by Zero Hedge - October 31st, 2010 11:56 pm
Courtesy of madhedgefundtrader
President Barrack Obama certainly arrives at a party like a rock star. Three silver GM Suburbans flanking an armored black Cadillac limo screech to a halt with lights flashing, and all of the roads in the immediate vicinity closed to traffic. A dozen sunglass bedecked Secret Service agents leap out, immediately scanning the perimeter. The president bounds out and briskly walks to the plush Atherton home, where he enters through the kitchen of former EBay executive and California state controller, Steve Wesley.
For a mere $30,400 donation to the Democratic National Committee, I received a sweaty handshake and an assembly line photo with the once South Chicago community organizer. A Koch brother I am not. The event came on the heels of the President’s 45 minute private audience with the Golden State’s own version of royalty, Apple’s (AAPL) Steve Jobs.
It was all part of a broad swing through the Western states to rally the faithful, and to top off the DNC’s coffers, which has raised a record $50 million in California this year. Perhaps Obama just wants to be among friends. While his national job approval rating languishes at 47%, it is 55% here, and an eye popping 72% among Democrats.
With a short two weeks until the election, the online betting site, Intrade (click here for their site at http://www.intrade.com/ ), is giving an 95% probability that the Republicans will win control of the house. But to me, this is all starting to take on the flavor of a consensus trade that I love to fade. The Democratic Party has become the BP of American politics. Expectations of its imminent demise may be greatly exaggerated, but not for the reasons you expect.
Since the 2008 election, some 4 million “millennials”, “generation Y’s”, or “echo boomers” have gained the right to vote. Have you spoken to your kids lately? The only issues they care about, the environment, global warming, gay rights, and ending the war, are overwhelmingly Democratic ones.
Another 2 million immigrants have also joined the rolls. Thanks to the racist rants by many Tea Party candidates – last week Nevada Senate candidate Sharon Angell said she thought many Mexicans looked like Asians—I would be surprised if any of these voted conservative.
Sure, only 30% of these groups vote at all. But when election results swing on…
by ilene - October 31st, 2010 11:51 pm
Hello Everyone and Happy Halloween! This weeks’ newsletter is available here. Feedback much appreciated.
by Zero Hedge - October 31st, 2010 10:02 pm
Courtesy of George Washington
Mervyn King – the governor of the Bank of England – has proposed abolishing fractional reserve banking.
As the BBC noted last week:
Mervyn King, the governor of the Bank of England, has tonight made a big intervention into the debate on banking reform. In a speech at Buttonwood, New York, he [listed] much more radical proposals.
1. Forcing the riskiest banks to hold capital “several times the magnitude” of requirements at present.
2. The Volcker rule-style enforced breakup of banks into speculative and non-speculative arms.
3. The “Kotlikoff proposal”, which forces banks to match each pool of risks with a requisite amount of capital, preventing losses in one spilling over into another.
4. Stunningly, Mervyn King imagines the “abolition of fractional reserve banking”:
“Eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not co-exist with risky assets.”
King does not advocate any of these radical plans – but the fact that he goes out of his way to list them, and to place them on the agenda of the UK’s Independent Commission on Banking, means that we are not yet at the end of the debate about long-term reform of the banks.
***
Beyond the technicalities, the fact that a central banker in a G7 country is prepared to imagine such outcomes is itself significant.
Moreover, King wrote to Ben Dyson and stated:
You suggest that banks should be forced to conform to the underlying purpose of the 1844 Bank Reform Act. You might be aware that I have said publicly that I think ideas in this spirit – such as those advocated by John Kay – certainly merit serious consideration in the debate as to how we reform our financial system. I remain sympathetic to these views. But as I said in my previous letter, I do not want to prejudice the outcome of the Banking commission’s deliberations. Now the Commission has been set up, I think we
…
by Zero Hedge - October 31st, 2010 8:46 pm
Courtesy of Tyler Durden
Whoooosh… or just another DXY flash crash? If this was indeed a BoJ intervention, it is the worst money spent by a central bank in the history of Keynesianism, with a half life of less than 30 minutes. Elsewhere, gold is predictably nearing its all time highs.
by Zero Hedge - October 31st, 2010 8:13 pm
Courtesy of derailedcapitalism
From DerailedCapitalism:
At 8PM EST tonight the EUR/USD cross sold off 80pips in seconds only to rebound 60pips. Is this another mini flash crash causing ripples through the fx markets with HFT’s going haywire? DXY spiked to 77.30. At what point are market regulators going to realize this gambling house is broken and there is no longer any creditability in capital markets?
EUR/USD
DXY
by Zero Hedge - October 31st, 2010 8:06 pm
Courtesy of Tyler Durden
As of today, one of the world’s top oil exporters announced that has exchanged about $15 billion of its FX reserves into gold. Earlier, Iran announced that the country has converted about 15% of its foreign exchange reserves into gold, and “will not need to import the metal for the next ten years.” There is your mystery buyer to all that gold the IMF was selling in Q3… And since Ahmadinejad said that Iran’s total FX reserves exceed $100 billion, the amount of gold in stock held by Iran is more than $15 billion. Which is equivalent more than 345 tonnes at a closing price of about $1350. Which also means that the WGC’s official gold holdings are in dire need of an update, as Iran does not appear anywhere on the IMF’s listing of official gold holders, and with over 345 tonnes, it would make Iran a top 15 holder of the yellow metal.
From Bloomberg:
Iran has changed some 15 percent of its foreign exchange reserves into gold and will not need to import the metal for the next ten years, Mehr reported, citing Central Bank Governor Mahmoud Bahmani.
Iran’s gold reserves have “multiplied several times” in the past two years, Bahmani said in a report published late yesterday by the state-run news agency.
Bahmani gave no specific figures, only saying the country consumes 30 tons of gold a year and that the central bank will have “ample supplies for the next 10 years” even if it doesn’t increase its gold holdings further.
Iranian President Mahmoud Ahmadinejad said yesterday his country’s foreign exchange reserves exceed $100 billion.
by Zero Hedge - October 31st, 2010 7:41 pm
Courtesy of Tyler Durden
Week in review
Intense speculation over what the Fed will do and uncertainty over how much is priced kept markets trading in a relatively tight range through most of the week. European peripheral spreads have started widening again as sovereign concerns have started to re-surface. Reports late Friday afternoon that the Portuguese government has reached an agreement with the socialists on the 2011 budget should provide some relief to markets. Reports that the US Administration is considering extending middle income tax cuts permanently and higher income tax cuts temporarily may also provide some boost to sentiment.
Week Ahead
The macro calendar does not get any more packed than this. We kick off with the usual monthly global PMIs, in particular the China PMI and US ISM (slight moderation is expected for both, more details below). We get our final GLI reading as well, which is important to watch for confirmation of stabilizing momentum. The initial reading showed a positive uptick after four months of negative momentum.
The US mid-term elections is on Tuesday, followed by the all important FOMC meeting on Wednesday. Our US economists’ baseline view is for a program of about $500 bn in Treasury purchases, to be accomplished over a period of about six months, but it is quite possible that a program of similar implied size might instead be specified in terms of a monthly purchase rate. In either case, there should be a clear indication that the program could extend beyond the initial commitment. Ultimately, our US economists expect the cumulative easing to reach a possible $2trn..
We also have important central bank meetings on either side of the FOMC decision, with the latter weighing heavily on the individual response functions. The RBA meets the day before the FOMC and it is likely that they hold rates steady (although our Australia economists think they go ahead with a hike in December). BOE, ECB and BOJ are all scheduled to meet soon after the FOMC. The BoJ meeting was advanced to allow an earlier start of its asset purchases program. For the MPC, our UK economists do not expect an announcement of additional QE. Policymakers around the world will no doubt be closely watching the market reaction following the FOMC decision.
We end the week with the key non-farm payrolls release. We expect the headline at +50k and private sector…
by ilene - October 31st, 2010 7:34 pm
Courtesy of The Pragmatic Capitalist
Thursday’s third quarter
The percentage change becomes less impressive when viewed in the context of the dollar level of activity, but it also starts to look like the beginning stages of a typical recovery in housing. Compare the current reading to the previous bust in the late 1980s and subsequent boom that began in 1991. Are we in store for a similar road back to “normal”?
How comparable are the two situations, the early 1990s and the late 2000s? What happened in 1991 to help put in a bottom? First, mortgage rates came down from over 10% in 1990 to 7% by 1993. Second, household debt as a percentage of GDP was 60% in 1990. The ratio of household liabilities to disposable personal income was 85%. The respective levels of these metrics are now 95% and 130%, each at or very near all-time records of indebtedness. The tailwinds for the housing market were substantial in the early part of the previous decade: interest rates were coming down and borrowers had room to expand their debt loads. The official response during this crisis has been an attempt to artificially engineer the same tailwinds that existed naturally before. The Federal Reserve has purchased around $977 billion of agency MBS in an attempt to bring mortgage rates lower (despite already historically low rates). Tax credits have been created and expanded to incent already heavily-indebted households to take on more debt. So far, it’s worked!
We’ll close with a great quote from James Aitken, of Aitken Advisors, that sums up the situation perfectly:
“The primary difference between Japan and the United
States at this point of their respective monetary malaises is that whereas Japan created a nation of zombie corporations, the United States is creating a nation of zombie households.”
by ilene - October 31st, 2010 5:54 pm
Courtesy of John Nyaradi
I don’t usually recommend books in a blog post but I make exceptions for exceptional books. John Nyaradi’s book “Super Sectors” just came out and I believe that it is a useful book for anyone wanting to really take advantage of rising industries and sectors. He includes a section in the book containing interviews with top advisers and industry experts (including yours truly) which adds a wealth of information that you won’t find in other books.
Buy the book here, enjoy! www.supersectors.net
by ilene - October 31st, 2010 5:51 pm
By Jeremy A. Kaplan, FoxNews.com
Don’t hold liberals responsible for their opinion — they can’t help themselves.
A new study has concluded that ideology is not just a social thing; it’s built into the DNA, borne along by a gene called DRD4. Tagged "the liberal gene," DRD4 is the first specific bit of human DNA that predisposes people to certain political views, the study’s authors claim.
And the key to it all: Liberals are more open, said lead researcher James H. Fowler, a professor of both medical genetics and political science at the University of California, San Diego.
"The way openness is measured, it’s really about receptivity to different lifestyles, for example, or different norms or customs," he told FoxNews.com. "We hypothesize that individuals with a genetic predisposition toward seeking out new experiences [a measure of openness] will tend to be more liberal" — but only if they had a number of friends when growing up, Fowler cautioned.
This isn’t a typical gene association study," he said. "There’s a combination of genes and environment that matter."
Source: Friendships Moderate an Association between a Dopamine Gene Variant and Political Ideology
Jaime E. Settle,Christopher T. Dawes,Nicholas A. Christakis and James H. Fowler (2010).
The Journal of Politics, Volume 72, Issue 04, October 2010 pp 1189-1198
http://journals.cambridge.org/action/displayAbstract?aid=7909320
January 27th, 2012 1:52 pm
Largest Central Banks Now Hold Over 15 Trillion in Fictitious CapitalCourtesy of Russ Winter of Winter Watch at Wall Street Examiner
I could not help noticing that China’s imports from Japan fell 16.2pc in December. Imports from Taiwan fell 6.2pc. The strong yen strikes again: Honda decides to build a high-performance hybrid Acura in Ohio – instead of its home nation of Japan. The firm’s continued shift in p...
January 27th, 2012 1:40 pm
Reminder: David is available to chat with Members, comments are found below each post.
January 27th, 2012 12:55 pm
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
In an effort to reach the angry mob, CNBC's Rick Santelli goes all Sesame Street on the numbers behind the US Debt Ceiling Rise. Focusing for two minutes on what this practically means for every man, woman, child, and politician, the shouting Chicagoan points out that when the US breaches this new limit then the world's entire population will be on the hook for $2,346 each (and $52,409 per US person).
...January 27th, 2012 12:35 pm
Courtesy of Doug Short.
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) posted -6.5 in its latest reading, data through January 20. The latest public data point is a reduced contraction from last week's -7.6 (a slight downward revision from -7.5). This is the highest level (i.e., least negative) since early September. However, the underlying WLI declined fractionally from an adjusted 123.3 to 122.8 (see the third chart below).
Early last December Lakshman Achuthan, the Co-founder of ECRI, spoke with Tom Keene on Bloomberg Television's Surveillance Midday. You can watch the video on the ECRI website here, with bold heading Recession Update. The eight-minute video is well worth watching in its...
January 27th, 2012 11:15 am
Submitted by Mark HannaCourtesy of MarketMontage. View original post here.
Some combination of better made cars, and less Americans able to pay new car prices has conspired to push up the average age of U.S. vehicles to a new record high. Reflecting this sea change, one of the best investment g...
January 27th, 2012 10:05 am
Courtesy of Benzinga.
Shares of battered tech company Research in Motion (NASDAQ: RIMM) are seeing much strength during Friday's trading session.
Fairfax Financial Holdings released a 13G filing with the SEC this morning, in which they disclosed a 5.12% stake in Research in Motion.
Currently, shares of Research in motion are up over 4% at $16.85. Over the last year, Research in Motion is down over 72%.
Research In Motion Limited is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. RIM provides platforms and solutions for access to information, including e-mail, voice, instant messaging, short message service.
...January 27th, 2012 12:00 am
Top 5 RisersStockRatingAnalysisASBCBUYMany analysts are expecting higher than previously expected long term growth from Associated Bancorp, and its near-term earnings outlook is also improving.CZZSTRONGBUYThe recent earnings history for Cosan Ltd shows significant improvement while projected valuation continues to rise.STLDBUYProjected value continues to rise for Steel Dynamics while long term increases in earnings growth are also becoming more widely expected.PSESTRONGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a fe...January 26th, 2012 6:16 pm
Courtesy of John Nyaradi.
Major markets and major index ETFs corrected slightly today after the stock market’s euphoric party yesterdayMajor markets suffered a slight hangover today, as the S&P 500 dropped .57%, the Dow Jones Industrial Average dropped .18%, the NASDAQ dropped .46% and the Russell 2000 Index dropped .34%, after yesterday’s crazy Fed and Tech Sector induced Wall Street Party. The NASDAQ, in particular, partied very hard, so hard in fact that the NASDAQ reached its 11 year record high.
The major market index ETFs were hungover too as the SPDR S&P 500 ETF lowered .51%, the SPDR Dow Jones Industrial ...
January 26th, 2012 1:38 pm
Today’s tickers: DB, ATHN & LSI
...
more from Caitlin
January 23rd, 2012 8:56 am
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
Optrader
...January 22nd, 2012 10:09 pm
Here is the virtual portfolio weekend update. Basically a recap of the positions and some notes about the trades. As usual, I'll post the previous week's P&L for comparison. Not the greatest of week in general! AA Money Only transaction last week as we bought back the AA Feb 9 puts on Tuesday for close to a 70% profit. The idea is to sell another set of put as soon as we get a chance. Previous week P&L - $400.00 We lost some ground this week, but we'll keep on selling premium! FAS Money We also lost some ground in this virtual portfolio, but we have sold plenty of premium for the coming week. A little correction would go a long way to help! On Wednesday we sold the FAS Feb 72 puts (already good for 50%), on Thursday we added the Jan4 78 calls and on Friday we had to roll the Jan 78 puts to the Jan 80 puts. We were hoping for these ones to expire worthless on Friday, but a late stick killed that hope. Previous week P&L - $4372.00...January 22nd, 2012 2:52 am
NEW: Elliott and Ilene are available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here's the latest Stock World Weekly. We discuss the Fed's next move, and it's new policy for more QE-cating. Brief review of Sabrient's trade ideas for 2012 (already doing well) and a few new buy-writes from Phil and Pharmboy. Enjoy! (Feedback appreciated - give some life to the comment section below.)
Click this link for this weekend's newsletter, and sign in or sign up.
...January 18th, 2012 1:09 am
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack. Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game. More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline. In addition, the stock can be manipulated by market makers so investors don't know which way is up. I approach investing in biotechs as a long term prospect. I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Philstockworld, LLC (PSW) nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither PSW nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance, including the tracking of virtual trades and portfolios for educational purposes, is not necessarily indicative of future results. Neither Phil, Optrader, or anyone related to PSW is a registered financial adviser and they may hold positions in the stocks mentioned, which may change at any time without notice. Do not buy or sell based on anything that is written here, the risk of loss in trading is great.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only intended at the moment of their issue as conditions quickly change. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice. |
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