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Archive for 2009

IS CHINA THE ACHILLES HEEL?

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IS CHINA THE ACHILLES HEEL?

Courtesy of The Pragmatic Capitalist

Great piece of research here out of Societe General.  Is China, the supposed engine of global growth, actually the biggest risk to the global recovery?

http://ftalphaville.ft.com/lib/data/filecache/attachment/G/l/Global-Strategy-Weekly-06-16-09.pdf

*****

"Most areas in the markets have now discounted a V-shaped recovery. Any doubt will trigger a rapid reversal in prices. I continue to be extremely sceptical and see recent events as part of a 1930s-like, long march to revulsion. Talking about long marches, nowhere in the world fills me with more scepticism than the Chinese economic recovery. The continued enthusiasm for all things China reminds me so much of the way investors were almost totally blind to the fact the US growth miracle was built on sand. China could be the biggest disappointment yet."

 Full report here.

 


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Bloated State Police Pension Plans

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Bloated State Police Pension Plans – Something Has To Give

Courtesy of Mish

The police union in Michigan is doing what public service unions in general usually do, 1) whine for more taxes 2) Complain they need more workers to maintain safety 3) Elect layoffs over reduced pay 4) Ignore the long term issues that need addressing.

Please consider Michigan State Police layoffs take effect Sunday.

LANSING, Mich. (AP) – About 100 Michigan State Police troopers will be laid off Sunday after a last-ditch effort to avoid the job loss failed.

Members of the Michigan State Police Troopers Association voted against a furlough plan that would have temporarily cut their pay to avoid layoffs of low seniority workers.

The furlough plan would have required troopers to take 37 hours of unpaid leave over a six-week period. That would have saved jobs now, but there was no guarantee low-seniority officers would have kept their jobs in the next budget year.

Mike Moorman, the troopers’ union president, said the vote reflects dissatisfaction with how the state has handled public safety funding in recent years. Michigan has lost more than 2,000 law enforcement officers statewide this decade, including more than 400 from the state police. Positions have been eliminated as government tax revenues decline during a lengthy recession.

"The membership’s rejection of furlough time is not a reflection on our unwillingness to stop the loss of 100 troopers," Moorman said in a statement. "Our members are fed up with the lack of public safety priorities in Michigan, which have been discussed for years, yet never acted upon."

Col. Peter Munoz, director of the Michigan State Police, said in a statement he is "deeply disappointed" a solution could not be found to avoid the layoffs.

The state spent more than $8 million in the past few years training the troopers it now plans to lay off to save less than $2 million in the current budget year.

Some state lawmakers continue to question why Gov. Jennifer Granholm’s administration plans to move the police department into a new $40 million headquarters building in downtown Lansing early next year. The move could have long-term financial implications for the state police — including significantly higher annual lease payments of $3.7 million


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Paul Desmond of Lowry’s Research: 90% Down Days Siganling Trouble Ahead

Paul Desmond of Lowry’s Research: 90% Down Days Siganling Trouble Ahead

A quick video with Paul Desmond, President of Lowry Research (oldest TA firm on the Street) … a lot of talk about the 90% down days we have started to see the past 2 weeks. Just another opinion to mix in with your whirlwind of various views…

 


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The SEC Needs Your Feedback

The SEC Needs Your Feedback

Critical update: Zero Hedge thrives on its proactive readers, yet I never expected a barrage of information such as the one I received since posting this. In the hundreds of emails received over the past several hours, much of it from current industry insiders, a substantial portion is likely actionable, and upon further refinement, enforceable. Going through it all will take time, however I take this opportunity to welcome any and all readers to provide information they believe captures wrongdoing in the financial system – in the absence of objective, unbiased and fair external regulators, it is the responsibility of everyone, but most notably insiders, to cleanse the system.

Zero Hedge will filter the data and forward our work product directly to appropriate Attorney General offices and local FBI branch offices. In retrospect, approaching the SEC and FINRA is futile, as they are both as much an integral part of the system as the perpetrators they are supposed to protect against. We’re slowly learning that fact. And we are very, very pissed off.

So…

Dear CDS trader talking on the phone to your sales coverage discussing insider information on a deal while your bored analyst is eavesdropping

Dear Senior Vice President at the strip club boasting to your subordinates how you misspent tens of thousands of taxpayer and investor dollars on strip clubs and prostitutes currying favor for the client, to catch that elusive multi-million deal so you can buy the third vacation home you will never frequent…

Dear General Counsel receiving sexual favors from the blonde assistant in exchange for promises of advancement that never come…

Dear Chief Executive Officer having an affair with the lady at the cosmetics section in that 5th Avenue store, while your wife and 3 children wait at home…

Dear retail broker guaranteeing your 70 year old client that investing in this particular BBB+ rated CDO will never lose money, just to hurry up and do the trade in the next 5 minutes…

Dear sell-side analyst telling your equity salesmen over shots of Grey Goose at Marquee just how crappy the REIT that


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FOIAing The Fed: The AIG Bankruptcy Negotiations

FOIAing The Fed: The AIG Bankruptcy Negotiations

Marshall Huebner is a person Zero Hedge has great respect and admiration for. The Davis Polk lawyer, in addition to having an impressive work ethic with many successful bankruptcies under his belt (Delta’s 2007 emergence being a case in point: in fact, he will likely be making a repeat appearance there quite soon now that Goldman has envisioned another ramp to $200/barrel of crude), volunteers 13 hours every Sunday night as an Emergency Medical Technician – a noble dedication to his community. Marshall’s dedication however is not only to his immediate community, but to American taxpayers in general: a little known fact is that Davis Polk is the official yet still formally unannounced legal advisor for the Federal Reserve. And no other company has tested Marshall’s mettle more than AIG, which has been on the verge of complete financial collapse on many occasions over the past year.

AIG’s collapse of course has been ruled out as an option by both the current and prior administrations, both of which observed the market’s reaction to Lehman’s bankruptcy and realized that one more financial failure would be the end of civilization as we know it. Readers will recall that TARP was originally envisioned as a toxic security purchase program (comparable to what the latest version of TALF has become). It took Paulson, and subsequently Geithner, no time to make TARP and the ensuing alphabet soup of programs, merely a backstop for all financial companies whose foundations were shaken as a result of AIG’s failure. In essence, the fate (and progression of troubles) of nationalized AIG is the one, most critical question mark, from which all subsequent policy decisions emanate.

What does Huebner and Davis Polk have to do with this? A few days ago, Fox Business published emails it has received as part of a FOIA request to the Federal Reserve. What the email (below) indicates is that not only was an AIG bankruptcy a viable option for the Fed, but that Marshall Huebner was in fact presenting to an extensive audience of Fed members on the merits (or lack thereof) of such.


This coincides perfectly with unconfirmed rumors swirling in late January that AIG had


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FOIAing The Fed

FOIAing The Fed

Marshall Huebner is a person Zero Hedge has great respect and admiration for. The Davis Polk lawyer, in addition to having an impressive work ethic with many successful bankruptcies under his belt (Delta’s 2007 emergence being a case in point: in fact, he will likely be making a repeat appearance there quite soon now that Goldman has envisioned another ramp to $200/barrel of crude), volunteers 13 hours every Sunday night as an Emergency Medical Technician – a noble dedication to his community. Marshall’s dedication however is not only to his immediate community, but to American taxpayers in general: a little known fact is that Davis Polk is the official yet still formally unannounced legal advisor for the Federal Reserve. And no other company has tested Marshall’s mettle more than AIG, which has been on the verge of complete financial collapse on many occasions over the past year.

AIG’s collapse of course has been ruled out as an option by both the current and prior administrations, both of which observed the market’s reaction to Lehman’s bankruptcy and realized that one more financial failure would be the end of civilization as we know it. Readers will recall that TARP was originally envisioned as a toxic security purchase program (comparable to what the latest version of TALF has become). It took Paulson, and subsequently Geithner, no time to make TARP and the ensuing alphabet soup of programs, merely a backstop for all financial companies whose foundations were shaken as a result of AIG’s failure. In essence, the fate (and progression of troubles) of nationalized AIG is the one, most critical question mark, from which all subsequent policy decisions emanate.

What does Huebner and Davis Polk have to do with this? A few days ago, Fox Business published emails it has received as part of a FOIA request to the Federal Reserve. What the email (below) indicates is that not only was an AIG bankruptcy a viable option for the Fed, but that Marshall Huebner was in fact presenting to an extensive audience of Fed members on the merits (or lack thereof) of such.


This coincides perfectly with unconfirmed rumors swirling in late January that AIG had retained TBTF law firm


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Swing trading virtual portfolio – Week of June 29th, 2009

This post is for live trades and daily comments. 

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

- Optrader





Members of U.S. House Financial Services Committee Trading Stocks

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The "appearance of a problem" or a problem? 

Here’s the definition of insider trading from wikipedia

"Insider trading is the trading of a corporation’s stock or other securities… by individuals with potential access to non-public information about the company. In most countries, trading by corporate insiders such as officers, key employees, directors, and large shareholders may be legal, if this trading is done in a way that does not take advantage of non-public information."  [emphasis mine - Ilene]

…"In May 2007, a bill entitled the "Stop Trading on Congressional Knowledge Act, or STOCK Act" was introduced that would hold congressional and federal employees liable for stock trades they made using information they gained through their jobs and also regulate analysts or "Political Intelligence" firms that research government activities. The bill has not passed."

Members of U.S. House Financial Services Committee snapped up or dumped bank stocks as bottom fell out of market

Posted by Stephen Koff and Sabrina Eaton/Plain Dealer Reporters

As financial markets tumbled and the government worked to stave off panic by pumping billions of dollars into banks last fall, several members of Congress who oversee the banking industry were grabbing up or dumping bank stocks.

Anticipating bargains or profits or just trying to unload before the bottom fell out, these members of the House Financial Services Committee or brokers on their behalf were buying and selling stocks including Bank of America and Citigroup — some of the very corporations their committee would later rap for greed, a Plain Dealer examination of congressional stock market transactions shows.

Financial disclosure records show that some of these Financial Services Committee members, including Ohio Rep. Charlie Wilson, made bank stock trades on the same day the banks were getting a government bailout from a program Congress approved. The transactions may not have been illegal or against congressional rules, but securities attorneys and congressional watchdog groups say they raise flags about the appearance of conflicts of interest.

"I don’t think that any of these people should be owning these types of financial instruments," said Brian Biggins, a Cleveland securities lawyer and former stock brokerage manager. "I’m not saying they shouldn’t be in the


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Weekend Reading

Weekend Reading

A personal thanks to the over 350 people (and growing… Zero Hedge record) who have taken the time to share their thoughts on the Paging the SEC post.

  • Breaking news: Military coup in Honduras, President Manuel Zelaya deposed (Sky News)
  • Louis Gerstner criticizes choice of Steve Rattner for auto task force czar (Bloomberg)
  • Plunge in Dubai biggest property developer Emaar leads to index collapse (Bloomberg)
  • Porsche rejects Volkswagen ultimatum, hope you loaded up on CDS (Marketwatch)
  • GM to cover future product-liability claims (WSJ) [Yet the Supreme Court had no qualms overruling an objection in the Chrysler sale based on just this issue.]
  • The collapse of residential real estate in China (Reuters, h/t Steven)
  • Novartis in talks to buy Elan (Reuters)
  • Iran arrests British embassy employees over UK protests (Bloomberg)
  • Four Seasons: the quandary of ultra luxury caught in a depression (NYT) Delinquencies on US Auto-backed securities jump 22% (Research Recap) 7 habits of highly suspicious hedge funds (Rick Bookstabber)
  • Most expensive real estate markets in the world: follow the commodity bubble (Infectious Greed)
  • First Nigaz, now Bengaz (Bloomberg)
  • Investor Sentiment: Summer Doldrums (Technical Take)
  • House members engaged in potential insider trading (The Plain Dealer, h/t E)\
  • Very, very wrong and very, very off topic (YouTube)
  • Chartology:

My sincerest gratitude for the generous donations by Linda, Ronald, Jeff, Brendon, Peter, Joseph, James, and Kristian.





Weekend Reading – Can American Consumerism Save Us?

There’s hardly any point doing a wrap-up as hardly anything has been happening.

If you are buried in the daily gyrations of the market, lots of stuff happens during the day but, as soon as you step back and look at the action – you’ll notice nothing really happened at all.  After a catastrophic downturn on Monday, we pretty much bottomed out at 8,250 on Tuesday until Thursday’s 200-point bump and here we are, back at good old 8,450 - which is where we bumped along for pretty much all of May

Indeed our best plays have, by far, been our premium burning plays, as attested by the very nice performance of our $111,659 Virtual Portfolio, our exercise in conservative hedging that is outperforming most risk-based strategies in this very choppy market.  The other winning strategy in this annoying market has been Day Trading, and we’ve had fantastic performance from our Oxen Group picks each morning and Ilene has a good article what David looks for in "The 5 Keys to Identifying a Fundamental Day Trade."  Combine that article with our Strategy Section and my article on scaling in and you have your own little day-trader’s manual! 

Est2009gdpThis will be useful next week as we have a 4-day week (Friday is the observed 4th of July) and there’s no way we want to go into the 3-day weekend with too many positions so it’s going to be a lot of in and out trading once again.  I probably shouldn’t, but I keep focusing on these silly fundamentals like Bespoke’s GDP chart on the right.  These are FACTS, which are the things being ignored as you hear things like Friday’s Michigan Consumer Sentiment hit 70.  I often point out that these are the same consumers – 60% of whom, when polled, believe their homes have held their value or gone up in value.  Just because they are all chipper for the pollsters, does not mean they will be out there turning these economies around.

US consumers are the New York Yankees of global consumption.  They are indimidating, they are record-setting and, from an historical perspective, they give the IMPRESSION of being unbeatable - but I grew up in New York and remember a streak from 1965 to 1975 when they didn’t win a single pennant.  That’s a team that has averaged one World Series Title every 3.3 years since 1923 (26 Times World Champs) and one League Championship every 2.3 years over the same time period.  Like the
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Zero Hedge

Gun Violence In America (In 6 Uncomfortable Charts)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

A recent report, The Annual Review of Public Health, summarizes the basic facts of firearm violence, a large and costly public health problem in the United States for which the mortality rate has remained unchanged for more than a decade. It presents findings for the present in light of recent trends. Risk for firearm violence varies substantially across demographic subsets of the population and between states in patterns that are quite different for suicide and homicide. Suicide is far more common than homicide and its rate is increasing; the homicide rate is decreasing. As with other imp...



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Phil's Favorites

Phil on Oil, Russia, the Fed, and the Trade of the Year

Must see: Phil visits with Money Talk's Kim Parlee on Business News Network. In this great interview, Phil talks about his target price range for oil and presents an options trade idea that he is calling the "Trade of 2015."    

?

Click on the links:

Segment 1 (Oil, Russia, and the Fed) : http://www.bnn.ca/Shows/Money-Talk.aspx?vid=515921

Segment 2 (Trade of the Year 2015) : http://www.bnn.ca/Shows/Money-Talk.aspx?vid=516607

In segment 2, Phil introduces the trade of the year for 2015 and discusses the s...



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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...

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Insider Scoop

Oppenheimer Initiates Coverage On Twitter, Believes Stock Is Appropriately Priced At Current Levels

Courtesy of Benzinga.

Analysts at Oppenheimer initiated coverage of Twitter Inc (NYSE: TWTR) Friday by issuing a Perform rating and setting a $36.00 price target. Twitter is a global social networking platform with over 280 million active users.

The Numbers

While Oppenheimer analysts fully recognize the strength in Twitter as a company, they believe that Twitter’s stock is appropriately priced at current levels. “While TWTR is the best Internet platform for real-time content discovery, we believe that the stock’s current valuation of 10x 2015E sales, a 52% premium to peers, fully reflects future prospects based on current growth rates.”

Insider Dumping

Between November and December 2014, Twitter insiders have sold more than $...



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Chart School

Relief Bounce in Markets

Courtesy of Declan.

Those who took advantage of markets at Fib levels were rewarded.  However, this looked more a 'dead cat' style bounce than a genuine bottom forming low.  This can of course change, and one thing I will want to see is narrow action near today's high. Volume was a little light, but with Christmas fast approaching I would expect this trend to continue.

The S&P inched above 2,009, but I would like to see any subsequent weakness hold the 38.2% Fib level at 1,989.


The Nasdaq offered itself more as a support bounce, with a picture perfect play off its 38.2% Fib level. Unlike the S&P, volume did climb in confirmed accumulation. The next upside c...

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Digital Currencies

Chart o' the Day: Don't "Invest" in Stupid Sh*t

Joshua commented on the QZ article I posted a couple days ago and perfectly summarized the take-home message into an Investing Lesson. 

Chart o’ the Day: Don’t “Invest” in Stupid Sh*t

Courtesy of 

The chart above comes from Matt Phillips at Quartz and is a good reminder of why you shouldn’t invest in s...



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OpTrader

Swing trading portfolio - week of December 15th, 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 ...



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Sabrient

Sector Detector: Energy sector rains on bulls' parade, but skies may clear soon

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

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

Stocks have needed a reason to take a breather and pull back in this long-standing ultra-bullish climate, with strong economic data and seasonality providing impressive tailwinds -- and plummeting oil prices certainly have given it to them. But this minor pullback was fully expected and indeed desirable for market health. The future remains bright for the U.S. economy and corporate profits despite the collapse in oil, and now the overbought technical condition has been relieved. While most sectors are gathering fundamental support and our sector rotation model remains bullish, the Energy sector looks fundamentally weak and continues to ran...



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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 this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

I officially bought 250 shares of EZCH at $18.76 and sold 300 shares of IGT at $17.09 in Market Shadows' Virtual Portfolio yesterday (Fri. 11-21).

Click here for Thursday's post where I was thinking about buying EZCH. After further reading, I decided to add it to the virtual portfolio and to sell IGT and several other stocks, which we'll be saying goodbye to next week.

Notes

1. th...



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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...



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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!




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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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