Archive for
May, 2009
by ilene - May 31st, 2009 7:10 am
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Don’t miss reading this enlightening article. "Thank yous" to author Stephen Lendman ("we need a mass public awakening determined to change a very ugly system"), and Tyler Durden for finding.
By Stephen Lendman, posted at Steve Lendman’s Blog and at the Baltimore Chronicle
Wall Street’s mantra is that markets move randomly and reflect the collective wisdom of investors. The truth is quite opposite. The government’s visible hand and insiders control markets and manipulate them up or down for profit – all of them, including stocks, bonds, commodities and currencies.
It’s financial fraud or what former high-level Wall Street insider and former Assistant HUD Secretary Catherine Austin Fitts calls "pump and dump," defined as "artificially inflating the price of a stock or other security through promotion, in order to sell at the inflated price," then profit more on the downside by short-selling. "This practice is illegal under securities law, yet it is particularly common," and in today’s volatile markets likely ongoing daily.
Why? Because the profits are enormous, in good and bad times, and when carried to extremes like now, Fitts calls it "pump(ing) and dump(ing) of the entire American economy," duping the public, fleecing trillions from them, and it’s more than just "a process designed to wipe out the middle class. This is genocide (by other means) – a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts."
Why? Because the profits are enormous, in good and bad times, and when carried to extremes like now, Fitts calls it "pump(ing) and dump(ing) of the entire American economy," duping the public, fleecing trillions from them, and it’s more than just "a process designed to wipe out the middle class. This is genocide (by other means) – a much more subtle and lethal version than ever before perpetrated by the scoundrels of our history texts."
Fitts explains that much more than market manipulation goes on. She describes a "financial coup d’etat, including fraudulent housing (and other bubbles), pump and dump schemes, naked short selling, precious metals price suppression, and active intervention in the markets by the government and central bank" along with insiders. It’s a government-business partnership for enormous profits through "legislation, contracts, regulation (or lack…
Tags: Counterparty Risk Management Policy Group, Exchange Stabilization Fund, government, insiders, Market manipulation, Plunge Protection Team
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by Zero Hedge - May 31st, 2009 3:51 am
Courtesy of Tyler at Zero Hedge
The New York Times reporting that according to people briefed on the matter, just over 50% of GM’s holders of $27.2 billion in bonds have agreed to support the automaker’s proposed bankruptcy plan. Apparently those 15% warrants (which could eventually bump up the bondholders’ stake in the company to 25%) made all the different in the world. For the estimated value of the warrants per Ron Gettelfinger, click here.
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by ilene - May 31st, 2009 3:15 am
Click here to sign up for a free subscription to the PSW Report. It’s easy! – Ilene
Courtesy of Bill Luby at Vix And More
Several readers noted that options on leveraged ETFs seemed like a recipe for disaster, as if no good could possibly come from piling leverage on top of leverage. While I certainly understand the sentiment, this type of thinking is typical of investors who have little or no experience in options. To the investor who is not versed in options, the options world often seems to be limited to an occasional covered call or an out-of-the-money call that is barely distinguishable from a lottery ticket – and seems to pay out just about as often.
In fact a large percentage of options traders are attracted to options because they are an excellent way to define, limit and manage risk. Yes, one can buy a put to provide protection for a long stock protection, but in the absence of owning the underlying (be it as stock, ETF, index or whatever), options traders are particularly fond of creating multi-leg options positions where the downside risk is known at the beginning of the trade and does not waver as long as the position is maintained.
Getting back to leveraged ETFs, I have reproduced a portion of the options chain for FAS, perhaps the most notorious of the Direxion triple ETFs, in the table below. With a current mean implied volatility of 126, FAS is a highly volatile ETF. FAS is so volatile that even with only 17 trading days remaining in the June calls, it is possible to sell the June 15 calls, which are 70% out of the money, for 0.05. The June 11 calls, which are 24.4% out of the money, can be sold for 0.40.
In terms of risk management, let’s say that an investor does not believe that FAS is going to rise more than 24% in the next 3 ½ weeks, so he or she decides to sell the June 11 calls, but hedge that position by buying an equal amount of the June 13 calls at 0.15. This is a bear call spread and will net $25 for each option contract, with a maximum loss of $175 per
…
Tags: risk management
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by ilene - May 30th, 2009 10:59 pm
Courtesy of John Mauldin at Thoughts From The Frontline
This Way Be Dragons
A Housing Update
More Prime Foreclosures In Our Future
Are We Paying Too Much for Health Care?
In fantasy novels the intrepid heroes come across a sign saying "This Way Be Dragons." Of course, they venture on, facing calamity and death, but such is the nature of fantasy novels. We live in a very real world, and if we don’t turn around there will be some very nasty dragons in our future. This week we look at three possible paths we can lead the world down. We then review a number of charts and data on the housing market.
If you just read the headlines on this week’s data, you could be forgiven for assuming the worst is over — not. And then finally we look at some rather stark comparative data on the health-care systems of the US, Canada, and Great Britain. Everyone knows the US pays way more in terms of GDP than the latter two countries. Are we getting our money’s worth? There is a lot to cover, and I hope to finish this on a flight to Naples, so let’s jump right in.
This Way Be Dragons
More and more we read about the growing concern over $1-trillion-dollar deficits. Stanford professor John Taylor (creator of the famous Taylor Rule) jumped into the debate with a rather alarming op-ed in the Financial Times this week, echoing much of what I wrote last week, but with some real insights into what trillion-dollar deficits mean. Quoting:
"I believe the risk posed by this debt is systemic and could do more damage to the economy than the recent financial crisis. To understand the size of the risk, take a look at the numbers that Standard and Poor’s considers. The deficit in 2019 is expected by the CBO [congressional Budget Office] to be $1,200bn (€859bn, £754bn). Income tax revenues are expected to be about $2,000bn that year, so a permanent 60 per cent across-the-board tax increase would be required to balance the budget. Clearly this will not and should not happen. So how else can debt service payments be brought down as a share of GDP?
"Inflation will do it. But how much? To bring the debt-to-GDP ratio down to the…
Tags: Foreclosures, Health Care, Housing
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by ilene - May 30th, 2009 10:08 pm
Click here to sign up for a free subscription to the PSW Report. It’s easy! – Ilene
Friday’s strange closing action in the S&P futures – observations and theories, courtesy of Karl Denninger at The Market Ticker.
Friday’s close was "interesting", to put it mildly.
Here’s a chart of Friday’s price action in the /ES, the S&P 500 "Electronic" Futures:
Notice the huge volume spike (the blue underlay) on the chart at the close.
There were 146,083 contracts traded in that one-minute period between 14:59 and 15:00 (Central); the next minute, when the real dislocation hit, traded 91,774 – after the cash market bell had rung.
The closing bell is usually busy. But this sort of volume is absolutely unheard of. To put it in perspective yesterday the same time recorded 26,540 contracts, and 36,642 the minute after.
Volume was light all day, as is somewhat common in the summer on a Friday. The close started its usual increase, and was up to 23,000 contracts at 14:57 with two minutes remaining.
Then all hell broke loose.
"Paper", or institutional representation, was stalking the close; the pit audio feed so stated. Directly in front of the bell 1,000 contracts were bought – as near as I could tell at the market.
Those are "Big" contracts, each being 5 of the /ES minis; this was, in effect, a 5,000 contract /ES market order.
The reaction was instantaneous. The offer side of the market collapsed and the /ES rocketed higher. In the pit, trades went off as high as 925, but on the E-Mini trades were recorded as high as 927.75. As quickly as it got there, it collapsed back to 922 – a nearly six-handle (3/4 of one percent) straight-up and down spike.
Now here’s the problem:
For me to believe this was "organic", that is, this was an un-forced order, I have to believe that someone wanted to go home net long the equivalent of 5,000 /ES contracts into the weekend at a severely disadvantaged price. The market had been calm all day; if you wanted to buy 1,000 spoos (equivalent to 5,000 E-Minis) there was plenty of opportunity to do so all day long. This sort of market order was guaranteed to dislocate the market – so the buyer had to simply
…
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by ilene - May 30th, 2009 9:16 pm
By Stephen Gandel at TIME
Commercial real estate may soon bulldoze the green shoots.
A coming wave of defaults on loans to developers of condominiums, office buildings and malls could do significant damage to the already deflating economy. That was the overwhelming concern expressed at a public hearing of the Congressional Oversight Panel (COP) on Thursday that focused on corporate and commercial real estate lending.
The COP was set up last fall as part of legislation that gave the Treasury Department permission to spend $700 billion to rescue the nation’s ailing financial system. The panel, which is headed by Harvard Law professor Elizabeth Warren, has no legislative or official regulatory powers. It is supposed to monitor the Treasury’s spending and report back to Congress as to whether it is being effective in boosting lending and shoring up the financial sector.
Thursday’s hearing was one of a number of public forums the COP is hosting on different segments of the lending market. Warren is often criticized for being too critical of banks and their lending practices. But at the hearing on commercial real estate, Warren focused on how big a problem future loan defaults will be and what should be done about them.
She got an earful. Richard Parkus, an analyst at Deutsche Bank, said he thought two-thirds of all commercial real estate loans due in the next few years — hundreds of billions of dollars’ worth — could go bust. Jeffrey DeBoer, president of trade group the Real Estate Roundtable, fretted that problems in the lending business could cost the nation thousands more construction and real estate jobs. Next up, Congressman Jerrold Nadler of New York expressed worry that the country was headed for a lost decade of economic stagnation.
There were not many solutions offered. Nadler said he thought the government should create new banks, which, unencumbered by souring loans, would boost lending. Nadler said he thought private investors would be interested in helping fund the new banks. A number of the panelists thought the government’s TALF and PPIP programs meant to boost lending were helpful but not the answer. Parkus said he thought extending the terms of commercial loans set to default would only delay the problem and make it worse. As more and more bad loans pile up, he predicted, it will…
Tags: Commercial Real Estate, Congressional Oversight Panel
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by Zero Hedge - May 30th, 2009 9:08 pm
- Commercial Real Estate – The economy’s anvil (Time)
- First ever global housing-led recession (Dr Housing Bubble)
- Ralph Nader: Obama’s GM plan looks like a raw deal (WSJ)
- GM bondholders near deadline to accept equity plan (Reuters and NYT)
- Niall Ferguson: how economists can misunderstand the crisis (FT)
- The inefficient capital markets hypothesis (Credit Slips)
- My therapeutic rant on the current economic madness (EconoSpeak)
- Emir of Qatar still studying stake in Porsche (Reuters)
- Zoellick warns stimulus "sugar high" won’t stem unemployment (Bloomberg)
- Putting a price on leaving the TARP (Dealbook)
- How laypeople and experts misperceive the effect of economic growth (Journal Of Econ Psychology, h/t Paul Kedrosky)
- Apollo units wins dismissal from Texas trial over Huntsman bid (Bloomberg)
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by ilene - May 30th, 2009 8:55 pm
What’s the next bubble? To see, open your eyes. Courtesy of ep at finem respice. – Ilene
It has been the habit of the United States, in its capacity as a nation of investors and consumers with a highly developed sense of entitlement when it comes to returns and little or no tolerance for corrections of any kind, to sate the appetite of the cult of buoyancy by inflating various bubbles. This is particularly so when it appears the national vessel is beginning to sit low in the water. Loyal readers will know that finem respice does not go so far as to call for the abolition of the Federal Reserve, or make bleating noises about fiat currencies, but, without a doubt, it is worth looking at the role of various institutions as we confront the next gas-filled, surface-tension-bound, expanding topography. That sort of reflection, culminating in exactly nothing, is about all we can expect. The tools of the Federal Reserve and the Treasury are a grant of immense power to the executive, and he or she is unlikely to relinquish it without the sort of battle that resembles a protracted land war in Asia. So serial-bubbology will prevail. Junk Bonds to Dot-Com to Real Estate, for instance. Of course, this means we don’t exactly have a large sample size with which to draw conclusions (n=3 perhaps) but it stands to reason that the longer we delay correction and manipulate markets with bloody sacrifice to the minions of buoyancy, the worse the wrath of the deleveraging.
Having taken great pains to ignore this lesson, and to obfuscate it completely no matter [what] form with which it attempts to make its presence felt, it is pretty obvious that the present administration intends to bubble its way out of the latest opportunity to reset prices and moderate debt. Moreover, our leaders intend to do so via massive borrowing to pay for about every government program of any size ever conceived going all the way back to that one that crossed the kickback-addled mind of some flaccid congressman while waiting in line at Disney World back in 1972.
Small sample size or not, it is so clear that the next bubble is on the horizon, or, perhaps, already upon us, that a great deal of time and effort is spent speculating as to which
…
Tags: Economy, Financial bubbles, government
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by Zero Hedge - May 30th, 2009 2:32 pm
- Pravda, yes, Pravda: American capitalism gone with a whimper (Pravda)
- Manipulation: How markets really work (Baltimore Chronicle)
- Banks’ appraisal conflicts could continue under new HVCC rules (Implode-O-Meter)
- Gonzalez theater continues: will "decide" on Chrysler-Fiat deal on Monday (Reuters)
- Canadian/Russian Magna picked for Opel/GM savior (WSJ)
- Fortress seemingly hoping to become a Bank Holding Company by purchasing one, become eligible for taxpayer rescue (Bloomberg)
- Gordian’s Kaufman on a GM bankruptcy (Dealscape)
- Reserve management clears Treasury Fund (WSJ)
- NY AG wins court OK staying SEC pension case (Reuters)
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February 23rd, 2012 12:07 am
Courtesy of www.econmatters.com.
By
EconMatters Oil futures spiked more than 2% in one day to their highest level in nine months on Tuesday Feb. 21. WTI front month contract closed at $105.84, while Brent ended at $121.66 on ICE, primarily on investors fear of potential conflict over the escalating tensions between the US, Europe, Israel, and Iran. A second Greek bailout deal of €130bn (£110bn; $170bn) also helped to inject some optimism into the market (which would seem totally mis-placed as we may need to
relive this Greek drama in two years). Nevertheless, the fact remains crude oil market supply and demand has not changed a bit to warrant a 2%+ price jump in one day.
...
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February 22nd, 2012 12:15 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Earlier today, we learned the first stunner of the Greek bailout package, which courtesy of some convoluted transmission mechanisms would result in some, potentially quite many, Greek workers actually paying to retain their jobs: i.e., negative salaries. Now, having looked at the Eurogroup's statement on the Greek bailout, we find another ...
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February 22nd, 2012 11:05 am
Courtesy of Benzinga.
In recent years, traders and investors have increasingly turned to social media to discuss their investments. Now, interested parties can get a scientific look at what is being discussed on a weekly, monthly, and even hourly basis.
Provided by Social Market Analytics, here is the morning social media outlook for Wednesday, February 22.
Most Bullish
Sentiment has been most bullish this morning on two tech companies.
Sourcefire (NASDAQ: FIRE) reported stellar earnings yesterday afternoon, which prompted several analysts to upgrade their price targets on the stock. The company hit a fresh 52-week high earlier this morning, as shares surged over 23%.
Procera Networks (NASDAQ: ...
http://www.insidercow.com/ more from Insider
February 22nd, 2012 11:03 am
Courtesy of David Grandey.
In today’s market, it’s more important that ever to have a mindset to maintain a sane mental state and stay peaceful calm and centered.
Keep in mind with the markets as stretched as they are, we are in a high risk zone for pulling back as we have been in an accelerated uptrend with barely any pullback to speak of which as we all know can not continue forever — it never does. That said the music can stop at a moment’s notice and odds favor when it does it will be a gap down. So using that as a backdrop let’s look at SXCI. SXCI — SXC Health Let’s say that issue breaks above the pink line and triggers a long side trade. That’s all fine and dandy HOWEVER it’s what happens next that we have no control over. At that point it either follows through or it doesn’t. WE NOR YOU HAVE ANY CONTROL ...
more from Chart School
February 22nd, 2012 12:00 am
Top 5 RisersStockRatingAnalysis
AGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a few weeks ago make AGCO a company to watch.
PCUBUYThe recent earnings history for Southern Copper shows significant improvement while projected valuation continues to rise.
PAGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a few weeks ago make Penske a company to watch.
FEICBUYAn increasingly attractive expected long term growth rate and a significantly higher projected va...
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February 21st, 2012 2:23 pm
Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Other than that rally last Thursday that caught a lot of technicians flat footed (i.e. post the Apple reversal) the breadth in this market has been relatively poor the past 5 sessions or so. The Russell 2000 has been lagging the major indexes dominated by large caps, and my watch lists have contained far more red than green. Some people have been calling it the NBA market ("Nothing but Apple") but it's been a bit broader than that – i.e. Microsoft has acted well, and some groups are still working.
A bearish take on this is of course what I cited above – breadth is narrowing which usually happens near tops. Fewer and ...
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February 21st, 2012 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
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February 21st, 2012 1:39 pm
Today’s tickers: WYNN, CTRP, DTV & WMT
...
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February 21st, 2012 8:58 am
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
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February 20th, 2012 10:36 pm
Courtesy of John Nyaradi.
Monday comes and goes with no agreement on Greece until late night settlement on Greece.
European finance ministers met in Brussels Monday and deep into the night and finally, in the wee hours, apparently have struck an agreement for the next round of bailout money for Greece.
In overnight trading, the European indexes were up with the DAX gaining 1.46%, the STOXX 50 adding 1.2% and the FTSE climbing 0.7%
In Asia, major indexes were down slightly as the world waited for an answer on Greece.
The U.S. Dollar (NYSEARCA:UUP) declined after announcement of the agreement while the Euro Dollar (NYSEARCA:FXE) jumped.
The issue remains the same as it always ha...
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February 19th, 2012 3:12 am
NEW: Elliott and Ilene are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the most recent Stock World Weekly, Balancing Act. Click on this link to sign in or sign up to read.
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January 30th, 2012 7:22 am
Here is a quick update of past trades and our current position.
AA Money
No trade this week as we wait for AA to settle. Phil remarked last week that AA seemed overvalued. In the meantime, it looks like we might have to roll our Feb 9 calls. Good thing we sold only 5 of them against our position.
Last week P&L - 310.00
We lost ground last week, but we still have 11 months to sell premium!
FAS Money
Very good week for FAS Money as we benefited from the large amount of premium sold the previous week. We covered most of the shorts in advance of the Fed speech, but sold another set of options on Wednesday after the speech - 2 FAS calls that expired worthless on Friday, 2 FAS put that we are still holding and 2 FAZ put that we bought back for a profit on Friday. A late stick comparable to last week's almost gave us problems at the end of the day though!
Last week P&L - $4277.00
IWM Money
A decent week in this virtual portfo...
more from Strategies
January 18th, 2012 1:09 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack. Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game. More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline. In addition, the stock can be manipulated by market makers so investors don't know which way is up. I approach investing in biotechs as a long term prospect. I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...
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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...
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