Archive for 2009

Swing trading virtual portfolio – Week of May 11th 2009

Let’s use this post for live trades and daily comments. 

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

- Optrader





So, You Think This Is Another Great Bull Market…

Courtesy of Henry Blodget at ClusterStock

So, You Think This Is Another Great Bull Market…

Jubliation has replaced fear, and the consensus is now that the second-worst bear market in US history ended on March 9th and it’s all champagne and roses from here.

Let’s hope.

In the meantime, let’s review what happened after the two other biggest bear market bottoms of the past century, 1932 and 1974 (see Prof Shiller’s chart above).  In both cases, as now, the market had a sharp rally off the lows. 

In real terms (after adjusting for inflation), the 1932 market almost doubled in a year.  The 1974 market, meanwhile, jumped about 35% over two years.

But it’s what happened after that that matters now.

After doubling off the low, the 1930s bear market pushed another 50% higher over the next three years to 1937 (not bad!).  But it then got cut in half again, and it remained below the 1937 peak for 15 years.  In 1949, 17 years after the 1932 bear-market low, when the next secular bull market finally began again, the market was 50% below the 1937 rebound peak and about 70% below the 1929 bull-market peak.

In 1974, the market rebounded 35% in a couple of years.  In 1982, however, eight years later, when the actual bull market began, it was back below the 1974 low.  The 1973 peak, of course, was lower than the 1966 high, so the bear market that ended in 1982 was actually 16 years long.
DavidRosenberg.jpg

That’s why they call them "secular" bear markets.

So even if March 9th was the bottom of a Great Bear Market that took stocks down 60%+ in 9 years from the 2000 peak (in real terms), let us not celebrate too much about what is likely coming next.  As Jeremy Grantham has said, the great bear markets don’t hurry, and this one probably has a long way to run.

Here’s Merrill strategist David Rosenberg on this topic.  Rosenberg, by the way, thinks the bear-market rally has now run its course and we’re going to quickly retest the March lows:

At this time, we believe it is necessary to provide clients with some historical
perspective from the last colossal credit collapse in the 1930s, understanding that


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RealPoint Sees CRE Deterioration Accelerate

Courtesy of Tyler Durden

RealPoint Sees CRE Deterioration Accelerate

RealPoint provides a comprehensive April CMBS delinquency report. A must read for both our readers and Merrill Lynch REIT analysts. Main charts extracted below. Most notable is the explosion in 90+ day delinquencies for March relative to April. In fact the deterioration is accelerating across all metrics: no second derivative green shoots anywhere in sight in CRE land.

 

Sphere: Related Content





Wanda Sykes Shines Some Light

Courtesy of Tyler Durden

Wanda Sykes Shines Some Light

The roasting is to be expected, the seating of CNBC propaganda machine Jim Cramer next to chief of staff and apparent media liaison Rahm Emanuel (fwd to 7:02 and 10:47) not so much, although not that very surprising.

hat tip a a





Deutsche Bank’s Socialization Of Risk Culture Redux

Courtesy of Tyler Durden at Zero Hedge

Deutsche Bank’s Socialization Of Risk Culture Redux

Deepak Moorjani shares the below letter, which initially appeared in NYT’s DealBook, but subsequently was taken down for reasons known, and now only a big gaping 404 hole remains in its place (http://dealbook.blogs.nytimes.com/2009/04/16/another-view-deutsche-banks-culture-of-risk/). Moorjani, who is currently involved in litigation with Deutsche Bank, shares his perspectives on his former firm’s risk policies and the culture and reward structure that encouraged these with Zero Hedge readers. The story is all the more relevant as it intersects a core theme for Zero Hedge, that of commercial real estate and the skewed risk/return investment perspective from the bubble years, which we may very well be returning to if the administration gets its releveraging ways.

When speaking about the banking sector, many people mention a “subprime crisis” or a "financial crisis” as if recent write-downs and losses are caused by external events. Where some see coincidence, I see consequence. At Deutsche Bank, I consider our poor results to be a “management debacle,” a natural outcome of unfettered risk-taking, poor incentive structures and the lack of a system of checks and balances.

In my opinion, we took too much risk, failed to manage this risk and broke too many laws and regulations.

For more than two years, I have been working internally to improve the inadequate governance structures and lax internal controls within Deutsche Bank. I joined the firm in 2006 in one of its foreign subsidiaries, and my due diligence revealed management failures as well as inconsistencies between our internal actions and our external statements.

Beginning in late 2006, my conclusions were disseminated internally on a number of occasions, and while not always eloquently stated, my concerns were honest. Unfortunately, raising concerns internally is like trying to clap with one hand. The firm retaliated, and this raises the question: Is it possible to question management’s performance without being marginalized, even when this marginalization might be a violation of law? Two years later, our mounting losses are gaining attention, and I offer my experiences and my thoughts in the hopes of contributing to the shareholder and public policy debate.

Background

Born and raised in Toledo, Ohio, I was infused with Midwestern values of hard work, individual responsibility, honesty, quiet integrity and fiscal prudence. After careers in New York City and Menlo Park, Calif.,


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Weekend Reading

Tyler Durden’s Weekend Reading

Courtesy of Zero Hedge

  • Must-watch panel from Milken conference: Milken, James Walker, Steve Tananbaum, Stephen Nesbitt, David Malpass (Milken Institute)
  • Words from the (investment) wise (The Big Picture)
  • An offer you can’t refuse (Economist)
  • The credit card squeeze (NYT)
  • Vanishing credit lines for consumers and small businesses (GEA)
  • Chavez seizures fuel Venezuela oil fears (FT)
  • O’Connor, Volcker, Levitt main candidates to investigate crisis (Bloomberg)
  • Evans-Pritchard: Enjoy the rally while it lasts (Daily Telegraph)
  • Chrysler’s dissenting lenders abandon fight over Fiat sale (Bloomberg)
  • Psychologists are better stockmarket speculators than economists (Alea)
  • Shift to saving may be downturn’s lasting impact (NYT)
  • LCH.Clearnet received $1.2 billion offer from ICAP-led group (Bloomberg)
  • John Dizard: The long road to a "goog GM" filing (FT)
     

As always, sincerest gratitude for donations from Daniel, Evil, Hui, Jack, James, Jason, Jeffrey, John, Joel, Navid, Peter, Pooyan, Razvan, Roger, Steve, Vincent, and William.

Chartology [click on imag for larger view]:

 





The Chrysler CDS Question

Courtesy of Tyler Durden at Zero Hedge

The Chrysler CDS Question

There has been some media and political debate lately over who if any entities may have profited from a Chrysler bankruptcy due to CDS holdings. As is often the case, when you get the mainstream media entering the ever so slightly more complex world of CDS contracts, many of the theories that develop have the same "logic" that is underpinning the current market rally.

A little due diligence in this case reveals relevant facts. The 2019 White & Case filing from the Chrysler docket has some critical disclosure:

4. None of the Chrysler Non-TARP Lenders hold any credit default swaps or hedges with respect to their holdings of Senior Debt.

In other words, the original Non-TARP holdouts, who owned $295 million of Senior Debt, did not have one Chrysler Credit Default Swap to their name. Thus, being unhedged they did not stand to benefit at all from a Chrysler bankruptcy and any claims that they implicitly or explicitly pushed the company into bankruptcy are nonsensical (granted the question stays open of whether they had CDS at any point in the past, although that can not be gleaned from the filing).

If there really are CDS holding culprits (and we really are talking LCDS here) they would be in the non-holdout creditor camp. But most likely, CDS holders did not have secured long positions in the first place, and bankruptcy beneficiaries would likely not be found anywhere in the list of secured or unsecured creditors. However, due to the LCDS nature of the holdings, this is a case unlike GM or the recent finance company bankruptcies. Now, in GM things will likely get more interesting, as DTCC reports that the company has roughly $33.6 billion and $2.4 billion in gross and net CDS exposure, respectively.

As for any allegations that AIG was a taxpayer funnel again, this is not the case, as AIG rarely if ever underwrote single-name CDS (and much less LCDS). Thus comparing the AIG gift to banks in early 2009 with fund flows in the Chrysler and, soon to be, GM bankruptcies is in the apples and oranges realm.





More On The SHAM “Stress Test”

Courtesy of Karl Denninger at The Market Ticker

More On The SHAM "Stress Test"


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The “Apparent Abdication of Responsibility”

Courtesy of Mark Thoma at Economist’s View

The "Apparent Abdication of Responsibility"

Tyler Cowen says congress is letting others take the responsibility – and the potential blame – for decisions it ought to be making:

There’s Work to Be Done, but Congress Opts Out, by Tyler Cowen, Economic View, NY Times: The longer the financial crisis runs, the more policy makers at the Treasury, the White House and the Federal Reserve are working around Congress rather than with it. It’s not that anyone is behaving illegally or unconstitutionally, but rather that Congress seems to want to be circumvented and to delegate more power to the executive branch as well as to the Fed, at least temporarily.

While Congressional leaders are consulted on the major policies, Congress is keeping its distance, perhaps to minimize voter outrage. This way, Congress can claim credit if a recovery comes, but deny responsibility if the price tag ends up higher than advertised or if banks seem to be receiving unfair benefits from the government.

Trillions of dollars of financial commitments have been made without explicit Congressional approval. … The traditional division of labor among policy makers was that the Fed determined the quantity of money in the economy — it set monetary policy — and Congress decided precise government expenditures — it handled fiscal policy. These new programs blur that distinction and, in essence, the Fed is running some fiscal policy. … A full description of important financial policies handled outside of Congress would more than fill this column and would add up to trillions of dollars in potential commitments and guarantees…

Both Democrats and Republicans are at fault for this apparent abdication of responsibility. The Republicans are focused on blaming the Democrats for bailouts, since they know the policies can go through without their support. The Democrats want to enjoy the benefits of making commitments and guarantees without accepting accountability or responsibility for them.

It’s a common theme in American history that crises expand the power of the executive branch of government, and that is part of what is happening here. Even the Federal Reserve, which … is supposed to be quasi-independent, has ceded much of its power to the Treasury. … Just as the Bush administration brought a growth of executive power in foreign policy and


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California Continues To Implode

Courtesy of Mish

California Continues To Implode

Inquiring minds are reading Controller John Chiang’s May 2009 California Budget Summary Analysis. Here a are few noteworthy items:

The State’s revenues continued to deteriorate in April. Total General Fund revenues were down $1.89 billion (-16%) from the latest estimates found in the 2009-10 Budget Act.

Personal income taxes were $1.06 billion below the estimate (-12.6%), corporate taxes were below the estimate by $831 million (-35.6%) and sales taxes lagged the estimate by $108 million (-19.9%).

Some of April’s sales tax receipts were pushed into early May, but declining taxable transactions still drove sales tax receipts well below the Budget Act projection. While California’s sales tax rate went up April 1, revenues from the new rate will not be seen until May.

Compared to April 2008, General Fund revenue in April 2009 was down $6.3 billion (-39%). The total for the three largest taxes was below 2008 levels by $6.3 billion (-40.3%). Sales taxes were $452 million lower (-50.9%) than last April, and personal income taxes were down $5.7 billion (-43.6%). Corporate taxes were $142 million below (-8.6%) April of 2008

Sales tax collections year to date are short $327 million (-1.8%) from the 2009-10 Budget Act. Income taxes were $653 million lower (-1.7%) than expected, and corporate taxes were $788 million lower than expected (-9.5%).

The State’s other revenue streams were $299 million below (-6.7%) the estimates. Because the 2009-10 Budget Act contained actual revenue through February 2009, these disparities only occurred in the months of March and April.

Send a Message

Taxation is not the way out of this mess, reduced spending is. Please consider California, Please Send A Message!

The propositions to raise taxes are already short, and borrowing money from the lottery is sheer madness. California citizens have a chance to tell the spendthrifts to go to hell. All it takes is an appropriate NO vote on 5 of 6 California 2009 ballot propositions on May 19.

Mike "Mish" Shedlock
 

 





 
 
 

ValueWalk

WikiTribune Shuns Clickbait, Says Good Journalism Will Attract Donations

By Mark Melin. Originally published at ValueWalk.

Jimmy Wales, the founder of Wikipedia, is close to achieving his funding goal for the independent WikiTribune, a journalism enterprise that operates on many of the same principles as Wikipedia but is a separate business operation. Can Wales transfer the magic that transformed the encyclopedia model into journalism?

Jimmy Wales close to achieving initial goals for WikiTribune

With just one day to go before ending their initial fundraising efforts, the WikiTribune has funded nine of the ten journalists it originally targeted. Wales told ValueWalk he is “confident” WikiTribune is going to hit his fundraising target and embark on a new ...



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Zero Hedge

Outrage Ensues As Rambling Maxine Waters Has Her Mic Cut By Democratic Party

Courtesy of ZeroHedge. View original post here.

African American Caucus leaders are outraged today and wondering whether racism played a role in the attempted silencing of Maxine Waters as he microphone was cut at speech before the California Democratic Party African American Caucus.  From the LA Times:

The head of the California Democratic Party African American Caucus said Monday he was working with state party officials to determine who...



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Phil's Favorites

Gilead Sciences' Miracle Drug Combination

 

Oil is by my father Naum Katsenelson

Gilead Sciences’ Miracle Drug Combination

By Vitaliy Katsenelson, CFA

It was 1986. I was a junior high school student in Soviet Russia. In political information (propaganda) class, the teacher told us that the HIV virus was killing millions of people in the U.S. Though she didn’t say it explicitly, she made it sound like HIV was a just punishment for the U.S.’s flawed economic and political system. When asked if this virus could be cured, she said that because it constantly mutated it was incurable. (And in fact, HIV reproduces 12 million times daily.) Once you get sick, it’s a death sentence, she told us. I still remember the chilling and morbid certainty in her voice.

For a very lon...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

A Wall Street giant has raised $40 billion with the help of Saudi Arabia - and it could 'benefit significantly' from Trump's policies (BX) (Business Insider)

Blackstone Group, the investment giant led by Steve Schwarzman, announced a major deal with Saudi partners during the President's visit to Riyadh over the weekend. Schwarzman is a key outside adviser to the President.

America’s Cities Are Running Out of Room (Bloomberg)

A shortage of homes for sale has bedeviled U.S. house hunters in r...



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Members' Corner

Robert Sapolsky: The biology of our best and worst selves

Interesting discussion of what affects our behavior. 

Description: "How can humans be so compassionate and altruistic — and also so brutal and violent? To understand why we do what we do, neuroscientist Robert Sapolsky looks at extreme context, examining actions on timescales from seconds to millions of years before they occurred. In this fascinating talk, he shares his cutting edge research into the biology that drives our worst and best behaviors."

Robert Sapolsky: The biology of our best and worst selves

Filmed April 2017 at TED 2017

 

p.s. Roger (on Facebook) saw this talk and recommends the book ...



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Chart School

Gains Push Into Breakdown Gap

Courtesy of Declan.

While today's gains were modest they were significant in generating clean pushes inside last week's breakdown gaps. This brings indices back to challenge 'bull traps'

The S&P experienced lighter volume trading as On-Balance-Volume moved to a 'buy' trigger. Today's action opens up for a challenge of 2,405, although shorts may see this as opportunity to go aggressive with a tight stop once markets makes all-time highs.


The Nasdaq is also approaching its 'bull trap'. On-Balance-Volume holds to its ac...

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OpTrader

Swing trading portfolio - week of May 22nd, 2017

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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Digital Currencies

Bitcoin Soars Above $2000 For First Time Ever

Courtesy of Zero Hedge

Bitcoin is now up over 100% in 2017, amid global political uncertainty and increased interest in Asia, suddenly spiking above $2000 this afternoon for the first time ever...

That is a year-over-year gain of more than 350%. The move comes, as CoinDesk notes, amid a broader boost in the cryptocurrency market, which broke the $60bn barrier today. The increase has taken place amid strong surges from Ripple's XRP, which seeks to lower costs in enterprise cross-border payments, and ethereum's ether token, a cryptographic asse...



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Biotech

Beyond just promise, CRISPR is delivering in the lab today

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

Beyond just promise, CRISPR is delivering in the lab today

Courtesy of Ian HaydonUniversity of Washington

Precision editing DNA allows for some amazing applications. Ian Haydon, CC BY-ND

There’s a revolution happening in biology, and its name is CRISPR.

CRISPR (pronounced “crisper”) is a powerful technique for editing DNA. It has received an enormous amount of attention in the scientific and popular press, largely based on the promise of what this powerful gene e...



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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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All About Trends

Mid-Day Update

Reminder: Harlan 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...

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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...

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