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Monday Madness – Greek Vote Down to the Wire

greece greek parliamentGreece again! 

I’m getting sick of it too (although there is a GREAT overview in Stock World Weekly) but it’s moving the markets so we can’t put our heads in the sand…   There are now 4 defectors from Papandreou’s Pasock Party, narrowing the votes he can "count on" to a 1-vote margin in Parliament in voting for the austerity budget that will take place on Wednesday and Thursday this week.  So, 2 days for the opposition to flip one vote and squash the austerity program that is effectively selling Greece down the river to Euro-Banksters – I’d say that’s a done deal so why don’t we just move past wondering if the vote will fail and start thinking about what happens after it fails.  

Greece doesn’t have enough money to make July’s payments.  If they say not to taxing their people 3% to pay down the debt (along with cutting another 25% of Government services and another 10% of existing pensions) and if they say no to selling off their islands, their phone company, their water and sewer services, their ports etc in order to come up with barely enough cash to cover the interest on their debts so they can keep this charade going for another year – then what?  

Well, there’s the joke – then nothing.  The Greeks sold a note to an INVESTOR.  The INVESTOR took a risk that the note would be paid back in exchange for an agreed-upon interest rate that compensated him for a combination of the time value of his money plus the perceived risk of payback (as well as currency fluctuations and whatever else goes into the pricing of bonds).  The vast majority of the bond investors are professional fund managers, who fully understand the risks they take when buying bonds but STILL chase after the riskiest (highest-yield) bonds, simply because they believe that they can always do exactly the kind of arm-twisting that is now being done to Greece to keep them from defaulting.  

For the past two years, Greek debt has been selling for 10-20% and investors have been buying it hand over fist because they believe the game is rigged in their favor and that the EU won’t let Greece default.  Essentially, they are betting that the Greek paper priced at 20% is really as good as German paper priced at 4% so why not make 5 times more money for mis-priced risk?  That logic is so compelling that PIMCO dumped a lot of their US paper and moved into all sorts of European notes and now they are on TV every day, doing their best to manipulate the situation to their advantage.

But think how ludicrous this is getting – the Greeks sold bonds and the bonds promise to pay back the cash plus a rate of interest.  They are "non-recourse" notes, they are not backed by assets yet now the creditors are attempting to (and have succeeded so far) in getting the Greek Government (corrupt, inept, Bankster puppets) to treat them as if they were a mortgage on the country.  Following the same course of NO LOGIC AT ALL, the Banksters have also gotten the Government to treat it’s $800Bn of pension obligations as if THEY HAD NO RECOURSE and Greece has already defaulted on a portion of those payments.  Adding the pensions to Greece’s already $400Bn debt plus the $200Bn they will have to borrow to maintain the status quo through 2012 and we have $1.4Tn of debts against a $300Bn GDP (466% debt to GDP ratio).  

When do we own up to reality?  500%?  600%?  1,000%?  Do we just keep lending them more and more money and pretending they are not in default?  Before you say, that’s ridiculous, keep in mind THAT’s JUST WHAT THE U.S. IS DOING NOW!   That’s right, I fooled you – who cares about Greece and their silly $400Bn total debt when the US is borrowing $140Bn PER MONTH!  Wake up America – Greece is the distraction of the moment because it’s THIS country, America, that has REAL PROBLEMS, not Greece.  

Greece can just default.  If Greece defaults, they wipe out their debts and they simply can’t borrow more money but, at this point, any cutbacks the Government has to make and any taxes the Government has to oppose are nothing compared to what is being asked of them to service their debts.  Not only that but if Greece defaults, then that money stays in Greece, rather than the Greek people putting in all their efforts to fill the vaults of European Bankers and PIMCO.  

America, on the other hand, has a REAL problem.  Like a heroine junkie – we NEED our fix!  Greece has a 10.5% budget deficit but 10% of their budget is paying interest in Debt and another 10% is paying principal on debt.  The US has a budget deficit that is also 10% of our GDP (and we are not even going to get into UNfunded liabilities = $114Tn) yet interest on our debt is "only" about $400Bn a year at the moment (2.5% of GDP) but, at the current rates – have nowhere to go but up.  

In fact, if we were paying Greece’s average rate of 10% instead of our average rate of 2%, we’re need $2Tn more Dollars a year JUST TO PAY OUR INTEREST!  

Don’t forget, our interest is not just on the money we owe to foreign banks and pension funds, our interest is also "owed" on the money we stole from the Social Security lock-box.  Senior Citizens in this country better hope the Greeks don’t roll over and take the EU "deal" because they are a Bankster test case for how much crap they can get a nation to take before the people revolt and the US is next.  

In fact, at this very moment, our elected "leaders" are debating the issue of raising the US debt ceiling over the $15Tn level.  That’s 37.5 times the size of Greece’s debt and growing at a rate of 4 times Greece’s ENTIRE debt per year.  One entire Greece each quarter yet we are fixated on Greece and ignoring the ticking time bomb that is going off in this country.  Isn’t that strange?

Even stranger is the joke of the discussions going on where the Republican’ts in Congress insist that there be no tax increases to pay off our $15Tn current debt and reign in our $1.4Tn annual deficit.  The Reps feel we can just take an ax to Government Spending and slash $1.4Tn in spending while growing the economy at a 4% annual rate.  Our major spending items are:  

  • $818Bn – Medicare/Medicaid 
  • $713Bn – Social Security
  • $700Bn – Defense (not that anyone is attacking us) 
  • $423Bn – Income Security
  • $210Bn – Interest on Debt (not including SS interest owed)
  • $210Bn – Federal Pensions

That’s $3.1Tn out of $3.6Tn in total Government spending and then there’s $500Bn in "discretionary spending" on things like roads, bridges, environmental protection, post offices, education, the center for disease control, FBI, CIA… you know, Government waste, as Rush likes to call it (and there’s a great NYTimes article this weekend on the value of public spending so they can report, you decide).  On the collections side of the equation, we have the following (keeping in mind we’re $1.4Tn short already):  

  • $942Bn – Individual Income Tax
  • $842Bn – Payroll Tax (80% paid by people making under $106,000) 
  • $195Bn – Corporate Tax

That’s just $2.2Tn collected but don’t worry – All we need to do is cut $1.2Tn out of our $500Bn worth of discretionary spending (and 58% of the discretionary budget is military too!) and grow the economy 4% a year without those needless government programs (or the jobs they create) while keeping the interest on our debt at 2% or less and everything will be fine over here too – just like it’s fine in Greece!  Do you see how we are being lied to like children by our representatives – who themselves are to immature to face up to the truth.  

If you are dumbfounded by that $195Bn Corporate Tax Rate – you should be.  Corporations pay an average tax rate of just 12% – and that’s on the profits they declare!  That’s even better than the 17% average tax rate paid by the top 1%, which goes to show you the value of a good accountant vs. the joker who prepares your taxes!  Even more amazing is that we include the $842Bn in Payroll Taxes collected as Government Income, when it should be earmarked to fund the SS and Medicare payments it is specifically earmarked for.  

As with any Ponzi scheme (and clearly the SS game is coming undone) the real danger is that the rubes wise up and you can no longer find new suckers to fund the con.  As the Republicans succeed in paring back SS and Medicare benefits, at some point workers will wise up and refuse to contribute to a fund that’s never going to pay them back.  Once that happens, you can kiss $842Bn in revenues goodbye and then you will see that the Emperor really has no clothes as the US is actually collecting just $1.1Tn to cover their $3.6Tn spending habit.  Those Greek bonds are starting to look pretty good by comparison, aren’t they?  

Meanwhile, those 110M Consuming Households who will ultimately have to shoulder the US Debt Burden are themselves $16Tn in debt, with $13.7Tn in mortgages and $2.4Tn in credit card debt putting the average family over $150,000 in debt with 50% of those families earning less than $30,000 per year.  Every year, the US is CURRENTLY racking up another $11,616 worth of interest debt PER CITIZEN alone!  That’s $35,000 per family of interest payments that have to be made to service the current debt, which is projected to double over the next 10 years and if interest rates were to double to 4% (40% of Greece), then we’d need $140,000 per family just to pay the interest on our existing debt – EACH YEAR!

As I said, Greece is nothing but a distraction and thank goodness for it or we’d all be focused on these numbers every day and then everyone would be REALLY depressed but, as we reach the end game on Greece (and the EU HAS to give them money, whether they want it or not so it will come on Greece’s terms, not the EU’s) we need to get ahead of the crowd and focus on the beginning of the end game for America and that game does not look like it’s going to end well.  The ONLY possible way for us to avoid default is to grow our way out of debt but the only plans Congress is willing to vote on involve cutting back and (insane as this may sound) collecting LESS money to pay our bills.  

Anyone who looks at the above numbers can plainly see how ridiculous that is.  We either have to spend MORE money to grow the economy, putting more people to work and increasing our TAX Revenue base to close the spending gap, or we have to just print so much money that inflation devalues the $75Tn in national assets (was $100Tn before QE1 & 2) to extend and pretend this scam for another year or two.  So far, our Government has consistently chosen option number 2 – and $25Tn of lost asset value later we still have not filled the gaping hole in the balance sheets of the banks.  Can we survive another round of Quantitative Easing?  

We could if the Fed gave the next $16Tn to 110M families instead of the IBanks – that would wipe out all family debt and then we could raise taxes 10% and collect another $400Bn a year ($200Bn from citizens and $200Bn from corporations) and then we would at least be on a rational road to recovery.  But that’s never going to happen.  Instead we can expect more extending and pretending until collecting $400Bn will be nothing more than a drop in the bucket (and it’s not much now, is it) so there will be no point – just as there is no point for Greece to try to repay their impossible debt load.  

The only difference is, when Greece defaults, it will cause a ripple in the Global pond but when the US defaults, it’s very likely the whole World will go down the drain with it.  

 


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  1. flipspiceland

    @Felipe
    As you’ve said many times before we don’t care (on the investment/gambling level) about how the Masters of the Universe manipulate things as long as they telegraph what they are doing so that we can exploit it.
    What do you think are the two best moves, should Bill Gross manage to capitalize on his 20% return bonds?

  2. jcaesar

    @Phil - When and how did we take money from the Social Security trust fund?

  3. kurtww

     Phil – Related to what Flip asked, and this may be a discussion better suited to a weekend, but I thought I’d throw it out there since I forgot to ask this weekend. If you want me to table it till next weekend, just say so. If Greece defaults and leaves the euro, and the euro begins an inevitable slide towards oblivion, what do you think will be the consequences for a country like Germany? They are in great shape, but a lot of their growth has been in exports, and if the euro goes away, the new Deutsch Mark will probably go much higher, cutting their exports, etc. Will they trade euros for new currencies in an equitable fashion (perhaps convert back using the old values when the euro came out), and then watch them wildly swing to more appropriate levels, or would they try to make that adjustment before conversion? Obviously this is all speculation, but I’m curious how one would play that scenario. More specifically in my case, if I wanted to eventually own some real estate in Germany (lets say in 5-10 years), is there anything I could do at this juncture to hedge against it being unaffordable (in dollars) in the future? 

  4. stjeanluc

    Oil Lines
    R3 – 92.10
    R2 – 91.70
    R1 – 91.20
    PP – 90.80
    S1 – 90.30
    S2 – 89.90
    S3 – 89.40 

  5. iTrade

     Phil,
     
      After reading today’s post, and several in the past… I’m got motivated to suggest a "EMAIL YOUR CONGRESSMAN" post.
     
     Tomorrow you should gather all the points you want about the US Debt, the Debt Celling, and related items. We can then EMAIL THE TEXT to our congressman/senator.
    HOUSE
      https://writerep.house.gov/writerep/welcome.shtml 
    SENATE
      http://www.senate.gov/general/contact_information/senators_cfm.cfm
    PRESIDENT
    http://www.whitehouse.gov/contact/
     
      This topic is important… you way of wording things is perfect for motivating all PSW members to send this information on to people who hopefully will listen!

  6. stjeanluc

    FAS Money – Here is the current situation:
    Long Strangle (hedge) – Jan 2012 18.33/28
    On Friday we sold the Weekly 24 Put and 23 Call for respectively  P 1.20 (now  around 1.45) and C 0.95 (now about 0.85). For those who don’t mind the day trade, we bought back the 23 Call for a 0.30 or so profit between 11:00 and 13:00. Phil advised at the end of trading day to sell the 24 Calls for around 0.28 or so (your mileage may vary!). So now, we have a short 24 straddle open for the week.
     
    For those who don’t (or can’t) day trade, you have short the 24 P and 23 C. 
     
    Lapper and I sold a 23 straddle on Friday with the Calls around 0.65 and the Puts around 0.95. Just different gut feeling! I guess this might be a bit confusing, but we are still experimenting a bit with this trade. 
     
    Obviously, Phil is more bullish coming in this week thinking about the end of the quarter (hoping for 24) and Lapper and I are more neutral. Lots of factors in play – Greece can be fixed 5 days in a row and we could have an agreement on the debt ceiling negotiations. 

  7. nicha

    Great article, Phil. You should make it readable for everyone as it drives the debt cieling point home. This article explains all that the news shows cannot. Everyone should pass this article to everyone thet know!

  8. jabobeast

    Phil—what is your opinion of CMG raising prices? Does it help or hurt the stock?

  9. lapper

    yeah, i-trade, it’s nice believe in the system isn’t it?  Most members here are far too smart to do that though.  The smartest already have outs prepped, others are in the process.  Nothing will change to the better here.

  10. rainman

    Citi Explains Why The US Consumer Is Not Dead

    Read more: http://www.businessinsider.com/citi-on-why-the-us-consumer-is-not-dead-2011-6#ixzz1QTzQOhCu

  11. spiro21

    Phil
    Mood from Athens:
    I am here for about seven months studing, papertrading and closely watching. All this time I tried not to post anything about what is happening here. My reasoning: You really have top quality coverage of  the news ,  PLUS  comments from people capable to see beyond, PLUS further analysis from recently coloured Saint. So, it would be a great disappointment  for me  to mislead with my comment   anyone from  the long list of nice people and traders here.
    As per your question about the mood here :
    If you mean political mood, although I am not a close watcher, things are pretty clear. Austerity plan will pass this week, even  with votes of some opposition members , who remain silent for the moment. With this act , the ruling socialist party signs its defeat whenever next elections will be held. On the other hand, this will give more time to bureaucracy to organize a “ fifth phalanx plan” inside conservative party, in order to have them capitulated before their election.
    If you are asking about people’s mood,  I think that every day  we are getting closer  to the   “ ignition point” of violence with unprecedented consequences for everyone, as long as the politicians don’t bring a clear message of HOPE, even for the distant future.
    I wish everybody a nice and profitable week and H2
    Pharm , have a nice vacation

  12. tuscadog

    Phil / Spiro   His post is interesting indicating the vote will succeed.  While you seem to have decided it won’t due to defections.  Clearly the vote will either trigger a mkt panic or surge depending on the outcome.  How to play this?

  13. JRW III

    Good morning,

     

    IWM   77.90,  78.54,  79.19,  79.52,  79.77, 79.96,  80.18,  80.48,  80.81,  and 81.09

    I think we retest the lows (79.52) then………………………………….

     

    And deano posted this on Friday night, from Cory:

    Jun 24, 2011: 6:23 PM CST

    Well this is certainty a very interesting predicament – the Daily Charts of the three major US Equity Indexes are all showing EMA compression.

    Short-term daily moving averages are falling as long-term averages are rising, and price is distinctly trapped BETWEEN these averages that are on a collision course with each other and price will soon be squeezed one way or the other.

    It’s a unique situation we should be watching, so let’s start with the S&P 500:

  14. jabobeast

    great article again today Phil!

  15. rustle123

    This was a killer article this morning, very much enjoyed it and forwarded it to a few friends already.

  16. dclark41

    Nicha:
    Which article were you referring to? Thanks.

  17. exec

    JR,
     
    Which lows, Fridays or the 16th?

  18. Pharmboy

    For you stj.  Good trading all!

  19. dclark41

    Nicha:
    Forget question. I must still be recovering from the weekend!

  20. doro165

    Phil, why do you have Social Security listed twice on your chart above? 713BN and 423Bn

  21. jabobeast

    another all-time high for CMG--the mf never goes down!

  22. acobra65

    Phil/Post
    As usual, Phil your post hits the nail on the head…. a picture is worth a thousand words is an understatement.  EVERY SINGLE SENATOR AND CONGRESSMAN past and present is responsible for not straightening out this mess.  In the private sector each of these a**h**** would have been sued hard and long….. I believe someone should buy a plot of gound near the Capitol and begin building a " New Washington Monument"….. similar to Mount Rushmore…. but put every Senator’s and Congressman’s Face and dismal resume of "No Votes" to fix this problem. This momument would be complete as the end nears……. Nothing like having your "face" there for all your constituents and citizens to see…. Just a thought…    

  23. Phil

    Good morning! 

    Clearly I’m a bit more bearish after doing my weekend reading.  It started out with me just trying to get a handle on the Greek situation but, since I know all the US numbers off the top of my head – each time I read about how Greece is "doomed", "unpayable", "already in defalut", etc. – it kept occurring to me that the same or worse could be said about the US other than the fact that the Fed is papering over our debts by buying TBills at artificially low rates.  If the EU were brazen enough to run such a scam on Greece and buy all their notes at 2%, then they’d look much better as well!  

    Already the Fed has indicated that there is still $300Bn to buy TBills with as QE 1 and 2 "roll over".  That’s 1/2 of QE2s total that they’ll still be using but they are unclear about their rate of purchase so TBT is back at $33 ahead of note auctions.  XLF, on the other hand, seems happy as that’s another $300Bn the IBanks get to play with.  

    So we can expect a little panic shake-out this morning to dump the weak hands, followed by the beginning of the real move higher as the news of the $300Bn spreads and, I’m sure, someone will talk about "augmenting" that number by the week’s end.  They didn’t take the Dollar all the way down from 76.50 to 76.08 this morning just to let the Dollar float back up again and crash the markets!  

    When in doubt, we watch our levels and our levels say those 2.5% lines on the Dow (11,895) and the S&P (1,268) are VERY BOUNCY – so the last thing we want to do is be fooled into betting that they will break when they are only bending:  

    797 on the RUT is also holding up well and what we need is confirmation from the Nasdaq at 2,672 and last would be the always slow NYSE at 8,073 to confirm what I am still sure is a move back to AT LEAST our Must Hold levels by Friday.  Yes, I realize I just wrote a post that clearly lays out how totally screwed America is but McDonalds is NOT America, Coke is NOT America, Dupont is NOT America.  Greece is bankrupt, screwed, over, in default, a total disaster but – do you know what?  Tomorrow morning the VAST MAJORITY of their 11M citizens (yes, that’s all) will still wake up and turn on a light switch (SO) and will drink some coffee (SBUX) and will put milk in it (DF) and have some cereal (KFT) and, hopefully, use some deodorant (JNJ) and wash their clothes (CL) and go have lunch (MCD) and go to the supermarket (SVU), maybe even in a car (F) with gas (XOM) etc., etc.  (see  The Worst-Case Scenario:  Getting Real With Global GDP!).

    So we don’t run from equities just because the US is falling apart.  They are probably more reliable than commodities in the long run to protect our wealth.  We just need to focus on companies with good management and solid international bases.  They may go through a rough patch and have a downturn but, in the end, they are likely to emerge stronger as their competition falls by the wayside.  

    No new upside plays today (other than bullish futures plays in Morning Alert as long as the Dollar is below 76), we took enough chances going into the weekend and now we’ll just have to see if we hold our levels or if we need to scramble and cover:  

    Monday’s economic calendar:
    8:30 Conference: Dodd-Frank One Year On
    8:30 Personal Income and Outlays
    8:30 Chicago Fed Midwest Mfg. Index
    10:30 Texas Manufacturing Outlook Survey
    11:00 Fed’s Kocherlakota: Rethinking Leverage Subsidies

    At the open: Dow +0.2% to 11959. S&P +0.11% to 1270. Nasdaq +0.06% to 2654.
    Treasurys: 30-year -0.02%. 10-yr +0.16%. 5-yr +0.04%.
    Commodities: Crude -1.13% to $90.13. Gold -0.13% to $1498.90.
    Currencies: Euro -0.03% vs. dollar. Yen -0.6%. Pound -0.1%.

    On the hour: Dow +0.48%. 10-yr +0.05%. Euro +0.31% vs. dollar. Crude -0.98% to $90.27. Gold -0.13% to $1499.00.

    09:57 AM The euro spikes 70 pips in minutes, with U.S. and European shares jumping higher alongside. There’s no apparent news, but expect some sort of positive announcement out of Europe before the morning is overFXE +0.3%.

    May Personal Income and Outlays Income: +0.3% vs. +0.4% expected, +0.3% (revised) prior. Personal spending 0% in-line with expected, +0.4% prior. PCE core price index +0.3% vs. +0.2% expected, +0.3% (revised) prior

    May Chicago Fed Midwest Manufacturing Index: +0.6%, to a seasonally adjusted level of 84.0 (2007 = 100).

    Drivers get a bit of relief as average pump prices drop 11.22 cents to $3.63/gallon,  Lundberg Survey says, citing "poor economic news" as a reason. More falls in crude prices, especially as the IEA releases reserves, could send gas down another 20 cents. As recently as May, it was almost $4.

    The International Criminal Court at The Hague issues an arrest warrant for Libya’s Gaddafi.

    Moody’s censures Japan for its inability to forge a plan by its self-imposed deadline of last Monday to deal with its massive debts. "This development is credit negative as it does not anchor government finances in a framework that holds out the possibility for containing debt," the ratings agency says

    S&P estimates a U.S. rating downgrade costing bond investors $100B as yields rise. Additionally, the government will face higher costs to finance its deficit. A reminder: Japan has had numerous downgrades over the past decade, only to see its financing costs continue to drop to nearly unimaginable levels

    President Obama is due to separately meet Democrat and Republican Senate leaders today as he looks to solve the impasse over cutting the deficit and raising the U.S.’s $14.3T debt ceiling by August 2 in order to avoid a default.

    Even as the U.S. economy has slowed and economists have ratcheted down growth forecasts, analysts of individual stocks remain as upbeat as ever - not just keeping earnings estimates for the current quarter intact, but raising them. Skeptics warn that analysts have set the bar too high, increasing the chances companies may disappoint and trigger more market turmoil

    In its annual report, published yesterday, the Bank for International Settlements calls on central banks to start raising rates in order to rein in inflation, and says they may have to do so at "a faster pace than in previous tightening episodes." 

    Portuguese and Irish bond yields hit another record high as markets isolate the next weakest members of the EU herd. Irish 2 years jump 34 basis points, moving above 14% for the 1st time, while Portugal hones in on 15%

    Former ECB member Axel Weber calls the argument about private sector involvement in the Greek bailout a canard. He notes the vast majority of Greek debt is guaranteed by the EU/IMF, held by central banks, or held by other banks rescued and partly owned by governments. There’s little private sector to involve.

    The eurozone should prepare a Plan B in the event Greece’s parliament rejects new fiscal reform this week, says German deputy finmin Asmussen. In Athens, PASOK party leaders are engaged in furious horse trading to retain the votes of wavering members.

    Moody’s warns on deposit outflows from Greek banks, saying they amount to 8% this year, but accelerating in recent months. It is estimated that half this amount is cash leaving the country (the Swiss franc is at a record high). A decline of 35% could cause "a severe shortage of cash" in the banking sector, even with ECB funding. (pdf)

    French banks have reportedly told the French government they’re willing to partly roll over maturing Greek bonds, while U.K. banks are being urged to take multi-million pound losses in a bid to stave off Greek default. The moves come even as eurozone leaders admit they’re preparing for default just in case. 

    Nicolas Sarkozy announces the outline of an agreement with French banks to roll over their Greek debt, following which German bankers voice their interest in the "French model." Whether ratings agencies will accept such a deal without declaring a default is open to question. (earlier

    A report by Boston Consulting Group says Spanish banks are hiding an additional €50B in real estate losses, and the sector will need an additional €20-€30B in capital. The report estimates the Spanish bank rescue fund – the FROB -  could end up a 20% owner of the industry.

    It’s ‘probably inevitable’ that the eurozone will have to create a mechanism allowing weaker economies to exit the euro, opines George Soros. "We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread. The financial system remains extremely vulnerable."

    Chinese Premier Wen Jiabao says China will find it difficult tomeet its 4% inflation target this year but expects it to come in below 5%. In May, inflation was 5.5%. Wen, who is on a trip to Europe, also forecast that the economy would grow above 8%-9%.

    Hoping to ease concerns about the threat of state and municipal debt to bank and national finances, China’s National Audit office reveals there is total local debt of $1.66T. The office says the localities are obligated to pay back 62% of this amount, begging the question about the other 38%.

    Already the world’s busiest container port, Shanghai is planning for continued powerful growth over the coming years. As manufacturing plants seek cheaper costs inland, Shanghai, sitting at the mouth of the Yangtze – which stretches across the country – occupies a key spot.

    Chesapeake Energy (CHK -1.1%), Quicksilver Resources (KWK -1.9%) and Southwestern Energy (SWN -1.5%) trade lower after a NYTreport suggests some U.S. government energy officials are skepticalabout the shale gas industry. CHK’s Aubrey McClendon rebuts: It’s "ludicrous to allege that shale gas wells are underperforming as we sit awash in natural gas." 

    LDK Solar (LDK) approves a buyback of $110M of its American Depository Shares. "We remain confident in our current outlook as well as the long-term prospects for our business. However, we believe our ADSs are currently grossly undervalued." (PR

    Morgan Stanley issues a positive Research Tactical Idea on Apple (AAPL), saying the recent dip offers a buying opportunity. The worst of the earthquake-induced production constraints have passed, allowing shipments to increase and potentially giving a boost to profit margins. Shares +0.8% premarket.

  24. lol730

    25K/FAS – are we half covered or naked?

  25. JRW III

    Thanks for the save !!

  26. rustle123

    With the news of the QE 2 1/2 which will probably lead to the dollar getting weaker and possibly back into the 74′s, do we start taking a position of going long oil?

  27. yodi

    Hi Phil How are we playing the FAS today now 23.48 up.67 24c is .35 we sold some Friday for .27 and the 24 JUL1 put sold for 1.23 now .90

  28. tuscadog

    Phil / $300B rollover    How does this create any new net liquidity if Treasury has to repay on original note as it’s selling the new note to the Fed?

  29. exec

    The games they play with the dollar.

  30. exec

    JR/Save,
     
    So they finally did it.  What have they decided to call it this time?

  31. Anonymous

    Wow.  It’s really impressive how fast they can drive the price back up when they just stop selling-  Bravo. 
    fyi, been fully covered since the open.

  32. bobhu

    FAS income, if you didn’t sold for FAS $23 calls(waitng for rebound), I just sold them for $0.90.

  33. rustle123

    Phil, another question, do you think they go bullish on the market all week or would there be a point you would start looking at DIA Puts again, and if not, should we be purchasing some DIA calls?

  34. exec

    Phil/F
     
    I’ve been itching to buy Ford for a while.  Schwab has them listed as a strong outperform which is a rarity with their rating system.

  35. rustle123

    Have an email from Goldman Sachs which is  for a thorough recap and outlook of the crisis in Greece, the US Debt Ceiling debate and other spotlight areas that leads to the conclusion “Increased Turbulence Ahead.”  Don’t know how to post it in a link, but can forward it to anyone who wants it.  Just in case you didn’t read enough fiction over the weekend.

  36. stjeanluc

    FAS Money – I will cover the 23 PUT short for a 0.45 profit in my 23 straddle. Might as well use this spike to collect what I need for the week. Now I just have to worry about the 23 calls! 

  37. stjeanluc

    Also, I am flying to France tonight for my parent’s 50th Anniversary this weekend. So this afternoon and tomorrow are traveling days… I will not be in front of my PC all the time to monitor the FAS money like last week. Although with time difference, tomorrow might be OK. 

  38. Phil

    Gross/Flips – I think they MUST take down the Dollar.  They know we’ll just print more so no harm to the US really (other than the poor suckers who live here and can’t hedge against inflation) and that makes EU bonds more valuable (and a strong Euro isn’t bad as they mostly import oil and Japanese and Chinese goods and trade with each other) and makes the EU citizens feel rich and generous enough to bail out Greece.  The weak dollar is, of course, a booster for our markets but – HOPEFULLY – the commodity game will end and speculators will rotate into stocks that will fare well against inflation rather than in things that cause inflation.  

    When and how/JC – there are two links above in the paragraph where I discuss SS and I’m happy to discuss after hours.  

    Default/Kurt – Also good for after hours.  I could write a whole book on what I started this morning, these are just quick crib notes to try to give everyone an idea of what I’m seeing at the moment.  Greece can’t default.  Look at the news above on Portugal and Irish notes already – it will be next, Next, NEXT! until they get to Italy and France and all that money ultimately bleeds out of Germany if they should pursue the hopeless path of attempting to keep the EU together once they allow the first default.  So, if Greece goes – then the EU is done for.  Not quickly, but the reality is bondholders will never trust the weak countries again and they’ll just pick them off one by one.  So Germany CAN’T let Greece default.   If they are smart, they’ll get someone to buy a Greek Island for $150Bn ($7.2Bn a year mortgage at 4%), maybe GS and other Banksters can create a tax haven (charge 7,000 rich guys $1M per year to live tax-free) – many ways to game things if you want to pretend Greece is better without more loans or a direct hand-out.  As to the hedging thing – very interesting topic for after hours so remind me.  

    Email/Itrade – It’s a busy week but feel free to plagiarize and maybe I can edit something later if you put it together.  Meanwhile, you can just send this one out.  If you click back to the main page, it’s got an Email, Twitter, Facebook icon and I made today’s post available to the public.  

    Wow, 75.80 on the Dollar and oil back over $91.  Gold still $1,499 for you /YG players.  IWM bull call spread and QLD spread looking very exciting and NO, I do not want to cover FAS in the $25KP!  

    FAS Money/StJ – If XLF breaks $15, an aggressive trader would want to kill 1/2 of the short $24 calls and I guess the $23 calls too (if you didn’t listen to me and sold those).  

    Thanks Nicha!  

    CMG/Jabob – Well it helps if the increases go through without hurting sales but you won’t know that for 3 months.  People who are dumb enough to buy a $6 burrito will buy a $6.50 burrito too, I think so I’d have to call that a positive but now expectations are high and they still have to report the earnings that caused them to have to raise prices so a nice dip probably coming on the report now.  

    Not dead yet/Rain – Not if we get gas prices back down but look at Personal Income today – barely keeping up with even the BS core inflation.   

    Athens/Spiro – I wish you wouldn’t feel that way, I LOVE to hear the opinions of people who actually live somewhere.  Nothing we read can replace the actual experience of life within the country and I can make much better use of your particular knowledge by getting to know you and understanding where your own observational strengths, weaknesses and biases are.  So thank you very much for your observations and please do let us know if you see any major changes in mood that aren’t being reported over here.  

    Vote/Tusca – I don’t know yet.  I now have to look more closely at the Greek Government.  As I said, I could not imagine that the public officials could be so controlled by the Banksters that they are willing to suicide their political careers in order to sell their country down the river but Spiro seems to feel it’s a given – that’s very interesting to me and he seems like a nice, rational guy (although we haven’t had a chance to get to know him) so I think I’ll have to pull up a lot of Greek political commentary and think about it.  Anyway, either way Greece will be "fixed" and that is how we’re playing it (bullish) because it can’t go any other way – not in any world in which Germany pursues a logical course of action and Germans are pragmatic, if nothing else.  

    Nice 9:32 call JRW!  

    Thanks Jabob, Rustle!  

    Social Security/Doro – Thanks, fixed!  

    Thanks/Acobra – It’s a good thought but who goes to DC anymore?  It’s time for torches and pitchforks, I’m afraid…

  39. angelcur

    spain cds +5.7% today…looks like today’s stock move is the usual end of quarter switcheroo…a bad quarter usually sees a couple of big up day’s in final week.

  40. Ottomatic

    @Phil – When you mentioned "drink coffee" you forgot GMCR.  Apparently it’s what America runs on, ha. 
    Analyst disclosure – Otto has a bear put spread on GMCR.  

  41. dclark41

    Phil:
    I have SQQQ hedge 27(in at 3.46)/35(sell at 1.31) now: (2.75/1.15). Should I roll the whole spread down to 26/34? When do you adjust a hedge or do you just take it out? Thank you.

  42. JRW III

    Out of TNA for $2.53 average or 3+% !!

  43. hoss18

    So maybe this is the start of a real rally? Between QE2.5 and Greece beer bonging austerity? I dunno, still nervous, so getting flatter, raising cash.

  44. shadowfax

    Very nice orderly ride up and out.

  45. David Ristau

    Phil -

    QQQ $55 Weekly Calls. So, the index came all the way back. We are up just a bit though on our calls due to the decay and rising theta on these calls. I believe we are going to move higher.

    What do you do with weekly options when you see the dropping theta? Just getting worried that I need to continue to see rises in the market just to keep this price level.

    Perhaps a more general rather than narrow response is what I am trying to gage. Thanks!

  46. kustomz

    Nice one year round trip for GS back to 129

  47. rainman

    Since when does MSFT deserve so much love?

  48. rustle123

    Found this article hilarious, tobacco companies have not had an easy time advertising since 1960 going forward as well documented on "Mad Men"
     
    http://beta.news.yahoo.com/philip-morris-fights-australian-packaging-rules-013947085.html

  49. Phil

    FAS/$25KP, Lol – I don’t remember calling a cover on $25KP and, if I did, I was wrong and we should be naked.  We covered in FAS Money (officially with the $24 calls) because it’s meant to be conservative(ish) and it wasn’t worth taking a chance.  Actually, it was worth it but it was bad practice as it was 50/50 and I was going with my gut, which is not something you can teach so the proper move is to sell your premium, not play hero.   In the $25KP, the whole point is to take risks (you don’t make 300% in a year playing it safe) so it’s an entirely different situation.  

    QE2.5/Rustle – It’s not news.  We knew they were going to roll over the old notes so I don’t think that’s going to be enough to get us over the hump but it did save us from falling through the floor.  Now that excitement is wearing off already and the Dollar is holding 75.75 with the Euro at $1.427 and the Pound at $1.60 and 80.89 Yen to the Dollar so – what now?  Clearly they have room to boost the Yen back to 80.50 without hurting the Nikkei much and the Euro already punched over $1.425 so that’s nice and if the Pound holds $1.60, that too will be bearish on the Dollar and continued bullish on stocks and oil but – then what?  They need more and I don’t know what more is going to be but they can’t even afford to give up the lame momentum they have so there should be something out by noon if we are going to keep this "rally" going through the afternoon.  

    FAS/Yodi – As I said above, If we sold $24 calls, we should buy them back (now .35) but I could have sworn I said they were not worth selling in the $25KP to generate just $1,200 or whatever it was.  

    Rollover/Tusca – The Fed bought a lot of 2 and 3-month notes so those cash out regularly and the Fed has cash again so they plow it back into new notes.  It’s not new liquidity but, if they didn’t do that, it would drain cash from Treasury and they’d have to borrow from somewhere else to pay the Fed and that could send rates higher, etc…

    DIA/Rustle – I hate to do this but I’m EXPECTING A MIRACLE that boost the markets.  Whatever BS it is – I expect us to have a huge relief rally into Friday.  It’s like watching Indiana Jones hanging off a cliff and he let’s go but you know he’s not going to die – you just don’t know how.   This market is just as fixed as a movie script, we’re just sitting here with our popcorn waiting to see how they get out of this mess….

    F/Exec – I like them back here at $13.38 as a long-term play.  They don’t give you a dividend so no point in giving them your money for the stock and you can buy the 2013 $12.50/17.50 bull call spread for $1.70 and sell the $12.50 puts for $1.87 for a .17 credit on the $5 spread that’s already .87 in the money with $5.17 of upside at $17.50 against $3.60 of net margin so a nice 145% return on margin over 18 months if F hits $17.50 and your worst case is you own them for net $12.33 (7% discount).  

    GS/Rustle – Same stuff they always send out really but you can quote them if non-proprietary.  Would be nice if they actually came up with a trade based on that other than "the markets may move up or down".  

    Now Art Cashin saying the fix is in on Greece on CNBC.  He’s a straight-shooter, about the only useful analyst on that channel.  

    GMCR/Otto – Yeah, I didn’t want to give them any credo.  

    SQQQ/DC – That’s August, I take it?  Well, we’re bullish for 5 days, then bearish again so rolling is good but no hurry. Maybe offer .40 for the $26 roll or .80 for the $25 roll so, if you get it, it’s already a bargain.  Otherwise, the logic is, SQQQ either goes back up and you didn’t need to roll or it goes down and the roll is cheaper (time not a real factor between now and Friday on a spread).    This is, however, why bullish offsets are the best way to play these.  For example – I’m sure most of the various short put ideas from Friday are all doing well – the idea is that the bullish short put pays for the bull call and if the market goes up and blows out your bull call spread, the short put pays for it and your overall hedge cost little or nothing.  When you don’t offset the play – then you have a bearish bet and you have to treat it as such, which means you either roll it or stop out with a loss when your comfort zone is breached.  

    Fantastic timing JRW – back in the groove I see! 

    75.84 on the Dollar on the bounce off 75.75 but that’s a fall from 75.60 so .85 down = .17 bounce (20% of the drop) is 75.67 is weak 20% and 75.84 is a 38%(ish) Fibonacci retrace so – if this level holds – it’s game on again for the bulls if the dollar turns down.  Over 75.85 then on the Dollar begins to get bearish.    

    Cash is wise Hoss.  

    QQQ/David – Those weeklies decay fast, if we fail to get ahead of the curve into the afternoon they are a dead trade.  Better to get out even and try again than watch an out of the money call fade away on you!  

    11:00 AM On the hour: Dow +0.79%. 10-yr -0.05%. Euro +0.66% vs. dollar. Crude -0.55% to $90.66. Gold flat at $1500.90.

    11:09 AM The Fed buys $4.578B in Treasurys maturing 2015-2016, of $13B offered by dealers, and bonds are trading lower across the curve: the 30-year yield +0.04 to 4.23%; 10-year +0.01 to 2.885%; five-year +0.04 to 1.41%; two-year +0.03 to 0.36%. 

    June Texas Manufacturing Outlook: Business Activity Index -17.5 vs. previous -7.4. Mfg. Production Index 5.6 vs. previous 12.7. New Orders 6.4 vs. previous 1.1. Shipments 0.4 vs. previous 8.

    The spike in the euro (and stocks along with) seems related todetails emerging about the French plan for Greek debt. Reportedly, the plan seeks to create a Special Purpose Vehicle for the rolled-over bonds. Banks would then hold equity in the SPV rather than Greek paper. Is anybody else getting flashbacks of CDOs and Hank Paulson’s Super SIV?

    Bad news continues to be good news: Citi credit strategists have a look at an investing world where returns depend on the spigot of government-sponsored liquidity. Their recommendation: "When the world feels okay, be worried; when it feels horrible, expect another kick of the can."

    The tax code could use some deleveraging, Minneapolis Fed’s Narayana Kocherlakota says, calling for limits on deductability of home mortgage interest and corporate debt interest payments; credits on down payments and corporate tax cuts would help without subsidizing debt. Dodd-Frank is making things more stable, he says, but isn’t going far enough.

    Citing continued strong economic growth and rising inflation expectations, economists surveyed by Bloomberg expect a July hike in Brazil’s benchmark interest rate to 12.5%. Despite the country sitting in an apparent economic sweet spot, Brazilian shares are recent underperformers. EWZ -9.2% YTD. 

    Freeeeeeeedom!  The U.S. Supreme Court rejects a California law banning the sale or rental of violent video games to children. Take Two (TTWO +2%), Activision (ATVI +1.75%).

    More Chinese insanity:  More volume today heading into Noah Holdings (NOAH +11.2%), the wealth-management service provider targeting the high net worth market in China. Shares are down 42% YTD, but up nearly 18% from their 52-week low. 

    XOMA soars 33% after announcing the discovery of two new classes of fully human monoclonal antibodies at the American Diabetes Association 71st Scientific Sessions in San Diego.

    Despite the latest plan to boost soft drink prices, Goldman Sachs says the top stock for investors to own at this stage of the cycle is Coca-Cola (KO +0.2%): "We recommend an overweight position in the Consumer Staples sector. Within the sector, Coke ranks highly from a revenue growth and ROE perspective."

    With Nokia (NOK) and Research In Motion (RIMM) struggling, Apple (AAPL +1%) goes for the jugular in its rumored launch of two new iPhones this September: the iPhone5 and a "mid-range" iPhone4S priced at $350. The iPhone5 could "roll right over" Apple bears, and the cheaper smartphone would expand Apple’s market and fend off Android’s (GOOG) rapid growth. 

  50. Jbur

    Rain/MSFT: Since Jbur is short July 25 puts!!

  51. mrmocha

    It’s kind of interesting how inconsequential our President has become.  A few years back Phil’s articles were all about Bush and his henchmen but in today’s blog we get 5,000 words deep before Phil’s first mention of Obama!

    Re. Soros’ quote about Europe, it seems to me that this is his golden opportunity to help the planet and to show his ideas at work: he can just buy Greece and turn it into a living model for his Open Society blueprint. Show me don’t tell me…

  52. rainman

    25 US Mega Corporations: Where They Rank If They Were Countries

    Read more: http://www.businessinsider.com/25-corporations-bigger-tan-countries-2011-6#amazoncom-is-bigger-than-kenya-19#ixzz1QUVGd3zI

  53. stjeanluc

    FAS Money / Phil – Thanks for the input. I’ll keep an eye on XLF then (now at 14.89)! In the meantime, I have a line at 1272 on  /ES and it looks like we are hovering around that as well. 

  54. rainman

    Phil / Cashin — Art is one of the few I actually pay attention to. He’s not afraid to "not know".

  55. rainman

    Jbur / MSFT — Nice! Did you just get into that position?

  56. jabobeast

    CMG 300! FU CMG!!!

  57. rainman

    Jabo / CMG — But that POS CSCO is up 0.10 today!

  58. jabobeast

    Rain--maybe CMG will buy CSCO?

  59. rainman

    jabo ./ CMG — well, the country does need a gas network if we’re to convert vehicals to NG :)

  60. rustle123

    Phil, got in the DIA calls on your last run through of messages, nice call.  Will see if we get a pop on the Greece fix.

  61. Jbur

    Rain: No. Went 40 short on 6/6 at $1.17. It was just getting so cheap.

  62. willsons

     YRCW moving up nicely the last week.

  63. jabobeast

    now all the momos are flying
    phil--your call from a couple weeks ago was perfect timing
    amazing how they keep moving higher and higher again (with no real news)

  64. rustle123

    scary think on CMG is it looks like it can easily run another 15-20 points before getting into that overbought territory.  I’ll be looking to write naked calls on it if it gets to 315-320.

  65. Phil

    MSFT/Rain – Spent a very long time being unloved.  

    Tobacco/Rustle – Just think how amazing it is that they can still sell a product that absolutely kills the user.  That in itself is a massive "victory" for the industry.   Maybe that’s the solution for Fukushima – get tobacco advertisers to start a campaign to get people to store radioactive waste in their home ("Sure it will kill you one day – but it’s warm and it glows AND the chicks will dig your burn scars!").   The just need to make a TV show about a lovable cop who likes to collect nuclear waste and, before you know it, it will be a fad….

    Inconsequential/Mr. M – I don’t think our President should be consequential.  Clinton didn’t go meddling in people’s affairs on a regular basis – he steered the ship and let most of the economy run itself.   Bush tinkered and poked and changed the rules constantly and, of course, the whole game blew up eventually.  Now Obama is less intrusive – they throw money at the problem and hope it sorts itself out – that’s not really working but at least we don’t have to wake up every Monday and wonder what insane new announcement will come out of Washington next.  As to Soros – he’s actually put tons of money into the Open Society foundation and they do a lot of good work but it’s not Soros’ invention, it’s an ideal espoused by Karl Popper just after WWII and the theory is that we live in an open society (simply defined as one in which political leaders can be overthrown without the need for bloodshed) and Soros’ "issue" is that the "Democratic Process" has been subverted by the power elite where we have the illusion, but not the fact of openess.   It’s America that needs to show us, rather than tell us that our society is truly a representational democracy where our political leaders serve the will of the majority of the people and not just the moneyed few.  

    Nice rejection at 75.85 so far.  

    Good list Rain. 

    LOL Jabob – Still playing the MoMos?  

    Good job Rustle – kind of fun waiting for good news when you don’t know what it’s going to be….


    “The only function of economic forecasting is to make astrology look respectable.”  -John Kenneth Galbraith

    12:00 PM On the hour: Dow +0.96%. 10-yr -0.09%. Euro +0.67% vs. dollar. Crude -0.32% to $90.87. Gold -0.12% to $1499.10.

    Still pushing this news for now:  QE Lite update: Even with the Fed’s second round of asset buying ending this week, the central bank will remain Treasurys’ biggest fan, using rollovers to buy what could be $300B in debt over the next 12 months (some $25B/month). Just something to weigh as you wonder who steps in to buy bonds in the coming weeks. 

    Ron Paul’s Anti-Fed Message Gains Respect (Bloomberg)

    Debt Hamstrings Recovery (WSJ)

    Contrary to official statements, sources say EU officials have been at work for weeks on a contingency plan to supply Greece with the dough necessary to make good on debt payments should its parliament reject fiscal reforms this week. Though the bills appear to have the votes they need, in private, officials are a bit less optimistic. 

    PBOC Governor Zhou Xiaochuan expresses "quite full support" for Christine Lagarde’s run for IMF chief. Though that decision is beyond Mr. Zhou’s pay grade, the comment suggests privately, China is more supportive of Lagarde’s bid than it has publicly suggested. 

    China Stocks Priced for Hard Landing Signal 2nd-Half Rally by Top Brokers (Bloomberg)

    Consumers will pour $2.1B into digital products in 2011, Gartner says, up from $2B last year – and the companies that will do best with shoppers are the ones with diverse offerings across content, devices and services categories. Those vendors "earn revenue across the full ecosystem and take legacy services to transform to newer products and services." 

    The Great Divergence In Pictures: A Visual Guide To Income Inequality (Slatesee also Where the Rich Are Keeping Their Money (Yahoo Finance)

    The Psychology of Choice: 5 Perspectives (Brain Pickings)

    Human Errors Fuel Hacking as Test Shows Nothing Prevents Idiocy (Bloomberg)

    And, today’s appropriate lunch-time musical break (and I can’t believe no one has made a video of this):  The Greeks Don’t Want No Freaks   

  66. rustle123

    Phil/Radioactive Waste
     
    Phil, if comic books (and now comic book movies) have taught  you anything, is that radioactive things are good for you and can either turn you into a cool mutant with superpowers or if a radioactive spider bites you, transfer cool superpowers to you.  You must do your research into the positives of radioactive benefits.

  67. acobra65

    Mocha/Presidents
    They only made one "W" and then broke the mold…. Besides, Congress is where the action is……

  68. jromeha

    Phil- do you think COF is a good short? Owes looking at shorten near the end of the week…

  69. David Ristau

    Phil -

    Still liking a long play on oil?

  70. etradingsignals

    Phil:  CMG over 300 and LNKD up 7%! Any suggetions to play these?

  71. yodi

    etradingsignals
    CMG buy calls

  72. topher7

    Anyone scooping up any GLD calls here for a bounce??

  73. Phil

    YRCW/Willsons – WOW!  Every time I look away lately, they put up some shocking move….

    MoMo/Jabob – I think I said a long time ago that they are generally great inflation-speculating stocks because they have high-growth models and not a lot of legacy costs so everything looks extra-good on the road ahead.  If they are priced to grow and the pie is growing too – that’s a win, right?  Not a tide we really want to fight anyway – just good to pick them off when they get very crazy like PCLN last week into that bad airline news.  

    Radioactivity/Rustle – Can’t argue with that logic (see, we are already being conditioned to accept the radioactive lifestyle!). 

    COF/Jrom – If the Fed is done handing out money – probably but another flavor MoMo and I think delinquencies are coming down (because no more credit is being extended but whatever) so not a good time to bet against a CC company that can make an extra Billion just by reducing their reserve requirement.  

    Oil/David – I don’t think oil has a lot of upside legs but I do think they get back to $92.50 into the Holiday weekend.  Gasoline (/RB in futures) is  a more exciting upside bet at $2.7714 but gasoline betting is VERY dangerous as it’s about $4,200 per penny move per contract.  

    MoMos/Etrad – Not today.  I think the market goes higher so the rising tide lifts them too most likely but on FRIDAY, FRIDAY – we’ll be gettin’ down on FRIDAY!  (my daughters sing this endlessly).   

    Taxes/MrM – Ooh, that’s another good one to throw at the market. 

    Buzzkiller:  "There’s still a lot of work to be done," says Deutsche Bank CEO Ackermann, speaking about the French plan for dealing with Greece’s debt. He says the French idea is one of several options floating around. "We need all investors on board."

    Lawsuit Contesting Greek Bailout to Be Heard by German Constitutional Court Imminently.

    Cool superpowers already!  Fukushima Residents’ Urine Now Radioactive. More than 3 millisieverts of radiation has been measured in the urine of 15 Fukushima residents of the village of Iitate and the town of Kawamata, confirming internal radiation exposure, it was learned Sunday. Both are about 30 to 40 km from the Fukushima No. 1 power plant, which has been releasing radioactive material into the environment since the week of March 11, when the quake and tsunami caused core meltdowns.

    ECB’s Stark – Aid Plan Gives Greece a "Last Change". Greece’s rescue package gives Athens a "last chance" in its debt crisis as aid programmes cannot be continued endlessly, European Central Bank policymaker Juergen Stark said in a newspaper interview released on Friday.

    Greek Central Banker Warns Time Running Out for GreeceTime is running out for Greece which needs to end debate and move ahead with concrete actions to overhaul its debt-strained economy and reassure its partners and financial markets, the country’s central bank chief told the daily Kathimerini on Saturday. 

    Greek Reforms May be Hard to Deliver, Warns Deputy Prime MinisterTheodoros Pangalos told Spanish newspaper El Mundo that the parliament may reject parts of the €78bn austerity package. 

    European Union Competition Commissioner Joaquin Almunia said the deficits in Spain’s regions are "worrisome" and officials should start making decisions about how to reduce them. "If Greece isn’t able to move forward with the aid provided, the consequences will come," Almunia said, referring to the rest of the euro-zone countries. "The financial markets transmits those risks in a matter of seconds."

    Floodwaters Surge at Fort Calhoun Nuclear Power Plant After Floodwall Fails. (pic)

    European Banks May Need to Raise More CapitalDeutsche Bank AG (DBK), Germany’s biggest lender, and UniCredit SpA (UCG) are among European banks that may have to raise additional capital after regulators dismissed lenders’ threats that stiffer rules may stunt economic growth.

    Economist Charles Gave: The Euro Will Not Exist In One YearCharles Gave is the French economist whose research firm GaveKal is fairly well known, and read in some hedge fund circles.

    Peak "Portfolio Manager Frustration": Goldman(GS) Weekly Chartology Update. It must come as music to every fundamental analyst’s ears to learn that, as Goldman’s David Kostin puts it in the his latest weekly chartology, "Frustration is clearly evident across the portfolio manager communityThe S&P 500 has returned 3.0% YTD compared with 2.7% for the typical large cap core mutual fund and 1% for the average hedge fund." It gets worse: "Investors of all styles are lagging their benchmarks.

    Oil Falls on Outlook for Slowing Demand; IEA May Release More Stockpiles. Oil fell in New York on concern the economic expansion in the U.S. is slowing and as the International Energy Agency said it’s prepared to release more stockpiles to stabilize prices. Futures dropped as much as 0.7 percent before reports this week that may show U.S. consumer spending climbed at the slowest pace in almost a year and manufacturing cooled. 

    One down, 100,000 to go:  Former Citigroup (C) VP Gary Foster was pulled off a flight at JFK Airport, arrested and charged with bank fraud, as he allegedly embezzled more than $19M from the bank in what U.S. Attorney Loretta Lynch calls "the ultimate inside job."

    Though demand from Asian steelmakers is on the rise for now, top iron-ore miner Vale (VALE -0.3%cuts its 2015 production target by 10%, to 469M metric tons. New CEO Murilo Ferreira is backing off forecasts amid worries that Chinese rate hikes will slow demand. - Kind of a mixed message.  

    Copper Falls on China Inflation Concern, Euro Zone DebtCopper lost its footing on Monday on continued concern that inflation pressures may prompt top buyer China to tighten credit further along with demand worries linked to the euro zone debt crisis and a stronger dollar.

    Small and medium-sized companies in China’s southern Guangdong province are facing shortages of capital and higher borrowing costs although there have been no "significant" bankruptcies, Zhang Wenxian, director of the province’s bureau overseeing such businesses, was quoted as saying. Some companies aren’t accepting orders, while some industries have experienced a drop in profits and see business suspending their operations, Zhang said. Guangdong province is China’s biggest export hub.

    Richard Bernstein Explains Why Investors are Way Too Bullish on the BRICs, And Way Too Bearish on the US. (graphs).

    BIS Warns of New Emerging Markets Debt, Property Market Bubbles. Emerging economies are at risk of building up debt levels and property bubbles similar to those in advanced economies that triggered the recent financial crisis, the Bank for International Settlements warned Sunday. "

    Going where the growth is, Goldman Sachs (GSplans to boostits Brazilian headcount 20% in 2011 after bumping it 50% last year. The domestic firms that dominate investment banking in Brazil are unworried. "They’re going to have a hard time getting market share from us," says an exec from Banco Itau (ITUB).

    Seeing most of the damage done, Goldman upgrades Sina Corp. (SINA +5.3%) to neutral on valuation, but remains cautious over the near-term. The stock’s declined more than 30% since going on Goldman’s sell list in April.

    China’s National Audit Office warned of debt repayment risks in some regions and industries, Liu Jiayi, the country’s auditor-general said today. Some local governments offered non-compliant guarantees or issued debt directly, Liu said. Some local governments’ debt repayments rely heavily on land incomes, Liu said.

    China Real-Estate Concerns Keep RisingA recent decline in Chinese real-estate prices is starting to shake confidence in the country’s economic vitality and open a debate about whether the country’s economy is over-leveraged. That’s what made the real-estate bubble’s aftermath so painful for the U.S. and Japan.

    Beijing: Hong Kong Has Property ProblemProperty has had a renewed focus in Hong Kong in the past week as a bubble in prices has officially been recognized as a problem. Hong Kong’s Chief Executive Donald Tsang went as far as to describe property prices as “quite frightening,” raising expectations of a new round of measures to stem price rises.

    Migrant Workers’ Anger Boils Over in South ChinaEmboldened by the tightening labor market, workers are lashing out over brutal working conditions and corruption.

    GSV Capital (GSVC +29.4%) buys a $6.5M stake in Facebook at a price that values the company at $70B. - I would like to announce that PSW is buying a stake in Facebook…  

    Stealth Survey To Test Access To PhysiciansAlarmed by a shortage of primary care doctors, Obama administration officials are recruiting a team of “mystery shoppers” to pose as patients, call doctors’ offices and request appointments to see how difficult it is for people to get care when they need it. 

    Here comes my girl!  Bachmann Surges in Iowa Poll.

    Three lunchtime reads:
    1) Investors have plenty of nothing
    2) Mortgage REITs: where danger lurks
    3) Nine reasons why Spain is not different 

    This is a fun calendar:  

  74. rainman

    For those still struggling finding their trading system: (Video) Jack Schwager Winning Methods of the Market Wizard

  75. jakester

    CMG/Etrade- I would not follow Yodi’s advise of buying calls unless you wish to lose money. They are bumping up against resistance and should retrace over the next few days. If they blow through $303.00 then buy. Just my opinion.

  76. rpme

    Phil, I sold AMZN July $200 calls @ $1.41. Should I let them run down the premium for a couple weeks or roll them now?

  77. rpme

    Diamond, that’s hilarious!

  78. mrmocha

    DPTR - anyone else been watching this one?  Somebody bought 11 million shares of it late Friday, gets me wondering.  Any of you oil experts have an opinion on what’s up?

  79. biodieselchris

    CMG and GMCR rule the world

  80. Phil

    GLD/Topher – I think you can play gold over the $1,500 line (about $146 on GLD) but under there is no real support.  

    AMZN/Rpme – You should try to never let anything that happens in a single day force you to change your position unless your premise has changed.  AMZN got a bullish note from MS and they’re up 4.5% today – the question is – do they deserve it?  Now, before you asked me, I’m sure you already read the research note, which raised the target to $245 from $225 but there was no news in the realease – just a generally bullish long-term outlook and this is the same MS analyst who called AMZN long after the quake – so he’s probably just trying to put a cherry on top of his quarter by giving them a push into the EOQ back to the highs ($206).  Even if you expect $210, which would put your caller $10 in the money, and the current $290s are $12.30 and can be rolled to the Aug $200s at $11.40 for less than $1 so, if you can stand the possible roll-up to Aug $210s (now $6.85) – don’t worry – just don’t let that roll get away from you.  

    That’s excellent Diamond:  

  81. yodi

    jakester
    CMG I have been rolling my short calls from 220 to 280 so I am a bit dissy of rolling only my short puts keeping me alive so far!!!!!

  82. biodieselchris

    Mocha – I was reading in the Economist over the weekend that business is booming for oil exploration companies. Basically, as the cheap "low hanging fruit" oil is plucked from Arab sands, companies need to drill deeper and move to more offensive "climes" in order supply the world’s oil thirst, and these third party exploration companies are just killing it.
     
    Not sure if DPTR is an exploration company or not, but I’m looking for investments in this area so any suggestions on oil exploring compaines are welcome.

  83. jakester

    Yodi/CMG- Understood, but it appears they are at the top of a three and nine month channel.  Anyway, it’s a MoMo so anything can happen but seems like a greater chance of this one headed down rather than up at this point. FWIW

  84. yodi

    jakester I wish you were right as I in deed like to get ride of this SHIT or monkey on my back

  85. samz3700

    who in their right mind wants to yet long before news from greece.

    seems like the only thing to do is wait for a bs rally off of news and then get short or shorter.

    also who or should i say Hu is buying the Euro, is Hu still in office?

    Finally! a little perspective on debt – europe already has very high taxes so its hard to raise revenue by raising taxes – US would be able to address our debt if we could work out a political solution – with eceonomic growth and some higher taxes we could be ok – not saying we will be but there is a little hope – europe just seems screwed.

    who is buying euros today?

  86. rainman

    2 pm stick, right on time.

  87. jabobeast

    fu stick ;-)

  88. shadowfax

    That was no stick!
    The market went down fast and back up to where it was. Something broke and fixed again!

  89. yodi

    shadowfax market
    Well what ever it was some one put gasoline on the fire

  90. jakester

    Stick- 40 points in 0-5… If that wasn’t a stick then I need to be re-educated in the laws of stichism!

  91. JRW III

    In TNA, 1/3 off 80.18, 1/3 off the 8 EMA, and1/3 off the break of 80.48 !!

  92. shadowfax

    yodi
    Crazy market since 11 AM. I really wish we the market goes higher to our next levels so I can have faith for 2 days!

  93. rainman

    <rant> Why the f*ck do people add an "S" to email? Isn’t email plural without the S? How come people don’t "check their emails" then? </rant>

  94. yodi

    shadowfax
    Faith you need to pray more

  95. rustle123

    hoping to test 12200 again by tomorrow or Wed for some very nice profits on the DIA calls.

  96. angelcur

    look like money coming out of infra/commodities and into real growth….huge outperformance.

  97. shadowfax

    JRW
    At about 11:30 I saw a reversed head and shoulder pattern with negative money flow which is a red flage to me. I cought the morning up perfect so I did’t want to give that back. What gave you faith in last up?

  98. shadowfax

    I will add that now it looks like get out to me!

  99. JRW III

    Sell signal; legging out of TNA for about 1% !!

  100. Phil

    And can I get an upside wheeeeee!? 

    Well Angel, your call to radicalism has been redacted by Business Insider already!  

    Who/Samz – They who know the outcome before it happens.  There are many who have a receipt for each of the votes that are needed from Greek politicians – already bought and paid for.  You are right, if you didn’t talk longs last week – best to wait until Friday when we flip short again.  Europe may be a mess but they are a mess that won’t print money at half the speed we do – therefore, like a good Pokemon card, Euros will be rarer than Dollars and thus – more valuable.  As soon as we agree to pop the cap on $15Tn – the writing is on the wall.  They can pretend to save whatever they want but it’s maybe $200Bn a year out of $3.6Tn in spending and they’re going to call it $2Tn in cuts and claim victory while people who can do math will notice we raised the ceiling to $16Tn and we’ll hit it in 12 months.  

    Damn Dollar still won’t give up 75.  Someone needs to buy the Pound to get us going (or selling the Yen).  Speaking of Yenly things – /NKD futures at 9,675 – thank you very much!  

    I’d love to get behind you on that rant Rain but hard to get concerned on the subject what with the World and all….

    Rotation/Angel – Just what I wanted for Christmas (or the 2nd half).  

    01:00 PM On the hour: Dow +0.86%. 10-yr -0.08%. Euro +0.55% vs. dollar. Crude -1.04% to $90.21. Gold -0.51% to $1493.30.

    01:06 PM The Treasury sells $35B in two-year notes at 0.395% (.pdf) – the lowest yield on record. Bid-to-cover ratio of 3.08, vs. a recent 3.18; indirect bidders take 22%, vs. a recent 33.4%. Direct bidders take 13.5%, vs. a recent 14.3%. - Poor auction – TBT up to $33.32

    Treasurys dip further after the two-year note auction came in at a record low yield: the 30-year yield now +0.05 to 4.24%; 10-year +0.03 to 2.9%; five-year +0.07 to 1.44%; two-year +0.05 to 0.39%.

    02:00 PM On the hour: Dow +1.11%. 10-yr -0.29%. Euro +0.59% vs. dollar. Crude -0.38% to $90.81. Gold -0.28% to $1496.70.

    Consumer spending came in flat for May, and adjusted for inflation actually declined a bit, but much of the drop came from decreased demand for autos driven by supply disruptions from the Japan earthquake. It raises hopes for a prompt reversal of the downtrend, since June vehicle sales appear to be stronger than in May.

    "Institutions so powerful and considered so important that theyrequire special support and different rules, the future of capitalism is at risk," says outgoing KC Fed chief Hoenig of the TBTF financials. He dismisses as "nonsense" the meme that tougher capital rules could hamper the economy.

    S&P downgrades Toll Brothers (TOL) to junk as it lowers its expectations for a U.S. housing recovery, citing a particularly weak spring selling season. The agency expects Toll has enough liquidity to weather another year or two of weakness while still investing for the future. 

    Fitch cuts its rating on Best Buy (BBY -3.3%), citing sluggish same-store sales, pressure on margins from higher advertising costs, and tough competition from online and discount retailers. Same-store sales haven’t been materially positive for the retailer since 2007, and Fitch expects they will remain in negative territory.

    Amazon (AMZN +4.2%) tops the S&P leader board after Morgan Stanley places the stock on its “Best Ideas” list, citing "underestimated" global market share opportunities. Amazon is growing 4x and 2.5x the rate of e-commerce in the U.S. and internationally, respectively, and should enjoy a very strong Q4 this year as online sales activity accelerates, Morgan says.

    One big U.S. firm not a fan of a weaker dollar is Goodrich (GR), among the world’s largest producers of major components for Boeing and Airbus. The company owns plants in Europe, but its products are priced in greenbacks. Hedging helps, "but that’s not a long-term answer," says its CEO. 

    No-volume metal and coal miner China Natural Resources (CHNR-20.4%) pounded on what looks like a big block sale this morning – and maybe it’s just unlucky having "China" in its name these days.

  101. JRW III

    shadow

    My 80.18 held, then an 8EMA confimation, then a break North of my 80.48 line !!

    This could be a Bull flag, but there is a lot of resistance here (R 1) IWM 80.64;  I will buy on the break from here !!

  102. shadowfax

    Thanks JRW
    I was looking for a reason to pay less attention, My Mom has a knee replacement July 6 and my Father is becoming a total distraction, he has decided he hates me for taking control. I know what I need but it is not happening!

  103. rustle123

    and here we go on the next leg.

  104. tuscadog

    Phil / Oil    If oil slides down to $80, does that mean we can talk about 4% growth again?  Absence structural / fiscal, it’s all we have left other than ZIRP and Ben’s $300B rollover.

  105. JRW III

    Legging into TZA here (IWM 80.64) !!

  106. shadowfax

    The simple stuff says it’s up but I have indicators or reversal.

  107. Jbur

    jabob: everytime you "fu" something you make me laugh.

  108. Jbur

    Rain: Nice video. Thanks for posting.

  109. angelcur

    naz was down big fri…but breadth wasn’t bad…today naz up big but breadth not very good..try the link below..its an altucher piece..
     
    http://www.businessinsider.com/politics-is-a-scam--why-i-will-never-vote-again-2011-6

  110. Lincoln

     Phil: Amazing Kreskin
    Okay, you are clairvoyant. But for someone not daytrading or week trading what should I generally be thinking about re: July hedges in DIA ( bear put 119/116 and TZA  bull call 35/40) approaching point of needing adjustment.  Wait til next week or roll out to August?  TIA

  111. strether

    Phil
    Should we use this week to get short by Friday?The question is going to be: Will Friday be just a one-day  pullback from end of quarter push up, or will it be the start of a reversal in a market without POMO?
    Strether

  112. angelcur

    zerohedge just tweeted"president auctioning off dinners, unclear if proceeds will goto FRBNY to buy ES…hahahaha

  113. tuscadog

    Phil / Greek vote    How much do you think we pop from here if they get that Judas vote on Wednesday?

  114. angelcur

    i hate to tell everyone this..BLAGO is guilty

  115. Savi

    Phil--on the 4 AMZN july 215 calls @ 5.25 (now 1.25) in the 25kp --we wait until end of week?
    Tnx

  116. JRW III

    Out of my 1/3 TZA position, even (+2 cents) !!

    Buying 1/3 TNA, not confident ;-)

  117. rainman

    Where do they get these reporters from?: (Reuters) – The White House on Monday said a significant deficit reduction deal was possible this year if everyone was willing to compromise.

  118. rainman

    50 Best Performing US Stocks Year to Date -- and CMG didn’t even make it! GMCR did.

  119. Phil

    NYSE, SPX and Dow still have big gaps to fill – Nas and Russell are through theirs.  

    Oil/Tusca – It could!  We use about 7Bn barrels a year so say 2Bn a quarter at $100 is $200Bn and we waste half of it shipping the money out of the country.  Give it a 2.5x multiplier for higher food, raw materials and transport costs tied to oil and we’re getting hit for about $500Bn a quarter and $2Tn a year tied to oil prices.  So if we drop oil from $100 to $75, that’s going to save $500Bn in discretionary and consumer spending is 70% of GDP ($16Tn) so about $11Bn and that makes $500Bn 4.5% more disposable income.  Figure 1/2 of that was staying in the country though (local oil) and it’s still 2.25% added to our current 1.9% GDP and, PRESTO – we’re back over 4%.  See why I hate high oil prices?  

    The key to a successful turn here is getting money to keep moving out of commodities (strengthening the Dollar) and moving into consumer sectors, not materials – we need to break that cycle but that’s going to be tough as commodities get very attractive as they fall – especially when people start seeing a "recovery".  

    Voting/Angel – Oh come on!  James Carville is married to Mary Matalin – that right there tells you what a total joke the whole thing is.  I’m going to give Jim crap about his "observation" later – he’s a Facebook buddy of mine!  

    Boring trading/Lincoln – Tough market not to day-trade, that’s for sure.  We expect a "Greece is fixed" pump that takes us to at least the Must Holds on Friday – I wouldn’t adjust until/unless those break.  If they are hedges, then they are protecting something that is hopefully doing well.  Hedges, ideally, should be mitigating about 50% of your downside losses, not all of them – if you are net losing in your portfolio because of your hedges – then you are WAY over hedged.  If all goes according to plan – then on Friday (Friday, gotta get down on Friday!) we’ll be looking to improve bearish positions.  

    Friday/Streth – See above.  This was our plan for the last 2 weeks – use the rally to cash out unhedged longs and flip back to bearish over the holiday.  I guess I’ll just keep saying it over and over again until Friday…  I don’t expect the pullback on Friday but I think the risk of a downside correction after Friday is huge (unless there is a QE3).  

    Dinners/Angel – Not an auction – A lottery of everyone who donates $5 or more, been going on all month.  Cute way to fund-raise.  

    Greek pop/Tusca – I would be surprised if we get over any of the 2.5% lines, as they should provide good resistance.  If we get right to there, I’ll be pretty comfortable flipping short.  Meanwhile, still waiting for the NYSE to give us 26 more points and we will officially be moving up.  

    AMZN/Savi – Yes, we are hoping for a pop.  So far, so good.  They are just bonus leftovers from a credit spread so nice, free money.  

    Reporters/Rain – Hey, that’s what they said….  The guy covered who, what, when and where – that’s the job..  

  120. rainman

    Phil / reporters — Yeah, you’re  right. It wasn’t the reporter that said nothing, it was the White House! What a waste of electrons…

  121. kurtww

     Phil – my main hedge is a 29/33 Jul 15 BCS on SQQQ. I just rolled half of the 29s to 27s for .50, which seemed like a good deal. Do you think I should wait until Friday to roll the other half, or do it now and maybe roll down further if we go up higher? 

  122. Phil

    03:00 PM On the hour: Dow +1.28%. 10-yr -0.26%. Euro +0.56% vs. dollar. Crude -0.53% to $90.68. Gold -0.39% to $1495.00.

    Quote of the year:   "I sleep very soundly at night because I believe in the boundless stupidity of the German government," says economist Stefan Homburg, long Greek paper yielding 25%. He explains the folly of bailing out Greece, even as he profits off of it. "Why should it only be banks and hedge funds that benefit?"

    Nassib playing catch-up (and stealing credit):  Greece is "peanuts" – the U.S. is a "much graver threat," Nassib "Black Swan" Taleb says. “Greece’s economic ills are a trivial menace to the global economy compared with the much graver threat posed by a heavily-indebted and seemingly immobile U.S. government… The U.S. deficit is around $1.5T. It’s far more dangerous than Greece."

    JPMorgan Chase (JPM) remains on top in global investment banking revenue for the first half of 2011, Dealogic says, amassing $3.33B – a 39% Y/Y increase, giving JPM 8.7% of the global market. Bank of America (BAC) remained in second place, well ahead of Morgan Stanley (MS) and Goldman Sachs (GS).

    Smart!  The CME requests for the USDA to release some of its key crop reports during trading hours, allowing participants the opportunity to trade on the news. "It’s a volume play," says an analyst, "to capture the greatest amount of trading volume and not to let people think about it too much." 

    DirecTV (DTV +3.4%) shares attract strong interest from a weekend Barron’s report spotlighting flourishing operations in Central and South America. Analysts have penciled in a 30% jump in DTV’s total operating earnings for this year, but that may understate the contribution from south of the border. Shares could jump another 20-25%, the report says.

    Uh-oh!  Research In Motion (RIMM -1.6%) is losing support among some developers who had been making programs for the BlackBerry because they say creating apps is too complex and costly for the size of the market. “You have to put your resources where the growth is,” says the CEO of one app developer – and the growth is with iPhone (AAPL) and Android (GOOG) operating systems. 

  123. angelcur

    say hi to jim a for me we go back a long time!..great guy super bright!

  124. JRW III

    Another 1/3 TNA into the close !!

  125. matt1966

    Looks like they will perpetrate one more fraud (run) to the upside before we finally go down till QE3. 

  126. Phil

    SQQQ/Kurt – If it’s a real hedge and things are not going your way – it’s more important to roll for time than position.  Let’s say you spent $1 and it’s now .50 – you can spend $1 to roll to the Aug $30s and, when the premium burns on the July $33s, you can sell Aug $31s (now $1.60) and roll yourself down to the $26s (now $3) and then you are in the lower, longer, wider Aug $26/31 spread for another $1, locking in the gains on the long side that forced you to roll.  If you lose $1 5 times as the market goes up and up and it’s 1/2 of what you gain, then you are +$10 and -$5 on the hedge but when the market pulls back, you can relax, cash in your longs and get back your whole $5 on the hedge.  The key is to PLAN the WHOLE trade trough, not just look at each one-month slice.  

    Rally Killer:   Mortgage insurers are off sharply following a Barron’s article saying they are severely undercapitalized to meet claims they are likely to face over the next two years. Should their risk/capital ratios rise much more, state regulators would no longer allow them to write new business, i.e. game over. MTG -4.3%PMI -5.7%RDN -3.1%.

    Cam Hui’s breakdown of the world’s stock markets shows bears in control almost everywhere. Weakness in banks, signaling rising systemic risk in the financial system, cements his pessimistic view.

    Dreaded Housing Data tomorrow and Wednesday:  

    Date ET Release For Actual Briefing.com Forecast Briefing.com Consensus Prior Revised From
    Jun 27 08:30 Personal Income May   0.3% 0.3% 0.4%  
    Jun 27 08:30 Personal Spending May   -0.3% 0.1% 0.4%  
    Jun 27 08:30 PCE Prices – Core May   0.2% 0.2% 0.2%  
    Jun 28 09:00 Case-Shiller 20-city Index Apr   -3.8% -3.9% -3.61%  
    Jun 28 10:00 Consumer Confidence Jun   59.0 60.3 60.8  
    Jun 29 07:00 MBA Mortgage Index 06/25   NA NA -5.9%  
    Jun 29 10:00 Pending Home Sales May   2.0% 2.0% -11.6%  
    Jun 29 10:30 Crude Inventories 06/25   NA NA -1.711M  
    Jun 30 08:30 Initial Claims 06/25   420K 420K 429K  
    Jun 30 08:30 Continuing Claims 06/25   3700K 3715K 3697K  
    Jun 30 09:45 Chicago PMI Jun   51.0 53.5 56.6  
    Jul 01 09:55 Michigan Sentiment – Final Jun   71.0 71.8 71.8  
    Jul 01 10:00 ISM Index Jun   49.5 51.1 53.5  
    Jul 01 10:00 Construction Spending May   0.3% -0.5% 0.4%  
    Jul 01 15:00 Auto Sales Jun   NA NA 3.95M  
    Jul 01 15:00 Truck Sales Jun   NA NA 5.14M  
     

  127. Phil

    NKE getting some real volume panic into the pre-earnings close.  

  128. JRW III

    And out for the day ; 4 1/2% for the portfolio today !!

    Tomorrow should be down, but we’ll see; good evening all.

  129. Phil

    Down/JRW – The market can’t afford down – there’s not enough firepower to reverse a down in time for the end of the week so I don’t think down is going to happen or, if it does – it will not be good.   I think the EOD action was someone selling into the excitement who doesn’t want to risk that this was just a gap fill from Wednesday’s close.  

    Still half-point + improvement beats the doom and gloom most were predicting on Friday so all we can do is see which side of 75.75 the Dolllar lands on tomorrow.  

    OK Guys – Great start to the week, hopefully NKE doesn’t screw things up.  XOM is down 2.5% and just getting back to $80 for them and $102 for CVX is about 50 Dow points right there so we’ll see if oil can cheer up and get back to $92.50 by inventories and that’s the kick we need to get over 12,200 again on the Dow.  

  130. kurtww

     Phil – thanks for the reminder. What if it’s more of a play to placate my bearish nature? I’m trying to catch a wider spread if we go down before July 15th. Is that too aggressive? My net on that spread was .90, and if I spend .50 to roll, I’m at 1.40 for a potential $6 spread. I do have some long exposure, but it’s fairly small. Right now my portfolio is very light and low-touch, since I’m only able to trade sporadically. I’m ready to start getting long when things feel more bottomed-out, or when I get back to full-time trading in mid-August. But at the same time I feel like I want to make a bet on a potential pullback. I cashed out my hedges too early 2-3 weeks ago and I’m regretting not capturing more of the downside move, which I was pretty sure was coming. 

  131. kurtww

     By the way, Scott from ToS wrote back right away this morning, and in case anyone else is interested, here is the commission structure he offered. It seems pretty good to me:

    p.p1 {margin: 0.0px 0.0px 0.0px 0.0px; font: 13.0px ‘Bookman Old Style’; color: #1070c0}

    For IB clients we offer a flat rate of $1.25 per contract which is typically for somebody trading 1,500 contracts per month.  To go to $1.00 we look for 2,500 contracts per month and to go to .75 we look for 5,000 contracts per month.  For futures and options on futures I will offer you $2.50 per contract $5.00 round turn).

  132. sampuran7

    Phil / All    New here at PSW     Looking to learn to manage positions that are turning against me   I have an Iron Condor spread on SLV    Collected $325 pemium
    -15 SLV July 11 31 p
    +15 SLV July 11  29 p
    +15 SLV July 11 42 c
    -15 SLV July 11  40 c
    SLV trending down with the commodities to within 5% of my 31 short strike    My options are wait it out to July expiration   Close the position at at net $300 loss   Leg out of the 31 and let the 29 increase in value    Roll down 1 strike giving SLV more room for the next 18 days ???    How should I be thinking about this?

  133. strether

    Phil
    Got it.
    thanks
    Strether

  134. ilene

    Today’s levels.

  135. Phil

     At the close: Dow +0.91% to 12044. S&P +0.92% to 1280. Nasdaq +1.33% to 2688.
    Treasurys: 30-year -0.84%. 10-yr -0.21%. 5-yr -0.21%.
    Commodities: Crude -0.39% to $90.80. Gold +0.01% to $1496.50.

    Currencies: Euro +0.66% vs. dollar. Yen -0.55%. Pound +0.15%. 

    Market recap: Stocks powered higher across the board, firmed by growing hopes that the Greece storm will pass and Basel capital rulesthat were less onerous than feared. Tech shares led the way, boosted by Microsoft, preparing to join the cloud mania, and an Amazon upgrade. Oil and other commodities drifted lower; Treasury yields rose after aweak auction. NYSE gainers led losers two to one. 

    Nike (NKE): FQ4 EPS of $1.24 beats by $0.08. Revenue of $5.77B (+13.6% Y/Y) beats by $0.24B. Shares +3.9% AH. (PR)  Nike (NKE) peers tick higher after its strong FQ4 earningsUA+1.3%FL +0.4%LULU +0.4%CROX +0.3%

  136. doro165

    Just ran across this thought on a baseball site, thought it applied to Greece.
    "You want this to go to the bankruptcy court. Its like crossing the river Styx, or better yet, opening Pandora’s jar. With all the evil that comes out of that, the last item is Hope: still there. We weather Prometheus’ fire and contempt for civilization, we perverse. It will take some time and effort, but end result will be the end of the man whose name shall never be mentioned, will be long gone, and Dodgers will be whole again."

  137. Phil

    Dollar down to $75.66 now that Japan is open.  Nikkei (/NKD) up to 9,690.  Oil $91.22, gasoline rolled over but July contract (/RBN1) is still $2.829 while the new contract (/RB(Q1)) is $2.764 and that seems cheap going into the holiday…

    Euro $1.4315, Pound still can’t get over $1.60 but still trying and 80.746 Yen to the Dollar with gold at $1,501.60, silver $33.81 and copper at $4.085 (a good buy off the $4.05 line for future reference).  Nat gas is back to $4.275 – that one was obvious with the abundant shale supplies called into question.  

    Bearish/Kurt – If you’re just betting, then still you don’t want to keep throwing money into an event that’s just 18 days away.  You are the sucker paying premium and the clock works against you every day – that’s especially true if you believe we may run up through Friday – then you’re just GIVING away the premium decay between now and then PLUS whatever loss of position there is.  If you netter .90 on the SQQQ July $29/33, you now have the $29s that are still .90 so sell you can sell them and get your money back.  Now, if you want to stay bearish, you can just roll over to the Aug $32s at $1.50 for .60 more.  That puts you in the Aug $32/July $33 calendar spread but you can roll the July $33 caller (now .40) to the Aug $44s even, so that’s not going to hurt you and you can put a stop on 1/2 at .60, which would bump up the net on your longs to $1.20 and you’d be half covered with SQQQ rising enough to have forced you to buy out the July $33s – so that would be a good thing.  See how you have a lot more control?  And then, in 18 days, the July callers expire worthless and you can decide what, if any, Aug callers you want to sell and begin the cycle again.  

    TOS/Kurt – Well it’s nice to have some actual benchmarks – thanks.  Can someone put that up in the Wiki for reference?  It would be a good idea to have a page with various info about brokers.  

    Welcome Sampuran!  I am not a fan of condors – not enough flexibility for my taste and a negative risk/reward is a big no-no to me (you collected $325 and risk losing $2,675 – you only have to be wrong one out of 8 times and the whole thing is a waste of time!).  SLV is at $32.63, still inside your range but scary.  Do you ever consider rolling the puts?  You can roll the July $31 puts, now .57, to the Aug $28 puts, now .55 for .02 out of pocket ($30) but then you will either have naked puts in August or you’ll have to pay to cover those (.30 for the current Aug $26 puts).  I’d say if you are not willing to do the naked roll, then better off taking the loss now and living to fight another day.  The problem with your idea of killing the $31s and "letting the $29s increase in value" is you are very likely making this decision at the bottom of SLV’s range and what you may actually end up doing is paying $855 to go naked on the July $29 puts, which are currently worth just .21 ($315) and were half of that last week so not much of a bounce can send them back to oblivion with so little time left.  Overall, SLV is way to volatile for this play.  In late April it was $48.35 and 5 sessions later it was $33.58 so a $15 move there.  Then it went back to $37.90 (+$4) and back to $31.97 (-$6) all before May 15th so you are, on the whole, playing against a "black swan" event that already happened twice this quarter.  Giving you 1/8 odds that it will happen over the course of a month when it happened twice in the last 3 months is playing you for a sucker – we don’t like our Members to be suckers – it reflects poorly on my teaching skills…  ;)

    Levels looking pretty good – especially the Dow, NYSE and S&P, who are all forming very nice patterns that look very much like double bottoms waiting for a breakout back up while the Nas and the RUT didn’t bother retesting the bottom – they just headed right back up and the RUT bottom test of the -2.5% line and holding it today was pretty bullish too.   

    So it doesn’t look like TA is going to stop us this week – it’s all about Greece and the Dollar, now 76.675.  

    Yes, getting tied to a rock and having your liver eaten by an eagle over and over again for eternity is pretty much what the EU is negotiating for the Greek people!  

  138. sampuran7

    Gracias Phil Had thought SLV was consolidating after the bubble burst. I remembered how stable silver was after the Hunt Bros run up crashed (dating myself) Will close this out, absorb the lessons and move on……

  139. lapper

    Sampuran, once delta on your 31′s hit 20 you should have bought insurance which would have allowed you to roll when delta hit 30.  However, condor on something as volatile as silver is absolutely crazy.  closing out before it causes carnage is probably the smart thing.

  140. Phil

    Good morning!

    You’re welcome Sampur – As long as you learned something is the rule of thumb for taking a loss and moving on!  

    "There is no plan B" says the EU  - screwing up a perfectly good pre-market rally this morning.  Is it just brinksmanship or are we going over the brink?  Also not helping is a repeat of last week’s scene outside of Greek Parliament, with protesters AND a 48-hour national strike in progress.    The actual vote is scheduled for tomorrow so we have 2 days of this craziness to get through.  

    Last Tuesday, we didn’t get the Greek vote until our close but we ran up like a rocket in the morning BEFORE the vote so we don’t want to play against the uncertainty – it was very much a "sell on the news" event in the end but the rumor was a BUYBUYBUY and that vote was very close too.  

    The Dollar is at 75.82 at the moment but we haven’t broken yesterday’s active trading high of 75.90 in the overnights so that’s a good sign (for the market).  The Euro is holding $1.427 so not too bad, the Pound slipped the most to $1.594 and we really need them to get over $1.60 if we are going to get the Dollar below 75.50 and it’s 80.82 Yen to the Dollar – a bit stronger than yesterday, otherwise the Dollar would be back over 76.  

    Oil is at $90.84 – can’t hold $91 with the Dollar over 75.75, gasoline is $2.7541 on the Aug contracts, nat gas $4.25, gold $1,504 (uncertainty always good for gold but a short on the news probably), silver is $34.05 (good save for Sampur) and copper is good old $4.08.  

    We did well yesterday building a bullish technical case so let’s hope they don’t squander it today.  NYSE MUST get over the hump at 8,073 this morning or the Bulls don’t  have the firepower we thought they have and that should make us nervous.  It should go without saying that a failure by the Russell or Nasdaq to hold their 2.5% lines is immediately bearish as we fall from 4 of 5 over to 3 of 5 and 2 of 5, which is officially a bearish signal!  

    In the futures, I’m watching the RUT (/TF) at the 800 line – if that goes, we’re going to sell off a bit more so the RUT is a good short below that line (with VERY tight stops) – especially if the Dollar goes back over 75.90 – that’s doom for oil and they become a short below $90.75 and then you can watch the Dollar breaking back below as a buy signal.

    Above the 800 line – /TF makes a great long as that 800 line (about 805 in the Russell and $80.50 on IWM) should hold well in either direction so it’s all about the Dollar and whether it’s above 75.90 or not.  

    Just don’t forget – lest week we went up like a rocket Tuesday morning but last Tuesday the Dollar was knocked down to 75.12.  Since that worked last week and since all we need now is a "plan B" to make people happy today – I think they will go with the same script and smack the dollar down hard at the open and goose the markets.  I hate playing the expectation of manipulation on such a massive scale but I can’t build any other working scenarios that don’t end in a global meltdown and I just can’t imagine anyone wants that.   

    It’s only 6 and it’s going to be a crazy couple of days.

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    9:00 S&P Case-Shiller Home Price Index
    10:00 Consumer Confidence
    10:00 Richmond Fed Mfg.
    10:00 State Street Investor Confidence Index
    1:00 PM Fed’s Fisher: ‘A Report on the Economy’
    1:00 PM Results of $35B, 5-Year Note Auction

    Overseas: Japan +0.7%. Hong Kong +0.1%. China +0.1%. India+0.4%. London +0.3%. Paris +0.5%. Frankfurt -0.2% 

    Notable earnings after Tuesday’s close: SHAW

    Many are keeping a close eye on the S&P 500, which lately has dropped enough to nearly pierce the 200-day moving average for the first time since last fall. It keeps bouncing off, but consider that Q3 is often ugly for the S&P (but, oddly, not so bad for the Dow and Nasdaq).

    In a CNNMoney survey of 26 Wall Street forecasters, not a single one sees less than a 6% gain in the S&P for the rest of the year.

    Flying a bit under the radar, the silver ETF (SLV -2.2%takes out its May sell-off low to close at a level not seen since March. With that key support taken out, could a $20 handle be in silver’s near future?

    More on Nike (NKE): Strong sales in its key China, U.S. and emerging markets, heavy-duty cost cutting, and favorable currency hedges helped to offset higher product costs and propelled a 14% surge in earnings. Shares +4% AH. 

    Waving off concerns of a Chinese property bubble 2 months ago, Nicholas Lardy changes his tune, acknowledging a bubble whose end could produce a "major, major economic contraction." Unlike the U.S., it’s not the Chinese homeowner who is leveraged, but the local governments and SOEs where the debt lies. 

    Billionaire Harold Hamm is convinced there?s 24B barrels of oil to be coaxed from the Bakken field of North Dakota and Montana. If true, it’s enough oil to double proven U.S. reserves, or supply the entirety of U.S. demand – 20M barrels/day – for three years. Regarding U.S. energy supplies, “the glass is not just half full, but fixing to run over," Hamm says.

  141. pentaxon

    Phil,
    good guess: the dollar manipulation seems to have started already…

  142. $(^_^)$

    TEST

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