California State Controller John Chiang announced on January 26 that California’s bills exceed its tax revenues and credit line and that the state is going to print its own money known as IOUs. The template is already designed.
Instead of receiving their state tax refunds in dollars, California residents will receive IOUs. Student aid and payments to disabled and needy will also come in the form of IOUs. California is negotiating with banks to get them to accept the IOUs as deposits.
California is often identified as the world’s eighth largest economy, and it is broke.
A person might think that California’s plight would introduce some realism into Washington, DC, but it has not. President Obama is taking steps to intensify the war in Afghanistan and, perhaps, to expand it to Pakistan.
Obama has retained the Republican warmongers in the Pentagon, and the US continues to illegally bomb Pakistan and to murder its civilians. At the World Economic Forum at Davos this week, Pakistan’s prime minister, Y. R. Gilani, said that the American attacks on Pakistan are counterproductive and done without Pakistan’s permission. In an interview with CNN, Gilani said: “I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan.”
How long before Washington will be printing money?
On January 28 Obama announced his $825 billion bailout plan. This comes on top of President Bush’s $700 billion bailout of just a few months ago.
Obama says his plan will be more transparent than Bush’s and will do more good for the economy.
As large as the bailouts are--a total of $1.5 trillion in four months--the amount is small in relation to the reported size of troubled assets that are in the tens of trillions of dollars. How do we know that by June there won’t be another bailout, say $950 billion?
Where will the money come from?
Obama’s bailout plan, added to the FY 2009 budget deficit he has inherited from Bush, opens a gaping expenditure hole of about $3 trillion.
Who is going to purchase $3 trillion of US Treasury…
That’s the message from author Michael Panzner, who has contributed many excellent articles to Phil’s Favorites and now has a new book out on the shelves of your local book store, or Amazon. – Ilene
My latest book, When Giants Fall: An Economic Roadmap for the End of the American Era, has just been published by John Wiley & Sons. It is already on the shelves at Barnes & Noble, and will soon be in stock at Amazon.com, Borders, and many other booksellers around the country.
For a taste of what it’s all about, here is the Introduction:
In late 2007, a Chinese submarine suddenly “popped up” in the middle of U.S. military exercises taking place in the Pacific Ocean. According to Matthew Hickley of the United Kingdom’s Daily Mail, the 160-foot Song class diesel-electric attack submarine “sailed within viable range for launching torpedoes or missiles ” at the USS Kitty Hawk, a 1,000-foot aircraft carrier with 4,500 personnel on board that was being guarded by a dozen warships and at least two submarines. The newspaper added—in a report that received scant U.S. media attention—that American military chiefs “were left dumbstruck.” One North Atlantic Treaty Organization (NATO) official said that “the effect was ‘as big a shock as the Russians launching Sputnik ’—a reference to the Soviet Union’s first orbiting satellite in 1957 which marked the start of the space age.”
But it isn’t only in the military arena where there are signs that the United States is not quite in a league of its own. An August 2007 New York Times editorial, “World’s Best Medical Care?” highlighted two studies that revealed the U.S. health care system, contrary to popular belief, had fallen significantly behind those of other nations. The first, published by the World Health Organization seven years earlier, ranked the United States 37th out of 191 countries worldwide. The second, detailed in May by the well-regarded Commonwealth Fund, rated the United States “last or next-to-last compared with five other nations—Australia, Canada, Germany, New Zealand, and the United Kingdom—on most measures of performance, including quality of
How did Robin do this week with the market call? Comments from the weekly blog posted 1/24/2009:
“The INDU is trying to break resistance at 8348. The index has shown me that it wants to go higher as evidenced by a “Tweezer like” candlestick formation on Thursday and Friday. The DOW will have significant difficulty breaking below 7900 [...]
-7900-8000 has exhibited remarkable support. Once again, there does not appear to be strong conviction to drive the INDU below support as evidenced by decreasing volume. We are in a trading range between 7900-8405. We may linger briefly at this level and confirm support before once again making another attempt to breach immediate resistance at 8340-8405. [...]
The Bear put is the mirror image of the Bull Call. It is a debit spread which means that the trader must pay to initiate the trade. The strategy optimizes a bearish trend and is comprised of two trading instruments. 1) the long put and 2) the short put. Each [...]
In (partial) defense of Peter Schiff, he made some correct calls, but unfortunately did not turn these calls into profits for his clients. True, it was a particularly vicious year for being only part right!
Geez…. Mish’s post from Sunday night, “Peter Schiff Was Wrong”, has sure generated a lot of interest and controversy. That’s because Peter Schiff is a polarizing figure. People tend to either love him or hate him and have a hard time coming to a balanced, realistic assesment of him.
Today, The Wall Street Journal weighed in with a piece on the front of their Money & Investing section: “Right Forecast By Schiff, Wrong Plan?” (subscription required – [but see excerpt below]). In it, they mainly rehash criticisms from Mish’s piece. Schiff was wrong about decoupling, wrong about commodities, wrong about the dollar in 2008.
They provide a couple of specific examples of how this played out for specific Euro Pacific clients. Richard De Gennaro, an 83-year-old retired Harvard University librarian, put $100,000 into a Euro Pacific account early in 2008. The account is now worth $37,000 – a 63% plunge.
Similarly, Brian Kullberg, a design engineer in Portland, Ore, put $70,000 into a Euro Pacific account early last year. That account is now worth about $25,000 – a similar 64% drop.
Schiff has put up a piece defending himself: “Peter Schiff Answers His Critics”. The main defense is that short term market fluctuations don’t disprove his longer term investment theses: “[Mish] is confusing short term market fluctuations with long term economic trends……I never held myself out to be a market timer. My advice was always geared to long term investors.”
The truth, as usual, lies somewhere in the middle. Peter Schiff deserves a lot of credit for the correct calls he made about the housing bubble, the financial system and the US economy – not only for the calls but the intransigent way in which…
What a way to start the year! I’ve decided to delve into the bear case this weekend to see if I can talk myself out of thinking we’ve suffered enough at the 8,000 line. I’ll be posting as I read in a Weekend Reading section but I thought it would be a good idea to first review what worked and what did not work in a choppy week.
After a solid and active week of picks last week, we went into this week with a much more cautious attitude. Monday morning I warned that the VIX would fall and it was time to start grabbing those March premiums. The VIX did drop 20% (and spiked all the way to 34 on Wednesday) but recovered nicely into Friday, which is why I was up all night Thursday working on our Buy List, as it was once again a good time to enter some hedged plays. But on Monday Morning, I was in no mood to buy anything and my comment that morning was: "XOM and CVX together on Friday (15% of the Dow weighting) have me really, really, REALLY worried that we’ll get a -5% GDP along with poor earnings from them and people are going to act like the world is ending so it’s going to be a tricky play this week but lots of fun playing the ultras."
In the end, XOM and CVX did not kill us but the 33% decline in XOM profits didn’t inspire a lot of confidence in the XLE, which fell 6% from Wednesday’s silly high and finished at the low for the week. The bottom-line takeaway from XOM’s report is that revenues are way off and even the best companies are getting hit very hard – what chance do the little guys have? I pointed out on Monday that January is supposed to be THE BEST month of the year for the markets – let’s hope not! Of course I mentioned gold again, stating: "investors look for REAL safety as opposed to the very imaginary safety of fiat currency, no matter what country is issuing the paper" and the January chart really emphasises why I do, indeed, like gold.
Rolling CAT puts we sold to the March $30 puts at $2 is not helping so far as CAT fell another…
No need to debate whether science has been held hostage for eight years, but we can ask what areas of science suffered the most and what can we do about it now? This article discusses one of the greatest harms flowing from a combination of failed policies in medical science tainted by greed, willful blindness (or worse), and political collusion, to the detriment of a generation of our children. – Ilene
Even as the evidence connecting America’s autism epidemic to vaccines mounts, dead-enders at the Centers for Disease Control (CDC) — many of whom promoted the current vaccine schedule and others with strong ties to the vaccine industry — are trying to delay the day of reckoning by creating questionable studies designed to discredit any potential vaccine-autism link and by derailing authentic studies.
On January 12, a cadre of mid-level health bureaucrats left over from the Bush administration ignored Federal requirements for advance notice in order to vote to quietly strip vaccine research studies from funding allocated by Congress in the Combating Autism Act (CAA) of 2006. Members of Congress had said that this money should be used to study the vaccine-autism connection.
These rogue bureaucrats — members of the Interagency Autism Coordinating Committee — held an unannounced vote to remove previously approved vaccine studies from funding under the CAA. Nearly all of the "Federal" members of the panel voted to remove the two studies, whose estimated cost was $16 million – or 1.6% of the billion dollars authorized by Congress for autism. The panel’s civilian members, in contrast, voted nearly unanimously to retain the funding.
IACC’s action to halt vaccine-autism research flies in the face of congressional intent. The bill’s authors clearly stated that vaccine research should be funded. Even the esteemed Institute of Medicine has condemned CDC’s methods. In 2005, an IOM panel condemned CDC for its "lack of transparency" in vaccine-autism research.
The bureaucrats responsible for this scandal are on the wrong side of history and it’s hard to not attribute an obstructionist motive to their act since vaccine-autism research has already entered the realm of mainstream science. Serious scientists (except those tied to the vaccine industry)…
It was the worst January ever for the Dow industrials and S&P 500, according to Stock Trader’s Almanac data.
The Dow lost 8.8% and the S&P 500 lost 8.6% in the month.
The Nasdaq’s loss of 6.4% was eclipsed by last January’s loss of 9.9%. That 2008 loss was the worst in the tech average’s history, going back to its inception in 1971.
The International Air Transport Association (IATA) released international scheduled traffic results for both December 2008 and the full-year.
In the month of December global international cargo traffic plummeted by 22.6% compared to December 2007. The same comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%.
For the full-year 2008, international cargo traffic was down 4.0%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%.
“The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9%,” said Giovanni Bisignani, IATA’s Director General and CEO.” Air cargo carries 35% of the value of goods traded internationally.
The number of containerships laid up is growing very fast. According to French maritime consultant AXS-Alphaliner, 255 ships, equivalent to 675,000 teu in capacity (5.5% of the global containership fleet), were laid up as of January 19 this year. It projects that the volume of containerships on standby will jump to the equivalent of 750,000 teu in early February this year, accounting for 6% of the entire global boxship fleet.
Since the week before Christmas – just one month ago – the number of ships idling has grown
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Deflation simply means falling prices. The 4-pack below reflects that the bond players believe in the deflation theme as the yield on the 10-year note breaks below the 2009 and 2011 lows.
Speaking of deflation and falling prices, the CRB has now broken below last summer's lows, the CRX is at last summer's lows, and Crude Oil finds itself on key rising support.
With the only real catalyst on the horizon not due for nearly one month - that would be the Greek elections of June 17 which while presented as the make or break event for the Eurozone, we believe will be once again inconclusive, resulting in no actual government, but merely more elections down the road - here is the daily sequence of events of what we can expect: i) Europe releases definitive rumor that everyone is preparing for a Greek exit full of bombastic jargon and details of how Greece will be annihilated if it does exit the EMU; ii) immediate election polls are...
China Automotive Systems, Inc. (NASDAQ: CAAS) oday announced that its wholly owned subsidiary, Great Genesis Holdings Limited, has entered into a definitive agreement to sell its equity interest in Zhejiang Henglong & Vie Pump-Manu Co., Ltd, to the Zhejiang Vie Group Great Genesis's joint venture partner in Zhejiang. This transaction is subject to local regulatory authority approval.
Founded in 2002, Zhejiang, which designs, manufactures and markets power steering pumps, is located in Zhuji City, Zhejiang Province. According to the Agreement, Great Genesis will sell its 51% stake in Zhejiang to Vie Group for RMB52 million, which represents a 24% premium as compared to the May 20, 2012 estimated net book value of approximately RMB42 million. According to unaudited accounting information, Zh...
The small Mediterranean country of Greece has been more than a thorn in Europe’s (NYSEARCA:VGK) back for the past eighteen months; it has been the focal point of foreign press on Europe, and in this case all press is not necessarily good press. To truly understand the scope of the Greek debt crisis, one must analyze the Greek economy and its overall importance to the Euro. As ever more countries bid to enter the Euro, now Greece appears to bid for an exit, the first ever in the Euro’s history. A Greek exit from the Euro has been likened to a w...
Top 5 RisersStockRatingAnalysisWDCSTRONGBUYWestern Digital is one of the top candidates projected to achieve both higher than previously projected earnings in the short run and a higher earnings growth rate in the long run.KROSTRONGBUYKronos Worldwide is gaining higher expectations and its recent history of its earnings increases is significant.URIBUYProjected value continues to rise for United Rentals while long term increases in earnings growth are also becoming more widely expected.SWHCBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valu...
The market remains a mess right now as we are back to the environment of latter 2011 and middle 2010 where random comments from officials across the Atlantic move everything en masse. Today the market was hit by word that preparations for Greece's exit from the EU are being considered.
Of course a denial by another official would send the market up 1% immediately. Rinse, wash, repeat – year #3.
The bigger picture right now is all stocks are moving as one asset class as our massive correlations return. Until that changes it is very difficult to bother to be a stock picker.
EXPR - Express, Inc. – Shares in apparel retailer, Express, Inc., dropped nearly 30.0% today to a new 52-week low of $16.38 after the company projected full-year earnings below those expected by analysts. Options on EXPR are far more active than usual today, with overall volume on the stock currently at 4,460 lots, up nearly 2,000% over the stock&rsq...
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...
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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.
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Here is this week's test version of the latest newsletter. We apologize for some formatting issues that need to be worked out. Please tell us what you think.
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In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big reward...
My last weekend update is dated from January 30 so after a long hiatus, here is an update of our virtual portfolio. Since the last update, we have closed the AA Money portfolio due to a lack of enthusiasm (and activity) and I have stopped tracking the FAS strangle as the low VIX makes it hard to get rewarded for the risk! But we have added a small $5KP virtual portfolio which does not use any margin.
FAS Money
We have had to recover from a big move up by FAS and a low VIX which keeps option prices low. But the portfolio has gaine about 10% since the last update.
Last update P&L - $5499.00
IWM Money
Not a lot of activity in this portfolio where the main focus is on the large IWM BCS. But the portfolio has grown over 20% since the last update.
Last update P&L - $1998.00
$5KP Portfolio
This is the virtual portfolio that replaced the AA Money portfolio. It does not use margin and we will keep holdings under $5K.
AAPL $50K P...
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...
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who has contributed many excellent articles to Phil’s Favorites and now has a new book out on the shelves of your local book store, or Amazon
They provide a couple of specific examples of how this played out for specific Euro Pacific clients. Richard De Gennaro, an 83-year-old retired Harvard University librarian, put $100,000 into a Euro Pacific account early in 2008. The account is now worth $37,000 – a 63% plunge.
Worst January EVER!
In the end, XOM and CVX did not kill us but the 33% decline in XOM profits didn’t inspire a lot of confidence in the XLE, 
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(