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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

Gun Violence In America (In 6 Uncomfortable Charts)

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

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



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Phil's Favorites

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

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

?

Click on the links:

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

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

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



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All About Trends

Mid-Day Update

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

Click here for the full report.




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

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Insider Scoop

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

Courtesy of Benzinga.

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

The Numbers

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

Insider Dumping

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



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Chart School

Relief Bounce in Markets

Courtesy of Declan.

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

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


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

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Digital Currencies

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

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

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

Courtesy of 

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



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OpTrader

Swing trading portfolio - week of December 15th, 2014

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

 

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

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

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

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



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Sabrient

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

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

Courtesy of Scott Martindale of Sabrient Systems and Gradient Analytics

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



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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

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

 

...

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Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

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



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Market Shadows

Official Moves in the Market Shadows' Virtual Portfolio

By Ilene 

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

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

Notes

1. th...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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Help One Of Our Own PSW Members

"Hello PSW Members –

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

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

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

Thank you for you time!




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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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About Ilene:

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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