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Thursday’s Thoughts – To ECB or Not to ECB?

 

 

 

 

To bail, or not to bail--that is the question:
Whether ’tis nobler in the EU to suffer
The slings and arrows of outrageous swap rates 
Or to print money against a sea of debt
And by printing, inflate them. To loan, to bail-- No more
And by a loan to say we end the illiquidity,
and the thousand natural shocks
That economies are heir to.

 

 

The ECB may dig deeper Into its crisis toolbox to stimulate bank lending and fight off a recession as Europe’s leaders gather to lay the foundations for a fiscal union.  

ECB policy makers meeting in Frankfurt are expected to cut the benchmark interest rate by a quarter percentage point to a record-low 1%. They may ALSO loosen collateral criteria to give banks greater access to cheap cash and offer longer-term loans, said three euro-area officials with knowledge of the deliberations speaking to Bloomberg.

Hours later, Europe’s leaders will convene in Brussels for talks to frame the FIFTH “comprehensive solution" in 19 months to a debt crisis that’s left Germany and France facing the threat of losing their AAA rating from Standard & Poor’s. The ECB says that governments must address the cause of the turmoil as it focuses on getting banks lending again rather than increasing purchases of indebted nations’ bonds.

It’s yet another date with destiny in the euro area,” said Julian Callow, chief European economist at Barclays Capital in London. “It’s clear there won’t be the ultimate resolution, but the proposals are going in the right direction. The markets seem to have finally understood that in the ECB’s eyes it’s up to governments to solve it, and it’s worth noting that it’s doing a lot on the banking side.”

Fitch says last weekend’s austerity plan put together by Italy’s new government eases near-term pressure on the country’s credit A+ rating, but the outlook still remains negative. Budget savings were made, says the agency, but the question remains on whether this paves the way for economic growth to return.

European options traders, meanwhile are pushing bullish bets on Europe to the highest level since March 2010 as governments work to forge a solution to the two-year-old sovereign debt crisis. The ratio of outstanding calls to buy the Euro Stoxx 50 Index versus puts to sell has climbed to a 20-month high of .92-to-1, according to data compiled by Bloomberg. The open interest for Euro Stoxx call options has risen 6.1% in the last two weeks to 22.3 million contracts, faster than the increase for puts, which rose 3.5% to 24.3 million.

Optimistic investors may be punished as the cuts European economic growth and corporate profits, according to Gergor Smith, a London-based fund manager at Daiwa Asset Management, which oversees $111.3 billion. "It’s a very dangerous position to have.  The outlook into 2012, at least for the first half of the year, looks pretty poor." Even with those risks, investors are more concerned about trailing the market should equities climb, according to Lothar Mentel, who manages $3.9 billion as chief investment officer for Octopus Investments Ltd. in London.

EUROPOLL

According to the WSJ: "A majority of people in embattled euro-zone countries remain confident that the euro will remain their currency a decade from now", and most say that sticking with the euro is the right path, according to the latest results of the GfK Investment Barometer survey.  The survey also found that in all seven euro-zone countries polled, affluent individuals were more optimistic about the euro’s fate, and more likely to support its continued use, than less-affluent individuals.   

The survey also polled people in France, Germany and the Netherlands, three countries with triple-A debt ratings at the core of the euro zone. About two in three French and German respondents believe their countries will still have the euro in a decade, while four of five Dutch respondents said the euro would remain. On whether they should keep the euro, 57% of Germans said to keep it, with 43% preferring to drop it and switch back to the mark. In France, 58% said to keep the euro, and 42% said to dump it. In the Netherlands, 70% said to keep the euro, with 30% to exit.

Keep in mind that these are the FACTS versus the constant BS OPINIONS we get from the MSM.  Just like if you ask politicians in America for their opinion, it very much matters which one you ask.  We have speakers and whips and House majority leaders and Senate majority leaders and a Fed that says one thing when the President says another – JUST LIKE EUROPE.  So why is it you take Fox’s word for it when they interview one guy and tell you that the Euro is doomed?  

So – if the Euro is not doomed, why is it so cheap?  And, if the Euro is too cheap, then isn’t the Dollar too high?  And, if the Dollar is too high, then the markets are too low.  See – it always comes back to inflation!  That’s why, last year, we had our "Secret Santa Inflation Hedges for 2011" that I put out on Christmas Day last year.  Those are, of course, hugely successful and we’ll do another round for 2012 at the end of the month but, for now, we need some bullish positions to cover the upside of the market as a "solution" from the ECB to the crisis can send the markets flying.  

FAS is still my favorite upside play or the moment.  In Member chat yesterday, we added 10 FAS next week $66/67 bull call spreads for .60 ($600) in our White Christmas Portfolio to keep us balanced as we were tilting a bit too bearish after adding an aggressive TZA hedge.  We’re trying to stay even into the weekend as we could move violently in either direction in the short run but, long-term – we’re still pretty bullish, with inflation being our main reason for being so.  Short-term, it’s all up to the ECB and the EU.  We already know what the ECB will do this morning and we can fade any rally off that "news" – what the EU counsel does, however, is a mystery – but it better be BIG or we’re in even bigger trouble.  

Already this morning the market spiked up on the official news from the ECB but I warned Members not to chase it and already the whole move up has been erased.  Although we got the rate decrease and longer loan terms (triple!) to help kick the can down the road from the ECB, Draghi’s press conference indicated that there will not be a reserve ratio cut until Jan 18th (to 1%).  Too little, too late is the sentiment from the doom and gloomers so we’re back to seeing what sticks.  

Now the ball is back in the EU’s court and, should they not come up with something FANTASTIC tomorrow – it’s going to be a very scary weekend.  

 


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  1. stjeanluc

    Oil Lines

    R3 – 104.07
    R2 – 103
    R1 – 101.80
    PP – 100.74
    S1 – 99.53
    S2 – 98.46
    S3 – 97.26

    Yesterday’s high and low – 101.94 / 99.67

    Breakout lines – 105.61 / 93.72 

  2. stjeanluc

    Copper as an indicator of things to come in the market:

    http://www.ritholtz.com/blog/2011/12/dr-copper-flashes-a-warning/

    And it’s not up… 

  3. dclark41

    Someone put the cement shoes on the dollar this AM!

  4. stjeanluc

    ECB cuts rates and the dollar tumbles…. weird! 

  5. stjeanluc

    And here are the details:

    http://ftalphaville.ft.com/blog/2011/12/08/787311/hors-doeuvres-from-the-ecb/ 

  6. Phil

    Very silly move up on "news" I was writing about over an hour ago – don’t get sucked in!  

  7. stjeanluc

    Yup, already back to normal… 

  8. exec

    Phil/Debt Champions
     
    The debt champion depiction in your post yesterday is impressive. 
     
    Dude….we’re kicking their asses.  Well…Japan’s giving us a run for our money but the rest of the wanna be superpowers couldn’t be a pimple on our butts when it comes to spending money they don’t have………………and what’s all this talk about China……a measly 799 billion……our Fed craps more debt than that after a healthy Thanksgiving feast. 
     
    I just don’t understand why all these fear mongers are making such a big deal about our spendful ways. I heard one guy saying that our debt was the biggest threat to our national security.   Obviously he doesn’t know that if anyone messes with us…..we won’t give them any more money.
     
    Anyway….I just thought it was interesting that they’re making such a big deal out of Europe when we are facing a wall of debt that is increasing exponentially.
     
    Is it true that last year was the first year that the Social Security surplus was exhausted, so that instead of using the surplus via some clever accounting scheme to reduce the amount of the yearly deficit, that Social Security will now add to the yearly deficit?

  9. stjeanluc

    Summary of the Draghi news conference:

    http://ftalphaville.ft.com/blog/2011/12/08/787411/the-ecbs-new-non-standard-measures/ 

  10. crussell14

    Phil
    i own NLY paying 14% dividend. As a conservative income play, what are your thoughts on selling jan 13 $15 P at $2.24 and holding NLY for another year to increase the return to 28% with interest rates expected to stay low over the next year. Thx

  11. Pharmboy

    UP…now DOWN!  YIKES!  PP for today:

  12. yshenhar

     /DX just shot up from 78.15 to 78.76

  13. Pharmboy

    exec – unfortunately the ‘End Game’ is facing the EU in the face.  27 countries have to be on board for a treaty, otherwise it screws those that play by the rules.  There was a video posted interviewing a gentleman from Dallas/Austin the other day and he summed up the EU best saying something like this – if your extended family was in debt, and you bailed them out, but they did it again, and again, would you continue to rescue them?  Now, the EU is an extended family, but for many, many years, as you well know, they all fought each other very hard…

    The US is a few years away, as is Japan, but both can print their own money…the EU is in a bit of a quandary on that one.

  14. Pharmboy

    New EU fiscal compact…nothing new….move on…na na na, hey hey hey, goodbye!

  15. 1020

    Good Morning!
     
    Hey Pharm, why does that frog have a …. nevermind…. :)

  16. vic55

    Phil,
    "So – if the Euro is not doomed, why is it so cheap?" – How did you figure out that euro is cheap? I went through the tons of data and couldn’t make any sencible calculations. How do you calculate the fair value of fiat currency?

  17. kustomz

    Pharm your in a chipper mood this morning! Like to see that.
     

  18. Pharmboy

    1020 – Take it up with that ‘Geezer’ on Colbert Monday night (in regards to the Denver Airport) ;)

  19. stjeanluc

    Oil below $100… woohoo! 

  20. exec

    Pharm/EU
     
    Do you really believe all them individual country’s are going to be able to agree on anything substantial.  Particularly when what is in the interest of some country’s is the exact opposite of what’s in the interest of others.
     
    Similarly….if the states that made up the USA were all different country’s it would be a total mess.  Think of how many states would be opposed to bailing out California for example given the drastic ideology differences.

  21. stjeanluc

     

  22. Pharmboy

    Welcome back my friends…to the show that never ends….ok I am done.  I will sit back and watch the show now.

  23. stjeanluc

     

  24. Pharmboy

    Exec – we r on the same page by your comments…..no? 

  25. jcaesar

    vic / Euro – By any traditional measure, the Euro is vastly overpriced.  Not sure why Phil made that statement.  The Big Mac Index is a proxy for purchasing power parity.  Here’s the Economist measuring the valuation of various currencies from around July this year.  Euro was similarly overpriced then.  They said by 58%.  I think that’s an overstatement, but again it’s overpriced, IMHO.

    http://www.oanda.com/currency/big-mac-index

  26. stjeanluc

     

  27. yshenhar

     Phil – FAS Dec 62/63 BCS at 0.60 – do you like that as upside play?

  28. stjeanluc

     

  29. doro165

    Pharm that was a great Colbert bit!

  30. flipspiceland

    @Exec
    Not 50 diffferent countries but at least 12 to match the 12 FED reserve districts.  Then they could each kick out the FED and provide a few other countries on this part of the N. American continent to move to.
    THAT would be fabulous.  It would be an upheaval for a bit, but it’s got to be better than what is coming at us now, and will only increase in the future, because the country is already divided but its politicial system is in denial.
    Bring subdivision on!  I’d love it.

  31. Phil

    Good morning! 

    Dollar up huge on ECB money-printing as well as fears that it isn’t enough.  Could all be "fixed" again tomorrow so we’ll have to see.  

    TZA $29 calls popped to $1.70, so a winner there in the WCP and we’re done.  

    Oil back at $99.85, if they fail $99.50 it could get interesting but back over $100 can be played BULLISH (/CL) with a very tight stop on the line, of course.  

    FAS TOMORROW $61/63 bull call spread is $1.40 and the $61 puts can be sold for .90 for net .50 in the $2 spread that’s $4.50 in the money.  It’s a bet that XLF holds $12.50 through tomorrow (now $13.13).  

    Thursday’s economic calendar:

    7:00 BOE Rate Decision

    7:45 ECB Rate Decision

    8:30 Initial Jobless Claims

    10:00 Wholesale Trade

    10:30 EIA Natural Gas Inventory

    12:00 PM Quarterly Flow of Funds Report

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet 

    At the open: Dow -0.38% to 12150. S&P -0.63% to 1253. Nasdaq -0.57% to 2307.

    Treasurys: 30-year -0.13%. 10-yr -0.02%. 5-yr -0.01%.

    Commodities: Crude -0.67% to $99.81. Gold -1.32% to $1721.85.

    Currencies: Euro -0.6% vs. dollar. Yen -0.39%. Pound +0.26%.

    Market preview: Darn those Europeans! Weekly jobless claims tumble to the lowest since February and boost stock futures, only for ECB chief Draghi to play down the prospect of more sovereign bond purchases. S&P futures, once green, now -0.8%. Costco -4% after missing earnings forecasts, but Smithfield +1.3%after its beatLater: wholesale trade.

    Initial Jobless Claims: -23K to 381K vs. -7K consensus. Continuing claims -174K to 3.58M.

    Canadian housing starts fall a seasonally adjusted 14.4% in November. "A level which is more consistent with the rate of household formation," goes the spin from the Canadian Mortgage and Housing Corporation. Along with China, Brazil, Oz, and Denmark, Canada has its own formerly frothy, now tippy property market. 

    ECB chief Draghi announces a lowering of the bank’s 2012 GDP growth forecast range for the EU to -0.4% to 1% from 1% to 2.2%. "Growth revisions reflect debt crisis uncertainty."

    Mario Draghi kneecaps the oft-floated plan whereby the ECB will lend to the IMF which will turn around and forward the funds to needy EU states. He calls such ideas "very complex," and suggests it would be a violation of the spirit of the treaty. Risk selling off even more. Stoxx 50 -1.3%. Euro off 100 pips from minutes ago, now buying $1.3363. Cool chart from 8:45-9 ET.

    Draghi: "We have a treaty which bans monetary financing (of government debt) … the treaty embodies the best tradition of the Bundesbank … the ECB’s primary remit is price stability." In the last 15 minutes, the ECB president has exploded a month’s worth of leaks and rumors, and risk markets, for now, aren’t pleased. European shares and the euro are at the day’s lows

    Mario Draghi’s public rejection (III) of the ECB lending to the IMF to lend to the GIIPS isn’t stopping the rising hum of speculation.Reuters reports that even the Bundesbank is open to national central banks in the eurozone lending to the fund so that annoying EU law can be bypassed.

    Gallows humor:  Stunned silence comes over the ECB press room as Mario Draghi says, "I wish our leaders the best and the ECB is here." After a few moments, Draghi adds, "Which doesn’t mean that the ECB will respond by the way," bringing some laughs from the audience.

     The eurozone-IMF jiggery-pokery is back on again, with the latest speculation saying the bloc’s central banks will lend the fund €150B ($200B) which will then be lent to distressed countries. Non-eurozone nations will top that up with another €50B. Given fantasies of $1T-$2T in bailout fund, it doesn’t seem all that much.

    Gold is tumbling, reversing its recent perkiness on disappointment the ECB isn’t about to unload a wave of freshly printed euros over the continent. The metal dives $40 to  $1,725/oz. since Mario Draghi’s press conference started. GLD -1.4% premarket.

    The spot price for polysilicon, the raw material used to make solar wafers, is reportedly stabilizing around $25/kg, if only because that price is near the variable costs of Western producers. Such stabilization could provide a bit of a respite for U.S.-based WFR, which just announced the idling of an Italian plant. However, Chinese vendors are still seeing price pressure – a potential negative for YGE.

    McDonald’s (MCDreports global comparable sales rose 7.4% in November, including a 6.5% gain in the U.S. which beat the consensus estimate of analysts for 4.5% growth. The company says sales were boosted in the month by the addition of the seasonal Peppermint Mocha to its lineup and a Chicken McNuggets promotion. Shares +1.2% premarket.

    Helping to hold up the Nas:  UBS raises its guidance for iPhone (AAPL) sales, now predicting sales of ~30M iPhones in FQ1, up from a prior estimate of 28M. It also lifts Apple’s FQ1 profit guidance to $9.90 /share from $9.47, while maintaining its Buy rating and $510 price target. AAPL+0.9% premarket.

    UBS isn’t alone in lifting its iPhone sales forecast today: R.W. Baird and Citi are also predicting strong calendar Q4 shipments, following AT&T’s (T) comments about record smartphone sales. Citi also says it believes Apple recently raised its iPhone orders to suppliers. However, the firm is throwing cold water on hopes for the near-term arrival of an Apple TV set, claiming "Apple has not even defined specs yet."

    Not too surprising:   Just a day after scheduling it, a House committee last night canceled a vote on measures to ban Congressmen from insider trading. The GOP’s Spencer Bachus said the reason for the move was a bi-partisan desire for more time to study the issue.

  32. stjeanluc

    FAS Strangle Experiment – That was fun… I was able to cover my 68 calls for a 24% profit in that silly move down. I will sell another strangle after 10:00 AM if things calm down a bit! 

  33. stjeanluc

    They do seem to program the bots properly… here are my lines for today in a more graphical representation!

     

  34. angelcur

     Europe Calls at 20-Month High Before EU Leaders Convene: Options. Options traders are pushing bullish bets on Europe to the highest level since March 2010 as governments work to forge a solution to the two-year-old sovereign debt crisis. The ratio of outstanding calls to buy the Euro Stoxx 50 Index versus puts to sell has climbed to a 20-month high of .92-to-1, according to data compiled by Bloomberg. The open interest for Euro Stoxx call options has risen 6.1% in the last two weeks to 22.3 million contracts, faster than the increase for puts, which rose 3.5% to 24.3 million.

  35. angelcur

    lots of E guys are reading psw…lets see if they fix it i need a rally into year end!

  36. Pharmboy

    Go SGEN go…..mrm….those $20/15 bull put spreads, if/when they come in, will be sweet ….

  37. JRW III

    Good morning,

     

    IWM  71.87,  72.15,  72.56,  72.98,  73.24,  73.51,  74.12,  74.62,  74.80  and  75.06

    I will be traveling today; good hunting !!

  38. Phil

    SS/Exec – Yes it’s true that we’ve moved into deficit, especially with the new payroll tax cut.  But I’m sure they’ll change the accounting back to exclude it now.  

    NLY/Crussell – There’s nothing conservative about playing with these REITs – so make sure you are not fooling yourself.  One mall project goes bust on them and they are filing for Bankruptcy way before you have a chance to get out of short puts.  That being said, you are being well-compensated for the risk and NLY has smart management who weathered the last downturn (to $8) very well so, as long as you REALLY plan to stick with them long-term, I like them.   With the stock at $16.30, the problem is there’s no good way to protect it as the 2013 $15 calls are just $1.42, so they would just call for the shares on dividend day to make a quick .60.  You can sell the puts, but that’s committing to doubling down so, make sure that’s your intention as we could still crash CRE down the road. 

    Euro/Vic – It’s cheap if you take into account the amount of Euros in circulation vs. Yen and Dollars and look at the debt ratios of all three.  The Euro is being priced for a crisis that hasn’t happened yet because they are considered to be only as strong as their weakest state.  By that logic, you could judge the US by California and New Jersey to spook investors out of here as well.  

    78.90 – things are getting ugly. 

    Money Trades/StJ – Waiting and seeing, I think.  

    Good music Pharm.  

    Euro/JC – Seriously?  We’re using Big Macs to price currency?  

    FAS/Yshen – Sure, same logic as yesterday, that $13 holds on XLF.  

    France and Germany down 1.5%, Dollar 78.85 and I doubt we pop 79 so this is the spot to take a poke at a few longs. 

    USO Tomorrow $37 calls are $1.30 with just .08 premium for you non-futures players.  I’d stop if they can’t hold $38, which would be down about that $99.50 line.  Similarly, you should be happy with $100.50 and thrilled with $101..  

  39. lflantheman

    AAPL  50k    Sell  10  Weekly Dec 9 395 calls for $1.80  or whatever you can get.

  40. stjeanluc

    Iflan – I have added the transaction to the spreadsheet. Please verify the prices as I don’t track the trade in my portfolio. Thanks.

  41. revtodd64

     APPL up and oil down.  Great to win on both sides today!  Nice work Phil and Iflan.

  42. pat_swap

    Phil/USO
    How did you determine that USO 38$ is close to about 99.50 on the Oil? Is is the % change?
    Thanks

  43. sagemm1

    Phil to follow on pat_swap Question: when you place a particular emphasis on where the dollar is one day 98.50 may be bullish the next week it may be bearish, is this relational to the SPX, Treasuries or just years of being buried in it.

  44. Pharmboy

    RIG getting its arse handed to it today.  Seems that they can suck you in, only to spit you back out…..Those are a monster moves over the last week.

  45. angelcur

    appl is th enew gold!

  46. revtodd64

     Really?  http://www.marketwatch.com/story/corzine-i-do-not-know-where-the-money-is-2011-12-08
     
    I have 5 guys on parole living in my program who say about the same thing.  The only difference is they went to PRISON.  Maybe that is the only reform legislation we really need-serious prison time for white collar crime.

  47. jasu1

     Phil,
    Have the 10 EDZ Jan 15/20 BCS, and Jan 16 Put. Entered at .35DR, Would you suggest I run with the Profit, or do any adjustment to this position. Thanks

  48. stjeanluc

    White collar / Rev – Not gonna happen until the white collar guys are not allowed to give money to the people writing the rules… Good luck with that! 

  49. Burrben

    Question on the buy shares of stock, sell straddle.  
    So I’m still a little confused on this type of play.  I’m not sure how to manage it, and I’ve read through the strategy guide a few times.
    For example, I own
    200 shares of CHL at $47.90
    -2 Jan13 47.5 put at $6
    -2 Jan13 47.5 call at $5
    CHL is trading at $48.20
     
    So what am I suppose to watch out for, or do?  I know CHL is one of Phil’s fav’s, which is why I initiated the play.  I’ve also read that it can be though of as a "Covered Straddle", or actually "Two covered calls"
    http://www.theoptionsguide.com/covered-straddle.aspx

  50. jthoma

    looks like GS stock is reflecting a slow down in revenues with possible slowing of insider trading by Congress- what a friggin shame that would be!

  51. angelcur

      eu banks must raise additional $153B-bloomy..that will get the old Weinerschneitzel in a twist

  52. yodi

    Burrben
    CHL You just sit back and smell the roses. Just look at it end of next year

  53. Pharmboy

    Go ahead, make my day…..

    Not sure if anyone listens to Tim Knights posts at Slope (well, I know 1020 does), but he reminded me last night that down moves are/will be swift.  The pattern from 2008/2009 is eerily similar to the one we have now (see the chop in January 08)….noted by this chart:

  54. angelcur

      this is what im talking about…this market is so dumb and inefficient it is mind-boggling….that capital raise has been widely talked about in the euro press for days, yet it hits our market immediately when announced.

  55. stjeanluc

    FAS Strangle Experiment – I sold a 59/70 strangle after 10:00 AM giving me about 10% on each side for a good chance of expiring worthless tomorrow. One can hope! 

  56. kustomz

    Well behaved market (controlled) no major selling but, that may change if we continue to see weakness in EUR and AUD.

  57. 1020

    Pharm/Swift  Nice moves before the bell… too bad I was looking at frogs!  ;)

  58. ronresnick

    Dear Phil, In the FAS tomorrow $61/63 bull call spread and the sale of the $61 puts, what is the reason behind doing the trade as a BSC and not just selling a somewhat higher strike call and selling a somewhat lower strike put, outside the range you suspect FAS will close at tomorrow, to reap the same or even greater premium, without buying any call?  Thank you. 

  59. 1020

    Handing out a little inspiration (which will hopefully lead to perspiration) to some family members this Christmas….
     
    You can now buy them in packs of five and save 75%!   Ho Ho Ho!  :)
     
    http://www.amazon.com/gp/product/1936719029?smid=ATVPDKIKX0DER

  60. Phil

    Thanks Rev!

    USO/Pat – Yep, USO is about 1/3 of oil and should track it.  Now oil is $98.60 and the calls are still $1.17, which is why I liked them, as USO is holding up much better than oil is so, even though wrong, not too terrible.  

    XLF hugging that $13 line – very bad sign if they fail that.   Same with RUT at 735, of course, as well as oil $98.50.  

    Emphasis/Sage – Unfortunately, it’s mainly just experience.  I do look for key indicators at key levels and like to have 3 or 4 major lines to watch each day but which ones they are changes depending on what I think is going to give us the best tip-off to changes in the news. 

    Reps filibustering nomination for Consumer Financial Protection Bureau, crippling the Bureau after all of the wragling they all ready went through to weaken it from its original mission.  When will people wake up and realize that the Reps are AGAINST the American people (well, the ones that don’t have millions, of course).  

    RIG/Pharm – That is a very crazy stock to try to guess. 

    AAPL/Angel – Yep, up 1% today is better than gold, which is back to $1,715.  

    Corzine/Rev – Not going to happen.  This was all carefully orchestrated.  

    EDZ/Jasu – Looks on track to me.  Certainly nothing in today’s news indicating you should bail early, is there?  The $15s are $5 and you can put a stop at them at $4.50 and add the Apr $25/30 bull call spread for $1 so you take 10x off the table if they dip and that would leave you with the April spread covering the short Jan calls.  If EDZ keeps going up and your calls hold $4.50, then you already have a bonus hedge should EDZ move up over $25.  

    Dollar 79 – no bottom for the markets if they go up from here.  Lost the RUT too.  

    CHL/Burr – It’s SUPPOSED to be a very dull trade.  There’s nothing to do as long as you are on track (over $47.50) between now and 2013.  Your net is $36.90/42.20 so you don’t really have a problem until you’re below $42.50 and we call it a buy/write because you buy the stock and write puts and calls against it (we’re simply folk).

    And what Yodi said.  

    Swift moves down/Pharm – Yep, it’s funny how I thought that flatline last night was indicating a violent move up or down and we got both this morning.  Still, it doesn’t matter until we see how the day ends and, even then, the EU can change the whole ball game with a few words (again).  

    France down 2.4% now, DAX down 1.8%.  FTSE is the star, down just 0.6%, which is where we should be if we calm down and get rational.  

    79.07 is NOT rational though – at the moment, panic into Dollar is trumping everything else.  

  61. Phil

    XLF TOMORROW $12 calls at $1.02 – 20 in WCP with a stop at .90.  

  62. stjeanluc

    Panic indeed… TLT back to close to 119 again! 

  63. Phil

    S&P (/ES)  futures are a nice bullish play off the 1,240 line with tight stops – just under it now at 1,239.75.

    Expecting the Dollar not to hold 79 once the EU closes in a few minutes.  

  64. kustomz

    Pharm, Im a believer in the fast and hard sell off (we need QE) the shock effect of a sell off now would be incredible.

  65. Phil

    10:00 AM On the hour: Dow -0.35%. 10-yr +0.02%. Euro -0.6% vs. dollar. Crude -1.08% to $99.41. Gold -1.34% to $1721.45.

    11:00 AM On the hour: Dow -0.58%. 10-yr +0.25%. Euro -0.73% vs. dollar. Crude -1.89% to $98.59. Gold -1.72% to $1714.75.

    11:41 AM European shares close sharply lower after the ECB cuts rates, but disappoints those hoping for bolder action, and ahead of a 2 day summit of EU leaders just getting underway. Stoxx 50 -2.3%, Germany -2%, France -2,4%, Italy -4.3%, Spain -2.1%, U.K. -1%. Euro-0.8% at $1.3309.

    Financials (XLF -2.5%) are suffering the most in early trading, in a steep slide that comes after the sector scored an outsized gain of 1.2% yesterday. Investors are ignoring the better-than-expected U.S. jobless claims report and focusing on the latest disappointment from Europe. Among big banks: BAC -2.7%JPM -2.8%C -4.8%GS -2.3%WFC -1.9%MS -5.1%.

    Oct. Wholesale Trade (.pdf): Inventories +1.6% to $470.2B vs. consensus of +0.5%, +0.2% (revised) in September. Sales +0.9% to $400.6B. Inventory-to-sales decreased slightly to 1.16from 1.18 last year.

    EIA Natural Gas Inventory: -20 bcf vs. consensus of -12 bcf. Futures rocket, +2.79% to $3.517.

    The St. Louis Fed’s Housing Affordability Index for October rises sharply to 197.8 – the highest reading in at least 3 decades. At that level, it means a family with median income has nearly double the necessary wages to qualify for a mortgage for a median-priced home, assuming a 20% down payment. - Not good news if you are the guy selling or renting a house!  

    Concomitant with the selloff in shares in Europe is a sharp rise in peripheral bond yields. Italian 10 year BTPs shoot 35 bps higher to 6.34% after the ECB offers no support beyond current measures. Spain is higher by 26 bps to 5.69%. The money flows to Germany, where Bund yields are down 5 bps to 2.05%. 

    "Not even in Japan, during its lost decades, did real GDP decline for 6 consecutive quarters," say Citigroup economists who are predicting just that for the eurozone. It’s another in a line of bleak forecasts from Citi, whose chief economist, Willem Buiter, is a top table-pounder for the ECB to print the troubles away. 

    Results begin to leak out about the latest (likely irrelevant) EU bank stress tests. The EBA concludes the continent’s banks need to raise €114.7B, €8B more than the October estimate. German lenders need €13.1B, Italians €15.4B. U.K banks (the collective) apparently are not in need of fresh capital. 

    An OECD report finds governance in Athens such a mess – ministries don’t communicate, records aren’t kept, and oversight is virtually nonexistent – that it wonders if any significant change is possible. "Greece’s central governmental apparatus has neither the capacity nor the ability to undertake large reforms."

    Everyone else may be fleeing the eurozone but JPMorgan (JPM -2.5%) has upped its lending to the area to $15.9B on Nov. 17 from $14B at June 30. The bank’s long and short exposure is "huge," CEO Dimon said yesterday. "Maybe it’s $100B by $100B" but he forgot the exact figure. Good thing JPM’s got a "battleship balance sheet."

    Growth in the U.S. economy may have reached a sustainable pace that will ease pressure on the Fed to buy more bonds while giving it time to fine tune how it informs the public about the outlook for interest rates. "There does seem to be a desire to move away from" the FOMC’s 2013 interest rate pledge, Barclay’s chief economist Dean Maki says. 

    As expected, the Senate blocks the White House’s nominee, Ohio AG Richard Cordray, to head the Consumer Financial Protection Bureau. Cordray needed 60 votes but only got 53, with the vote going almost entirely along party lines.

    And now your payroll tax break is held hostage in exchange for favors for oil companies:  House Republicans link the extension of the payroll tax cut to the swift approval of TransCanada’s (TRP) Keystone oil pipeline. President Obama has already said he’ll have none of it, but John Boehner declares that the "the American people can’t wait" for the jobs the pipeline would bring. 

    While the stock market has been drifting higher since October, traders have been raising their bets that copper is set to move lower, pointing to a slowing global economy that could become evident in the first half of next year. Copper traders have held a net short position for 11 consecutive weeks, a persistence reminiscent of a similar move in Aug. 2008 ahead of the financial crisis.

    Goldman Sachs resumes coverage of oil service stocks (OIH -2%) with an Attractive rating, noting that "U.S. land rig demand has just entered the second phase of a multi-year pickup." Helmerich & Payne (HP -1%) and Halliburton (HAL +0.8%), down 35% from its recent peak and priced near its historical cyclical-low multiples, are added to its Conviction Buy List.

    What conspiracy?  Procter & Gamble (PG) is slapped with a €233.6M (~$310M) fine for fixing laundry detergent prices in France during 1997-2004; Colgate-Palmolive (CL) and Henkel (HENKY.PK) are hit with smaller fines. The companies "met secretly several times a year in hotels and restaurants to discuss pricing and discount strategies," the French antitrust authority says.

    No conspiracy here, either!  Wachovia (WFC) will pay $148M to settle charges it riggedat least 58 municipal bond reinvestment transactions in 25 states and Puerto Rico from 1997 to 2005. As usual, Wachovia won’t admit or deny the allegations – Judge Jed Rakoff is unlikely to be pleased. (PR)

    I don’t know nothing about no conspiracies:  The House Agricultural committee begins its meeting and Jon Corzine and others are expected to give their testimony momentarily. Watch live here. Corzine’s prepared remarks were released and summarized ("I know nothing") earlier.

  66. Phil


    Hartford Financial (HIG -6.2%) takes a hit after the company releases FY12 guidance at its investor day this morning. The company expects its Q4 EPS to come in around $0.80 – $0.85 versus the Street consensus of $0.83, and FY12 EPS to be around $3.30 – $3.60, the lower range of estimates. The company also predicts a fragile economic recovery and persistent elevated unemployment in 2012

    Affymax (AFFY +41.3%) skyrockets following yesterday’s recommendation by an FDA advisory panel for its peginesatide treatment of anemia in dialysis patients. Cowen believes the drug can capture $250M in U.S. sales by 2016, and Raymond James suspects AFFY can take market share if it prices its drug lower than Amgen’s (AMGN +1%) Epogen. 

    Domino’s Pizza (DPZ +3.1%) trades higher after the firm that runs the food chain in India reports that an 11% price hike hasn’t cut into demand. Pizza seems to be catching on in India, as the same firm projects 27% Y/Y growth for same store sales in the region. 

    Jefferies takes a shine to McDonald’s (MCD +1.5%) after the firm knocks out a stellar sales report for November, lifting its price target on shares by $7 to $95. Analysts with the firm now see Q4 same store sales of 6% and ups its projection for 2012 to 3%.

    Confirming recent fears of tougher competition (III),Gartner estimates NetApp’s (NTAP) share of the enterprise storage system market fell 230 bps Q/Q and 70 bps Y/Y, to 10.7%. ArchrivalEMC, whose VNX line is seen as partly responsible for NetApp’s struggles, saw its share rise 360 bps Y/Y, to 32.1%. IBM‘s share rose slightly to 12.9%; HPQ‘s rose 80 bps to 10.4% (thanks to 3PAR); andDELL‘s fell 60 bps to 7.8%.

    More from Gartner: The firm estimates overall enterprise storage system sales rose 10.4% Y/Y, a rate that’s down slightly fromQ2′s 11.6% growth. Much like the server and Ethernet switch markets, growth was fueled by strong Asia-Pac demand (+23% Y/Y). North American sales were up 6.7%.

    A growing number of music artists are following the lead of Coldplay and choosing to withhold their new albums from streaming services such has Spotify and Rhapsody, as they assert that play-on-demand cuts into album sales. The math: A sale of a single download is approximately the same as the revenue on 100-150 streams. 

    As expected, a French court has shot down an attempt by Samsung (SSNLF.PK) to obtain an injunction banning iPhone 4S sales within the country. An Italian court will hold a second hearing next week on a similar ban attempt. According to Florian Mueller, Apple (AAPL) and Samsung are now "embroiled in more than 30 lawsuits in a minimum of 12 courts in at least 9 countries on 4 continents" (previously

  67. ban2

    Phil
    How do you relate the math between FAS and XLF to come up with your following trade.?
    FAS TOMORROW $61/63 bull call spread is $1.40 and the $61 puts can be sold for .90 for net .50 in the $2 spread that’s $4.50 in the money.  It’s a bet that XLF holds $12.50 through tomorrow (now $13.13). 
    tia
     

  68. 1020

    A payroll tax break for a pipeline!?
     
    Those clowns make me sick…..

  69. zeroxzero

    I’m at 30,000 ft flying X/C on Delta, nice to able to do this. Corzine: He should share a cell with Blago, just being locked up is too good for him. By all reports, he ran it like a one-man show, but doesn’t recall looting his clients to meet margin calls? Unfortunately, the PR tide is turning against Wall Street; he picked the wrong time, and hails from the wrong investment bank, not to end up behind bars. Too bad you can’t load up on Corzine puts, but GS might not be a bad proxy.

  70. revtodd64

     Phil/stjeanluc – Corzine
    I know its wistful thinking to get prison time for white collar crime.  I just like to periodically point out the injustice of seeing people every day who do hard time for ripping off gas stations and selling a few hundred dollars worth of drugs, while the big time criminals who crash the economy are let go with a fine that is really pocket change to them.  We can talk of campaign finance reform, stronger SEC, Consumer Protection rules and agencies, Dodd-Frank or whatever else we want to try to do to make change, but I’m starting to think that the real change needs to be serious jail time for serious crimes.   OK, end of sermon.  I just have to post it again about every three months.   

  71. stjeanluc

    XLF is drifting lower but I have a long term Fib line around $12.90. Hopefully that holds!

    On the other hand, this is working out well for our FAS 64 Call that Yodi was worried about yesterday. Amazing what an ECB rate cut can do!

  72. revtodd64

     Ford – Market data for F was just halted.  They are down 3.25% on the day.  I don’t see any other news.

  73. 1020

    …something else that makes me REALLY sick…
     
    http://nymag.com/daily/intel/2011/12/air-force-dumped-remains-of-274-plus-in-landfill.html
     
     
    Sorry folks, back to work…. :(

  74. Phil

    Mind boggling/Angel – So stop trying to fight it and play for the dumb.  

    We’re overbought now because retail schmucks are panicking – are you buying?  

    FAS/Ron – I just take the combo that looks best at any particular moment.  As you can tell by the WCP trade on XLF, I have a lot of confidence in XLF holding $13, so FAS should hold $63 and getting a 4:1 payoff on that combo in 24 hours is very appealing.  I don’t know whether FAS will go higher or not but I am pretty confident they hold $13 and, if not, it’s an easy line to watch for a stop out.  And, of course, we are also selling max premium, which burns out fast – also in your favor, even if it goes nowhere.  

    78.95 not helping – YET.   Out of bullish bets if we go back over 79 at this point.  Dow 12,066, S&P 1,243, Nas 2,622, NYSE 7,418 and RUT 732 – all pathetic.   Oil $98.84, gold $1,715, copper $3.50, silver $31.74, nat gas $3.46, gasoline $2.56.   

    Euro $1.332, Pound $1.562, 77.7 Yen to the Dollar and the Swiss still have perfect control at 1.235 to the Euro – We should just let the Swiss run the whole thing and tell them where we want our currencies to be!  

  75. dmoroz

     Phil,
    I sold my SCO DEC bull spread this morning. I want to get into a JAN spread but thinking I should wait for oil to come back up. Was wondering what you would do?

  76. Pharmboy

    That Jonny Damon is a gansta…..JPM balance sheet is a battleship….and we all know how well battleships held up in WWII with the advent of aircraft carriers…..

  77. lol730

    Key time is approaching.

    Oil is stuck in Bollinger bands .25c wide.
    It’s very unusual for day session to have that narrow bands.
    Expect very strong break out very soon.
     

  78. yodi

    stjeanluc
    FAS well you got a point for today how the winds change but and this is but what will be there tomorrow at this point it can be any ones guess

  79. Pharmboy

    lol – or breakdown….

  80. revtodd64

     1020 -Sounds like you are having the same kind of day I am.  The Dems should get more than the payroll tax cut for pipeline since the Republicans are for a tax cut anyway.  Pipelines mean agreeing to cap and trade on carbon.  That should be the counter offer.

  81. lol730

    @Pharmboy
    I didn’t  break up,
    I said out.
    May be any direction.
    But most likely be strong.
     
    Bias is down today, and everything just above support. Usually consolidation just above support is bearish.
    But if it holds – bounce may be significant.
    You know …

  82. Phil

    FAS/Ban – FAS is a 3x ETF and .50 on XLF is 3.8% so that’s actually 11.4% on FAS so down to about $55 if they go down that far.  Oh well, I really don’t think $13 fails…

    White Collar/Rev – It will never happen.  Most of our Lawmakers DREAM of becoming white collar criminals when they enter the private sector.  There’s a reason GS et al hire so many Washington people – it creates a psychology that, if they play their cards right and vote correctly, there’s a huge opportunity waiting for them on Wall Street.  The system is so corrupted, it’s hard to tell where the corruption really begins – there’s almost no line!  

    F/Rev – Restatement of dividend is all I see.  People are just insane! 

    SCO/Dmor – I’d wait.  Coming into the weekend, shorting is always dangerous and, as you say, it’s already down $3 so kind of expensive to chase.  Believe me, we’ve been playing oil for many years and it’s never very long between plays.  

    78.92 – Still not helping.  

  83. revtodd64

     Ford – Here’s the deal:  http://www.marketwatch.com/story/ford-reinstates-quarterly-dividend-2011-12-08.  Nice bonus to my 2013 buy-write from a few months ago (selling $10 puts and calls.)

  84. jcaesar

    Phil / Big Mac Index – I know that’s not the first time you’ve heard of it.  It can’t be.  Lots of issues with it, but I think it’s much more robust than your "SPY in World Currencies" chart that you put up every now and then.  If you want to learn more about it, and it’s limitations, here you go:

    http://en.wikipedia.org/wiki/Big_Mac_Index

    http://www.economist.com/node/159859?story_id=E1_TVJRVJ

  85. Pharmboy

    GOOOOOOAAALLLLLL….oh, WHEEEEEEEEE

  86. stjeanluc

    FAS / Yodi – Oh I agree, I was just kidding you… They could fix Europe tonight and we fly up. But right now, it still rolls to next week’s 70 even so we should be in decent shape no matter what. 

  87. NF**X

    White Collar Revolving Door – GS may be king of the universe, but nobody does high-level government hires like Carlyle.   And until recently, they’ve been happy to ply their revolving door trade in the shadows – sans IPO, press, etc.   But these guys are the scariest vampires in the land.  Do not invite them to cross your threshold.    

  88. stjeanluc

    Speaking of Europe, I did mention in my post about my FAS Strangle last night that I was not worried about the 68 strike because they could not fix Europe 2 days in a row. They had to break it first before. And there it is! The pattern is still holding … break Europe and then fix it. Repeat and rinse. If we make money out of this pattern, it’s hard to imagine that the big guys are not making a mint out of these moves! Only the retail guys are getting the shaft!

  89. revtodd64

     Phil/Change – Nothing ever changes…until it does!  My son has no idea what the Berlin Wall or Apartheid is, except for a history quiz.  I get real cynical some days, but one year ago all the same BS was going on and no one was protesting.  I’m going to try to get some progressive group to calculate how many people have been arrested for civil disobedience in 2011 compared to 2010.  I bet it is huge.  
    Here’s a Daily Double story:  99 Percent occupies K Street AND gets coverage from Fox that is almost reasonable.  http://www.myfoxdc.com/dpp/news/dc/occupy-protesters-march-on-k-street-120711
    And here is why they have to do it:  30 Corporations who paid more in lobbying than taxes!
    http://thinkprogress.org/economy/2011/12/07/383779/30-big-corporations-taxes-lobbying/
    (Sorry for all the lunch time politics during trading hours.  Maybe I’m just in a good mood being long AAPL, F and MA while short oil and EEM.  My best day in a couple of weeks being at a standstill.)

  90. Pharmboy

    GTHP….anyone, anyone…?  Up 10% today.

  91. stjeanluc

    Of course, many of these folks according to Newt use the money to pay for trips to Hawaii!

    http://www.bespokeinvest.com/thinkbig/2011/12/8/food-stamp-usage-continues-to-surge.html

  92. mrmocha

    Pharm - GTHP from Businesswire – "The National Cancer Institute (NCI) has designated the LuViva™ Advanced Cervical Scan by Guided Therapeutics, Inc. as one of the agency’s successful investments for developing innovative products to fight cancer."  I have some shares at $1 from a year ago, it’s been boring so far, please wake it up!

  93. Pharmboy

    Pujols…bastard.

  94. Pharmboy

    Damn MrM – ur my ‘bestest’ customer…

  95. joemayo

     STJ
    Thanks for posting the links to the money plays and fas strangle spreadsheet.  I wonder if it would be of any benefit to post where fas is trading at the time the strangle is opened or are you always 10% away?

  96. Phil

    Close to stopping us out but no cigar on that little move down!  NOW I’ll be worried if we retest the lows (3rd time being a charm).  

    Volume still lame – 60M on Dow at 1pm.  

    78.935

    C down 7.5%!  

    Big Mac/JC – Of course I’m familiar with it but notice how I never mention it.  

    Damn, spoke too soon – Dollar jumped back to 78.99 and we’re dipping again – over 79 is a good reason to kill any short-term bullish positions but I’m hoping this run will be the end of the Dollar strength for the day. 

    Notice CNBC not showing any of the Congressional statements on MF Global – wouldn’t want the viewers to hear something may be rotten in the markets.  

    And there goes the Dollar – have to give up now and just see where things settle – out of WCP longs too!  

  97. Pharmboy

    Down gold, down…..bad dog

    .

  98. exec

    Phil/Theory,
     
    I think you called it yesterday….they’re going put the scar on until the auctions.

  99. palotay

     Wheeeeeee!

  100. exec

    Dagg…..Ford reinstates dividend.  Closed out the calls.

  101. scottmi

    CDE – noticing that this silver miner has been holding up very well through the recent challenges with miners. HL also solid.

  102. stjeanluc

    FAS / Joemayo – I usually try to open the strangle with 10% protection, but it doesn’t always work out. For example, on Monday I was carrying the calls rolled from last week and I was only 5% or so away. I sold a put 10% away then, but the strangle was unbalanced for a couple of days. It worked out at the end… I bought back both legs and sold another strangle 10% away. It looks like I will buy back to call side tonight and keep the put open until tomorrow and maybe sell another call. 

  103. jmm1951

    Corzine/Rev Todd
     
    Considering that Blagojevich got 14 years for impersonating a 15-year-old, it is not unreasonable that Corzine should go to jail for his criminal activities. They could start by threatening to  prosecute him under the RICO laws. This would give the government the right to confiscate all his personal assets pretrial. I think that threat would make him start to squeal like a rat. Unfortunately Obama did not even have the guts to prosecute known torturers, as he was bound by law to do, so little chance of justice while the two-party junta remains in power to protect wealthy criminals.

  104. Phil

    Carlyle/NF – Yes, staying private lets them get away with murder.  

    Change/Rev – The more things change….

    Corazine using the Shultz defense.  

    Hawaii/StJ – I know, when I was at the 4 Seasons in Maui, they wouldn’t take American Express by the pool so the couple with us treated us with their food stamps!  8-)  Sadly, that fake anecdote will be used on Fox this weekend to prove the point!  

  105. Tarpoon88

     Phil, re your comments yesterday about the tue/wed Treasury auction, is there reason to think that today, versus early next week, will find a bottom before the x-mas push up?

  106. Pharmboy

    Someone put a huge strangle on YHOO Apr 16/14 C/P.

  107. yodi

    stjeanluc
    Is the roll you mentioned above on FAS from Dec2 64 to Dec 11 70 or was this just a sugestion thanks

  108. stjeanluc

    My XLF Fib lines… So far so good with $12.90 

  109. stjeanluc

    FAS / Yodi – I was just mentioning the safety valve for the position – rolling to next week (Dec 11). Please note that the calls are currently at $1.66 and we sold them for 1.76. And it’s all premium. I would sit tight for now! 

  110. Phil

    1:00 PM On the hour: Dow -1.27%. 10-yr +0.34%. Euro -0.66% vs. dollar. Crude -1.89% to $98.59. Gold -1.97% to $1710.45

    The Fed’s Quarterly Flow of Funds shows that U.S. household debt slowed by 1.25%, extending a long streak of debt reduction. Americans lost wealth in Q3, as Fed data reveals net worth for households fell back $2.4T for the quarter to $57.4T- That is down 5 F’ING PERCENT!!!

    Rates on 30-year fixed mortgages averaged at or below 4% for the sixth straight week, according to Freddie Mac’s weekly rate survey. The 30-year mortgage averaged 3.99% for the week ending Dec. 8, vs. 4% in the prior week and 4.61% in the same week a year ago. The 15-year averaged 3.27%, vs. 3.3% last week and 3.96% a year ago. 

    United (UAL -3.7%) dips after reporting a 3.6% drop in its total November traffic, declining to around 15.56B revenue passenger miles, versus 16.15B revenue passenger miles in the year-ago period. Its total November capacity fell 4% to 19.16B available seat miles

    Macroadvisers raises its estimate for Q4 GDP to 3.5% from 3%, citing strong growth in inventory investment from October. The latest estimate from the consulting group joins other forecasts for Q4 that have crept upwards – over so slowly – in the last few weeks.

    Today’s quote:  "I have never understood why financial stability should be an objective of public policy," writes London Banker. "Stability is a silly and impractical goal in a capitalist economy … Financial stability (is) the most misleading banner for a set of bad, harmful, and expensive public policies." Or as a wise man once said, "Stability is destabilizing."

    A check on European bank shares in light of the ECB disappointment and stress test results showing the necessity for bigger capital raises than expected. Deutsche Bank (DB -6.5%), Commerzbank (CRZBY.PK -10.4%), RBS -7.4%, SocGen (SCGLY.PK -9.3%). European financial ETF: EUFN -4.4%

    The FT recycles a report Commerzbank (CRZBY.PK -9.9%) faces nationalization following the EBA’s updated stress test figures, which show the bank needs to raise €5.3B by June 2012, about the same as floated a few weeks ago. The figure for the German sector as a whole jumped to €13.1B from €5.2B at the last estimate.

    Jon Corzine has begun his testimony in front of the House Agriculture Committee. Watch live here. (previous)

    Nymex operator CME (CME) yesterday said it’s in talks with market participants about launching another crude-oil futures contract that could be physically settled with delivery to the Gulf Coast, as its flagship WTI contract faces criticism for not reflecting the real price of oil. 

    Valero Energy (VLO -4.6%) trades down after RBC cut the shares to Outperform earlier today and removed it from its top pick category. The firm notes heavy/sour crude differentials have narrowed significantly, which is a negative for complex refiners because they lose their advantage of being able to process lower cost oils. Tesoro (TSO -4.3%%) trades lower on the report as well.

    Reuters reports that the EPA will issue a draft report saying fracking for natural gas has polluted water in Wyoming.

    Continuing to warn about the weak global economy, commodity giant Cargill is cutting staff. The company is worth listening to as it’s as tied into the center of global trade as much as any firm on the planet, and – being privately held – is a little less concerned with spin than most.

    "I always argued that the quality of Chinese growth matters more than quantity," tweets Vitaliy Katsenelson on reading a story about the demolition of a Chinese luxury high rise because it began to lean just months after completion. What does Katsenelson know? It will have to be rebuilt – bullish for copper!

    The Vietnam News Agency reports that Las Vegas Sands (LVS -5%) is considering opening a $2B tourism complex in Ho Chi Minh City. The proposal – announced by LVS CEO Sheldon Adelson in Vietnam – includes hotels, restaurants, and entertainment centers connected together in a huge complex.

     Las Vegas Sands (LVS -5.1%) dips after being cut to Neutral at Janney Montgomery Scott, citing overly high expectations for profit growth in its Macau property and slower than expected near-term growth in Singapore.

    Biotech firm Amgen (AMGNexpects to repurchase almost $5B worth of stock – or around 83.3M shares at $60 a pop – following a Dutch auction. The buyback represents about half of a $10B program. Shares +0.4%. (PR)

    H&R Block (HRB -0.1%) gives a health boost to its annual dividend, raising the payout up 33% to $0.80/share. Shares of HRB now yield a juicy 5.1%.

    Citing macro issues and hard drive shortages, Gartner is slashing its 2012 PC shipment growth forecast to 5%, from a prior 10.1%. The firm is also predicting 2012 chip sales growth of just 2.2%, but is lifting its 2012 mobile phone growth forecast by 50 bps, to 7.5%. DRAM sales are expected to rise 3%, following an expected 26% decline in 2011. NAND flash sales are seen rising 16.6%, following a 20% gain this year. (Q3 figures

    Three lunchtime reads:

    1) Europe: We cannot afford another half-baked solution

    2) Are emerging markets cheap?

    3) Wells Fargo 2012 Outlook: Transitioning to a post-leveraged world

  111. kustomz

    Just got a delivery from FDX , driver tells me they are so busy they need to rent trucks from budget…

  112. NF**X

    Closing WCP bullish plays – sorry, PD, was the FAS 66/67 dec bull call spread one of these?  If not, sit?  1/2x DD perhaps for next week?  Or are we no hopin’ it?  thank u, sir

  113. revtodd64

    Phil/Change – Touche’!  

  114. kustomz

    And closed my TZA position for a handsome profit…

  115. stjeanluc

    VLO / Phil – Looks like someone (RBC) finally noticed that they can’t make as much money with the crack spread where they are and with the Brent/WTI spread declining! We might get more from the downgrade police and pick it up again around 18! 

  116. Phil

    Oh NOW we start going up.  XLF still good in WCP (20 $12 calls still .93) but I’d rather stay cashy otherwise. 

  117. cwan120

    lflan:
    What are your thoughts behind today’s trade of full cover of the calls?  Because of the general market?  Or anything specific to AAPL?
    Just want to learn your decision process.
    Thanks.

  118. Phil

    Treasury/Tarp – If we go too low, it won’t accomplish what they want.  They need the markets to be falling INTO the auction – this move down is too early – maybe they are just testing the bots.  

    FDX/Kustomz – I know my doorbell rings from UPS at least twice a day.  

    FAS/NF – NO, that’s a spread.  I mean anything naked.  If we lose faith, we can pull the $66s ($3.30) and that’s a LOT more than we can hope to make on the spread if it comes in at $67 ($1).  

    Nice Kustomz!  

    VLO/StJ – I hope so.  Just in time for XMas.  

    78.93 – You really only have to watch the Dollar to make most of your timing decisions. 

  119. kongen

     FAS – as is true of most indexes, we have been trading in a box since 12/02.  For Fas, range is 62.30-68.80.  Now at bottom of range – if I hadn’t used up my margin, would sell another Friday put spread here.

  120. Pharmboy

    IF things get settled tomorrow morning, I like the XLF Dec 13/14 monthly call spread for 25c.  They will explode tomorrow/Monday if it gets settled.  Less risk to me than the 12 calls.  On the flip side, the 13/12 put spread is 33c….

  121. exec

    So this is where Lloyd learned to stick us!!!!
     
    Anyone know if this chart is accurate?

  122. rainman

    kustomz / FDX — Matches up with the rest of the data points -- low gas demand, high online sales, increased Christmas spending, etc.

  123. stjeanluc

    FAS / Kongen – On 11/30 FAS opened at 51! Keep in mind that they have that itty bitty meeting in Europe and we could have a big move either way…  Going to close my calls today and I’ll be prepared to roll my put side tomorrow just in case!

  124. l4real

     Phil- This seems bizzare! The dollar is up .40 cents to 78.89 and all we get is a max move down on the dow of 170 points! Smells like "Bot" manipulation!

  125. Burrben

    CHL Covered Straddle
    Phil said "Your net is $36.90/42.20"   Sorry I’m being dumb today, but can someone spell out how those numbers figure out and what exactly they mean.  

  126. sns1

    Phil- I’ve been reading the news and your posts and i’m confused about your view on what market expectations are regarding the Dec 9th summit…if they state that they have an agmt in principle to work towards fiscal union, is that enough to keep us here or move us higher? While I interpreted the ECB moves today as positive, others I have spoken to feel that the most important aspect were that Draghi’s comments suggested it is illegal for the ECB to use its balance sheet.

  127. zeroxzero

    L4: I take the view that having every U.S. industrial group move up & down in synch with every Euro twitch has been wonderfully profitable but overstates the rational correlation by a good measure.

  128. SellPremium

    Phil – I sold a Dec bear call spread (bought $115, sold $110) on DECK when it hit $107 earlier this week after having witnessed your accurate prediction that it would stay under $110 going into Nov expiration and that trade paid off very well today.  Thanks.

    Instead of just taking the fish (trade idea), I’d like to learn how you came up with that analysis about DECK having an upper range of $110.  The P/E ratio doesn’t look bad at 24 (trailing) so it must be something else. 
     
    Also, do you have any other stocks on your radar where you feel as confident about their upper range as you did for Deck at $110? NFLX at $90 perhaps?
    Speaking of P/E ratios, an update on that "selling bear call spreads on stocks with really high P/E ratios" I had mentioned a while back.  I’ve been using and it has worked like a charm.  Credit call spreads on CRM, FiO and LNKD have paid off well in the last 6 weeks.

  129. l4real

     Good point zerozero!

  130. yshenhar

    on days like these I LOVE EDZ!!

  131. lol730

    Stick isn’t followed by oil

  132. jerconn

    PHil, both AAPL and GOOG showing strength today, what does that say about the overall market (if anything)?   NAS down 33 points but AAPL up and GOOG only a tiny bit down?

  133. winningdean

    Truth: http://www.youtube.com/watch?v=G4yDCUJJm_U&sns=fb 
    Disregard the title of the video. the guy offers solid points. also worth mentioning, serious reforms to entitlement systems (Medicare, social security, etc.) would help because those will continue to cause major liability problems for the government down the road. but like he said, hard to do with as he puts it, a "bought congress"

  134. NF**X

    pharm/XLF – By "flip side" do u mean if it goes the other way?  (no settlement, etc.)  If so, is there a more non-directional volatility play here? 

  135. Pharmboy

    jerconn – they are using AAPL and GOOG as their hedges against the market. 

  136. stjeanluc

    We had gotten over the 200 DMA for SPY yesterday, but we are now well below… That’s the 4th time it has happened since  October. It’s been a tough line to crack!

  137. Pharmboy

    XLF/NF – if both plays are put on, the outlay is ~55c.  IF XLF goes either direction, then the payoff is 45c.  I was hoping for a pop here to buy the XLF put side at 25c so we could have it for 50c.  The move will be violent either way, and we have next week to allow things to come into play.  That was my premise with less risk than 92c.

  138. Phil

    XLF/Pharm – Good call!  

    Debt/GDP/Exec – Seems a bit exaggerated but clearly debt is growing much faster than GDP.  That’s the problem.  

    Smells like/L4 – Dollar up 1%, markets down 2% is about the "normal" relationship.  Dollar just fell to 78.90 and that gave us a mini-rally and now bounced off that line and we pull back.  I don’t think we hold 78.90 so I’m still a bit bullish but it’s 10-minute bullishness – taking it moment by moment today!  

    CHL/Burr – See "How to buy a stock for a 15-20% Discount" for explanations.   You can Google it.  

    Summit/Sns – They could have an agreement but it may be perceived as not being enough.  There’s no real way to tell but I think they’re not so dumb as to come this far and then shoot blanks.  At least I hope not.  In short – we’re all confused – that’s why we like CASH!  

    DECK/SellP – I wish there were some formula but DECK was simply high in the range and then went higher on earnings that didn’t justify the move (not the day move, the overall valuation) so it seemed like a good short with the advantage that, by selling premium, we could do a little rolling if they went higher than we thought.  DECK, in fact, was a play from our Long Put List that we had going from when I thought we were toppy in October and we had a whole bunch of Jan puts we played speculatively to take advantage of the dips so that trade came out of a list we were watching anyway that met various overbought criteria, not some random stocks that seem fishy. 

    EDZ/Yshen – Very comforting in a crisis. 

    Oil/Lol – Good point, no confirmation means don’t trust the move.  

    78.90 – we need it to crack! 

    AAPL & GOOG/Jercon – I’m not sure it says anything other than, with the Summit meeting this weekend, people may be taking reasonable gambles on stocks that  don’t suck to own anyway – just in case we gap up on Monday – or even tomorrow.  

    And what Pharm said.  

    Dylan/Winning – I love that guy!  

  139. mrmocha

    Pharm - just saw your earlier SGEN post.  I doubled down on those a few days after I posted and am now up a few K already, so I’m happy but clearly should have sold more.  You get the credit since I’m following them based on your posts…

  140. kongen

     As usual, the Kirk Report has an important take on today’s action:

    Sell pressure has now been sustained for five straight hours which is actually quite rare. The last time was back on October 17th which was followed up by large next day rally. Rallies also followed other recent occasions as well back on 10/12 and 10/3. 
    Worst case scenario? The sell pressure continues and we not only break through tight range but also close under the 20/50 day by the close.  Best case scenario for the bull camp? Perhaps build a right shoulder and see if we can close out strong.  

  141. kustomz

    Google oil..LMAO its incredible how many nutty stories are out there..

    Oil company executives warned that attacks were becoming more frequent and more carefully planned.
    "If anybody gets into the area where you can control opening and closing of valves, or release valves, you can imagine what happens," said Ludolf Luehmann, an IT manager at Shell Europe’s biggest company .
    "It will cost lives and it will cost production, it will cost money, cause fires and cause loss of containment, environmental damage – huge, huge damage," he told the World Petroleum Congress in Doha.

    http://www.reuters.com/article/2011/12/08/us-cyber-oil-idUSTRE7B71FO20111208

    Islamabad, Pakistan (CNN) — Militants armed with rocket-propelled grenades and automatic weapons attacked and destroyed at least 22 oil tankers parked in Pakistan, carrying fuel for NATO troops in Afghanistan, a senior Pakistani police official told CNN.
    http://www.cnn.com/2011/12/08/world/asia/pakistan-nato-tankers-attacked/?hpt=wo_c2
     

  142. rustle123

    Why does Virginia seem to attract the people who want to shoot up schools?

  143. Phil

    WCP:  10 TNA Dec $41/43 bull call spread at $1.10, selling 5 JPM $32 puts for .90 for net .65 on the spreads.

    WCP:  20 XLF next week (Dec) $13 calls for .28

     

  144. jerconn

    Phil – is this the move in oil that you’re expecting to continue on down to mid-80′s or there’s some catalyst expected to send it back up again?

  145. sns1

    Phil- How do you feel about a buy/write on BX?

  146. nicha

    rustle – any updates from John Faesell?

  147. kustomz

    Very low volume in the futures market..

  148. 1020

    Pharm/Pujols  254M and you get to leave St.Louis for So.Cal.?
     
    Tough choice – Let me run that past the wife…. :)

  149. Pharmboy

    1220 next stop on SPX?

  150. sns1

    Phil- Re WCP TNA spread, why wouldnt you sell for .90-$1.00 a less volatile non-financial put (eg, Qcom, aapl, other)? JPM was under 30 just a few days ago. if europe disappoints… 

  151. crussell14

    Phil
    nice profit on the DXD Jan ’12 $15/$20 BCS. Hold for now or take profit? Thanks

  152. Pharmboy

    Selling a few IMGN July 11 Puts for 1.95 or better.  Buying more stock, and selling the 14 Calls for 1.10 or better.  Start with 100 or 200 shares and 1 or 2 of each  P or C if this is a starter position.

  153. kustomz

    I cant tell you how odd this is, super low volume and markets are very weak. May just be a controlled descent, I would think shorts could see a lack of buyers and sell off the market to a larger degree. Like I said very odd.

  154. Phil

    WCP Open Items Update

    • 10 GNW Jan $5 calls at net $1.34 ($1,340)
    • 10 GNW Dec $6 puts sold for .85 (-$850)
    • 10 GNW Jan $6 calls sold for $1.15 ($1,150)
    • 5 SCO Dec $37 puts sold for net $1.90 (-$1,900)
    • 10 FAS Dec $66/67 bull call spreads at .60 ($600) 
    • 20 XLF 12/9 $12 calls at $1.02 ($1,020) 

    GNW is at $6.50 so good enough to keep. SCO should expire worthless but a stop at $1 (now .50) is prudent.  FAS is iffy but no biggie and we can risk it next week so our big gamble is just the XLFs for tomorrow but let’s take $1.12 or better and run EOD if it’s there.  

  155. lolobear

    "WCP: 10 TNA Dec $41/43 bull call spread at $1.10, selling 5 JPM $32 puts for .90 for net .65 on the spreads."
    Pardon my ignorance.  Just a quick question.  When you say the above – you mean 10 of each right?  Not 5/5 split to have 10 in total.  I know i know i’m sorry for this question.  But a question is better than losing money. 

  156. Phil

    WCP – Oops, and the TNA and XLF plays above! 

    Oil/Jerconn – The range has been $98.50 to $102 so, unless $98.50 breaks, this is more likely another bottom move.   The VALUE of oil is in the mid $80s but we can’t make it go there in the short run so, at this level, it could go $4 either way very easily.   

    BX/Sns – I think they are good but they were $3 in the 2008 crash and we may be crashing like that again so, on the whole, I’d rather have cash than these kind of stocks for now.  

    TNA/Sns – You can sell anything you REALLY want to own for that price but I agree with Jamie Dimon when he says that JPM is pretty "bullet-proof".  

    3:15 is hopefully time for Mr. Stick. 

    DXD/Crussell – Oh I’m bullish now so I’d take that money and run unless you need it for a hedge.  

    Odd/Kustomz – And very easy to whip back up if they want to!  

    TNA/Lol – No, it’s buying 10 spreads for $1,100 and selling 5 puts for $450 to net $650.  

  157. kustomz

    If /ES catches up to EUR strength this afternoon it should close 10 points higher from here.

  158. angelcur

    Phil/no i am still short and i think theeruo decline could get absurdly rapid if the deam men of europ don’t do somehting..its been somehting betting against rationality….or on dumb as you say…i am going to start covering around 1235-30 basis cash
     cameron/merkozy meeting just broke without agreement…where is our usual swoon day ft 3pm rumor??? i guess they are with draghi in trying to cause swoon for political pressure

  159. Pharmboy

    Pujols started in the St. Louis Pharm system…..the Team was loyal, and realistically him being worth 25M/yr until he is 41 is absurd…..

     

    Short covering into tomorrow.  Be ready.

  160. Tarpoon88

     Phil, what is the timeline on these bullish plays? Meaning: how soon before the auctions do we bail--monday, or friday? Thanks…

  161. stjeanluc

    Apparently AAA rating should be added to the endangered species list:

    http://ftalphaville.ft.com/blog/2011/12/08/788111/inigo-montoya-has-a-delayed-message-for-sp/

    That is unless something really drastic happens… 

  162. yshenhar

     Phil – take EDZ money off the table?

  163. Burrben

     Phil / CHL   
    Ok I re-read the article again, and it makes more sense.  Last question on this.  How do you decide if you want to do a "Buy Write" or if you choose to sell puts to finance a bull call spread?  When do you decide to use which type of strategy?

  164. crussell14

    Phil – cashed out EDZ $15/20 BCS for nice profit (another great call). Left with Jan ’12 $16 Put sold for $1.50, now $1.15. Sell now or hold? Thanks!

  165. stjeanluc

    FAS Strangle – Closed the call side of the strangle for a 68% win for the day ahead of a possible stick! I’ll leave the put side open overnight. Worst case, rollin’, rollin’ to next week! The 59 put roll even to next week 50 for now! 

  166. jerconn

    PHil – are you advising BOTH the XLF $12′s (from earlier) and the $13′s?  I got in the $12′s at .93 as recommended, perhaps should get out on a stick tonite…

  167. kustomz

    Just call me Chief Wahoo cause I’m scalping this market baby!! WHEEEEEE!!

  168. mrmocha

    Pharm - only you would say that Albert Pujols started baseball playing on a "pharm" club.  ROFL 8)

  169. lolobear

    Phil, i was only asking about the bull call spread portion?  10 on each side right?

  170. Pharmboy

    YIKES!

  171. Phil

    Agreement/Angel – I think the time for rumors is over and we soon will have the FACT of an agreement – for good or bad.  CNBC says some stuff is leaked but nothing different than what we knew going in – the question is what can they actually accomplish this weekend?

    Timeline/Tarpoon – If we make money, we get out.  If we don’t, we consider how to adjust it.  Don’t forget, I trade on fundamentals – it’s not my problem if it takes the market a long time to figure out I’m right…  8)  

    EDZ/Yshen – If it’s a bet, sure.  If it’s a hedge, no way. 

    Decisions/Burr – If the stock is cheap or pays a dividend, I’m happier to own it.  If it’s going to tie up a lot of money and doesn’t pay a dividend, I’d rather go artificial.  Also, if I am worried about the trade and want to limit losses – like when we bought BP – then the spread makes more sense.  As with anything, you always have to look at all the alternatives at the time and decide which has the best overall risk/reward.  

    EDZ/Crusssell – Well, if you think EDZ is a nice long-term hedge for your portfolio and don’t mind having some assigned to you at net $14.50, then why give the guy $1.15 today NOT to have that happen?  Just put a stop back at $1.50 and you can relax or, you can look at the April $12 puts ($1) and the July $8 puts (about $1 too) and figure let the premium expire no matter what because you can always roll.  

    Not encouraging to see XLF have trouble taking $13 back.

    Dollar bounced off 78.75 and back to 78.88 already – that was a head-fake!  

  172. yodi

    Burrben
    CHL Selling puts is always great when the market is going up But hell can break out if the bottom drops out.
    First role you only sell put if you really like to own the stock any other play you are just taking a chance futher remember puts eat up margin like honey for the bears!!!!

  173. crussell14

    Good counsel. Thanks Phil

  174. Pharmboy

    or zoinks!

  175. hanna5

     What just happened? Why the drop?

  176. mrmocha

    jerconn / XLF – Phil’s post was "XLF TOMORROW $12 calls at $1.02 – 20 in WCP with a stop at .90."  They dropped below .90 and we were stopped out, so the portfolio only has the calls for next week.

  177. Phil

    XLFs/Jerconn – Sure.  I think "good" news out of Europe can send up back to the highs tomorrow and that’s back to about $13.20 on XLF at least.  I think right now, they are trying to get all the retail bulls out on a very frustrating day.

    Good call Chief! 

    Bull spread/Lol – Oh yes – super rare that we do uneven spreads.  

    Drop/Hannah – Possibly because the EU news leak is considered dilutive for the Euro and that’s boosting the Dollar relatively.  So good news is they are "fixed" bad news is they are fixing it with MORE FREE MONEY.  The Financials should be happy on both counts (they have a lot of Dollars).  

    XLF/WCP, Mr M – Actually I called an audible to keep those (now .88) – I just REALLY feel we get a strong move up tomorrow.  

  178. dclark41

    rumors…rumors…rumors!
    3:44 PM Another rumor please. A German official hits the wires rejecting the reported draft measures, including giving the ESM a banking license. Stocks, the euro, and risk assets in general drop back to where they were before the first news hit. [Global & FX, Breaking News] 4 Comments

  179. Pharmboy

    Strong move up…not after those red candles…no way.  3 Black crows to the down side, more to come.  Broke S2.

  180. stjeanluc

    As Rick Perry would say…. oops! Broken stick again! 

  181. stjeanluc

    And oil below 98…. unusual move that late in the day! 

  182. Pharmboy

    MS down 10%.  Why? B’C their books are poop.

  183. Pharmboy

    na na na na, hey hey hey Good bye 12K….good bye.

  184. jabobeast

    FU 12k!!!

  185. kinkistyle

    Buy-writes/Burr: Divies make it worth buying the actual shares.  For something like GOOG or AAPL which tie up a ton of capital and pay no dividends, better off taking a Bull-call spread to leverage with less capital while getting all the upside.  Phil actually gave a pretty good explanation of the leverage effect on his recent BNN interview

  186. Phil

    German official/DC – Exactly what I was talking about this morning.  It’s like saying "an unnamed US official said Obama is not a US Citizen" – you can find people dopey enough to say anything.  

    MS/Pharm – Corazine not saying anything that couldn’t apply to all those firms.  

    Well, looks like I picked the wrong day to go long! 

  187. Phil

    10-year back below 2% – Mission Accomplished!  

    Oil $97.77 – wow!  

    Dollar only 78.94, was higher earlier.  

  188. stjeanluc

    So much for Buffett’s BAC gamble – when he put in his money, the stock was at $7 (8/25), it’s now trading at $5.55. You’ve got to have a strong stomach or some long term conviction to put money into that business! This has been a sell in the rally stock for the last 4 months. 

  189. dclark41

    I hear you Phil, but it certainly can rattle the market. We are listening (I have XLF!), but no one else is!

  190. Phil

    OK, big day tomorrow – one way or the other….

  191. kustomz

    Purge this baby!! AAPL holds onto 390!

  192. Pharmboy

    Buffet probably wants the banking arm to go with the insurance business…wasn’t it one time that Citi had insurance, banking, brokerage, electrician, welders, plumbers, doctors, lawyers, etc. under one roof?

  193. lapper

    PHIL, does anybody know what time the news come from europe tomorrow?

  194. sns1

    Angelcur – you called 1235 cash basis at 2:22 yesterday…golf clap! what made you think that?

  195. dclark41

    Now its fact! ……….but if you follow the link it goes right back to the link from a Reuters employee’s tweet!
    4:00 PM Bank stocks (XLF -3.8%) sink to session lows after Germany rejects giving the ESM a banking license: BAC -5.3%, C -6.9%, GS -4.9%, JPM -5.2%, MS -8.4%. [Financials, On the Move] Comment!

  196. stjeanluc

    Various portfolios are all up to date:

    https://docs.google.com/spreadsheet/ccc?key=0Anwf9je9MizqdGQzN2NZUjNfdjhrbjFwWlc1eDYtWnc 

  197. stjeanluc

    Citi / Pharm – I think that you also forgot politicians and hookers! 

  198. 2nifty

    re 3:57 comment "looks like I picked wrong day to go long" Phil you are downright EVIL!!! :)

  199. kinkistyle

    Warren extorted BAC with an offer they couldn’t refuse. Guy is a gangsta!

  200. Pharmboy

    For your after hours enjoyment…..this will be tomorrow…as many will be running for the hills.

  201. CaFords

    Did someone just get hosed? I see 1M traded on SPY on the buy side @ 126.62

  202. jerconn

    Pharm, you better be wrong…and Phil you better be right!

  203. kustomz

    FU TXN!  :-)
     

     
     
    In a scheduled update to its business outlook for the fourth quarter of 2011, Texas Instruments Incorporated (TI) (NYSE: TXN – News) today narrowed and lowered its expected ranges for revenue and earnings per share (EPS).  The reductions are due to broadly lower demand across a wide range of markets, customers and products, except for Wireless applications processors.
     
    The company currently expects its financial results to be within the following ranges:

    Revenue:  $3.19 – 3.33 billion compared with the prior range of $3.26 – 3.54 billion
    EPS:  $0.21 – 0.25 compared with the prior range of $0.28 – 0.36.

  204. lflantheman

    cwan120 ….  re your 1:46 post……. logic behind selling AAPL Dec 9  395 covers today on Jan 390 long calls.   l. Negative overall market , so don’t expect AAPL to move much higher next 24 hours.   2.   AAPL tends to "pin" at numbers divisable by 5 on options expiration.  I’m guessing 395 tomorrow.   3.   Last 24 hours before expiration yields RAPID loss of time value.  Great time to sell slightly OTM options with some value.  4.  Finally, if AAPL pulls back with the market, good short-term downside protection.   See you tomorrow! 

  205. elliotteldrich

  206. stjeanluc

    I guess taxes will go up on the middle class in January… but it will be an Obama tax hike on Fox:

    http://tpmdc.talkingpointsmemo.com/2011/12/gop-filibusters-dem-compromise-payroll-tax-cut.php

    The vote on the Democrats’ bill was 50-48 — the narrowest majority, but not enough to overcome a GOP filibuster. One Republican, Sen. Susan Collins (R-ME) crossed the aisle to vote with most Democrats.

    The GOP bill went down in flames, 22-76. Identical legislation received only 20 GOP votes last week — in both cases, a minority of the Republican caucus. 

    Not even 1/2 the republicans voted for their own bills… Why even bother to put it up?

  207. stjeanluc

    They are talking about bank nationalization in Germany now:

    http://www.spiegel.de/international/business/0,1518,801827,00.html

    According to government sources, if Commerzbank doesn’t manage to raise sufficient capital on its own by next summer, Berlin will reactivate the Special Fund for Financial Market Stabilization (Soffin) and purchase additional shares in the bank. The sources say that they assume the government would acquire a majority of the bank’s shares in a capital increase. 

  208. stjeanluc

    Some euro draft information from Barry’s site:

    http://www.ritholtz.com/blog/2011/12/eu-summit-draft/

    And the quote of the day:

    Bottom line, the market has become completely untradeable with all that is going on in Europe. 

  209. stjeanluc

    Why even bother picking stocks… pick one, any one!

    http://www.ritholtz.com/blog/2011/12/correlation-in-the-markets/

    In the entire history of the S&P 500, there has never been a day in which all 500 stocks in the index go up or all 500 go down.  There have been 11 days in which 490+ stocks all move in the same direction on a given day.  Of those 11 instances, 6 have occurred since July 2011. 

  210. diamond

    One witty fund manager posts a Venn Diagram of the solutions for the eurozone. Maybe tragically, what will work and what Germany will allow do not intersect.

  211. 1020

    We could use a few more ceo(s) like AMR’s ex-ceo, Gerard Arpey…..
     
    http://www.nytimes.com/2011/12/01/opinion/at-american-airlines-a-departing-ceos-moral-stand.html?_r=1

  212. deano

     Phil
    It may not be good timing, but how about a spread on DD, Jan 13′s, buying the 35′s, selling the 40′s and the 35 puts for a .65 debit on the $5 spread, and certainly don’t mind owning the stock 25% below today’s price. Please let me know what you think and if I’m missing anything. Thx,

  213. Kwan

    Yesterday Groupon announced its new online appointment service, Groupon Scheduler, a tool that seeks to make online appointment booking easier. It was developed by OpenCal, a Vancouver-based start-up that Groupon acquired back in September. Groupon Scheduler removes the extra step of calling the merchant to book an actual appointment. Groupon users will receive a reminder email 24 hours before the appointment.

    Poop. I guess it was inevitable, Phil!

    http://www.groupon.com/scheduler

  214. zeroxzero

     EuroRescue V. 12.9:  Bloomberg - By James G. Neuger and Gregory Viscusi - Dec 8, 2011 10:24 PM MT

    European leaders added 200 billion euros ($267 billion) to their crisis-fighting warchest and tightened anti-deficit rules, seeking to lure theEuropean Central Bank into stepping up its rescue operations.
    In an accord hailed by ECB President Mario Draghi, the leaders laid out a new “fiscal compact” to prevent future debt runups, accelerated the startup of a planned 500 billion-euro rescue fund and scaled back bondholder loss-sharing provisions.

  215. jomptien

    stjeanluc / portfolios,
    When I click on your up to date portfolio link I just get a google sign up page? Is there another way to access it or am I doing something wrong? Thanks

  216. Pharmboy

    EU failing to live up to expectations…..or maybe it was expected.

  217. Pharmboy

    What a joke these banksters/politicians/people are.  Thx zero…I was going put that up…$267B.  The Fed did that in 2 months…..tomorrow is going to be fugglie….

  218. angelcur

    euro short still looking good risk assets look gimpy..ultimately i think this mess redounds to the us’ favor..where else are people going to invest..dim sum bonds?..euros?..oh i forgot gold and silver…let’s see what sarkozy can pull out of merkles ass…

  219. Phil

    OK, looking good on the 3am trade!  

    Dollar was all the way up to 79.20 at 3am and now back at 78.92 and that popped us 100 points on the Dow (/YM) just under 12,000 and playable up off that line, of course but let’s see if we make it first!  

    EU says they have an agreement but no details yet.  

    Friday’s economic calendar:

    8:30 Trade Balance

    9:55 Reuters/UofM Consumer Sentiment 

    10:14 PM Deep into the middle of the night in Brussels, EU leaders are still at work, but what has emerged doesn’t sound good. Reuters reports diplomats saying treaty change for all 27 states isn’t happening, but is still alive for the 17 nations that use the euro. A sizable rally in stock futures has reversed, with the S&P down a hair after being up about 0.8%. The euro gives up about a 40 pip gain since the NY close.

    2:55 AM Asian markets are broadly down, but are off earlier lows as investors digest the news of the eurozone’s agreement for tighter fiscal coordination. Japan -1.5%. Hong Kong -2.8%. China -0.6%. India -1.9%. The yen is flat vs. USD, while the euro is -0.4%.

    Only steady PBOC purchases have kept the yuan fromfalling in value over past days as traders position for a halt or even reversal of the currency’s seemingly inevitable rise. The change in sentiment may have to do with questions over how China can maintain rapid growth with slowing export markets and a domestic economy possibly on the wrong slope of a credit bubble.

    Economists are predicting 2 key economic reports from China tonight will give room for further easing from Beijing. November industrial production is expected to have grown just 12.6%, the slowest pace in more than 2 years, while annualized inflation is expected to fall to 4.5% from 5.5% last month. Chinese shares have fallen about 4% since last week’s reduction in reserve requirements.

    Chinese inflation slows to 4.2% in November from 5.5% previously and against expectations of 4.4%. The soft number will do nothing to stand in the way of Beijing continuing to loosen monetary policy. Hong Kong -1.7% and Shanghai flat following the sharp downturns in the West earlier today.

    3:25 AM European markets get off to a rough start, despite (or because of) some tepid progress from EU leaders. London -0.6%. Paris -2.8%. Frankfurt -1.1%.

    Of the 27 EU nations, 23 have agreed to tighten their fiscal coordination, though leaders remain deeply divided on the details of their crisis strategy. The U.K. will stand aside, while Hungary, Sweden and the Czech Republic have reserved their positions. All 17 eurozone nations are participating.

    As speculated, the central banks of EU countries will lend the IMF €200B ($267B) to loan out to distressed countries. European leaders hope the down payment will encourage other reserve-rich nations, like China, to join the rescue efforts. 

    Excessive pessimism surrounding Europe ultimately will prove bullish, Nomura says in its annual outlook. It’s now clear that a resolution eventually will be reached, it says, yet the stock market continues to price in a tail-risk event – a cautious and excessive positioning. Nomura sees the biggest opportunity in emerging market stocks, which have been punished far more than U.S. equities.

    With all the hullaballoo surrounding the EU summit, one item on the agenda that has gone largely unnoticed: whether to grant Serbia candidate status for joining the group. The EU is expected to sign off today on an accession treaty for Serbian neighbor Croatia, positioning it to become the bloc’s 28th member in 2013. 

    Very interesting:  George Soros’ family fund purchased $2B of the European debt formerly owned by MF Global in the days following its collapse, according to sources. The buy includes a large amount of Italian paper set to mature in Dec. 2012, so it’s safe to say Soros and his CIO Scott Bessent have faith there will be no default before then. 

    Europe is heading toward a Chapter 11-type event says Saxo Bank economist Steen Jakobsen. The losses in the region are 30% – to 50% of GDP, and at some point they will need to be realized. Politicians continue to deal with problem as a liquidity crisis, rather than the solvency crisis it actually is. All they talk about is printing more money and spending their way out, Jakobsen says, which is just going to make the day of reckoning even worse. (video

    Here’s something for the Occupy Wall Streeters to hang their hat on: working Americans are now getting the smallest slice of the income pie on record. The labor share of Q3 productivity — the amount paid to workers instead of businesses and other income-earning entities — was reported to have fallen to 57.1 cents on the dollar, its lowest level since it was first reported by the Bureau of Labor Statistics in 1947

    Americans are pounding the plastic again, as CardHub.com reports Q3 credit card debt jumped $16.8B, or 154% Y/Y. "The speed at which consumers are garnering new debt in 2011 is unprecedented… the first time in the last two years that a Q1 paydown has been completely eradicated by the end of Q3." CardHub results include charge-offs not counted in the Fed’s consumer credit report.

    Gold has tumbled ~6% over the past three months, amid macro conditions that would seem bullish for the metal. But Bespokeadvocates a longer-term perspective; gold is still up ~20% YTD, exceeding its five-year and 30-year average annual returns. "Relative to just about any other asset class this year, gold is still glistening."

    Peak imports!  Exxon Mobil (XOM) says oil imports have reached a peak in the United States and will steadily decline over the next three decades, thanks to rising domestic supplies and a 20% cut in oil demand. The company projects U.S. oil imports will eventually drop to 7M bpd by 2040, with most of the foreign crude coming from Canada and Mexico, while imports from OPEC countries decline to almost zero.

    Toyota (TMsharply downgrades its earnings outlook for the fiscal year ending in March, pointing to a strong yen and recent flooding in Thailand. The company now expects a net profit of ¥180B ($2.3B) vs. August’s projection of ¥390B, revenue of ¥18.2T vs. ¥19T, and sales of 7.38M vehicles vs. 7.6M.

    Texas Instruments (TXNdrops 6.6% AH after using its mid-quarter update to guide for Q4 revenue of $3.19B-$3.33B and EPS of $0.21-$0.25, below prior guidance ranges of $3.26B-$3.54B and $0.28-$0.36. TI blames the shortfall on "lower demand across a wide range of markets," save for wireless application processors. Between TI and Altera’s (ALTR) warnings (previously), chip stocks are likely to see weakness tomorrow. (webcast)

    Google (GOOG), which reportedly tried to buy mobile reader app developer Flipboard last year, is launching a rival product it calls Currents. The product differs from Flipboard in its focus on news sources rather than Facebook/Twitter links, and features tight Google+ integration. However, Currents faces competition not only from Flipboard, but from many other reader apps, including Taptu,Pulse, and Yahoo’s (YHOOLivestand. (previously)

     Along with reporting an increase in Apple’s (AAPL +0.8%)iPhone orders, Citi’s Richard Gardner claims "several sources" tell him the next-gen iPad will launch in February. Like many others, he predicts the device will feature a higher-resolution screen (reportedly4x as many pixels as the iPad 2). Bullish iPhone commentary is helping Apple shares outperform today. 

    We’re heading into the "free lunch trade” time of year, where beaten down small caps often make a move. Starting in mid-December, the Russell 2000 begins to take off in a display of seasonal strength that typically lasts until early June, according to a Stock Traders Almanac analysis. 

  220. Phil

    Fortune‘s "10 best stocks for 2012": AAPLCATEEPGT,HALINTCJCILMTMSFTRY. The picks are based entirely on valuation, but the 2011 selections have lagged the market, +2.1% vs. +7.8% for the S&P through Nov. 30.


  221. pentaxon

    Right back on the line yesterday:
    http://www.pentaxon.com/psw/spy_worldcurrency.html

  222. lvmoda

    The Dec Euro Future peaked at R1 at 1.3435, driving equity markets higher.  However, the real tell is Italian 2Y note yields, which risen to 6.118.   If that number doesn’t come down, Italy will careen towards default in 2012 regardless of what the EU politicians say.  My own opinion is that the spike in the Euro is due to short-covering.   The only small positive out of this summit is an arrangement with the IMF, which provides an avenue for the ECB and Germany to continue their love affair.  Unfortunately, that small commitment seems not to satisfy those who are being called upon to provide short-term funding to Italy in the meantime, much less providing any level of comfort that a bailout of Italy can be funded down the road.

  223. angelcur

    modaman..lets not assume rationality has anything to do with this process..party first hurl later!..gosh you are in the biz no?..on a serious note..its not going to work because you can see they have bcked off the banks taking heat and haircuts for crap bets..ultimately thats the bugaboo…as it means more unfiar risk sharing with eu citizens….

  224. lvmoda

    angel – yes, the yields going up will only hurt the people and we all know the banks will be ultimately be bailed out but only after complete fiscal capitulation to the demands of the germans, bundesbank and their b*tch, the ECB.

  225. angelcur

    the other sad reality is that th ebanks continue to go unpunished for their insane risk taking did oyu see corzine yesterday when one congreeman calmly said 37 to one that a bit of risk why do you guys keep doing that’ coz we can asshat!…both parties should be guillotined..where is madame lafarge!!

  226. lvmoda

    WWIII axis and allies lining up sides again…?  How can these German-led moves succeed?  UK bolts and remains with US strategy.  France and Italy give up early, like usual.   China…they have their own opportunist agenda like Japan, the zombie who will be with US time (as if it matters, other than for sea lanes).   Just wondering…!

  227. pstas

    Axis and allies- interesting perspective. Sometimes useful to remember the old political adage applicable from ward healers to heads of states - "There are no permanent alliances, only permanent interests".

  228. lvmoda

    pstas – yeah, that’s right.  And those interests always have to do with wealth preservation.   The prior wars were preceeded by similar economic upheaval where bankers and the populaces being raped needed a distraction..

  229. pstas

    Exactly- which is the corollary to above- "Follow the money"

  230. TheChaser

    Amazing call yesterday Mr. Phil.  I thought you were nuts going all bullish on that close but that’s why your name is on the top of the page!  Thanks for your guidance and, of course, Merry F’ing Xmas. 

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