Archive for February, 2011

China Forced To Deny It Will Experience HYPERinflation In 2011, As Russia Unexpectedly Hikes Interest Rates

Courtesy of Tyler Durden

And now for this evening’s stunner, via Dow Jones. “There won’t be hyperinflation in China this year, the state-run China Securities Journal reported Tuesday, citing Yao Jingyuan, the chief economist of the National Bureau of Statistics. The abundant stocks of grains and main agricultural products in China are key factors in stabilizing consumer prices, the newspaper quoted Yao as saying. China’s consumer price index rose 4.9% in January from a year earlier, picking up from December’s 4.6%.” So putting aside what official denial means about the validity of a story, not to mention this utterly bizzare and completely out of left field statement, China’s best and only reason why it won’t have hyperinflation is that it has “abundant stocks of grains and agricultural products.”… We can, at best, hope that this has to be some early version of an April Fool’s joke, or else things are truly far worse than anyone expected.

Also, just where does China put the threshold cut off on “hyper” – 10%? 20%? 50%? Is it at least safe to say that China may well experience mega, turbo, or nitrous inflation (and we generously put all three terms to the left of “hyper” on the X-axis)?

In the meantime, Russia, which will soon come out with comparable warnings, unexpectedly hiked interest rates by 0.25% to 8.00%:rest

The Russian Central Bank unexpectedly raised its key interest rate by 0.25 percent to 8 percent for the first time since the economic crisis over two years ago.

The Bank of Russia said in a statement that the rate hike, effective from Monday, was needed due to the high inflationary pressure and the expected rise of capital inflow into Russia as the world oil prices surge on the unrest in the Middle East.

“There are grounds for capital inflows into Russia due to higher oil prices,” the central bank said in a statement accompanying the decision.

By tightening its monetary policy, Russia is sending a strong signal that it views rising prices as a greater threat than slow economic growth.

Since the start of 2011, according to the Rosstat data, customer inflation in Russia reached 9.7 percent in a yearly term, mostly due to rising food prices. Earlier, in December 2010, central bank Chairman Sergey Ignatiev said monetary policy makers next year will focus on


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China Forced To Deny It Will Experience HYPERinflation In 2011

Courtesy of Tyler Durden

And now for this evening’s stunner, via Dow Jones. “There won’t be hyperinflation in China this year, the state-run China Securities Journal reported Tuesday, citing Yao Jingyuan, the chief economist of the National Bureau of Statistics. The abundant stocks of grains and main agricultural products in China are key factors in stabilizing consumer prices, the newspaper quoted Yao as saying. China’s consumer price index rose 4.9% in January from a year earlier, picking up from December’s 4.6%.” So putting aside what official denial means about the validity of a story, not to mention this utterly bizzare and completely out of left field statement, China’s best and only reason why it won’t have hyperinflation is that it has “abundant stocks of grains and agricultural products.”… We can, at best, hope that this has to be some early version of an April Fool’s joke, or else things are truly far worse than anyone expected.

Also, just where does China put the threshold cut off on “hyper” – 10%? 20%? 50%? Is it at least safe to say that China may well experience mega, turbo, or nitrous inflation (and we generously put all three terms to the left of “hyper” on the X-axis)?

In the meantime, Russia, which will soon come out with comparable warnings, unexpectedly hiked interest rates by 0.25% to 8.00%:rest

The Russian Central Bank unexpectedly raised its key interest rate by 0.25 percent to 8 percent for the first time since the economic crisis over two years ago.

The Bank of Russia said in a statement that the rate hike, effective from Monday, was needed due to the high inflationary pressure and the expected rise of capital inflow into Russia as the world oil prices surge on the unrest in the Middle East.

“There are grounds for capital inflows into Russia due to higher oil prices,” the central bank said in a statement accompanying the decision.

By tightening its monetary policy, Russia is sending a strong signal that it views rising prices as a greater threat than slow economic growth.

Since the start of 2011, according to the Rosstat data, customer inflation in Russia reached 9.7 percent in a yearly term, mostly due to rising food prices. Earlier, in December 2010, central bank Chairman Sergey Ignatiev said monetary policy makers next year will focus on


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American Monster: Excerpts from The Madoff Tapes

Here’s an excerpt from The Madoff Tapes, and Jesse at his best, calling out the fraud and greed characterizing our power structure and offering little hope for the future. – Ilene 

 Pic credit: MTTS (Via Jr. Deputy Accountant)

Courtesy of Jesse’s Cafe Americain 

“It’s unbelievable. Goldman … no one has any criminal convictions—the whole new regulatory reform is a joke. The whole government is a Ponzi scheme.”

Here are some brief excerpts from a story in New York Magazine called The Madoff Tapes. The story runs to nine pages, so consider this just a taste and read the whole thing when you have the time. I thought Steve Fishman did a terrific job of letting Bernie talk and of presenting his thoughts in a orderly manner without a lot of interpretation and editorial intrusion. He has real talent as an interviewer, and seems a natural reporter. 

But while you read this bear in mind that you are seeing reality interpreted through the eyes of Madoff, a master manipulator and pathological liar, an individual perhaps in deep denial, but the question is, to whom. 

His psychiatrist in prison tells him he is not a sociopath because he has remorse. I think his major remorse is that he was caught. The article implies that he is a narcissist. I think he is all of the above, and much, much, more.   

Always full of self-pity and the quick deflections of a classic con man, he seems to blame his corruption on the failure of his father’s business, and a personal vow never to let it happen to him, a resolve that became an obsessive compulsion.   Besides, everyone was doing it.  He just did more of it, more quickly and with an automated efficiency that turned into raw fraud when the easy gains evaporated.   It is a microcosm of the US financial sector today.

Sometime in the future someone is going to do a thorough analysis on what was common in the background of these fellows who were drawn to Wall Street in the 1980′s and beyond, and what made them the way they are. But we can discover what set them free to do their worst, and that was the undermining of regulation,…
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Oxen Group Nightly – Feb. 28 – Stock Market Recap





US Military Counter-Libya Preparation Update: USS Enterprise Now Back In Mediterranean

Courtesy of Tyler Durden

Earlier today, we reported that the US military is in the process of repositioning its forces in the area around Libya “to be able to provide flexibility and options.” And while we have yet to get an updated US naval map for this week (the last one can be found here), it appears that the USS Enterprise which was previously on its way to the Straits of Hormuz has made a 180 and has now backtracked completely through the Red Sea and is now once again north of the Suez, where it has joined the big deck amphibious warfare ship Kearsarge. This means that the USS Vinson is again left alone to protect the highly combustible gulf region, which now includes both Bahrain and Oman, in addition to Yemen and of course Iran and Saudi, on revolutionary watch. It may be time to send Abraham Lincoln, which in turn is patrolling the South China Sea, back to the Persian Gulf as the possibility of a flashpoint escalation there is far greater than around Indonesia (which however would leave all of Korea and China unguarded). Keep an eye out on CVN 74 and 76 – Stennis and Reagan. If those two start making a move west, then next steps can be extrapolated quite easily.

AFP has more:

“We’re studying all options to ensure that Colonel Gaddafi understands that he has to go. I know that people have mentioned military solutions, and these solutions are being examined by the French government,” Fillon said in an interview with RTL radio.

One option on the table was using NATO air power to impose a no-fly zone over Libya to stop Gaddafi from using air strikes against his own people. However, such a step would require UN approval, experts said.

 For any military intervention featuring air power, US commanders could turn to the USS Enterprise aircraft carrier, which is currently in the Red Sea, as well as the amphibious ship the USS Kearsarge, which has a fleet of helicopters and about 2000 Marines on board.

As of Monday, the nuclear-powered USS Enterprise had moved to the north of the Red Sea, near the Suez Canal, according to the US Navy’s website.

As recently as last week, the carrier was in the Gulf of Aden, when it was part of


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…To The Shores Of Tripoli

Courtesy of Jack H Barnes

The Empire is stirring. You may not notice it initially and you may not care yet: in time you will. The US is the only military in the world that can invade a prepared and defensive nation – not only expecting to win; but to dominate the event.  Pax Americana is coming to an end.

Outside of an attack on Hawaii like Japan used in 1941; the US picks its wars.  The only functioning Empire in the known universe, America has the capacity to unilaterally act with overwhelming force.

It normally takes years for a situation to reach a critical boiling point where the US will intervene.  The GW I & II era took 6-9 months of obvious preparation time before occurring.  Kosovo was an aerial war with no real ‘boots on the ground’ until the outcome was in the waning stages.

Afghanistan started out as a special ops cowboy war; it has now slowly grown into the largest armed conflict on the planet currently. The Iraqi war is winding down with combat troop levels dropping to historic low levels since 2003.

Normally, the U.S. is slow to act; however when the Empire does act, under most circumstances it is prepared to handle two individual wars at the same time. The Iraqi war is winding down currently, giving the US the capacity to act unilaterally again.  The US has a military budget that is larger than the rest of the world combined.  This gives it the capacity to act in its own best interest on demand.

World War I & World War II are both prime examples of the US arriving into an ongoing conflict with overwhelming muscle.  The above will provide you with the context of what is next to come.

When an Empire decides to attack another nation, there are a set of dances that both sides normally undertake: it’s akin to a ritual courting, in reverse.  The outcome of this public ritual dance is war, not a peaceful diplomatic outcome.    With the benefit of hindsight, these signs are unmistakable.  The US and England have always had a unique international relationship and is one prime example.

While the US is the current Empire, the US was originally part of the last Great Empire.  Those old relationship bonds run deep and true.  While the media loves to try to highlight the gap…
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Wake Me, Shake Me

Courtesy of James Howard Kunstler   

     A quickening of events pulses through lands where for so long time stood still, and the oil – what’s left of it – lies locked for the moment beneath hot sands – woe upon all ye soccer moms! – while Colonel Gadhafi ponders the Mussolini option – that is, to be hoisted up a lamp-post on a high-C piano wire until his head bursts like a rotten pomegranate. Then the good folk of Libya can fight amongst themselves for the swag, loot, and ka-chingling oil revenues he left behind. Meanwhile, Hillary Clinton scowls on the sidelines knowing how bad it would look if US marines actually hit the shores of Tripoli (and perhaps how fruitless it might turn out to be). And Italian grandmothers across the Mediterranean wonder why there’s no gas to fire up the orecchiette con cime di rapa. 

       The fluxes of springtime run cruelly across the sands of Araby, clear into Persia where the ayatollahs’ vizeers toy with uranium centrifuges and thirty million young people wonder how long they will allow bearded ignoramuses to tell them how to pull their pants on in the morning. Along about now, I wouldn’t feel secure standing next to somebody lighting a cigarette in that part of the world. 

      Pretty soon we’re going to find out just how fragile things are in the Kingdom of Saudi Arabia, there at the heart of things oily. Last week, King Abdullah wobbled out of his intensive care unit to spread a little surplus cash around the surging population, but let’s remember that their share of the oil "welfare" has been going down steadily in recent years – a simple matter of numbers really. Putting aside even the common folk, a thousand princes from dozens of different tribes pace restively in the background awaiting the struggle that must follow King Abdullah’s overdue transmigration to the farther shore. All along the western coast of the Persian Gulf and down toward the Horn of Africa, dark forces stir. Fuses sputter in Kingdoms from Bahrain to the Yemen.

     Also last week, Wikileaks released papers signifying that Saudi Arabia’s oil reserves were quite a bit less than they had claimed. It was basically an old story, one that the late Matthew Simmons had published in 2005 just from poring over reams of production data from…
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Is PIMCO The Fed’s “Agent Provocateur” In Scuttling Billions In Legal Putback Claims Against JP Morgan And Bank Of America?

Come back to this after reading:  What I don’t understand is how, Blackrock, for example, holding "an estimated USD 3.4bn of BofA equity," could make a settlement with BofA that is considered binding to any other party. – Ilene 

Courtesy of Tyler Durden

Perhaps it is time for JP Morgan to revise its estimate for putback liability claims. As a reminder back in October, it was none other than JP Morgan which said: "We estimate putback risk to be approximately $23-$35bn for agency mortgages, $40-80bn in non-agency and roughly $20-30bn for second liens and HELOCs. However, there are a number of reasons why these estimates are on the high end, including losses already taken and loss reserves established."

Well, there appear to be a number of reasons of why these estimates may have been on the very low end as well, the first one being that the bank itself just announced "it faces up to $4.5 billion in legal losses, in excess of its established litigation reserves, should its worst-case legal scenario occur." And if JP Morgan is seeing billion more in putback exposure, then what should Bank of Countrywide Lynch say, which just reported that the amount of debt which is being put against the firm for fraud of various types has just doubled from $46 billion to $84 billion. Luckily, according to a DebtWire report, PIMCO and BlackRock are actively doing the Fed’s bidding in attempting to form a splinter group within the putback litigants and to settle with BofA for a nominal charge. Will the Fed be once again successful at subverting justice?

From the WSJ:

The SEC has requested the additional disclosures on what banks could potentially face on legal losses on top of what they have set aside. The banks all face a rash of lawsuits regarding the financial crisis and collapse of the housing market, particularly from investors who purchased mortgage-backed securities that later tumbled in value.

The bank already accounts for what it considers a reasonable estimate of losses in a litigation reserve, a number it doesn’t make public. The $4.5 billion figure would be a worst-case scenario on top of that number. It said the additional losses could be zero, though it could also go higher as the bank can’t yet make estimates on the more than 10,000 legal proceedings it faces.

To those…
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CNBC On The Case For $130 Silver

Courtesy of Tyler Durden

Nothing new for regulars here. Yet the fact that CNBC, following Cramer’s endorsement of gold, is now apparently pushing silver on retail is very troubling: can’t the fast money crew just stick with pitching Netflix or some other widowmaker to their demographic. That said, since per Nielsen, said demo did not even register in recent surveys, we are not all that concerned. That said, the people still demand Doug Kass to appear with an immediate rebuttal how he is all in short silver, just to neutralize the suddenly disconcerting feng shui.





A Look At The Lawsuit Against Michael Lewis, In Which We Find That Brad Pitt Has Bought The Movie Right To “The Big Short”

Courtesy of Tyler Durden

Earlier today, some hilarious news hit the tape after it was made public that disgraced CDO trader Wing Chau has decided to go nuclear and sue Michael Lewis and Steve Eisman due to their all too honest representation of the Harding Advisory asset manager, in Lewis’ book “The Big Short” (not spared from the lawsuit was even book publisher W.W. Norton). “Michael Lewis was sued by Wing Chau, president and principal of Harding Advisory LLC, who accused the writer of defaming him in his 2010 book. The book “depicts Mr. Chau as someone who ignored his professional responsibilities, made misrepresentations to investors, charged money for work that was not performed, had no stake in the CDOs he managed, was incompetent or reckless in carrying out his responsibilities, and violated his fiduciary duties by putting the interests of ‘Wall Street bond trading desks’ above those of his investors.” It appears that Chau missed at least one additional defendant: Jody Shenn of Bloomberg, who in 2010 wrote a scathing article titled “How Wing Chau Helped Neo Default in Merrill CDOs Under SEC View” which provided just as damning and just as accurate a portrait of the (allegedly) pathologically greedy manager who presided at the “center of an epidemic of conflicts of interest.” And while we present the key highlights from Shenn’s piece which is a must read for anyone interested in what will surely be a recurring drama in the coming months (the Michael Lewis op-ed repartees will be worth the price of admission alone), what appears to have forced Chau to take this career ending step (sorry Wing, no more AUM for you) is that he is about to hit the silver screen. In the full lawsuit we read that “Brad Pitt’s production company, Plan B Entertainment Inc., has bought the movie rights and is working with Paramount Pictures Corporation to produce [The Big Short] film.” Well isn’t that special…

Here are some of the choicest quotes by Jody Shenn from his May 2010 article:

In early 2007, with subprime-mortgage defaults soaring, Wing F. Chau teamed with Merrill Lynch & Co. to create a $300 million pool of assets that shared a name with the main character in The Matrix movies who discovers reality isn’t what it seems.

Neo CDO Ltd. was a complex construction. More than


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Zero Hedge

"All Men Are Not Created Equal" Louisiana State Rep. Rejects Declaration Of Independence

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Via The Hayride,

HB 1035, a bill by Rep. Valarie Hodges that would have mandated that schoolchildren in Louisiana be taught the Declaration of Independence, sailed through the House Education Committee with a 6-2 vote. But Wednesday, when the bill reached the floor of the House, it had a different fate – amid a torrent of squabbling, Hodge...



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Phil's Favorites

Trickle-Down Crash? Trophy Assets Suddenly Tanking

Courtesy of John Rubino.

One of the defining traits of the past few years’ “recovery” has been the torrent of money flowing from big banks to favored clients, and from there into trophy properties like high-end real estate, superyachts, and fine art. This might be the first financial bubble to completely bypass the 99%.

And now it’s ending. Falling oil prices and negative interest rates (rich people own a lot of government bonds) seem to have sucked the animal spirits out of the 1%, leading to stories like this:

A Worrisome Pileup of $100 Million Homes

(New York Times) –...



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Market News

Breaking News And Best Of The Web

Courtesy of John Rubino.

China’s growth slows further. Japan ramps up the stimulus, bolstering the thesis that huge deficits are the next big financial mistake. The government’s fake numbers become a campaign issue. Charles Hugh Smith on why pension funds (that is, your retirement) are doomed. Great interviews with James Rickards and Helen Chaitman. Oil stabilizes and gold continues to correct. Look for next week’s COT report to be a lot less bearish. Bitcoin gets a serious cryptocurrency competitor. Trump clinches the nomination, but won’t debate Sanders. Clinton gets some bad legal news.

Best Of The Web

Here’s why all pension funds are doomed, doomed, doomed… – OfTwoMinds.com

...

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ValueWalk

Brian Bares on His Favorite Investment Books and Resources

By Jacob Wolinsky. Originally published at ValueWalk.

Brian Bares on His Favorite Investment Books and Resources

Here are some books he recommends

Berkshire Hathaway letters 

...



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Chart School

World Markets Weekend Update: The Global Rally Accelerates

Courtesy of Doug Short's Advisor Perspectives.

Seven of the eight indexes on our world watch list posted gains over the past week, up from five the week before, and the average of the eight was an impressive 2.60%. India's SENSEX was the outstanding out performer with a 5.34% surge, and three indexes, France's CAC 40, the Hong Kong's Hang Seng and Germany's DAXK closed the week with gains in the mid-three percents. China's Shanghai was the sole loser with its fractional 0.16% decline. Japan's Nikkei had the second worse performance with a modest gain of 0.59%. Incidentally, the Nikkei about 4% below its late January close when the Bank of Japan adopted its negative interest rate policy.

A Closer Look at the Last Four Weeks

The tables below provide a concise overvi...



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Kimble Charting Solutions

Gold Mining Stocks- Most dangerous time to own them in years?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The rally in mining stocks since the first of the year has been very impressive.

The rally has taken Gold Miners ETF GDX up to test the 23% retracement of the collapse over the past 5-years. At the same time it is hitting the 23% level, two other resistance lines are being put to a test, with momentum at the highest levels in the past 5-years.

Joe Friday Just The Facts...



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Insider Scoop

Graham Media Group To Buy WCWJ, CW affiliate In Jacksonville, NBC Affiliate in Roanoke

Courtesy of Benzinga.

Graham Media Group, Inc., a Graham Holdings Company (NYSE: GHC) subsidiary, said it struck a deal with Nexstar Broadcasting Group, Inc. and Media General, Inc. to purchase WCWJ, a CW affiliate television station in Jacksonville, Florida and WSLS, an NBC affiliate television station in Roanoke, Virginia for $60 million in cash and the assumption of certain liabilities.

The agreement to acquire Nextar Broadcasting included pension obligations. Graham Media Group, Inc. would continue to operate both stations under their current network affiliations.

Graham Media said the acquisition is subject to approval by the FCC, other regulatory appr...



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OpTrader

Swing trading portfolio - week of May 23rd, 2016

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

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

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



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Digital Currencies

The Biggest Bitcoin Arbitrage Ever?

Courtesy of Chris at CapitalistExploits

Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?

Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.

I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.

I was thinking of this since a buddy of mine recently started ...



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All About Trends

Mid-Day Update

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

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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