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Monday Market Movement – Meaty Beaty Big and Bouncy!!

POMO, POMO, POMO!  

The Fed is in all-out attack mode this week with $35Bn scheduled for release in the next 5 days.  If that doesn't goose the markets, then I think we are screwed because people, $35Bn is A LOT of money for a week.  It's $1.82Tn a year at that pace or 12% of our entire GDP being created by the Fed to give you the illusion that all is well with the markets.  So say, thank you Chairman Bernanke, for treating us like children who would rather be lied to than facing reality and making necessary choices.  

Speaking of necessary choices, I HIGHLY recommend looking at Barry Ritholtz's "Fix It Yourself" deficit kit.  Barry takes the more complex (but also good) NY Times article and presents the very excellent chart that shows us exactly what budget cap needs to be filled and what the available choices are to fill it.  It's a great way to think about the budget and also it makes you realize that 5 or 6 reasonable people sitting down with this chart at a table should be able to knock this thing out in a weekend if we were living in a rational world or perhaps one where an out-of-control Central Bank cooperated with a deceitful Treasury Department to maintain a status quo that clearly is not working for the American people.  

FMD2QE2 is not about "fixing" the economy, it's about FIXING the profits of the Primary Dealers (Gang of 12) who are estimated to reap a $50Bn benefit by simply acting as the conduits through which the Fed distributes our money as if they were the town Santa tossing candy off the back of a fire truck.  

POMO spending might keep equities up and that is good for those of us who own them but what is it doing for the great unwashed and unemployed masses?  Speaking of unemployed, did you know that 100,000 of Octobers 156,000 jobs created were not actual jobs but a bookkeeping entry as the government changed the "seasonal adjustment" it made to payroll numbers?  Our friend, John Maudlin, explained the shenanigans over the weekend:    

"According to John Williams at Shadow Government Statistics, the BLS’ fiddling with the figures via what he calls ‘seasonal-factor games’ actually created 200,000 phantom jobs last month. John cites such finagling as the reason his prediction of an October decline and a rise in the jobless rate was wrong. It also explains why seasonally adjusted payrolls were revised upward by 110,000 in September, including 56,000 in August."

Of course, this kind of misrepresentation of the facts is small potatoes compared to what we get from the Mainstream Media but that was the topic of discussion of our Weekend Member Chat so I won't get back into that here.  What I will get into, though, is pointing you back to this nifty little cartoon that does such a nice job of explaining Quantitative Easing – in case any of your friends ask you to explain it to them.  

We went over the week that was in our Stock World Weekly Newsletter and you can still get your FREE copy this week as we still have a lot of work to do to set up the new billing system so the super-cheap sign-up prices remain, probably through the end of the month at this point.  Since it's free, I can reprint the updated Beta 3 overlay chart that we've been using to track the expected market move from the September lows.  It's not complicated really, Lloyd is just running the same trade-bot he ran in February but the Fed kicked us up a notch last week and we ALMOST broke the pattern (and we had calculated that this run would hit 11,500 anyway) but, of course, gravity reasserted itself last week as the markets pulled back about 2.3%:

 It's not very hard to pick winners when you have the map, is it?  That explains why Goldman Sachs had just 2 down trading days in Q3 with 31 days of $75M profits and seven days where the profits exceeded $100M.  And that was with just 20% of the money the Fed is giving to them this week!  Yes, it's a good time to be a Capitalist and a good time to be in cash as we are likely to have a nice, violent market move to play – one way or the other.  We got our bearish satisfaction last week and cashed out, as planned, into the weekend as we watch and wait to see what the effect of $35Bn dumped into the market is.   Of course, anything less than a move over our breakout levels will be a huge disappointment.  As it is, we're already testing the breakdown lines I drew out last Wednesday in our dollar-adjusted market charts:  

 Gee Phil, that's amazing – you draw lines on Wednesday and that's exactly where we end up on Friday – how do you do it?  As I keep trying to tell you nice people:  THE MARKET IS FIXED!!!  I used to help design these trading programs – why do you think they spend all this money to make them?  Why do you think Goldman Sachs testified, when their precious HFT code was stolen, that "Somebody who knew how to use this program could use it to manipulate markets in unfair ways"?  Does someone at Goldman Sachs know how to use this program?  Could they manipulate the markets in unfair ways?  Are there any "fair" ways you can think of that lead to a year-to-date 98% success rate in Goldman's market bets?  (odds are 47,379,232:1 against)

We don't care (from an investor standpoint) IF the game is rigged, as long as we understand HOW it's rigged so we can play along at home.  On Monday's post last week, we talked about shorting oil futures off the $87.50 line and that was a huge winner as oil finished the week at $85 on Friday.  We also, of course, had some nice USO plays from Member Chat.  It's very wrong that I can publish a trade idea like that to 200,000 people AND IT STILL WORKS!  In Member Chat, where we can be more aggressive, we went with yet another QID play and that one is detailed in the Newsletter (pg 3) with an 840% gain.  Is this "fair" to the 401K crowd, who sit like deer in the headlights while their wealth is transferred to people like GS and us in a game that's rigged to steal their hard-earned wages?  Of course not, but the public voted out any hope of reforming the system this month so I'm not going to waste two years pitying their poor choices.  They want unfettered Capitalism – they've got it and we're going to party like it's 1999!   

 

On Monday we also sold PCLN Nov $430 calls for $8 and those fell to $2.30 (up 71%) and we went long on BA and VLO (hedged, of course) but it's the FAS play I want to talk about today as we're getting a great new entry opportunity here with XLF beaten down again.  Keep in mind we are bearish and very much looking to be mainly in cash but, IF QE2 rallies the market, then we think the Financials make good laggards to play.  FAS Jan $20 puts can be sold for $1.50 and that money can be used to fund the purchase of the Jan $20/23.33 bull call spread at $1.80 for net .30 on the $3.33 spread that is starting out, with FAS at $23.50, 100% in the money and on the way to a 1,000% gain.   

This is the kind of stuff you can do with 1% of your sidelined cash and, if successful, you end up with a 10% profit on your entire virtual portfolio in less than 3 months – that's how we hedge against QE2 inflation and that buffers our more aggressive bearish plays like shorting PCLN calls or taking QID longs.  I remain generally bearish until the technicals prove me wrong as, fundamentally, we are totally screwed and no amount of lipstick is going to dress this pig up for long.  

Speaking of pigs, the November Empire State Manufacturing Survey was a 200% miss, coming in at -11.14 vs +13 expected and down from 15.73 in October.  Employment was chopped in half, down to 9.09  from 21.67 and new orders were off 300% at -24.38 from 12.9 a month ago.  One thing the Fed does seem to be right on is deflation as the TOTAL lack of manufacturing activity in the New York region led to a 2.6 decline in prices, down 500% from 8.33 in the prior month.  When new orders are declining faster than you are contracting – it's a good bet next month won't be a good report either!  

October Retail Sales, on the other hand, beat expectations of 0.8%, doubling September's 0.6% with a 1.2% gain but that was October and we know October started off well and begin falling apart in the middle of the month.  Also, without autos, it was just a 0.4% gain and that was actually a miss of the 0.5% expected.  Gas station sales accounted for a huge chunk of the gains, up 17.2% from last year thanks to a massive price increase so let's hear it for those plucky consumers, who can still be forced to dig into their pockets to buy the things they need to survive!  

Also speaking of PIGS, the EU crisis did not magically go away over the weekend.  In fact, Greece's 2009 deficit was revised up from 13.6% of GDP to 15.4% of GDP and that raises the 2010 estimate to 9.4%, which is 3 times Greece's 2014 goal.  Greek officials are braced for 'substantial pressure' from the EU and IMF to adopt additional austerity measures.  Ireland continues to insist that it doesn't need a bailout, but Germany is pushing it to ask for one anyway. Goldman economist Erik Nielsen says Germany's efforts are a 'purely political decision' prompted by "an assessment of the broader risk of the spread levels to economic and financial stability." 

China has frozen property loans to property developers for the remainder of the year in their continued attempts to halt their runaway real-estate bubble.  Goldman Sachs has already told their investors to RUN AWAY from China stocks and now the OECD is warning Australia about mounting inflationary pressures in that country as the US becomes the World's leading exporter of Global inflation.  The Chinese Government is taking swift action to fend off the onslaught of "hot money" pouring in from the US but can their relatively puny economy ever hope to withstand Bernanke's "fully armed and operational" POMO assualt?  

Jim Chanos says China is on a "treadmill to Hell" with construction now accounting for 60% of their economy – a far worse situation than the US was in 2 years ago – just before the whole thing blew up in our faces.  Our man Alan Greenspan warns us that "The United States must move to rein in its massive budget deficits or it faces the risk of a bond market crisis" – Duh!  He said the risk is that the deficit, which hit $1.3 trillion this year, could spook the bond market. That would result in long-term interest rates moving up rapidly and could lead to a double-dip recession.  

We're back to watching and waiting mode but it only took us about an hour into last Monday's open to begin shorting the market so we'll see what happens during chat today but this week we have that $35Bn capital injection coming and that's going to keep us from committing too much to either side until we see what the effect of POMO, week 1 will be.  

[Fraudmuda Triangle Artwork Credit: Special thanks to William Banzai7]


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  1. Phil — If it wasn’t Monday, I’d probably go through your MSM links. Being a Monday, I don’t want to ruin the rest of my week (heading back to Vegas Thursday!). I gave up being "informed" by the MSM about 12 years ago and now I find it more entertaining than any "reality" show (which I refuse to watch as well). At the same time it makes me sick to my stomach. Gotta laugh so I don’t cry…
     
     
    Question of the Day: Are people so stupid they assume any pill having to do with the sex organs or sexual disfunction will prevent STD’s? Why the warning on all the related commercials? The gene pool needs some clorine…
     
    Reminds me of my grandmother telling my sisters the best form of birth control is an asprin. Just hold it between your legs :-)


  2. Sorry, that should be "hold it between your knees".


  3.  Phil- totally agree with your stock overlay observation, but (1) could you enlighten me on how you’re thinking about that applies going forward given where we are in the calendar and the uncertainties earlier in the year that have been addressed and/or managed? (eg,Nov elections, additional QE, an anti-business White House, Euro sovereign debt, China/EM meltdown, dollar strength, BP oil spill malaise, flash crash fears, unemployment and "sell in May, go away"). (2) Have we set a new lower base of support (if so what is it?)? (3) Or do we rollover just as the stock overlay chart would suggest? (4) How does "buy in October, sell in May" influence your outlook in the context of Beta 3?
    Thanks


  4. Aclend/Phil   Assuming a normal distribution of the sample (not skewed) 68.2% of the population would account for one standard deviation from the mean in either direction.  In the IQ realm scores would fall between 90-100 IQ points as measured by the WAIS (Weschler Adult Intelligence Scale).  There is also a WISC for children by the way. So, 68.2 percent of the general population would have an IQ score between 90 and 100.  This is referred to the Normal or Average range.  No test of IQ represents the ‘true potential’ and the’g’ factor is a theoretical construct and not reality .  Given the error of measurement, using the normal distribution as the referent,  that would mean a whopping 31.8% of the population would have ‘IQ’s above 110 or below 90.  So given that ‘g’ only explains 50% of the variance in genetics,  there is indeed a huge case to be made that Nurture plays a  significant role in influencing performance (up or down) over time.  Therefore it would be incumbent upon a parent to provide every possible opportunity to expose a child to a positive and nurturing environment.  Same hold true for those that do not (Destructive). 
    Given that MSM speak to 68% of the population who are easily influenced (look at the power of commercials)  Cramerica gets slaughtered in the markets.  The people who have less intelligence generally are not investors (could be gamblers though).  Investor/traders are the few at the top of the range who can and do manipulate the markets.  That is why most of the money is held by so very few people.  I would predict that most of PSW members happen to fall =>+2 SD above the mean.  Perhaps we can’t manipulate the markets but it is possible to predict what is about to happen.  Great Charts Phil!!
    DD


  5. Phil

    Jury Duty this week. I feel naked without without a trading platform. Do you have any gold star purchase and forget plays this week?


  6. Phil,  Would you take a small position in TBT or short the TLT?  I guess it is risky, if Europe unwinds or QE2 fails interest rates could plummet again


  7. Phil--any play on JOYG (sell calls into excitement) on BUCY buyout? Tx


  8. GM everyone.  Who’s ready for some POMO ?  Please sir, may I have some more ?
     
    Gel … that was some diatribe you happened to stroll into last night !  Been there, done that my friend.
    I’m not gonna get in the middle of that scrum today, but you can get my general viewpoint on hopeychange.blogspot.com
     
    As for today, markets, the only reasons to go up are POMO & Seasonality.  Maybe a little M&A excitement also.  Many more reasons to go down.
     
    Let’s go kick PCLN & CMG & NFLX ass this week !


  9. NET $ (358)%, dx/y = +.33% at the bell


  10. Oh, things are great out there….Business conditions in the New York area deteriorated in November, as the New York Fed’s Empire State manufacturing survey plummeted 27 points to -11.1, driven by a sharp drop in new orders. The release was far worse than economist expectations for a +15 reading and marks the first negative reading since July 2009. The shipments index also fell below zero. (Marketwatch)

     

    New Writeup for those that may have missed it in the book writings last night.


  11. NET $ (.28)% highest I have seen today


  12. Down goes the VIX!!!


  13. Mike5885,  I did a quick google search and unfortunately google cant see the private chat on here.  This means I cant find the original post where you explained what the numbers you keep posting mean.  Do you have a link to your original post,  or do you remember which artice it was under?


  14.  Phil / China
    With China on the road to hell what do you think of a play on FXP?
    (March 25/30 is at $2.24 and March 25 put is at 2.05)


  15. NET $ (.26)%,  dx/y = +.29%
     
    oil +.39,  gold +3.5
    C = 1202.93, F =1201.25
    10yr = +3.77%,  30yr = +1.15%


  16. Phil

    That cartoon was awesome!!!

    Tell me it ain’t so…..tell me it’s a pack of lies……distortions……exagerations…….half truths!!!


  17.  

    Oxen Alert – CSUN Exit, New Play of the Week Entry



    Hey all,

    We have exited CSUN close to the open at 4.76. We only got another 1% on our second half of the position, but we were able to average out our gains for 2.5% after exiting the first half at 4.88.

    We have a new Play of the Week in Dress Barn (DBRN). We are looking to enter at 23.80 – 24.00. I am involved at 23.83. 

    Up 1.5% on STP and down 0.8% on FSLR!

    Check it all out here!

    Good Investing!

     


  18. NET $ (.07)%


  19. We  after months my 10  Jan11  34/40 Bull Call Spreads are finally Green if you add in the Jan34 sold puts.  I never thought I would see the day.


  20. Good morning!

    I feel much better now that I got all my liberal randing done over the weekend.  Now let’s make some money so we can escape this death trap if we have to!!!  

    We’re getting the pop we expected off last week’s drop as well as the 2nd day (Friday was one too) of the new Fed pump.  We think we should get a reaction in the same way you get a reaction even if you defibrillate a corpse – it’s going to jump, the question is whether or not the patient’s heart can start on it’s own and keep going….  

    Last Monday I said: "So, the question is, how long can they maintain our levels and how high can they fly this thing?  Looking at the Beta 3 chart above (Omega 5 was last year’s pattern) it’s obvious they are trying to push us higher but our ranges are governed by stock market physics and not the wishes of the FOMC board.   So please, Please, PLEASE keep in mind that this is all, FUNDAMENTALLY, BS and it is not at all safe to go long on this market at the moment.  It’s not safe to go short either with the Fed pumping in $110Bn a month but we are a very long way from having a stable base to build off as well."

    This Monday, we are  starting off 200 Dow points lower but it’s the same thing.  Keep an eye on those dollar-adjusted charts, which you can update using THIS LINK.  I’m just not as gung-ho enthusiastic as I was last Monday about grabbing new shorts with the Fed about to pump a ton of money in but, when in doubt, we watch our technicals, especially that 10% line as another index failing it will be very bad news for the bulls:

    • Breakout LevelsDow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Up 10% (must hold)Dow 11,220,S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • Up 7.5%Dow 10,965, S&P 1,146, Nas 2,365, NYSE 7,280 and Russell 672
    • Up 5%: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 

    As I mentioned in the above post, the FAS spread is the best current upside play as it pays enough (1,000%) on a flatline to compensate us well for missing a rally with long bets.  The flexibility of cash is worth much more than gold right now, keep firepower available and I’m sure we’ll find plenty of interesting opportunities, like BA, which is still dropping!  Our gold plays are still doable with gold at $1,369 and oil can give us another nice drop if they fail $85 but I’m hoping they push it higher into inventories.  

    My GAMBLE of the morning would be the SPY $119 puts at .53, which have a .29 delta and should move very nicely if the S&P fails 1,200 but 1,205 should be the stop there for a quick .03 loss or better yet to wait until either the S&P fails 1,200 and take it as a momentum play or the RUT fails to hold 720 – which would be our canary in the coal mine for the day. 

    September Business Inventories are not that meaningful but they are up 0.9% and about in-line.  In-line is disappointing though as the sales to inventory ratio has been dropping and that’s never a good sign!  


  21. Oops that was in TBT


  22. NET $ +.06% first positive I have seen today,  dx/y = +.21%


  23. Craigzooka
     
    The NET $ is just my quick attempt to net the dx/y out against the Euro, Yen, Franc and Yuan.  Just to see if the dx/y is representative if what is really going on in the $$$.


  24. PCYC – someone is taking a large position on the positive side.  Data must be coming out, but I cannot find anything that says so.  1500 Dec 5 P were sold for 30c and 1500 Feb 6 Cs were bought for 1.30.  I think we need to follow the money on this one and try to get the spread for 40c by selling the Feb $7.5 Cs as well. So that is a $1.50 spread for 40c which is 20c ITM.  I am going to try a few, so scale in appropriately.


  25. NET $ (.14)%


  26. Phil,
    Re cartoon for dummies, I do not see it anymore today, it was great. I like to send it to some friends, how can I transfer it to the email ??? thanks


  27. Not only does China have the fastest computer in the world now (far surpassing anything we’ve ever built in the US) but they have also figured out how to put up a 15 story hotel in 6 days. There’s no bubble…


  28. NET $ (.66)%,   dx/y =.+.45%
    the NET$ fell straight lower after poking its head into positive for a brief moment, as it fell the mkt off its lows slightly


  29. Looks to me like stocks are waiting for POMO to end, so selling can begin ..


  30. Hi Phil, what might be our tolerances on the FAS spread. It looks like the $1.80 might be history.


  31. AMZN down $5 (3%)
    PCLN down $5 (1%)
    NFLX down $3.5 (2%)
    CMG ?  slightly green LOL … cmon, let;s kill this one !


  32. Phil
    any thoughts on Toyota?   
    also 9aside from the obvious or maybe its just the obvious) why is the Fed buying from goldman and not direct from the treasury?
    thanks


  33. MSM/Rain – Yep, very depressing to dwell on.  As to people’s knowledge of pills – perhaps if we taught sex ed in schools or basic pharmacology, which may actually make people more intelligent consumers of health care rather than taking any crap a doctor prescribes…  Only an uneducated population can be manipulated into spending 2-3 times more on health care than any other nation on Earth but I guess you can say the same with our military spending.  It’s not the gene pool that needs to be cleaned but the halls of power but our prison system has done an excellent job of weeding (get it) out the rebellious genes for the last 40 years….  

    Going forward/SNS – My simple answer to all your questions is "I don’t know."  If I knew, then we wouldn’t be in cash, right?  Overall, the World is a mess and there are many things that can fall apart and most of those things will cause a panic into the dollar, which will give you a relative profit on the cash you do nothing with.   Will that cash be more than if you short the market?  Probably not but the Federal Reserve is pumping money into the economy at the rate of $1.8Tn a year so betting against that is kind of like betting water won’t put out a fire – you may be right but, short-term, there is very likely to be at least some sort of effect.   If the 10% lines hold and POMO gets us to take off then yes, it could become new support, which makes sense as a 10% long-term devaluation of the dollar would raise our floor to the 10% line – this is not complex stuff.  As for buy in October etc – what kind of market premise is that?  Ignore all conditions, ignore all news, ignore all technicals and just do what a poem tells you?  Forgive me if I don’t construct an investing premise based on old wive’s tales….

    As to "Beta 3" – Keep in mind this is a pattern that we made up.  It’s not magic and we are reaching the end point.  That does not mean that the next pattern "THEY" run will be a selling pattern – clearly they WANT to run another buying pattern based on the Fed’s free money but that depends on how many big funds are going to be looking for the exits into the end of the year, playing off the mindless "Santa Clause" and "buy in October" fans to dump their inflated stocks on the next set of future bag-holders.  There is nothing to do at the moment but see which way things play out and be ready to react when we get a clearer signal.  

    Good IQ points DD.  Of course, my liberal logic is that if you feel it’s incumbent upon parents to provide every possible opportunity to expose a child to a positive and nurturing environment then isn’t it also sound economic policy for the Government to do so because each person that is made more productive will become a net contributor to society and not a net beneficiary.  Even if we could only move 10% of the bottom 90% up to the higher levels, that would still lower the social support burden paid by the top 10% by 9% and would also reduce the overall tax base as it’s shared by our newly productive workers.  It’s a huge win-win that would easily dwarf the paltry $105Bn a year we currently put into educating our children…

    Jury duty/Exec – Oh that sucks.  Set and forget is cash.  I like BA as they fall and I like XLF/FAS as it’s hard to imagine POMO not working at all but, on the other hand, if it doesn’t work – then look out below! 

    TBT/Trad – Not this week.  Again – $1,800,000,000,000 is the rate at which the Fed is pumping the market – could there possibly be a worse time to bet against them?  

    JOYG/Savi – I haven’t done the arb math on that one.  They really saved POT from a big fall, I think selling the Dec $140s for $4.30 is a better bet but dangerous if the phantom Chinese bidder really shows up.  

    Your restraint is admirable Cap!  So far, our momo friends are behaving themselves but we’ll have to see what happens when the money spigots get turned on.  

    FXP/Yshen – The only economy in the world more manipulated than this one is China’s.  It’s a very dangerous play so keep that in mind and also consider EDZ instead as a crisis in any of the BRIC nations would do well on that one, not just China. 

    Cartoon/Exec – Sadly, all very true.  

    TBT/Stock – Congrats!  Good job sticking with it!  Just keep in mind you are lucky to be even and you can always run to a longer time-frame rather than risk a short-term move against you.

    Cartoon/Yodi – What the one on QE2?  That’s:  http://www.philstockworld.com/2010/11/13/quantitative-easing-explained/

    Construction/Kwan – Look how many workers!  It’s like an ant colony building something…   We are so toasted by these guys!  AAPL thing seems to be just an ITunes announcement – probably not that sexy.  

    Waiting/Cap – But POMO will never end…


  34. Phil / BAC   Does this very recent insider buying influence your view on BAC?

    Director Robert Scully acquired 39,500 shares, paying $12.45 per share for a total amount of $491,716. This was the first purchase of Mr. Scully through a trust. He also owns 77,655 shares directly.
    Director Charles O Holliday Jr acquired 30,000 shares, paying $12.61 per share for a total amount of $378,150. Mr Holliday increased his stake by 121.70% to 54,650 shares with this purchase.


  35.  Cap, let’s kill CMG as soon as I’m able to retire my short Nov $230 puts! :D They are now $2.4 I just need them to be below $1.70.. 


  36. NET $ ).04)% rising here, dx/y +.56%
    oil +.43,
    C = 1203.81, F =1201.50


  37. that is a (.04)%


  38. Phil/Waiting  I hope you had the chance to see "The Wall" when it came to your neighborhood. The family and I will catch the show in Vegas the day after Thanksgiving…… :)


  39. Good Morning Phil,
     
    Still have my RICK Nov. 10 Put open, original trade was Buy RICK at $8.91, Sold Nov. 10 Put and Call for 2.65.  After this week, my cost will be $8.13.  Consider to sell May 11, $7.50 Put and Call for about $2.00 to make my cost to $6.13, if call away, it will be 22% profit…..  What do you think?
     
    Thanks.


  40. Phil I have TBT 35/37 C spread 0,54, today 1.28. What I can do? Closes or roll smth?


  41. NET $ (.55) falling again here


  42. DEC spread


  43. Good morning,

     

    IWM 71.38, 71.88, 72.02, 72.64, 73.04, 73.76, and 74.06

    A failure of 72.02 (not a head fake) should be a FMD to the downside; I’m currently waiting for direction !!


  44. 10yr = +3.05%,  30yr = +1.17%


  45. ravalos,
    nice to see you in better spirit today, I know it is tough to take emotion out of trading
    AMZN down 5.14 nice to see this high flyer looking for lower landing


  46. NET $ (.74)%, dx/y = +.51%


  47. Phil / ABX  Are we still waiting for a gold correction / $ bounce, or do we go ahead with ABX entry now?  Should we be in UUP now?


  48. Phil….Your comment…."Only an  uneducated population can be manipulated into spending 2-3 times more on health care than any other nation on earth"….is right on.   Here’s a fact that will impress you, or anyone:    It’s been shown that over 1/3 of all cardiac catheterizations done in this country are NOT INDICATED.    That’s a HUGE amount of money.,, and a huge risk to many patients.    Hospitals involved in this activity, and (of course), cardiologists, will dispute these findings.  And why shouldn’t they?  It’s their bread and butter (or perhaps filet mignon), and they won’t stop doing it based on science.  It’s only one of many examples.  The average patient in this country will walk into a physicians office, and if the doctor says they need an organ operated upon, or evaluated, (pick any….heart, brain, kidney) they will simply agree to it without question.  The vast majority are totally ignorant of health matters, and certainly of the health care system. 


  49. If you want to see my new Ford Ratings Report with the new layout…5 pages:

    It is here!

    Good Investing!


  50. dropping fast as Europe closes
     
    NET $ (1.21)%,  dx/y = +.64%
    C =1203.30, F =1201.50
    oil = +.07,   Gold +6.30


  51.  yodi, I had a very pleasant weekend where I completely forgot about financial markets, trading, portfolios and specially CMG.. I disconnected myself for most of the time during the weekend. That helps a lot to always get a better perspective and recover some patience.. they always say the emotional mind is also good to have it "diversified in several emotional assets" where a downfall in one area does not affect the overall mind-health of a human being because it’s compensated by other nice up areas.. I was even close to eat in one Chipotle during the weekend.. :)


  52. Phil, any opinion on today’s POMO or is it too early still?


  53. Phil,
    Question re risk mgt: I recall you mentioning a guideline of a 20% stop before bailing or rolling on a position; is that a general rule subject to variation in specific situations? e.g. if we were to buy the bull FAS sprd du jour for 1.80 then we would close out if it hit 1.44.
    I appreciate, as you have mentioned, it takes many moons to develop Olympian competence but I, for one, would greatly benefit from any additional insights you could provide on risk mgt of option spreads AH if you have the time /inclination.
    Thanks.


  54. NET $ (1.15)%


  55. CSCO/Phil
    With the recent price drop…. moving forward do you see a good investment combination for CSCO…..  Thanks Phil !!!


  56. ravalos
     I was even close to eat in one Chipotle during the weekend..
    That realy takes the cake!!!!!!!!!!!!!!


  57. Ravalos, 
    CMG…I had been thinking of shorting them… but I stopped in a few days ago and the food was good, service good and they were packed. I thought maybe its a sign to leave them alone…


  58. Phil, 
    I am still holding the short SKX Nov 23 puts (sold for 1.18 now 2.4) they only have about .10 premium, so I guess not much to do with that, todays bounce thought is helping me so I am not sure if doing a roll at this time (in case the pop is just a for a day)… What do you recommend?
    Thanks


  59. FAS/Morx –  If you can’t get net .40 then better off waiting as .50 is just a huge difference but it’s still got a huge upside if we do pop.

    TM/Datuu – I like them at $65 but not at $76, just not worth chasing.  As to the Fed, see the Mauldlin article, it’s just another way the banks are manipulating the government into putting you more into debt so they can rake in fees (for your own good, of course!).  

    BAC/Tusca – No because i don’t know how much money Scully has to know if that’s meaningful for him.  If JRW buys 100,000 shares of FAS that might mean something but if he buys 10,000 shares he’s just poking around – it’s all relative…  I don’t hate BAC, I just don’t see a solid reason to trust them and invest.  I think XLF is enough of a leap of faith in the financials for me.  

    Wall/1020 – Nope, been too busy (still running back and forth to Florida) but I caught it the first time so I’m not too upset.  

    RICK/Bob – Yeah they were on a good path and then fell off.  No biggie as you did collect the $2.65 and now you have a $2.60 putter and you can just roll him along to the Mays but I’d still go for the $10 puts ($2.85) and the $7.50 calls ($1.05) to put another $1.30 in your pocket and drop your net to $4.96/7.48 and your only worry will hopefully be what to do with the $7.50 caller in May.  You are miscalculating your cost as your net on $8.91 less $2.65 was $6.26/7.18 but if you roll a $2.60 putter to a $2 combo, that ADDS .60 to your net and you’re at $6.86/8.43 – that’s why I like the other roll better – you are not much worse off if put to you but WAY better off if the trade pans out.  

    TBT/Pahurik – I assume that’s November?  I’d take the money and run this week and hope for a pullback or you can move in with another one on a breakout.   You could also cash the $2.30 of the $35s and take your chances on the $37s and just make sure you cover if they break $37.50 with something like the March $37s at $3 and then you can just roll the callers along.  

    S&P REALLY tight in the range here!  Not a good signs for the bulls as the POMO just went off without incident…  SPY $119 puts still looking good at .42.  

    ABX/Tusca – A small ABX position is fine although keep in mind I do not believe in it.  UUP you missed a nice move on last week so I hate to say chase it.  Just hope the Fed works their magic and it comes down again.  

    Health/Iflan – Sad and true.  Low number of doctors per capita contributes to the problem.  We rank 52 with just 2.3 doctors per 1,000 people vs. people like Russia, Greece, Italy, Belgium – with 4 (and I won’t even dare mention Cuba’s 6 doctors per 1,000 people or the Conservatives will accuse me of subversive thoughts!).    Hey, at least Kazakhstan only has 3.5 doctors per 1,000 people, that’s hardly more than 50% better than us in Borat’s country (and you can pay them in eggs!).   Between not having a lot of doctors, mystifying the profession, failing to teach medicine in our schools and all the legal nonsense that discourages well-meaning doctors from actually helping people – we do a very effective job of creating the Church of Medicine in this country, complete with fanatics who will defend that which they do not understand, no matter how much damage it is doing to the people.  In the very least, kids should watch THIS FILM!  

    Good job taking a step back RAV, now let’s hope the markets do the same.  

    POMO/Jabo – Well it’s disappointing so far but they did pop 1,205 on the S&P so we have to respect the technicals.  Oil, gold, copper etc not moving up so the rally not looking very impressive, especially with the dollar down 0.25 from the 11 am high.  If the dollar holds 78.50 and heads back up, then IT’s putting in a new floor so no reason to get bullish just yet.  

    FAS/8800 – Those are tricky as they are very volatile.  Best is to enter a 1x (out of 4x) position and at 20% make a decision to stick it out or bail and, if you stick it out, then 20% can easily go the other way just as fast but at 40%, you hare committed to a DD at that point and then you look for a 20% recovery to get you back to even where you can sell 1/2 and end up with a 20% lower basis to ride out.   That’s the "rule of thumb" on those.   Feel free to remind me after hours – you’re bound to catch me in the mood to pontificate one day but also make sure you read the Strategy Section article on scaling and the comments that are under it as there is a lot of stuff there.  

    Volume on Dow is lame at just 55M at 11:50, way below normal (70M).  That means this action is meaningless

     


  60. hey,
     
    you can sell NOV CRM 130calls for 0.68 .  That is 6 percent return on your margin in a week.  In case you are confident they wont jump 13 percent till  friday.


  61.  Lith,
    CRM earnings are on Thursday - 


  62. NET $ (1.21)%, 2nd lowest reading I have seen today, dx/y =+.60%
     
    C =1206.65, F =1204.50


  63. Phil
    i have read the mauldin artcle--if you go by the old adage "follow the money" how does the fed benefit by purchasing from goldman vs the treasury? i understand what the banks get out of it--but why/how does the fed let itself get manipulated and what does it get out of it?
    thanks for the advice on toyota--


  64. At the open: Dow +0.18% to 11213. S&P +0.26% to 1202. Nasdaq +0.48% to 2530.
    Treasurys: 30-year -0.61%. 10-yr -0.6%. 5-yr -0.38%.
    Commodities: Crude +0.78% to $85.54. Gold +0.33% to $1370.00.
    Currencies: Euro -0.21% vs. dollar. Yen -0.36%. Pound -0.02%

    10:00 AM On the hour: Dow +0.26%. 10-yr -0.58%. Euro -0.51% vs. dollar. Crude +0.35% to $85.18. Gold +0.15% to $1367.60.

    11:00 AM On the hour: Dow +0.42%. 10-yr -0.53%. Euro -0.73% vs. dollar. Crude +0.32% to $85.15. Gold +0.52% to $1372.60.

    11:15 AM QE2 continues as the Fed buys $7.92B in bonds in its latest POMO repurchase, of $28B offered by dealers. Treasurys remained lower; the 30-year yield +0.02 to 4.31%; 10-year +0.05 to 2.84%; 5-year +0.05 to 1.43%. 

     

    Sept. Business Inventories: +0.9% to $1,402.9B in-line with consensus and unchanged from last month (revised from +0.6%). Sales +0.5% to $1,101B. Inventory/sales ratio of 1.27, down slightly from 1.30 a year ago. 

    There’s no two ways about it: November’s Empire State Manufacturing Survey paints an ugly picture, with double-digit drops in employment, manufacturing and new orders. New orders had its sharpest drop since Sept. 2001. That’s as bad in New York as when half of downtown Manhattan was blown up!  

    A group of economists pen an open letter to Bernanke, arguing QE2 "should be reconsidered and discontinued" and "improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus." More here.

    A Philadelphia Fed survey of economists finds expectations marked down across the board, with years of high unemployment and lower forecasts for growth this year and beyond – to 2.2% this quarter, 2.5% next year, 2.9% in 2012. The only positive: They think contracting prices will be avoided.

    The Pragmatic Capitalist agrees with today’s open letter to Bernanke that QE2 shouldn’t go forward, but not because it will cause inflation or currency debasement. Rather, QE2 puts the Fed’s credibility at risk while creating ‘market distortions’ thanks to "misconceptions surrounding a policy that very few people actually understand." 

    California will launch $14B of debt sales today, hoping investors’ search for yield will compel them to overlook the state’s weak finances and last week’s sell-off of muni bonds.

    Credit-card delinquencies (usually one of the first indicators of future losses) have fallen to the lowest levels of the year at BofA (BAC), Discover (DFS) and Capital One (COF). Charge-off rates are still historically high but are improving, and loan portfolios are still shrinking.

    Japan’s GDP grew 0.9% in Q3, up from 0.4% in the preceding three months and better than expectations of 0.6%. Too bad it’s almost all from ‘stimulus steroids.

    A set of announcements from the Bank of England amounts to wind-downs of its various support schemes for British credit, though it will keep buying some asset-backed paper in order to support smaller companies. 

    RBS (RBS +1.3%) and Lloyds (LYG +0.7%) have only ‘minimal’ exposure to Irish debt, according to research by UBS, with gross investments in the country of around £35B ($56B) and £27B respectively. Given the banks’ strong profits and capital bases, "we see Ireland as no more than a modest challenge for the banks." 

    There’s no oil peak in sight, according to the IEA which says the market is ‘well supplied‘ until the end of 2011. After dipping below $85 per barrel last week, prices are rebounding this morning as bargain hunters think  $90 is possible by year-end. Futures +0.8% to $85.54. (previously: IEA’s monthly oil report)

    Android (GOOG) phone users suffer Apple envy, with one-third claiming they’d prefer an iPhone (AAPL), notes a survey. Contrarily, only 7% of iPhone customers wanted an Android. Android owns 25.5% of the global market share and iOS only 16.7%, so Apple marketing wins even if it loses the sale. 

    Google (GOOG) is urging Washington to pressure the Chinese government to stop arbitrarily blocking the country’s 420M viewers from online info or sites it doesn’t like. But Google also says over 40 governments engage "in broad-scale restriction of online information," a 10-fold increase from a decade ago. This, in the long-term, poses a threat to the American internet sector, Google says.

    Qantas says it may need to replace 14 of the Rolls-Royce (RYCEY.PK) engines on its A380 planes, and discloses that a plane heading for Buenos Aires was forced to return to Sydney because of electrical faults, becoming at least the fourth flight turned around by Qantas in less than two weeks.

     

    DIA $112 puts at .62 could be nice movers on a Dow pullback here


  65. Just as an FYI, CRM reports earnings Thursday after market close.


  66. Phil, Peter D or whomever:      I started legging into a short strangle on 10/19 by selling 2 Dec 1110 puts for $10.50.  After the run up on 11/5 i wanted to hedge the position and protect my profits by adding the short call side so i added 1 Dec 1280 for $5.25.  My thinking was with POMO we could  go higher so i left the roll from 1/2 cover to full cover open in case i needed more room on the short call side.  The deltas of the short puts were .10 so total of .20 and the short call delta was -.20.  I balanced the delta to zero but on the drop from SPX 1225 to 1200 i wasn’t happy with the hedge results.   Could you recommend a better hedge please?  My choices were 1)  take the profits off the table and close the postion, 2) close 1/2 the postion and take 1/2 the profits off the table, or 3)  add the short call side to the postion and continue to let Theta work its magic.   It has worked out ok but i am sure there was a better hedge.  Should i have chosen a diffent strike?  Thanks for the guidance. 


  67. CMG looks like its about to roll over…. if it breaks down, next target area is 217 IMO.


  68. Sorry, new here and I’ll pick up the shorthand pretty quick – I hope!  In Phil’s chart above – "Dow up 10% 11,500" .  Up from what? 
    And "dollar at 78.50" – again – in relation to what? 
    Thanks


  69. @PHIL
    I sold 40  $4  TZA  Jan 2012 puts, as part of a pair trade a while back.
    What, if anything, would you recommend doing with them at this point, 14  months  from expiry?


  70. Strategy Session
    Mossavar Rahman ??? basically to paraphrase, she says, because of USA’s past in many areas… education, military, innovation etc, etc etc that just because China is accelerating in these areas at the moment don’t count USA out because of USA’s resilience………. Now time to listen to Toby Keith…… reminds me of a relay race….. now since the USA is finding itself continually  falling behind in many key areas which drives an economy…. the finish line for that "back in the pack" runner dealing with REALITY is quite different from the fantasy of finnishing first……. Then AGAIN, maybe the USA is really a SeaBiscuit…… we are just taunting all these other country’s economies prior to the "home stretch"…….         


  71. Ravalos, you have a good roll of those Nov 230 puts to the Jan 195 puts for $1 or so credit.  Maybe 1.15 or 1.20 credit.
    I would be looking at that roll …


  72. NET $ (.85)% here at 12:35, dx/y =+.47%
    C =1205.31, F =1203.00
    oil = +.30


  73.  Cap, I debated over the weekend Phil’s suggestion to retire the Nov $230 short puts and re-think the strategy to sell another round of 9x Dec $220 puts for $5.60 or so..  CMG looks indeed weak today, but will the trend reverse if the general markets don’t fall? I have two priorities here: 1) reduce the pain when CMG shoots up (by selling the short puts for significant premium) and/or 2) at the first opportunity to roll the my 9x short Dec $200 calls out in time, higher in price but most importantly, in a lot less # of contracts than 9x. For that to happen, I really need CMG to fall around the $210 area.. the question is, what is the rational behind rolling my Nov $230 puts all the way down to Jan $195? What am I really protecting with that move? I think that would protect nothing at all.. if I really want to protect the position or somehow reduce the pain of its up move, I need to be aggressive like how Phil suggest and really sell Dec $220 short puts in equal number of contracts (9x).. otherwise there’s really no need to sell them.. I’d assume that roll you suggest is more of a precautionary move to not lose on my current 9x Nov $230 short puts, right? If that were the case, I think I would rather take them off the table now, wait a bit, see if CMG really reverses, and if not, then sell aggressively the $220 short puts.. what do you think?


  74. Russia – Population 141 mm, a third the size of the united states
    Greece – 11 mm-  one thirty fifth
    Italy- 60 mm - one seventh
    Belgium – 10 mm  – 1 thirty sixth
    Compare if you must, but the conclusion you reach is useless other than for reasons of provocation.
    There is no country on earth the size and diversity of the disUnited States.  Therefore we will NEVER have a system of health care or anything else  like a country the size of one of our large cities. 
    You can do many things once you cut the size of the governed body down to manageable size.  I’m all in favor of busting up the disUnited States into a manageable model, but to continue on this Quixotic journey to uptopia without doing tha is less than useless. Never gonna happen. 
    Politics: The art of the possible
     
    Altogether they don’t add up to the 360,000,000 here in this country.


  75. PHil,
    Your comment on ABX to Tusca… wasn’t ABX on the list of gold plays? I just entered a few days ago on that spread…
    Thanks


  76. arganx,
    10% above Phil’s fair value range  (you need to read the article on the 5% rule that can be found in the archives) and the 78.50 is the dollar index amount against a basket of currencies


  77. Now that’s what I am talking about!  Bayer, J&J pill beats warfarin in stroke trial.  This one is going to crush clopidegril (better known as Plavix).


  78.  Pharm, I totally agree.  I think we are going to go to a real back to basics in pharm.  Unless you can prove a real benefit with a low side effect profile you’re drug is F’ed.


  79. CRM – I think the play is a straddle. They’ll either go way up and this uber-ridiculousness continues or the bag deflates, they crash.
     
    Bonds – OptionsXpress lists Agencies 3-month at -0.44%, Corporate AAA 3-mo and 6-mo at -1.38 and -0.25, respectively and corporate at -.72. Schilling is right – the $600B QE2 rally does nothing. Why would these corp’s borrow money at 0% when they can charge you to loan money to them?
     
    This is getting so ridiculous. Who would buy a bond for $1,008 to get paid $1,000 in Feb 2011?


  80.  Adding some BA to retirement account.  I think Dreamliner delay is priced in at this point.  In addition, they continue to generate revenue and orders on other planes.    Will probably sell some leaps agains this for a set it and forget it type of retirement account play.  1/2 posiiton today.  If it drops below 60 will add another 1/2.


  81. NET $ (1.19), dx/y = +.59%
     
    oil +.35, gold +5.60


  82. Ravalos … you have articulated your objective well, so it all depends on how you want to define your protection and your risk.  The Jan 195′s offer you some protection, not as much perhaps as the Dec 220′s; but the Dec 220′s also expose you to more downside risk in the event of a sizable drop.
     
    Which to choose is up to you …


  83. jo – I think it is a balance of risk/reward.   For cancer, stroke, Parkinson’s, Alzheimer’s, etc. the benefits are going to be minimal if patients want to take the risks for AEs.  For diabetes (Type II), obesity, cholesterol, etc, then patients need to have incentive to exercise and eat right.  We are an instant gratification society….and pills provide that.  I am happy to provide!!!! 


  84. Exercise and eat right? Ha! Move that crazy talk to the back of the bus. Bring on the Super Pill.
    Speaking of eating right: time for CMG to tank 


  85. Here U go BDC!


  86. Question: if WYNN goes ex-div on Thur (or was it Fri), how can the 110 put only be worth 85 cents? 114-9 = 105, so you would be paying 85 cents for an option already $5 in the money?


  87.  Cap/CMG, that’s right. The downside of the Dec 220 puts is big if there’s a sizable drop.. but this is where Phil mentioned the idea of looking at this as a longer-term play now (we are now past the point where I had initiated all this to get one win in one month only by selling the Aug $165 calls). So, I need now to break this guy down in several pieces and in different time frames.. first, I gotta reduce my loses by selling the puts for significant premium.. if/when the trend reverses, I have to work on the call side to roll them out but reduce the size (this is imperative). If it continues down, now I will have to focus on the down side, but one difference here though is that if I lose on this side, at least I get the shares.. now this is easier said than done, that’s why I mentioned to Phil that I really can’t see very clear at this point how I would manage this if the different scenarios play out.. I can’t deny the fact that CMG is a great business, pleased the investors in the recent Q, and the momentum is (was?) strong.. for this to reverse something very negative must come out of the industry, restaurant itself or overall markets.. tough thing!


  88. BDC – they will reposition the option FWIW.  PDL Bio does it after its ex-div as well.  It is a pain to manage, so I tend to wait.


  89. since when do option prices re-adjust to dividends? I’m totally confused.


  90. Hi Pharm, 
     
    I sold a few weeks ago some puts on ARIA as per one of your comments… They seem to be hanging there pretty tough. I am breakeven at this point (sold the Dec 3.50′s)… Are you still in these?
    Thanks



  91. Phil:  its well shown that the normal market laws of supply and demand to not apply to physicians.  If we train more physicians, more procedures, tests, etc will be done.  Close to 80% of internal medicine residents go into sub specialty fields now.  Why see patients in the office when you can do procedures on them for three times the income.   Increasing the numbers of physicians will only make things worse.   If the government were not involved in health care reimbursement things would be different, but its an endless pot of gold; its the system that’s in need of reform.  
    Oh by the way:   our infant mortality rate says more about our culture/society than about health care.  Link is evidence of that:  Japan has lowest infant mortality rate at 5 deaths/1000    US white is 5.2  US Japanese is 3.8 !!
    US Black 17.6 (over three times national average); Hispanics and Asians in the US have lower rates than Whites. 
    http://www.arthurhu.com/index/infmort.htm
    So many women don’t get prenatal care out of choice.  You want to improve infant mortality then you need to improve the inner city culture of drugs/alcohol etc.  What curtailed the TB problems in the past was not so much improvements in medicine as it was improvements in our living conditions.  When you cram 10 people into a crowed space they share all their bugs.  
    Next time you chime in about our infant mortality rate showing our health care is the blame, you will know better (or perhaps you already do?)


  92. Look at PDL – if it is a cash outlay that repositions the stock, the move the options down.  So, PDL gives a 50c div, and the option positions will readjust by 50c as well.  I don’t understand it, but if it is a special div, then the adjust the stock price and hence the option.


  93. ama – yes. i will take the stock if put to me.


  94. TEVA showing life…buying the Dec 50s.


  95. By the way, to your point on the doctor’s per capita and Borat’s country.  It’s interesting that Kazakhstan is swimming in oil and gas money.   The scenes of Borat’s village were actually filmed in Romania.  I guess it’s close enough for the majority of Americans.  Check out these pictures of Astana, the newly built capital of Kazakhstan.  http://en.wikipedia.org/wiki/Astana


  96. PeterD- per your earlier comments regarding your vacation and selling strangles out several months- curious as to what strikes you have executed or considering?


  97. NET $ (1.21)% as traders come back from lunch


  98. Physicians/cardiologists etc – many good points.  But be careful what you wish for – most medical care in the coming years will be shifted towards nurse practitioners and physician assistants.  Variance in quality is on the way.  


  99. NET $ (.77) rising here, dx/y = +.44%
    C = 1206.84, F =1204.25
    oil +.29,   gold +2.80
    10yr = +3.99%,  30yr = +1.66%
    VIX (7.04)%


  100.  Can we get a cheer going for TBT, TBT, TBT, go TBT!
    TLT down a full 1% – guess bond holders are not so big on QE2
    I can just hear the screams from irate bond holders – guess they did well on the way up as well


  101. CSCO/Acobra – I do like them, selling the 2012 $20 puts for $2.62.  

    SKX/Amatta – They are going to be a roll but no real hurry – just in case we do have a huge rally.  

    Fed/Datuu – The Fed is the banks’ government liason, they are there for the benefit of the banks, not for themselves.  People are under the illusion that the Fed is a branch of government or the Fed has the interest of the people at heart but that’s not the case at all – the Fed is there to make sure banks make money under any and all conditions and they are very good at it.

    Overall, we’re pretty weak at the top of the downtrending channel from last week with today looking very much like Wednesday if we flatline here.  

    Welcome Arganx!  Those measures are from our baseline midranges that were established way back in 2009.  You can read up on the 5% Rule in the comments on the article that’s linked in the Strategy Section (I think it’s title is about Salvaging plays).  78.50 is the index value of the Dollar and now it is time for you to read the New Member’s Guide and do your homework of reading back a month of posts and comments so you are up to speed!  

    TZA/Flips – Well they are worth about 0 so there’s not much to be done with them but wait.  It was a 1:5 split so $20 is $4 and those puts are 100% premium (also with crazy bid/ask spreads) so there’s not much you can do until we get to next Jan because even the current Jan $4 puts have crazy spreads.  

    Sea to Shining Sea Biscuit/Acobra – Good luck with that working out!  I think the old gray mare just ain’t what she used to be. 

    CMG/Rav – I think Cap was looking at the short $230 puts in a vacuum.

    Yes Flips, no nation can be compared to America because of whatever arbitrary differences you need to apply to protect your own opinion.  What are you saying, that the number of doctors per 1,000 people is a function of the geography or the population?  We’ve already had this conversation and you refuse to look at the EU as a single entity unless it suits your purpose going the other way but EVERY one of the EUs 27 nations kicks our assess, whether it’s Norway and their 12 people and frozen tundra or the UK with a population density about 5 times ours.  We lose by any measure to EVERY SINGLE CIVILIZED COUNTRY ON EARTH and you carve out a very narrow standard to exempt us from the measure – to what end?  What do you gain by perpetuating the myth?   To make statements like "country the size of one of our large cities" in relation to Russia or the UK or  Germany or France is just ridiculous – you are only fooling yourself with this constant denial of facts.  Not only that but THIS COUNTRY used to be ranked #1 with the same population and the same land mass etc. etc.  - back in the 1960s – we were the envy of the World in medicine – a leader without question but Nixon "fixed" it and that ball has been in motion ever since, leading us from first to worst as people like you defend the status quo.  

    Also, what is with this "360M people" number in the US?   I notice other Conservatives are using it too and I just can’t figure out where this sudden urge to add 15% to our population came from?  Are there some political calculations Rush is using to tell you some sort of statistics that rely on 50M phantom people?  I don’t get it.  Once upon a time, people used to actually cared whether or not they had accurate information before they began spouting off about policy debate – now it seems like you can pick any random number as a starting point and just go with it…

    By the way, if you try to tell me that 310M people doesn’t include 50M illegal immigrants on welfare I WILL throw up in total disgust!  

    LOL BDC, Pharm!  

    Dividends/BDC – Dividends are usually priced into the options but special dividends often end up causing special obligations in the options.  

    Increasing/Humvee – Well it’s all part of an entire attitude adjustment in the system.  The government should pay to educate doctors and nurses so they don’t come out of school hopelessly in debt.  In Europe, being a doctor is like being a teacher – it’s a good, steady income but no one expects to be insanely rich from it.  Since the profit of care is removed from the doctors in Europe (and many other countries) and the doctors are generally rewarded for patient health, the system has incentives from the ground up on keeping people healthy.  Nothing gets done in Europe without a 2nd opinion – that’s just sensible policy.  As to infant mortality – that is a good measure because you can’t say that the babies had poor habits etc. and breaking down the USA into white and black is simply drawing a line between rich and poor, covered and uncovered and illustrates what a very sick and shameful system we have where a person of a different color/income level living in the same country as a rich white person has a 3x more chance of dying at birth.  We make more of an effort to save cattle than we do the poor!   

    Kazakhstan/Leon – Man where do we get some of that oil stuff?  


  102. tisk tisk jo – I don’t mind a nurse prac nor PA for basics…as long as they give me the lil super pill!


  103.  Phil / Gel -
    What do you guys think of KMP and EPD here – my thought is that as interest rates rise they are going to come down bc their yield starts to look less attractive – have to think that yield hungry investors have pushed them up to their current prices – any thoughts?
    Thanks 


  104. Run Forest, Run…those long Ps are going to be SOOOO nice.



  105. What’s with all the mo-mo stocks down – amzn, goog, nflx, pcln, yes, even cmg, yet the indexes are all up? 


  106. I know Cap, speechless, huh?


  107. NET $ (.91) oil closed in next 10-15 min


  108. Phil – What are you looking for from oil this week?


  109.  The way bonds are selling off is kind of scary – seems like might be setting up for a big sell off in equities.


  110.  TLT now off 1.20%


  111. sam – or money is moving out into equities…..ROI.  Too early to tell.

     

    Phil – is POT a good short now….?? Sorry if I missed it from earlier, but don’t see it anywhere.


  112. Phil,
     
    Thank you for the RICK play, got another hedge play open for Nov. SQQQ put, bought Nov. 43/48 bull call spread, sold Nov. 40 Put for $1.75(now about $4.7) to cover.  Sould I roll that to Jun 11, 40 put for about $6.00 credit to buy some time or roll that to Jun 11, 35 put for less credit but more protection?
     
    Thanks.


  113. If we bounce of 72.36 ( current ascending support, 200 SMA, AND Pivot ), I’ll be going long looking for 73.10 or better. I like to take these opportunities with a grain of salt………………… plus a slice of lime and a shot of tequila 8-)


  114.  I wish I can put a sweating little face like those from Pharmboy’s for CMG with my short Nov $230 puts..


  115. NET $ (.65)%
    C =1202.49, F =1200..25


  116. 10yr = +5.12%,  30yr = +2.30%


  117. Phil – one of the many problems in your argument of comparing our health care to the EU is the legal system here is very different. The second opionion in the EU works there because a doctor does not have the same legal liability in their system as he/she does in ours. In the EU they can and often do dissagree with the original opinion.
    In my prior profession we used to encourage second opinions and actually reimburse 100% of the cost for them unitl we found that most docotors were affraid to contradict the original doctor for fear of being wrong and suffering the consequences of our system. So in the end the second opinions in 95+% of the cases came in agreeing with the original opinion and as a result didn’t save any money but added to the overall cost of healthcare.
    How many doctors loose their license because of malpratice in this country ? You can’t find state medical societies willing to discipline their own yet alone find docotors who would willingly testify against each other in court. 
    We can’t reform healthcare in this country without addressing the legal aspects of the system and that is another story in itself. 


  118. Hey Samz – your TBT chant actually worked!  

    KMP/Samz – I always like them but not at $70.  EPD in about the same boat.  Like T or VZ or PFE or MRK, those are the kinds of companies you want to just keep an eye on and wait for something bad to happen so you can scoop them up at a good price.  Otherwise, there are usually more interesting plays to make.  

    FRX/Pharm – You think they are toast?

    Momo/Rdn – As I said last week about CMG – the money has to eventually come from somewhere and you can trade a share of CMG for 6 other restaurant companies with 50% lower p/es – not everyone in the market can be a complete idiot you know…

    Oil/Pakdog – Well they’re not holding $85, which is a bad sign but we have inventories on Wednesday and they usually pump into that so they don’t look like a fun short at the moment.  We want some silly run-up to short into.  There are still a whopping 197M barrels of oil scheduled for Dec delivery, which closes next Monday so they have 5 days to dump the 175M barrels they are only pretending to want.  There are already 306Mb jammed into January and 99M in Feb and 102M in March and that’s 500M, which is about as packed as the front 3 months ever get so what will happen to 170M unwanted barrels?  This is a big problem at the NYMEX and could lead to a pretty epic sell-off if people start liquidating contracts.  

    Bonds/Samz – Well, at the moment people are getting to cash.  Sadly for them, they are two weeks behind my call to do so and now it’s getting crowded.  It is possible that the money is staging for a move back to equities but it won’t take much to just scare people into shoving cash under the mattress at this point.  

    POT/Pharm – Yeah, I think it was selling the Dec $140 calls and they are still $4.50 so a good short there.  

    SQQQ/Bob – Oh Bob!  You have GOT to do something about these trades BEFORE they go down 50%!  Well forget the bull call, you can pull the $42s and leave the $48s if you want but that’s dead and all you can do now is try to get the free put.  You are down $3, that’s all that matters and I would just roll down to the March $31 puts for about $3 and leave it at although you could be more aggressive and roll to the Dec $37 puts ($3.50) as we do still think they are the right play, it’s just taking longer than we thought.   Still, the POMO makes me nervous on short plays like this.  

    Lick, shoot and suck/JRW – Good strategy!

    Legal/DK – Like I said, we need total system reform, not just "more doctors" or whatever piece they compromise on.  


  119. I love it!  FDX’s CEO was watching TV with Congressman Ryan this morning and they concluded that we need to stop punishing success in this country and cut those corporate tax rates.  A real reporter would have asked him if he was pitching or catching  at that meeting….


  120. Phil:  You just don’t get it, maybe it doesn’t fit into your preconceived notions:  correcting for income Blacks still have unacceptable infant mortality rates.  My goal is always clarity first, you obviously can’t consider that health care has little if anything to do with black infant mortality rates.   Giving free medical education to doctors and nurses and sending them all to the inner cities would have little impact   it’s the culture     Poor white, hispanic, asians all have much lower infant mortality rates.
    You make light of it and dismiss my post  " that infants don’t bad habits":  perhaps you’re not thinking about fetal alcohol syndrome, babies born addicted to drugs.    You are very myopic on this point…….disappointing.


  121. robert,
    December has become a tricky month to play as VIX is low and options premium is also small.  I think the market markers has priced in the Thanksgiving holiday market closure.  1280 callers only have $1.3 premium left and doesn’t give much of a hedge.  You’d need to sell 1270 or 1260 callers.  However, those can burn you if the market jump.  That’s why it’s tricky.  If you look at January, the 1300 callers have a lot more premium to sell, and the 1025 or 1050 also have plenty of premium, plus offering more cushion.  So if we find it’s hard to play in a certain month, it’s about time to move to the next month, unless we want to play very close to the money.


  122. DKGUY:  Great points you make.  People will state that malpractice insurance only accounts for 3% of the health care dollar, but this fails to take into account the unnecessary tests that are ordered.   I know that I order tests solely because of fear of missing a diagnosis, even when it is unlikely, at times very unlikely.  I recently saw a young woman involved in a motor vehicle accident, she was knocked unconscious (of course she was drunk and high on cocaine), seen in an ER scans taken, all negative.  She comes into the office 5 days later complaining of continued head ache, no neurologic findings on exam.   In a reasonable world, I would just document this, state I consider the risk of a missed or small hemorrhage very slight and see her back in a couple days.  But,  to protect myself, I ordered another scan for a couple thousand dollars (which was negative).   No one ever finds fault with this, its only when one doesn’t order a test that they are liable.  Twisted system to say the least.


  123. Congrats to those who stuck with TBT and averaged down; my total play became profitable last week for the first time in a while. The nearest options i have are 2012, but i still believe that this will be a great way to make a ton of money over the coming years – just keep rolling out! And, if we drop again you can average down or roll down calls! :) Yay!


  124. Phil – "A real reporter would have asked him if he was pitching or catching  at that meeting…." Just brilliant!


  125. DKGuy, Phil – We need to take into account the income of health care professionals as part of the health care cost equation. They are underpaid in Europe as far as I can tell (I just paid 22 euros for a doctor visit in France 2 months ago!) and in a survey they were estimating the net average income (in 2005 dollars) to be as follows:
    USA - $ 8,189
    France - $ 3,620
    Japan - $ 4,594
    Italy - $ 3,051
    Portugal - $ 1,984
    Cost of living vary from one country to another, but it ain’t cheap to live in France or Japan! And doctors there work for 1/2 of what they get in the USA. Not even talking about specialists and nurses. Like I said, it seems to me like they should get more in other countries. That might impact the comparisons. 


  126. NET $ (1.01)% fell off, here comes the last hour


  127. Phil – I have 10 Nov SPY 119 Calls @ .44.  Should I keep overnight or sell at close?


  128. pstas,
    For Feb, I’m into SPX 925, 950, 975 short puts and 1350, 1375 callers (but just rolled some 1375 to 1325).  For March, it’s 875 and 900 putters and 1375 or so callers.  We want huge cushions as we won’t have a chance to make adjustments while away on vacation.  Plus we should calculate the appropriate margin so that we can roll 2X or 4X if needed when we are back.


  129. Phil – sorry, correction.  I have 10 Nov SPY Puts @ .44.  Same question, day trade or keep overnight?


  130. Phil,
     
    Still learning, like to know what could I do(did) when that trade down about 50%.  Original trade was bought SQQQ Nov. 43/48 bull call spread for $2.00 and sold SQQQ Nov. 40 put for $1.75.  Paid $0.25 for a $5.00 spread. 
    That’s was a hedge play, I remember you once wrote "the important for hedge is leave it alone".
     
    Thanks a lot.


  131. Peter- thanks


  132. humvee/healthcare
    "if the government were not involved in healhcare reimbursement things would be different"….
    Explain.. how different?? In my experience, many hospitals own clinics and Dr’s practices ( not so many years ago). These organizations are profit centers and as long as everyone in the medical food chain has the opportunity to make more income and profit by "piling on the fees"  ….they are going to take advantage.  Theoretically, competition should reduce costs….. but as in the money center banking sector… competition is a joke…. there is a mild colusion among the big players….. I believe it is the same with the medical insurers and large hospital organizations.  In my opinion. LOL, one would be better off taking a medical vacation to a superior hospital in a foreign country at much reduced costs.  In fact, American medical services should be sub-contracted to these American trained physicians at these 5 Star hospitals at far less expense…. Now that’s real capitalism at work….


  133. NET (.92)%
     
    is the volume still extremely light?


  134. Acobra65:   I agree about going to Sinapore, etc for an elective surgery; that’s what I will do when I need a total hip, etc.  The government subsidizes virtually every segment of the health care delivery system from Medicare, to tax deductions for gold plated health care insurance programs. 
    To be brief: I believe we need a system where the consumer takes an active role and has "skin in the game"; currently once deductibles are met, then its all free and we all want everything done when its free. 
    Patients want the name brand over the generic, as long as their insurance pays for it, even if its no better.
    When I’m King my first act will be to pull ads from Pharmaceutical companies as well as ads from Plantiff’s Attorneys.


  135. FRI close on the cash was 1199.21


  136. Phil, nice call on DIA puts – just sold them for a nice profit before potential stick.  Went for a nice  6 mile run (72 degrees in scottsdale) and came back with a nice relative pullback in DIA!!


  137. see if we break,  1194.08 was the intraday low from FRI
    the F overnight low was 1192.50


  138. Phil,  On the momentum plays, do you suggest "stops"?  I had to go out for a couple of hours and used stops on both the DIA and SPY plays and got stopped out and missed the move down.  Just bad luck or bad strategy?


  139. @Phil
    Total System Reform?   And you think I’m nuts? 
    At least I recognize a stark reality, what is possible and what isn’t.    I know, if you don’t, that the French,  Italian or whatever other nation is a separate entity  with in EUROPE and you attempting to make it as one is beyond specious.
    You, on the other hand can rant and rave until your hands fall off and never approach a system in this country that exists in one or another country—RUSSIA ?? fer krissakes??—or another, which country’s other wheels are falling off (Greece in riots and chaos and economic turmoil from borrowing billions of dollars to pay for that health care, Russia awash in public drunkenness, Italy where most of the my relatives come from and whose families still live in near poverty (but boy they have great health care) as we sit here and debate it.  Go to Naples and tell me how wonderful it is.
    Total system reform?   Never.  Not until the states take back their rights and start their own version of state health care. I won’t wait.
    Now congress will move on to what can be done. You can accept that or drive yourself and everyone else crazy for tilting at windmills and getting nothing done.
    I will stand resolutely by the very valid statement that you can not HONESTLY compare the disUnited States to ANY NATION ON EARTH because there is none, not one in which that comparison will hold up with anything but your liberal dreams.
    And conservativitis has nothing to do with how I think about health care.  I’ve been screwed over by the best Cardiologist in town, missing a basic diagnosis any first year med student could (and did) have found in a hearbeat. I have no love for the Cleveland Clinic, a hyped, overmarketed patient mill. When it comes to our health care system I could scream at the waste, fraud, abuse, incompetence, and outright theft of money from the people for, as you say, lousy outcomes vs every nation on earth you have named. 
    You mistake my thinking once again because you only see thru one set of flaming liberal eyes.  You don’t want accept that you are wrong to compare us to Norway, or France. That we will never be of a manageable size.  
    We do agree that something massive must be done to ’reform the system’ but we disagree on how that is to come about. 
    As long as the disUnited  States remains a single unit, the changes we both desire will never happen. The only way it has a chance is IF the  US becomes a European model divided up with separate governments with a common currency and perhaps Defense but other than that it needs whittled down to a manageable size which as I have said before will never happen. 
    I think I’m done with this argument.
    I know what is going to happen, even if you won’t accept it in health care just as well as you know that the market is fixed:  We will have Marginal change, at best.  
     
    On that I would all the gold  in the world.
     


  140. SeaBiscuit/Phil
    We agree… my point exactly…the USA is No SeaBiscuit…. AND I believe we are now…."the Old Grey Mare"….. BUT, that was not the import of "Strategy Session"…. bring on Toby Keith…. 


  141. mike
    yes 103mil


  142. Phil, if oil does sell off – would selling ATM DUG puts be a decent idea?  Thanks in advance


  143. NET $ (1.12)% at imbalances
     
    I am going to have to run here


  144. Phil / TBT – any new spreads for this one?  Thx. 


  145. SPY 119s worked like a charm. In .43 out .57 for 32%. Just covering some hedges, thx for the idea.


  146. sold my Jan 2010  – 1210 puts from Thur here at 44.40


  147. MEDICAL ISSUES
    The US medical system failed for me first in 1982. In 2001 it completely F**KED me over and all arguments are wrong on this, Banksters, and Politicians. REVOLUTION!!!!!!!


  148. Mortality/Humvee – This is why there needs to be a sustained effort to break the cycle of poverty.  There are black people in other parts of the World you know and they don’t suffer from the same care and outcome disparities that black and white populations have in the US.  There are many interesting studies in South Africa and the UK on the subject, since they had essentially the same medical system but opposite population mixes.  I’m not here to do research studies for people who don’t want to open their eyes anyway.  YOU just do not get it if you can make a statement like "it’s the culture" as if it doesn’t matter what you do, that black skin just dooms people to a life of drugs and alcohol addiction and dead babies – is that the "logic" you want me to embrace?   At least I agree with you on the overtesting issue, it’s ridiculous.  

    TBT $38!  Congrats Hannah!  

    Getting more/Stjean – Or perhaps our doctors get too much?  I’m not saying they don’t deserve it with what they go through to get that far but why isn’t something as important as medicine given paid training the way we pay the police to train to fight crime?  If you have an aptitude for medicine then the state puts you through medical school and you owe them 10 years of service or whatever on the other end after which you can choose to continue as a government practitioner or go into private practice.  According to the Times (2009), US doctors make about double the average so, as I said, foreign doctors get about $50K a year – a normal, teacher-level salary.   If you want to cut health-care you need to make it less special.  The same logic could be applied to if we want to educate our children we could add more teachers but I’m sure many here would much rather have vouchers. 

    SPY/Pete – I say yes with the weak finish and the dollar back at 78.75.

    SQQQ/Bob – When you go down 50% it’s time to roll if you intend to stick with it, buy some more time.  It’s not about the .25 net, that doesn’t matter, it’s about the puts and making sure they stay free so if you sell the put for $1.75 and you have a .25 cash in, then you are kind of in the puts for $2 and if the puts tick up to $3, it’s certainly time to do something with them to at least salvage (hopefully) a free play for yourself by getting them to expire worthless.  Once the puts go in the money like that, your call side is toast and it’s good to cash them out and salvage what you can so maybe you recover .50 and you are down "just" $1.50 at $3 per put and then you roll to whatever is now $1.50 or 2x something that’s .75 just looking to get even.  If it’s a hedge, this should all be good as you better have made good money on the call side with SQQQ getting squashed like that…  

    DIA/Jo – Literally taking the money and running, good man!  

    Momentum/Trad – I suggest not going out!  Momentum plays are plays you take on momentum in a certain direction that you cash out when the momentum slows or changes.  As I often say, all stops should be mental stops.  If you can’t watch a momentum trade and make a live judgement call, just don’t bother.   I’m sure we’ll find something to trade tomorrow.  I have gotten into the habit of calling stops because, if I don’t, people come up to me a week later and say "I’m down 97% on that DIA put, how do I fix it on expiration day."  So I now try to call the level I’m hoping to hold but if you are not prepared to roll and DD and work the trade (normal scaling in) then those are pretty hard stops.  As you can see, just before the SPY puts went against us, I affirmed that I still liked them so they became a better candidate to DD.  As we went up, the DIA puts got more appealing for a quick win.  I would strongly suggest paper trading these a lot and getting used to scaling in and out until you do it reflexively – THEN you are ready to momentum trade but it’s a tricky sort of thing to get used to, especially as I’m really making fundamental calls so I often enter that first round too early, which is fine if you are scaling in but a nightmare if you are not.  

    Windmills/Flips – Someone has to do it.  The system we have now is totally broken.  THIS country is going bankrupt paying for healthcare as well as obscene tax cuts to the rich who DON’T pay for it.  ALL 813M people in Europe are fully covered for less money than we spend to cover 310M people.  For you to sit there and defend that system is simply not something I am ever going to understand.  

    DUG/S3 – You are diluting oil with gas.  I’d rather go USO Dec $35 puts at .67, which give you time to be wrong and could be a nice double at $82.50 or maybe even $83 but, on the whole, I’d much rather get a chance to buy $37 puts on a spike for about $1.10 (now $1.50).  

    TBT/Terra – No thanks, just thrilled to get out of our last set alive!  

    SPY, DIA/Hoss – Good point, now that they are nicely up there is no point in keeping them until tomorrow!


  149. Phil:  Don’t put words in my mouth……  my point is address the culture and the roots of it, and improve it-- that’s how to decrease infant mortality here, not by putting a bunch of white coats in the ghetto.


  150. Lol poor Pete, that wasn’t much of an answer. I bailed because I didn’t want to be greedy. They puts fulfilled their mission and I let them go. I’ll reload something tomorrow. $0.70 would also be a good exit!!!


  151.  Could someone please post the link to the gold plays? For some reason I can’t seem to find it….Thanks


  152. WOW!  This QE2 thingy is working g-r-e-a-t-!-!


  153. Wheee…. and that was fun. A whole lot of work to get nowhere. Talk about ineffecient markets! 8-)


  154. Phil – using your logic, why don’t we make trading stocks less special and cap the amount a trader can make each year. Or maybe we should make the Apple products less special and not allow them to be sold for the 30+% margins. Where does it stop ????? Our govenment was never intended to level the playing field but to allow opportunities to be created. It’s really not that hard to understand.


  155. rainman
    Have you missed the main point, someone made money on every trade to no where!


  156. 12:00 PM On the hour: Dow +0.68%. 10-yr -0.5%. Euro -0.68% vs. dollar. Crude +0.41% to $85.23. Gold +0.41% to $1371.10.

    01:00 PM On the hour: Dow +0.69%. 10-yr -0.42%. Euro -0.59% vs. dollar. Crude +0.37% to $85.19. Gold +0.4% to $1371.00.

    02:00 PM On the hour: Dow +0.68%. 10-yr -0.53%. Euro -0.61% vs. dollar. Crude +0.35% to $85.18. Gold +0.25% to $1368.90. 

    03:00 PM On the hour: Dow +0.51%. 10-yr -0.96%. Euro -0.72% vs. dollar. Crude -0.25% to $84.67. Gold -0.18% to $1363.00. 

    Speculators are cutting their shorts on the dollar, according to CFTC data showing the greenback’s net short position fell to $21.85B from a week-ago $24.53B.

    If economists in the latest Philly Fed survey are right, unemployment will still be hovering around 8% in 2013, while GDP growth in 2012 will come in at 2.9% instead of 3.6%. One of the only positive signs in the report was that only 11% of respondents now expect a double-dip, down from 16.8%. 

    Yields on mortgage bonds at Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) are at a four-month high, meaning home loan rates are sure to follow after plumbing new record lows in the past couple of months. Fannie’s 30-year fixed-rate mortgage bonds have climbed nearly half a percentage point in two weeks, to 3.71%.

    There’s no plan at the moment to cut the Aaa U.S. credit rating, Moody’s says – but implementing the proposals from the government’s debt commission would keep it safe. The commission itself says its plan is unlikely, but Moody’s says "Actual adoption of a plan to reduce deficits and debt ratios, regardless of its composition" is what’s important. 

    Total bank losses in Spain, Greece, Ireland and Portugal have totaled around €140B ($191B) so far, or 8% of GDP. If the countries mirror past banking crises, Credit Suisse estimates peripherals face another €350B of costs, or 22% of their GDP. Combined with delevering costs, the crisis’ price tag could rise to €1.65T

    Whatever you do Flips – Don’t compare it to the US!!!  China is set to become the world’s second-largest economy this year, an incredibly impressive feat for a still-developing nation that has 150M citizens below the poverty line. By 2020, China is likely to overtake the U.S. as the world’s No. 1 economy.

    Boeing (BA) and Airbus (EADSY.PK) are about to get some competition, at least if China has its way. China expects ‘hundreds’ of orders to be placed for its C919 jet at this week’s Zhuhai Air Show. The aircraft makers are competing for China’s domestic market, which Boeing believes could be worth $480B over the next two decades.  

    Pump it!  Legg Mason’s Bill Miller looks at QE2 and sees 15% gains for stocks over the next year: "The Fed wants the stock market to go up, and they will do what’s necessary" to pump equities and get the "wealth effect" of stock prices to stimulate growth.

    Pump it! The small-cap Russell 2000 index is up nearly 20% since the end of August amid some signs of serious improvement in small-business fortunes. With access to credit eased, a pickup in jobs is appearing in some areas and recovery "could be pretty dramatic for stocks." 

    Madness!  Swept up with a growing sense of optimism, underwriters of GM’s heavily oversubscribed IPO are apparently planning to raise the deal’s suggested price range above the original $26-29 range. A revised price range, possibly $31-33/share, could be filed with regulators as soon as today. 

    A recent uptick in M&A is expected to continue into next year and strengthen significantly, according to a broad-based market survey. Global deal activity is on track to rise 36% next year to $3.04T, the highest since 2007, with the top sectors likely to be real estate, financial firms and healthcare. 

    Wall Street analysts are still upbeat about Cisco (CSCO -0.3%), with 32 recommending Buy, 15 maintaining Hold, and one dubbing it a Moderate Underperform. One optimist says Cisco is a ‘fallen angel’ that has the resources to pull itself back up. Given that it’s trading near its 52-week low of $19.82, this could be a chance for a bargain.

    Facebook will roll out a new ‘modern messaging system‘ to become the inbox of choice for its 500M users, says CEO Mark Zuckerberg. The company is offering a single place to access multimedia conversations in SMS, chat, Facebook messages, and email. Expect a fierce fight from other email providers, Google (GOOG) especially.

    Amazon.com (AZMN) is down 3.4% amidst worries that Wal-Mart’s (WMT) free online holiday shipping offer could eat into its profits. Amazon.com may have a little wriggle room – it hit its 52-week high of $173.37 last Wednesday, and is hiring 15K-plus temp workers for the holidays. 

    Apple (AAPL) will make an iTunes announcement tomorrow, opening wide speculation about what exactly is in the wings. If it’s a cloud-based iTunes service, as some analysts expect, it could help Apple leverage its family of devices and serve as a path for an all-in-one connected Apple TV.

    Details are reportedly coming tomorrow on the joint venture between Verizon Wireless (VZ, VOD), AT&T (T) and T-Mobile (DTEGY.PK) (as well as Discover (DFS) and Barclays (BCS)) on a mobile payments system that will allow consumers to complete purchases with their phones. 

     

    Three lunchtime reads:
    1) Alan Blinder: In defense of Ben Bernanke
    2) Four stocks value guru Ben Graham might pick
    3) Q&A: The many battles of AIG’s Benmosche


  157. @Phil
    Hardly think this qualifies as ‘defending the health care system’..
    "When it comes to our health care system I could scream at the waste, fraud, abuse, incompetence, and outright theft of money from the people for, as you say, lousy outcomes vs every nation on earth you have named". 
     
    What I think is the health care system suffers from the same paralysis to change that every other institution in an ungovernable (but disastrously so) entity does: Status quo is too lucrative for the participants to change it.
    Maybe our main point of contention is that I’m a macro-economist and you gravitate to micro.


  158. Humvee – it’s not a culture thing it is a CLASS thing. Just like certain peopleto point to the fact that blacks make up so and so portion of the population but are 50%+ of the jail population or whatever when arguing about the need for a cultural change. it might be true but they dont look at the big picture, or other factors  You’re a smart guy, you know that correlation is not causation. POVERTY, is the underlying problem and it just so happens many blacks live in poverty. I bet the ratio of crimes committed by white people in poverty (and infant mortality rates etc) are very similar to their poor black counterparts….


  159. Played today poorly, 3% on two TNA plays.

    If I were Lloyd, I’d gap down the open tomorrow to IWM 71.60 and then run it up on some concocted rumor or fraudulent government statistic to cause a short squeeze to new highs (75.25) !!


  160. Poverty – didn’t we start the "War on Poverty" during the Johnson administration. Maybe we just need to spend more on it……not  


  161. Culture/Humvee – It’s not culture.  It’s poverty.  It’s a lack of opportunities you so take for granted that you refuse to believe others don’t have the same.  Decreasing infant mortality starts with keeping kids in school, educating the parents in health and other issues, making affordable, friendly care available and addressing any special issues on the ground.  These are the kind of things China is good at as they take 20 years or so to make real changes but it has to start with people caring enough to make the changes.  This country doesn’t do the vision and sacrifice for the future thing anymore and that’s why China is about to displace us as number 1.  You keep defending a status quo that’s on a straight downhill path from which we may never recover – I just can’t do that.

    Gold/Sun – I think under the Portfolio tab.  

    LOL Matt!  Actually it is because, without it, we would be very, very screwed!  

    Capping trades/DK – Oh don’t get me started there.  I don’t think anyone should be able to earn more than $10M in a year (other than one-time long-term gains) and that $100M is as much wealth as any individual should be able to accumulate.  If you disincentify gross pools of wealth then you automatically create a better distribution.  

    Macro/Flips – I want the whole system thrown out and rebuilt from the ground up.  Is that macro or micro?  The way to do it is to have government health care that begins to compete with private health care and let the government (in the interest of cost savings) begin buying up their own hospitals and drug companies and open up medical and nursing schools etc.  That would be fair and capitalistic and it wouldn’t cost the American people any extra money, it would simply put the existing system out of business over time.  


  162. Gap down/JRW – I was thinking that’s the plan (same pattern as last Weds, thurs) but then we got this satisfying dip into the close and I didn’t see the point of pushing it.  If we do gap down, I would be inclined to test long.  

    War on poverty/DK – We were making great progress until Reagan pulled the plug.  Now we’re 30 years of regression, back to scratch again.  How is is people don’t get that a strong middle and working class CREATES wealth for all?  This country has gone from a nation of innovative wealth builders to a devastated population that is being picked clean by vultures that circle overhead and they (top 1%) are stripping the land clean and not allowing anything new to take root.  The only end to this game is either a violent revolution in which the wealth of the top 1% is stripped away by the people or that the people will simply die with a whimper while the top 1% move on like locust to the next potential victim nation.  The war on poverty ended in the 80s – the poor lost – welcome to Rich World….


  163. Phil – again using your logic, why can’t a doctor earn 10M a year?  Because someone decides their profession is "less special" ? Who decides ? I would be happy to take that job. But or system does not provide for a "dictator" no matter how benevolant I might choose to be. 


  164. Poverty – was it Reagan or was it Clinton when he eliminated welfare ?


  165. @Phil
    I won’t .  There is no comparison at all between China and the disUnited States on so many levels anyone who attempts it is to be disregarded in their opinions of what is to be done about it.
    This notion of comparing nations that are incomparable is a mystery to me. I don’t understand for a second what it gets you.  An old coach drilled that into our heads in High School. We were not to compare our quarterback with North Catholic’s.  The players were taught to compare themselves to their own levelof performance and if that was lacking in any way, to keep the focus on what we could do to be the best, or lacking that, to be as good as our talents and training would allow. That down the road the only practical results that would come from COMPARISONS as sure as Monday follows Sunday, is misery and failure. We would be tempted all our lives to compare, compare, compare. We were to resist and destroy that temptation.
    The differences between three children, so blatantly obvious, was enough to convince me that  it is not only intellectually lazy but dangerous to compare one entity to another. I can’t imagine comparing anything (that isn’t monoclonal to something that is poly), let alone people of a different culture altogether.  I never will.
    That is why I will always refuse to accept specious comparisons, especially when used to further some agenda.
    There is no United States of Europe. Until we get the European model of separate boundaries here in the U.S. with separate governments, no argument anyone makes will convince me that we can have what the separate countries on the European continent have. 
    And that, as they say, is that.


  166. Phil : Luv  ya like a son,but I think your site is getting way too many political comments during trading hours.   


  167. Health care – Phil what you are advocating already exists. It’s called the VA. Talk to a few Vets and they would tell you it doesn’t work. They would rather the VA system be canned and they be allowed to access the public system.


  168. Shadow — I didn’t miss the point. My glass is more full now than it was this morning :-)


  169. Phil/Jrohma   You guys aren’t looking at the information properly:  it’s is not poverty   (correcting for income  blacks still have a much higher infant mortality rate than any other group).   There is too much data available to just think its poverty.   Just look at the facts that’s all.
    Phil I don’t know how you think I’m defending the current system; after all the stuff I’ve posted over the year, geez.  I actually support rationing and control of the supply. 


  170. DKGuy  I worked in a VA hospital and know people who currently do; it’s so inefficient.  I just spoke with a guy last week about it; he says the mandatory electronic medical record system is so difficult to navigate through, that it takes longer to chart the visit than to perform it.  He’s going to leave it and join an HMO.


  171. dflam:  you’re right about the politics--but it has to start at the top.


  172. I’ll start it at the top – I do not want political discussions during the trading day!  I’ve said that before but my only real remedy is to mark comments as spam but once I do that then it’s hard to stop the system from marking all your comments as spam by default and then I have to "rescue" non-political comments from the que, which is more work for me and screws up the order etc.so I am TRYING to have the adults police themselves and put a muzzle on it during market hours.  Today was a slow day so I did make comments too so I take the blame for this one but please people, try to talk about the markets during market hours.

     If you have nothing to say – go read some news sources and see if anything interesting is going on – if everyone did that, we would probably catch some good things!

    Thanks,

    - Phil


  173.  Phil: john stewart/colbert  After reading your weekend discussion I thought you would be interested in another reason to like stewart/colbert.  I went to the rally in DC and even though it was a response to Glen Becks claims that the number of people at his rally was proof of some major national movement stewart/colbert didn’t really make a big deal about the numbers at their rally, other than to estimate 3 billion.  I know people have trouble estimating crowd sizes but I can tell you we were part of a huge group that couldn’t get close to the mall, and thus not in any estimate of crowd size, you had to do the penguin walk for several blocks adjacent to the mall.  The Metro was at capacity all day, 500,000 more trips than a normal Sat.  The point is that they didn’t feel the need to hype up attendance to justify the point of the rally and I thought it showed class that they just accepted the estimates with typical good humor.


  174. Flip, I am not buying your disUnitedStates thesis.
    Without getting into a protracted discussion, it makes no sense to me.
     
    Time to go watch the Charles Rangel "trial".
    This guy has spent something like $2 million of donor money to various PAC’s (improperly and probably illegally) to try to obfuscate, er, defend, his behavior.  I just heard him say, in his defense, that "i served in the War (korea), as if that excuses him from being a liar crook and thief.


  175. Charley makes my skin crawl. He is acting like a guilty man….. There Cap! Threw ya one!!!  :)


  176. Cap:  Serving in Korea seemed to work out ok for Don Drapper (of Mad Men), except for being a chain smoking filandering alcoholic; so who knows……


  177. Dollar Index:   I’m no chartist/technician, but am long UUP for last two weeks with so far good results.  The DX  popped through 78.5 as is currently 78.75.    It seems like 78.5 was resistance (it stopped there 3 times in the last month.  Question to all:   was 78.5 a point of resistance, or do I need to smoke more medical marijuana and squint my eyes to see the resistance point..


  178. humvee4me,
    Looks about right to my untrained eye.  Strictly from the TA perspective, there’s also the 50-day moving average just above at 78.85, then it looks like smooth sailing to 80.


  179. thanks boobearsdad:  i appreciate your help, i’d love to see a move to 80


  180. DKGuy,
    CMS Center for Medicare/Medicaid services is who decides for everything except drugs. The privates pay a little more, but it is based on average costs which are also used by cms as one  input. Regarding drugs, some of the more gouging companies use value based pricing. Celgene for instance, charges $105000 per year for thalidomide (that 1950′s drug they gave for morning sickness). It extends the life of lymphoma patients. And, they figure its worth $105,000 per year. Celgene spokes people admit its only a few $ to make, but says they price by value.
    If we used the same logic for a surgeon who saved the life of 10 year old, then assuming the 10 year old would live another 70 years – the surgeon should charge 70 * $105,000 = $7,350,000.
    The other pricing technique is to just make your price higher than the last drug in the category. That is how they are pricing the new prostrate cancer drug. I think that makes it $92,000 or something like that.
    Its like the real estate market a few years back. The real estate agent in the northern va area told me. I look up the last comparable that sold and add 20% to get the asking price.
    How can they get away with this pricing?  Its a monopoly and they are gouging in many instances.  And, there are differences between the companies. Amgen is more reaonable – I checked one of their drugs and they had reasonable price increases. And, there is celgene the poster child for the value based pricing idea. 
    Sometimes its very hard to tell what is reasonable and what is excessive. I was part of a grass roots effort because cms was underpaying for a drug. We had to argue the price should be higher. We were accused of being paid by the drug companies. It took monumental effort (probably 1000 people)  to get cms to listen. In this case they had made a mistake is categorizing.  Eventually, they figured out we were not being paid and payed attention.
    But, in the celgene case, they were pricing a 1950s developed drug at $105,000 per year. That is pretty clearly excessive.  I’m sure those pregnant women were not paying anything close to this.
    Sorry for the rant. Its just ridiculous. Drs. are so underpaid its disgusting. Yet, because of the monopoly on life saving drugs (due to patent, special deals (like thalidomide), etc.), they can drive the price up dramatically. Its like charging a man who is dying from dehydration $10,000 for a case of water.


  181. judy:  i have a patient that has multiple myeloma and he was placed on thalamide about 10 years ago; it’s worked very well for him (although he’s also now been through 2 stem cell transplants); I had no idea that thalamide is so damned expensive, its outrageous to say the least.  For the heck of it, I went on a Canadian pharmacy website and even there its $100/pill  amazing for a pill that was banned in the 1950′s and should be check as aspirin.  Obviously, we can’t afford such abuse.  
    I know of a pacemaker representative, who takes care to drive a crappy car so as not to tip off the cardiologists who put in the pacemakers that he’s making more money than they are.  In 2009 he made over $1 million dollars, holding hands with the cardiologist while the procedure is done.  He’s on commission and works hard, but what is wrong with this picture when there is that much extra money floating around to pay commissions like this.
    If the general public was aware of all the greedy rip offs occurring, we’d have another tea party rebellion focusing on wasteful, excessive and unnecessary spending.


  182. humvee,
    Checked the article. Tried to copy it but, something isn’t right. A woman in northern VA, took for multiple myeloma, and it cost $144 per pill – which is per day. That is where they got the $105,000 per year.
    I stuck my head in this area and there is so much spin it is ridiculous. Even cms can not figure out who is spinning and who is being straight forward. There are some very pricey drugs – that should be pricey. Others are pricey that should be just a few $s.
    I get why they can’t decide. I can tell you a story.  When the democrats made gains in congress for bush 2nd term, drug companies were afraid of drug price negotiation. So a whole bunch of companies just raised prices so they could lower them if they had to negotiate. I had one drug, a prescription vit K, that I filled in Dec. In January, I filled it again. The price was about $39. I asked why my insurance wasn’t covering it? The pharmacist told me that it had never been covered. Its just that the previous price was $15 (about like a copay – so I never noticed).
    So, how come the cost to manufacture, handle…. this drug went up over 100% in one month. Because the dems got into congress. And, the worst thing is, they never lowered it when it was decided that not to negotiate drug prices.
    I am truly bummed that Obama sold the drug negotiation because the drug companies agreed to put up $80M (doesn’t seem like enough, but 80B seems a little big) (a big sum), to help fund the drug purchases.
    That is the one thing that is totally out of control in our system.  The VA gets drugs cheap, but medicare has to pay a ton.
    I guess to solve the healthcare issue, we will have to require that everyone join the service so we can afford the drugs they need through the VA.


  183. Judy:  yeah, it’s just like the health insurance companies preemptively raising pricing before Obamacare kicks in..  I’ll tell you what all this abuse has done to me.  I used to feel like we were all in the same boat together (silly me); now I see that it’s just everyone grabbing to get the biggest piece of the pie; and its made me cynical and  suspicious.  It seems like the glue that used to hold us all together is just dissolving before our eyes.  I don’t know what can turn things around, perhaps its time for gold and guns.


  184. Phil,  Thanks for reinforcing market talk only during market hours.  Frankly, I find other topics to be of little value to the primary focus on your site.   I think it is a matter of discipline, which was lost during the political season.  I would encourage you to set the ground rules clearly and repeatedly.   It seems that on slow market days, of which we had quite a few recently, the discipline fades more.  Perhaps a snooty icon reply would remind us to stay focused (and not replying with comments during market hours).    I would suggest that more analysis and interpretation of the market would better serve all to understand next moves, changes in trading strategy based on volatility or lack thereof, etc.   As a final comment,  I’ve noticed a lot less emphasis on core holdings and management of those positions.   Mostly, I’ve seen swing trades and macro-economic viewpoints, both of which are valuable.   Perhaps core holdings are not appropriate any more, given the increased risk due to economic uncertainty over the next 24-36 months.  Anyway, my two cents for increased focus on markets, trades, strategies and outlooks.   Thanks!


  185. Since November 4th corporate bond funds (LQD) have lost nearly an entire years worth of yield. These funds have been strong for quite some time. LQD has broken through the the 20 day and all the way through the 200 day. Where is all of this capital moving if not to Treasuries (whose chart also looks scary) or gold. Phil looks to be correct, cash really may be king.


  186. Peter D, Thanks for the good guidance as usual.  When looking at this situation, do you focus more on balancing the delta or are you more concerned about the "cusion?"  How does the amount of the dollar value of the premium factor into your decision?  Obviously, Jan will have more premium than Dec.  In your exerience, does the low vix affect further out in time options (Jan verses Dec) less than current month? 


  187.  Judy/Humvee:  Thanks for the insights into the medical situation. 


  188. MSFT says it’s sold 1 million kinect sensors in 10 days. ($150 a sensor) They say they’re on pace to sell 5 million by the end of the year.


  189. Judy/Humvee:  I know where a good portion of that lucrative drug money is going:  Into my stomach.   Every two weeks my physician dad gets an invite from a drug company rep and he takes us all out to the most expensive restaurants in the city.  I’ve been to all the restaurants at Columbus Circle at least twice.  All you I eat, all you can I drink for free.   Sometimes we’ll go to Nobu or Morimoto when we just want some casual dining.
     
    THAT, and of course the executive’s pockets is where all the exorbitant drug prices are going to.  Nobody is doing anything about this.  I go, because my father asks me to come along with him, but everytime I go, I just feel increasingly disgusted.  That $1000 meal could have gone to lowering drug prices, instead its going to wining and dining their favorite clients.


  190. Sorry guys, but raiding all the posts on healthcare problems, you are missing gigantic forests for the trees…. It’s not about physician payments, drug company revenues, or the VA system.
    Its about violation of some very basic principles that should govern healthcare…No one has the guts to admit what needs to be done…that is the ONLY problem. We have enough resources in this country to take care of EVERY human being, ( and lots of animals’ health too)
    And for a fraction the cost, too…


  191. BA news.  The Chinese are shoving their way into the big airplane duopoly:
     
    China Wins 100 C919 Orders, Breaks Airbus-Boeing Grip
     
    "Commercial Aircraft Corp. of China announced its first 100 C919 passenger-plane orders, breaking Airbus SAS and Boeing Co.’s stranglehold on the world’s second- largest market for new aircraft.
    General Electric Co.’s leasing arm and China’s big three domestic airlines were among the customers for 168-seat plane, state-controlled Comac said in a statement issued at the Zhuhai air show in southern China today. It didn’t say how many aircraft each customer ordered."


  192. robert,
    I usually look at both.  For instance, I’m a bit concerned that we are due for a correction, so I would want to get the Delta to a Negative number.  However, that may mean selling the Dec 1260 short calls, which appears to be too close to the money, especially if SPX gets back to its recent high of 1227.  This is where the cushion comes in.  Would I sell something for $3.1 with a 5% cushion with 4.5 weeks to go, and may get burnt on the upside?  I might, but that would need close monitoring, and when I’m not in a vacation mood.  That’s why selling the Jan 1300 short call at $3.6 is more attractive.  Note that the Dec 1300 callers is only $0.65, so if the market doesn’t move, the Jan 1300 callers would be down to $0.65 in a month. 
     
    Things can change quickly though.  If the market drops a quick 2% from there and we are stuck with, say a 1110 short put, we would quickly cover with anything that has reasonable value at that time, 1250 or 1240 callers.  And we know that this is a stop gap measure to change the Delta and need to move the shot calls if the market surges back up.  Being forced closer to the money is the price that we pay by playing the shorts with low VIX.  When VIX is higher, we get a much bigger cushion and option premium.


  193. For example
    I just got food insurance!
    Went to grocery store…frree stuff! Wow!
    And I happen to be a millionaire too.
    So I loaded up the cart, even though I did not need all the food!
    Came home, realized I did not need all the food I got for free ( insurance was paying)
    Threw away most of it…will do the same every week….cos it’s free.
    Eventually, the grocery store will not be able to have all these people with food insurance load up all the stuff.
    So, next month, since they cannot ‘deny’ food, they will get cheaper food…
    Will I even know lower quality? I doubt it, since its still free, anyway!
    But that’s FOOD, folks!
    And your health is more important, for heaven sake !
    Our government has already abandoned any pretense of quality in health….Obamacare and its offshoots, have already decreed cost savings over qualityy.
    its about saving costs in an INCREASINGLY inefficient and wasteful system…..that’s all!
    Its not about HOW MUCH we spend on healthcare, folks!
    It’s about how EFFICIENTLY we use healthcare resources!
    Our government is the MOST inefficient organization. PERIOD!


  194. Wall St. Journal Blog

    http://blogs.wsj.com/economics/2010/11/15/open-letter-to-ben-bernanke/

    The following is the text of an open letter to Federal Reserve Chairman Ben Bernanke signed by several economists, along with investors and political strategists, most of them close to Republicans:

    We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued.  We do not believe such a plan is necessary or advisable under current circumstances.  The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

    We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.”  In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

    We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

    The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems. 


  195. I’m thinking of a model where we look at China as our factory floor, like the Midwest once was in the US.

    The manufacturing jobs moved out of the Eastern cities and high-speed transportation (rails) made it possible for us to outsource to low-paid farm laborers.  

    The US was in debt from the Civil War and WWI and we inflated our way out of that, which caused a stock market bubble that eventually crashed but it’s not a very different playbook than we’re running now.

    China is our Midwest, they are as tied to us, though the dollar peg and as their biggest customer as closely as Michigan ever was to New York or DC.  

    They are urbanizing through a constant inflow of our dollars, money that rains on them from the sky, money that is produced outside their economy and flows in – adding to their overall wealth every day.  

    Our inflation doesn’t bother them, other than as our debtholder, because our money is, effectively, their money so they can inflate right along with us. 

    Inflation lets us pay off our debts, and we "only" owe China about $1Tn, while we owe 15x to others.  

    Inflation lets them pay their workers more money and helps ease them out of their property (and stock) bubble.  They’ve already hedged against inflation with hard commodity purchases. 

    Inflation lets us pay down our debts and extend and pretend our own real estate and market issues.

    Who gets really screwed?  Europe and the other emerging markets with Europe on an austerity course and the emerging markets forced to sell their commodities in exchange for ever-declining dollars and Yuan. 

    Meanwhile, China begins using the excess wealth to snap up Global Real Estate:

    So, the question is, can the US and China actually be on the same page in a partnership to screw over the rest of the World?   It makes more sense if we look at it as a tag-team attack…


  196. Oh yeah, another point.  Our inflation makes China’s exports cheaper to everywhere else while their peg to the dollar makes them remain on par for US consumers so we can inflate away but still go to Wal-Mart and buy $10 outfits for our kids to go to school.  Since we make our own food, we don’t get too screwed over by food inflation as long as energy prices don’t run away.

    There are now 475,000 Chinese Millionaires, we have about 3M but Asia is catching up in the number of top 0.01%’ers ($30M or more):



  197. Phil
    Very smart angle….US/ China partnership re f….ing rest of world…so all should be hunky dory as they say? no?


  198. I believe it was Sun Tzu who said, "first, divide your enemy, then conquer one by one."  The dollar peg of the yuan is dividing their enemies. China is attempting to divide Japan, Europe and US interests by marrying themselves to the dollar.  However, the Ben Bernank(from the cartoon) is calling their bluff.  Because what’s he sees is that by pegging to the dollar, if we tank the dollar, we tank the Yuan, so China will be forced to defend or face uncontrolled inflation exported from America.
     
    Think about it for a minute…..had the Chinese pegged to the Euro, the Europeans would be the ones tanking their currency in the same end game only with the US being the patsy.  The reality is, the Euro is the better patsy and the US the better mark.  The fly in the ointment is that the Chinese are not the only ones good at playing 3D chess, and Bernanke sees the move and is countering it.
     
    There may be a chance, albeit remote, but I would give it credence, that Bernanke’s plan works.  It hinges on Europe being able to avoid any peripheral defaults before inflation torches China.  If Europe can avoid such defaults, and I believe they will because they are backstopped by the Fed through various international operations, then the blowtorch of inflation will be applied to China and their bubble will finally pop.  That, or the suddenly exploding wealth of the middle class will force a political change in the country that no one is currently forecasting.  Either way, Bernanke and the Europeans will be championed the saviors as China will finally be forced to price exports at appropriate levels and exchange rates will return to a proper function.  Jobs will no longer flow to the black hole that is China, because it will be unable to maintain slave wages.
     
    My idea hinges on the concept that the US and European Central Banks are already waging war and we are only just beginning to get wind of it.
     
    But then again, I’m just a househusband living in Chicago.  What do I know…….(I’d still bet against China, they aren’t that great yet.)


  199. @Cap
    What aren’t you buying?  That it can’t be done to govern 350,000,000 (climbing to 400,000,000 in spite of Phil’s denial of the numbers, and then to 500,000,000 when "Free Health Care" begins) or that it shouldn’t be done so that governance can continue to be a monstrous joke?
    No discussion necessary.  It won’t change a thing in my mind.  I know what needs to be done, and what will never be done. The current elite would never allow it  because in the chaos  that passes for governance, there is huge profit.
    Profit = other people’s ignorance.


  200. flip
    It only takes a second to check your "facts".



  201.  rj_jarboe:  don’t you wish it was that easy to introduce the facts all the time :)


  202. @ rj_jarboe & @redlog
    If you think a government figure suits your purposes go ahead and believe it.  Do you think that about 200 illegals got into the U.S. in the last 24 hours?
    Do you think the population next year, 5 years and 10 years will still be "310,000,000"? How about 400,000,000 in 2050?
    Can’ t find that ‘fact’, can you?