"The financial industry brought the economy to its knees, but how did they get away with it? With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout." PBS Video here.
William K. Black is currently an Associate Professor of Economics and Law at the University of Missouri-Kansas City School of Law. He was the Executive Director of the Institute for Fraud Prevention from 2005-2007… He was litigation director for the Federal Home Loan Bank Board, deputy director of the FSLIC, SVP and the General Counsel of the Federal Home Loan Bank of San Francisco. He is the author of the popular book, "The Best Way to Rob a Bank is to Own One: How Corporate Executives and Politicians Looted the S&L Industry", 2005, University of Texas Press. On April 3, 2009 Black appeared on "Bill Moyers Journal" on PBS and provided some disturbing commentary on the current banking crisis. In the interview with Bill Moyers, Black asserted that our current banking crisis is essentially a big Ponzi scheme, that the "liar loans" and other financial tricks were essentially illegal frauds, and that the triple-A ratings given to these loans was part of a criminal cover up. More at Wikipedia.
We were right in the comments by saying that we were not making much money this month and not losing much either: +0.87R (or approximately 2%) profits for the whole month on closed trades!
It is certainly better than losing money as this was a very difficult month to trade with high volatility. We were very well balanced, and booked profits fast when we got some.
WMT calls was the big winner this month. For the trades still opened, we still have APPL calls to book, which will probably be our biggest win since we started this virtual portfolio. There are also a couple trades, such as AMZN puts, that went against us.
We are up 53.75% for 2009 so far, thanks to our exceptional month of January.
Another week, another 5% gain – isn’t the stock market easy?
We’ve gained 1,400 points in 4 weeks from our March 9th low of 6,600 – pretty impressive on the whole - but we have suffered a serious decrease in upward momentum since March 23rd, when we finished at 7,775. That’s 1,175 points in 10 sessions followed by just 225 over the next 9. It’s a little hard to reconcile this very toppy sort of action with the "bull market" mania that has swept the media this past week. We’ve been bracing ourselves for a slap of cold water all week that never really came although this weekend the WSJ ran this nasty unemployment graph along with an article titled: "Time to Brace for Trouple as Profits Debacle Starts" which reminds us why we went into the weekend 55% bearish.
I was actually more optimistic on Monday than I am today as Monday our plan was we were hoping to hold our pullback levels and form a base we could build off. The problem was the way we did rally made no sense – we didn’t climb a wall of worry – we climbed a wall of ACTUAL bad news that gave us brand new reasons to worry. While the difference may sound subtle – it’s actually a big deal! As a UBS economist I quoted in Monday’s post said: "he housing market isn’t about to start booming, but the intensity of the pain will probably recede." This is the result of our abusive relationship with the markets as they declined over 50% in 6 months – the mere absence of pain is treated as pleasure.
We had 4 new trade ideas from the Weekend Reading post in HIG, ING, FXE and BLK with all but HIG solidly performing already. As with most of our stock entries, we have been hedging with puts and calls sold against to…
With the S&P 500 closing just shy of 850, will this level hold as resistance? A test of the 20 week EMA and negative volume divergence hint that it may.
Keep in mind that the market has recently ‘blown through’ key resistance levels so who’s to say this one is any more important? But it does seem likely that bears might counter-check the recent bullish upside momentum with at least a downswing that could start at this level.
Back to basic Technical Analysis, price is in a confirmed downtrend, and the moving averages are in the most bearish orientation possible. Price has rallied up to test the falling 20 week EMA and we see a slight negative volume divergence (higher price on steadily lower volume) forming under the recent swing up.
We’re coming off a type of Three Swing Positive Momentum Divergence on the 3/10 Oscillator, so that hints that we might get a more powerful than expected rally, but divergences are often only good enough to forecast a short-term trade back to test the 20 EMA (on the timeframe in which it develops). If so, then we achieved this target on Friday’s close.
In the week ahead, let’s watch the 850 level closely for signs of weakness on the part of the bulls… and if bulls can push through this resistance, then a challenge of the 2009 highs from January (at 950) may be the next likely target, no matter how much the bears want this market to head lower.
New York, March 31, 2009 – Data through January 2009, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, with 13 of the 20 metro areas showing record rates of annual decline, and 14 reporting declines in excess of 10% versus January 2008.
The chart above depicts the annual returns of the 10-City Composite and the 20-City Composite Home Price Indices. Following the lead of the 14 metro areas described above, the 10-City and 20-City Composites also set new records, with annual declines of 19.4% and 19.0%, respectively.
The chart above shows the index levels for the 10-City Composite and 20-City Composite Home Price Indices. As of January 2009, average home prices across the United States are at similar levels to what they were in late 2003. From the peak in the second quarter of 2006, the 10-City Composite is down 30.2% and the 20-City Composite is down 29.1%.
Please see the original article for more commentary and tables on the data.
Case-Shiller Declines Since Peak
The following charts were produced by my friend "TC" who has been monitoring Case-Shiller Data. Although individual cities topped at varying times, the top-10 and top-20 city composites peaked in a June-July 2006 timeframe.
Case-Shiller Declines Since Peak Current Data
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Case-Shiller Declines Since Peak Futures Data
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The Jan 2009 Case-Shiller data continues to accelerate to the downside at a record pace. The 10 and 20 city index show declines from their peak at 30% and the bubble cities (along with Detroit) all have declines of 40% or more with Phoenix having the largest percentage drop of nearly 50%. Additionally, all 20 cities tracked by Case-Shiller have now experienced price declines in excess of 10%. I want to once
For all those who feel like punching their monitor or TV every time the administration says that the legacy loan program is fair and equitable at a transaction price in the 80-90 cent ballpark, we have some news for you (that will likely make the half life of said monitor or TV even shorter).
But first, there has been a lot of speculation about where banks have marked their commercial loan portfolios. Zero Hedge had previously discovered and disclosed interpretative data from Goldman, which concluded that the major banks were still stuck in a fairytale world where these loans were marked in the 90+ ballpark, a far, far cry from where comparable loans would clear in the market. Of course, FDIC’s head Sheila Bair (who many WaMu shareholders lately do not feel too hot about) had some interpretative voodoo of her own, claiming the bid offer disconnect is purely due to a lack of liquidity and access to financing:
"It has been clear for some time that troubled loans and securities have depressed market perceptions of banks and impeded new lending. Difficult market conditions have complicated efforts to sell these troubled assets because potential buyers have not had access to financing. The Legacy Loans Program aligns the interests of the government with private investors to provide financing and market-based pricing, and is a critical step forward in the process of restoring clarity to the markets. While there are inherent challenges to implementing a program of this magnitude quickly, the framework announced today provides the foundation upon which the FDIC will begin to build immediately."
So it came as a big surprise that none other than the FDIC keeps a track of where commercial loans clear in its own internal auctions. In a relatively obscure part of the FDIC’s website, there lies a little gem of disclosure, which exposes all the rhetoric by Sheila Bair and by other members of the administration as hypocrisy on steroids. We bring you: FDIC’s closed loan sales database. Zero Hedge took the liberty of compiling some of the data
There was a time on Wall Street when insider trading was rampant, when sellside analysts would pump stocks under the guidance of their superiors only to have their corporate finance colleagues do an equity offer shortly after, when the amount of money a bank’s corporate clients paid would determine its rating, and when analysts said in internal emails a company is worthless, only to issue reports claiming the company was the next sliced bread. Then things changed for the better briefly, when Spitzer came on the stage. However, with his thunderous fall from grace in an act of utter hypocrisy, the behavior he fought so hard to curb started gradually coming back.
Yesterday, Wall Street’s shadiness came back with a vengeance.
As Zero Hedge disclosed yesterday, mall REIT Kimco decided to dilute its equityholders by issuing over $700 million (including the green shoe) in new shares which would be used to buy back the company’s debt, as KIM has $735 million in debt maturities over the next 3 years, and a $707 million currently drawn on its secured credit facility. One look at the company’s equity prospectus reveals that the lead underwriter is non other than "scandal-central" investment bank Merrill Lynch. [click on images for larger views]
There is, of course, nothing wrong with being a member of an underwriting syndicate – in fact, absent generating profits from AIG structured finance liquidations forever, banks like ML (better known these days as Bank of America’s slam dunk acquisition if one listens to Ken Lewis) will need it if they want to generate revenues. However, what Zero Hedge has a major problem with, is what ML equity research analyst Craig Schmidt did hours if not minutes after the offering was announced. In a research note update, Schmidt, who now gets his paycheck from Bank Of America (this will be relevant in a second), raised KIM’s rating from Underperform to Buy.
This is where visions of Jack Grubman should resurface. While Zero Hedge will not speculate over the efficiency of the Chinese Wall at Merrill Lynch, aka Bank Of America, something
Lawrence Summers, a top economic adviser to President Barack Obama, pulled in more than $2.7 million in speaking fees paid by firms at the heart of the financial crisis, including Citigroup, Goldman Sachs, JPMorgan, Merrill Lynch, Bank of America Corp. and the now-defunct Lehman Brothers.
He pulled in another $5.2 million from D.E. Shaw, a hedge fund for which he served as managing director from October 2006 until joining the administration.
Thomas E. Donilon, Obama’s deputy national security adviser, was paid $3.9 million by the power law firm O’Melveny & Myers to represent clients including two firms that receieved federal bailout funds: Citigroup and Goldman Sachs. He also disclosed that he’s a member of the Trilateral Commission and sits on the steering committee of the supersecret Bilderberg group. Both groups are favorite targets of conspiracy theorists.
And White House Counsel Greg Craig earned $1.7 million in private practice representing an exiled Bolivian president, a Panamanian lawmaker wanted by the U.S. government for allegedly murdering a U.S. soldier and a tech billionaire accused of securities fraud and various sensational drug and sex crimes.
Those are among the associations detailed in personal financial disclosure statements released Friday night by the White House…
The dramatic run up of 25% that we have seen in the S&P 500 from it’s 666 lows may be coming to an end. The retracement back over the 840 level should provide sufficient resistance to reverse this market to the downside. I am looking for an area to once again get short this market and trade with the major trend in our favor. Would you believe me if I said the target for the S&P is down near 500?
Checkout this short video that will cover two important elements in trading: the Elliott wave theory, and the other is the Fibonacci retracement levels that prove right more than wrong. As always, the video is available with our compliments and there is no requirement to register to watch this video. Click the chart to see the video.
Here is a picture of the US credit bubble, with the deleveraging which has just begun.
It is/was a Ponzi scheme, enabled by the advantages of controlling the reserve currency of the world, pure and simple.
[click on charts for sharper images]
It was the US dollar that was monetized, or more specifically US debt obligations, which are now substantially worthless and will have to take a significant haircut in real terms. This is similar to the Japanese experience in which they monetized their real estate.
Ironically, those expecting this deleveraging to result in a stronger dollar could not be more mistaken. The Obama Administration is scrambling to obtain relief from Europe and Asia, getting them to inflate their own currencies through ‘stimulus,’ in order to continue to hide the unalterable truth – the US must partially default on its debt as expressed in the dollar and the Bond.
This is the inevitable outcome of all Ponzi schemes. Several smaller, private schemes already have collapsed. The big one is yet to come down. And when it does, the foundations of democracy will shake, several governments will fall, and we will once again experience the kind of uncertainty more familiar to those who lived in the first half of the twentieth century.
The sad truth is that the Obama Administration has barely begun the real work of rebuilding the economy. Everything to date is simple looting, paper-hanging, and the rewriting of history.
Until the median wage improves significantly in real terms, and the economy is put back on a productive basis without relying on the unsupported expansion of credit, there will be no recovery, merely sound byte opportunities for the smoke and mirror crowd.
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 firstname.lastname@example.org 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.
Global growth expectations... we have a problem. With all eyes focused on BABA, Treasury yields, and Russell 2000 death-crosses, the old equally-weighted CRB commodity index has broken down through support to 4-year lows this morning...
Commodities have slipped notably since confirming their own death cross in August.
The Census Bureau's annual household income reports for 2013 were published this week. I've now compiled a few tables for the 50 states and DC based on the Current Population Survey, a joint undertaking of the Census Bureau and Bureau of Labor Statistics, which includes annual data from 1984 to 2013. The details are fascinating, if somewhat sobering.
First, some context. The median US income in 2013 was $51,939, up from $22,415 in 1984 -- a 131.7% rise over the 29-year timeframe. However, if we adjust for inflation chained in 2013 dollars, the 1984 median is $47,866, and the increase drops to 8.5%.
The Latest Data and Peak Income Years
The peak annual median income for the US, adjusted for inflation, was in 1999. The latest data point, fourteen years later -- after t...
Investors are dumping shares in Yahoo, sending the stock down 5.0% to $40.08 after shares in Alibaba made their debut on the floor of the NYSE just before midday. Shares in BABA for their part initially traded up to a high of $99.70, a near 47% increase over the IPO price of $68.00. Typically, one would expect put options that are 5% out of the money with roughly 4-hours left to trade to see waning implied volatility. But, at the start of the trading session and ahead of the first trade for BABA, the Sep 19 ’14 40.0 strike put options were trading with 271% volatility or $0.30 per contract amid uncertainty as to how the start of trading for Alibaba would take shape.
Christopher Helin Star auto on steep grade, San Francisco 1922
The quote of the day today must be this one from Belgian EU Trade Commissioner Karel De Gucht in the aftermath of the Scottish rejection of independence: “A Europe driven by self-determination of peoples … is ungovernable … ”
I don’t think he understands the implications of what he says, and I’m quite sure he completely misses out on the mastodont sized problem he – quite accurately despite himself- describes.
Which is something along the lines of ‘Europeans should stop wanting to make their own decisions, because that makes it hard for us in Brussels to make those decisions for them’.
Administradora de Fondos de Pensiones Provida S.A. (PVD) shares will not be trading on the NY Stock Exchange after today. Tomorrow, shares will be harder to sell. Strangely, I wasn't able to find information on the internet, but Paul just sent me a copy of the email he received from Interactive Brokers.
We're selling PVD out of the Virtual Portfolio today at $87.18.
From: Interactive Brokers dated July 18, 2014
Holders of AFP Provida S.A. American Depository Receipts (ADR) are advised that the Company has elected to terminate the Deposit Agreement effective 2014-09-18.
Although the stock market displayed weakness last week as I suggested it would, bulls aren’t going down easily. In fact, they’re going down swinging, absorbing most of the blows delivered by hesitant bears. Despite holding up admirably when weakness was both expected and warranted, and although I still see higher highs ahead, I am still not convinced that we have seen the ultimate lows for this pullback. A number of signs point to more weakness ahead.
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 offer up some actionable trading ideas, including a sector rotation strategy using ETFs and an enhanced version using top-r...
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
Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.
Opinions differ as to what constitutes "money."
The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...
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...
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warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
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