The really sad story is that this is what our political system has become. It has nothing to do with representing the people and working on their behalf. Obviously, to anyone who is not a corrupt and lying a******, something needs to be changed dramatically if our country is ever going to reclaim its greatness. – Ilene
The call made by a Buffalo blogger pretending to be billionaire right-wing activist David Koch to Wisconsin Governor Scott Walker is quickly making an impact on the news cycle. (You can listen to the call on YouTube: Part 1 | Part 2.)
Walker is extremely frank with the man he believes to be an important financial supporter, both of his own campaign and right-wing causes. Below are the six most important revelations we learn from listening to the Governor speak his mind.
1. Walker and the Senate Republicans are conspiring to withhold Democratic lawmakers’ paychecks.
A minute into the call, Governor Walker describes a plan by the Senate Majority Leader to institute a new rule that would stop automatic deductions of lawmakers’ paychecks if they do not appear in the Senate for more than two days. It would require lawmakers to appear in person to collect their checks.
Walker describes this as part of a plan he is working on with GOP Senators: "Each day, we’re going to rachet this up a little bit."
2. Walker sees billionaire David Koch as "one of us."
After making a few jokes the President went on to defend his budget at his talk today. He said that if his budget were enacted it would result in the US achieving the lowest debt to GDP ratio since Eisenhower. That’s quite a claim. I don’t think there is any truth to it. I don’t believe Obama really believes that is the case either. He’s just blowing political smoke.
The budget that “produces” these great results is actually built on sand. The assumptions that result in the dramatic improvement the President is counting on are not going to happen. Therefore we are in for a disappointment.
The CBO produced a set of slides last week that describe the economic fundamentals that are behind the magic the President is selling:
The key assumption is that GDP is onward and upward every year for the next ten. Forget the structural weakness(s) that makes this most unlikely. Forget that the US has a recession of some form or another every five years or so. If this completely Goldilocks outcome is the future then the Prez is right. We have nothing to worry about. The problem is that this scenario is the least likely outcome.
This graph stinks to me. Somewhere around tomorrow (or the next day) unemployment is going to plunge according to this. It will fall in just a year or two from now to a level not seen in history. And it will stay at that “perfect” level for, well, for ever. Give me a break!
This shows the rate of jobs creation. A hockey stick is what it is called in finance. And financial guys know whenever someone shows them a plan like this, you just look the other way on the deal being offered. Hockey sticks never come true. Those that bank that they will, are always the losers. In this case that means the public.
Sub 2% inflation. Forever. The lowest rate on the charts. No wonder the president’s budget looks so “good”. His core assumption is that the rising cost of government will be tame. If you build a house on this assumption, your
Today’s 13 and 26 week bill auctions have been updated on the US Bond Auction Statistics page [link, GDocs]. Also I have updated the calendar with the upcoming March issuance.
Tomorrow in Fed Buyback land we have the purchase (monetization, fluffering) of the 8/15/2028 – 2/15/2041 maturities; 1.5-2.5 billion expected. The SOMA holdings sheet along with our overlay of when that particular CUSIP was auctioned for tomorrow’s operation can be found here [GDocs].
An interesting article by @The_Anal_yst caught my eye during lunch: BMW to UAW: You Suck. Must read, given the union vs. nonunion “tensions” occurring as of late.
Some unpleasant perspectives for dollar bulls (and manna from heaven for the M.E. genocidal maniacs) from Sovereign Man‘s Simon Black.
The market is telling us that the dollar is finished
There’s major shift occurring right now in financial markets.
Sure, the food and freedom riots that are spreading across the globe are a major indicator that civil unrest follows very closely behind resource shortages and economic turmoil… but there’s something else that I’ve noticed recently– it’s a sea change in the financial system.
In the past, major crises normally caused investors to seek safe haven assets, and everything else equal, the dollar would rise. They call it a ‘flight to safety’, and investors would flock towards the perceived stability of US Treasury securities.
In 2008, for example, the Lehman collapse spurred the market to go rushing into the dollar. The pound, euro, S&P, oil, and gold all went into freefall, and the dollar surged. Anyone holding cash felt pretty smart, and the market paid tribute to the US dollar as the world’s safe haven currency.
There were a lot of reasons for why this happened. The US government likes to claim that it has never failed to pay on its debts. Of course, even the most cursory analysis would lead one to conclude that they trade debt for inflation… and more debt.
Regardless, when financial markets were collapsing in 2008, investors made a rational decision to accept negative real rates in the dollar (effectively paying a fee to hold short-term treasuries) over other currencies and asset classes.
It was the lesser of all evils at that particular moment and should not be conflated with ‘confidence’.
The other big reason for the dollar’s 2008 surge was that many of the world’s financial markets were leveraged to the hilt… in dollars. When Greenspan started slashing rates in 2001, investors around the world had been able to borrow cheap US dollars and park them in higher yielding assets abroad.
This global carry trade helped produce huge returns in emerging financial markets as investors borrowed four to six times their dollar equity at 2% to 8% and invested in China at 20%+.
When those markets began to melt down, however, the dollar loans needed to be repaid, and investors went rushing back into the dollar.
The dollar sat atop its altar for about six-months from September 2008…
If CNBC is wondering whom to invite to its highly objective and oh so critical news dissemination service, they should take a long hard look at Oppenheimer’s Brian Belski.
Feb. 28, 2010 (Bloomberg) — “Rising oil prices simply do not have the shock value they once possessed” for U.S. consumers, according to Brian Belski, chief investment strategist at Oppenheimer & Co.
After all, Belsky has an impeccable oracular record.
Nov. 8, 2007 (Bloomberg) — The decline in technology stocks today is an “overreaction” and investors should buy shares of technology companies because they are undervalued, Merrill Lynch& Co.’s U.S. sector strategist Brian Belski said.
We look forward to Belski’s appearance on nanosecond Fast Money.
Acceptance Speech of Charles Ferguson, Oscar Winner of Best Documentary Feature for Inside Job
“Forgive me, I must start by pointing out that three years after our horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that’s wrong.”
The video above is Charles Ferguson’s acceptance speech from the 2011 Academy Awards for winner of best documentary feature for “Inside Job.”
Talk about taking advantage of your situation. Now where are the damn handcuffs?
Inside Job
SYNOPSIS From Academy Award® nominated filmmaker, Charles Ferguson (“No End In Sight”), comes INSIDE JOB, the first film to expose the shocking truth behind the economic crisis of 2008. The global financial meltdown, at a cost of over $20 trillion, resulted in millions of people losing their homes and jobs. Through extensive research and interviews with major financial insiders, politicians and journalists, INSIDE JOB traces the rise of a rogue industry and unveils the corrosive relationships which have corrupted politics, regulation and academia. Narrated by Academy Award® winner Matt Damon, INSIDE JOB was made on location in the United States, Iceland, England, France, Singapore, and China.
This commercial from BMW is an awesome F*CK YOU to the UAW and all unions. While the Big 3 were all in bankruptcy and getting federal bailouts, BMW spent a billion dollars expanding a plant in South Carolina. Last I checked, most of these employees are non-union. Oh yea, and BMW – a luxury automaker – is actually profitable, and still was, even during the crisis. GM, Ford, Chrysler, friends (or frenemies) of the UAW? Saved only by the largess and questionably-legal bailout actions of the Government*.
Apparently, some workers at the plant want to unionize. Their rationale is, as almost always the case, retarded. Ok, perhaps that’s too harsh. At best though, their rationale is painfully ignorant of things everyone should have learned by high school, if not earlier. Ultimately, as always, the rationale comes down to whining about how the firm has reduced benefits, asked more from their workers, etc. Big deal, it happens in every industry, especially when sales are down and unemployment is up. If you don’t like it, quit. There’s millions of un/under-employed people who’d LOVE to get paid $25/hour and get full benefits to do your job!
This one comment on the BMW forum thread illustrates some of the main the reasons why I am absolutely, positively anti-union (so long as a country has decent employee protection laws), emphasis mine:
I’ve worked with union workers over the years; my dad was a in a trade union all his working life. However, I’ve seen the downside. I’ve been to a place where it takes three people to change a simple part, because it required a plumber (for a simple air line), a mechanic (for two screws) and an electrian (for one electrical connector). This is not an exaggeration, but something I personally witnessed. Or, I’ve been yelled at for moving a pallet truck that someone left in front of the machine I needed access, so I broke union rules and moved it five feet. Also, I’ve seen companies unable to get rid of or even punish unproductive or damaging employees, again because of the unions. All the while watching unskilled labor getting paid significantly more than me. So don’t mind me if I don’t shed a tear for you.
Who said the CME can only hike margin rates? Today, the Chicago Merc announced that is “unveiled a cross-margining plan that would help customers trading both interest rate and Treasury futures, as the world’s largest derivatives exchange prepares for more competition.” The step is a preemption of a comparable product to be offered by its recently sold competitor, the NYSE Borse. “The New York Stock Exchange parent expects in March to launch NYSE Liffe U.S., a rate futures market, at the same time as its partly owned New York Portfolio Clearing (NYPC) clearinghouse for the products.” In addition to confirming that this step pretty much puts an end to persistent rumors that the CME may overbid the DB for the NYSE, what it also shows is that the exchange is perfectly willing to do anything it wishes when it comes to margin rules as suits it. “CME’s new membership class — called Financial Instruments Clearing Membership (FICM) — would provide margin benefits of up to 65 percent between interest rate futures and Treasury securities, it said.” While we have yet to see a practical example of what this means, we predict that the implication is a major drop in margin requirements when trading products determined to be a national interest such as Treasurys.
[The FICM] is expected to launch by the end of the current quarter, CME said. The company named four trading firms that have tested the offering and are working toward becoming FICM members.
Underlining the importance of derivatives businesses, Germany’s Deutsche Boerse bid this month to acquire NYSE Euronext — a combination that would dominate European futures trading and squarely take on CME on the global stage.
Before this happens, however, expect for several more rounds of margin hikes in any commodity that threatens to put a dent in the Fed’s ludicrous worldview that record prices on the commodity board are driven by “demand.”
New Financial Instruments Clearing Membership (FICM) Provides Margin Benefits of up to 65 Percent
CHICAGO, Feb. 28, 2011 /PRNewswire/ — CME Group, the world’s leading and most diverse derivatives marketplace, announced the creation of a new clearing membership class for interest rate futures allowing for significant margin offsets between CME Group Interest Rate futures…
I could not help noticing that China’s imports from Japan fell 16.2pc in December. Imports from Taiwan fell 6.2pc. The strong yen strikes again: Honda decides to build a high-performance hybrid Acura in Ohio – instead of its home nation of Japan. The firm’s continued shift in p...
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In an effort to reach the angry mob, CNBC's Rick Santelli goes all Sesame Street on the numbers behind the US Debt Ceiling Rise. Focusing for two minutes on what this practically means for every man, woman, child, and politician, the shouting Chicagoan points out that when the US breaches this new limit then the world's entire population will be on the hook for $2,346 each (and $52,409 per US person).
The Weekly Leading Index (WLI) growth indicator of the Economic Cycle Research Institute (ECRI) posted -6.5 in its latest reading, data through January 20. The latest public data point is a reduced contraction from last week's -7.6 (a slight downward revision from -7.5). This is the highest level (i.e., least negative) since early September. However, the underlying WLI declined fractionally from an adjusted 123.3 to 122.8 (see the third chart below).
Early last December Lakshman Achuthan, the Co-founder of ECRI, spoke with Tom Keene on Bloomberg Television's Surveillance Midday. You can watch the video on the ECRI website here, with bold heading Recession Update. The eight-minute video is well worth watching in its...
Some combination of better made cars, and less Americans able to pay new car prices has conspired to push up the average age of U.S. vehicles to a new record high. Reflecting this sea change, one of the best investment g...
Shares of battered tech company Research in Motion (NASDAQ: RIMM) are seeing much strength during Friday's trading session.
Fairfax Financial Holdings released a 13G filing with the SEC this morning, in which they disclosed a 5.12% stake in Research in Motion.
Currently, shares of Research in motion are up over 4% at $16.85. Over the last year, Research in Motion is down over 72%.
Research In Motion Limited is a designer, manufacturer and marketer of wireless solutions for the worldwide mobile communications market. RIM provides platforms and solutions for access to information, including e-mail, voice, instant messaging, short message service.
Top 5 RisersStockRatingAnalysisASBCBUYMany analysts are expecting higher than previously expected long term growth from Associated Bancorp, and its near-term earnings outlook is also improving.CZZSTRONGBUYThe recent earnings history for Cosan Ltd shows significant improvement while projected valuation continues to rise.STLDBUYProjected value continues to rise for Steel Dynamics while long term increases in earnings growth are also becoming more widely expected.PSESTRONGBUYAn increasingly attractive expected long term growth rate and a significantly higher projected valuation from just a fe...
Major markets and major index ETFs corrected slightly today after the stock market’s euphoric party yesterday
Major markets suffered a slight hangover today, as the S&P 500 dropped .57%, the Dow Jones Industrial Average dropped .18%, the NASDAQ dropped .46% and the Russell 2000 Index dropped .34%, after yesterday’s crazy Fed and Tech Sector induced Wall Street Party. The NASDAQ, in particular, partied very hard, so hard in fact that the NASDAQ reached its 11 year record high.
The major market index ETFs were hungover too as the SPDR S&P 500 ETF lowered .51%, the SPDR Dow Jones Industrial ...
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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.
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Here is the virtual portfolio weekend update. Basically a recap of the positions and some notes about the trades. As usual, I'll post the previous week's P&L for comparison. Not the greatest of week in general!
AA Money
Only transaction last week as we bought back the AA Feb 9 puts on Tuesday for close to a 70% profit. The idea is to sell another set of put as soon as we get a chance.
Previous week P&L - $400.00
We lost some ground this week, but we'll keep on selling premium!
FAS Money
We also lost some ground in this virtual portfolio, but we have sold plenty of premium for the coming week. A little correction would go a long way to help! On Wednesday we sold the FAS Feb 72 puts (already good for 50%), on Thursday we added the Jan4 78 calls and on Friday we had to roll the Jan 78 puts to the Jan 80 puts. We were hoping for these ones to expire worthless on Friday, but a late stick killed that hope.
Previous week P&L - $4372.00...
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Here's the latest Stock World Weekly. We discuss the Fed's next move, and it's new policy for more QE-cating. Brief review of Sabrient's trade ideas for 2012 (already doing well) and a few new buy-writes from Phil and Pharmboy. Enjoy! (Feedback appreciated - give some life to the comment section below.)
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Finding new and exciting Biotech companies that target novel mechanisms is like trying to find a needle in a haystack. Sure there are many companies working on cutting edge science, but investing in those companies to reap the rewards of their work is a very dangerous game. More often than not, companies fail because the mechanism does not pan out, the compound(s) do not have pharmacokinetics (get into the body or last very long in the body), or an adverse event happens that knocks years off a development timeline. In addition, the stock can be manipulated by market makers so investors don't know which way is up. I approach investing in biotechs as a long term prospect. I continue to like our current portfolio of biotech companies (join in chat for many of those plays), and we continually add/subtract shares and sell/buy options on ...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(