for doing so.  At the time I said (as we had moved to 70% invested, trying to pick a bottom): "I wish there were a more painless way to pick a bottom but the only way to get ahead of the curve is to take a little damage at the bottom.  We need to be very realistic about what happens next week and fall back to a more conservative strategy if we break below 11,000 but I’m really hoping something comes out by pre-market Monday to let us put the GSE issue behind us so we can get back to focusing on a very busy earnings week."

As I had said that weekend, just because you call a bottom doesn’t mean you get it and that Monday we discussed the manic-depressive nature of the markets as we were cynical of the sudden recovery, even though we were playing for it.  That morning I said "Here’s my problem – I’m a fundamentalist, so I believe a company has value and an economy will do X and not Y and I don’t believe that changes from day to day to any great degree.  Our basic investing strategy is that, when we see a stock deviating from our percieved "value" of a company and we feel the risk/reward is justified over the time frame – we buy some options looking for a return to the norms.  So it disturbs me when, for example, a massive financial institution like FRE or FNM can, through the wisdom of Wall Street and the "efficient market," lose 1/2 it’s value at 9:30 and then get it all back at the end of the day.  When the Dow goes up and down
continue reading





“This Time It’s Different”

Discussion of the four words "this time it’s different," courtesy of Gary Gordon, ETF Expert at Pacific Park Financial, Inc.Nasdaq

Stock Market Recovery And ETFs: Another Take On "Four Little Words"

Jonathan Burton for MarketWatch recently posted a feature about the 4 most dangerous words in the vernacular of investing. Specifically… "This time it’s different."

As Burton explains it, the late 90s/early 2000s tech bubble is a prime example. Stock market valuations no longer mattered… it was a new era of dot-com excitement and endless possibility. Of course, it wasn’t a new era and the stock market suffered one of the worst bears in its history from 2000-2002.

Real estate’s collapse is another. "This time it’s different" led to the perfect storm of imprudent lending standards, get-rich quick home flipping and faulty declarations of ever-increasing demand amid limited  supply. It wasn’t a new era for real estate either… as the 2007-2009 real estate crash continues.

Some say that energy and commodities may be the next to falter… if they haven’t already; that is, you’ve got alarmist projections about demand for all commodities far outstripping supply, crippling consuming nations and causing greater geopolitical tensions. It’s not that commodities haven’t been hot, but "this time it’s different" has led some to over-allocate to energy/resources at a time when demand could possibly slow.

Yet "this time it’s different" thinking can be harmful in a different sense. Just as extreme optimism leads to an inability to see impending doom, extreme pessimism is going to keep investors from making wise purchasing decisions for long-term wealth.

If you read the mainstream media with any degree of regularity, you can’t help but feel that the U.S. economy is lost forever. Our dollar is on its way to being worthless. Our system of credit will never operate smoothly again. And Wall Street will be mired in a bearish grip for many years to come.

Why? Because this time it’s different. Recovery for the investment markets? Impossible… because this time it’s different.

Hogwash!

History shows that the mid-point of a recession typically marks a stock market bottom. In other words, new bull markets begin when things couldn’t possibly seem any worse. Just as they did in October 2002… or March 2003… depending on who’s calculating.

The 2nd half of a recession and the


continue reading





Spotlight on Euro, Dollar

 

Mish’s thoughts on the Euro and the dollar; he would not be surprised to see the bounce in the dollar going further than most people think.

Trichet Puts Spotlight on the Euro, Dollar


Bloomberg is reporting Euro Slumps to Five-Month Low on Reduced Bets for Higher Rates.

The euro slumped to a five-month low against the dollar as traders pared bets that the European Central Bank will raise interest rates due to a slowing economy.

The euro also fell to a three-week low versus Japan’s currency after ECB President Jean-Claude Trichet said economic growth will be "particularly weak" through the third quarter. The dollar headed for its biggest weekly gain against the yen in almost two months as oil dropped 18 percent from a record. The Australian dollar declined for a ninth day, the longest stretch since 1980, as futures show the central bank will cut borrowing costs this year.

"Trichet triggered the euro’s decline when he went out of his way to highlight weakness in the economy," said Saburo Matsumoto, senior manager of foreign-exchange sales at Sumitomo Trust & Banking Co. in Tokyo. "A rate increase is off the cards for the time being, and the euro is likely to adjust lower."

Trichet said yesterday he has "no bias" or "pre-commitment" toward future rate movements after the central bank left the main refinancing rate at 4.25 percent. He told reporters at a press conference in Frankfurt that while inflation remains a threat, risks to economic growth are "materializing."

Risks To Growth Are Obvious

Risks to growth have been materializing for so long now that they should have long ago been obvious to everyone. In the US, "Talk Of Rate Hikes Is Comical".

With Trichet signaling he is done hiking, a signal that was not expected, there is now room for the US dollar to rally. With that in mind, let’s take a look at a few charts.

$USD – US$ Index Daily

Click on chart for sharper image

On the daily chart the US$ crossed resistance and sitting right on the 200 day exponential moving average. It has not closed above the 200 EMA since March of 2006.

$USD – US$ Index Monthly

Click on chart for sharper image

What looks like a rally


continue reading





 

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Phil's Favorites

Tim Cook: "I'm Proud to be Gay"

Tim Cook discusses being gay on BusinessWeek. Recent bullying statistics show that gay teens are from 2 to 3 times more likely to commit suicide than others, and almost 30% of completed suicides are related to problems dealing with sexual identity. Perhaps Tim Cook's story will help people accept their differences, whatever they are, and move on to achieve their goals. 

Excerpt:

Being gay has given me a deeper understanding of what it means to be in the minority and provided a window into the challenges that people in other minority groups deal with every day. It’s made me more empathetic, which has led to a richer life. It’s been tough and uncomfortable at times, but it has given me the confidence to be myself, to follow my own path, and to rise above adversity and bigotry. It’s also given me the s...



more from Ilene

Zero Hedge

Caption Contest: "So Bullish It Hurts" Edition

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Don't worry the pain will stop soon... (one way or another)

 

 

h/t @JoeSaluzzi

...

more from Tyler

Chart School

Visualizing GDP: A Look Inside the Q3 Advance Estimate

Courtesy of Doug Short.

Note from dshort: The charts in this commentary have been updated to include the Q3 2014 Advance Estimate.

The chart below is my way to visualize real GDP change since 2007. I've used a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics:

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

Let's take a closer look at the cont...



more from Chart School

Insider Scoop

UPDATE: D.A. Davidson Reiterates On Rogers Corporation On Strong Q3 Upside

Courtesy of Benzinga.

Related ROG Earnings Scheduled For October 28, 2014 Earnings Scheduled For July 29, 2014

In a report published Thursday, D.A. Davidson analyst Avinash Kant reiterated a Buy rating on Rogers Corporation (NYSE: ROG), and raised the price target from $71.00 to $77.00.

In the report, D.A. Davidson noted, “ROG reported Q3:CY14 operating EPS of $1.09 on record revenues of $163.1 million (up 6% from Q2:CY14 and up 14% from Q3:CY13); well above consensus expectat...



http://www.insidercow.com/ more from Insider

All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David

Sabrient

Sector Detector: Bullish conviction returns, but market likely to consolidate its V-bottom

Courtesy of Sabrient Systems and Gradient Analytics

Bulls showed renewed backbone last week and drew a line in the sand for the bears, buying with gusto into weakness as I suggested they would. After all, this was the buying opportunity they had been waiting for. As if on cue, the start of the World Series launched the rapid market reversal and recovery. However, there is little chance that the rally will go straight up. Volatility is back, and I would look for prices to consolidate at this level before making an attempt to go higher. I still question whether the S&P 500 will ultimately achieve a new high before year end.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then o...



more from Sabrient

OpTrader

Swing trading portfolio - week of October 27th, 2014

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the latest Stock World Weekly. Enjoy!

(As usual, use your PSW user name and password to sign in. You may also take a free trial.) 

 

#455292918 / gettyimages.com

 

...

more from SWW

Market Shadows

Bill Ackman's Big Pharma Trade Is Making Wall Street A Super Awkward Place

 

#452525522 / gettyimages.com

Intro by Ilene

If you're following Valeant's proposed takeover (or merger) of Allergan and the lawsuit by Allergan against Valeant and notorious hedge fund manager William Ackman, for insider trading this is a must-read article. 

Linette Lopez describes the roles played by key Wall Street hedge fund owners--Jim Chanos, John Paulson, and Mason Morfit, a major shareholder in Valeant. Linette goes through the con...



more from Paul

Option Review

LUV Options Active Ahead Of Earnings

There is lots of action in Southwest Airlines Co. November expiry call options today ahead of the air carrier’s third-quarter earnings report prior to the opening bell on Thursday. Among the large block trades initiated throughout the trading session, there appears to be at least one options market participant establishing a call spread in far out of the money options. It looks like the trader purchased a 4,000-lot Nov 37/39 call spread at a net premium of $0.40 apiece. The trade makes money if shares in Southwest rally 9.0% over the current price of $34.32 to exceed the effective breakeven point at $37.40, with maximum potential profits of $1.60 per contract available in the event that shares jump more than 13% to $39.00 by expiration. In September, the stock tou...



more from Caitlin

Digital Currencies

Goodbye War On Drugs, Hello Libertarian Utopia. Dominic Frisby's Bitcoin: The Future of Money?

Courtesy of John Rubino.

Now that bitcoin has subsided from speculative bubble to functioning currency (see the price chart below), it’s safe for non-speculators to explore the whole “cryptocurrency” thing. So…is bitcoin or one of its growing list of competitors a useful addition to the average person’s array of bank accounts and credit cards — or is it a replacement for most of those things? And how does one make this transition?

With his usual excellent timing, London-based financial writer/actor/stand-up comic Dominic Frisby has just released Bitcoin: The Future of Money? in which he explains all this in terms most readers will have no tr...



more from Bitcoin

Pharmboy

Biotechs & Bubbles

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



more from Pharmboy



FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>