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Monday Morosity – “Hard Times Ahead” says Rajoy

Hard times ahead!

Mariano Rajoy won the biggest majority in a Spanish election in almost 30 years, and told Spaniards to brace for hard times as the nation fights to avoid being overwhelmed by the debt crisis. Bonds continued to drop.  Rajoy’s People’s Party swept the ruling Socialists from power after eight years, winning 186 of the 350 seats in Parliament, compared with 110 for the Socialists’ candidate Alfredo Perez Rubalcaba.

Hard times lie ahead,” Rajoy, 56, told supporters outside the PP’s headquarters in Madrid, giving no new details of his plans. “We are going to govern in the most delicate situation Spain has faced in 30 years.”

Spanish borrowing costs continued rising toward euro-era records (6.6% this morning) even as the PP won a mandate to slash the budget deficit, overhaul the stagnant economy and reduce the 23 percent jobless rate.  Rajoy, who hasn’t given details of his proposals, won’t take over for a month, prompting him to say on Nov 18th he hoped Spain wouldn’t need a bailout before he’s sworn in.  Miguel Arias Canete, head of the PP’s electoral committee and a former minister, said today markets need to give the party time, as ministers won’t be appointed until Dec. 21 and Spanish law doesn’t allow Parliament to resume any sooner than Dec. 13.

So NO QUICK FIX IN SPAIN IS POSSIBLE – let’s face that fact now so we’re not endlessly surprised by it as the rumor-mongers can now have a field day attacking the lame-duck outgoing Government ahead of the transition.  Meanwhile, our own do-nothing Congress looks to be heading towards certain disaster as we have what appears to be a TOTAL FAILURE of the US Deficit Reduction Committee to do anything to actually reduce our deficit.  

Now I don’t want to point fingers (cough, Republicans, cough, cough) ahead of our National Holiday that celebrates unity and goodwill and crap like that.  Let’s just say "they" couldn’t agree, so now it’s going to be Hard Times for America as we, in theory, will kick in $1.2Tn of automatic cuts including (gasp!) over 5% of our nation’s Trillion-Dollar annual Defense budget.  Oh, not until 2013, of course because our Government doesn’t really have the balls to cut anything under any circumstances.  

EXCEPT, of course, aid to the poor.  THAT they can cut and cut and cut and cut.  Payroll tax cuts – terminated.  Unemployment extensions – terminated.  US AAA rating – terminated…

And that’s SMART because those poor people are EVERYWHERE these days and, the poorer they get, the more they need – it’s ridiculous!  The general Republican strategy is to see if we can make those nasty poor people so poor they stop bothering us completely.  They can either leave, like all those immigrants we kicked out – or just get out of our way and leave us alone – just like it says in another Dickensian novel:  

I wish to be left alone,” said Scrooge. “Since you ask me what I wish, gentlemen, that is my answer. I don’t make merry myself at Christmas and I can’t afford to make idle people merry. I help to support the establishments I have mentioned (prisons and workhouses): they cost enough: and those who are badly off must go there.”

Many can’t go there; and many would rather die.”

If they would rather die,” said Scrooge, “they had better do it, and decrease the surplus population."

It’s not my business,” Scrooge returned. “It’s enough for a man to understand his own business, and not to interfere with other people’s. Mine occupies me constantly. Good afternoon, gentlemen!” 

Ah Ebeneezer, a true Libertarian!  God bless us, every (top) one (percent)!  A new census report finds that one out of 3 Americans are now living in an expanded Census Bureau category of "poor or near poor" – families with incomes less than 50% over the poverty line for a family of 4 of about $24,000.  I know a lot of my Republican friends will argue that an extra $12,000 for a family of 4 over the course of a year has them living high on the hog, with toasters, refrigerators and color TVs, but those of us who do have a sympathetic bone in our bodies find these numbers quite shocking.  

The middle and upper classes (the wanna-be rich, who are screwed by the top 1% while fighting for their rights not to be taxed or regulated) fared EVEN WORSE than the poor this past decade. Families with incomes four times the poverty threshold or more — $97,372 for a family of four — shrank to just 17 percent of the population, compared with 36 percent under the official measure.  That’s 50% of our middle and upper middle class wiped out in order to funnel more money to the top 1% – SUCKERS!  

While we cry a river for the losers in the tri-corner hats who think it’s the Government that’s screwing them, let’s not forget we’re talking about 100M Americans who are either IN POVERTY or in the desperate zone just above it and perhaps one small economic downturn from POVERTY.  51M Americans are already there, making less than $6,000 per family member to live on for their year (and that’s better than minimum wage, which is only $14,500 for a full year’s work by Dad).  As noted in the NYTimes:  

They drive cars, but seldom new ones. They earn paychecks, but not big ones. Many own homes. Most pay taxes. Half are married, and nearly half live in the suburbs. None are poor, but many describe themselves as barely scraping by.  Down but not quite out, these Americans form a diverse group sometimes called “near poor” and sometimes simply overlooked — and a new count suggests they are far more numerous than previously understood. 

Meanwhile, in order to insure no governments head back down that dangerous path towards Socialism (even the word makes Americans cringe due to media conditioning), our friends at Goldman Sachs are, according to The Independent, putting the finishing touches on their plan to take over Europe.  

This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort. Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.

Really, I kid you not – this is not a Robert Ludlum novel – this is what is actually happening in our World today!  “While ordinary people fret about austerity and jobs, the eurozone’s corridors of power have been undergoing a remarkable transformation,” the independent points out – much like the takeover of the US Government by GS alumni (see "Government Sachs").  In fact, we were having a discussion this weekend among fund managers and nothing could have done more damage to Goldman Sach’s competition than the loss of trust in smaller houses caused by the failure of MF Global under the stewardship of ex-Goldman CEO Jon Corzine.  Money is flying out of the smaller IBanks and into the Gang of 12 who are deemed "too big to fail" thanks to – yep, you guessed it – Government Sachs policies and statements.  

You’ve got to know the secret handshake to get a fair shake in America – that fact is made clear by the inclusion of Masonic Symbols on our own currency!  That’s what the Occupy Wall Street movement is really all about – as we push 1/3 of our citizens towards abject poverty, the fairy tale of "equal opportunity" begins to wear thin and even some of those ex-middle and upper middle class dwellers begin to wake up to the fact that half of their ex-friends (because we don’t follow people who drop out of our gated neighborhoods) can no longer afford club memberships or, even worse, whatever crap the remaining Middle Class is trying to sell at their own stores.

Despite the myth, the "job creators" aren’t making up the difference by parking the limo on Main Street and shopping up a storm.  As I pointed out to Members this weekend as we perused the "House Porn" section of the Wall Street Journal, even with all the excess, the rich hit a certain level of consumption and that’s it.  While a person in the top 1% may have 1,000 times more money than the 100 people they smacked out of the Middle Class to accumulate it – they don’t buy 100 times more toilet seats or 100 times more candles and they don’t go to the Dentist 200 times a year or pay 100 times the school taxes in their community.  

No, the money the top 1% take from the rest of you is taken out of circulation and that increases the cost of money for you and that let’s them leave it in the banks or bonds and collect interest – sucking even more money out of circulation from the people who need to borrow just to scrape by.  The less you tax them, the more they accumulate and the worse the income disparity becomes.  Already we have a situation in the US that is now worse than it was DURING the Great Depression – we are at the breaking point and our Congress (cough, Republicans, cough, cough) is doing NOTHING and soon it will snap and we’ll have a real disaster on our hands – be warned!  

Bring it on I say.  We have been bearish since last week and went into the weekend bearish after cashing out our short-term portfolios so this morning’s sell-off is PERFECT for us to get a look at how the next set of levels hold up on our Big Chart.  We did take the sell-off in the futures this morning as an opportunity to speculate long.  As I said to Members at 6:01:  

80%/Flips – Wow, I don’t know about 80% (chance of success) but I do like buying the RUT (/TF) on the 700 line and playing for a bounce or the Dow (/YM) off 11,600 or the S&P (/ES) at 1,190 or even gold (/YG) at $1,700 but VERY tight stops because, if those lines fail – we’re on that Highway To Hell I warned about on Friday.

As usual, we’re happy when our futures trading pays for our breakfast and we’re well past that already with a nice bounce shaping up into our open (quick profits are always taken on silly, pre-market runs).  We remain skeptical, of course, until we make some real progress back at our Must Hold lines and we already planned on staying mainly on the sidelines this week but we couldn’t resist a nice opportunity to jump in with some bullish bets ahead of the open – as we’ve seen this movie before and we’re pretty sure we know what happens in the next scene (dollar dumped into US open to spark an equity/commodity rally).  

Also, despite all of the problems and the deteriorating condition of the American Middle class and massive expansion of the ranks of the American poor – I’m still bullish on corporations because they could give less of a crap about the American people.  As you can see from the above chart of the Koch Brothers’ net worth – impoverishing our fellow Americans has never been more profitable so we may protest against the top 1% but, until they change the rules – we’ll still put our money on them as well!  

I had occasion this week to go back to my July 10th post, when I last warned that the economy was about to go over a cliff.  I hit that pretty much on the nose timing-wise as the Dow fell from 12,750 the next day to 10,605 on August 11th – down 17% in 30 days.  Since then, we climbed all the way back to 12,284 in October but again we went bearish as the markets were unable to break into the top of our range (back to July highs) and since then we’ve sort of drifted along between 12,200 and 11,600 – which is almost dead center of the July/August drop.  

I am not bearish because I think that 11,600 is about the "right" price for the Dow, given the exact same global situation we observed back in July.  I thought 12,750 was too high and, when we fell all the way to 10,605, I thought that was too low and we initiated our September’s Dozen Buy List on August 27th with 13 (baker’s dozen) very aggressive, bullish trade ideas that, of course, had spectacular outcomes for our Members as we mostly cashed out on October 27th - another great top call!   

Now we’re back to cash and we’d LOVE to see another panic sell-off to give us another good round of buying opportunities but I’m not sure we’ll get it because there is really nothing going on today that wasn’t already obvious to us in July – including the US being unable to fund its own deficit spending – all of this has now been long discussed and no longer has the power to shock the markets like it did in the summer.  

So cashy and cautious is how we’re playing the space under our Must Hold lines – especially ahead of the long Holiday Weekend.  We’ll take another look at things next Monday but this is a week to kick back and relax although, as noted in this video – that’s hard to do if you are a New York football fan

 


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  1. jmm1951

    They should lock the Deficit 12 in a room with no heating or food and drink and only let them out when they have an agreement. Either that or just put their salary and benefits on hold until they complete their assigned task.

  2. stjeanluc

    Or have them live with $9,000 per person per year to see how they like it… 

  3. jmm1951

    Re just above poverty. Yes, but most of the human beings now living and who have ever lived we’re in poverty or near poverty. Even the Roman emperors did not have cotton, penicillin, potatoes, or $5 cell phones.

  4. stjeanluc

    Them fighting words this morning Phil! Thanksgiving is bringing the best out of you…

    I saw my favorite Republican last week (Paul Ryan) insisting that raising taxes (I guess especially on the "job creators") now would be a disaster for the economy but cutting $1.2 trillions by reducing Social Security, Medicare, Medicaid and unemployment benefit was necessary! In his Randian fantasy world, that doesn’t have any impact on the economy I guess. Or rather, it’s an incentive for the bottom 99% to work harder so that they can join his 1% overlords!

    We are now bringing in taxes at around 15% of GDP and Ryan’s own budget proposal calls for spending at around 20% of GDP and he doesn’t see the need to raise taxes. Even his plan promises deficits of 5% of GDP by design… Are these 5% going to appear magically? Are there pots of gold at the end of rainbows when the GOP is in power? And yet these guys are taken seriously when it takes 2 seconds to punch holes in their theories. Unreal.

  5. stjeanluc

    Oil lines

    R3 – 98.64
    R2 – 98.25
    R1 – 97.84
    PP – 97.45
    S1 – 97.04
    S2 – 96.65
    S3 – 96.24

    Yesterday’s high and low – 97.86 / 97.06

    Breakout lines – 99.15 / 94.96

    Monday’s lines are generally less reliable because they are based on Sunday’s "thin" action!

  6. stjeanluc

    Barry says – Let the "Do Nothing" Congress do nothing:

    http://www.ritholtz.com/blog/2011/11/is-it-really-the-debt/

    That will automatically generated $7.1 trillions in debt reduction through expiration of tax cuts and other programs. So a good thing I guess! Well except for the "job creators".

  7. terrapin22

    Phil – I’m already in EDZ.  Need a few more hedges or single name put ideas if we head down to early October lows.  what are your favorites?  Is another U.S. downgrade already priced in or will it be a surprise like the one in August?  

  8. rehat

    Phil TLT is getting close to 120 again. Would you go short again. What is you preferred trade.

  9. exec

    Phil/No Balls,
     
    You got that right…..God forbid these spineless politicians would do anything that could potentially cost them a vote. 
     
    They’re all about buying votes with taxpayers dollars….not attempting to take back the freebies they’ve already granted.  That would be like giving a crack addict a big ol 55 drum full of dope…..then just when you get him good and addicted….taking it back.
     
    Ohhhh nooooo….they won’t be doing anything that could potentially cost them their sweetheart, high paying, do nothing, screw that general public while your pretending to help them, phony balony jobs.
     
    Instead…put together a "super duper committee" to hide behind.  Only problem….that super duper committee wants to be reelected too!!!!……………oh my……what a dilemma.

  10. yodi

    Phil/No Balls,
    you guys can let out your frustration out on this site but it does no matter a sht for these guys with their asses in the butter!!!! You just filling up space.

  11. danosu77

    I agree with JMM. Lock them all up until they can agree. Feed them water and generic chicken nuggets. Let them sleep on 10 year old mattresses. Thenet them take the bus home for the holiday.

  12. gmarts

    I for one intend to vote to diselect every single senator and congress member on my ballot, and have called their offices to let them know. Same goes for the President. Both sides have shown willingness to destroy this country in an effort to advance their personal ambitions and blame the other side. The whole mess disgusts me. And the leadership on both sides disgusts me particularly.

  13. gmarts

    There are NO babies in this bathwater!     [/rantoff]

  14. jcaesar

    Yodi – "Asses in the butter?"  Is that a German phrase, or do I just need to learn my own language better?  ;-)

  15. stjeanluc

     

  16. carter

    Whoooooooa AMZN…

  17. dclark41

    Phil:
    If governments are being infiltrated by the likes of Goldman Sachs and crew, why on earth would you want them to give them more money until you can guarantee, with some certainty, that the entity (government) is, in fact, working for the 99%? Who do you trust, currently, in our government? Words are cheap. All I hear, from both sides is the same ole’ talking points. I don’t trust either one of our parties, but I will admit, that I am not sure how to fix the problem.

  18. yodi

    jcaesar
    Possible a German phrase After the war you did not have any butter and the people who had butter were very well off!!!

  19. stjeanluc

     

  20. exec

    Caesar/Butter
     
    Dude….they don’t have KY in Germany. 

  21. jabobeast

    Quick question on a BC spread..If it matures in the middle can you get stuck with the underlying stock???

  22. stjeanluc

     

  23. jcaesar

    Yodi – Thanks.  I always like to keep up with my German, but that was a new one to me!

  24. stjeanluc

    Money Portfolio updates – I am trying a new format to track the open position as this makes it easier for me. The P&L is only for the open position, not the trade. You can access the portfolio status at:

    https://docs.google.com/spreadsheet/ccc?key=0Asgfso25VaEPdGgtbnVFeWl1aGdoTVVmQ3Y0U0wzelE

    It has all the details on previous trades and results so far. 

  25. yodi

    jcaesar
    you well come

  26. exec

    Phil
     
    Is this pullback the real deal or just another bear trap before the Christmas rally………….excuse me…..I mean holiday rally
     
    I’m tempted to start selling puts.

  27. NF**X

    AMZN – Hard to tell if they are getting rocked with techs last few days or the "big news" that the Fire appears to be a loss leader.  Love this company.  But they are in a the midst of a bit-risky massive cap expenditure period – I’d imagine the Fire, the last earnings guidance and the poss of a "phone" has some thinking they are off-track.  But the building of 17 new DCs seems to substantiate their thinking that creating more hardware options – esp mobile ones – to buy their stuff will rocket sales.  I think I’m betting with Bezos.  Not sure how to play them tho.

  28. morxlntway

    Pharm – What’s up with PLX? I can’t find any news.

  29. rpme

    http://www.wimp.com/filterbubbles/
    From TED, the internet is watching you and deciding what you see, very interesting.

  30. lflantheman

    AAPL:  Below 370.   Last week I re-entered with a 10% position.  Today will get another 10%, then wait for possible drop to below 365 for next entry.    :)

  31. dclark41

    gmarts
    I like your idea. They all suck. And they will continue to suck until they finally get a clue that they work for us and not themselves. And for those of you that think "good people" won’t run unless they are highly paid…….well, how is that working for us now? Senators and congressman used to be positions of honor because they were held by honorable people.  Honorable people don’t need to be highly paid for what comes natural. It’s called serving your country. Write a book or make a movie after your done if you want to get rich from it! Everyone else does!

  32. kinkistyle

    Yeesh! I thought the Illuminati was supposed to be just some crazy conspiracy theory!!

  33. exec

    BMY Traders
     
    What do you think of the selling the 2013 25′s or 27.50′s?

  34. Phil

    Good morning!  

    Sorry but spending half the weekend trying to figure out how to allocate half us much food in NYC to twice as many people as last year for Thanksgiving put me in a less than rah-rah mood about our current situation.  

    Things are really rough on the ground, much worse than you get the impression of from the media and I’m starting to become very concerned about what will happen if we have another financial shock that throws another 5M people or so out of work.  Last time, people had a little to fall back on – cash, credit, charity, friends and family with some money to lend – now there is NOTHING – everyone is tapped out and, as noted in the above report – 50M people have slipped to the point where they live right on the edge of poverty – it’s a terrible situation.

    So that sucks but, as I said not too long ago – does it stop AAPL from selling 50M IPhones in 2012?  No, it does not.  Maybe they sell 45M but not 25M – for every job lost in America, 2 are gained in China or India or wherever because stuff is still getting done – it’s just not getting done here.  This country is simply the loser in the game of Global Economy and our big players (the Corporate Kleptocracy) have long ago moved on to more fertile pastures.  While perhaps 5M less people may buy an IPhone than would have in a crash – 50M more people will wipe their asses with toilet paper than last year due to population growth and the expansion of sewer systems in China.  

    So, if we get another breakdown here (and, with the news-flow, we likely will), then it’s just going to be another buying opportunity once we find a bottom.  For now though, let’s not assume anything.  Mostly let’s watch the Dow, as long as they hold the Must Hold line (11,590), there is hope.  As we noted last week – we liked the DXD shorts because the Dow had a lot of catching up to do and it’s right about a 1.5% drop for the day so hopefully we hold there, down right at about 5% for the week and hopefully stopping there.  

    If it doesn’t hold – the next hope for the Dow is the 50 dma at 11,535 but, failing that and we’re very bearish until it’s re-taken.  EDZ is flying now ($24) and we can add the Jan $22/26 bull call spread for $1 in preparation of stopping out all or part of the Dec spread.  If we pull the Dec calls we bought (the $18s are now $6) and leave the $24s (now $3) naked, covered by the new Jan hedge, we have all the way up to $29 before it becomes a problem and, as we’ve seen – they don’t move that fast.  Keep in mind though it’s a STOP out on the Dec calls, not a roll now so we are, at the moment – adding more protection and not cancelling our original position until we clearly have a reversal of fortune.  

    Oil is still stubbornly high and, in a real meltdown, it should fall back to the $80s.  SCO Dec $40/46 bull call spread is $2 and you can offset that with the sale of XOM Jan $70 puts at $1.60 or RIG (who have more spill issues) 2013 $35 puts at $5.  RIG is a bit risky but, long-term, they should come back and currently $45 means there’s a long drop before the $35 puts worry you.  You can sell 5 of those for $2,500 and buy 10 of the SCO spreads for $2,000 with a stop at $1,000 for a net $500 credit that could bring back $6,500 if all goes well.  

    At the moment, I’m hoping the Dollar stops at 78.80 (now 78.64) and pulls back to give the markets a chance to recover but this is no place to be catching falling knives – we are really getting to the point where there is the possibility of a 2008-style meltdown if confidence erodes any further. 

    Even as I write this – things are getting uglier so let’s just stick to plan and stick to cash and see what happens at the 2.5% lines this morning.  

    Tuesday Nov 22

     

    Dennis Lockhart Speaks
    2:30 PM ET
     

    GDP
    [Report][Star]
    8:30 AM ET

    Redbook
    [Bullet
    8:55 AM ET

    FOMC Minutes
    [Star]
    2:00 PM ET

     

    Huge Data Day and Fed minutes – strap in for a wild one!  

    Jobless Claims
    [Report][Star]
    8:30 AM ET

     

    US Holiday: Thanksgiving Day

    All Markets Closed
     

    Weekly Bill Settlement

    NYSE Early Close

    SIFMA Rec. Early Close 2:00 ET

    Money Supply
    [Bullet
    4:30 PM ET

     

    Equity Settlement
    11-25-11
    Equity Settlement
    11-28-11
    Equity Settlement
    11-29-11
      Equity Settlement
    11-30-11
  35. Phil

    Deficit/JMM – You guys need to stop blaming the puppets and go after the puppeteers.   It doesn’t matter who’s in Congress when Congresspeople have no actual power.  Corporate America has taken over our Government and whether it’s Goldman or the Kochs or Murdoch – until people wake up and focus on the people who really have power – nothing is going to change.  Politicians are replaceable pawns in the Koch Brother’s game – when you get tired of Palin they have Scott Brown and when Scott Brown says something stupid, they have Bachmann and when she begins to look insane, they bring Newt Back for a star turn – it doesn’t matter who the mouthpiece is, as long as they all stick to message because when you hear that our Job Creators need to be able to do business without the Government looking over their shoulder – it begins to sound right because SO MANY people have said it for so long – it GOTS to be true!   

    Look at how good they are at staying on message:  

  36. exec



    Phil/On the Ground
     
    I’d agree that it is worst than perceived.
     
    This is the first year that we are laying off large numbers of our people.  Including supervisors and other key employees.  There just isn’t anything going on, and the work that is going on is going at such ridiculously low prices that it doesn’t even make sense to take the work.  Of course we are not desperate yet.  The companies that are bidding so low are the ones that are hanging by a thread.  They need cash flow simply to avoid bankruptcy.
     
    It’s bad out here.  Hunker down baby it’s going may get rough.

  37. Kwan

    Phil, FWIW my parents went to give Thanksgiving packages to those in need in the city (in Durham, NC) and they came back with both packages. One family had ‘moved’ (not sure if this was by choice or forcibly) and the other woman had just gotten out of jail and didn’t have an oven to cook a Turkey with. I’m trying to wrap my head around how this organization’s information was so out-of-date that they couldn’t even give food away successfully. I’m not sure if the stove and/or copper pipes had been stolen from the house in recent days or if this woman never had an oven or what.
    I was pretty much left speechless after hearing my parents tell me this yesterday.

  38. jtncsanford

    Damage control! Phil, I’m in BAC jan.13 $10 calls down 70%… should I roll down/DD? Thanks

  39. gucci

    Hi Phil-- SQQQ Dec 20/25 bcs hedge for 0.80 would you do the same rec as above EDZ, buy back the 20 call and open a new hedge in jan bcs for strike around 1$. thx

  40. pentaxon

    Adjusted charts are looking nasty, however the (green) non-USD chart is showing some support here (trend channel & MA)
    http://www.pentaxon.com/psw/spy_worldcurrency.html

  41. stjeanluc

     

  42. jmm1951

    Phil/Corporate power
     
    Actually my current Kindle reading matter is a biography of Cornelius Vanderbildt, which is pretty interesting, and it seems that the whole issue of corporate power and government has been going on ever since the Revolution and the invention of the Supreme Court and of  corporations. The Supreme Court has always been a tool of the corporations. Steamboat and railroad operators would demand monopolies from legislatures, etc. or would drive each other out of business by offering fares below cost so as to obtain monopoly pricing power. As early as the 1830′s Jacksonian democrats feared that the power of corporations, which were considered by the law to be  people who never died, would eventually take over everything, and so it has come to pass. They say that every revolution needs to be refreshed with the blood of martyrs, and maybe we are gradually moving towards a refresh of the American Revolution, though not just yet, I think.

  43. jcaesar

    exec – What’s your area of business?

  44. pakdog

    BCS / jabobeast – If you bought a BCS and it expires with your owned call ITM and your sold call OTM, yes you will own those shares.

  45. jmm1951

    Of course the days when what was good for General Motors was good for America are long since gone.

  46. jabobeast

    thanks pak…brain wasn’t turned on this morning..

  47. Phil

    Romans/JMM – Wow, really?  No cell-phones?  That must have been tough on the slaves that had to run their messages 100 miles.  I’m pretty sure they got cotton from Egypt and, of course, no one had penicillin so you may as well complain about their web service and potatoes is way outside my field of expertise but if french fries at McDonald’s constitutes wealth in this World – then truly the US poor are a blessed lot! 

    Thanksgiving/StJ – Yeah, I had a rough weekend trying to solve overwhelming problems.  We like to rag on politicians but, for people who do try to make a difference, it’s a constant struggle and it’s made 100 times worse because there’s an opposing party who doesn’t want to help people in a different way and they don’t want to not help people at all but they actively want to take away what little the poor people have left – it’s literally like they are cartoon-like villains from a Capra film!  Food Bank lost $800,000 in state funding this year and The Partnership for the Homeless lost about $500,000 and it was a really good program.  Just to try to sustain TPH as well as Catholic Charities, which also took a big hit – we have to go to the congregations to make up the shortfall but then, of course, other organizations that they usually donate to often end up getting less – by cutting off funding from the top, the State forces charities to poach each others’ funding and all of that energy could be much better directed at actually helping people.  Anyway – don’t mean to go on about it but it’s been a frustrating weekend… 

    2,200 is a line that hopefully will give a small bounce in Nas futures (/NQ).  AAPL is down 2% so hopefully they hold up too and that, of course, is most of the Nasdaq story.  RUT 700 is still holding – that’s a hopeful sign.  

    EDZ/Terra – See above, at this point we look to layer them as Emerging Markets could still cliff dive.  Although a US downgrade is priced in – that doesn’t mean people won’t be "shocked" when it happens and take the markets a bit lower.  THAT would be a nice buy opportunity.  

    TLT/Rehat – The idea of shorting TLT is when we think the panic into TBills is over-done.  Given the current situation in Europe – I couldn’t make that call so best to stay away for the moment – tempting though it may be…  

    Politicians/Exec – See above.  You are barking up the wrong tree.  Our politicians are a front for the Corporations just like they are in any banana republic.  

  48. Lincoln

      Phil: artificial buy writes
    I have several artificial buy writes where premium has melted away and I like the stock long term.  For example ABX Jan 12 10 ea,   long 40 ‘s, short 50′s and short 45 puts. Should I be thinking of rolling the longs to Jan 13, letting the shorts run their course?   At this point gain would be about $4,000,  a close above 50 in Jan and gain would be about twice that and then  would need to start a new position.  Once again I’m less concerned with the specific stock but rather how to adjust similar set-ups as expiration gets closer and price is near the short call price.   TIA
    (whoops prices have changed since I posted originally yesterday)

  49. kustomz

    My charts say another 200 lower on the dow..if the men in black focus on FX they can save or stabilize the drop here. AUD/USD is the focus.. .9393 target..worst case scenario

  50. Phil

    Filling up space/Yodi – I don’t know about that.   I was interviewed last week and a guy asked me if I consider myself a founder of OWS because I’ve been pounding the table on income disparity for years and now it’s finally gaining traction.  I said (and I explained this to Angel once) that I think I can accomplish more by acting as an outside provocateur – better to get people thinking about things than trying to tell them what to think.  What’s missing from the MSM is the truth – most people don’t want to hear it but, if you put it out there – it’s a powerful thing that is very hard for "them" to stuff back in a bottle.  I think if we just wake people up (a la Matrix), they will do the right thing on their own.  

    AA Money/StJ – That does not bode well for the Industrials.  Why were calls never sold?  

    AMZN/Carter – That’s not good, is it? 

    Fix/DC – You can only fix Government one Representative and one Senator at a time.  I don’t agree with "they all suck", I know people of good conscience in politics but they become bitter and frustrated as they try to fight the good fight.  The game is very much stacked against them but it’s either try to get good people in power and change the laws or overthrow the whole system and that, as we have seen in the Middle East – can be a bit messy.  New York City was once intensely corrupt – it changed.  If NY can change, then the US can change but it takes more people to believe in change – not more people who decide they are all bums and change is impossible.  

    Failing to hold 2,200 and 700 – now we can look short below those lines with stops going the other way on Nas (/QM) and Rut (/TF).  

    Dollar 78.65 so don’t blame the Buck.  Oil $95.44 and gold $1,683!  

  51. exec

    Caesar
     
    Contracting.

  52. exec

    JR
     
    Are you trading today?

  53. stjeanluc

    AA Money / Phil – On Friday you said that we should risk it naked on the call side over the weekend. Might have to wait for a rally now to sell some.

  54. lflantheman

    Oh, and forgot to post…in TZA at 9:45

  55. stjeanluc

    FAS is now trading at 53 and change and the weekly options still don’t have a 52 strike! 

  56. lflantheman

    Down 500 on the dow would not surprise me today.  

  57. pakdog

    Well, the VIX is green for the day…

  58. stjeanluc

    Dow / Iflan – Well, more than 1/2 way there now! 

  59. Phil

    FAS Money/StJ – What happened to the money that was already made?  No running total in P&L?  I certainly want to sell another Nov $53 put for $3 – if all goes well, we can use that money to roll down the long callers with some of the profits.  

    Spreads/Jabob – You can always get assigned.  If it happens you just make adjustments.  It always sounds bad until it happens and then you go – "Oh, was that it?"  

    IWM Money/StJ – We can sell 1 TZA Dec $30 put for $2.25 and that’s a nice, additional $225 since we’re looking so good for collecting $440 this week on the call side (means we have $4 to roll down for net $24 at least).  Again, we’re looking for cash to improve our long spreads through rolling.   I like the new format but maybe you can add a spot so we know how much cash we have in the trade to put towards improvements (I’m trying not to dip into our pockets, if possible).

    Pullback/Exec – Panic is setting in Globally.  If the EU or the Fed do nothing into the holiday, I think we have a big chance of a major meltdown.  I can’t believe they are going to let things go again but I couldn’t believe they did it last time.  We need to wait for the Super-Committee to officially fail and that should give us a bottom move.  

    VIX back to 40.  

    Filters/Rpme – Very disturbing.  That’s another reason monopolies or near-monopolies, like GOOG-Bing, are bad – so easy for someone to take control of the system and direct people’s thinking.  

    DECK really failing now – $97! 

    AAPL/Iflan – $360 was my downside target, very close already.  I hope it holds because, if not, that’s going to be a general sign of market failure.  

    Illuminati/Kinki – No matter how high you climb, there’s always another room with a velvet rope you’re not invited into…

    Dollar getting knocked down – watch the 78.50 line but, if that fails – up we go.  

    10 QQQ weekly $54 calls in WCP at .94 – out at .80.  

  60. kustomz

    And here they go working their magic going into Europes close..this is their chance to save it. If they fail to reach the critical lines say buh bye..  .9850 on AUD/USD

  61. carter

    Phil/AMZN — It’s only good on the Optrader side, where I thought I was posting! I follow along here & there as well.
    Sooo… yes, It’s good for AMZN puts, but not good as it’s not exactly isolated to AMZN. Not by any stretch.

  62. flipspiceland

    @Exec
    re: BMY
    No problem selling the 25s and rolling them to the 2014s.  You’d likely get twice as much in the nexr year than if you simply sold the 2014′s now.

  63. lflantheman

    I agree Phil…..If AAPL fails 360 we are in deep doo-doo.  

  64. stjeanluc

    FAS Money – I’ll add a running P&L to the what I post to make it easier. It’s all in the spreadsheet in any case. last week we cleared $309 between the puts and calls. The weekly 53 Put are 2.65 now and the 54 are 3.00. Moving fast… Which one do you want now? 

  65. amatta

    Iflan, 
    You still looking to buy AAPL at 360 and backing the truck at 350? 

  66. stjeanluc

    IWM Money / Phil – The calls are December calls so we don’t cash in the $440 for another 4 weeks. In any case, selling 1 TZA Dec 30 Put (now 2.10) 

  67. Phil

    Rough/Exec – I agree, very nasty and will get worse if we don’t do something to boost the economy.  Austerity will not be the answer.  

    Disorganization/Kwan – That’s what happens, the care organizations don’t have the manpower to verify data and they end up cutting back on computers before they cut back on food.  It’s completely overwhelming.  What that organization needs is organization – maybe your parents can help with that…

    BAC/Jtn – Well it might have been a good idea to do something at 20% or 40% or 50% or…  Down 70% is a bit painful but you could sell the $7.50 calls for .93 and use that money towards rolling your $10 calls (.45) down to the $5 calls at $1.90 for net .97 out of pocket to put you in a $2.50 spread that’s .60 in the money.  If you originally had .75 in, now you are in for about $1.70 on the $2.50 spread and you can still make 50% if BAC makes it to $7.50 vs the zero you make by staying in the $10s.  If that’s worth spending another .97 for – then that’s the way to go but, if you don’t have that much faith in BAC – perhaps it’s time to move on and just avoid spending so much money in premium next time.  

    75.39 – looking good!  

    SQQQ/Gucci – Well I’m bullish on the Qs at the moment but yes, if you set up the 2nd spread, the point would be to buy back the $20 calls and pull the profits off the table.  You can always re-cover if the Nas fails to hold 2,500 – it’s a good, solid line to play off.

    That’s the chart that matters, Pentax:  

    SPY in world currency

  68. williex

    Just checking in 
     
    What happened sounds like we have enough people here to have an occupy phils world focused on bringing down the corporate overlords.  Ha Ha Ha
     
    As to the romans phil, I thought the slaves thought it was better to be a slave of the romans than to be a peasant from where ever they came from or is that just corporate brain washing LOL

  69. exec

    Flip,
     
    Your talking selling the Puts correct?

  70. stjeanluc

     

    The P&L is accurate on this one because we have not covered any of the positions.

  71. stjeanluc

     

    Sorry, last time I didn’t update the IWM BCS… Good to go now. Real-time updates!

  72. rehat

    Phil, would you get back in VLO?

  73. Phil

    Good control chart StJ.  The amazing thing about Democracy is that it fools so many people into thinking they are on top of that pile and not the bottom.  

    Corporations/JMM – Jefferson was very anti-corporation.  He saw them as the eventual downfall of America.  

    I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country. – Jefferson
     
    Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny. - Also Jefferson (smart guy)

    Damn, QQQ $54 calls were .87 so the stop is .70, not .80!!!

  74. kinkistyle

    Dear god there is word that the shortfall in client deposits at MF Global could run to 1.2 Billion! What are the chances that MF Global is not the only firm and that co-mingling on a wide-scale might be rampant in the industry.  Why would anyone want to keep there money at any brokerage thats not TBTF!?

  75. lflantheman

    amatta….I’ve turned the truck in and decided on only a van.      :)     That is to say, this sh%& could just keep going down and AAPL with it.  I’m mostly watching and waiting.    

  76. jerconn

    PHil, Gucci/ SQQQ BCS – I’m a little confused, I have the SQQQ Dec 20/25 BCS for .80…I bought the $20 calls and sold the $25′s, so what $20 calls are  there to "buy back"?   Maybe you mean "sell" the $20′s cause they’re up 132% and move on to a Jan hedge?   But the hedge is "on target," why mess with it?  Or are you referring to another BCS?

  77. flipspiceland

    @Exec
    Yes.  Owning—— in the worst case———— BMY at 25.00 isn’t too hard to take.  And then your buy/write comes back into play.
    I’m beginning to become ever more convinced that $30 is the new ‘$25′ for BMY.

  78. lflantheman

    When does the supercommittee anounce their failure?   Reason for inquiry is this will signal a further fall in the markets.   

  79. kustomz

    Looks like they are in total control of the FX markets, .9850 next stop for AUD/USD careful if your short

  80. jcaesar

    Iflan / Deadline - This Wednesday is the official deadline.  I’ve read that the "unoffical" deadline is tonight. 

    http://www.futuresmag.com/News/2011/11/Pages/NYSEDB-may-split-off-.aspx

  81. stjeanluc

    Very muted reaction in the market to that big dive in the dollar…. Not a normal day! 

  82. kustomz

    Someone needs to tell the guys on CNBC the markets are tracking AUD/USD and not EUR/USD

  83. lflantheman

    Who  disagrees with me on the following:
    1. Supercommittee anounces failure.  2.  Markets plunge further with announcement.  

  84. jcaesar

    Iflan – Your scenario is possible, but the cuts don’t take effect until 2013.  Any market reaction specific to the failure itself would, I think, be very short lived.  I believe more significant reaction would follow if US debt is downgraded as a result.   

  85. cslanson2

     Iflantheman
    I’m more inclined to think that Wall Street in it’s usual pattern will "sell the rumor" and "buy the news".  You might see a bit of a knee jerk from the robots but I suspect it will be short lived.

  86. kinkistyle

    Iflan:  FOMC minutes tomorrow, if Ben comes riding in on a rainbow made of money I think your premise might be invalidated.

  87. yodi

    Phil I have a simular situation as the one below only bought the Jan13 15c for .93 cents now some .13 cents Looking at it by doing the roll yo suggested you throwing more money in to the poy if BAC goes up the long caller will go up as well not limidting you to the 7.5 call  Thanks for the comment.
    BAC/Jtn – Well it might have been a good idea to do something at 20% or 40% or 50% or…  Down 70% is a bit painful but you could sell the $7.50 calls for .93 and use that money towards rolling your $10 calls (.45) down to the $5 calls at $1.90 for net .97 out of pocket to put you in a $2.50 spread that’s .60 in the money.  If you originally had .75 in, now you are in for about $1.70 on the $2.50 spread and you can still make 50% if BAC makes it to $7.50 vs the zero you make by staying in the $10s.  If that’s worth spending another .97 for – then that’s the way to go but, if you don’t have that much faith in BAC – perhaps it’s time to move on and just avoid spending so much money in premium next time.  

  88. deano

     Phil
     
    What is your trigger for stopping out the first EDZ (18/24) spread? Thanks,

  89. yodi

    stjeanluc
    What is the final move on the put of FAS now?

  90. jerconn

    FAS and FAZ approaching parity…FAS at $53 and FAZ at $50…any suggestions for plays?  Short both of them?

  91. zeroxzero

     Just stopped traveling and have tuned in, Dow down 326 — buy, sell or do nothing, gents?

  92. flipspiceland

    @ifm
    I do, WADR.   When has a government prince EVER announced that he failed?   

  93. lflantheman

    zeroxzero…..count your CASH and have a glass of wine.  

  94. shadowfax

    A very strange thing happened as my heat pump was finished. I hired a firm to build the big main runs and charge the system. After the work was done the 2 sheet metal workers thanked me for giving them 3 days work. The only 2 with steady work are the Technician with the licenses and the sales man helping with repairs and trying to find more work. He also braised the supply and return lines while saying, "I haven’t done this in years." These people have skills and lots of experience, the work can’t go to china, but as mentioned today, cut the middle and upper middle classes a bit more, work is going away, and skills are lost.

  95. scottmi

    AONE -the folly of government investment is not just limited to Solyndra.

  96. angelcur

     ZERO// depending on what your mission is i would buy a very large tequila slammer!

  97. Phil

    ABX/Lincoln – You can pull the $40s with $8.30 and it’s a damn shame you didn’t use any kind of stop as they fell from $12.50 last week.   You made money and you still like them so you can re-establish a long 2013 $30/50 bull call spread at $12.10 and, if you really like them, you can sell $38 puts for another $4 and then you are rolling your current $8.30 about even to a $20 spread that’s $17 in the money and, of course, if the Jan $50 caller expires worthless, you are fine and, otherwise, you have a whole year to roll them along and a bonus $4 on the short puts if you need to and another $12 coming from the spread so you don’t get in big trouble with them until you are over $60.  The adjustments depend on your goals but also on what spreads are available and how we feel about a stock long-term.   In the case of ABX, we love them long-time and we can improve your current position by $10 and you WANT to own the stock so there it is – you effectively own it.  We don’t think ABX will get bought between now and Jan expiration so leaving the open puts seems OK and we’re not expecting gold to pop $2,000 so leaving the naked Jan $50s seems OK and we think they have a good chance to make $50 by next Jan so the $30/50 spread seems like a good target and, you can always sell $1 calls each month to help pay for the long position.  If you consider that you are tying up $8 instead of taking it off the table – then your goal to get a 30% return on that $8 is simply to sell .20 per month in calls while you wait. 

    Charts/Kustomz – Nah, I’m calling it here.  

    AA/StJ – Damn, that’s right, I forgot you didn’t do that sale.  I’d give it a day at this point – Fed minutes could be interpreted bullish plus GDP may come in warmer than expected.  

    FAS/StJ – That’s interesting.  

    AMZN/Carter – Nice call by Opt!  It’s OK, stop by any time.  8)  

    Which one/StJ – I wanted to sell the lowest, not looking to take big risk but too much premium to turn down for 3 day’s we’re open.  Think how insane that is, they are willing to pay almost $1 per day of premium – that’s MADNESS!  

    TZA/StJ – I know that but, logically, if we get in trouble on the short puts then we WON’T be in trouble on the short calls so I’m allowed to count on that $440 in the context of having to roll the short puts, right?  See the idea is we’re both selling more premium into the excitement AND locking in the quick gains we already have by selling opposite premium to cover.  

    Better to serve in Hell/Willie – Well, my religion only has the one book of the bible but I don’t remember the part about how cool it was to be a slave in Egypt – maybe it was in the sequel. 

    VLO/Rehat – $18 is our usual buy-in.   I’m not optimistic about oil or gas prices after this weekend so I’d wait. 

    MF Global/Kinki – That’s exactly what I was talking about in the post – a total loss of confidence in small investment houses drives Billions of Dollars into GS and the Gang of 12 – despite the fact that Corzine used to run GS so why would anyone think they are any better?  

    SQQQ/Jerconn – So now it’s $2 and you’re up 125% but you could take the $20s off the table for $3.70 and then spend $1.70 on the Jan $21/28 bull call spread which puts the same $2 in your pocket and leaves you with a $7 spread covering the $25 calls.  If SQQQ breaks higher, you can add another layer of bull call spread in Jan or move further out in time.  Even if SQQQ heads much lower in Dec – you should retain some value on the Jan spread that will get you close to collecting your full $5 but without all that messy risking the gains you already have.   If it’s a hedge, then yes, you are "on target" but if it’s a bet – you really don’t want to blow 125% profits if you can avoid it.  

    Keep in mind, if I thought we were going down another 5%, then I wouldn’t consider it but I think we may turn it around here so I’m more inclined to cover bear gains.  

    Dollar popped off 78.30, over 78.40 again is bad.  

    Gold $1,676!  Oil $95.67.  

  98. Phil

    Super-failure/Iflan – I think that’s a done deal and we’re already trading off it.  In context, they were going to cut $150Bn of spending a year starting 14 months from now – it’s a friggin’ joke and nothing to trade off.  Not that people won’t but I’m already moving past it.  

    WCP moves:

    • Buying back Jan $7.50 calls for .24.

    • Selling DXD Dec $15 calls for $2.80, leaving $17 calls naked.  

    • No change on SCO short puts or new QQQ calls.  

  99. harip

    Phil/Pharm,
    Is it time to start looking at gild? Opinions on what would be a best way to start position in an IRA account?
    thanks

  100. lflantheman

    Out of TZA …+25%  (options).     I think we turn up here.   No play yet

  101. kustomz

    Nah will turn into O’ Shit if they fail to hold .9836/.9832 AUD/USD.. like I said they are in control (.9850 needs to cross) and looks like they are milking it for a possible afternoon rally. .9819 is the critical line to the downside now.

  102. jabobeast

    Phil—is there a possible stick today or is it too ugly of a day for him not to show his pretty face, in your opinion?

  103. stjeanluc

    FAS Money / Phil – Then let’s sell a weekly 53 Put in addition to the 55 we have. They are still $2.60 or so!

    Trade – Selling 1 FAS weekly 53 Put for around $2.60 

  104. kallenjr

    Phil,
    Two questions: 1) When you refer to the dollar being ‘jammed down’, who is doing it and how are they it?,  and 2) Is there any analysis you believe regarding whether the governments will try and inflate their way out of debt or whether deflationary defaults/haircuts will prevail?
    -ken

  105. stjeanluc

     

  106. pstas

    Phil, what are your thoughts on oil (/CL) going forward the next few weeks. Debating what to do with a Dec SCO 37/42 BCS with a nice profit now. More to come if /CL stays in its current range or lower.

  107. yshenhar

    stjanluc – what do you think of selling Jan 12 iron condor on SPX?
    925/950/1350/1375 is 59 days away, ask is about $3.50 which is 14% on margin and we have a strong move today, which at least this morning was outside of 2 SD on the VIX.
    Any thoughts?

  108. stjeanluc

    SPX Condor / Yshenhar – JC and I are looking at a trade now. But as before, I am not comfortable with the upside protection at the moment. The high for the year is 1375 or so and if they were to announce QE3 or get off their behind in Europe, we could get back there in a hurry! And that would breach the lower strike of your call spread. The put spread looks good though… 

  109. exec

    This is starting to feel like a stick into turnaround Tuesday.
     
    Big tail into holiday rally?

  110. joel

    Phil,
    I’d be intrested to hear your take on the Gross/Fink forum tonight on Bloomberg.  I think it’s at 10 east coast time, if you have a chance to watch.

  111. terrapin22

    FMCN – that’s been fun to watch today.  bought some puts earlier on the muddy waters report news.  It traded as high as $21 after the report broke but now is around $10.   It looks like they haulted trading.  does anyone know what happened?

  112. exec

    Wow….IWM dropped like a rock right back to the trend line on that move.

  113. pahurik

    Terrapin,

    Muddy Waters making cautious comments; Initiates with Strong Sell rating 

  114. Lincoln

     Phil: re-post
    I either keep just missing you or maybe you prefer me to ask AH?  
     Phil: artificial buy writes
    I have several artificial buy writes where premium has melted away and I like the stock long term.  For example ABX Jan 12 10 ea,   long 40 ‘s, short 50′s and short 45 puts. Should I be thinking of rolling the longs to Jan 13, letting the shorts run their course?   At this point gain would be about $4,000,  a close above 50 in Jan and gain would be about twice that and then  would need to start a new position.  Once again I’m less concerned with the specific stock but rather how to adjust similar set-ups as expiration gets closer and price is near the short call price.   TIA
    (whoops prices have changed since I posted originally yesterday and earlier but the gist of my question is the same)

  115. Lincoln

     Phil:  My bad, thanks for the response on my lunch break :)

  116. David Ristau

    Phil,

    What do you think of Gamestop (GME). I like them and have a Buy rating on them. They may be a nice play for Black Friday  bounce. Lots of consolidation around 22.00.

  117. Phil

    And what JC said about Super-Committee!  

    BAC/Yodi – Why not flip to XLF and spread the risk around?  2013 $10/13 bull call spread is $1.65 and you can sell the $10 puts for $1.30 for net .35 on the $3 spread that’s currently $2.17 in the money.  Then you are only screwed by a massive financial meltdown and that’s something you should be able to hedge on the way down.  

    EDZ/Deano – That, to me, is a hedge and I don’t see myself being too motivated to stop out ahead of the weekend unless there is some real news that makes us more comfortable.  EDZ Dec $18s are $6.30 so you want to pull them at $5 (below $22.50) in the very least and then leave the $24s as naked short calls.  If EDZ crosses back over $22.50, then you can re-cover but, otherwise, time is on your side and against the $3 of premium in the $24 caller.  

     

    FAZ-FAS/Jerconn – Yes, a straight short on both, in theory should work out over the long haul.  You can buy the FAS 2013 $60/55 bear put spread for $3 and the FAZ 2013 $55/50 bear put spread for $3 and there’s an excellent chance they will both pay off in a year due to decay.  Doesn’t pay as well as straight double shorts but it limits the loss (and there will be a loss on one side) while you wait for them to wind down.  I would certainly consider this an experimental play but it could pay a nice 66% if both sides hit.  

    FMCN CRASHING!  

    Skills/Shadow – True.  That’s the problem with long-term unemployment.  We had 5M people who were skilled home and commercial builders and we have Trillions of Dollars worth of infrastructure projects that need to be completed, many of which are rated critical – yet no one seems to be able to put these two things together to solve our problems – tragic!  

    GILD/Harip – I like them long-term but not sure if they are done going down yet.  Since the overall market is dicey at best, I’d be careful and wait rather than try to call a bottom. 

    Stick/Jabob – Well they’d better do SOMETHING as this is getting dire.  Volume is low enough but if I were Mr. Stick, I’d be worried about getting sold into with no good news to play off.   Better to wait for after hours or pre-market to find some flimsy excuse to pump it up.  

    FAS Money/StJ – Didn’t we say that already?  

    Dollar/Kallen – Who is a good question.  Whoever wants to goose the markets.  Knocking the Dollar lower automatically re-prices stocks and commodities higher so it’s a great way to quickly reverse a sell-off and you only have to focus your firepower in one spot, rather than laying it off on all the indexes.  That’s why, when we see Dollar-driven rallies, we are not likely to believe them – it has nothing to do with building an actual base of new stock buyers.   As to analysis – I think hyperinflation is the only possible solution for the Global debt crisis and one by one countries will begin to accept this.  We’re all about 100% of GDP in debt so $60Tn globally with a $60Tn GDP and if we first practice some austerity to clamp down on new debt – let’s say bringing it down to 5% of global GDP ($3Tn/yr), then 10% inflation for 5 years will jack GDP up to $97Tn and debt would go up about $20Tn so then we’d have a $97Tn GDP with $80Tn in debt – PRESTO – we’re getting control.  If we crank it up to 15%, then we’ve got a $120Bn GDP with $83Tn in debt – run it out like that for 10 years and you have a $242Tn GDP with $140Tn in debt and you’ve practically solved the problem!  

    SCO/Pstas – I think that one is on target and I doubt oil holds $95 through Dec so not much to do with it unless you want to get aggressive and take $6 off the table and flip it to a Jan $37/46 bull call spread for $3 so you pull $3 off the table and you’re left with the short $42 calls (a bit dangerous) protected by the $9 bull call spread that’s $5 in the money so your bet is that SCO stays below $46 (up about 10% so about 5% on oil to $92) and then you still net $2 on the spread after paying off the caller.  Probably less stress to just call it on track and leave it alone…

    Forum/Joel – If I remember.  Feel free to remind me this evening. 

    FMCN/Terra – Seems like they might be another Chinese ADR that’s just an empty shell.  That’s the rumor of the moment and that’s why I don’t touch those things!  

    Artificial/Lincoln – 12:35

  118. jcaesar

    Phil – This question may be a little out of left field, but ever since I’ve begun to follow financial news web sites (e.g., Seeking Alpha),  I’ve been amazed at the number of Austrian School / Ayn Rand followers who frequent these sites (some of them authors, but mostly people who comment on articles).  I studied economics at two universities and never once met a person who seriously believed in the gold standard.  And I was taught by mostly Republicans (with a few independents and Dems thrown in).  Where do these people come from and get their kooky ideas?  Totally bizarre to me.

  119. kallenjr

    Phil,
    Thanks for deflation/hyperinflation viewpoint. So in your example governments benefit from hyperinflation (after some austerity measures)? At any point in this scenario do incomes rise? If not, devastating to all with minimal assets and who live primarily from their income. Seems that would create great unrest for the majority of people.
    -ken

  120. stjeanluc

    FAS Money / Phil – Just making the official trade… It has been tough keeping up these days as the prices move $0.50 between the time you post and when I start analyzing the trade to post it! Which is why I sometimes need to confirm with you. 

  121. dflam

    Phil/F; after recently closing out Jan. $12.50 C at $.09 (sold for $.57), I now have 1000 shares of F at $11.93 and 10 short 2013 $12.50 P at $3.70 (sold at $1.84) for net $$9.56/ $11.03. Thinking of selling the Feb. $12 C for $.22 and rolling every 2 months.Looking for suggestions. Thanks

  122. yshenhar

     xkcd explains money

  123. jmm1951

    Jcaesar/kookonomics

    I have never tuned in, but it might come from Rush Limbaugh or something similar on the radio. Seem to be quite a lot of people who think we can get rid of paper money. In my mental picture they are Vietnam vets with pony tails and Harley’s who live on disability and run small ratio businesses on the side. But I could be 100 percent wrong.

  124. biodieselchris

    Don’t forget the ones making the laws are already in the top 1%

  125. jmm1951

    I hate apple correction or censorship. That should be tattoo, not ratio.

  126. rainman

    From Bespoke: S&P 500 Breaks Below 50-Day Moving Average
    Monday, November 21, 2011 at 02:36PM

    As shown below, support at the 50-day wasn’t able to hold for the S&P 500 today. The index is now back inside the 1,100-1,200 sideways trading range that it traded within from August through October.

  127. jcaesar

    jmm / kookoonomics – If you ever follow comment threads on Seeking Alpha, you’ll see ‘em come out of the woodwork. Trust me!

  128. Phil

    GME/David – I think apps are hurting that business but not completely so.  There is always a line of kids when I’m there and they have crappy little stores in every mall I’ve ever been in – sort of like the model for comic book stores but with bigger budgets.  I think they are already priced for poor earnings and there may be a surprise BUT – I would not buy them because you are counting on millions of people to buy things – not just the top 10% and, since it’s a very optional thing – I think you can still get burned so I would be careful, especially if they can’t get over $25 on their next move up as that would confirm a long-term downtrend.  

    Where/JC – I believe that many of them are paid to promote points of view.  You are right, their are more Austrian School commenters than there are people in Austria and that just doesn’t seem right.  As you know, the "vocal minority" has been a PR/Lobbying strategy since the time of Reagan and it really takes advantage of the Web as the average person reads without commenting so all it takes is a few hundred monkeys on payroll and you can give the impression that "most" people think anything you want them to think.  Very often, on Seeking Alpha, I call people out for spouting talking points and, if you follow some of these people and read their comments under dozens of various articles – you pick up a theme that they follow.  There are oil apologists and bank boosters and Government bashers and they seem to have all day to read and comment on every article that is written on SA that dares to have a contrary opinion to theirs – just doesn’t smell right to me…

    Hyperinflation/Kallen – Well there’s no point in hyperinflation if your debt begins to grow exponentially too so goal number one is to lay off your debt into fixed long-term notes at low rates (kind of like we’re doing now) so that, when you inflate things, you get to pay back your long-term debt in funny money.  Goal number two is to get your spending under control or those costs will inflate you right back into massive debt and number three is to protect the rich people – one of the best ways of doing that is to let them foreclose on everyone’s land and buy up all the distressed assets for 10 cents on the Dollar right before you inflate them 20x – that’s all in progress now.  Yes, incomes MUST rise for this to work but that’s the LAST thing our Corporate Masters want to see so first they want to outsource what they can and automate what they can and do as much M&A as possible at the lowest rates possible.  It’s the best way to quell revolution – just give everyone jobs and raises and they will go right back home and watch Dancing With the Stars saying "start the revolution without me."  

    FAS Money/StJ – No biggie, I have full faith that it works out over time.  

    F/Dflam – I’d sell for $10 and buy 2x (20) the 2014 $5/10 bull call spreads at $2.93 and roll the 2013 $12.50 puts ($3.60) to 2x (20) the 2014 $8 puts at $1.70 (net .20 out of pocket).   So that puts you in the spread for net $9.81 less the $4.14 you have in your pocket is $2.84 for 20 $5 spreads ($5,670) and you make $4,330 at $10 and $8 is still better than break even and your worst case is you end up owning 2,000 shares for an additional $16,000 plus the $5,670 you already spent (assuming it’s below $5 because over $5 is money for you) $21,670 for 2,000 shares or $10.83 a share so your WORST case is better off than you are with the current buy/write but you have a much better chance of winning since anything between $8 and $10+ is a positive outcome vs $11.03 now.  

    Wow, that’s a cool chart Yshen!  

    79.43 – real photo finish shaping up.  

  129. JRW III

    Good morning; sorry, I’m traveling.

     

    IWM   68.95,  69.74,  70.09,  70.69,  71.07,  71.33,  71.87,  72.15,  72.56,  72.98,  73.24  and  73.51 

  130. jcaesar

    JRW – Good morning?  You really are traveling.  Time traveling maybe?  ;-)

  131. exec

    Hi JR,
     
    Have you been able to follow the action today?
     
    Target?

  132. neetcorp

  133. zeroxzero

    Phil:  Wow, that’s a very cynical view of both the discernment and attention span of the average U.S. working person.  "Bread and circuses" all the way. I wish I didn’t agree with you. Plus ca change……

  134. Phil

    2:00 PM On the hour: Dow -2.66%. 10-yr +0.28%. Euro -0.18% vs. dollar. Crude -1.75% to $95.97. Gold -3.13% to $1671.05.

    3:00 PM On the hour: Dow -2.62%. 10-yr +0.24%. Euro -0.12% vs. dollar. Crude -1.99% to $95.72. Gold -2.88% to $1675.45.

    Europe closes sharply lower in a disappointing session that didn’t see even an attempted rumor aimed at turning things around. Stoxx 50 -3.2%, Germany -3.1%, France -3.2%, Italy -4.8%, Spain -3.1%, U.K. -2.5%. The euro braves the meltdown, off just 0.1% at $1.3508. 

    Not fazed by 0% interest rates, money is headed to the U.S., with foreign bank deposits at the Fed more than doubling to $715B from $350 at 2010′s end. "There’s not anything close to a substitute and part of it is the deepness of the market, the liquidity," says a fund manager. "There’s a perception, right or wrong, that we’re going to make good on all our assets."

    Moody’s reports U.S. credit card charge-offs falling 6 basis points in October to 5.21%, the lowest level since 2007. Of note, says Moody’s is October’s decline followed a big September decline – typically, September improvements are followed by deterioration the next month. 

    The ongoing impact from a sluggish birthrate in the U.S. could hit the housing market after data shows the number of babies born fell to the lowest level since 1999. Fewer babies reduces economic activity and drags down housing demand, says Wells Fargo economist Mark Vitner. "More households will likely choose to rent for longer periods of time, and there will be fewer trade-up buyers. I fear this is a trend that will likely persist." 

    Outgoing ECB member Juergen Stark warns the sovereign debt crisis has now spread to the EU’s core, "a new phenomenon." He also reminds that government debt is not just an EU issue – "Most advanced economies are facing serious problems with their public debt." 

    "The fate of the euro is about to be decided," solemnly writes the team at Credit Suisse. The analysts say "a momentous deal" must be reached by mid-January to save the bloc. Wasn’t that achieved just 4 weeks ago, or before that in July, or before that in April 2010? Are bailouts the only way or is proper governance even an option anymore? 

    The Bundesbank slashes its forecast for 2012 German growth to just 0.5%-1% from the previous prediction of 1.8%, citing the usual suspects of slowing foreign demand and market turmoil. The Buba also panned the recent Greek haircut deal – saying it expands shared liabilities, thus lowering incentives for states to promote sound public finances.

    Spain’s "drastic change is palpably useless," says Ambrose Evans-Pritchard. "Mariano Rajoy has precious few policy levers at his disposal and cannot alone do anything… to prevent a death spiral." Instead Rajoy needs Germany to allow EMU-wide reflation and the ECB to become a lender of last resort.

    Belgian Socialist leader Elio Di Rupo – who was expected to head a the country’s new government – offers his resignation to King Albert II after weekend talks failed to move towards a coalition deal. The nation has been without an elected government for more than 500 days, and needs to get busy slashing its deficit as its paper also comes under attack.

    Did 2008 even happen? Deutsche Bank (DB -4.2%), with €2.28T in assets, has equity of just €51.9B – a leverage ratio of 44. As comparison, JPMorgan’s (JPM) is about 18. Deutsche accounts for its sovereign debt holdings as "risk-free," thus bringing its "risk-weighted" capital ratio down to 13.8%. If it’s all German paper, then fine, but how much is Italian? French?

    Nouriel Roubini breaks down the epic failure of the so-called "supercommittee" to reach a deal – saying the collapse poses a fiscal drag for 2012 but doesn’t create greater sovereign risk. "That’s why bond yields are down and stocks plunging." 

    Jefferies (JEF -3%) sends an extraordinary letter to shareholders, blasting a hedge fund for "spreading false rumors." The company says it has reduced exposure to the PIIGS by nearly 75%, and is actually net short the group. Somebody has to be long, no? (PR, pdf

    Gold takes out new lows for the session, dropping to $1,675/oz. and not helping a bit in the midst of a large equity sell-off. "When you really need something for safety, gold disappoints you," tweets one punter. "A safe haven loses its safety when it is not contentious," says hedge fund manager Hugh Hendry. GLD -2.7%

    Though the Global X Social Media ETF (SOCL) is only on day 5 of trading, it has seemingly already taken about a year’s worth of criticism. Global X CEO Bruno del Amo defends one of the points of attack – the fund’s high concentration of Chinese names – by noting China has 50% more internet users than the U.S. and firms like Facebook, Twitter, and Zynga are set to be added to the fund after they go public. Shares now stand down 9% since the ETF’s launch date.

    The bloodletting in Focus Media (FMCN -54.8%) following a critical Muddy Waters report (.pdf) has reached extraordinary levels. In some ways, the move is an inverse of the run-ups tech stocks saw in the 1999-2000 bubble following a mention in the Gilder Technology Report. Muddy Waters is accusing Focus Media of overstating the size of its ad network, and of claiming to acquire companies it never actually purchased. 

    With 25 of the 37 sell-side firms covering H-P (HPQ -3.9%) maintaining Hold or Sell ratings, is sentiment too bearish heading into today’s FQ4 report? Sterne Agee seems to think so. But the bears have their reasons: Goldman thinks H-P’s server business will continue to be hurt by the "encroachment of white box vendors," while Deutsche expects the PC division’s problems to ding earnings.

    Research In Motion (RIMM -6%) is making fresh 52-week lows after receiving a rash of negative sell-side notes. JMP is downgrading RIM to Underperform, citing competition from low-end smartphones; RBC is cutting its PT after its checks indicated weak U.S. sales (nothing new); and Credit Suisse is slashing its estimates, predicting RIM’s BBX devices won’t arrive until mid-2012, and declaring a buyout unlikely. (Canaccord

    The inventory gluts seen by Android tablet vendors this year may get even worse after the holiday season ends, according to DigiTimes’s sources, as the arrival of the Kindle Fire (AMZN) and Nook Tablet (BKS) make life even more difficult for tablet vendors struggling to compete with the iPad (AAPL). NVDA and ATML are two chip suppliers who would likely take a hit from a major inventory drawdown.

    14% of respondents in a ChangeWave survey of North American consumers said they’ll buy a tablet in the next 90 days – up from just 4% a year ago. While many are interested in the Kindle Fire (AMZN), nearly 3x as many would-be buyers said they would buy an iPad (AAPL). Moreover, 74% of current iPad owners said they were "very satisfied" with their purchase, compared with just 49% of owners of other tablets. (earlier)

    Speaking of Apps:  According to Piper, Android Market (GOOG) has generated 93% less app sale revenue for developers than the App Store (AAPL). While not a perfect comparison, given the App Store’s head start, and the greater reliance of Android apps on ads, the data is still in-line with existing commentary about the App Store’s monetization edge – an edge which could keep it the preferred platform for many developers, in spite of Android’s runaway growth.

    Three lunchtime reads:
    1) Deflating the bullish case for stocks
    2) Lynch’s rule of 20 can make you plenty
    3) Eurozone debt web: Who owes what to whom?

  135. angelcur

    from a sentiment perspective… seems like everyone has shifted bearish all of a sudden.
      the vacuous talking heads are looking for lower prices….  in fact….they r nearly hysterically negative
     againat this backdrop the S&P is stretched 55-60 points below its 10 day EMA…. AND the index is currently several points below its lower Bollinger Band…. it rallies back inside the band it’ll create a "buy" signal for the broad stock market….time for phil to do his burning pipe dance!

  136. lflantheman

    I’m riding some TNA Dec calls upward. 

  137. JRW III

    Not the Euro, not the Super-commitee, but MF Global has put the fork in this market !!

  138. Savi

    Phil—-took off half of the QQQ calls—-always early but had 30 % profit—thanks

  139. Phil

    Good morning JRW – You missed all the fun.  

    Cynical/ZZ – Is it, gosh I’m getting old…

    Sentiment/Angel – I don’t know about them but my bottom call is holding up nicely so far.

    QQQ/WCP – I’m a little torn here as we’re up .25 but we could be up $1 tomorrow so do we take $250 and run or risk $1,100 to make maybe $500 more?  Since we won’t likely get wiped out, I think we’re risking less than $500 to make $500 and I still feel good about it so most likely let it ride.  If we had more than 10 – I would certainly cash half out at $1.10.  

      

  140. JRW III

    exec / Target

    I think that anyone would be happy with IWM 70.69 or better, but read the above post; the MS Global run on the market has started !!

  141. Savi

    Phil—your opinion on /RB thru the holiday weekend?
    TIA

  142. lolobear

    lflantheman… you gotta give us some tna, tza calls… i’m happy you’re making money but i would never mind the help :-)

  143. Phil

    Good job Savi – taking profits always nice to do.

    RB/Savi – I think $2.50 should be a good floor to play off but that one I don’t think I’d want to risk overnight – better to see if the World improves tomorrow.  

    All in all, same old BS plus MF Global isn’t enough to justify failing the Dow Must Hold line.  If oil breaks – could be a different story as XOM and CVX fall down, go boom but that’s not too likely into the weekend and AAPL should hold $360 so Nas and Dow have support and we can assume that’s enough that we need to see a breakdown below there before we get more bearish.  

  144. lflantheman

    lolabear….sorry, I’ll try to post the exact trades and times from now on.     I’m of course out of the TZA but I got the TNA Dec 40s for 4.50.  I plan on holding them at least overnite.    But I’d advise you follow JRW on the TNA/TZA trades.  He’s the man.   I’m the boy in training.   

  145. craigzooka

     @Phil,  In reference to Game Stop I have talked to people that work there and have some information to share.
    1.  Game Stop actually makes most of it’s money in the buying and selling of used games.  People come in all the time and sell their games back for 1/2 what they paid for them,  then buy other used games for a couple bucks under retail.  I have been told that a single copy of game could be bought and sold upwards of 5 times.  With Gamestop pocketing 50% on each sale.
    2.  I would think that if the economy tanks people would be more likely to participate in the secondary Game market.  Which essentially puts Game Stop in the role of Market Maker for particular titles except the spreads are out of this world.
     
    Personally I think Game Stop is a terrible investment, if Walmart or Best Buy decides that the secondary market in games is worth it, they will step in and Game Stop becomes instantly worthless ( in my opinion).  However, until a big box retailer decides to do such a thing, I think GME might be surprisingly strong.  

  146. kallenjr

     Phil,
    I have looked around the site but could not find but I’m pretty sure it’s there… How are the levels defined for the indexes?
    -ken

  147. Phil

    GME/Craig – I always make my kids buy the used games but we never end up selling them back.  I guess it is a good profit center as they don’t have to remit to the manufacturers (and look how screwed the game makers get) but so did Blockbuster and look at them now.  While it would help me understand if they do better than I think they should, it isn’t enough to get me to bet on them.  

    Levels/Kallen – I believe under the Portfolio Tab (or maybe education) if you page back a bit you’ll find a few articles on the 5% rule that gives you the gist of it.  Good thing for someone to include in the Wiki..

  148. Phil

    Speaking of the 5% rule – we had a 1% weak bounce off a 5% drop and now heading back down – that’s a bearish sign.  Should have taken the money and ran on the QQQ calls – greed kills!  

  149. gmarts

    Looks like a downside tape painting excercise into the close

  150. flipspiceland

    @lflantheman

    Employed your ‘just for fun’ options play on AAPL today.  Into the DEC 425s for .45 cents and out for .67.   If you lose the decimal point, that’s not just pocket change.  
    Feels like I just took down a 12 point buck in deer season.
    Thx. 

  151. stjeanluc

    FAS Money – The decay on these FAS weekly options is just absolutely unreal. I am trying to paper trade a daily short strangle as we discussed last week and here is what I got today:

    10:45 AM FAS is at 54.90 – I sell a 53/60 strangle for $3.59 (I wanted 52/60 but there was no 52 strike) 
    3:45 PM FAS is at 55.23 I buy back the strangle for $2.63 or a 27% profit (over 10% over committed margin of around $8)

    I was hoping for 3% on the day. Obviously I was helped by the fact that we gaped down at the open and recovered back to the original trading point after going down over 2%. And it’s one day. But something to keep on testing…

  152. flipspiceland

    @JRWIII
    That means, if Denninger is correct that all that money running out of the markets entirely isn’t even going short because they believe even if it does tank that the brokerage they use will not be ‘alive’ for them to collect their fortunes nor will the insurance companies who insure the accounts.  Is that what I’m seeing?

  153. stjeanluc

    Let;s not forget that beside MF Global, Jefferies is also facing some scrutiny:

    http://ftalphaville.ft.com/blog/2011/11/21/756521/jefferies-lies-damn-lies-and-the-anonymous-hedge-fund-who-tells-them/ 

  154. stjeanluc

    Wow, someone is bearish on the Euro experiment!

    http://ftalphaville.ft.com/blog/2011/11/21/756071/the-last-days-of-the-euro/ 

    We seem to have entered the last days of the euro as we currently know it.

    That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.

    That may sound overdramatic, but it reflects the inexorable logic of investors realizing that – as things currently stand – they simply cannot be sure what exactly they are holding or buying in the euro zone sovereign bond markets.

  155. gmarts

    @flip, I know I’m not the most trusting guy out there but re; money flight, and trust…. I’ve got 7 figures parked in FDIC insured "interest bearing" bank savings accounts currently earning me a whopping 35 BASIS POINTS per annum. Trust the brokerages? I can barely trust the FDIC insured commercial BANKS!
     
    The f@ckers didn’t even give me a friggin’ toster.

  156. stjeanluc

    From Barry:

     • Housing in the US at just 2% GDP has already collapsed; housing in the Eurozone at 5% has substantial downside risk.

    • Capex in the Eurozone at 14% has downside risk.

    • Eurozone consumer already is a significantly smaller share of GDP than US.

    • Exports & imports = 24% in Eurozone is much more exposed to global slowdown and currency changes.

  157. scottmi

    Where is the money going? – if it is leaving the bank/trading accounts and is not just sitting in cash, look for it to go to physical gold and silver and a hard bump up in those in next few days. Could be the support seen in silver today though no showed gold any love. And if not gold and silver, not markets, and g*d help’em not bonds!, then more toys and real estate.

  158. stjeanluc

    And that’s not a good trend:

    http://www.bespokeinvest.com/thinkbig/2011/11/21/european-spreads-on-the-rise-again.html

     

  159. kustomz

    There are many examples one can point to when talking about manipulation in the markets but, todays action in AUD/USD was the most prevalent. Bravo Fed bravo.

  160. stjeanluc

    And this also could lead to bad things:

    http://www.bespokeinvest.com/thinkbig/2011/11/21/third-quarter-guidance-disappoints.html 

  161. rdn4evr

     STJ, Thanks for all the info and analysis on FAS Money.  Those premiums are incredible.  I still have the legacy long calls and puts from the original FAS money trade, and with $7-8 premium available on a weekly $2 spread, I’ve been having fun, yes fun, just playing a JRW type strategy on short puts and calls.

  162. jabobeast

    does the stock market close at 1pm on Friday?

  163. rsaxton

     Levels & 5% rule / kallen – posted to wiki - http://www.philstockworld.com/wiki/index.php?title=5%25_Rule

  164. stjeanluc

    FAS / rdn4evr – That’s another thing, you could play these using TA and optimize the trades. I am just trying to see if a dumb somewhat market neutral trade could benefit from people willing to pay so much in premium. 

  165. neetcorp

    Pharmboy,
    YMI not acting well after the $VRUS/$GILD deal.

  166. deano

     some good news:
     
    Hewlett-Packard (HPQ): FQ4 EPS of $1.17 beats by $0.04. Revenue of $32.1B (-3% Y/Y) beats by $250M. Company expects FQ1 EPS of $0.83-$0.86, below $1.11 consensus. Expects FY12 EPS of "at least $4.00," compared with $4.84 consensus. Shares+2.9% AH. (PR

  167. gmarts

    I wonder if the last minute selloff was Congressional insiders selling on the knowledge that "Super committee" deal was dead?

  168. stjeanluc

    Here are some thoughts from David Frum on the state of the GOP:

    http://nymag.com/print/?/news/politics/conservatives-david-frum-2011-11/

    Good stuff for future rants Phil…. Just a small sample as this is a long article.

    This past summer, the GOP nearly forced America to the verge of default just to score a point in a budget debate. In the throes of the worst economic crisis since the Depression, Republican politicians demand massive budget cuts and shrug off the concerns of the unemployed. In the face of evidence of dwindling upward mobility and long-stagnating middle-class wages, my party’s economic ideas sometimes seem to have shrunk to just one: more tax cuts for the very highest earners. When I entered Republican politics, during an earlier period of malaise, in the late seventies and early eighties, the movement got most of the big questions—crime, inflation, the Cold War—right. This time, the party is getting the big questions disastrously wrong.

    It was not so long ago that Texas governor Bush denounced attempts to cut the earned-income tax credit as “balancing the budget on the backs of the poor.” By 2011, Republican commentators were noisily complaining that the poorer half of society are “lucky duckies” because the EITC offsets their federal tax obligations—or because the recession had left them with such meager incomes that they had no tax to pay in the first place. In 2000, candidate Bush routinely invoked “churches, synagogues, and mosques.” By 2010, prominent Republicans were denouncing the construction of a mosque in lower Manhattan as an outrageous insult. In 2003, President Bush and a Republican majority in Congress enacted a new ­prescription-drug program in Medicare. By 2011, all but four Republicans in the House and five in the Senate were voting to withdraw the Medicare guarantee from everybody under age 55. Today, the Fed’s pushing down interest rates in hopes of igniting economic growth is close to treason, according to Governor Rick Perry, coyly seconded by The Wall Street Journal. In 2000, the same policy qualified Alan Greenspan as the “greatest central banker in the history of the world,” according to Perry’s mentor, Senator Phil Gramm. Today, health reform that combines regulation of private insurance, individual mandates, and subsidies for those who need them is considered unconstitutional and an open invitation to “death panels.” A dozen years ago, a very similar reform was the Senate Republican alternative to Hillarycare. Today, stimulative fiscal policy that includes tax cuts for almost every American is “socialism.” In 2001, stimulative fiscal policy that included tax cuts for rather fewer Americans was an economic­-recovery program. [...]

    In the aughts, Republicans held more power for longer than at any time since the twenties, yet the result was the weakest and least broadly shared economic expansion since World War II, followed by an economic crash and prolonged slump. Along the way, the GOP suffered two severe election defeats in 2006 and 2008. Imagine yourself a rank-and-file Republican in 2009: If you have not lost your job or your home, your savings have been sliced and your children cannot find work. Your retirement prospects have dimmed. Most of all, your neighbors blame you for all that has gone wrong in the country. There’s one thing you know for sure: None of this is your fault! And when the new president fails to deliver rapid recovery, he can be designated the target for everyone’s accumulated disappointment and rage. In the midst of economic wreckage, what relief to thrust all blame upon Barack Obama as the wrecker-in-chief. [...]

    Backed by their own wing of the book-publishing industry and supported by think tanks that increasingly function as public-relations agencies, conservatives have built a whole alternative knowledge system, with its own facts, its own history, its own laws of economics. Outside this alternative reality, the United States is a country dominated by a strong Christian religiosity. Within it, Christians are a persecuted minority. Outside the system, President Obama—whatever his policy ­errors—is a figure of imposing intellect and dignity. Within the system, he’s a pitiful nothing, unable to speak without a teleprompter, an affirmative-action ­phony doomed to inevitable defeat. Outside the system, social scientists worry that the U.S. is hardening into one of the most rigid class societies in the Western world, in which the children of the poor have less chance of escape than in France, Germany, or even England. Inside the system, the U.S. remains (to borrow the words of Senator Marco Rubio) “the only place in the world where it doesn’t matter who your parents were or where you came from.”

    We used to say “You’re entitled to your own opinion, but not to your own facts.” Now we are all entitled to our own facts, and conservative media use this right to immerse their audience in a total environment of pseudo-facts and pretend information.[...]

    The conservative shift to ever more extreme, ever more fantasy-based ideology has ominous real-world consequences for American society.  

    Good stuff!

  169. zeroxzero

     Kustomz:  Why AUD?  It’s usually a straight basic materials play, given it’s international GDP weight, which is marginal.  I see it dropped 1.7% versus USD today, as did GBP 1.03%, while the Euro only gave up 0.2%.  But then no one expects basic materials prices to outperform with a rising dollar and weak global demand.  I’m not breaking the code here.

  170. stjeanluc

    There are some good reasons why it would be a good idea to send every congressman and senator home and tell them to take 5 or 6 years off:

     

  171. zeroxzero

     http://www.ft.com/intl/cms/s/0/ad3fb44e-1167-11e1-9d04-00144feabdc0.html#axzz1eNZeOz77 / Support grows for Insider Trading Ban
    Excerpt: "High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights.http://www.ft.com/cms/s/0/ad3fb44e-1167-11e1-9d04-00144feabdc0.html#ixzz1eNa10PrN

    In a new book, Throw Them All Out, Peter Schweizer of Stanford University’s Hoover Institution, accuses Spencer Bachus, the Republican from Alabama who chairs the House financial services committee, of short selling stocks based on insider knowledge.
     
    Mr Schweizer found “no less than 40 options trades” by Mr Bachus between July and November of 2008, many of them within days of receiving closed door briefings from the likes of Henry Paulson, then Treasury secretary, and Ben Bernanke, chairman of the Federal Reserve."
     
    You would think our politicians would make enough just suckling off corporate teats.
     

  172. zeroxzero

     Sorry, forgot to excise the customary FT admonition. FT is worth the subscription, I will add by way of atonement.

  173. rustle123

    Netflix might be a good buy at 8.  Looks like it’s headed there pretty quickly in the after hours.

  174. dflam

    Phil: what do u think of WAG at this low price and doing a buy write with the 2013 $30C. I think the Express Scripts termination is more than built into the price.

  175. stjeanluc

    Felix might be a bit too cynical…

    http://blogs.reuters.com/felix-salmon/2011/11/21/can-austerity-cure-contagion/

    But here’s the cunning bit: the bankers don’t really have their banks’ best interests at heart. They just want to keep on getting their coupon payments until this year’s bonuses are paid. And then, once those bonus checks are cashed, they’ll start trying to get next year’s bonus payment, too.

    The bankers and technocrats know full well that the longer they manage to kick the can down the road, the worse it’ll be for everybody in the long run. But in the short run, they get very wealthy. Even as crucial government services are cut to the bone, and the risk of major social unrest increases greatly.

    Or just telling the truth!

  176. kustomz

    Zero, throw up a chart of AUD vs SP the correlation is perfect. Its been the favored trigger of risk on for the past month. Pricing in a China slow down should be the markets next move and AUD is the canary in the coal mine.

    Too many variables in the EURO. Rate cut, repatriation, Europe can get fixed at anytime etc. etc…

  177. revtodd64

    Zero  -  Insider Trading
    I have been doing some reading on current legislation trying to overhaul Congressional Insider trading, and I’m not enough of an expert to know what is effective vs. window dressing.  However, here is some information I’m digging deeper into and would like to here what others think of the STOCK Act to ban his crap.  Here’s one website I have found helpful to begin my research from ProCon.org.  I also found a petition favoring the stock act done by Motley Fool at Change.org.  I haven’t used this resource before, but perhaps similar effort could be done by Phil’s readers to urge passage or this or other trading legislation we deem worthy.

  178. kallenjr

    I think the current Carry Trade indicator FX is AUD/JPY.

  179. elliotteldrich

  180. nicha

    Interactive Brokers – what’s up with the cancel/modify order charge? Other than that any other cons with them? Anybody ever use their mobile app? How does it compare to TOS? Thanks.

  181. Lincoln

     Phil: rolling short calls down
    Scaling into short calls has become one of my favorite plays.  In a case like I sell 8 Dec HOG Dec 39 C’s for $1.15 they drop to $.45 quickly I’m thinking rather than just cashing out altogether I  should take my $ 560 profit and roll down to 4 of the Dec 37′s since I really want to short them for 8 in Jan 40′s and then 16 Feb 44 or 45′s.  My premise is that I see no impetus for a breakout or buyout, I think I know their range and I could easily stomach a DD at $45 if need be. Or should I just wait for them to get to top of the range again?  TIA

  182. stjeanluc

    Josh’s take on FMCN:

    http://www.thereformedbroker.com/2011/11/21/focus-media-crushed-halted/

    You have to be deaf, dumb and blind to be long any of these Chinese companies after what we’ve witnessed this year. They’re all to be assumed a scam until proven otherwise – every last one of them. 

  183. lflantheman

    Positive information for the markets tomorrow…..http://finance.yahoo.com/news/p-says-no-cut-planned-232038389.html  Surprisingly (or not) the supercommittee failed and after hours indices are up.   Perhaps many see it as a good thing if the congress just stays out of it and lets the 2013 automatic cuts take place. 

  184. revtodd64

     nicha – IB charges for just about everything, and I get a fair number of cancel orders charges every month.  But my trading costs are still dirt cheap even with these charges.  I use the android mobile app sparingly, mainly to check in and see what is happening.  It functions in a pinch, but you can’t put spreads into it, as far as I can see so far.  Compared to TOS, IB has a very clunky interface, but it is a durable platform that is often functioning well when TOS melts down.  My trades go through well, and you can’t beat .70 cents per option even with the order cancel charges that crop up.  If TOS got anywhere near that price, I would change over in a heartbeat, but they really take a bite out of profits for smaller accounts.  I have been with them for two years and I’m generally satisfied, and I can also trade through an adviser account, so I can trade my IRA, my wife’s IRA and my mother’s IRA from the same platform.  

  185. lflantheman

    Lincoln….I’m not Phil but your question interests me.  It is basically what to do with short calls that are ‘coming in’ nicely.   In the case of HOG it does have somewhat of a ‘range’.  It has not been above 40 or below 32.50 since August.   It’s about 35.50 today.   Your short 39 calls are well in the money and  HOG just made a nice 3 day move down.  So what I would do is sell some Dec 33 puts for about 80 cents.   No additional margin is required for going from the short calls to the short strangle, and you may as well profit on both ends if HOG wants to stay range-bound.  If it moves against you up or down you can merely roll up/out to accomodate the move.  Now to see how Phil would manage it. 

  186. biodieselchris

    pharm – did you have VRUS?

  187. Lincoln

     Iflan: thanks for the input
    My goal is to get the feel for a couple of stocks the way you do AAPL.  I’ve not had great success for the Peter Lynch principle of "invest in what you know" over the last decade. For example I was an early adopter with TIVO and Audible. love their products, not so much on the stocks.  HOG on the other hand having owned one and then traded down to a Yamaha at 1/3 the price I feel pretty negative long term.  A) most customers are upper middle class 50 yr olds who can easily forgo the Harley when times are tough, B) Financing is big part of the business and pretty easy to quit payments if it comes down to mortgage or health insurance, and C) after a couple of years the mid life crisis plays out and there will be a huge number of used bikes available, nobody today is going to ride enough to wear a bike out.
    Now AAPL I also love and use all the products but have never committed to the stock in a big way.  I do sell OTM puts but never make a big stand so I’ll be watching your move  :) 

  188. jcaesar

    Not sure we needed to a study to know this – Fox News Viewers Know Less Than People Who Don’t Watch Any News

    And here’s the study in question – http://publicmind.fdu.edu/2011/knowless/

  189. lflantheman

    Lincoln…..Yes, I would love to have a Harley.  But I have to keep peace with my loving spouse, who unfortunately lost her younger brother when he was 16 and was struck by an automobile the first month he owned his Yamaha.  So I don’t ride, but I do reminisce, as I had a Honda Dream 250 when I was a youngster.  I was crazy like most kids and remember doing wheelies every chance, and once going down the interstate in Indiana on my stomach doing 120!   Yes, just to see if it would go that fast, and on my belly to get the most speed possible.  So I got lucky, and lived to do other things.  I still miss riding.  But I get my thrills now from an occasional risky option play!
    And AAPL?   Yes, I love working that company with options, as you know.  And if you like to sell OTM puts , right now is a great time to sell some Jan 360 puts on AAPL for about 19 bucks each.  Those will come in for sure!    Gowrownteed!

  190. drmtv10

     Hi Phil,
    Thanks for update on EDZ Dec 18/24 hedge earlier today, closing Dec 18C and holding Dec 24C naked, while layering in Jan 22/26 hedge.
     
    Question: How to make this adjustment, if there is not enough margin to hold Dec 24C naked.  
     
    Is it  better to cash out completely by taking $2.8 out of max $6 possible and layer in the next round as suggested? Would it be reasonable to Sell Dec 18C, buy Jan 22C (net ~0.8 credit) and wait for Dec opex. If EDZ stays above 24 at the end of expiration cycle, Jan 22C will still be atleast $2+ over whatever 24C are worth. Would you recommend something different for margin challenged?
     
    Thanks in advance.

  191. zeroxzero

     Thanks Kustomz, Kallenjr, very interesting.  The "China derivative" link is worth watching, although I’m at least half-convinced that China’s command economy won’t play out in a pattern recognizable from freer markets. It occurred to me today to hold my brokerage cash balances in CNY, which is a nice neutral ground from which to launch quick attack forex trades, since China controls its currency and is unlikely to let it weaken in public view with the doubts currently being expressed about China in the international press.  

  192. stjeanluc

    It has been tough for some and tougher for others…

    http://www.bespokeinvest.com/thinkbig/2011/11/21/not-so-lucky-1111.html

     

    Not surprisingly, refiners TSO and VLO have been hit hard… 

  193. NF**X

    Deficit Choke Joke:

    “S&P, which stripped the U.S. of its top AAA grade on Aug. 5, said yesterday the supercommittee’s inability to reach agreement didn’t merit another downgrade because the inaction will trigger $1.2 trillion in automatic spending cuts. The deliberations were “not decisive,” Moody’s spokesman Eduardo Barker said in an e-mail after the panel issued a statement.”

    Really? Not decisive in the sense that there’s a year to prevent, say, any defense cuts at all? Talk about having a come-to-Jesus moment or two after the first downgrade. Was it justified at the time? Who knows. But the manipulation and corruption is so pervasive – tho, of course, not decisive.

    Naturally, I”ll take and be happy with a little pop tomorrow even though this will be the kind of garbage contributing to it.

  194. zeroxzero

    It’s hard to argue with Moody’s conclusion that an "inability to reach agreement" is "not decisive", given that the supercommittee didn’t decide anything.  However, if the absence of an agreement  triggers $1.2 Trillion in automatic spending cuts [in 2013], then the supercommittee managed to accomplish its mission while effectively "foxholing" from the opprobrium of voters.
    Automatic spending cuts hit programs prized by both parties: social services such as Medicare for Democrats, defense for Republicans.  Anyone taking side bets on NF’s "pop?" 

  195. scottmi

    Greece – if you have any interests in the Aegean, some speculation from Mish Shedlock’s blog about Greece freezing accounts and exiting the Euro before xmas..

  196. stjeanluc

    Zero and NF – these automatic defense cuts will never happen because the GOP will use them against Dems in the election saying that they are weakening the country. But they will get their domestic cuts which was the plan all along. Deadlock on the super committee worked out well for them… Sickening, but they play a good game I guess. As long as you don’t care about the country.

  197. kustomz

     I agree Zero and is why i’m not as focused on China and think RBA will be first to react.

    From Forexlive
    Australian interest rates are currently at 4.5% but two of the bigger banks are pricing in rate cuts of some 150+bps within the next 6 to 12 months. Both see rates at below 3% by mid-to-late 2012.
    Interestingly, New Zealands rates aren’t expected to fall by anything like that amount, more like a 25bps cut over the next 12 months.
    That should mean that AUD/NZD will struggle to trade much higher and at some stage will turn lower, as its usually very sensitive to the interest rate differential.
    and the article below

    “There could be deeper cuts in 2012, taking the cash rate below 3.75 per cent, if conditions in Europe, in particular, result in disruptive global credit events.”

    Mr Walters said further turmoil in the eurozone would raise the risk of even weaker growth in the global economy, damage the prospects for Australia’s major export markets in Asia, most importantly, in China.

    He said JPMorgan’s forecasts today for rate cuts are “modest” relative to the cuts in 2008-09, when the RBA took the cash rate down by more than 400 basis points to a record-low of 3 per cent.

    “The risk of even more aggressive action from the RBA this time, though, is rising by the day,” he said.
    http://www.theaustralian.com.au/business/interest-rates/jpmorgan-tips-rba-to-cut-rates-in-december-twice-in-early-2012/story-fn91wad8-1226202440897

  198. mrmocha

    BDC / VRUS – I can’t speak for Pharmboy, but since he’s on vacation and I keep a pretty good log of his recos I will note that don’t think he’s owned VRUS based on my recall.  His most recent mentions of the stock are here and here, with the latter one suggesting YMI over VRUS.

  199. Phil

    Good morning! 

    Things are not too encouraging so far.  Europe is up about 1% (Asia was flattish) but our futures are flat DESPITE the Dollar down at 78.20.  That’s not good because it’s not too likely the Dollar goes lower and we should have had a better pop in the futures off the weak Dollar.  

    Oil (/CL) is right on the $97.50 line and can be shorted below that line with very tight stops.   The Dow (/YM) is at 11,535 and I’d look to short either off the 11,550 line or below 11,500 but not in between, oil is the safer short since $97.50 is good resistance.  

  200. Phil

    At the close: Dow -2.22% to 11534. S&P -1.97% to 1192. Nasdaq -2.06% to 2208.
    Treasurys: 30-year +0.46%. 10-yr +0.19%. 5-yr -0.17%.
    Commodities: Crude -0.22% to $97.46. Gold -2.41% to $1683.55.
    Currencies: Euro -0.17% vs. dollar. Yen +0.09%. Pound +0.89%.  

    Market recap: It could have been worse. Though the Dow was off nearly 3% in the late morning, equities trimmed losses to end up roughly where they opened, with debt in Europe and the U.S. still the top concern affecting nearly all stocks. Volatility higher, but not like last week, and oil and precious metals felt pressure as well, with gold dipping below $1,700/oz.

    As the markets break down, they’re sending up some key technical warning signs, says Marketwatch contributor Tomas Kee. The S&P 500 broke through a key support level at 1192, with similar breakdowns in the Dow and Nasdaq. Regardless of whatever news event may have caused it, the break was significant enough not only to change the recent trend, but it also presents a more comprehensive bearish case for the days and weeks immediately ahead.

    A poorly kept secret, the congressional supercommittee makes it official, announcing it cannot reach a deficit-cutting deal. "After months of hard work and intense deliberations, it will not be possible to make any bipartisan agreement." The good news: no more supercommittee? 

    After the congressional supercommittee fails to come up with a deficit-cutting deal, President Obama vows to veto any measure designed to override automatic budget cuts caused by the failure.

    China’s leaders are shifting their outlook toward a decidedly more negative economic view than they had just six months ago, now expecting a long global downturn that could act as a drag on growth in the world’s second largest global economy for years

    I love my EDZs!  The level of property transactions in China’s largest cities – down 39% Y/Y in October – has fallen well below the worst case scenario of stress tests carried out by banking regulators last April. An analyst who has seen the test documents says neither they nor the banks had enough appreciation of the extent to which loan collateral is tied to the value and turnover of real estate.

    European leaders will need to take "urgent action" if they want the euro to survive, says Warren Buffett. The system they have is fundamentally flawed, because it prohibits countries from issuing bonds in their own currency. Unfortunately, without any like mechanism in place, the Oracle of Omaha says it’s doubtful the European Union going to survive this crisis.

    When the going gets tough, the tough … change the rules? After seeing sharply higher yields on its bonds last week, Spain requests bond data providers use a different benchmark, resulting in an immediate 35 basis point drop in the reported 10 year yield. "It’s a farce and shouldn’t be allowed," says one trader. Whatever the benchmark, suffice it to say Spanish yields are headed in the wrong direction.

    The FT‘s Martin Wolf provides an on point summary of Iceland’s response and quick rebound from the financial crisis. Depositors were protected, managements sacked, shareholders wiped out, and bondholders left to fight for their scraps in bankruptcy proceedings. "The contrast with what happened elsewhere – particularly in Ireland – is striking. Iceland let the creditors of its banks hang, Ireland did not. Good for Iceland!

    A company town like none other, D.C. could be the big loser should the automatic spending cuts mandated by the supercommittee’s failure get triggered. George Mason’s Stephen Fuller believes it could eliminate all of the growth projected for the entire D.C. region in 2013 – a loss of $23.7B. Not to worry though. Fuller believes a way around the cuts will eventually be found. - This is why austerity is STUPID!  In one city, $120Bn of spending cuts cost the city’s economy $23.7Bn – obviously, hundreds of cities across the country are effected by the cuts and, of course, Washington more so but obviously we can’t afford this kind of economic hit anywhere in our country but this plan is to have it EVERYWHERE – just to avoid removing the tax breaks from this morning’s chart.  

    Retailers take a hit after a Barron’s article over the weekend suggests that holiday spending this year may be at the low end or below expectations. Retail shares have outperformed for most of this year, thanks in large part to strong consumer spending – at the expense of savings – but that trend soon is likely to end: Tiffany & Co. (TIF -4.4%), Nordstrom (JWN -1%), Coach (COH -1.2%).

    CNBC reports (video) an unusually high volume of call options in Pharmasset (VRUS +84.7%) were purchased just a few days before the buyout of the company by Gilead Sciences (GILD -9.7%). Analysts say the activity may get more than a passing glance look from regulators. 

    Netflix (NFLX) is down 6% AH after declaring in an 8-K it’s selling $200M of zero coupon convertible notes to VC firm TCV, at a conversion price of $85.80/share (60% less than what Netflix traded at 3 months ago). As part of the deal, TCV gains the right to nominate a candidate to Netflix’s board. The deal is likely raising fears about Netflix’s cash burn, given shrinking margins and rising content costs. (earlier) Update: Netflix will also be issuing $200M in stock to other parties as part of the deal.

    Hewlett-Packard (HPQ): FQ4 EPS of $1.17 beats by $0.04. Revenue of $32.1B (-3% Y/Y) beats by $250M. Company expects FQ1 EPS of $0.83-$0.86, below $1.11 consensus. Expects FY12 EPS of "at least $4.00," compared with $4.56 consensus. Shares +2.9% AH. (PR

    More on H-P’s FQ4: Revenue declined in Americas and EMEA, rose in Asia-Pac. Enterprise hardware business saw 4% Y/Y revenue drop (7% gain in FQ3). Services grew 2% (4% in FQ3). PC revenue fell 2% (9% consumer drop), not as bad as some expected. Imaging & Printing fell 10% (just 1% in FQ3). Software was a bright spot, up 28% (boosted a little by Autonomy). HPQ +2% AH. (PR) [

    Jack in the Box (JACK): FQ4 EPS of $0.49 beats by $0.09. Revenue of $504M beats by $12.5M. Guides same-store sales up 2% – 4%. Shares -0.4% AH. (PR

    Zale (ZLC): FQ1 EPS of -$0.99 beats by $0.43. Revenue of $350.9M (+7% Y/Y) beats by $12.3M. Same-store sales up 5.8% Y/Y, compared with 9.8% in FQ4 2011. Gross margin was 53.5%, up 220 bps Q/Q and 300 bps Y/Y. Shares +9.6% AH. (PR)

    In another setback for HTC (HTCCF.PK) in its patent feud with Apple (AAPL), the ITC is dismissing (.pdf) a complaint filed regarding the alleged infringement of patents owned by HTC’s recently-acquired S3 subsidiary. The ITC plans to make a final ruling on Dec. 6 regarding a complaint made by Apple against HTC; an initial ruling made in July came in Apple’s favor.

  201. Phil

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:30 GDP Q3
    8:30 Corporate Profits
    8:55 Redbook Chain Store Sales
    10:00 Richmond Fed Mfg.
    1:00 PM Results of $35B, 5-Year Note Auction
    2:00 PM FOMC minutes

    Notable earnings before Tuesday’s open: CHS, CPB, EV, MDT, SIG

    Notable earnings after Tuesday’s close: NUAN, TIVO

    European stocks rally in early trading after heavy losses yesterday, brushing off the Congressional supercommittee’s inability to come to a debt deal. Euro STOXX 50 +0.6%, London +0.6%, Paris +0.8%, Frankfurt +0.8%, Milan +0.7%, Madrid +0.4%

    Foreign Banks Double Deposits at Fed (Bloomberg)

    Following the "supercommittee" failure, Fitch republishes what it said in August, that such a failure would probably lead to "a revision of the rating Outlook to Negative." That would indicate a more than 50% chance of a downgrade over a two-year period, although a one-notch downgrade is less likely. Fitch will complete a review by the end of Nov. 

    Krugman: Dangerous Romanticism of Dubious Economic analysis (NYT)

    Are Derivatives Contracts Nothing More than Unenforceable Gambling Debts? (Climateer Investing)

    How Would You React To The News Your Local Central Bank Just Went Bust? (Fistful Of Euros)

    While Fitch is reviewing the U.S.’s rating, S&P and Moody’s say they won’t issue downgrades following the supercommittee’s failure, as $1.5T of automatic spending cuts will be triggered. However, S&P warns that any easing of the limits of the Budget Control Act may cause a "downward pressure on the ratings." 

    Michele Bachmann says Bush, GOP embraced ‘bailout socialism’ (LA Times)

    U.S. Billionaires Avoid Reporting Cash to IRS (Bloomberg)

    Report: 1 in 5 of US adults on behavioral meds (Yahoo)

    Frum: When Did the GOP Lose Touch With Reality? (New Yorker)

    LDK Solar (LDK): Q3 net loss of $0.87/ADS misses by $0.44. Revenue of $471M (-30% Y/Y) misses by $71.9M. (PR

    More on LDK Solar (LDK) Q3: Swings to net loss of $114.5M from profit of $93.4M a year earlier. Results reflect a write-down of $47.3M on inventory because of a fall in demand, and the prices of wafers and modules. Estimates Q4 revenue of $440M-$520M vs. analyst estimates of $535.9M. 

    Idiosyncratic Risk Puzzle Solved: Not All Investors Are The Same (All About Alpha)

    Occupy Wall Street! The Musical (The Reformed Broker)

  202. Phil

    Lobbying Firm’s Memo Spells Out Plan to Undermine OWS

    November 19, 2011 in News

    “A well-known Washington lobbying firm with links to the financial industry has proposed an $850,000 plan to take on Occupy Wall Street and politicians who might express sympathy for the protests, according to a memo obtained by the MSNBC program “Up w/ Chris Hayes.”

    The proposal was written on the letterhead of the lobbying firm Clark Lytle Geduldig & Cranford and addressed to one of CLGC’s clients, the American Bankers Association.” 

    Lobbyist Memo

    Read the article.

    Memo source.

  203. Phil

    Guidance/StJ – That’s what turned me bearish when we were testing our +5% lines.  As we came into the heavy part of earnings, those numbers were beginning to poke through.  

    Friday/Jabob – I hope so as I’m only planning on putting in a half day.  

    Thanks Rsaxton!   It’s funny as I’m reading the 5% Rule article from May and we’re still at the same S&P 1,200, trading in the same zone and it’s the same zone we predicted in 2008!  The 5% rule allowed me to say on May 5th:  

    So what lies ahead? Most likely a retrace back to 1,100 (25% of our run) but if that holds and we consolidate a bit, I will be downright bullish.

    Great article StJ!  I think this is a very important part for people to know about: 

    On the day of the House vote that ensured the enactment of health-care ?reform, I wrote a blog post saying all this?and calling for some accountability for those who had led the GOP to this disaster. For my trouble, I was denounced the next day by my former colleagues at The Wall Street Journal as a turncoat. Three days after that, I was dismissed from the American Enterprise Institute. I’m not a solitary case: In 2005, the economist Bruce Bartlett, a main legislative author of the Kemp-Roth tax cut, was fired from a think tank in Dallas for too loudly denouncing the George W. Bush administration’s record, and I could tell equivalent stories about other major conservative think tanks as well.

     

    I don’t complain from a personal point of view. Happily, I had other economic resources to fall back upon. But the message sent to others with less security was clear: We don’t pay you to think, we pay you to repeat

    Doing nothing/StJ – Well, of course it’s all about ending the tax cuts that got us into this mess.  Bush Tax Cuts + War = Our Entire Problem.  

    Now things are turning back up as the Dollar is smacked back down to 78.30 but it will probably double bottom at 78.20 so be careful. 

  204. japarikh

    Phil,
      thinking of adding a little BBY here before the holiday shopping season. what do you think of a Jan 24/30 BCS for 2.75 selling Jan 24 put for $1? should I wait until after earnings on Dec 13? Thanks.

  205. Phil

    Bachus/ZZ – More importantly, how did he vote?  If a guy shorts stocks and then votes to block TARP or other bailout measures – that’s just criminal!  Man, he must have made a fortune buying short options after meeting with Paulson!  

    WAG/Dflam – Hard to quantify issue with Express Scripts – could be sign of a bigger problem to come.  Still, they are a good, steady dividend-payer who are underperforming the sector despite being in the low end of p/e (10).  I think what bothers me most is the stupidity of management going to war with Express Scripts – people who are covered with them won’t switch plans to keep going to WAG – they WILL go elsewhere so WAG has a lot to lose (even though from their point of view, they are only losing unprofitably business) and, if they cave – they may start getting pressure from other providers so they can’t cave – it’s not a good position to be in.  .90 dividend leans them in favor of buying – just in case this is a bottom but I’d certainly plan on doubling down in the low $20s.  At $31.29, I’d sell the 2013 $25 puts and calls for $10 for a net $21.29/23.14, which is a nice 25% discount if 2x are put to you and a 17% profit if called away plus .90 dividend is another 4% for 21% total.  It’s cautious but, of course, you can always roll the caller to 2014 whatevers and stick with it but I think it’s good to be cautious on the first entry.  

    Felix/StJ – Sounds right to me. 

    China slowdown/Kustomz – See news above!  

    Insider Trading/Rev – I think it’s more important to spread outrage than sign petitions.  Just make sure you find some good links, like ZZ’s article from the FT above, and post it on many places and encourage people to read it.  The problem with petitions is people sign them and feel like they "did something" but, of course, nothing gets done.  Flooding Congresspeople with mail works – they count personal (non form-letter) Emails from constituents on various topics and if they see something "trending up" that does become an issue for them because it’s all about the polls for Congresspeople.  

    Big Chart – Already breaking down – RUT failing that 697 line (-10%) could indicate another tragic failure and look how juicy shorting the Dow will be for the next 1,000-point drop!  So far, we are shaping up for that Black Monday scenario we were worried about.  

    Spanish 3-month bills just went off at 5.1%, was 2.2% last month.  

    Short calls/Lincoln – If you chase them down, you increase your chance of being burned to the upside.  I prefer to watch lots of stocks and short the ones that are at the top of the channel – as you seem to have been doing.  It’s a very different game when you start thinking you are a genius and shorting the middle.  You do have nice protection from a declining 200 dma at $38 so I’m not against the trade – just pointing out that you are entering a zone of much more risk than the one you’ve been playing. 

    Josh’s take/StJ – I thought that was my take.  

    HOG/Iflan – I disagree on selling short puts on HOG.  They got slammed in 2008 as liquidity dried up and their customers couldn’t get loans, freezing sales (and sales were 20% higher then with profits 4x more). They dropped all the way to $7.73 in big, scary chunks – it’s not the kind of company you want to call a floor on at $33.  

    Good analysis Lincoln.  

    Fox/StJ – ROFL!  

    78.27!  Oil $98.20, Gold $1,699.

    EDZ/DrMtv – You can cap margin by buying July $28 calls for $8 while you wait for the Decembers to expire or Dec $34s at $1.10 but, of course, you’ll lose those and give up the $1.10 for sure.  Either way, if you don’t have margin then an early exit is simply not an option for you.  Yes, cashing out (nice profit anyway) and switching to a less volatile position is the graceful way to get out.  Going to Jan is not that great because the Dec $22s are just $3.50, so you will likely drop $1.50 while you wait.  

    What a strange mix of S&P losers – no real theme at all other than RECESSION!  

    RBA/Kustomz – It’s all leading up to a massive hyper-inflation gunfight.  A race to the bottom for currencies.  

    VRUS – That thing went up and up and up and up and now they got bought out for even more.  Crazy!  

    BBY/Japar – You are a braver man than I am!  I’d wait and then I wouldn’t try to catch the falling knife.  My main issue is that laptop sales suck, IPad sales have crap margins and TVs just get cheaper and cheaper and cheaper (and 3D was a bust) and WHR is one of the S&Ps biggest losers so I don’t think appliances saved BBY either.  Just too many ways to lose and really I only see service likely to save them.  

  206. pakdog

    "…the results show us that there is something about watching Fox News that leads people to do worse on these questions than those who don’t watch any news at all."
     
    That’s the conclusion taken by researchers at Farleigh Dickenson University on a study they done American’s level of understanding of current events. Similar results have been shown by other studies. This is more important than just adding more fuel to the raging partisan fire we have because to get to the right answers to the big problems we have we need to working with the facts not illusions about them. To have such a widely trusted news source be so consistently wrong, even if it’s ignorantly done (which I doubt), is working against us getting things right.
     
    http://publicmind.fdu.edu/2011/knowless/

  207. revtodd64

     Phil – outrage
    I made a similar argument to my son who came home from college saying the Occupy movement was pointless and he saw them dealing drugs at Occupy Boston (he is at Dean College near there) and just a bunch of hippies who could be successful with more effort.  I pointed out the need for anger and civil disobedience to get attention on people who have no clue.  People don’t realize they are being oppressed when they are getting beat up through financial transactions, but the demonstrations and police repression are showing how entrenched the oligarchs really are. People start to get it when heads get split open.  Outrage and demonstrations can be important in bringing about change.  
     
    At the same time, I have been to demonstrations since I was five years old.  My mother took me to peace marches in 1969 and I have burned through a great deal of wax at candlelight vigils over the last 30 years.  I find protests and vigils energizing and very moving, but I have seen so many come and go.   Demonstrations, protests and outrage are like the technicals in trading.  You have to pay attention, but in the end the fundamentals will win out.  The only worthwhile things I have accomplished in my life as an activist took 2-4 years to build and grow.  For the past two years I have found "The Man Who Planted Trees" to be an organizing principal in my life.  We need political equivalent of a 2013 buy-write on a blue chip stock that we would love to double down on in the future.   That is what Grover Norquist has done to Congress and the nation with his no tax pledges.  His strategy is like investing in Altria for 20 years.  Those compound dividends really pay off, too bad about everyone dying of lung cancer over the same period of time.  In the end, the day is won by the persistent, not the loud, the smart or the flashy.  I really liked the weekend discussions we had a few weeks ago on solutions.  There are a lot of great ideas on this list.  My personnel favorite has been your constant refrain about taxes being more fair and the infrastructure.  I tell everyone I meet and post the charts on Facebook.  It is time for me to go to work and I may be straying from my point by now.  Just my musings from a fellow tree planter.

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