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Thrilling Thursday – Consumers Still Unemployed, but Shopping!

The MSM is so happy about the February Monster Employment Index!

They’ll tell you it’s up 10 points from January without mentioning that January was the worst month of the past 12 and, in reality, we are up just 2 points from last February when the shockingly poor data we were seeing sent the S&P all the way to 666 the next month.  Today though, it is considered a reason to rally as people watching the MSM will believe anything the talking heads tell them because they don’t get shown the actual results and they trust their talking heads to have checked the facts carefully, rather than make them up, which is pretty much what they do.

We discussed the shenanigans of the ADP report in yesterday’s post and I did warn you that it was a fake rally based on happy headlines papering over poor data.  As we expected, the market giddiness persisted until about 11:30 and then reality began to bite back.  This was FANTASTIC for us as we were playing bearish into the rally but it’s very scary to hold bearish positions overnight but there’s no reason to hold options overnight when you pick up plays like our 9:54 Alert play on the DIA $103 puts, which averaged in at .77, hit $1 (up 30%) at 2:45 and finished the day at .94 (up 22%).  You HAVE to learn to be satisfied with making 20% on day trades and cashing back out.  Cash is flexible – overnight positions are not…  In fact, since we did cash out yesterday, I was able to send out an overnight Alert to Members with a short on the oil Futures as they ran up to 80.50 which was good for a quick victory and then another this morning at $81, which is already up .30 with a .06 trailing stop (futures pay $10 per penny per contract so lots of fun for morning, pre-market trading!). 

We went longer on our oil and gold shorts (in yesterday’s post it was GLL Apr $9 calls at .65) because we don’t expect them to resolve quickly but the chart on the left illustrates why we also firmly believe that this commodity rally is BS.  This is a chart of the Employment to Population Ratio for Men 25-54 Years Old since WWII.  Kind of puts a 2% year over year rise in the Monster Employment Index into perspective doesn’t it?  20% of the men in the United States of America between the ages of 25 and 54 ARE UNEMPLOYED!  That is up 8% in 3 years. 

This will NOT turn around in one year.  In fact, we need to add about 5M jobs to get back to the 20-year average of 13% unemployed so, unless tomorrow’s Non-Farm Payroll number comes in at +400,000, we are off track for a recovery – certainly for the kind of recovery commodity speculators are betting on!  Speaking of Non-Farm Payrolls – let’s prepare ourselves for tomorrow’s nonsense numbers by taking a look at the hidden bonus jobs we expect to gain from the decennial hiring of 1.4 Million Census Workers between now and June

[CensusImpactJan2010.jpg]Wow!  That’s going to have quite an impact on our jobs numbers for the next few months but keep in mind these are TEMP jobs that convey skills that are usable only once per decade!  Calculated Risk has this great chart that breaks down our hiring expectations for the next few months.  So 25-50,000 bonus jobs in Februrary (reflected in tomorrow’s numbers) and close to 100,000 bonus jobs in March leading up to 350,000 hires in May – perfect timing for our anticipated run to 11,500 that month but let’s watch out for that shocking dip that will follow in June. 

There, now you have a better understanding of the factors that will influence jobs numbers for the next 6 months than the people on TV do, so you are now free to laugh at them when they tell you how surprising the gains are! 

8:30 Update:  469,000 pink slips were handed out last week – about in-line with expectations, with 4.5M continuing claims, down from last month’s 4.6M.  The great news for employers is how much productivity they can get out of the 80% of men 25-54 that are lucky enough to have jobs – Q4 Productivity has been revised up to an amazing 6.9%, meaning we now need 6.9% LESS people to do the same jobs as remaining workers are too terrified to take a vacation or a sick day or even a coffee break.  So terrified, in fact, that Unit Labor costs are dropping 5.9% in the same period.  Sure it’s a horrifying, deflationary sign but how cool if you are a slaveowner capitalist who captures employs thousands of victims middle-class workers who are now doing more work than ever for less wages and less benefits than we’ve had to pay since 1865!  Ah capitalism, it’s amazing how easy you make it to justify the oppression of the masses!

Retail Sales January 2010Fortunately, having no job doesn’t mean you can’t shop in America and Same Store Retail Sales are up, Up, UP!!!  Of course, we are up compared to last February, when the Dow was in the middle of a 2,500-point drop (Jan 6th-March 9th) and people weren’t exactly in a shopping mood but we’ll have fun today playing along at home as the MSM gushes over 5-10% improvements over last year’s comatose numbers.  ALSO – keep in mind that these are SAME-STORE sales numbers, so when a chain closes 20% of their stores or a competitor goes out of business – we don’t count the zeros – we only count the "new" business that flows over to the remaining stores.  So, on the whole, this is a meaningless and misleading number. 

We’d better hope that China’s sharp drop this morning was meaningless or misleading, and not the start of the trend we’ve been expecting as we accumulated shares in EDZ.  The Hang Seng was harshly rejected by the 50 dma at 21,000 and pulled back 301 points (1.5%) to finish the day at 20,575.  The Shanghai fell 2.4%, back to 3,023 dropping 1/2 of February’s gains in a single session.  The Nikkei fell 1% and, sadly, back below 10,200 at 10,145 but happy for us as we grabbed those EWJ $10 puts in yesterday’s Member Chat for just 0.09!  India didn’t get the memo and held flat for the day at the top of their spectacular 10% run-up so I like the EPI $23 puts at $1 as a short-term play on India catching up with their peers (or you stock people can just short it!). 

Nothing happened in Asia but they went down.  Compare this to last week when nothing happened and they went up and we have the makings of a change in sentiment.  There was certainly noting in yesterday’s Beige Book to make Asian investors excited (see my Parsing the Fed’s Beige Book for the full analysis). 

In yet another reason to love TBT, Japan’s Housing Finance Agency is attempting to woo foreign investors by INCREASING the yields on state-backed mortgage bonds.  This may be the opening shot in a very long war as debtor nations fight for a shrinking pool of investor cash to subsidize their non-stop spending.  Both the ECB and the BOE left their rates unchanged today and Europe is down just slightly ahead of the US open where we may get yet another low-volume push for the first hour or so until somebody hits the sell button and dumps shares into all the bagholders, who are being herded like sheep to the slaughter by Cramer and his MSM cohorts.

Greece is still the word and even a rumor of a move regarding a possible resolution to the Greek tragedy send the Euro and the Pound flying up and down.  So let’s enjoy this morning’s "good" news and we’ll see if we can get another nice entry on the USO puts and possibly a re-load on the DIA (same plan as yesterday) but we DO NOT want to be too short into the close as we may get an upside surprise on tomorrow’s Non-Farm Payroll number thanks to the census hiring. 

 


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  1. wayne

    Phil (or anyone)
    What is the symbol for the oil futures?

  2. doro165

    Good quote from the Friedman article, thought it aptly describes not just Silicon Valley but everybody, EXCEPT Wall Street.
    Does the Obama team get it? Otellini compared the Obama administration to a “diode” — an electronic device that conducts electric current in only one direction. They are very good at listening to Silicon Valley, he said, but not so good at responding.

  3. lionel

    Wayne/
    It s CL for the light sweet crude oil futures

  4. lapper

    Phil, can we short that hotel in Brazil for $3 mil? :)

  5. DKGuy

    Gel1, thanks for the info yesterday.
    My MDVN calls did well, the puts…..not so much.
    Thought I had a wide enough spread going with the 65s and 20s. Turns out the low was not low enough.
    Other than taking the loss, I will try to roll the puts longer and lower.
    I also still have to do something about the pencil I jammed in my ear yesterday morning. Not very attractive.

  6. wayne

    Thank you.

  7. morxlntway

    EDZ up 890% this morning. guess i’ll buy the hotel.

  8. pstas

    Thanks, Phil. Chomsky is always good for a chuckle.

  9. ssdirk

    JRW – what do you see today? Thanks.

  10. jcedens

     Phil,
    What’s all this BS about all of these men being unemployed and working more for less. Facts are facts, just look at those nice men at Wells Fargo. They show that wages for hard working men are NOT falling. And I’ll bet they aren’t working any harder either. ….so there you go, just more BS complaining from the bottom 90%. Now get back to work!

  11. JRW III

    ss
    65.15; test as a floor, possible flush, then higher ( unless it fails of coarse )

  12. judahbenhur

    JRW, SS, Yesterday, I had this insight into my day trading style.  I’m better at counter-punching, i.e., waiting for the first real test of resistance or support and jumping on for a move the other way.   Where do you see resistance coming today?

  13. EricL

    GOOG with a nice break over the 545 resistance. Looks like it could fill the gap higher from 1/22.
     
    Despite the crappy fundamentals, this market is giving us no reason to be bearish, apart from a short-term overbought condition that may lead to a pull-back this week.

  14. jim123

    Morxintway- Good try, but EDZ had a 10 for 1 reverse stock split.  Not generally a good thing.

  15. morxlntway

    jim123 – guess i better cancel that check :)

  16. Phil

    Good morning. 

    We’ll be watching our bounce levels today and tomorrow at: Dow 10,300, S&P 1,105, Nasdaq 2,225, NYSE 7,100 and Russell 625 – losing ANY of these levles is a VERY serious concern at this point and we would likely then go flying to retest —-

    Our 5% levels at: Dow 10,165, S&P 1,088, Nas 2,200, NYSE 7,000 and RUT 620

    The pattern has been low volume moves up followed by much higher volume selling but as soon at 10,400 breaks on the Dow it’s a good time to get more aggressive to the short side. 

    Make sure you’ve rolled your DIA Mattress play up to at least the June $105 puts and we don’t want to be more than 1/2 covered by March $104 puts, now $1.12 unless we get over 10,450 – in which case the other 1/2 can be the $105 puts, using 10,450 as the on/off line

    The dollar is strong against the Euro ($1.363) and the Yen (89.14) this morning so let’s take the money and run on the EWJ puts (.12) as 33% is plenty for a day. 

    Copper is down to $3.37 and FCX is not liking that at all so woo-hoo on those plays.  Gold is $1,134 and $1,130 is the beginning of a breakdown for them and silver is still $17.21 on the fast track back to below $16.50 if gold fails $1,120 and copper fails $3.20 so keep an eye on any of them to break down.

    Huge victory on those oil puts (/CL) as they dove and tested $80, now back to $80.60 and ripe for another mo play as they cross back under the $80.50 line.  I still like the Apr $37 puts, now .82 as oil is currently up on threats of attacks on oil tankers by Rent-A-Rebel so you know they are getting desperate to keep prices floating

    We MAY have a real rally if the Nasdaq can crack 2,292 and they are only 5 points away so, like yesterday, they will be a great turn signal and we can watch AAPL, who are 15% of the Nasdaq, for an even earlier indicator of where we’re going. 

    OIH at $126 is a very tempting short if oil gives up $80 and the Apr $120 puts are $2.65 but I like being aggressive and selling the March $125 calls for $3.60 with a stop if oil breaks $81.50

    Another crazy day – Factory Orders are at 10 along with Pending Home Sales so that should boost or bust us. 

  17. yodi

    Phil Good Morning  Technical question  I sold SPWRA Mar 20 c for 1.15 covered obviously Jan 11 c + Stk is trading at 20.21 having 1.00 +- premium I would like to set a stop if the stk exceeds 21.15. How do you calculate what the option price will be to buy the option back on the stop order as the 21.15 will be the time to sell not running in to a loss.
    Thanks

  18. JRW III

    judah,
    I’m Bearish today ( as usual ) I’m in TNA, but yesterday was a DOJI and we are short term VERY oversold, so I think TZA is in our future !!

  19. ssdirk

    JRW – do you mean VERY overbought?

  20. Phil

    Brazil/Lapper – CNBC says Greece is considering selling off islands – that is EXACTLY what we want!

    Pending home sales down 7.6%!  They are blaming the weather despite the extended home-buyer tax credit so that will mute the impact and the CNBC girl made a good point that the West was down sharply and it didn’t snow there…

    Factory orders were in-line, up 1.7% with a positive revision to last month.  Nothing to get excited about.

    So, on the whole, muted impact either way on that data and now we have Nat gas at 10:30 and the Chicago Fed’s Evans is speaking on "Current Market Conditions" at 1pm so that will be the first "official" interpretation of the BBook.

    Woo hoo on EDZ – I’m RICH!!!!  8-)

    Chomsky/Pstas – I knew you’d love that. 

  21. judahbenhur

    JRW, I hope so.  The RUT must be feeling lonely so far out in front of its compadres these past few days.  Time for it to drop back about 10 points and give us a nice long ride on TZA. 

  22. ssdirk

    Phil – Just got your daily terrorist attack for oil.

  23. JRW III

    ss
    Sorry, of course I meant overbought; I guess I need more coffee !!

  24. dmankoff

    hi, phil, any new trade on TBT you recommend now, looking at it freshly?  and how about the 3x Bond bear fund  TMV ?  or FXI  and EWZ ?

  25. EricL

    Caught part of the GOOG move with some call verticals this morning, now I’m going to turn them into a short condors with me short the 550 line and buying two strikes away. However, once we get a little pullback I hope to go back to long GOOG this week or next, provided it can close over 545.

  26. Phil

    LOL JCEd – You have a career in Capitalism my friend! 

    Fundamentals/Eric – I got some insights from some bankers and what I’m seeing is people and businesses spending money because they are not paying their mortgage (or rents) and they are not getting evicted because the banks don’t want to take the properties onto their books so we have a mounting $100Bn a month problem being swept under the rug as everyone, including the banks, HOPING the government will ride to the rescue before it all gets very ugly.  That’s how consumer spending is holding up without borrowing and without job growth and it’s like a ticking time bomb.  That’s a fundamental I find it hard to ignore…

    SPWRA/Yodi – That sounds like a good question but I can’t figure out where you are.  I take it you have Jan calls but what strike and what basis?  I take it you sold a March $20 put for $1.15 which is still $1.15 and you want to set a stop or something so please clarify, although I’m pretty sure my answer is that the March $20 calls have $1 in premium and what the hell are you even thinking about buying them back?

    Terror/SS – Yawn…

    TBT/DMan – It’s the same play as usual and holy cow it’s hard enough to ride TBT and you want to mess around with 3x funds?  You are the master of danger! 

  27. stockbern

    dmankoff              Pick a TBT trade and go with it.  They don’t change that much from day to day.

  28. EricL

    Phil,
    That’s good information, if sadly unsurprising. I totally agree most or all of this "recovery" is a stimulus- and credit-generated fraud. I’m probably about as bearish as anyone here in the intermediate to long term. But near-term, we obviously have a rally going. We haven’t really seen a blow-off top to the rally off of the March lows — the kind of thing with wild exuberance and increased volume on up days. We may need that before the top is really in.  A pullback in the dollar combined with another push over the 1150 level could be one of the things that triggers it.

  29. ssdirk

    JRW, judah – in TZA at 8.25.  good luck to us.

  30. tchayipov

    Phil
    let’s cheep in and buy one island :)

  31. yodi

    Phil SPWRA I hold the jan 11 calls long bought for 10.30 now 5.25 so you told me the other day to make up the loss to sell some shorts so selling Mar 20 calls ,stock is up seems to be a good idea but the stock can go over 21.15 and the option will go up accordingly so if I set a stop to buy the option back at 1.40 for example I limit my loss Obviously I trust the stock will stay or better the option will lose its time value very quickly. Thanks

  32. ssdirk

    judah – yeah, I need a gown downdraft on the RUT to give my short calls some breathing room.  Geez, it seems like I have been babysitting these things for weeks.

  33. gucci

    Hi Phil OIH trade is for day trade, not to keep posittion overnight ? do you look at delta to caculate stop loss on option for $81.50, therefore delta 0.54, stop loss is 1.5×0.54 is 0.81, and stop loss on option caller is 3.6+0.81= 4.41 this is the price to buy back right , thx

  34. Pharmboy

    I did my writeup yesterday and one of my picks was VOLC.  It should  be posted today….but they popped after earnings….have to see where the settle, but in essence it is:
     

    I would be a bit more cautious with VOLC for now, as they are at the top of their channel and a pullback to the $18-20 range is not out of the question.  Buying a small position here at $21.5 and selling the July 20 calls and puts for $3.9 gives you a 18% gain if called away or $18.80 entry if put to you (13% down from here).  (Earnings are after the bell 3/3…as I am writing this). 
     
    Guess caution would have cost us….

  35. Pharmboy

    Sorry about the junk….

  36. Phil

    Whee already?

    BoE Rate Decision: As expected, the Bank of England maintains its bank rate at 0.5%.

    ECB Rate Decision: ECB leaves rates unchanged at 1%, as expected

    Gosh, who would have guessed that the dollar would go up after both CB’s held rates steady?  This is not rocket science people…

    The party lineFeb. Monster Employment Index: +10 to 124, with growth +2% Y/Y. "Although some of the increase in the February Index can be attributed to seasonality… a year-over-year increase in the Index may be an early indication that companies are stepping up recruiting efforts and will begin hiring again."

    Initial Jobless Claims: -29K to 469K vs. 473K consensus. Continuing claims -134K to 4,500,000.

    Q4 Productivity and Costs: +6.9% vs. +6.5% expected and +6.2% prior. Unit labor costs -5.9% vs. -4.9% expected and -4.4% prior.

    Jan. Factory Orders: +1.7% ($378.4B) vs. consensus of +2%. Factory orders had increased 1.5% in December (revised from +1). Ex-transport, +0.1% vs. +1.2% prior. Shipments +0.3% vs. +1.8% prior (revised from +1.9%). Inventories +0.2% vs. -0.2% prior.

    Jan. Pending Home Sales: -7.6% to 90.4 month-on-month, vs. +1% expected, from upwardly revised 97.8. Sales +12.3% year-over-year. NAR’s Lawrence Yun: "January pending sales, though still higher than one year ago, remain much lower than expected given that a large number of potential buyers are eligible for the expanded home buyer tax credit."

    UBS (UBS +2.2%) wins a key court ruling in Luxembourg, potentially insulating it from hundreds of claims by Madoff investors who lost money through funds set up by UBS. The Luxembourg court said in a ruling concerning 10 test cases that investors can’t bring individual lawsuits for damages against the bank.  It’s not their fault they steered investors into a bogus fund and got paid a fat commission by Madoff without doing an due dilligence

    The SEC charges a Miami couple with running a $135M Ponzi scheme. The duo lured in unwitting investors with promises of 9-16% returns.

    More Gang of 12 Action: Vikram Pandit (C) is back in the hot seat today, testifying in Congress about the $25B Citigroup still has from the government. Pandit reportedly plans to thank taxpayers for the bailout, while lawmakers want to see whether Citi is acting like it has an implicit government backstop and if it’s lending again.

    Citigroup (C) wants to bulk up its commodities business over the next three years. It’s targeting a 40% increase in traders and bankers as it tries to regain momentum following last year’s sale of its Phibro oil trading unit.  Oh no!!!

    JPMorgan Chase (JPM) was tops in fees for 2009 among investment bankers at $4.9B. Citigroup (C) no. 2 in fees and no. 1 in M&A. Morgan Stanley (MS) made a powerful comeback, taking in $4.3B in fees last year. Total fees for all firms rose 13% to $59.8B.

    Analyst Dick Bove isn’t trying to spare any feelings when it comes to NY AG Cuomo. Bove says Cuomo is the "father of the subprime crisis," is "one of the key reasons why [Fannie Mae and Freddie Mac are] bankrupt today," and could be dangerous to the banking sector if he becomes the next NY governor.

    Greece begins selling ten-year bonds today as protesters storm the Finance Ministry, block roads and call for new strikes.  Ah, this is all going swimingly

    Another word for begging:  Greek PM Papandreou heads to Berlin today, and then Paris, to try to drum up eurozone support for Greece’s deficit reduction plan. Many nations, especially Germany, are reluctant; two members of the German parliament say Greece should consider selling some of its islands to reduce debt.

    If eurozone nations fail to provide aid, Greece is prepared to turn to the IMF for help.  Again, this counts on people not understanding what the IMF is.  They don’t have anywhere near enough money to help Greece nor the charter for it and, by the way, 50% of the IMF money is ours

    Greece’s debt problems spark some speculation about a possible funding crisis in Britain, another high-deficit country. There are some reasons to worry, but Britain is not another Greece.

    Since the euro can’t be a target of speculation in the way the pound was in 1992 or the Thai baht was in 1997, it’s hard to see why the Justice Department is getting so worked up about hedge fund bets on the euro. Unless, that is, regulators care less about the euro and more about repairing a public image severely tarnished by the financial crisis.

    With the U.S. money stock stalled, the real risk is for deflation and the Fed should be able to keep rates low.  Not good for TBT.

    Suntech Power (STP): Q4 EPS of $0.27 beats by $0.16. Revenue of $584M (+40.8%) vs. $468M. (PR) Good for SPWRA.

    Western Refining (WNR): Q4 EPS of -$0.58 beats by $0.10. Revenue of $1.9B (+18.3%) vs. $1.8B. (PR) Good for VLO.

    Zumiez (ZUMZ) soars 23% on better-than-expected same-store sales. Other gainers on sales beats: Abercrombie & Fitch (ANF +9.6%), Aeropostale (ARO +5.1%), Dillard’s (DDS +4.1%), Hot Topic (HOTT +4.2%), The Buckle (BKE +5.8%), The Wet Seal (WTSLA +5.2%). (See: I, II, III)

    Though it won nearly the full extension it was looking for, General Growth (GGWPQ.PK) says it has also opened up its books to Simon Property (SPG) and other suitors.

    EIA Natural Gas Inventory: -116 bcf vs. consensus of -132 bcf. 

    Nat gas dove to $4.62 on that one.  Oil down to $79.94 so congrats to the futures players!  Gold down to $1,129 and copper testing $3.35

  37. lionel

    EDZ/
    How has the split affected your option positions.
    Interactive is not quoting EDZ options yet. Does TOS allow trades on new EDZ options?

  38. ssdirk

    JRW – do you see support at 64.82?

  39. samz3700

    Phil -
    Just managed to get to my computer -
    Sold March 80 calls on fcx – nice call phil – do you have level you are looking for on the pull back -
    I don’t really mind if I have to keep rolling those things so I am inclined to hold on – but I will also take an overnight 20%

  40. chaps

    lionel/TOS EDZ
     
    No, not yet.

  41. ssdirk

    lionel – TDA changed my EDZ call symbol, but the bid/ask prices are roughly the same as yesterday.  Although I have 1/10 the number of EDZ shares as yesterday I still have the same number of options.  Not sure how this will be handled.

  42. tchayipov

    JRW, Judah
    when you daytrade TZA, TNA what kind of stops do you use: Hard, mental, trailing and how far?

  43. JRW III

    ss
    I’ve got it at 64.85, but yes

  44. EricL

    ss,
     
    Your EDZ options are probably 10/100ths options now: they track 10 shares not 100.

  45. ssdirk

    tchayipov – I use mental stops based on chart lines (some of my own and some of JRW’s), then use market orders to enter/exit quickly.  They are very liquid with usually 1 cent b/a spread and huge volumes.

  46. ssdirk

    Eric – got it. Thanks.

  47. samz3700

    edz IB is quoting edz – options are listed as hxu – my contracts were small enough that they don’t seem to have been impacted by the reverse split – in other words – I am short the march 6 calls – bid ask is .10 / .20 -

  48. sarahd

    I have the Jan 2011 TBT 45/50 call spread (7.23/5.23 basis) now 6.02/3.50.  I am thinking of buying back the 50 leg and reselling it later as rates begin to rise.  Is this wise or would you leave it alone?

  49. EricL

    yodi or anyone else in the V condors, I’m putting in bids to buy back half for 2.70, which would be just under 50% profits on them (sold for 3.45). Although I like the way the trade is going, I don’t want to be too greedy.

  50. samz3700

    fcx – sorry phil – I sold calls yesterd – at 2.31 – just logged in to see the good news

  51. tchayipov

    thanx SS, you don’t trail it?

  52. judahbenhur

    Tchay, Mental stops always. If I’m in a trade, I look at the next support/resistance points (often supplied by JRW in the morning, but also just a matter of following minute by minute) and wait to see if the support/resistance is broken.  If broken, I look to the next support/resistance point.  If not broken, I get out.  If the trade is going the wrong way, of course, I get out long before then.  No heroics, looking for dimes and quarters with TZA, or .50 to 1.00 with TNA.  Sometimes we’ll do better, but the dimes and quarters add up.

  53. judahbenhur

    Tchay,  And what SS said.  And JRW is better at this than I am, so listen to him.

  54. tchayipov

    Thanx Judah,
    I daytraded SP futures before but looks like TNA/TZA more fun. when and where JRM post support/ resistance level?

  55. Pharmboy

    DWSN looks like it has topped out here, been trading for a few days at upper resistance.  If they fall, they fall hard.  BIDU is also moving in the right direction…..charts look like a nice short.

  56. judahbenhur

    Tchay,  Usually SS or I ask him for his lines in the morning.  As SS says, they are money lines (no pressure JRW ;) ).

  57. jomama

     pharm – thoughts on pfe here?  familiar with the obvious, lipitor 13 billion/year rx etc?

  58. JRW III

    tchayipov
    64.85,  65.15,  65.21,  65.28

  59. gel1

    DKGuy/MDVN
    I’m sure that pencil also hurts a little as well – LOL. I decided to close out the puts and move on. The short calls saved my ass and even made the whole experience profitable. I loaded up on the short calls when Phil said " This drug is nothing more than an antihistamine from Russia" and Pharm, as well had negative sentiments. I have to thank "the team" for this one !

  60. ssdirk

    JRW, judah – out with .07.  Whenever the market stalls at resistance I am more inclined to get out of TZA quicker than with TNA.  A market pause has generally meant more upside to come than downside.  Is that how you see it?

  61. tchayipov

    Thanx JRW

  62. lflantheman

    Here’s what I consider some useful information that I hadn’t known previously.   Normally I will buy OTM calls and sell closer OTM calls, but at the same strike or higher……example    buy GOOG Sept 570, sell GOOG Mar 570.  No margin with this.  The trade I don’t often do is buy OTM months out and sell at a LOWER strike at a closer month, (example)  buy GOOG Sept 570, sell GOOG Mar 560.  I did that exact trade today and find there is margin on the Mar 560 sale, but it is quite minimal ($1000 per contract in this case).   Both TDA and TOS allowed this trade, and the latter is an IRA acct.  

  63. JRW III

    ss
    Good point, that’s because the trade bots need spool up time but a big seller doesn’t

  64. Phil

    Rally/Eric – We shall see.  If they resolve Greece tomorrow morning and we get an upside surpise in NFP, we could leap up towards 10,700 again.  I was hoping we get down to test 10,165 first, then I’d feel good about taking a long-side poke but it’s tough to call at 10,400 because a disappointment of any kind can send us right off a cliff. 

    Island/Tcha – I’m for that.  Put up a flag and start our own nation and immediately apply for IMF aid to cover our $1Bn deficit! 

    SPWRA/Yodi – Don’t think in terms of "winning" or "losing" a month.   The idea is to sell calls for $1 EVERY month and NOT buy them back until you have EARNED the premium by BEING PATIENT.  Even if SPWRA goes up to $23 and you owe the caller $3, you still collected $1 in premium and your longs got the benefit of the $3 move so you just roll them up where you can and enjoy the $3 of downside protection.   If you are so gung-ho bullish on SPWRA that you feel the need to pay $1.40 to the caller, why not just roll them up to the Jan $30s, now $1.30, which leaves you with a net $9 basis on the $12.50 spread?  Or you can sell March $20 puts for $1, putting $1 IN your pocket rather than taking $1.40 out of your pocket if you are so positive that your March $20 caller MUST be bought back.  That way, you have another $1 of upside room, all the way to $22.15 before you are below even on the sales and, if SPWRA heads back down (which you clearly don’t believe is even possible) then you have the $20 calls protecting you al the way down to $17.85 before you are below even.  ANYTHING is better than paying your caller $1 in premium!!!

    OIH/Gucci – Like any good day-trade, it’s a day-trade if we make 20% but not something we would be ashamed to carry overnight if we have to.

    EDZ/Lionel – There’s no activity yet and only the old contracts are showing and all noted out with 10/100s but the prices have not changed on the old contracts so far (nor will they I think).

    FCX/Samz – I don’t really do targets.  25% in one day is my target and that’s fine with me!  Keep in mind that we take advantage of mispricing (the initial excitement) on a move we disagree with and we sell the premium (or buy puts that have gotten too low) and then we take advantage of the correction back to "normal" and get the hell out.  Why should we sweat out the craziness of FCX, gold and copper for another 2 weeks when we made 25% in one day and get back to cash?  If they go up again, then we can consider selling again but why take a sure thing (cashing a 25% win) and turn it into risk?

    TBT/Sarahd – $3.50 pays for you to roll down to the Jan $40s, which are $7 in the money vs. your current calls, which are $2 in the money so you are buying $5 of intrinsic value for $3.50.  Compare that to buying your caller for $3.50, who is $7 out of the money and leaving yourself in a naked position that is 66% premium.  If you roll yourself down $5 and TBT falls further, you can roll the caller down to the $45s for + $2.50 and you would have spent net $1 to gain $5 of intrinsic value while keeping the same $5 spread but at a much lower strike.  In short – improve your own position first before bailing out your caller by giving him most of his money back! 

    Natural gas heads further down after a lighter-than-expected draw from inventory this week; futures -2.8% to $4.626 per million btu.

    We’re testing $1.50 to the Pound again, bad news for the UK if that breaks.  Euro bounced back to the $1.36 line and we’re hovering at 89 Yen.  Copper bounced off $3.35 and is back to $3.375 but that’s a weak bounce if they can’t take $3.40 back.  Gold bounced off $1,126 back to $1,132 but now needs $1,135 to re-assert itself.

    Oill bottomed out at $79.75 and is back to $80.30 but not looking like they’ll be able to beat $80.50 again.

  65. JRW III

    Very busy morning BTW !!

  66. Pharmboy

    PFE/jo – great to sell against for increasing yield, and they have climbed from 12 when Phil was on the band wagon for them (kudos to him).  They have approval for a new vaccine, which should help the bottom line…but time will tell with them b’c of what you mention – 13B out of 50B is hard to swallow, but there are a few things in the pipe that could help (mostly WYEs pipeline). 
     
    The problem now is the P/E of many companies.  MRKs is 6.  PFE, NVS, etc are 14.  Why?  Someone has to climb or fall, as they all are in the space.  I see MRKs moving up (hence my bull call spread with selling much like Phil does around the call spread to drive down the cost. 
     
    Deep cuts are coming from all Pharma yet again.  AZN just announced, MRK will realign today, cuts in June (big ones), and GSK, LLY and others are going to cut more.
     
    Speaking of LLY, write up on them in BusinessWeek.  They have problems (worst in the industry – as I noted a month ago here in my writeup). They need help, as Zyprexa is their bread and butter.  Imclone is supposed to help, and they better have things in the next 2 yrs.
     
    BMY is the logical choice still for consolidation in the industry.  GENZ, BMRN, BIIB, and CEPH  are gonna also be targets.  I am thinking BMRN and BIIB, and liking them but they both have double/triple tops on the charts.  Easing into them is the way to go.

  67. samz3700

    Phil -
    did you see the piece in the wsj about deflation – and M2 – i am starting to question my thinking on inflation as deflation is starting to seem like a distinct possibility -
    online.wsj.com/article/SB10001424052748704541304575100020148686364.html 

  68. judahbenhur

    TIVO.  Won huge in its court case against Echostar.  Fed circuit decisions come out at about 11:00. Sorry I didn’t post before, I was scrambling to make a trade.  Out now.

  69. samz3700

    aapl – insane premium on atm front month calls – 210′s current 4 bucks

  70. lflantheman

    samz3700    aapl/      I’ve been selling some of those to protect my earnings on July 200 calls.

  71. Phil

    The Treasury will auction $74B in debt next week, in line with expectations: $40B in three-year notes on Tuesday, $21B in 10-year notes on Wednesday, and $13B in 30-year bonds on Thursday.

    St. Louis Fed President James Bullard said in a presentation today that quantitative policy should be conducted in the same way that the central bank adjusts rates. Bullard, a voting member of the FOMC, is worried about inflation and has been arguing for actively selling assets more aggressively than other Fed leaders.

    Sure, says David Rosenberg, dividends are up, buybacks are rising and M&A is increasing. But real P/E says the S&P 500 is overvalued by 26%.

    Here’s a rule of thumb for people who wonder which fundamentals to worry about:  I generally am more bearish about things that have NOT been brought up as issues by the MSM, like the Ukraine (but not Spain) or the China debt we talked about yesterday or the copper stockpiles in China or the global storage glut of oil.   Once an issue does "blow up" and become something that takes the market down – I can get more comfortable with it being priced in.  That’s part of what I do when I draw levels – I think about what possible land-mines are still in the road ahead and whether we can really ignore them for whatever period of time or if we are likely to hit them and at what critical resistance we’ll be at when they blow up.

    Right now I see WAY too many unemployed people to sustain any kind of rally.  I expect riots in Greece that will spread to other countries (did you know China has more riots than the rest of the world put together but they are generally, ruthlessly squashed and news is "discouraged") and that it’s still less than 50/50 that they are resolved by the weekend.  CRE is, of course, the Elephant in the room nobody talks about and, of course, $80 oil and $2.23 gas is murdering the consumer.  Until these things become "issues," I consider the market overpriced to the fundamentals. 

    Deflation/Samz – Yes, it’s a big possibility but the government will not allow it.  They can’t allow lower tax revenues and lower housing prices and more defaults on depreciating assets – if they did, we’d go bust and then rates would go up anyway so better off inflating now.  Deflation scares the crap out of the top 10% too so we have the "political will" to fight it at all costs.

    TIVO/Judah – Yay!  About time with them too.  They were getting so screwed by all these people just ripping off what was very clearly their patent.

    AAPL/Samz – If it were a $21 stock and the $21 calls were .40, would you think that was an insane premium?

  72. bord

    Phil, Sorry I was away for a few days, scanned the archive comments, but did not see anything on the FCX sell 5 Mar 75 buy 3 May 80 backspread. Any adjustments there or maintain?

  73. drumkeerin

    phil
    does the RUT long may 680 and short the march 650 for 1.25 still look attractive to you?

  74. Phil

    From my new pals at ForbesFed Fights Deflationary Demons

    Banks Await Outcome of Dubai World Talks.  "The entire scene now depends on the outcome of the restructuring negotiations between Dubai World and the banks," said Dheeraj Lakhwani, banking analyst at Prime Emirates. "Only then will confidence return and banks can decide how to pursue their lending strategy in UAE."  Moody’s estimated Dubai World owes UAE banks $15 billion (Dh55 billion) based on its receipt of "sufficient information from most rated banks." Provisions will also have to be made for heavy losses likely to be taken against exposure to the troubled Saudi groups Saad and Algosaibi.

    Smoking Swap Guns Are Beginning to Litter EuroLand, Sovereign Debt Buyer Beware! There are broad indications hinting that Italy and Greece are not the only countries that have used SWAP agreements to manipulate its budget and deficit figures. France and Portugal may be two other European economies which have resorted to similar manipulations in the past in order to qualify as part of single currency member nations (Euro Zone). Below is a small subset of the research that I have been gathering as I construct a global sovereign default model.

    House Price Slide Could be Start of Longer Downturn. UK’s largest building society warns a second downwards trend could be in store.
     

    Germany is considering more regulation for so-called "naked" shorting of shares, citing an internal strategy paper from the country’s economy ministry. Transactions should be more transparent so regulators can intervene where appropriate and positions exceeding .5% of a company’s share capital could be subject to regulatory disclosure, citing the paper.
     

    Short-Selling Disclosure Proposals Raise Eyebrows. Hedge fund trade bodies have reacted with some dismay to the Committee of European Securities Regulators’ (CESR) proposal for a pan-European disclosure regime for short selling. CESR recommended short sellers be required to tell regulators when they have short economic exposure of 0.2% or more to shares listed in the European Economic Area, and when they change those positions by 0.1% or more. Once short exposure hits 0.5%, CESR said public disclosure will be necessary. In calculating their exposures, CESR said hedge funds should include exchange-traded and OTC derivatives as well as equities – a step-up in regulatory oversight, which has hitherto been largely confined to shares.

    Taiwan-Based Component Makers Doubt iPad Production Delay Rumors. In response to reports that initial volumes of Apple’s iPad in late March will be lower than originally planned and the launch will be only in the US market because production by Foxconn Electronics has been delayed, Foxconn’s component suppliers have said their supplies are on schedule and Foxconn should be able to ship 600,000-700,000 iPads in March and one million units in April. As for whether Apple will delay the launch of iPad, the sources believe plans are unlikely to change.

    Speaking of idiotic talking heads.  Barry points out about this Kudlow clip: "Its a contest to demonstrate who knows the least about lending and legal fraud."

  75. samz3700

    AAPL – Yes I would bite on .40 cents -
    If – 1) stock had not had a good run above 21
    2) I will take 2% over ten trading day!
    Yes you are also right – it’s the $4 bucks that has me stupidly drooling.

  76. Phil

    FCX/Bord – Nope, no change as we’re not really worried unless they break $80.  Anything else is rollable.

    RUT/Drum – Yes but I’d feel better about it tomorrow, once we get past the potential rally fuel of a surprising NFP number and/or a greek bailout. 

    So far today we have a lower high that came earlier and lasted less than yesterday.  Yesterday’s mid-day fall did not take us anywhere near the prior day’s close so we’ll see if the next leg down takes us lower than 10,375 but, from the trend so far, it’s looking like we’ll test 10,350 at least

  77. kustomz

    Middle East instability focus of Pentagon oil, gas infrastructure security contingency planning
    Intelligence collected by Western spy agencies strongly indicates Iran is hard at work developing nuclear weapons, as well as the means to deliver them atop at least medium-range ballistic missiles “that can certainly reach all the Gulf states, and perhaps even further beyond that,” warned a senior Defense Department (DOD) official who briefed a high-level group of oil company executives on Middle East and central Asia regional security issues in Houston late last month.
    http://www.hstoday.us/content/view/12389/149/

    bombs away, hey Iran will have nukes soon guys…you might want to cut back production so we can really jam up the prices

  78. b1ll

    Phil, are you going to play with the elephant / SRS @ 7.0X on any rally in overall market? (6.90 52wk low)

  79. JRW III

    Phil,
    By now Blankfein has tomorrow’s job numbers; what is this action telling you about tomorrow ?

  80. ssdirk

    JRW – whatever it is I am sure it is a trap.

  81. chaps

    Mattresses:
     
    Market pattern over the last 4-5 days have been good for picking up money on front-month half covers. Take them off after the open push up, look to recover only if the market breaks higher, recover at the close. Really helps drive down your basis on the longs.

  82. ssdirk

    JRW – back on TZA BTW.

  83. stjeanluc

     Phil, any thoughts on F. They are going like gangbusters now and with TM still in their paper bags there might be more room to run. Thinking about selling Jan 10 P. Thanks. 

  84. Pharmboy

    C U all later….off to Palm Springs/Sedona for a long weekend.

  85. bgbigelow

     BIDU just exploded up.  No volume but price explosion.

  86. gel1

    Chaps/Mattresses
    Good strategy… Which indexes do you use for the mattress plays ?

  87. chaps

    gel/Mattresses: DIA.
     
    Of course, you can’t count on any pattern continuing. But as per Phil’s mattress strategy, you never take a loss on your front-month covers if the market moves against them. You DD and roll as necessary.

  88. gel1

    Chaps…. Thanks!

  89. Phil

    Looks like we’re setting up to flatline into jobs now. 

    Iran/Kustomz – What a disaster!  One bomb and Israel is gone and then what?   Do we or someone else retaliate or do we spend our lives living in fear that we might piss off Iran? 

    SRS/JRW – They are unbearable to play!  Still the 2012 $4/8 spead at $1.60 is not bad, selling 1/2 Apr $8s at .26 to cover as 10 sales is pretty much a free spread

    Blankfien/JRW – What does it tell us that we had a very weak volume week where we flatlined at 10,400?  If the news we had was actually "good" then what are the big boys doing?  Are they waiting for things to go up before they BUYBUYBUY?  That may be true of some technichal traders (maybe 60% of the market) but not the kind of guys who do have the scoop.  I’m pretty sure if I have GS’s resources, that I can pretty much nail the jobs number to within 10,000 as they must have access to the full methodology used to gather the data.  They upgraded everything in China on Tuesday and China went down for 2 days – that is cashing out behavior by them – if they were looking to buy, they’d be telling us to sell…

    F/Stj – You are buying the for $42Bn.  They have $60Bn more debts than they do cash and investments and the $90Bn worth of investments are questionable.   That does not include unfunded pension and insurance obligations.  In the past decade they have had income of:  3.5 (all Bns), -5.5, -1, 0.2, 3, 1.5, -12.5, -3, -15, 3 for a grand total of $25.3Bn in losses.  Clearly they can string together 4 great years ($3Bn in profit) and it can all be wiped out in one bad one so it’s reallly about if you think the world can put together un unbroken chain of prosperity that will let Ford grow out of it’s massive debts without slipping even once.  Even if you double the profits to $6M, that’s still a p/e of 7 down the road and I can buy VLO NOW with a p/e of 8.  I don’t know who will be selling cars in the future but I am pretty sure they’ll need gas until we get to a 50%+ electric fleet. 

    Have fun Pharm!

    Uh oh!  An international court rules against Cemex (CX -1.3%), the world’s third-largest cement maker, in its request to prevent Venezuela from taking control of three Panama-based cement ships. Venezuela nationalized Cemex’s in-country assets in August 2008.

  90. kustomz

    Phil, i dont know how in the world they gave Iran the ability to create a bomb of mass destruction when so many of our soldiers died in Iraq for that very same reason and in the end there was nothing there. Iran’s leaders are a much bigger threat to world stability than SH ever was. This world is nuts, LMT GD BA  etc etc must be watering at the mouth.

    I cant see taking GOOG to 550 without the intent of testing 570 

  91. TmDecay

    The last two days the selling came in at 2PM.    Maybe we’ll get some selling this afternoon rather than flat line like we have been since 11AM.

  92. ocelli7

    Phil, am out of town and checking in periodically……where can we read your Forbes article….am not a subscriber.

  93. Phil

    With Greece taking advantage of a favorable market to issue debt, Spain (facing a huge rollover this year) jumps on the bandwagon, issuing €4.5B in five-year bonds. (ETF: EWP)

    Forbes/Ocelli – It’s just time-delayed versions of what we get here.  You can find my stuff on the main page under the "Personal Finance" section with more or less the same title we had here. 

  94. David Ristau

     Oxen Report – Overnight Trade

    I just posted a new article about an Overnight Trade opportunity in Solarfun Power Holdings (SOLF). We are looking to get involved this afternoon with a sell tomorrow. 

    Read the full article here.

    Thanks and Good Luck!

  95. ssdirk

    Out of TZA with a few cents.  No way to tell which way we go or if we go.  Getting out in case Mr Stick shows up.

  96. yodi

    Phil JUst came back.  As usual great advice now on SPWRA canceled the stop of course. thanks
    I see there is not very much Talk about the Mattress today Still holding Jun 106p at 5.43 now 5.07 anf jun 105p at 4.96 now 4.55 during the last days bought back 1/2 my  Mar 103p sold for 1.93 and bought  now for+- for .79 now they running at .83
    as well still short Mar 104p sold for 1.58 now 1.20  with both at present cover 1/2 the Jun contracts. any change ? thks

  97. Kwan

    Pharm – have fun and be sure to check out Elote Cafe if you’re in the mood for some good mexican/southwestern cuisine.

  98. yodi

    TIVO  up over 50% 15.89 Mar call 1.45 sell in the excitment ????

  99. Phil

    Hugh Hendry: Investors Infatuation with China is Misguided

    The composition of China’s growth has undergone a potentially treacherous change: in the absence of expanding foreign demand for its exports, it has instead come to rely on a massive surge in domestic bank lending to fuel its growth rate.  Indeed, when measured relative to the size of its economy, the 27pc point jump in bank loans to GDP is unprecedented; at no point in history has a nation ever attempted such an incredible increase in state-directed bank lending.

    This appetite for cheap Chinese exports, which had at one point seemed insatiable, means that we in the West have come to owe our largest Asian trading partner quite a hefty sum of money. China has become the world’s biggest creditor, after amassing nearly $2.3 trillion of foreign exchange claims on us. However, the spectre of a creditor nation running persistent trade surpluses has ominous historical portents. It has happened only twice before, with the US economy in the Twenties and with the Japanese economy in the Eighties.

    The China bulls assure us that this time it is different. Yes, the banks are lending money at breakneck speed, but look at what they are doing with it! They suggest a new era reminiscent of Protestant Capitalism. They want us to believe the atheist Chinese are prepared to work harder and defer their gratification for longer.

    Remember, it is one thing to create economic growth, but it is another thing to truly create wealth. If I commit to building a new commercial property in Shanghai I will undoubtedly contribute to GDP growth. However, if I have no tenants and the city already has a vacancy rate of 20pc, then I am probably destroying wealth.

    Pound ($1.502) and Euro ($1.355) are testing lows of the day.  Europe finished slighltly red and copper is at $3.36 with gold at $1,131.  Oil is failing $80 again, nat gas is $4.56 (down 5%) and silver is $17.12. 

    I keep looking at my aggressive portfolio, which is down for the week and totally committed to a Dow dump and I can’t bring myself to do the right thing and cash it out.  The action seems totally fake today but that means if we fly up tomorrow – I’m just screwed and I’ll have to gut it out over the weekend.  So it’s really just a gut call being so short in that portfolio but by no means a smart one – unless it works of course!

    Retail and Financials are leading the markets with energy dragging it down.  Notice the utilities are unable to get things going and I’m pretty sure that real economic activity runs on utlities so why are they lagging everything this year? 

    DIA/Yodi – Yes, I’d stick with the 1/2 cover of the $104s.  Better to get burned to the downside and roll than get burned to the upside with no cover.

    Notice how 10,400 sparks huge buying interest and then nothing.   That’s about as fake as it gets.  

    Chicago Fed President Charles Evans says leaving current monetary accommodation in place too long could fuel inflation, but removing it prematurely could choke off recovery. He predicts inflation at 1.75%, but Fed policy cannot be passive to achieve that outlook.

  100. qcmike

    Phil
    I have C Jan 11 5 calls under water any suggestions, or just wait  ?
    thanks

  101. samz3700

    IYR – SRS – Phil I think we have to come up with better shorts for CRE -
    regional banks with massive exposure to loan cre portfolios? i am going to do some reserach over the weekend – i cannot take it anymore -
    Problem with IYR is that it has a bunch of non-typical cre components – I don’t know about everyone else – but I am not really looking to short – PSA  (Public Storage) or Annaly Capital Management, Inc.,  – (a real estate investment trust, engages in the ownership, management, and financing of a portfolio of investment securities) or
    Health Care Property Investors, Inc. (operates as a real estate investment trust in the United States. The company, through its subsidiaries and joint ventures, invests in health care-related properties and provides mortgage financing on health car… ) -
    seems like a growth area to me -
    These are all in the top 10 holdings of IYR – pairs trade – short iyr and go long the components you like?

  102. Phil

    Research/Samz – Good points on IYR!  We aim to please on research:

    TIVO/Yodi – If you are in it, then covering or taking money and running is way to go.  I wouldn’t short them though as this is a fundamental reason to now value the company much higher. 

    C/QC – Yep, waiting is best bet.  It only cost you a dime to roll to the 2012 $5s (.41) and sell the 2012 $7.50s (.16), which caps you at $2.50 but buys you a year.  You can also roll out the the $4s at .65 and sell the $2.50 puts for .38 if you believe they are really too big to fail.  

  103. jcmcn5


     
    I agree with Samz re SRS.  I cannot believe that this thing represents what we think it does.  If somehing refuses to react to as much news as SRS has had thrown at it over the last 6 months, (and let’s face it, has there been any good news on CRE lately?), then logic says that all the bad news is in the stock.  It just feels wrong to wait so long for something that seems so obvious.  We must be missing something.

  104. chaps

    Sold BIDU March $540 calls naked for $5.50.

  105. gel1

    A sunny day is the best time to buy an umbrella – using the same rationale, I sold short puts on RTP (Rio Tinto) today. This is a play that if I get assigned, I will be happy as hell. Rio has a fantastic parterniship with Ivanhoe Mines that has one of the largest reserves of copper and gold in the world, located in Mongolia and all of the government regulatory crap has been achieved. I have watched this develop for 5 years, as an investor in Ivanhoe (Canadian company), but now I believe it will be eventually acquired in toto by Rio Tinto. This is a long term play that should have a nice ending.

  106. samz3700

    gel – what puts did you select for rio?

  107. samz3700

    gel – If you are selling puts – you want a massive thunderstorm not a sunny day – rio is off it’s 52 week high  by 10% -
    I don’t disagree that it might be a good stock to own – but i think you are mixing your metaphors

  108. Phil

    SRS/JCM – It does generally represent CRE but it’s the CRE components that act like they don’t have a care in the world.  Amazingly VNO and BXP are crawling back to my short zone at $70.  I think it’s totally insane but so what?   The banks don’t have to mark to market so neither to the CRE players and they are refinancing with nearly free money so if you have a $100M building that used to service a 15-year with a monthly payment of $980,000 and now you have and emergency relief loan from the bank of interest only (plus fee) that drops your payment to $600,000, then you can offset a lot of vacancies and both you and the bank can ignore the fact that the building has lost 40% of it’s value, even though, after 5 years, you still owe $75M on a building you’d be lucky to sell for $60M.

    So if you are 2/3 occupied maybe you can manage the taxes and the utilities and the 1% mortageg etc but if ANY of those factors change, most property owners would go belly up as they generally work on razor-thin margins at the best of times.  Interest rising is the most likely thing to blow this all up but if energy prices get too high, even the utility bills can topple some of these guys – especially the 60% of properties that are owned by partnerships whose sole purpose is to manage a single building – good luck getting the partners to chip in and float the building if things get even a little bit worse. 

    And, of course, you now have a constant battle of price war with everyone starting to steal everyone else’s tennants – anything to fill up a building.  If we are in an economy where 20% of the space is permanently gone due to business contraction, then, at a certain point, the weakest 20% of the CREs will begin to go under one by one. 

    RTP/Gel – They are a great operator but watch that 50 dma at $212. 

    Marc Faber would buy gold every month "forever… [Gold's] quantity cannot increase at the same rate as you can print money, which will eventually weaken the U.S. dollar." He also says the Greek bailout will fail, the crisis will spread to other countries, and he "would rather buy Vietnamese shares than U.S. shares."

  109. phlit

    Phil. I shorted DDS (per David) @ 17.85 and I think I should sell puts to cover.  Your thoughts.  Phil

  110. gel1

    Samz/RTP
    Oh no… never buy an umbrella in a thunderstorm, as the price goes up. RTP has corrected off its high, therefore a good time to buy. My purchase strategy is to sell puts for a discount entry. In this situation, I sold the Octovber 190 puts, which represents a 20% discount off of todays price if assigned. I believe RTP dividend is 1.7%

  111. gel1

    Phil/RTP
    They are terrific in what they do, and sell lots to China, but the strength of their story is the Oyu Tolgoi reserves in Mongolia.

  112. jdbs13

    Fairly new to the board but I’ve been in and out of SRS and frustrated with the results as well.  I would also look at PNC as a CRE short for a few reasons: 
    1) Some of the greatest exposure
    http://www.ritholtz.com/blog/2009/08/bank-holding-companies-ranked-by-commercial-real-estate-loans/#more-36495
     2) They jumped into CRE at the peak
    Commercial loans (in millions) went from 27,672 (2006), 39,956 (2007), 99,516 (2008)
    3) They are one of Goldman’s biggest net shorts as of late last year
    http://www.zerohedge.com/article/goldman-sachs-updated-equity-holdings-analysis

  113. Phil

    DDS/Phlit – That was kind of crazy to hold onto after a 3% stop.  Also, I would suggest you keep an eye on the momentum before entering these trades, his picks are not like mine, you don’t want to jump into a short on a stock while it’s moving against you.   I think, if you want to stick with this to try to get what is now a $3.50 loss back, you are better off flipping to 3x the Jan $25 puts at $5.70 and selling 2x the April $22.50 puts for $1.85 and wash, rinse repeat until things go your way. 

    Wow, very brave investors – there must be a consensus that the NFP will be wonderful or something…

    PNC/Jdb – Very good reasons!  Seems like a good spot for a backspread, buying 3 Jan $50 puts for $4.90 ($1,470, delta 1.02) and selling 5 Apr $52.50 puts for $1.48 ($740, delta 1.80).  If PNC breaks below $54 (50 dma) you can just DD on the long puts to flip the delta to a slight advantage and then roll the putters along

  114. gel1

    Phil/RTP
    China is the largest producer of Gold in the world, and the government buys all of their production The Mongolian Oyu Tolgoi reserve is the largest known Gold reserve in the world. Peter Schiff has vehimently projected Gold to reach the $5000 per ounce price in the not too distant future – given these dynamics, if they should play out, then it is profit city. Possibly Schiff will win the Connecticut senate seat, formerly occupied by Dodd, and press for a gold standard – that might be pushing it !

  115. Phil

    RTP/Gel – Sweet deal.  Maybe Paul/Schiff in 2012!  THEN I would buy gold…..

    The IRS tells AIG (AIG +7.0%) and MetLife (MET +3.5%) that it will rule in their favor on a tax question, a move that clears the way for the sale of AIG’s Alico foreign life-insurance unit, sources say. The deal could be finalized as early as Sunday night.   Wow, this is an innovative way to give out even more bailouts!

    Lowest volume of the week so far – 123M at 3:45 on the Dow.

  116. roaster

    I am short 3 APPL March 210 calls and long 4 April 220 calls all at same price (3.90 or so). Would you make any change or just wait for premium to decay on march calls?

  117. phlit

    Sorry Phil I shorted DDS @ 18.75 so I am stuck only 2500.  Does that change what I should do?  And I dont know anything abt 3% trade.  Thanks Phil

  118. Phil

    I’m getting the hang of Forbes’ editorial policy – if I write anything that is critical of IBanks or capitalism, my article is "held for editorial review" indefinitely…  This is how, ultimately, everyone learns to play ball…

    AAPL/Roast – I wouldn’t change it while they are still all premium as you have $1,480 in premium decaying over 45 days ($33/day) and your caller has $1,200 in premium decaying over 16 days ($75/day) so as long as the ratio is good, you are good but think about what you will do if AAPL gaps up $5 of down $5 and make sure you are comfortable with your exits as you have very little flexibility with a 1-month spread. 

    DDS/Phlit – 3% was David’s stop-loss on that (and pretty much any) trade so .56 is the most you should have let it go.  That does not change my out on the trade, other than it’s a bit easier to catch up.  

    TIVO STILL going up!

  119. Phil

    Well that was either one hell of a flush or we’re heading back to 10,700!

    Oh wait – here’s what gave us the boost into the close – MORE FREE MONEY!!!  The House passes a $15B bill aimed at stimulating private-sector job creation. The measure now returns to the Senate for final approval.   See, as long as we dump $15Bn a week into the economy, we can hold 10,400!

    Tomorrow is going to be very interesting…

  120. samz3700

    gel – when you sell puts – you are not buying an umbrella – you are the guy standing on the corner selling them -
    i still like your play if not your metaphor

  121. roberthjrfl

    Phil – what did you do with your aggressive portfolio?  Did you cash out or hold your positions….really curious…

  122. gel1

    Phil/Paul
    That is the "laugh of the day"- Soros would be a safer bet, as he has become the latest gold bug (largest holder of GLD)

  123. gel1

    Samz…. Right you are ! Confusion is my weakness.

  124. gucci

    Hi Phil — where are the late buyers coming from, I do not get this, are the market overbought already ??? I could be wrong — If dow pop above 10450 and sp above 1125, go bullish or wait — THX

  125. CaFords

    Phil re: Forbes – maybe they can spell your name correctly so your articles can be found.

  126. matt1966

    Phil / Consumer Spending:  So how many of us are living in foreclosed homes for free?  If you figure it takes 15 months to finally get evicted, at a former mortgage of $2800 / mo, that’s a $42000 savings until you and your family gets tossed out on the street.  Not too shabby!   …..dare I say I should be so lucky? 

  127. Peter D

    Gel/Samz,
    That RTP is one wild stock, so is BHP.  Another way to play is selling puts on XME or GDX.  I find that XME has a little higher premium to sell too.  Gel, I know that you like RTP prospects, I’m just saying that we can play XME if we don’t want the risks associated with an individual stock.

  128. Phil

    Aggressive/Robert – I left it and I’m not too happy about it, frankly.  As I said earlier, it’s not just committing to tomorrow but, if we head up tomorrow, I’m pretty committed to staying beaish through the weekend (as there are no good outs) and that can hit me really hard.  I just think we’re following the same pattern we had on the Friday of expiration and the following Monday when we were jammed up on pure BS and then opened down 100+ on the 23rd.  So I decided I’d be madder at myself for wimping out and going to cash and missing a gap down open tomorrow than I will be taking a 15% hit from which I’ll go to cash and simply try to get it back.   With the Portfolio currently at $104K (already down $10K this week from holding out) I probably have a $35K upside on a 100-point drop vs a $15K downside if we head up. 

    Soros/Gel – He’s a very short-term speculator, you’d better hope he doesn’t change his mind and dump (or maybe he built up his position for just that reason while he piles on the puts). 

    Buyers/Gucci – The $15Bn gift from Congress (and I can’t believe Jim Bunning will just let this one through) is a good excuse and technically, we’re at a point where we should be bullish but I want to see the reaction to Jobs tomorrow.  Next week is a low-data week until Retail Sales and Business Invnetories on Friday so if we break up tomorrow, we can float all the way back to 10,700 next week and then we are back to expiration week and 2/19 was 10,400 on the button and 1/22 was 10,172 with 12/18 at 10,328 and 11/20 at 10,318 so this would be a pretty big move 2 expirations in a row, especially as we rallied 500 points in two weeks to make the last expiration day.  

    As I said earlier – 30M unemployed and underemployed people cannot afford $3 a gallon gas ($50 a tank) nor can the afford products made with $3.40 copper or $1,135 gold.  China, the engine of global growth, pays their top 20% an average of $200 a month – they can’t afford $50 for gas either!  Actually, in China, gas is subsidized at $1.60 so it’s costing the state $1.40 per gallon x 6.3Mg/month = $9Bn a month of subsidies and growing.  The only reason gas prices have been able to go up this month is heating prices (nat gas) have gone down so the home heating bill has shuffled over to the gas tank and, even then, we saw ANOTHER 4Mb build in oil this week – people CANNOT AFFORD the oil. 

    If people have to choose betweeen the proverbial guns and butter because there is only a fixed amount of money to spend (no more expansion of credit) then no matter how much you wish for your butter to go up, it can’t go up unless gun spending goes down.   It is, therefore, completely irrational for commodities and retail stocks to go higher at the same time in a flat economy - they CANNOT both get more business.  The more commodities go up, the less for Retail and the less for retail, the more people get laid off.  If the constant solution to this dillema by the commodity producers is to keep raising prices to offset the lower demand volume, then this cycle continues until the wheels come off the wagon, which works until you find a price that even the top 20% balk at – like we did in 2008. 

    The problem is, oil pushers seem to NEED $80 x 85Mbd or $200Bn a month.  So if demand drops, they have to keep raising prices and, since they used to get $100 x 85Mb ($2555Bn/month), they are probably not very happy at $200 either and they will keep pushing because they too can’t run their economies without that constant inflow of money.

    Europe has 30% more people than we do and uses 25% less oil than we do because they tax consumption heavily and the people there have all developed good energy-saving habits.  That’s why GM couldn’t fob Hummer off in the end – we are the only country stupid enough to drive a car that gets 11mpg!  We consume 500M gallons of gas a day.  A $1 tax on gas would bring it up to $4, which we already know we can afford, and would raise $182Bn a year to pay off the deficit with.  If we cut back our consumption by 25% over time, the tax would still bring in $135Bn a year and gas would probably go down to $2 (less the tax) and we’d be paying $3 per gallon but driving cars that used 25% less gas so it would be like paying $2.25 a gallong but instead of sending $135Bn to OPEC – we’d be paying off our debt.   

    How’s that for a solution?

    Foreclosures/Matt – I was pretty shocked by how many people are doing this.  The banks have their backs against the wall and they are terrified of it spreading.  I know of people doing this and they are going on vacations and buying IPhones – they know they are going BK so it’s a "party ’till you drop" kind of attitude.  What’s happening is people get behind on their mortgage and the bank sends them nasty letters, they go in to see about getting government aid and find they can’t get it because the bank is inflexible and won’t reduce principle.  When people find this out they finally realize the bank is their enemy and suddenly it’s "why should I give you money when you’re only planning to foreclose anyway?"

  129. Phil

    Forbes finally put up today’s post but removed: "Ah capitalism, it’s amazing how easy you make it to justify the oppression of the masses!" as well as my chart on how the census will boost the jobs data and Elaine’s picture of the Dragon and the Elephant.   LOL! 

    I should probably complain or they’ll start feeling free to edit me until I come out sounding like Karl Rove…

    Have I mentioned how much I hate the death tax lately? 

    D’oh! 

    8-)

  130. tradinv1

    Phil, I have looked everywhere and I can’t find an explanation of this "mattress" strategy that is so frequently talked about in the posts.  I did not want to bother you, but I have looked everywhere for an explanation.  Can you point me in th right direction?

  131. lflantheman

    100  people laid off this week at my 400 bed hospital here in Maine (total of 3700 employees).  Rumors 200 more to come.  Hospital in the red for weeks now.   Health-care problem complex, and intertwined with the economic problems of the day.   Health care as we know it is going to change significantly in the next 5 years.  We just don’t know how yet.

  132. judahbenhur

    Trandinv1,  As a starting point, here’s Phil’s original post explaining the strategy:  http://www.philstockworld.com/2007/03/05/the-stock-market-parachute/

  133. Phil

    Mattress/Trad – Well you can Google "Mattress Play" and that will take you to some old article I forgot about or you can Google "Stock Market Parachute," which is the article I most often steer people to.

    Layoffs/Iflan – That sucks.  You can tell from the productivity numbers that people are still very worried about losing their jobs. 

    Oh, thanks Judah!  I do have to add those to the strategy section…

  134. gilmdjd

    lflantheman
    …is right about healthcare, at least here in the mid-atlantic states. Practiced Emergency Medicine for 20 plus years and we have NEVER laid off staff. People get sick (and die) whether they have insurance or a job, right?
    We are laying off MDs for the first time. Gave two notices this week. Thats big income earners out of work.
    The Hospital at which I work has been doing everything they can to save jobs…but my gut tells me its coming.
    BIG changes coming in health care. And not good ones from where I sit in the food chain.

  135. tradinv1

    Thanks, Judah/Phil.  I thoght I had looked everywhere!

  136. matt1966

    The big banks are really starting to get pushed by some analysts.  Nice jump AH already.  I think we have the makings of a big fat goose to the market tomorrow after jobs.  The number is irrelevant.  I think they want to go up.  How else will they sell their calls for the month? 
     
    Phil / Staying Bearish:  Remember your levels?  That’s what they are there for.. leave the ranting to me.  8-)

  137. stjeanluc

    Phil, it always puzzled me that the gas tax is not pushed more! Even $4 a gallon is a bargain. In France, gas goes for around 1.30 euros per liter which works out to close to $6.5 a gallon. And yet people keep on driving! Yeah, they drive 30-40 mpg cars, but no one is going bankrupt paying for gas. And salaries are not higher there than here. On the other hand, they are getting closer to the point of negative returns with taxes. I ran a business there and when you look at the net income compared to what the company pays, scary! At some point, I remember having total cost to the company of 160,000 euros for a net of around 40,000 euros. That’s all contributions included – health, retirement, unemployment and income tax. We are so far from that here and yet we keep hearing that we are overtaxed! Of course, you got your health care paid for, 60% of your salary at retirement, etc. But still, pretty steep! I always said, better to be in the bottom 10% in France and top 10% in the US!

  138. Phil

    It doesn’t matter, we are all doomed! 

  139. gel1

    Phil/Soros
    Good advice !!! This guy was trashing GLD as a bubble play at the same time he was accumulating huge positions in it. What a cockroach ! He is the 29th richest guy in the world according to Forbes, but still a cockroach. Geez, what ever became of morality? or gentalmanly behavior ? He is the slut that pickes up used condoms and sells them as baloons.

  140. morxlntway

    a link to a long comment on the mattress play (if it works) If not, it was Jan 22, 10 at 5:28AM, which i guess means that it was Jan 21 chat, last comment before Jan 22 release.
    http://www.philstockworld.com/2010/01/21/philly-fed-thursday-the-fix-is-in/#comment-281999
    do i sound confused? I was working on my taxes and gainskeeper said i had lost more money than i possess in the account, so i spent a few hours trying to figure it out and it turns out that there was a stock TIE and an ATT option, TIE. Both with the same symbol! GK thought i sold 100 option contracts instead of 100 shares of stock. Glad to get it solved but left me a little crazy.

  141. cwan120

    Hospital / lflan – Why is your hospital laying off MDs?  Are people eating less and losing weights, and therefore healthier? 8)
    Okay, seriously, I thought people get sick regardless of economic conditions, and hospitals get the same number of patients no matter what, right?

  142. morxlntway

    my daughter had a cut in her hours at the hospital.  She thinks it is because of so many Hispanic folks that left town when jobs disappeared

  143. jcmcn5

    the slut that pickes up used condoms and sells them as baloons.
     
    Gaaa!  Could have gone without that visual Gel.  I’m glad I already ate dinner.  Couldn’t agree more about Soros though.

  144. ocelli7

    Phil, definately find out what the deal is on your article and why parts were altered or deleted. Maybe it is for a trivial reason, but maybe not. As you point out, we can’t have info squelched because it doesn’t fit their view. This is especially important in stock market where opinions are often wrong and what we need are facts to make better decisions.
     
    And while I am at it, how about cNBC. It gets really old hearing so many opinions about how to interpret their twisted view of new financial data…….when will be get an objective financial station?

  145. diamond

    The Day Trader’s Paradise
    http://lifehacker.com/5481921/the-day-traders-paradise

  146. lflantheman

     cwan…the major reason my hospital is in the red is that medicare does not pay us for the work we do.  We are 65% medicare.  In 1985 they began freezing medicare payments, effectively a reduction equal to inflation yearly, about 3% average, so in 25 years that’s a huge reduction in payments.  Then private insurance carriers joined in with reduction in payments or in many cases refusal to pay, using such ploys as ‘preexisting condition’ or ‘we weren’t notified within 24 hours that you were ill and admitted to hospital, as required’……..they have an entire list of reasons they use to get out of paying.  Time and space doesn’t permit listing them.  Couple this with the increasing technology associated with medicine, which increases costs, and the formula for eventual implosion is set.  It has finally bitten even large hospitals in the ass.  They can’t make ends meet.  So now they have to do what other large corporations do.  They lay off workers and they demand that those left behind become more productive.  And believe me, they do become more productive, as they fear they may be the next on whom the axe will fall.  So that’s it in a nutshell…..rising cost of medicine, lack of adequate payment for work done.  It can only end badly for this country’s healthcare system, and quite frankly, although I’m a healthcare worker for many years and think about these things daily, I really don’t know how it can be fixed.  I don’t think anyone in congress or the white house has the knowledge or the guts to do what would have to be done.  You have to lower costs, and you have to get paid for the work.  What could you do to accomplish this?  Here’s a short list:      Limit health care (example….if over 80, your aneurysm doesn’t get repaired)      Limit end of life care  (huge dollars are spent in US trying to keep 90 yo grandmothers alive)    Stop doctors from performing unnecessary procedures   (I see unnecessary surgery and treatments daily in my hospital.  The lay person can’t detect the difference between indicated and not indicated….way too subtle)     Stop lawyers from suing doctors except under exceptional circumstances  (try to get congressmen {mostly lawyers} to move with that one)      Stop trying to save 1.5 pound premature babies, at an average cost of $300,000 per  (Oh yeah, just try that one.  Even mention it and you will be ostrasized by anyone right of center politically)      And there are more, but I don’t have time.   I’m very very pessimistic that this is going to be solved in any meaningful way.   And now I must retire, as I must keep my energy up enough to stay highly productive.  Night.

  147. Phil

    Ah, I just realized Forbes changed more of my paragraph:

    Original:  Sure it’s a horrifying, deflationary sign but how cool if you are a slaveowner capitalist who captures employs thousands of victims middle-class workers who are now doing more work than ever for less wages and less benefits than we’ve had to pay since 1865!  Ah capitalism, it’s amazing how easy you make it to justify the oppression of the masses!

    Forbes version:  Sure it’s a horrifying, deflationary sign but how cool if you are a capitalist who employs thousands of middle-class workers who are now doing more work than ever for less wages and less benefits than we’ve had to pay since 1865!  

    It took them a day to decide how much they thought their readership could handle.  If they do that to me, imagine what they do to people who they pay full-time salaries to! 

  148. where

    Phil - It doesn’t matter, we are all doomed! 
     
    Reminds me of the movie "Idiocracy".  All you need to watch is the opening 5 minutes

  149. jburgess

    Diamond and Phil- I’ve imagined that that’s what Phil’s trading turret looks like!
    Phil, the Leno video was hilarious, funniest thing all day. It CAN’T be for real…. or can it?

  150. jomama

     IFlan, the whole system is a mess.  But providing essentially a "free money day"  for health care isn’t a solution either.  We have to ration.  I’m sorry if you are 350 pounds and 5’1” society shouldn’t pay for your a new knee.   Having another limitless entitilement isn’t the answer.  Everyone expects xrays, mri’s and antibiotics for the smallest cough, cold or sprain.  Guess what, this costs money.  Blaming doctors is like blaming Apple for selling iphones to the unemployed.

  151. gel1

    jcmcn5… My apologies to all for that comment… I guess this guy has me freaked out. Time for the penalty box !

  152. 1020

    Phil, let’s hope that Ronnie and Snooki do not  "get together"….. ;)

  153. Phil

    Health care/Iflan - All good points.  They talk about not rationing care but unless you intend to spend infinity on health care – ultimately it needs to be rationed, doesn’t it?  I think it’s not all that unsolvable though, but it may take a generation to get us into an EU-type system.  We need to change things from the ground up – pay for doctors to go to school without the debt, train nurses, universal health care and then concentrate on cost controls, in large part by shifitng a lot of research back to the government.  Global health care is an $8Tn business and, as we do with energy, the US spends 25% of the global total on 5% of the population.  When will we stop being the world’s rich idiots?  

    Layoffs/Cwan – There has been a serious drop in elective surgery plus you have 10% of the population losing health care coverage or not wanting to even make the co-pays they are covered for and hospitals don’t operate on a fat enough margin to take those kinds of hits.  Not only that but then you have populations shifting and a loss of population base or an aging population (no more babies) can hit hospitals in certain areas.  This is the kind of inefficiency that comes from a lack of central planning but hey, I’m sure capitalism wins out and the more successful hospitals that can squeeze the most out of their patients for the least possible costs will win out and take over from the less-efficient local hospitals and so what if 1/3 end up closing and an extra 100,000 people die because the closest hospital was over 30 minutes away – that’s the old "invisible hand" making the efficient choices…..

    Idiocracy/Where – Yeah I don’t think I need to see that movie when we have reality.  Of course Obama says his share of stupid things but he’ll NEVER take down the champ

    Turret/Jbur – Luckily, I’m not a TA guy so I can get by with just 8 monitors on one level although I do kind of like the idea of having 3 more on top of my front 3…

    Breeding/1020 – I’m not sure they are smart enough to work the zippers even if they did! 

  154. kustomz

    Phil its great to see your work getting out there, the unedgimakated need to get educated!!

    My GD man this is why Washington could give a crap, a large percentage of this nation is just as clueless.

    matt your right as rain…. i think they take the markets to new highs, GOOG is on a bullish tear up to 570 in the near term

  155. where

    Phil – I live in Scotland (and travel all over the world working for Halliburton) and I don’t need to tell you how badly damaged Americans reputations were overseas by "the Dubya".  Ignoring his policies, his attitude and stupidity in public is going to take a generation to fix.  Saying that, ignoring Obama’s policies for the moment as well, O has done much for repairing the USA overseas.  Let’s hope that he keeps it that way.

  156. Phil

    Back on health care – this is a very good article by a woman who analyzes the $618,000 worth of treatment her husband went through fighting cancer – a great overview of our health care system at it’s best and worst:

    The documents revealed an economic system in which the sellers don’t set and the buyers don’t know the prices. The University of Pennsylvania hospital charged more than 12 times what Medicare at the time reimbursed for a chest scan. One insurer paid a hospital for 80 percent of the $3,232 price of a scan, while another covered 24 percent. Insurance companies negotiated their own rates, and neither my employers nor I paid the difference between the sticker and discounted prices.

    ‘It’s Completely Insane’  In this economic system, prices of goods and services bear little relation to the demand for them or their cost to make — or, as it turns out, the good or harm they do.  “No other nation would allow a health system to be run the way we do it. It’s completely insane,” said Uwe E. Reinhardt, a political economy professor at Princeton University, who has advised Congress, the Veteran’s Administration and other agencies on health-care economics.

    …  For the next three days, with Terence in the same hospital bed, we spent $14,022 on the medications Ativan and Dilaudid, and on monitoring for him and counseling for a different kind of pain management for the children and me. The cost was less than a third of the previous four days’ $43,711.

    $57,000 charged to a terminal cancer patient the week before he died.  How many tens of thousands of times a year does this happen?   This is kind of like if you forced everyone in a stadium where their home team is losing by 4 touchdowns in the 4th quarter to pay another dollar for another minute of play.  This is another reason why it will take a generation to fix health care – we need to teach people to accept death at a cerain point.  Sometimes, there is no sanctuary

  157. Cap

    Phil; you are correct in that there are too many unemployed to sustain a rally.  I was at a real estate conference this morning in NYC, and Bob Knakal (http://www.masseyknakal.com) had some interesting comments. 
    Among those are that there can be no recovery in real estate asset prices without a recovery in employment (which nobody sees anytime soon).  Also, asset prices while way down are being supported by lots of capital on the sidelines that want to invest, but can’t find attractive investments and / or willing sellers.  In other words, money that needs a home will pay more than they should.  Being a good broker, Knakal suggests that sellers should take advantage and sell.
    He also had some interesting comments on housing .. that too easy FHA terms (3% down) combined with housing tax credit, allows most national home buyers to buy homes with no money down or even having money left over … which sets up conditions for a potential double dip down to the housing market.
     
    Andrew Coumo…. this time Dick Bove is right on target.  Analyst Dick Bove isn’t trying to spare any feelings when it comes to NY AG Cuomo. Bove says Cuomo is the "father of the subprime crisis," is "one of the key reasons why [Fannie Mae and Freddie Mac are] bankrupt today," and could be dangerous to the banking sector if he becomes the next NY governor.
     
    Cuomo is a hack.  Not much improvement over Paterson or Spitzer if elected.   Sad state of politics here in NY, like many other places.
     
     
    Great piece here:
     
    http://www.zerohedge.com/article/must-read-seth-klarman-real-and-false-lessons-financial-crisis-blasts-government-market-inte
     
     
    SLG:   Check out the pathetic volume as the stock climbs ever higher.  The past 2 days show the lowest volume BY FAR, for at least the last 2 years, except for Christmas Eve 2008 and 2009.
    http://finance.yahoo.com/q/hp?s=SLG
     
    This market advance is complete BS, built on nothing but air.  Look out below.
     
    Finally, also built on nothing but air were Summers’ comments earlier this week attempting to lower expectations for jobs tomorrow blaming the snow.  Read today’s John Crudele column in NY Post.  The data is based on 1 week of surveys from early February; and therefore include at least 1, perhaps 2 of Feb’s major snowstorms.

  158. Cap

    BIDU — yes that lunchtime explosion was such ridiculous manipulation.  Almost $10 pop in 1 hour.
     
    This afternoon, BIDU was downgraded by S&P research on valuation FWIW.

  159. Phil

    Real estate/Cap – Yes, there is this mass, delusional insanity going on in this country where 60% of the people surveyed think their home is going up in value and 90% of the CRE owners think they can ride out the downturn, which may be true as you can simply not pay your bank and they send you a letter that says "please pay us" but there’s no "or else" because everyone knows what a joke that is. 

    Cuomo is following the Spitzer track to Albany which is the same Guilliani track except Banksters have now replaced Mobsters as public enemy #1 - I would think Bove and his buddies would be thrilled to get Cuomo out of the AG chair and up to Albany where he can become disgraced and resign like most other NY governors….

    Volume is a total joke, especially this week so far. 

    Anyway, bed time for me but talking about accepting death got this song stuck in my head so now you guys can suffer too – it’s from my favorite musical:

    Because in all of the whole human race
    Mrs Lovett, there are two kinds of men and only two
    There’s the one staying put in his proper place
    And the one with his foot in the other one’s face
    Look at me, Mrs Lovett, look at you

    No, we all deserve to die, even you, Mrs. Lovett, even I
    Because the lives of the wicked should be made brief
    For the rest of us death will be a relief
    We all deserve to die
     

  160. Cap

    Phil / Forbes — That’s the difference between having your own blog; and having an editor and a publisher at a branded, mainstream dead tree publication.  I see your point; but the edits they made seem reasonable; takes some of the edge / emotion out of your comments; but your main point remains intact.   The difference between owning your own real estate and being a worker on the plantation (in this case, Forbes is the plantation).
     
    Do you get paid for that ?

  161. jomama

     cap, "plantation" is probably a poor choice of words.  But i get the metaphor.

  162. Cap

    NY / Cuomo, that does seem to be a good way to get rid of politicians these days, doesn’t it ?
     
    I’m having a hard time keeping up with all of the scandals and problems of politicians.  I hear Edwards may get indicted !
     
    Edwards, Dodd, Rangel, Spitzer, Sanford, Paterson, Massa, Delahunt …….   see, there’s even 1 evil Republican in that list of ethical heroes.

  163. Cap

    Plantation seemed to fit well w/ Phil’s intended text.  Plus, I am surprised, no shocked, that the P word made it past the army of PSW editors and censors.

  164. Cap

    :wink:

  165. Phil

    Wow, CNBC just hit a new all-time low!  They reported another 8.8 eathquake in Chilie and the copper markets went crazy and then, about 10 minutes later, they said "nevermind – must have been some bad data." 

    Shorting copper at $3.40!

  166. Phil

    Meanwhile, futures are flying with the RUT touching 655 and the S&P 1,128 in huge moves, also on the Earthquke (nothing like human suffering to get the markets going).  Tempting as it is, the indexes are too scary to short.

    Dollar still strong against Euro ($1.359), Pound ($1.503) and Yen (89.3) and the Nikkei jumped 2% this morning.

    It’s all noise until we get the jobs report and/or a solution out of Greece.

    Larry Summers and Ben Bernanke have both warned that jobs data will suck due to snow.  Interesting…

    Still, it’s going to be hard not to focus on 10% unemployment if we hit double digits today…

  167. Phil

    Copper Demand Is ‘Weak’ in China Now, Tongling Says. Copper demand in China, the world’s largest consumer of the metal, is “weak” because of lackluster consumption from the power industry, Tongling Nonferrous Metals Group Co. said. “From what we learned from our customers, copper demand is now weak,” Chairman Wei Jianghong said today in an interview in Beijing. Tongling is the country’s second-largest copper smelter. Demand “isn’t very strong,” bigger rival Jiangxi Copper Co. also said today. Slowing demand in China may indicate stockpiles in the country may continue to climb after reaching the highest level in more than seven years in February. “About 60 percent of copper is used in the power industry, and our sales to wire-and-cable users reflected that demand is rather weak,” Wei said while attending the National People’s Congress. “The demand is not very strong in the first place,” Jiangxi Copper Chairman Li Yihuang said in Beijing at the congress. But a lot of people have long positions in the market, so I think in the first half of this year, copper prices will be good.”

    Oh I get it – Copper prices will be good BECAUSE people are long.  Demand doesn’t matter.  Supply doesn’t matter – all that matters is whether or not speculators think copper should be expensive….  Wonderland…

    China’s ‘Latent Risk’ Rising in Country’s Banks, Wen Says. China’s banks are facing increasing risk in their lending policies, Premier Wen Jiabao said today in his annual report to the country’s legislature. “Latent risk in the banking and public finance sectors are increasing,” Wen said, according to a copy of his speech distributed today at the National People’s Congress meeting.

    China to ‘Resolutely’ Curb Rises in Housing Prices, Wen Says. China will “resolutely” curb rises in housing prices, according to a copy of a speech to be given by Premier Wen Jiabao at the National People’s Congress in Beijing today.

    And More Free Money!: Fed Presidents Say Rates Need to Be Low Early in US RecoveryTwo regional Federal Reserve Bank presidents, speaking before today’s release of a February report on US jobs, said they believe the central bank should keep rates low until the recovery picks up.

    Market Defies Fear of Real Estate Bubble in China. Everyone agrees China is in the middle of a spectacular real estate boom. The question is whether it is in the middle of a rapidly growing real estate bubble. When other recent booms collapsed — in the United States, for instance — they depressed entire economies. In China’s case, a bursting bubble could affect much of the world.

    China Budget Eases Back  China’s government unveiled a conservative budget for 2010 that reinforces its gradual shift away from stimulus programs adopted during the crisis, even as officials said they were still committed to supporting economic growth    This was AFTER their close!

    Asian Shares End Mostly Up;BOJ Easing Hopes Boost Japan  -  Japanese shares led gains across most Asian markets Friday, with Tokyo’s stocks powering higher on hopes the Bank of Japan would ease its monetary policy further.   Ah, more stimulus!

    A.I.G., Greece, Who’s Next? The big banks claim that derivatives are used to hedge risk, not for excessive speculation. The best way to monitor that claim is to execute the transactions on fully regulated exchanges, pass rules and laws to ensure stability, and appoint and empower regulators with independence and good judgment to enforce compliance. Without effective reform, the derivative-driven financial crisis in the United States that exploded in 2008, and the Greek debt crisis, circa 2010, will be mere way stations on the road to greater calamities.

    World’s Cheapest EV: Tata Nano Electrifies Geneva Show. The world’s cheapest car, transformed into the world’s cheapest electric car, went on display at the Geneva Motor Show.  We need to start buying lithium!

     

    Greece Attracts Strong Demand for Bond Issue. One day after announcing a new wave of austerity measures, Greece has moved to tap international capital markets with the issue of about €5 billion (£4.5 billion) through a syndicated 10-year bond issue that is already oversubscribed. The new bond issue received a positive market response in what is seen as a first test since the €4.8 billion-worth of austerity measures announced on Wedbnesday, equivalent to 2 per cent of gross domestic product, to help to cut Greece’s huge budget deficit and restore fiscal order. Greece’s Public Debt Management Agency (PDMA) said that the new 10-year bond was oversubscribed within a couple of hours of the book opening, with about €11 billion in offers received. The five banks acting as lead managers for the sale, which is due to be priced later, are Barclays Capital, HSBC, Nomura, National Bank of Greece and Piraeus Bank.

  168. pstas

    Cancer- the article brought back a flood of memories as my family experienced a similar situation years back. My brother was in his final days. No need to review the details but essentially,we brought him in to die "in comfort" As soon as he hit the ward, the hospital crew spun into action. They began by hook him up to monitors; ordering up tests; talking about additional actions, etc. God bless "em, that is what they are trained to do. Fortunately, my sister, who ran all of the food service ops for a major med center was present. Although not a medical professional, she was familiar with the "medical mentality". She stepped in and just said "Stop!. The man is dying. We know it . You know it. We brought him here to , etc…..".
    Well, it was quite a shock to the medical staff. They stood there with deer in the headlight looks, began raising objections but you could see the light bulbs coming on in their heads and quickly they said, you are right.
    The moral of the story is the critical decision was made by the family and to me , illustrates clearly where the solution rests. Medical decisions are best left to the "customer" and just as every other element of life, cost is a factor no matter how distasteful it may be. Thus, reworking the system to place that decision burden on the patient/family/customer should be the goal.
    Yes, we can mimic the EU and it could work. However, it can and should be so much better. If one were starting from scratch, which would you rather have? The Postal Service or Fed EX?

  169. Phil

    "Duh" Chart of the Day:

    TO SPEND just a bit more time exploring how persistent high unemployment could pose a threat to recovery consider this nice chart from Calculated Risk:

    What you’ve got here is a positive relationship between the unemployment rate and delinquencies and foreclosures. Causation runs both ways here—states with larger housing crashes will, other things equal, have higher rates of unemployment—but one part of the relationship is particularly clear. Homeowners with negative equity who find themselves out of a job are at a high risk of default, as they may no longer be able to pay the mortgage and can’t sell their home for enough to cover their loan.

    And foreclosures create a raft of other economic troubles, from continued difficulties for banks to increased housing inventory for sale (which depresses prices and construction employment). Recoveries in different sectors are interdependent, but in all of them renewed health comes back to increased employment. The longer the economy expands without boosting payrolls, the less likely that expansion is to be sustained.

  170. deano

     SPWRA earnings delayed:
    On November 16, 2009, SunPower Corporation (the “Company”) announced that its Audit Committee had commenced an investigation of certain unsubstantiated accounting entries on the books of the Company’s Philippines operations.  In conjunction with this announcement, the Company also indicated that certain previously issued financial statements should not be relied upon.  Management is reviewing the results of the investigation and the impact of certain matters identified during the investigation on the Company’s historical financial statements and in connection with the Company’s evaluation of its internal control over financial reporting and disclosure controls and procedures.  The Company is delaying the filing of its Annual Report on Form 10-K for the fiscal year ended January 3, 2010 (the “2009 Form 10-K”) until all procedures and evaluations relating to the investigation and other procedures necessary to prepare the 2009 Form 10-K are complete.  The Company currently expects to file the 2009 Form 10-K on or before March   19, 2010.

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