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Margin Call Monday – Yuan Falls Limit Down to the Dollar

It's amazing what the MSM ignores these days

The PBOC raised the Yuan exchange by 0.0005 and that microscopic move set off a panic that dropped the Yuan it's daily 0.5% limit against the Dollar – marking a huge and violent reversal to the recent trend and signaling that China's usual tight control of their economy may be starting to unravel.  Chinese banks scrambled to buy Dollars to meet a Central Bank rule that bars them from having Dollar short positions overnight but it's doubtful that all were able to comply in that violent action.  

The Shanghai Composite fell 1.5% this morning (Hong Kong was closed) but it does not show up in the charts on the WSJ's main page nor is it mentioned on CNBC – perhaps because it conflicts with the weak-Dollar narrative they are using to drive the speculative commodity frenzy.  Ignoring problems in China was a big theme of the summer of 2008 – as we rallied into the second biggest stock market collapse in history from Dow 11,000 in mid-July to 11,782 on Aug 11th and we were still testing 11,600 through Sept 1st but then things started going wrong as we broke below 11,000, then 10,000, then 9,000, then 8,000 – finally stopping at 7,500 (down 33%) on Nov 20th.

Special Report:  How to Make Millions in Metal and Oil:

As I keep telling Members, we don't have to be worried about missing a sell-off, it will be long and relentless when and if it comes as will the rise we get as inflation begins to kick in.  Gold is now over $1,500 for a week and, before you waste money on gold – let's look at an alternative:  GLD is the ETF that tracks gold and, if you think Gold is going to $1,600 – rather than plunk $1,500 down on an ounce of gold to make 6.6% on a move up, you can buy the GLD $140/160 bull call spread for $790 (1 contract spread at $7.90).  As GLD is currently at $146.74, that spread is currently $674 in the money and carried a $116 premium BUT – for about 1/2 the cost of an ounce of gold, if GLD gets to $160 (approximately $1,600 an ounce) then that spread is worth $2,000 – a $1,210 gain on that same $100 move up in gold!  

What's the catch?  The catch is the same leverage you gain on the way up goes against you on the way down.   Your break-even on gold is about $1,530 so you enter the trade at a disadvantage.  On the other hand, since you make 12x on the way up, look at it as risking $790 instead of $18,000 on 12 ounces of gold to get the same upside on a move to $1,600.  If you are worried about missing on the upside, you can "layer" the trade by buying the $145/165 spread when gold crosses $1,550 and the $150/170 spread when it crosses $1,600 so you only have to commit the next $790 after you have already locked in gains on the previous round.

By playing gold this way, if gold goes to $2,000, you would end up with 10 spreads that cost you about $8,000 that return $20,000 whereas buying $15,000 worth of gold at $1,500 would give you a gain of just $5,000 – IF gold goes all the way to $2,000.  This is the kind of money options traders make when there's inflation and that's why we're so gosh-darned excited about it!  On the way down, we can also make exceptional money as the metals crash and, in fact, the gains are so spectacular that we can also layer our hedges so we make money on a big move in either direction – this is why GS and company have so much fun jacking up and then destroying the markets over and over and over again – it only hurts the little people, right?  

Let the Glenn Beck crowd run around buying physical gold, the more demand from them, the more money we make.  We can set up similar spreads on silver and copper as well as – OIL!  Nothing is more exciting than oil these days and you can similarly use options to gain tremendous leverage on the price of oil.  In fact, back in December, I put up my "Secret Santa's Inflation Hedges" and our oil hedge was using XLE to make the following trade:  

  • Buy 2 XLE Jan $55/60 bull call spreads for $2.60 ($520)
  • Sell 1 XLE 2013 $50 put for $4 ($400) 

The total outlay on that spread was $120 per set and that trade was supposed to run for the year but XLE is already at $78.98 and the Jan $55/60 bull call spreads are now $4.50 ($900) and the 2013 $50 puts are $2.40 ($240) for net $660 off the $120 entry for a nice 450% gain in just 4 months – now THAT'S how we stay ahead of inflation!  

Rather than messing around on the NYMEX with a 1,000-barrel oil contract that would have set you back $90,000 in December and would be up to $112,500 today (up $22,500 or 25%), just $5,000 worth of the spreads would have returned the same amount while $90,000 would be $405,000 already – more than enough to gas up the new Range Rover!  We're actually betting oil to go the other way now so I hate to put up a bullish trade idea I don't believe in but, if you MUST play oil defensively bullish – then:

USO July $43/47 bull call spread is $1.70 and you can sell the USO Jan $35 puts for $1.30 for net .40 on the $4 spread with 1,000% upside if USO gains 5.6% (oil about $120) and USO hasn't been below $35 since November, when oil was $85.  

What I love about these inflation plays is that they are self-hedging.  If your family is going to spend $5,000 on gas this year ($100/wk) then your risk if oil falls below $90 is you will own 100 shares of USO at $35 for $3,500 but, a fall of 25% in oil prices will save you $1,250 so you are good for almost a 50% drop from there and if USO drops another 50%, then oil is $45 and you save another $1,500 so you pretty much can't lose to the downside (and you keep USO until the next time oil spikes) BUT – IF USO goes HIGHER and gets over $47 (oil about $120), then your $1,200 cash commitment turns into $10,000 and you have FREE GAS or, in the very least – the increase is offset, right?  

These are very basic hedges that anyone can do – including airlines – to lock in prices.  Of course the same layering strategy can be used if oil moves higher but keep in mind, as I said, we're shorting oil at $113 ($112.50 is our cross line in the Futures!) as we don't believe the average consumer, who has no ability to hedge, can afford to carry this expense for very long.  You can spike oil up to any price you want for any BS reasons you want but, eventually, you have to sell it to the masses – the same masses that can't afford to pay their mortgages or grocery bills but, unlike a mortgage – you do need money to buy gas and you can't go 6 months in arrears….

So no, I do not have my heart in either the oil or the gold trade as I think the Dollar is oversold and we're waiting for much better entries on both but we will be happy to go long when we get them – I just feel it's a good time to remind Members that we don't miss anything by waiting patiently for strong signs before committing because we can out-earn the suckers buying physical gold and oil 10 to 1 on a run up so it's up to them to PROVE to us that they have the conviction to take things higher.  

I'm certainly not against using a long or two like the ones above to hedge our short positions but, fundamentally – these commodity prices are a joke of a manipulated market and the Manipulator in Chief speaks to us on Wednesday as The Bernank conducts his first public spin session scheduled right after the Fed meeting at around 2:15.  

The Bernank better have some AMAZING spin this week as Timmy needs to sell $52Bn worth of TBills this week so we can keep the lights on in this country and, as noted in Stock World Weekly this weekend, there's no POMO at all on Wednesday and "just" $24.5Bn worth of free money being handed out to the IBanks by Uncle Ben in the other 4 days, despite letting them go hungry on Friday as well (holiday).  

The Big POMO day is today, with $8Bn being pumped into the market by the Fed around 11:20 and that times in perfectly with the 11:30 3-month and 6-month TBill auctions but Wednesday is weird as we have the Fed Meeting, the 5-year note auction and then Ben's press conference at 2:15.  Needless to say – this is NOT a day we want to be away from our trading set-ups! Also as noted in Stock World Weekly: 

Lee Adler of The Wall Street Examiner wrote last week,  “The market sailed through a week of light Treasury supply with reduced POMO support. A big Treasury paydown this week put extra cash in dealer trading accounts and it did exactly what we expected it to. S&P threw a little glitch into things on Monday by putting the US on a negative watch. They probably just had a big client with a huge buy order outstanding.  A little negative news and Voila! Done!"
 
Next week, Lee thinks, will be a little more interesting.  “POMO will be insufficient to absorb $52 billion in new supply. With that much paper to sell, the government will want to see yields lower. So be on the lookout for a 3 AM stock futures selloff in the pre market probably Tuesday and/or Wednesday. There’s nothing like a little stock market liquidation to get a buying panic going in Treasuries. If that doesn’t happen, then something will need to take a hit around May 2. That’s settlement day for $45 billion in new notes." 

Sounds like we're under the gun, doesn't it?  Well B-B-B-B-Bennie and the Fed know this just as well as Lee Adler does and it's no coincidence that this week (April 27th), The Bernank feels the need to address the masses in some delusional belief that his woeful public speaking style is going to reassure the markets.  

 

Notice in the above video that, when cornered, Ben's definition of the value of the dollar is FOOD AND ENERGY!  He actually says the value of the dollar should be measured in its buying power over the things that people actually use every day.  Unfortunately, Congress is not a court and any lame answer a Fed Chairman gives to a Congressperson once his time expires is considered "sufficient." At the next session of Congress where Bernanke is to appear – I would urge everyone to write to their representative and ask them to ALL give their time to Ron Paul!  Let Ron go at Bernanke for a full 2-hour session and expose him for the fraud he is and take the lid of the Federal Reserve scam that leads to the numbers we see on this chart.  

Keep this in mind when Bernanke comes on television and begins lying to you the way he lies to Congress.  His definition of inflation is whatever gets him out of trouble until his next appearance and then he goes right back to the Fed and begins printing money again, relying on the uneducated public's lack of understanding that the money he prints and hands out to the IBanks, aside from becoming additional debt that the American public has to pay off later – also IMMEDIATELY devalues our currency.  That's YOU SALARY, that's YOUR SAVINGS and, due to the gross understatement of the CPI to REAL inflation, that's also YOUR RETIREMENT that the Fed is washing away in a sea of free money for their friends.  If you can't think of it as a crime against America – at least wake up to the fact that this is a crime that is being committed against you as surely as if Bernanke and Geithner hit you over the head with a baseball bat and stole 10% of your live savings (and 10% of your future earnings as well) since the beginning of this year as the Dollar has dropped from 81.32 to 73.74.

Anyway, that's my public service announcement to the masses as this sickening spectacle begins this week.  If you don't care enough to write to your Congressperson or send this article to your friends to make them aware of how we are being robbed – then I wash my hands of it.  As I noted – we really don't care because we know how to make 450% when gas goes up 27% – just like Bennny and Timmy's pals at GS, JPM et al.  The only difference is I don't get $30Bn worth of POMO handed to me each week to take full advantage of it but we do OK and if you don't care enough to get off the couch and do something about it – we will be the guys buying your couch along with the home that surrounds it at the foreclosure sale…  

It's all a scam, though.  As you can see from the graphic on the right, the actual price of grain is only 2% of the price of a box of cereal.  What happens is if grain goes up 50% from 0.02 to 0.03, then the Food processor says "well, I usually mark it up 690% so now I'll charge 20.8 cents instead of 13.8 cents to keep up with inflation."  Then the wholesaler is told by the food processor that grain costs (one penny increase really) have caused a 50% increase in prices so they mark their 10.9 cent charge up to 16.35 to maintain their "profit margin" etc…  All "reasonable" actions along the supply chain but even that accelerates when you hit the Transportation and they pass in their extra fuel charges as well.  This way you are hit with oil twice – once in the Farmer's cost and again in the Transportation costs.

Before you know it, a box of cereal that cost $2 is suddenly costing $3 or $3.50 for the consumer – all because the price of grain went up a penny!  We're being hit the same way with gasoline as $4 per gallon with 42 gallons per barrel means consumers are paying $168 a barrel for oil.  Last year, a barrel of oil was $67 in May and a gallon of gasoline was $1.90, effectively $79.80 a barrel.  So the mark-up went from $13.80 a barrel last year to $55 a barrel this year – 300% more mark-up for the speculators!  

The funny thing – the joke that has the speculators yucking it up as they spend Ben Bernanke's money to drive up commodity prices to ridiculous levels – is that not only don't American's know when they are being raped but there are many, many political morons who will sit there and defend the speculators and the Banksters and the Fed as if they are somehow, as Lloyd likes to say – doing God's work and, therefore, their actions are beyond reproach.  

This is bullshit and you are fools to put up with it.  I hope that's plain enough… 


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  1. Good Morning,

    Phil, What do you think of UAN (CVR Partners). It has about a 10% yield.
    CVR Partners owns and operates a nitrogen fertilizer business based in Coffeyville, Kansas. According to the company, it’s the only nitrogen fertilizer manufacturing operation in North America that uses a petroleum coke gasification process to produce its fertilizer. The company is moving ahead with a two-year plant expansion that will increase its production of urea ammonium nitrate by 50% per year. The company also produces lower-margin ammonia.


  2. Oil Lines
    R3 – 114.50
    R2 – 113.80
    R2 – 113.20
    PP – 112.50
    S1 – 111.90
    S2 – 111.18
    S3 – 110.60 




  3. Good day, and I hope this finds you full of chocolate eggs and jelly beans b’w UR toes!  I really don’t like black jelly beans.


  4. Phil / Uncle Ben — The publicity stunt and no pomo sounds awefully convenient. Sounds to me like they intend on testing to see if QE3 can be accomplished by words and not actions.


  5. Now that is what we call in science…parabolic!


  6. Speaking of our weekend chat and our need for non-essential items:

    “As it turns out, quite a lot. A non-scientific study of Commerce Department data suggests that in February, U.S. consumers spent an annualized $1.2 trillion on non-essential stuff including pleasure boats, jewelry, booze, gambling and candy. That’s 11.2% of total consumer spending, up from 9.3% a decade earlier and only 4% in 1959, adjusted for inflation. In February, spending on non-essential stuff was up an inflation-adjusted 3.3% from a year earlier, compared to 2.4% for essential stuff such as food, housing and medicine.

    To be sure, different people can have different ideas of what should be considered essential. Still, the estimate is probably low. It doesn’t, for example, account for the added cost of certain luxury items such as superfast cars and big houses.

    Interestingly, people who spend more on luxuries have experienced less inflation. As of February, the weighted average price of non-essential goods and services was up only 0.2% from a year earlier and 82% from January 1959, according to the Commerce Department. By contrast, the cost of all consumer goods was up 1.6% from a year earlier and 520% from January 1959.

    The sheer volume of non-essential spending offers fodder for various conclusions. For one, it could be seen as evidence of the triumph of modern capitalism in raising living standards. We enjoy so much leisure and consume so much extra stuff that even a deep depression wouldn’t – in aggregate — cut into the basics.

    Alternately, it could be read as a sign that U.S. economic growth relies too heavily on stimulating demand for stuff people don’t really need, to the detriment of public goods such as health and education. By that logic, a consumption tax – like the value-added taxes common throughout Europe—could go a long way toward restoring balance.”


  7. A video of me having a converstion with my ex wife about the economy
     
    http://www.xtranormal.com/watch/11855451/drill-and-quit-printing-money?listid=2276247


  8. PHil
    If you could write a short essay on how oil is manipulated high I would be happy to send it to my representative.  He sent me a notice a few weeks ago that he was pushing for investigation into opec. and corporate malfeasence.  Not one word about market speculation.  Of course I used to write him all the time but I stopped when I asked for backing Ron Paul on an audit of the Fed.  His response which I found very condecending was that it was a complicated issue and should be left to the people who know what they are doing.


  9. @Pharmboy

    "The taste for the superfluous holds sway over a people who are still unacquainted with the necessary".
    Marquis Astolphe de Custine



  10. Good Article Pharm


  11. Good one Flip…. 


  12. Oil;/gold/silver all pulling back this AM aggressively


  13. Good morning!

    Sorry but I got off on a very angry rant this morning as I am basically disgusted by what’s going on in the World.  This scam is going to crash and it’s going to crash hard – I wish I could say when but  there are so many cross currents and – worst of all – how do you factor in the ability of a nation to destroy their own currency if they want to?

    It’s contrary to what one would think is rational action – the people running the Fed and Treasury WANT the Dollar to be the weakest currency on earth, heedless of the fact that they are wiping out a lifetime’s worth of savings for our citizens and creating a completely unsupportable class of seniors who will all be moving back in with us shortly as they won’t be able to afford to live on their own and we won’t be able to put them in homes as those are now charging $4,000 a month (but they like to point out that it’s "only" $2,300 a month after your Mom signs over her SS check for direct deposit to them).  

    My Mom’s a long was from a home, thank goodness but I am now all involved with her friends and hearing horror stories that make me want to take up parachuting before I’m 65 as I’d rather splat on the ground than end up like these poor people – at the mercy of the jackals that nip at every dollar they can wrest from the retirees in Florida.  I never realized how much of that state’s economy is based on taking money from old people – it’s amazing!  

    It’s all about holding 1,333 for the S&P this week and then we can look for the Dow to break higher but I’m still dubious as to the staying power for a rally that is based solely on the Dollar’s value being destroyed.  

    Not that I think the Dollar should be strong – the Fed has turned our currency into a joke but that still doesn’t mean we are WORSE than Europe, who have the very looming possibility of a cascading default on their hands and the UK is in the same boat and Japan is completely F’d with a 200% debt to GDP and NOW they have to deficit spend another 20% of GDP on top of the usual debt they run.  

    That then, leaves who?  Australia?  China?  Canada?  Switzerland?  All together, they make up 2% of World’s currency.  In order for them to supplant the Dollar as a reserve currency – what do they have to do?  They have to print money!  If they print money then they end up in the same boat as we’re in (which is why the Yuan went limit down this morning) and a country like China has to double the amount of their float 4 TIMES – JUST to get from 0.5% of the World’s reserves to 8% and that would still be 1/8th the amount of Dollars that are already in circulation. 

    People who tell you that the Dollar will be replaced as a reserve currency simply don’t understand math.  As I said this morning – it’s a SCAM and it’s based on Fear that is used to manipulate the World’s least educated (mathematically) investors into believing all sorts of nonsense about very complex issues as if they are black or white – based on whatever Cramer et al need you to believe that day. 

    I am SICK OF IT!   

    I got together with family this weekend and I realized that my productive conversations were held with my Father and my Uncles – it turns out my brothers are dumb-asses.  One of them is the VP of a multi-Billion dollar global company, another runs an auto dealership and the other is a CPA and has an executive search firm and they have been buying the MSM line on gold, oil – you name it.  That’s what got me so pissed off – Our Members here are people who, in the very least, are aware that there is an alternate reality to the one they are selling but to see my own family fall victim to this crap just makes me very, very angry.  

    Anyway, I hope you all had a nice Easter weekend.  There’s a ton of good stuff at the end of Friday’s post and then we did a Part 2 (still in progress) of Investing for Income and hopefully you all got the Email update of the $25KP but, if not, it’s right under the Portfolio Tab.  

    It’s a watch and wait day – I don’t know what Ben can possibly say to further weaken the dollar but we have to wait until Wednesday to see.  Oil went nicely through our $112.50 shorting target after a brief visit to $113.50 and is now heading to $111.50 and, of course, the trailing stop in the futures is .25.

    Silver hit $49.82 and flopped back to $47 already – blow off top maybe?

    On the whole, I’m glad we were bearish over the weekend!

    At the open: Dow 0% to 12506. S&P -0.02% to 1337. Nasdaq0% to 2820.
    Treasurys: 30-year +0.13%. 10-yr +0.1%. 5-yr +0.1%.
    Commodities: Crude +0.61% to $112.98. Gold +0.65% to $1513.50.
    Currencies: Euro +0.32% vs. dollar. Yen -0.18%. Pound +0.08%.

    10:00 AM On the hour: Dow -0.15%. 10-yr +0.05%. Euro +0.13% vs. dollar. Crude -0.55% to $111.67. Gold +0.18% to $1506.50. 

    10:02 AM Mar. New Home Sales: +11.1% M/M to 300K vs. 280K expected, 270K prior (revised from 250K). Median price +2.9% to $213,800

    Barron’s poll shows that more than half of U.S. money managers expect further stock market gains in 2011, but you’ll have to pick your spots. The crowd is seeking safety in big, defensive stocks. The pros also forecast a continued elevation in oil prices, now above $100/barrel

    China’s banks have been ordered to conduct a new round of stress tests, this time assuming a 50% drop in property prices as a worst case scenario. Now that’s a stress test. 

    The PBOC is considering the creation of separate investment funds to diversify the nation’s $3T foreign exchange holdings. Being studied are funds to invest in energy, precious metals, and another that would be used for intervention in currency markets.

    The trucker’s strike in Shanghai is of far more significance than local disturbances that break out all over China with regularity, writes Tom Mitchell. The source of the protest is inflation, which can’t be quashed by cutting a fee or issuing a decree. Social unrest in China is just getting started.

    Glencore reveals it made bullish bets on grain prices as Russia’s wheat crop deteriorated in 2010. After taking the positions, the companyurged Russia to ban wheat exports, which occurred a few days later, giving a renewed boost to prices. The Goldman of the commodity world? Indeed. 

    Believing high oil prices are the result of "fear and speculation," OPEC is not likely to change production targets at its June meeting. "There is no good reason for prices to be where they are right now … the market is oversupplied and demand is not that strong," says a delegate. 

    Putting a number on the output loss from the earthquake, Toyota (TM) says car production plummeted 62.7% in March to the lowest level since the company began keeping records. The fall means GM is likely to reclaim the title of world’s largest automaker.

    China’s Ministry of Culture will punish Baidu (BIDU) for providing illegal music downloads, a move that could pose near-term risk to the firm’s soaring stock price. The government will punish 14 websites that have provided illegal music downloads, including Baidu, China’s top search engine. 


  14. Phil- do you know of any public companies which manufacture greenhouses? Was looking at GAGA the Chinese ADR but I’m a lot more cautious about Chinese ADRs thx to you and companies like RINO…


  15. Phil,
     
    This comment was definitely worth a good laugh.  "it turns out my brothers are dumb-asses"
     
    Aren’t Easter gatherings wonderful.
     
    It shouldn’t be long before the 8 billion in BOT money takes over today.


  16. UAN/Aug – They are brand new and have no track record of paying a dividend so it’s hard to say.  As they opened at $16 a few weeks ago and are already up 25% at $20 and have no options to hedge with – it’s not something I would touch.  They sound good but lots of things sound good so I’d at least wait for the 5/9 earnings report to see what they are actually doing. 

    Words/Rain – That’s the usual thing they do.  Ben began talking about QE2 last September and they didn’t have to buy a thing until November but the Market popped from 1,050 to 1,225 before the Fed spent a penny and then, once they actually began spending – it was like everyone just found out about it and we suddenly went up from 1,225 to 1,344 in early Feb – where we’re still trying to get back to.  

    VAT/Pharm – I agree with that one 100%.  

    Rep/Willie – Why can’t you guys remind me of these things on the weekend?  I’ll be happy to put a primer together next weekend but I’m booked solid this week.  That guy Danny is making his documentary and wants something too.  

    Wheeeeeee – down we go!  

    Happy to get out of all 40 INTC June $20 calls at $1.80 in $25KP.



  17. Phil UUP, you said earlier that if the $ broke $75 the next resistance line would be $72.  What do you think the catalyst
    is to break the trend downward in the dollar?  Has anyone seen any articals indicating political presure on the Fed to tame headline inflation? 


  18.  Phil – any short play on silver that you like?


  19. Hello Phil;
    U.S. Energy Secretary Steven Chu is on the Diane Rehm show in WAMU DC. tlaking about oil and oil manipulation call in man !!!
    1-800-433-8850
     
    thedianerehmshow.org/shows/2011-04-25/us-energy-secretary-steven-chu


  20. I have noticed, that some days on good sized POMOs there is no wxpected POMO affect . Especially in these newer rounds of POMO. I wonder if today is a helper day for banks on margin calls as suggested elsewhere? We shall see. The three Imnetioned above are retreating and USD is firming on nearly all pairs.


  21. Phil can we use a stop on INTC as it’s over $1.80?


  22. Good Morning
    Phil
    When you get a chance would you please expand on FL economy and the way it is robbing the elderly in that state. If you want to wait until AH that’s fine. I know this is a sore spot but i’m very interested in this. Or can you provide a link on the subject?
    thank you


  23. Phil
     
    With  OPEN p/e now hitting 200, is there an out of the money put to buy on it?


  24. Phil
    I had a similar experience as yours this weekend except with a brother-in-law who was trying to convince me that China’s economy was the cats meow. He kept asking me if I had read their 5-year plan (I have-so what!). In return, I asked him if he was aware of their real estate issues and what they were trying to achieve by building so many buildings and towns with no residents. I would like to be better informed on the subject. Would you please (after close) give me your general thoughts and opinions on China or at least point me to some articles I could read on my own. Thank you.


  25. Greenhouses/Jrom – Sorry, I don’t.   

    Some more news from the weekend:  

    If America’s budget crisis really is that serious, "shouldn’t we be raising taxes, not cutting them?" Paul Krugman asks. "How we go about stemming the tide of red ink is… a choice – and by making tax increases part of the solution, we can avoid savaging the poor and undermining the security of the middle class." 

    The S&P warning on U.S. debt was silent on the real danger to the economy and the federal budget: Growth could be derailed by letting too-big-to-fail banks become irresponsible again or by allowing continually rising healthcare costs, Simon Johnson writes. He fears S&P’s "broad-brush" warning could whip up debt hysteria and push policies that quickly undermine growth. 

    After his pompous declaration that there’s "no risk" the U.S. will lose its AAA credit rating and other statements, Geithner hasdowngraded his own credibility to "junk," Jonathan Weil writes. "The problem for leaders who make indefensible claims like this one is that, after a while, nobody knows whether to believe anything they say."

    Over the past month, the percentage of Americans pessimistic about the direction of the economy has jumped to 39% from 26%.

    Only 39%?:   Lost decade? We’ve already had it, Calculated Risk says. The U.S. now has 130.738M payroll jobs vs. 130.781M in January 2000 – more than 11 years with no increase. Median household income in constant dollars was $49,777 in 2009 vs. $51,100 in 1998. 

    There’s that word again … tightening, likely to move to the forefront of the debate at the FOMC meeting this week, writes Jon Hilsenrath. With rate hikes problematic to execute, look for the Fed to stop reinvesting proceeds from the payoffs of securities it holds as a first step. 

    Pimco’s Bill Gross has been selling Treasurys, while BlackRock’s (BLK) Rick Rieder has been buying. Their disagreement is symptomatic of the larger debate over how Treasurys will fare once the Fed withdraws from the bond market in June. Gross argues that the absence of such a large buyer means Treasury prices will fall, pushing rates higher; Rieder sees the Fed’s exit as far more benign. 

    Worse and worse:  Portugal again revises up its 2010 budget deficit, this time to 9.1% from a previous estimate of 8.6%. This is way above the eurozone limit of 3% and even the government’s target of 7.3%. The new figure is another setback as Portugal negotiates it bailout

    So bad they won’t let you talk about it:  Already under investigation for allegedly spreading rumors of imminent Greek restructuring, Citi might just get itself banned from Athens after analysts point out no country with Greece’s high debt/GDP ratio has ever avoided default. Citi says a 76% haircut would be required to bring the ratio to a "credible" 60%.

    "Virtually assured" is how a TD Economics report (pdf) describes the odds of a Greek restructuring. The government has been unable to pare spending and revenues are coming in far slower than needed. As for the timing, don’t expect any action before June. Earlier.

    Look at the relevant trade surpluses and it’s clear the biggest beneficiary of the euro hasn’t been the weaker EU members, but rather Germany, which has gained in competitiveness not only against other industrial nations but also against every other member of the eurozone.

    A poor performance by the DPJ party in local elections this weekend is likely to increase pressure on Japanese PM Kan to step down. The response to the earthquake may be the trigger, but Kan’s departure will be the result of his attempt and failure to shake up the entrenched powers in Japan.

    In an unusually frank admission, BoJ Gov. Masaaki Shirakawa acknowledges "we are now expecting production and GDP will decline in the first quarter and the second quarter." It’s Shirakawa’s first public admission that the post-quake economy may shrink in H1 as a result of "severe supply shock." 

    The IMF says predictions of China’s economy overtaking the U.S. as more than a decade away are mistaken. By adjusting for a more realistic value of the yuan, the shift will come in 2016. Whoever gets elected President in 2012 "will be the last to preside over the world’s largest economy," writes Brett Arends. 

    China moves to nip social unrest in the bud by cutting or removing port fees for truck drivers in response to their strike over the levies and increased fuel costs, Xinhua reports. While the economic effects of the protests aren’t ‘serious’, says one economist, China’s efforts to control inflation “don’t provide very much immediate relief to those people like truck drivers."

    Silver funds like SLVPSLVSIVR and DBS are all up 50% and more year-to-date. Money’s still pouring in to chase that performance – SLV now holds about one-third of the silver bullion on earth, and Sprott’s fund is getting a 22% premium to NAV – but investors may want to double-check the appealing tax treatment and redemption options, so they don’t get burned by the hot metal.

    Inflation crushes margin, margin cuts consumer spending, consumer spending covers inflation — Now play — Margin, Inflation, Spending – Shoot!:  Rising input costs more than offset Kimberly-Clark’s (KMB -3.4%) success at moving Kleenex and Huggies in Q1, and its stock slide leads the S&P 500. “[T]he rapid run-up in commodity costs has influenced our near-term profitability, so… a number of our businesses will be raising selling prices, including most of our North American consumer products businesses,” CEO Thomas Falk says.

    Margin, Inflation, Spending – Shoot!Does the BLS do algebra? That the CPI for apparel prices fell in March is sure to draw a chuckle from the folks who sell it. Sometimes just jacking prices, but often using a stealthier approach, retailers are passing on cost increases to customers, with the hikes set to grow larger in coming months. 

    The "distressing gap." The gap is due mostly to the flood of distressed sales, which have kept existing home sales elevated, and depressed new home sales – since builders can’t compete with the low prices of foreclosed properties.

    Cramer’s jackals turn on AMZN:  Despite Amazon’s (AMZN -0.3%) outstanding fundamentals, TheStreet.com’s Jake Lynch finds the stock "overvalued and overloved," citing signs that the company’s growth trajectory is tapering. Amazon’s profit margins are "paltry," with an operating spread that declined from 5.2% to 3.9% in Q4. 

    Nintendo’s (NTDOY.PKannual earnings fell 66% to $947M for the fiscal year that ended March 31. Forecast sales for the fiscal year through March 2012 are expected to rise 8.4% to $13.4B and earnings are expected to increase to $1.34B. The company also says it will release an upgraded model of the Wii in 2012. 

    288-page Coast Guard investigation reveals "numerous systems deficiencies, and acts and omissions by Transocean" (RIG) that contributed to the massive blowout and spill at BP‘s Deepwater Horizon rig in the Gulf of Mexico. The report cites a long record of numerous safety code violations, maintenance deficiencies and safety incidents at Transocean. 


  26. Phil, thank you for your reply on STI last Thursday :) .  Oppenheimer seems to like them too.   I failed to remind you over the weekend due to family functions, but please review and share your thoughts on the overall portfolio allocation for someone in a similar situation to mine as per the 2nd part of this
    comment from Wed last week.
        Thank you.


  27.  So Cramer and his jackals hate AMZN which even though overvalued dominates shopping on the entire internet but loves OPEN which is more than double the p/e with a pittance in profits and a one trick pony.  Now I know how he got his show, he finds the value in stocks.


  28. Hi Everyone…  First day as a member..   thanks for all the info..  A LOT to digest..  
    Are they any specific stocks and ETF’s that are always on the radar and any in play right now?


  29. PHIL:  Good morning
    Looking at my 25kp .. I noticed that the only short position I have it’s  the Fas 1/2 cover.  Are you waiting for the market to move in any particular direction?.  I ‘m tempted to sell the GMCR May 62.5 Puts at $2.55 but not sure. thank you


  30. Hello…..stick?  


  31. Phil--I have the following JNJ trade--
    short 5 may 57.50s @ 2.40(now 6.60)—-long 5 July 60s@ 1.25(now 4.10)--where to roll the may 57.50s?
    Tx


  32. Manimal,
     
    It’s right about the time that they like to pull the plug on the dollar.  Sitting up against S1 on IWM so good as time as any to give it a pop.


  33. Catalyst/Lori – I think the catalyst is $4 a gallon gas across the country – that’s a number that freaks people out.  Also, the global situation is getting worse and worse and that sets us up for a flight to Dollar safety as a lot of EU nations and banks roll over debt in May and the US still needs $140Bn a month and Japan is printing money and our local Governments also need to float bonds by June to cover their shortfalls so a hell of a lot of money looking for buyers at the same time means either rates go up (totally unacceptable to the Fed) or the Dollar starts looking like it’s bouncing, which offsets the crappy rates we’re paying on our paper.  

    Silver/Yshen – I don’t like chasing them down at the $46 line.  Too bad you didn’t ask 10% ago this morning.  Let’s see if they retest $48 and fail that but it was pointed out that AGQ is at irrationally insane levels and you can sell Jan $300 calls for $107, which I think is a bit much with the ETF at $336 or you can play it relatively safer and go for the June $345/335 bear put spread at $5.50, which is good for a $4.50 gain on a slight pullback.  

    Chu/Micro – Thanks – a little too crazy at the moment but I’ll listen.   Oh wait, no I won’t – her voice is painful!  That picture of her must be from WWII as she sounds like she’s well over 100 now!  

    POMO/Goober – I think the actual cash is delivered the next day and you are probably better off looking at the trailing 3-day average as an indicator.  

    INTC/$25KP, Bruce – I’d love to say yes, but I’m overall expecting a pullback and yes, INTC may be immune due to Nas rebalancing but, then again – that may be where this whole spike came from and it’s $7,000 cash we can put to use elsewhere against what – .20 more gain before we get really worried?  Not worth it.   We get our best exit pricing selling into the excitement of a move up, the extra nickel is a gift, I was simply making a call to sell into the excitement.  

    Florida/Z4 – I’m just going by what I see.  My mother has gotten dozens of offers and hundreds of phone calls since my Dad died from all manner of "financial consultants" Realtors, mortgage people, insurance people, assisted living places, home care providers, etc, etc…  When I was down there, this guy came over to have my mother sign up for gap insurance to fill in the first 20 days of home health care that her current coverage doesn’t provide but the gap insurance was almost as much as the regular insurance and this jackass is trying to bully my Mom into signing and got indignant with me when I told him it made no sense to spend $200 a month every year to make sure she didn’t pay $200 a day for 20 days IF she needed home health but was not in the hospital (where she would be covered).  Just lots of BS like that and now that I’ve "saved" my Mom – all her friends want me to look over their stuff.  They pay thousands of dollars to all these people who claim to be their "financial advisers" and the only advice they ever have is to buy their products and they could not give a rats ass about the people’s overall situation – it’s disgusting and the most disgusting thing is that if I try to help them – I can be fined as an unlicensed adviser.  A really sick system that is perpetrated by the politicians and lawyers and insurance people to do nothing but strip these people of every last penny they have and the sad thing is that the women outlive the men by many years and a lot of the women never handled the money and these sleezebags prey on them and use high-pressure tactics to lock them into agreements that make no sense at all with huge penalties for early exits.  Consumer protection is a total joke! 

    OPEN/Strether – I thought you said $200 and almost had a heart attack!  The put pricing is ridiculous, you can buy 3 Jan $135 calls for $12 ($3,600) and sell 4 May $115s for $8 ($3,200) and just hope they don’t totally collapse before you make a 2nd sale.  On the put side, you can buy 4 Oct $110 puts for $13.50 ($5,400) and sell 3 May $110 puts for $5.50 ($1,650) and just plan on selling 2 or 3 puts against each month until you get a proper pullback. 

    China/DC – Sure, if you remind me. 

    Allocations/Leon – If you run down the Portfolio Tab back a while, we had 3 articles on "Smart Portfolio Management" that went into allocations on various sized portfolios.  Please read those and remind me after hours on the rest of the question. 

    Cramer/Rustle – It’s whoever is greasing the palms this week, that’s all.  

    Welcome Topher!  Best think to do is BE PATIENT and do what the New Members guide says, which is read the last month’s worth of posts and comments and then you will be up to speed on who is who and what we are following.  Also, try the Portfolio tab above and read back at least the last few months worth of portfolios – those are the stocks and ETFs we are paying extra attention to at any given time.  

    $25KP/Cnar – Yes, I’m waiting to see which way things go but we’re very bearish on oil and the Dow and a little wishy-washy on FAS at the moment.  I want to wait until Weds to see if Ben can keep this ball rolling uphill – if not, I wouldn’t want to cover GMCR or any of the other short plays. 

    JNJ/Savi – We don’t like them anymore and you are stuck in the bearish spread so I would do nothing at the moment and see what happens Wednesday.  


  34. exec, same thinking here. I’m watching for a cross of $84.01 and some volume. Its been nil since 11.


  35. Topher – please read 1 mo worth of posts, as well as the Ebooks at the top.  Paper trade for a month or three if you can be patient to get a feel of how things work.   ALso, scale into positions….and by scaling I mean 1/4 or 1/5 entries to get a flavor of how things work.  Also, don’t enter every position posted! 


  36. Phil-Tx


  37. Phil what are your thoughts on ARUN do you see a B/W opportunity? Thanks


  38. Right on that 1,333 line but, if it holds as a floor – then we can assume it’s gathering strength as a support for an up move. 

    11:00 AM On the hour: Dow -0.4%. 10-yr +0.21%. Euro -0.05% vs. dollar. Crude -0.66% to $111.55. Gold +0.01% to $1503.90.

    When I say "Stag," you shout "Flation": The Dallas Fed Manufacturing Index sinks from 24 to 8 in April, still indicating growth, but at a slower pace. The price indices remained at elevated levels with finished goods at their highest reading in 3 years. Also of note are supply chain issues creeping in because of Japan.

     "We no longer have free market capitalism and we no longer have a democracy," David Stockman says, replaced by a system of "crony capitalism" that benefits and even rigs the system in favor of banks. "The Fed is the great enabler" through its free money policies, which "generate results the market wouldn’t otherwise provide for," he says. 

    The oil shock has been largely dismissed as a concern by most economists, but Gavyn Davies thinks it is becoming a significant drag on growth in the U.S. and elsewhere. Steady 3% growth is looking less certain that it did a few weeks ago, and Davies thinks it will be "interesting" to see if the Fed lowers growth expectations when Bernanke talks to the press on Wednesday.

    Americans of a certain age may remember their parents returning from trips to Mexico with bags full of goods and tales of the low prices to be had. Canadians of 2011 feel the same way about the U.S., where the falling greenback has put a 20% off sale on items purchased in the States, according to BMO.

    It was there, and then it wasn’t. After being up nearly 8% and hitting an all-time record earlier, Silver performs a stunning reversal, now slightly down on the session. Another big mover in metals, copper is offnearly 3%. SLV -1.0%JJC -2.7%

    Travelzoo (TZOO +8%) extends Thursday’s earnings-juiced 27% surge, enjoying an extra boost from Benchmark’s upgrade to Buy from Hold and lifting of its price target to $123 from $66. “As markets are launched and offerings ramp, monthly sales should accelerate"; TZOO intends to add at least 15 new markets a quarter, CEO Chris Loughlin says. 


  39. Phil
    Thanks.
    Strether


  40. Phil – Thanx, seems as though some days it not consistant as previously. The settlement is delayed but I imagine th PDs are always in constant state of flux guessing to some degree just like everybody else, just not as much since they have a bird in hand? My comment was more of an observation than a call. Many of my comments are because I simply don’t have the depth as you and many here to draw on. I have a good handle on macro but putting it to good use is a very different matter, thus my presence! 


  41. OK…  Thank You guys…   will do..


  42. It used to be that you could count on Monday to be a bullish day. No longer, as seven out of the last nine, and all of the last four Mondays have closed down on SPX. There’s a good chance that today will be the same as SPX and NDX look overextended short term. Here the picture on the SPX 15min where some retracement looks likely, though it might be limited by the support trendline:


  43. Pharm,
     
    How did Tuesday after the down Monday’s play out?


  44. New Homes – LOL…..from the Census Dept. – Sales of new single-family houses in March 2011 were at a seasonally adjusted annual rate of 300,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 11.1 percent (±21.7%)* above the revised February rate of 270,000, but is 21.9 percent (±10.3%) below the March 2010 estimate of 384,000.


  45. Phil/Pharm
    What do you think of TEVA at these levels?
    thanks


  46. Exec – mixed bag if one goes back 7-8 Mondays.


  47. Thanks Phil, understood.   I fight my greed instincts every day but I didn’t even recognize them until you pounded it into my head.  I’m a better trader already thanks to you.  


  48. Good morning,

    Even though the last 4, and 7 of the last 9 Mondays were down days…………

                      ( 7 of 9 )

    I think we’ve seen the low of the day !!

    As evidenced here:


  49. TEVA – I think they have some pressures with MNTA having generic Copaxone, as well as NVS, BIIB and others having competition in the area.  Copax was a big driver of their growth, but I still think they are the best in the business.  Maybe a small, 1/4 entry of the Jan12 42.5/45 BCS, selling the 42.5 Ps for a net credit of $1.5 or better.


  50. Hi JR,
     
    Where did you find the chart that showed the % of fills on Gap days?


  51.  Phil
    why not to open non-profit financial advice company just for old people? I will be happy to be part of it to operate in my area


  52. Pharm/Housing
     
    I have a friend that just bought a place in Naples Florida.  He’s been bird dogging homes in one particular development for over a year.  When he started the proceedings to close the deal a couple of months ago, there were 15 homes in his section for sale.  When he closed last week, all 15 were sold.
     
    Perhaps things are turning in housing.  After all, the prices are dirt cheap as is our dollar.  Foreigners are buying up the inventory in Florida.


  53. ARUN/Willsons – They don’t actually make any money, do they?  Every year they have more sales but still lose money.  With a market cap of $3.2Bn, they need to make at least $200M, which is a lot more than nothing and would be $2 per share but they only project to make .58 this year ($50M) and $68 next year ($60M), which is a p/e over 50 IF all goes well.  Add that to the fact that they are up 250% from this time last year and it’s a "no thank you" from me.  

    POMO/Goob – That’s why we’re all here, we can all learn from each other as each of us brings something special to the table with our years of experience in various fields. 

    Homes/Pharm – Yes, they are always finding some positive to compare it to but those charts take out the noise.  

    TEVA/Harip – I was liking them last week.  Good artificial on them with the Jan $35/45 bull call spread at $6.80, selling $45 puts for $4 is net $2.80 on the $10 spread that’s 100% in the money so they have to take your 257% gain away from you.  

    Or what Pharm said! 

    Greed/Bruce – It’s tough.  We’re all greedy sometimes and the best you can really do is be aware of it.  Greed is indeed, sometimes good but other times it gets you into trouble – we have to learn to tun that to our advantage.  As RevTodd pointed out this weekend, Niebuhr wrote:  

    God grant me the serenity 

    to accept the things I cannot change; 

    courage to change the things I can;

    and wisdom to know the difference.

    Good morning JRW!  I’m hoping for a re-test of the morning lows and THEN a stick.  

    Non-profit/Tcha – They certainly need one but it’s a regulatory nightmare.  

    Florida/Exec – I certainly hope so but the prices aren’t coming back – everything is a short sale.  


  54. RE – we still have a lot of resets coming and inventory is huge but largely hidden from view by TPTB.


  55. 12:00 PM On the hour: Dow -0.37%. 10-yr +0.25%. Euro +0.04% vs. dollar. Crude -0.67% to $111.54. Gold +0.47% to $1510.90.

    Facing multiple blows from the earthquake, tsunami and nuclear crisis, Japan sees its growth downgraded by Moody’s to zero to 1% with a negative bias, from a previous 1.5%. The firm still sees Japan growing 1.5%-2.5% in 2012 in a recovery from a "recession" caused by crisis aftershocks. (earlier

    Corporate credit-default swaps came off monthlong lows with companies like RadioShack (RSH) and Kimberly-Clark (KMB) cutting profit forecasts – suggesting a slight slip in investor confidence. "Generally positive earnings, which we expected to be a catalyst for tightening, have so far not fulfilled its potential," says one strategist. 

    "Immensely worried," Brazilian President Dilma Rousseff says "under no hypothesis will the government demobilize efforts to controlinflation." This follows the central bank’s latest rate hike of just 25 basis points, from 50 ticks in previous actions; the "wrong move" says a local economist. 

    Big Oil may be set to repeat their banner 2008, as rocketing crude prices look to boost earnings for majors like Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP). A big Brent-WTI spread (since European pricing is the norm in high-output Africa, the Middle East and Asia) and improved downstream profits could help lift earnings 33-50%.

    Amazon.com (AMZN -0.2%) says it’s fixed the "majority" of the problems with its Web cloud service that took down sites like Foursquare, Reddit and Quora last week, and lingered into the weekend. Details are still scarce but a "detailed post mortem" is promised.

    Housing not actually cheap

    Three lunchtime reads:
    1) The myth about the myth of Japan’s two lost decades
    2) Buy the dip/avoid falling knives – which is right?
    3) Who’s disappointed in QE2? 


  56. Exec – yeah, last time foreign investment came into America, it did not end well.  In my recollection, it was Japan buying up most of the left (sorry, west) coast.


  57. Phil/Florida,
     
    Short Sale….true….my friends home was at 880K…..bought for 500K.


  58. Here’s the plan for today………………….


  59.  JRW III
    No levels today? getting to rely on your S3-R3
    Thank you


  60.  MDVN- Pharm- at the 5


  61. Hey tchayipov, are you still planning on doing your writeup on wheat/corn futures?


  62. JNJ & GILD/jo – not sure if you are around, but GILD is getting slashed again.  JNJ is now good for a short IMHO.


  63. Phil – agreed


  64. Phil / MELI — Thoughts on Mercado Libre? They appear to be breaking out above their 2008 highs and options have hefty premiums.


  65. pstas – Thx.  Watching, but it is not turning.  Also, spreads are a pain in the tush.


  66.  PHARM           Talk to me about RGEN.   Good, bad or indifferent?


  67. Speaking of oil/gas and the average consumer – on my way from Jimmy John’s just now I noticed a gas station with only 8 pumps had so many people waiting to get fuel that people were literally stopped in the main street waiting to turn into the gas station. Meanwhile the other three pumps on the same street (within a mile and a half of this pump) who were charging 10 cents more per gallon had empty pumps.  (Maybe 12-16 pumps.)
    Point being: people are willing to wait 10-15 minutes (best case scenario, but probably longer) to save $2.50 because $3.94/gal is too much already.


  68.  KWAN
    I have positions in /CL, /ZW , /ZC and RUT, so far they making money (10-25% per month), just don’t publish them because still testing and wouldn’t like that others loose money just to copy them
    if you want I can publish them but my advice to start in papermoney account or very small in real account


  69. jasu1 / Levels

    IWM    84.96,  84.54,  84.18,  83.80,  83.55,  83.27   (and  $7 Bil of POMO) !!

    And here is where we are now !!


  70. JRW III
    Thanks. I used lines from Thursday. Seems OK so far.


  71. CSCO moving up.
     
    The Dow is the laggard on Phil’s lines, and CSCO is a part of the reason why. I wonder if they’re finally going to inflate CSCO to help boost the Dow.
     
    Also, CSCO reports earnings in 2 weeks, and they tend to move up leading into earnings (before crashing and burning right after earnings :) )


  72. Phil:  I never did get the roll of the May 125 puts (25K); that do you suggest now, thanks in advance, gotta run i’ll check back later and execute tomorrow.


  73. Lots of earnings today, but obviously the big kahuna is NFLX. Any thoughts Phil! The weeklies are predicting a 10% move either way….


  74. DCTH/Pharm   Whats the news here?


  75. MELI/Rain – Up 50% in a month is a pretty good reason to have hefty premiums.  I don’t know enough about them to know if it’s all hype of a great find but I would say be very careful finding out. You can do a very conservative spread like Jan $80/90 for $5.40 and sell 1/2 the $80 puts for $9 for net .90 per $10 spread and that’s about as aggressive as I’d want to be on them.  

    Gas lines/Kwan – That’s odd for .10 when they probably burn $1 worth of gas waiting…

    Nice triangle squeezey thing forming, JRW!  Looks like something will hit the fan into 2pm.  

    CSCO/Jvest – Don’t forget that, in theory, they should be benefitting from Nas rebalancing with INTC, which is at our $22 target now.  CSCO has miles to go to get back so I like the Aug $17 calls for $1.07.  I also still like owning them for $17.12 and selling the 2013 $17.50 puts and calls for $5.20 for net $11.92/14.71, which makes that .24 dividend a reasonable 2% (and I bet the increase it at some point).  This is a good one to add to the Income Portfolio with 1,000 shares and 10 short 2013 $17.50 puts and calls.  

    DIA/Humvee – Sure, we’re still way high so I’d stick with it and roll out to the July $124 puts, now $3.30.  

    NFLX/StJ – You know how I feel about them.  It would be great if they pop and could be sold short tomorrow but you can sell 5 May $250 calls for $16 ($8,000) and buy 4 Sept $275s for $20 ($8,000) and play for the premium crush on the May calls.  


  76. pharm, yup – gild taking it on the chin


  77.  Phil,
    What do you think about AKAM Jan 30/40 BCS at $6.10 in an IRA (not selling the puts)? 100% ITM now….
    Looks like 64% profit if holds 40…..am I thinking right?


  78. All according to plan !!

    Resistance at SPX 1340, Russell 850ish; Target today 846; support 840 !!


  79. Good call JRW, markets just up and up from the lows.  Dollar at 74.20, oil back to $112.25 (only reload futures puts on the way back under $112.50 but dead now because of NYMEX close at 2:35). 

    TBT is always a fun trade at $36.50.  Unless Uncle Ben has QE3 up his sleeve on Wednesday, it’s going to be hard to keep rates down.  The June $36 puts can be sold for $1.16 for a net $114.84 entry.  Also on TBT, I like the Sept $34/40 bull call spread at $2.60, selling the $36 puts for $2.33 for net .27 on the $6 spread that’s $2.56 in the money (848%) to start.  That’s another nice inflation hedge!  

    AKAM/EtD – Yes, I like that one, good way to play as they are down but not out.  


  80. This is what will happen IF we don’t break through resistance (5):


  81. Phil your recommendation
    This is a good one to add to the Income Portfolio with 1,000 shares and 10 short 2013 $17.50 puts and calls.  
    The stock pays div of 1.4% as in income stock are you banking on capital gain ??? thx


  82. RGEN – indifferent.  If they like the pancreatic cancer imaging, well, I think there is more work to do.

    DCTH – who the hell knows.  they are one crazy stock, and I just keep playing them b’c one day, one fine day, they will pay off.


  83.  Yodi, 
    Phil is calculating the dividend on the net cost of the stock (after taking out the premium from the sold calls and puts)…


  84. CSCO/Yodi – I’m banking on it finishing at $17.50 and paying a $5,580 profit on $11,920 invested (46.8% in 19 months), the dividend is a bonus.  

    1:00 PM On the hour: Dow -0.28%. 10-yr +0.27%. Euro +0.02% vs. dollar. Crude -0.6% to $111.62. Gold +0.36% to $1509.20.

    2:00 PM On the hour: Dow -0.21%. 10-yr +0.26%. Euro +0.11% vs. dollar. Crude -0.06% to $112.22. Gold +0.44% to $1510.40.

    It says it all how bad the housing market is that today’s slightly better than horrible new-homes number is taken as a rebound sign, Stephen Gandel says. The increase is off last month’s lowest-ever numbers – and sales are still down 22% Y/Y.

    Treasurys are up on the last day before the Fed begins a key gathering; the central bank bought $7.24B in bonds today (of $16.947B offered by dealers), but for how much longer? The 10-year yield -0.03 to 3.37%; five-year -0.04 to 2.07%; two-year -0.02 to 0.64%.

    It’ll take not one, but two rounds of austerity for the U.S. to fight off an S&P downgrade, says Citigroup’s Managing Director Steven Wieting – and that’s all because of ever-climbing healthcare costs.

    With even AAA government debt in doubt, one instrument is coming out of the crisis in good shape: covered bonds, which give investors a claim on the issuing bank as well as underlying assets – and which hit record global issuance in Q1 of $173B (after a record 2010) as further-flung countries like Australia and South Africa work on laws to establish them. 

    State policy chiefs may be getting their way as Congress considers a multistate sales tax cartel to collect money from Internet vendors – an interesting approach to the constitutional hurdles blocking a national sales tax. It’s another signpost in the debate pitting "pure play" online sellers like AMZN and OSTK against brick-and-mortar firms with online operations.

    Margin, Inflation, Spending – Shoot!"The reality right now is that food and fuel are quite inflationary," says Pepsi (PEP) CFO Hugh Johnston, critical of the Fed’s reliance on "core" inflation. Sadly, says Johnston, it’s those who need help the most who face the biggest challenge from higher prices. 

    Margin, Inflation, Spending – Shoot!Maintaining its estimate of food inflation in the 3-4% range this year, the USDA upgrades its forecast for meat, poultry, and fish price hikes. It’s unclear which price estimates the USDA lowered to keep the overall number unchanged. 

    The world’s biggest P-E firm can’t find enough good LBOs, because cheap debt is driving up their prices, says Blackstone’s (BX) Stephen Schwarzman. The company and its peers are moving into new areas (including real estate) as deals get bid up due to easy financing.


  85. Speaking of MNTA – they are going to fill that gap up……Let’s see if they can take out 20.


  86. JR,
     
    What was it you said the other day about "What can’t go up…..must go….???


  87. They are having trouble getting the Dollar under $74.20 and that’s making the bulls a little nervous.  

    EDZ is still a good disaster hedge with the June $14/17 bull call spread at $1.40 with the ETF at $16.39 so well in the money and you can offset it with the sale of  CHK June $31 puts at .92 for net .48 on the $3 spread that’s starting out 498% in the money.  


  88. Phil,
    Any thoughts on MIPS into earnings?


  89. Phil on the csco play in the income portfolio-  Why would we sell 17.5 calls when CSCO was 24 6 months ago?
    Do we want it ti get called away?


  90. Phil/Dollar,
     
    74.20???…….I’m showing 74.00 at the moment.  What am I missing?


  91. exec – you are looking at $DXY.  Phil is looking at /DX.  This is all in TOS FWIW.


  92. CERS – well, looky there!  Someone decided to buy.  NOW FILL THAT GAP.


  93. Phil/25kp:
    Since we are really not expecting a QE3, would that not imply that making big bets on FAS is a bad idea? Do you you think we should atleast reduce our exposure on FAS and take some of the capital out (by taking some loss)?  We can perhaps use it to make some bets on other sectors/direction?


  94. Mashed potatoes is DCTH.  That stock is just crazy.  Big volume the last 6 min (3 min windows).  Someone wants in….


  95. MIPS/Make – It depends who they are making processors for.   Nintendo is doing terrible and so are other game makers as more and more people play App games for 1/10th the price.  I don’t know how DVD sales are but they have/had a diverse enough base that I imagine they will adapt.  They already seem to have been pessimistically hit and you can take a bullish flyer on earnings with 5 July $11 calls at .90 ($450), selling 4 May $11s for .55 ($220) for a $230 spread with a slight delta advantage (and a lot of time advantage).  

    CSCO/Lori – It’s a VERY conservative portfolio.  As a rule of thumb, if we might make more than 20% a year – it’s probably too risky!  

    Dollar/Exec – That the difference between /DX on TOS futures vs DXY.  I have found DX to be a more reliable indicator with DXY giving many false breakdown signals.  

    Dollar effect/Rain – Nice, thanks:

    CNBC’s mantra today is that gold is topping.  


  96. Sell any break below IWM 84.12 !!


  97. lori / CSCO — Getting called away isn’t really the intention, the intention is to maximize the chance of success and CSCO moving up 3% is more likely than moving up 14% not to mention that by taking the lower strike you lower your breakeven (more downside protection). Selling the $25′s for 0.53 makes your break-even 16.60 (-3% downside protection) whereas selling the $17.50′s for 2.38 reduces your breakeven to 14.72 (-14% downside protection). You make max profit on the $17.50′s with a 3% increase on CSCO (35% gain) whereas you need a 14% increase to gain max profit on the $25′s (50% gain). Time also works on your side with the $17.50′s since you are selling nearly 5x the premium (better for rolling if we stay flat). I’m probably not very clear here but it should give you something to think about…


  98. 3:00 PM On the hour: Dow -0.2%. 10-yr +0.27%. Euro +0.1% vs. dollar. Crude -0.11% to $112.17. Gold +0.47% to $1510.80.

    Equities continue to drift listlessly in light trading, and here’s why, according to Brian Battle of Performance Trust Capital: ""The [only] thing that matters this week is what the Fed is going to do." If the Fed ends QE, "we’ll find out if the economy can stand on its own two feet." But the market is divided on whether it can, so no one wants to commit one way or another.

    It’s all the rage this week to talk about a tighter Fed, but fed funds futures rising in lockstep with crude are pushing back expectationsof when the rate hikes will come. A 0.25% rate is fully priced in for December, but January contracts imply just a 6% chance (vs. a recent 48%) of a raise to 0.5% after the December policy meeting.

    Deutsche Bank AG says the U.S.’s finances are in almost as bad a state as those of Greece, Ireland and Portugal. An economists’ report from the bank gauging the sovereign risk of 14 advanced economies ranked the U.S. directly behind the three European nations.

    Exchange-traded products are still booming, with tracking-error differences vanishing and global assets up 6.9%, led by the U.S. run over $1T - and those funds are flowing out of emerging markets

    China PBOC Plans Forex-Reserve Investment Funds – ReportChina’s central bank is planning to set up investment funds targeting sectors such as energy and precious metals that will make use of the country’s massive foreign-exchange reserves, and is also studying the possibility of creating a foreign-exchange stabilization fund, Caixin Media reported on its website Monday, citing unnamed sources. "Relevant authorities" are studying a suggestion by the People’s Bank of China that the country’s forex regulator use some of the forex assets from the PBOC’s balance sheet to set up a fund to intervene in the forex market, the report said, citing a source close to the PBOC.

    China’s mutual funds reduced their combined holdings of stock at the end of the first quarter by 2.8% from the end of 2010, citing TX Investment Consulting Co.

    Some Chinese brokerages are reducing the number of stocks they offer clients for short selling after shorting of Henan Shuanghui Investment & Development Co. led to losses for some brokerages, citing sources at brokerages.

    China Property Tax ‘Desperately Needed’ to Fix Wealth Gap, Researcher SaysA property tax in China is “desperately needed” to “reverse” the country’s imbalances in wealth distribution, Zhang Monan, a researcher with the State Information Center, wrote in a commentary published in today’s China Daily newspaper.

    China’s consumer price index may rise between 4.9% and 5.1% in the second quarter of the year, citing Xu Lianzhong, an official with the National Development and Reform Commission’s Analysis and Prediction Office.

    Chinese President Hu Jintao said the country’s growth still faces many "risks and challenges", according to a transcript of his speech. The nation remains the world’s largest developing country, Hu said.

    China should slow the growth of its foreign-exchange reserves, otherwise efforts to curb inflation and home prices will be "greatly affected," Guan Tao, head of the State Administration of Foreign Exchange’s balance of payments department, wrote.

    Camouflaging Price Creep. The Easter special at many retailers this year involves higher price tags. As retailers have been warning, their costs are rising as cotton and other materials get more expensive, laborers in China demand higher wages and fuel prices go upBy this fall, many have said, they must charge customers more. Because retailers pay for items about six months in advance, spring merchandise on the shelves for a few months was ordered and paid for in late summer, before costs soared. And when costs first started creeping up, clothing makers used an array of tactics to keep prices flat, whether by moving production to lower-cost countries like Bangladesh, using cheaper fabrics or ordering early to lock in prices. By this time, though, retailers are running out of ways to avoid passing on the higher expenses. An uptick has quietly begun.

    Hawaii Average Premium Gas Hits $4.708, As Nationwide Pump Prices Jump By 30 Cents In A Month.

    S&P lowers its outlooks on six Japanese auto companies to negative, including Toyota (TM +2%), Honda (HMC +1.2%), and Nissan (NSANY.PK +1.7%). The downgrades are due to output reductions following the March earthquake, with S&P expecting the cuts to hurt the companies’ financial performance and erode their market shares.

    Toyota Says Global Output Will Return to Normal by November or DecemberToyota Motor Corp. (7203) expects production to return to normal by December at the latest, as the world’s biggest carmaker struggles with supply-chain disruptions caused by Japan’s record earthquake and tsunami.

    German Chancellor Angela Merkel is unlikely to get majority support from her government coalition for the European Stability Mechanism, German Free Democratic Party lawmaker Frank Schaeffler said.

    "We are again producing and consuming beyond our capacity," says a local economist about Turkey’s booming economy where lenders grease the credit process by making loans via text message and ATMs. "At some point life catches up with you and you crash." Y/Y: TUR+11.1%TKF +17.1%

    Medical Marijuana Companies Chase Investors, Eye IPOsIn what was once a pipe dream, medical-marijuana companies are courting private investors and even planning public stock sales.

    Sony’s (SNE -1.7%) PlayStation Network has been offline for the past five days while the company rebuilds it after an ‘external intrusion’ by hackers. Frustratingly, consumers can’t play multi-player games or download updates, etc, but more worryingly, Sony doesn’t know if users’ credit card and other details were taken.

    Julian Day, winding up five years at Radio Shack (RSH -0.8%), isleaving behind a mess with shares lower than when he arrived. The company posted a 30% drop in Q1 earnings and downward guidance, and its partnership with T-Mobile (DTEGY.PK) has been a "disaster." It’s a "surprise" that Radio Shack hasn’t been bought, which Paul Ausick says "should say something about its prospects." 

    chart 


  99. FAS/Etrad – I don’t see XLF going below 16 and that means we can milk FAS for income all year long.  If, on the other hand, Ben surprises us with QE3, FAS can go back to $34+ very quickly.  If you don’t like the trade, by all means get out – I will be making many more $25KP selections once we get past the Fed on Weds.  

    CSCO/Rainman – I thought that was a very nice explanation!

    Yen back to 81.7 to the Dollar – not at all what the BOJ wants to see!  Euro $1.458, Pound $1.65.  

    Silver did get rejected off the $48 line as expected, back to $47.40 at the moment.   Gold $1,510, copper $4.30, oil $112.25, gasoline $3.27 and nat gas $4.37.  

    Morgan Stanley’s top 10 “Return on Capital” stocks, listed by their estimated 2011 dividend yield and 2011 buybacks as a percentage of market cap: EATTRVDTVIRMSTXTWCCVCCB, {{RNR]], WLP.


  100. DCTH, short attack following comments by street.com’s Adam Feurstein. Feurstein has been the official mouthpiece for the institutional DCTH shorts since DCTH was 16.00.
    Also Fly on the Wall reports Meeting between DCTH and WJB Capital, speculation on a possible financing or secondary is being rumored…
    I call BS.


  101.  Phil --

    TBT is always a fun trade at $36.50.  Unless Uncle Ben has QE3 up his sleeve on Wednesday, it’s going to be hard to keep rates down.  The June $36 puts can be sold for $1.16 for a net $114.84 entry.
    <<<— HUH?  What’s the $114.84?
     
    Thanks,
     
    haschade


  102. Back to Plan A after the little flush !!


  103.  Phil (or others) --
    The income strategy of
    Buy 1000 shares of <XYZ stock> trading at AB
    Sell 10 calls at strikes below current price AND sell 10 puts at same strike
     
    Does this strategy have a particular name?  Like a LEAP Buy Write Collar?  Or something exotic — steel hummingbird?
     
    Thanks
    haschade


  104. DCTH/Gmarts – I would say anything you ever hear from Feurstein is BS.  I almost want to reflexively do the opposite of whatever that sleezeball says but he has a lot of power and can hammer stocks down relentlessly so be careful.  Still, the more he comes out against a stock, the more likely it is a good thing to get into. 

    TBT/Haschade – I have no idea where that came from – it’s $34.84 net, of course.  

    carefully planned affair, Fed chief Bernanke’s press conference will last about 45 minutes, beginning with a brief statement from the Chair to be followed by questions. Reporters from news groupsaccredited by Congress will be allowed, but no bloggers? Truth to power!


  105. DCTH – may need to raise money in 2Q or 3Q.  Moving about 7-9M/Q, and 45M on hand as of Dec 31.  Feurstein is a joke, although I do use his info to feed my engine!  I do believe he was part of the DNDN police as well, so now they have a new D to pick on. 


  106. Got my $2 on INTC – great call to double down and roll on that one Phil, thanks.  


  107. DCTH/AF:
    What he said:
    The Street – Adam F
     
    Simon56 asks, "Lots of news from Delcath Systems(

    _) but no word from you yet. You’ve been skeptical in the past but wondering if the European approval changes your mind at all? This looks like an exciting opportunity for Delcath to me and the stock is up."
    I see no reason to be any more optimistic about Delcath. European regulators granted a CE Mark to Delcath for its Chemosat Delivery System, but getting a medical device approved in Europe is a relatively easy task, basically requiring proof that the device is safe for use in patients. Much more difficult is obtaining reimbursement for use of the device, which Delcath hasn’t done. Without reimbursement, Delcath will find it difficult to generate significant Chemosat sales.
    To gain European reimbursement for use of Chemosat and to convince doctors there to try the device on their patients, Delcath needs clinical data demonstrating a significant clinical benefit. Again, Delcath doesn’t have that data, especially in Europe, where Chemosat has never been used.
    Chemosat is a medical device that isolates and bathes the liver with an ultra-high dose of the tumor-killing chemotherapy drug melphalan.
    Delcath CEO Eamonn Hobbs told investors last week that the CE Mark for Chemosat allows the company to address a potential commercial opportunity of 100,000 liver cancer patients.
    Really? Based on what data? The only phase III clinical trial of Chemosat conducted by Delcath enrolled melanoma patients with liver metastases. Delcath is running a small phase II study in patients with various tumors of the liver but no data have been presented or published yet. Neither of these studies enrolled any European patients.
    Hobbs has a credibility problem when it comes to discussing the commercial potential for Chemosat. He consistently overplays his hand, first with the potential for U.S. sales and now in Europe. Why would a doctor, in Europe or the U.S., treat a primary liver cancer patient with Chemosat in the absence of any data to support that use?
    I don’t fault investors for rewarding Delcath a little for the CE Mark grant, but I’d be much more concerned about the stateside regulatory status of Chemosat. I used to assume Chemosat approval by the U.S. Food and Drug Administration was a given, but now it seems to me that the risk of an FDA rejection is very real.
    Delcath disclosed last week that FDA has asked to see hospitalization data from patients in all three Chemosat clinical trials — phase I, phase II and phase III. Not only is Delcath being forced to compile far more safety data than previously disclosed, but the company also admitted needing to rewrite nearly the entire Chemostat new drug application.
    Instead of refiling Chemosat with the FDA in September, as Delcath previously thought possible, the resubmission won’t be ready until the end of the year. That means Chemosat’s U.S. approval is delayed at least one year. Delcath originally filed for approval last December, which was followed in February by the FDA’s refuse-to-file letter.
    To allay investor fears, Delcath’s Hobbs insists that FDA has not asked the company to conduct additional clinical trials. I believe him, but why would FDA ask for new clinical trials today when the agency hasn’t even been provided sufficient safety data from the old clinical trials? Delcath screwed up by submitting a hugely deficient data package in the first place. As a result of its incompetence, Delcath wasted a year just getting to the FDA review starting line. Nothing prevents the FDA from asking for new clinical trials later on, after the agency’s reviewers get a look at the data that Delcath should have submitted long ago.
    It’s not like Delcath has a hugely compelling benefit profile to brag about. In the phase III study, Chemosat treatment delayed the progression of tumors in the liver compared to patients treated with best supportive care. However, Chemosat did not help patients live longer than the control patients. On the risk side, five Chemosat patients died because of the Chemosat procedure, according to the investigators of the phase III study.
    Granted, this is cancer we’re talking about, so relatively more risk is acceptable. But the FDA’s request for lots more patient hospitalization data suggests heightened scrutiny on Chemosat’s safety profile relative to its purported benefit.


  108. Phil/FAS:  " If you don’t like the trade, by all means get out "
    I was merely trying to figure out the reason behind us sticking with the trade. I have mentioned this before as well, I have learnt so much about managing your positions, from this single trade. The way we sell weekly calls and still manage to collect premium while we wait for our big move, is something that I would have never done on my own.  I have heard you say things like "you can keep rolling after that" and I never quite understood what u meant until we did this on the 25kp portfolio.
    So I am happy to follow along. I do try to add my own trades to the mix (like I have sold FAS 30 weekly calls as well) – but for the most part, I am just learning how you do the trades.


  109. Thanks Rainman, very helpful! 
    Phil what would you have done if we were not being conservitive.  I did the trade as you suggested.  Just curious.  Thanks.


  110. This is from Lee Adler at Wall St. Examiner:

    Hoping to insure a positive audience response for Wednesday’s FOMC Circus act, the Fed injected $7.24 billion into the market on Monday, while the Treasury announced that it will reduce the size of Tuesday’s 4 week bill auction to $30 billion, from $34 billion last week and $40 billion estimated by the TBAC. As a result, Thursday’s Treasury settlement will have a net paydown of $16 billion on top of POMO of $13-$17 billion by Thursday.

    This “walking around money” means that, regardless of what the Fed says, Bernanke and Geithner have stacked the deck so that the news crews covering the event will have pictures of only cheering throngs. I would say that they learned the tactic from Khadafi, but it’s probably the other way around. The Fed has been doing this for a long time.


  111. Back to cash for the evening !!


  112. Back to cash as well.
     
      Thanks JR…..good day.


  113. Steel Hummingbird/Haschade –  That song is just too long.  Don’t ask for a steel hummingbird in Thailand, though – I’ll say no more on that subject…  Anyway, buying a stock and selling puts and calls is what we call a buy/write.  Many options sites call a simple covered call a buy/write but those guys are lame and have probably never been to Thailand so what do they know?  

    INTC/Chaser – Nice job!  Looks like $22 on the button was the top for this run. 

    FAS/Etrad – The purpose of the trade was to get into a position where we can raise a lot of cash selling calls.  If you read the write-up on the $25KP this weekend I mentioned this as well.  The low VIX is hurting us now (it’s always something) but we have 4 weeks to sell, we haven’t failed yet to get .50 a week and it costs $1.30 at the moment to roll to the July $30s, which would buy us 9 additional weeks to sell .25 per long ($1.75) so that’s the plan if we have to weakly keep rolling along in an unsatisfying manner.  The main objective (and this takes persistence) is to keep putting yourself in the right place and waiting PATIENTLY for the right time to come along.  The right place is half covered or naked when we get a nice pop in FAS – the right time – that’s hard to say but if we can keep showing up in the right spot to take advantage of it – we only have to be lucky once.   The times I’m really worried is when we are forced to go full cover – that’s when I worry FAS will pop and we’ll miss it…

    CSCO/Lori – That’s what I would have done either way.  If you want to take a chance, buy 2x on a 35% return rather than 1x going for 50% but why handicap yourself out of the gate when you don’t have to?  Buying premium is for other people, not you!  

    Fed/Ilene – Wow, they are amazing!  That’s bad for TBT this week, unfortunately.  

    Cash is indeed king JRW.  


  114. DD/Phil   Canidate for the conservative Investing for income -pt two   DuPont has product line not easily copied and one that is able to keep up with inflation.  I like the seed business and fiber applicatons.


  115. VIX up 7% on the day on very little movement in the market – that’s interesting.  


  116. Phil:
    A reminder to my question posed earlier today. If you get a chance tonight. Thank you.
    dclark41
    April 25th, 2011 at 10:46 am | Permalink  
    Phil
    I had a similar experience as yours this weekend except with a brother-in-law who was trying to convince me that China’s economy was the cats meow. He kept asking me if I had read their 5-year plan (I have-so what!). In return, I asked him if he was aware of their real estate issues and what they were trying to achieve by building so many buildings and towns with no residents. I would like to be better informed on the subject. Would you please (after close) give me your general thoughts and opinions on China or at least point me to some articles I could read on my own. Thank you.


  117. Phil
    Using your theory to sell premium, I’m looking at selling the aapl jan 13 450 call, selling 2×1 jan 13 250 put, and buying the jan 13 350 call for free?
     
    Am I diversified?
    j/k but does that seem like a fairly low risk play on aapl?
    stays flat you eat premium, goes up you win, seems like it would be hard to lose money on this position?


  118. "Inflation" is becoming quite a non-descriptive term, e.g., it doesn’t describe anything very useful to know.  Martin Feldstein of Harvard, interviewed today, says that U.S. domestic inflation — prices & wages — is not high, because food and energy do not represent an equivalent percentage of living costs.  He points out that personal consumption, housing prices and industrial production are falling this year.   He points out that the "strength" shown by the U.S. economy in 4Q 2010 was driven by a 1% fall in the U.S. savings rate, occasioned by that same spike in food and energy costs.
     
    All of which is not to say that there is, or is not U.S. inflation.  Rather it is to repeat that the word "inflation" is not sufficiently descriptive a term under current conditions to describe much of anything — it generates much more heat than light.  Does this matter?
     
     If judgments are being made about the probability of the Fed continuing QE or not based on whether there is "inflation", yes, it matters.  If wages are falling and food and energy costs are rising --which we can agree does not represent any kind of wage/price spiral traditionally associated with "inflation" as customarily defined —  it is likely because the dollar, as the global standard of currency values, is being depreciated intentionally, and there is no comparable currency on offer in sufficient general use to take its place.  So all kinds of stupid stuff [silver] are becoming "safe harbors", although this will probably end up badly.  
     
    To come to the point —  debating whether there is "inflation" tends to substitute a semantics for economic reality — a reality that is more nuanced and requires analysis rather than buzzwords.  We are living in a multi-polar economic universe which is manifesting new phenomena and which will require new terminology.  Note that despite Feldstein’s pronouncement that "inflation is low", he is against more QE — a clear demonstration that the word is devoid of predictive content.


  119.   Feldstein interview, Bloomberg http://www.bloomberg.com/video/67184682/   


  120. Volume was deplorable


  121. I think it’s time to short NFLX(sell calls). Their growth rate is slowing down.


  122. Zero – did you see my update to you on P solar ?


  123. Phil/VIX – do you know why the VIX is up 7% and the VIXX is down 2.29%?


  124. Inflation Expenses
    Took my dad to an oral surgen for 3 teeth extraction, $1,691 copay. Didn’t stop bleeding, returned to doctor gives injections that stop it but the doctor complains about the cost of them. Moms hip went fine but the rehab center is so bad that she wants out after 2 days, they are so understaffed left her kockeyed on bed for over an hour, I came in and moved her legs onto the bed. BEST MEDICAL CARE in the world!


  125. Hi Shadowfax — if your mom is in the dallas area — I can help her in a better facility that will take good care of her and rehab at the same time.  thx


  126.  Phil/NFLX — nice call on the short $260 calls, so far so good!!!!  THANKS!


  127. Thanks for the NFLX trade, Phil!


  128. @0 X 0
    Feldstein is one of the Prime suspects dispatched by the Disinformation Squad,  papering over the global financial debacle,  and likely TheBernank’s twin brother:
    http://www.insidejob.com/photo/martin-feldstein-inside-job?context=featured


  129. Thanks gucci
    About 2,000 miles away.


  130. Inflation – zero – words to my heart….long TLT.  This is gonna end badly.  In addition to the 1% savings rate noted, Nabi noted that earnings 4Q and 1Q this year were due to price hikes and lower ‘input’ costs (labor included?).   Wonder how that is going to turn out the rest of the year?  Wages continue to be depressed, and my jar of Skippy is much smaller (short sizing is the name of the game).  Ice cream is another.  Used to be 1/2 gallon…now it is 1.5L… ;) .  I guess it is better for my waist. 


  131. DD/Stock – I would like them but they are not cheap at $55.  A 3% dividend is not enough to get me to pay up for them and the low VIX makes them hard to protect.  Possibly interesting for a naked put sale but not for just .80 for the July $50s – not worth the margin requirement.  

    China/DC – China’s most recent 5-year plan is SUPPOSED to move China away from an export-driven economy and focus on building their local consumer base.  Unfortunately, there is really nothing here that develops anything other than more of the same infrastructure building they have been using to drive the economy for the past 5 years.  The projects outlined are massive with new highways, airports, ship ports, trains, coal mines, hospitals and a plan to "industrialize" entire regions of the country creating, in theory, 45M jobs over 5 years.  That sounds like a lot but China has 1.3Bn people so you are talking about putting 3.4% of the people to work over 5 years or about 0.7% a year – if they have ANY population growth – that’s not enough!  

    Now, how does building planes, trains and automobiles promote consumerism?  It does not.  If they were building low-income housing for 200M people or doubling their agricultural output to drive down the price of food to ultimately leave consumers with a little discretionary income at the end of the day, then I’d see the light but this is just more of the same – the government handing out fat contracts to the embedded wealthy who made their money selling commodities to 1.3Bn people as well as selling heavy industry to manufacturers (and don’t forget most manufacturers are state-owned) who, in the end – still have to rely on exports to make their numbers because what Chinese family outside of the top 10% (still 130M people) can afford $10 for a Barbie doll?   That’s as ridiculous as our government expecting you to pay $100 a month to watch TV.  Oh wait, we do that – boy are we stupid!  

    Anyway, building airports and highways and sea ports and rail lines has nothing to do with consumer spending – it’s the infrastructure that’s done for the benefit of the embedded rich to make it possible for them to efficiently sell their goods and transfer them out of the country.  The development of mines is to save the rich people money on raw materials as is the push for energy infrastructure – this is nothing more than a massive stimulus package for the capitalists and they are grinding their bottom 90% into dust at the same pace the US industrialists are.  

    Here’s the glory that is China:  80,000 "undesirables" are evicted to make way for their winter games.  Hugh Hendry has been very vocal on what’s wrong with China, you can read his stuf and he’s got some cool videos of his tour of all the empty buildings and abandoned projects around China.  Max Keiser is very down on China.  Mish agrees with him.  Here’s something on the empty cities from good old Al Jezeera. Marc Faber says they are doomed. Here’s a video on empty commercial real estate.  Jim Chanos also says China is done for

    Don’t forget, very few people saw a bubble in 2007 or even the summer of 2008 – I would point out issues and would be shouted down by "experts" who would talk about "new paradigms" and the "global economic engine" that I was supposedly not educated enough to understand.  Those of us who study history often make mistakes with our timing but fundamentals tend to win out over time.  As Chanos pointed out, China has 30Bn sq feet of commercial real estate under construction – enough for every man, woman and child in China to have an office cubicle – and that’s the NEW space!  Meanwhile, 1M people live in bomb shelters under Beijing because they can’t possibly afford to live above the ground, where monthly rents are their entire year’s salaries. 

    AAPL/RW – It’s not diversified at all, it’s a bullish bet on AAPL but if the margin doesn’t cost you much then the bet is simply that you get 100% of the upside on AAPL between $350 and $450 in exchange for being willing to buy 2x at $250 if they should go lower.  It’s a nice trade but make sure you know what you will do if Steve Jobs dies and the stock does drop to $185.  If you answer is "Double down and ride it out" THEN it’s a good trade for you but if the answer is "Freak out and take the loss in a panic" – then you are simply rolling the dice on how long Jobs lives and what the downside effect will be if something does happen to him.  

    Inflation/ZZ – The whole idea of using low wages to mitigate the effect of high prices on consumers is ludicrous.  Also BS on "living costs" as I would argue that rents for 80% of the people are fixed so the fact that marginal rents go down has no benefit to the consumers who are stuck in homes paying last decade’s prices.  When I say "inflation" I’m talking about the real inflation that affects the average american in a very real way.  I don’t have the time or the inclination to educate people every time I mention it – that’s a pointless exercise anyway.  The bottom line is – I see inflation and that’s how my economic model works – when I see economic models (like the Fed’s) that don’t factor in inflation, then I know their model is flawed and I have no reason to waste my time with it, unless it is the Fed in which case I have to factor in their wrong-headed actions based on their wrong-headed assumptions although it’s not wrong-headed – it’s actually deceptive because they know damned well what a load of crap it is to claim there is no inflation.  You are right, it’s all word games but that doesn’t mean you have to play. 

    NFLX/Bob – Nice outcome for our spread – down but not too far down so far.  

    VIX/Brook – I don’t know why the discrepancy but I wouldn’t trust either of those indicators to give you a clue as to what’s going on anymore.  I assume the VIX is up because people are wisely buying puts ahead of the possible end of QE2 on Wednesday, which could drop this market 5% by the bell.  VXX is probably a fun speculative play at the moment at $24.31.  

    That sucks Shadow, sorry you have to deal with that.

    NFLX/JBak, Etrad – You are very welcome!  

    1.5L/Pharm – Yep, we can all learn to make due with less. 

    At the close: Dow -0.21% to 12480. S&P -0.17% to 1335. Nasdaq +0.19% to 2826.
    Treasurys: 30-year +0.44%. 10-yr +0.26%. 5-yr +0.21%.
    Commodities: Crude -0.1% to $112.18. Gold -0.13% to $1507.10.
    Currencies: Euro +0.1% vs. dollar. Yen +0.1%. Pound -0.07%.

    Market recap: Stocks fell slightly after Kimberly-Clark and other firms trimmed profit forecasts, pointing to the fragility of equities amid concerns over the falling dollar, rising commodity costs and sovereign debt. Gold ended at $1,509 and silver spiked another 2.4%, as the dollar continued to weakenTreasurys rose, dropping the 10-year yield to 3.37%. NYSE decliners led advancers seven to six. 

    Told you so!  The true price of a fiat currency? A $1K investment in farmland in 1970, roughly the time Nixon closed the gold window, would have returned 50% more than $1K in the S&P 500. Go back to 1960 and the difference is even greater. Done at generational stock lows in 1980, however, shares have doubled farmland’s performance. 

    Netflix (NFLX): Q1 EPS of $1.11 beats by $0.03. Revenue of $719M (+21% Y/Y) beats by $16M. Shares -3.4% AH. (PR)

    Netflix (NFLX-4.3% AH after Q2 EPS guidance of $0.93-1.15 (vs. $1.19 consensus) disappoints. "For the first time, they’re talking about the streaming content costs growing dramatically," one analyst says, "and now it’s reflected in their guidance for the quarter."


  132. Wow, check out James Altucher of the WSJ kissing Cramer’s ass!

    Jim’s the best entertainer in the financial media business.  He combines education, with interviews, with six or so different voices (he takes voice lessons, or did at least, to be able to do all that he can do with his voice in a show and not go hoarse after a few days), with stock picks in different industries, call-ins, and even magic tricks. Jim always delivers more value than the simple “buy IBM” that still pervades most financial blogs.

    "Watching Jim on ‘Mad Money’ is sometimes like watching an impending train wreck. Jim’s a little crazy, a little off the deep end, but it’s either the kind of crazy we all see a little of in ourselves, or the kind of crazy we all wish we had."  


  133. James – his job was dependent upon Jim until he went to work for Rupert, No?  Another not to listen to….


  134. From PragCap: Well, the CRB Spot Index of 23 markets (which EXCLUDES oil) now dwarfs the 2008 move.  This bubble is not only larger, but it is substantially broader in terms of the markets included.  Few markets have been excluded from this price surge:

    This is such an extreme disequilibrium that I think the Fed has to now very seriously consider that they have contributed to this rise in commodity prices.  Several independent sources have come out to counter the propaganda out of the various Fed banks claiming no involvement in the commodity price increases.  It would be nice if the Federal Reserve stopped playing doctor on the US economy and actually tried to objectively quantify the impact their actions have had.  To anyone with a working set of eyes it is fairly clear that the Bernanke Put is working its magic in most destructive ways.


  135. Phil
    It seems more and more people just don’t get it. Thanks!


  136. How do you figure out the premium on an option? 


  137. Phil – I was embarrassed to tell you how short I had gotten on NFLX.  I followed your last several ideas and have been pacing back and forth but now I want to thank you for what looks like it may be the trade of my life!  I know you probably don’t approve of a big allocation on something so risky but you laid out such a consistent, excellent case for why Netflix was not worth $250 over the past 2 months (and I kicked myself in February for not following your short) that I saw it as a second chance in a life-time to go short into earnings.  Thanks for all that you do for all of us here, I will be making a donation to the Food Bank in your name!  

      


  138. By the way, Phil’s great quote from last week:  "Screw NFLX – I like selling the next week $260s for $8.30!"


  139. Damion
    Your a hero I thank you for Phil!


  140. Phil

    Your buddy Glen Beck went off today about the Fed printing dollars and how everything is tied to our dollar which is causing prices to go up. I thought is was you talking.

    You haven’t been tutoring is conspiritorial ass have you?


  141.  Hey everybody, I just wanted to make sure you knew I didn’t dissappear.  It’s finals week and my students have been taking up way more of my time.  I have some cool plans for my synopsis of how the craigbot has been doing.  This weekend I will have entered the final grades for the students so I will be available to trade and post fulltime.  Look forward to seeing you guys then.  


  142. Premium / Lori – It is difference between the option price, the stock price and the strike price. For example, a GE $20 call at $2.00 when GE is at $21.00 would have $1.00 of premium.
    Option Price ($2.00) – [Stock Price ($21) - Strike Price ($20)] = $1.00
    Hope that makes sense.


  143. @Damion
    I’ve been in the same trade but I can’t see where you would be making anything, yet.
    The NFLX 260s sold for $8.30 last week, are over $9.00 today, a net loss, so far.
    Did you manage a sale of next week 260s at some higher price than $9.00??


  144. @Damion
    Nix that…….Should have checked After Hours.  I didn’t see the 5% drop in the stock till just now. Can’t wait to see how the 260s open tomorrow.
    And thank you Phil, Once again.  Your instincts are something to behold.


  145. Today’s Levels.


  146.  Phil / Inflation-whatzit:  OK, we agree its just terminology.  In respect of whatever it is you do see, how does it work, exactly? Will the price of commodities and energy inflate indefinitely in time, or is there some "deflationary" horizon that pops the commodity bubble? And if and when oil and commodities crash, does your inflation-whatzit somehow continue upward?  Does Pharm’s peanut butter keep shrinking, while the price of energy and commodities goes into long decline?

    I try to extrapolate the consequences of your statement "the inflation I see is the real inflation that affects Americans in a very real way" and while it is agreed that Americans are suffering higher prices, for my money it appears to be purely a currency-related phenomenon.   To me it sounds like most of the phenomena you describe are incident to U.S. dollar levels, not to any wage/price inflation spiral as is normally seen.  

     
    Your thesis would then run that ending Quantitative Easing would strengthen the dollar and increase American purchasing power by lowering energy and food prices.  This would not increase U.S. wages, which have been dropping all along despite dollar weakness, because Americans are still greatly overpaid relative to their export-intensive competitors — a consequence of free trade policies, not monetary policy.  But since the U.S. imports more than it exports, the net effect would be positive, particularly on the less well-off.  In fact, a stronger dollar would increase the ability of Americans to make discretionary purchases and — if the dollar were perceived to have bottomed — might encourage substantial foreign inflows from the many who live in fear of their Euro-denominated investments. 
     
    At present, Bernanke is in effect betting that the negative effects of a cheap dollar — more expensive import prices of commodities with highly inelastic demand — will be more than counterbalanced by something.  The only "somethings" I can imagine are 1/ a the salutary effect on U.S. exports — the idea being that, while it makes life more expensive, it supports employment, without which Americans can’t buy at any price level;  2/ inward investment flows from overseas [not happening], 3/ higher stock prices [on a lower dollar] which create at least the illusion of a wealth effect that would support consumption, or 4/ it inflates away real estate indebtedness by reducing the value those loans in relation to other goods and services.
     
    Viewed as a forex phenomenon, the "inflation" of which you speak is a kind of unevenly-manifested derivative of a cheap dollar policy.  Instead of debating the definition of inflation, we should be discussing whether, and at what point, Bernanke might cross what he would consider the breakeven point on his "trash the dollar" policy.  Rather than pointing to "inflation" levels, one would examine the Four Reasons, as the Chinese would say:  A/ employment, B/ inward investment, C/ stock price wealth effect, and D/ debt destruction — and attempt to decide whether Bernanke is still getting his [cheap] money’s worth out of his QE gambit.  
     
    Deciding that correctly would be worth quite a bit.  Otherwise I wouldn’t have brought it up so often.


  147. Phil:
    Thank you for your take on China. It is exactly what I expected from you.
    Changing topics what is the best way to play the Fed’s dog and pony show on Wednesday? Would you take action before or wait until the results to determine a direction. I did the TBT trade you suggested earlier today, but I still feel like I am bit to bullish in my invested portfolio. Although I am mostly in cash and hedged positions I could stand another downside/disaster hedge. Does it make any sense to use EDZ when you have mostly domestic exposure? Thanks again for your help on China.


  148. Zero – you bring up many intereseting points, some of which I have wondered. Some go to the point Lori brought up recently about China and fed in stand-off ? Could be part of the equation and likely is to some degree, but I have a hard time thinking pummelling China is the main theory of fed. Seems to me debt reduction via inflation is the main theme although a hurt on China is a windfall but for how long? I don’t have a clue. Kind of a chicken and egg thing with currency and QE stimuli, as one is a vehicle to affect the other and vice versa. Although the amount of stimulus has never been forced and it is being forced, where the currency is a constant which is greatly affected by the nonconstant phenom, QE. Since we have never really been here before exactly, seems we are on uncharted ground and inflation/deflation scenario seems to be losing to inflationary, handily now. I would not bet against inflationary spiral here no matter what the underlying reasons  and how we got there. Some of BBs statements in recent times show he is clearly willing to sacrifice all wage earners and a few more for the banks and others. Not sure we need to know any more than that as he is focused on HIS methods which will have a major negative effect going forward, especially on middle class and fixed income. All the while, nothing has really been resolved or fixed at all. Just papered over as you know.   


  149. Thanks StJean,  could you give me an example of GE with a put.  The call was very clear.  Sorry I’m dylexic so this a little tough for me until I actually do it.


  150. Lori, Sure. For example, the GE 2013 20 P trades $3.15 right now. But GE trades a $19.89. The strike price minus the option price is 20 – 3.15 = $16.85. In this case, the premium is the difference between the current price and the price calculated by the strike minus the option price or 19.98 – 16.85 = $3.13.
    Another example, the 2013 25 P sells for 6.60. This one has only $1.58 of premium (25-6.60 = 18.4 then 19.98-18.4 = $1.58). The higher you go, you have less premium for puts and the lower you go, you have less premium for calls. 
    Obviously in calls, options whose strike is over the current price are 100% premium and for puts, options whose strike is below the current price are also 100% premium.
    Hope that makes sense, I am not a great teacher and English is not my first language!


  151. Phil,
      I took the 2012 BIIB $60/70 BCS you suggested a few months ago and now need some advice on how to adjust given the strong move up. I was thinking about rolling up the $70 call to the $90 call vs. just letting it ride out to expiration. Unfortunately I did not sell the $60 put to lower my basis when I originally bought the spread. Thanks.


  152. Stjean,
    Absolutly makes sense!!  Thanks!


  153. Be careful interpreting China’s actions in terms of just the US, guys – a chunk of what they’re doing is aimed elsewhere, especially Japan.


  154. Pharm- re your 1247 comment- how about just call it the BEST coast!?


  155.  From Ritholz page, Nassim Taleb — really excellent general discussion — he started out as an option trader, which a few of his ideas reflect. http://knowledge.wharton.upenn.edu/article.cfm?articleid=2755


  156. Taleb/zero – thanks for that, and the reconnection to knowledge@wharton. I used to subscribe via an old work email years ago when it first came out.  Resubscribed now. Some good content comes through there.


  157. CRB/Pharm – That is way out of control but exacerbated by the decline in the dollar, if you convert to Euros we’re still quite a bit below.  Of course the Fed SHOULD be very concerned about how it looks priced in Dollars because they are SUPPOSED to be looking out for Americans!  It doesn’t matter what the Fed says, they have a charter to maintain price stability and promote full employment and they are failing on both ends at the same time – something needs to be done!  

    Premium/Lori – Any amount you pay above the current price is premium.  So the AMZN May $185 calls at $7.50 have $7.08 of premium with AMZN at $185.42.  The $190 calls at $5.25 are 100% premium but also consider you are paying net $195.25, which is more like $9.83 in premium from the current price but, for the purposes of option decay, just the $5.25 will wind down over time although the position (strike premium) begins to affect the theta decay as we get closer to expiration.  For longer-term contracts, I’ll use the position premium like if I want to sell the 2013 $200 calls for  $27 that’s net $227 with a total premium of $41.58 over the current price and then my question would be – do I think AMZN won’t gain $2 a month for 19 months.  Since that’s impossible to feel comfortable betting against with a stock that can gain or lose $2 per minute – I wouldn’t play that one, of course.  

    And what StJ said!  I really need to start reading ahead before I answer…

    NFLX/Damion – Thank you so much for making a donation – nothing could make me happier!  I’m glad that worked out but keep it in perspective.  It’s a real rush to make a killing but the worst thing you can do is begin to crave (as in addiction) that type of play.  NFLX was a good bet BECAUSE it had run up to ridiculous levels and BECAUSE it was so high ahead of earnings and BECAUSE the fundamentals were completely being ignored by Cramer and Co as they herded the sheeple into buying a "famous" stock that they completely did not understand as a company.  Those are RARE opportunities and I think you recognize that but I just want to make sure all who read about such a great success understand that, in general, I consider playing with momentum stocks to be VERY DANGEROUS.

    Screw NFLX/Damion – LOL, I forgot I said that!  

    Beck/Exec – Someone posted a link to him over the weekend saying he was on the same page as me and I began to watch with an open mind but I couldn’t take more than 5 minutes of his drivel – I REALLY hope that’s not what I sound like!  

    Students/Craig – Yes, teaching jobs would be so much more fun if it wasn’t for those damned students!  8)

    You are welcome Flips but, as above – it’s a matter of putting your foot down and sticking with the short.  We’ve been too early on NFLX before although fortunate to have escaped on pullbacks without any damage.  CMG as well.  I generally try to avoid shorting MoMos until they are really ridiculous but PCLN was ridiculous $200 ago and we ended up staying away from them.  Just be careful is the short story here… 

    Futures off a bit so far with Asia down 1%.   Dollar hit 74.52 before they began to beat it back, now 74.41. 

    Inflation/ZZ – For my purposes, inflation is costs rising more than wages for the average consumer.  The average consumer moves only once in 7 years (once in over 10 years at the moment) so, while I do look at rents and housing prices, I discount their effect by 90% to account for how many people this actually helps.  I also look at the 4M people who are not paying their mortgage and count that as a plus for 4% of US households.  To me, this is a reasonable methodology for getting a realistic assessment of consumer buying power.  There are hundreds of little factors of course and they all have a weighting in my head as I pour over data but, on the whole, as Judge Stewart said about pornography I say the same about inflation:  I know it when I see it…

    You can blame the dollar for inflation but what does the average American care about why he can’t afford to fill up his tank or his grocery cart?  The fact that inflation is based on a declining dollar may make it more transitory and that may affect our long-range projections but doesn’t change the fact that it’s here.  And yes, I have only said about 1,000 times that this type of inflation is top-down inflation caused by Fed money printing and NOT demand inflation that leads to a proper inflationary cycle (yet).  The cue we are looking for is wage inflation.  Since the money supply has been increased though – it’s very doubtful the Fed really has the tools to pull it back before wage/price inflation kicks in.  

    As I’ve noted, China is getting raises, India is getting raises, Saudis are getting raises (from the King), Poland is getting raises – this is exactly the pattern we expect to see as wage inflation is a slow creep and our friends in the Republican party have been doing their best to set up a fire-wall to break the unions and prevent wage inflation from spreading to America.

    I don’t think weak-dollar inflation helps enough to offset the damage it does as we have 300M people in this country and only 11M work in manufacturing and we export just 10% of our GDP vs 15% imported so unless the dollar gets so week that our exports jump 50%, we don’t even close the trade gap and about 20% of our exports are BA anyway and another 10% is movies so it’s silly to think that creates a lot of jobs.  Even if we added 5M jobs and brought US manufacturing back to Clinton levels – doing it at the expense of devaluing the dollar by 10% is ridiculous as we’re paying 140M Americans 10% less so we can hire 5M more people – that’s pretty much the definition of dumb economic policy.  

    Of course we’re not JUST paying people 10% less in terms of buying power – we’re also robbing their life savings by 10% as well so if the average worker has 7 years salary ($300,000) saved for retirement (from the weekend chart) – a 10% decline in the dollar is costing 140M people $4.2Tn PLUS 10% of their current income to hire 5M people (in the rosiest possible assumption of manufacturing growth).  

    I also very much dispute the concept of a weak dollar attracting investment flows from overseas or we’d all own a condo in Zimbabwe right now, wouldn’t we?  Again, going back to Clinton (the last time the US actually did have a strong Dollar policy) – money was flying into this country as the RISING dollar made our markets go up even faster when priced in global currencies, just as we now have the illusion that global markets and commodities are rising faster than they really are because we price them in dollars.  

    Top down inflation does not inflate away real estate debt.  Certainly not in the short-term.  If you inflate the price of homes without inflating the wages – then who is going to buy the homes?  Only wage inflation driving home prices and rents higher can really ease the debt burden on consumers but, of course, the banks don’t like that one bit and that’s why the Fed works so hard to prevent it and why those psychopaths pat themselves on the back when wage inflation is "contained" to offset input price inflation.  The don’t give a rat’s ass how screwed over the people of this country are, as long as the cash is rolling into the banks.  

    You assume that Bernanke has a point at which he cares about the suffering of the American people and that’s a false premise.  Like Dorothy – he had the power to click his heels together and end this at any time in the past 2 years but he’s presided under the most rapid inflationary increase in consumer prices in US history and, as of the last Fed meeting – showed no inclination whatsoever to stop.  The only reason he might pull back is if it becomes politically dangerous for him to continue as more and more people wake up to the destruction that is being doled out by the Fed to this nation and its people.  Only then will you see a "benevolent" change in Fed policy.  

    Hopefully, we’re close.  The blogoshpere has certainly had enough of his BS but the MSM still considers it a matter that is "open for debate".  Also, you have to factor in the fact that the Fed has to keep buying TBills or that Ponzi scheme will collapse and in that you have the only legitimate reason for the Fed to do what it does – the fact that this country is unable to pay it’s bills and would very possibly collapse in short order if the Fed didn’t keep those presses cranked up at full blast and there we circle back to my hyperinflation scenario because, if the Fed can’t or won’t stop printing money – then eventually people will demand to be paid enough to gas up their cars and once they get more wages, they will spend more and once they spend more, prices will climb and then they will need more wages etc.. until we are running our own 10% annual inflation-driven GDP grown and then the entire country can inflate its way our of debt together.

    Ultimately, that screws the Bankers but so would a US default so that is possibly Bernanke’s path of least resistance and is the only viable escape I see for our own $15Tn current debt, which is an unsustainable 100% of GDP as well as our $30Tn of unfunded liabilities, that will kick in over the next 20 years as the Boomers move through retirement.


  158. Fed/DC – I think the Fed says they are concerned about inflation and ready to take action but no change in policy.  That will disappoint everybody and probably give us a market low Wednesday afternoon or Thursday morning.  EDZ is a good hedge because it’s a cheap hedge and a bouncing dollar will crush emerging markets, who are commodity driven and get less dollars for the same exports if the dollar rises.  So a rising dollar is good for EDZ, a stalling China is good for EDZ, an earthquake is good for EDZ, a nuclear melt-down is good for EDZ, wage riots in emerging markets would be good for EDZ, margin contraction on earnings in emerging markets would be good for EDZ.  So yes, I like EDZ!  

    BIIB/Japar – Why do you "need" to adjust?  It’s a winner and you should be able to cash out for about $9.75 without waiting, maybe even $10 if you get favorable exits.  There’s no sense in turning a win into risk again, we liked BIIB because it was way undervalued – now it’s not so we move on and find something that is.  

    Good point Snow! 

    Taleb/ZZ – Good article but he needs to move on from this black swan fixation – makes him seem like a one-trick pony.  


  159. Phil/Beck,
     
    He is hard to watch.  Almost as bad a Rush.
     
    He does make a lot of valid points though.  Pretty much says the same things we talk about only on a national level.  Yesterday he was really beating the money printing drum.  Claims the administration has started some bullshit commission in an attempt to stop gas price gauging.  Beck called him out on  it explaining in detail how gas is going up because they are devaluing the dollar.  He did a good job.  Marched out a bunch of charts showing how the dollar has been influenced by QE.
     
    I’m sure he’s on the administrations hit list.  Can’t have these people with a national audience explaining to the lemmings what’s really going on.


  160. Phil/Beck,
     
    Check out the last 2 videos.  It’s the Glenn Beck impersonating Phil Davis.


  161. Phil/Beck
     
    My mistake.  Starts with video number 3


  162. Good morning!

    Big futures stick last night – half point jack-ups across the board as they drove the Dollar back to 73.93 from 74.5 in an amazing show of manipulation.  The good news is we got our reload on oil futures at $112.50 (now $112) but this looks like the kind of BS open we’ll want to short.

    Beck/Exec – He sprinkles in a lot of crazy with those valid points!  Also, you can’t brush off a 100% rise in oil against a 10% drop in the dollar – what that really is is being an oil apologist and not at all making any point that Big Oil doesn’t want him to make.   A guy like Beck is all about being a distraction – keep the public’s focus away from the real enemies.  Bernanke doesn’t pay him, Obama doesn’t pay him – just follow the money and you’ll find his opinion.  It’s just drill baby drill and a rant AGAINST the people who are looking into Futures Trading.  This is past the FTC – the speculation has moved into the purview of Justice because the actions are criminal and Glenn Beck is just a Corporate Mouthpiece circling the wagons and attempting to poison the jury pool. 


  163. Interesting take on Beck Phil.