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Twisted Tuesday – Treasuries are not an Option

Remember Operation Twist?

Last week, Freddie Mac reported record lows on rates, with the 30-year notes at 3.91%.  This has not, of course, encouraged many people to go out and buy homes but it has DISCOURAGED people from putting their money into bonds and ENCOURAGED them to put their money into stocks.  There is, however, a problem with this.  When people put money into Treasuries, it is "locked up" for a period of time but stocks are more liquid so, as soon as rates begin going up (and they will when the panic in Europe subsides despite the Fed’s efforts), then money can come out of stocks as quickly as it went in and move into 5% paper

See, I said 5% paper and you were thinking "Yeah, I’d like some of that."  So are Trillions of Dollars worth of other investors and that means, I am sorry to tell you, that this little Federally-funded rally is full of holes you can drive a truck through.  

The Fed’s stimulus plan is the central bank’s third definitive attempt to aid the U.S.’s patchy economy since 2008. As expectations grew that the Fed would act in the weeks leading up to the bank’s actual announcement, which came Sept. 21, 10-year yields dropped nearly 0.30 percentage point. Since the Fed’s official statement, yields have already risen modestly, to 2.026% on Friday, from 1.95% on Sept. 20.

The program’s final debt purchase of the year was Thursday, when the Fed bought $4.6 billion in long-dated securities. The final sale Wednesday targets $8 billion to $8.75 billion worth of notes due in 2014. It will be a holiday-shortened week: The bond market was shut Monday and will close early, at 2 p.m., on Friday.

The problem is some corners of the market think the Fed’s tools are losing their punch. The financial system is already flush with money from the bank’s previous easing programs, and analysts argue that the Fed’s extra money is increasingly less useful. Borrowing costs, for instance, are at all-time lows and yet many investors aren’t taking advantage.  If Operation Twist isn’t enough to get us through 2012 – what’s going to be left in the Fed’s tool belt once the Global panic into Dollars begins to subside?  

 

You can see, on the above chart, where the Fed announced Operation Twist in September as it allowed the oil crooks to borrow cheaply and jam prices back from $80 to $100 (25%) and that took money OUT of consumers’ pockets into Q4 but at least they were able to increase their debt load as borrowing costs came down so it all works out – for the oil companies…

Banks in Europe paid attention to my cash call this weekend and parked a record $540Bn in the ECB’s overnight deposit facility, up from $500Bn the day before.  The previous record overnight deposits were $501Bn, at the onset of the Greek crisis in June of 2010 so – DESPITE all the nonsense to calm the markets – the European banks are as panicked now as they have ever been and the inter-bank lending system (LIBOR) is less liquid now than it was in the crash of 2008.  

The ECB’s so-called benchmark allotment pointed to a major liquidity overhang in the euro zone’s financial system Tuesday. Benchmark allotment, which is the ECB’s estimate of the liquidity banks need to conduct routine operations, was minus €493 billion. The negative allotment figure indicates the presence of excess liquidity in the financial system.  The ECB further said banks borrowed €6.13 billion from the ECB’s overnight lending facility, compared with €6.34 billion borrowed Thursday.  When markets are functioning properly, banks only use the facility to the tune of a few hundred million euros overnight.

I’m sorry to be a Debbie Downer for the holidays but it’s my job to search the truth and, as I was doing research for this year’s Secret Santa’s Inflation Hedges, I discovered that I can’t advocate any at the moment because the pressure is more deflationary than inflationary and, in fact, I am leaning towards putting up Secret Santa’s Disaster Hedges for 2012 – getting in-line with the Mayans for the moment.  

I’m still gathering my evidence so I don’t want to jump the gun but, as you can see from this post – I’m very much in macro mode at the moment, looking out at the bigger picture as we prepare to re-allocate our capital for 2012.  

Barring some immediate disaster this week (and we are short already), our Secret Santa Hedges for 2011 are 4 for 4 with all 4 of our trades up well over 100% and XLF and XLE both at max returns with DBA just off our $29 target at $28.60 but that only applies to very greedy people who didn’t take this trade off the table in August, when DBA was $34 and we soured on the sector.  I’ll do a full write-up as we officially close out that portfolio this weekend but, as I said, I can’t in good conscience replace it with 4 more bullish positions for 2012 as I’m not finding 4 things to be bullish about.

We’ll see how Europe acts this week but already they are not acting "fixed" and, if a Trillion Dollar commitment can’t cheer them up – what will it take?  

Let’s be careful out there!  

 

Top picture credit: thestreet.com 

Cooling Off chart from the Wall St. Journal

Cartoon credit: Bizarro Comic


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  1. stjeanluc

    Oil Lines

    R3 – 100.52
    R2 – 100.32
    R1 – 100
    PP – 99.79
    S1 – 99.46
    S2 – 99.26
    S3 – 98.93

    This being the first trading day, these lines are usually not very reliable! 

  2. stjeanluc

    This is an interesting stat – since the price increase in Netflix, people have been streaming more and going back to previous highs. Maybe it was the plan to get rid of the DVD altogether!

    http://techcrunch.com/2011/12/26/people-spend-twice-time-netflix-hulu/

    And Hulu seems to be losing steam:

    Netflix time spent 

  3. stjeanluc

    Some European news – over the weekend Spain predicted at least 2 quarters of negative growth and a bad 2012. Not surprising given the austerity measures being announced.

    On the other hand, my sister told me that they are passing a new measure in Spain that should help small businesses – apparently up to now, businesses had to pay the VAT due on invoices they produced the same year the invoice was issued. It’s OK if you get paid quickly, but apparently, payment terms are getting longer and longer and my sister was telling me that she was paying VAT for invoices that would not get paid until 2013! Crazy stuff… She had to borrow money to pay that VAT. Now the VAT will be due when you get paid! Needless to say, these changes will be welcome.  

  4. stjeanluc

    Ginormous graphic about drug prices in the US as compared to Canada (from Barry):

    http://www.ritholtz.com/blog/2011/12/why-americans-pay-so-much-for-brand-name-drugs/

  5. stjeanluc

    Phil, Looks like we lucked out on the Jan 68 Call as it’s cheaper today than anytime Friday. Do you still want to buy it back?

  6. stjeanluc

     

  7. kustomz

    Britain loses spot as sixth-largest economy to Brazil
    http://www.telegraph.co.uk/finance/economics/8977834/Britain-loses-spot-as-sixth-largest-economy-to-Brazil.html

  8. stjeanluc

    Looks like the 3 day weekend did some decay damage on the short options! 

  9. stjeanluc

    For those brave enough to short the FAS 60/72 strangle over the weekend, it was selling for around $0.70 on Friday and can be bought back for $0.44 today. Not bad….

  10. stjeanluc

    What a difference a week make with the AAPL portfolio – good job by lflan!

     

  11. yodi

    stjeanluc
    Remember I still have the 62/67 Dec 5 FAS stangle 62p sold for 1.15 now .51 and the 67c sold for 1.51 now 1.60 Shuold I close it and set up an other play or stick arround?

  12. stjeanluc

    FAS / Yodi – You could close it now. It’s a win anyway and setup another play with more upside protection. 

  13. cjji

     I am holding DIA Jan $118 puts, in at $1.81 now $0.88.  Any advice on whether to DD or roll to $120 puts?

  14. stjeanluc

    FAS Strangle Experiment – Being already Tuesday (faster decay…), I am selling a FAS 63/72 strangle for around $0.70 or so. 

  15. yodi

    stjeanluc
    Thanks What play do you suggest for this week? FAS strangle

  16. Phil

    Good morning!

    I hope everyone had a nice Christmas.  I’m around today but likely not tomorrow morning as I’ll be heading up to ski but then I should be back on-line in the afternoon and more or less available on Thursday and Friday for all you hard-core traders.  My excuse is I have a lot of reading to do to get my head around 2012 – what’s yours?  

    Austerity working its wonders:  Greek retailers had their worst Christmas season in decades with sales off 30% Y/Y, according to the ESEE. "Nine out of ten Greeks are less generous, not out of choice but out of necessity," says the group. Italy earlier - also poor, but not as devastating as Greece.

    According to consumer group Codacons, Italians spent €48 less/person on Christmas than the average of the last 5 years, giving retailers their worst result in a decade. As for the coming discounts, "They will be flop," says the group. "Families do not have more opportunity to spend on non-essential assets."

    French unemployment hit a 12-year high in November, with 29.9K losing work, bringing the total to 2.85M, a 5.2% rise for the year. The unemployment rate rose to 9.3%, still below the 9.6% peak in the wake of the GFC. It’s another bad data point for President Sarkozy who stands for election this Spring. 

    "I don’t think they’re the canary right now, I think they’re actually the grenade because they are the ones that are going to fixthis or make it worse," says analyst Ralph Silva of the EU banks. While last week’s ECB lending facility supplied a ton of liquidity, it did zero for bank’s capital adequacy levels, plans for whose improvement must be submitted by Jan. 20.

    3.9% interest and STILL no one is buying!  Oct. S&P Case-Shiller Home Price Index: -0.6% M/Munchanged from prior. -3.4% Y/Y vs. -3.2% expected, -3.6% prior.

    This is the ENTIRE bullish premise:  With inflation slowing, the doves at the Federal Reserve are giving themselves a pat on the back for their prescience, reports the Fed’s man at the WSJ, Jon Hilsenrath. Of most import, the drop in reported CPI numbers gives the central bank cover to take additional easing moves if the economy softens in 2012.

    What we have to do this week is hold those lines (whichever ones each index is over).  The NYSE had such a struggle getting over 7,473 it would be tragic if they blow it (over by just 20 at the moment) but notice the Dow consolidated right at that +5% line in early November AND early December so that line (12,170) should be taken very, very seriously and failure there is not an option.  

    AAPL over $400 is a green light for the Nasdaq to catch up to the Dow and we should be very concerned any time the Nas doesn’t outperform this week.  Oil is back to $100 but not a clever short with the Dollar below 80.20 and, clearly, they are still pushing the markets into the year end so, tempting though it may be – it’s not yet time for bearish betting – we’ll just keep pushing the lines, following the indexes higher until they fail to hold up and THEN we will short with good stop lines to guide us.  

    This is the year end rally and this last week of the year is usually bullish, it’s next month I’m worried about (and next year!). 

    If anything, I would look to go higher this week as there’s going to be little news and even less volume, so it’s easy to push the indexes higher to make 2011 look more attractive as salespeople try to compete for those investment Dollars in 2012.  Today was the day we were worried about and then we’ll be worried about next Tuesday as well but, in between, there’s no reason to be bearish but cash remains the smartest play.  

    Tuesday’s economic calendar:

    9:00 S&P Case-Shiller Home Price Index

    10:00 Consumer Confidence

    10:00 Richmond Fed Mfg.

    10:00 State Street Investor Confidence Index

    10:30 Dallas Fed Manufacturing Outlook 

    At the open: Dow -0.18% to 12272. S&P -0.15% to 1263. Nasdaq -0.16% to 2284.

    Treasurys: 30-year +0.16%. 10-yr +0.09%. 5-yr +0.05%.

    Commodities: Crude +0.03% to $99.89. Gold -0.76% to $1596.35.

    Currencies: Euro flat vs. dollar. Yen -0.16%. Pound -0.2%.

    Market preview: Stock index futures and European shares are a hair lower in slow post-holiday action. Sears (SHLD) is off 15% premarket as poor results will lead to the closing of 100-120 stores. The early data shows EU banks took their massive ECB borrowings of last week and deposited the funds right back with the central bank. Later: Consumer Confidence, Richmond Fed, Dallas Fed.

    Dec. Richmond Fed Mfg. Survey: +3, to 3 (above 0 = growth). Shipments +2 to 3, new orders +9 to 7, jobs -4 to -4. 

    Europe should boost the size of its bailout fund, Japanese officials said yesterday, in order to show investors and international partners that Europe is serious about solving its debt crisis. Japan has repeatedly said it’s willing to step in and help but only once EU countries "take decisive action."

    Der Spiegel: "German car manufacturers BMW, Daimler (DDAIF.PK), and Audi even had to shorten the usual break in production during the Christmas season because they have so many open orders to fill." Why all this kerfuffle over the slowing European and world economies?  Maybe it’s only a top 10% thing?

    Daimler’s (DDAIF.PK) Mercedes-Benz plans to boost outputby 13% next year to 1.4M cars, according to a report from Automotive News Europe. The carmaker sees its total passenger car output increasing to about 1.67M in 2013.

    EU banks deposited a record €411B with the ECB last night, suggesting they will pay for safety, rather than make a profit lending to each other or buying sovereign paper. Remember, banks borrowed €489B in the ECB’s LTRO last week – for which they are paying a 1% interest rate. Deposits at the ECB earn just 0.25%.

    Against a late year rally that has brought U.S. shares to a 5-month high are continuing declines in China, with a 1.1% fall last nightbringing the month’s losses to 7.2% and the Shanghai Composite to its lowest close since March 2009. Among the losers was Anhui Conch, the country’s largest cement maker, -2.4% for the session and47% YTD amidst mass overcapacity in the sector.

    In an effort to prop up its local solar industry as it faces anti-dumping charges from the U.S. and others, the Chinese government is lifting its 2015 target for domestic renewable energy installations by 50%, to 15GW. 2012 installations are expected to be around 5GW – only enough to give Chinese solar firms such as YGESTP, and LDKa modest boost as they deal with a mountain of troubles. (previously)

    Labor shortages force changes in China’s factory sector as college grads would rather set up their own online store rather than work on the shop floor. One major manufacturer is shifting his business from cheap trinkets for the overseas market to higher margin domestically-sold products.

    Rumor to boost us into the New Year:  Expectations are growing that China will cut its reserve ratioagain, as inflation eases and the economy slows. UBS chief China economist Wang Tao sees a cut as soon as next month, and says cutting the reserve ratio by another 2 percentage points would lead to double-digit growth for bank loans. (previously)

    Beijing clamps down on a flurry of new gold exchanges opening around the country, ordering all closed except for 2 in Shanghai. Citing lax management, irregular activity, and evidence of illegal actions as the reasons, the PBOC says the 2 Shanghai exchanges are enough to meet investor demand.

    It could be a very tough year for pharmaceutical firms, which face a slew of patent expiries and new costs from healthcare reforms. Market research firm CreditSights pegs Bristol-Myers (BMY) and Eli Lilly (LLY) as likely to be next year’s hardest-hit pharmas, while Abbott (ABT) and J&J (JNJ) will remain relatively sheltered. 

  17. Phil

    $12 is fine with us!  Jefferies lowers its price target on shares of Alcoa (AA) by $2 to $12, while keeping a Buy rating firmly in place. Though analysts with the firm cut their Q4 EPS estimate to $0.00 after Alcoa disclosed rising sequential costs, they still see 20% upside potential for shares if U.S. economic data improves.

    Sears (SHLD) will close 100-120 Kmart and Sears stores, and will take Q4 charges of $1.6B-2.4B. Quarter-to-date comparable sales are off 5.2%. "Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses, adjust our asset base, and accelerate the transformation of our business model." (PR)

    TV sales have been strong this holiday season, but as Best Buy’s (BBYFQ3 report demonstrated, that isn’t necessarily translating into higher profits for either TV makers or retailers, given the huge promotions needed to spur demand. Though the average size of a TV set sold in North America has risen to 38 inches, the average selling price is only $460 - less than the price of Apple’s cheapest iPad.

    Google’s (GOOG) move to place its own flight-search service at the top of search results for queries on flights rattles online travel players such as Expedia (EXPE), Orbitz (OWW), and Priceline (PCLN) which generate 10%-20% of their traffic from Google-generated searches. The travel sites say that Google is violating the spirit of DOJ guidelines set for its entry into the $11B market to book flights online. 

    ‘Tis the season for 2012 predictions. Among BI’s tech forecasts: Research In Motion (RIMM) will be sold; Amazon (AMZN) will "post serious losses" to go with strong growth; Facebook will hit 1B users; mobile advertising will take off; Nokia (NOK) will hold its own; and Apple (AAPL) will post results generally in-line with analyst estimates. (previously)

    Online shopping jumped 16.4% on Christmas from the year before, according to data released by IBM, while the dollar value of purchases made on mobile devices jumped 172.9%. In fact,nearly 7% of all online purchases on Christmas Day were made using iPads. The uptick was poised to continue yesterday, though final data isn’t yet available. 

    Apple (AAPL) plans on releasing television sets in Q3 2012,claims Digitimes, with the first sets expected to feature 32-inch and 37-inch displays. Samsung (SSNLF.PK) will reportedly provide chips for the sets, and Sharp (as previously rumored) will provide the displays. (earlier)

  18. rustle123

    wrote some open UCO 46 calls for Jan.

  19. rustle123

    Tuesday pre-market – - 12-27-2011
     
    Dr. John L. Faessel
    ON THE MARKET
    Commentary and Insights
     
    Quote of the day
    “It is dangerous to be right when the government is wrong.”
    ~ Voltaire ~
    ~
    The Dow breaks out to Cycle Highs
     
    Gold falls below 200-day moving average to 5-month lows
     
    EuroLand Bond Yields remain the Market Driver
    Italy 10-year (gross) bond yield – 6.95% off from 7.26% on 11-24
    Spanish 10-year (generic) bond yield – 5.24% - off from 6.7% on 11/24
     
    Today’s market backdrop has European markets up slightly as the Key Italian Bond Yield moves higher again. Today the S&P Case-Shiller home price index and consumer confidence will be released. Worry re home prices has S& P futures off 3 points. It’s a short week  and light volume and tepid moves are likely.
     
    On Friday the Dow Jones industrial average broke out to new cycle highs climbing 1% with 28 of 30 issues higher. The market rose on very low and well below average volume despite mixed economic data, capping the week with gains. Durable goods and new-home sales up 4% data beat estimates of 1.6%, although consumer spending and personal income came in below expectations.
     
    It was a good week as The Dow Jones Industrial Average, rose 3.6%, to close at 12,294.00. The Standard & Poor’s 500 rose 3.7%, to 1218.64, while the Nasdaq Composite added 2.5%, to 2618.64.
     
    The Market picture remains constructive as "price" broke above the apex of a triangle / coil. The "sure bet" Santa Claus rally seems to be muted, but let’s not argue with Price. The Dow at new cycle highs looks good on the charts.
     
    Again: “From a technical perspective the key declining Tops line resistance at (SPX) 1314ish that comes off last July’s top tick will be the overriding wall of resistance.” Correspondingly the lower trend line off “the” lows of 10/4 and 11/28 is at (SPX) 1193.
     
    The BARRON’s Confidence Index * moved higher to 67.3% from their cycle lows of 66.9% the prior week. In June and July it was a relatively healthy 77.
    _____________________________
     
    The (SPX) closed last Friday at 1265
     
    Short term price support in the S&P 500 (SPX) is at 1252.
    Important pullback low support of last Monday is at 1202 -
    then at pullback lows of 1229 registered on 12/21.
    Support from a minor ascending lows line is also at 1202.
    50-day moving average support is at 1233.
    The 200-day moving average support is at 1259.
    Price support at 11/28 lows is 1158.
    Deep price support at the October 4th lows is at 1074.
    Deepest ascending lows line off the (SPX) 666 (of 3/6/2009) is at 1109.
     
    Declining tops resistance is at 1226.
    Key Price resistance is at S&P 500 (SPX) 1266 and 1293.
     
    Last Friday’s key indicators and metrics:
     
    ·                       McClellan Oscillator is Neutral @ plus 148
    ·                       VIX – 20.73

  20. stjeanluc

    Looks like Trader’s Anonymous again today….

  21. dclark41

    Phil
    Are you waiting out the USO Dec 30 $38 puts (now .24)? Or DD here and try to get out even?

  22. Phil

    WCP Moves

    • We got killed on the Friday $120 puts, down to .15 so no reason not to spend .08 ($160) to roll them up to the $121 puts (.23) and DD at .23 ($460) to put us in 40 at $2,320 (.58) as those $121 puts were $1.23 on Friday morning but our goal is just to get out even if we can.  
    • USO Friday $38 puts are .25 and no reason to take 2 chances so we’ll give it the day and hope to pull a little closer to our .48 entry.  
    • The VXX spread is Jan but we sold this week’s $34 puts so we just have to hope the VIX doesn’t stay below $22 but I’m pretty confident there will be more put buying into the weekend.  
  23. Pharmboy

    Good morning.  PP for today…and watch out, VIX is up 5%.

  24. kustomz

    STJ, your the go to man….any info on how many of the DOW stocks at or near 52 week highs?

  25. Phil

    Spain/StJ – That’s going to be a huge boost because, essentially under the new rule, the businesses have pre-paid a lot of VAT and will be recouping that money as the invoices fill.  It won’t change the balance sheet but it will give them a pop in cash flow for a quarter.  

    Great drugs graphic.  Amazingly, I’ve been pointing this stuff out for years but it seems to drive Conservatives into a frenzy when I insinuate that the American private health-care system is not cost-effective at all and, in fact, leads to massive consumer abuses that simply are not tolerated in other civilized nations.  It’s the same drugs, made by the same companies in the same packaging but in Cuba or Mexico or Canada – it’s as little as 1/10th the price!  

    FAS Money/StJ – I think we’re good.  $13 is a logical pin for the week/year so with FAS right at $68 now and the VIX low, I think we should wait a bit to see if we do flatline or head lower and get a better price as the premium drains out.  

    AA Money – Not worried yet.  

    IWM Money – We’re on track with the RUT under 750.

  26. jmm1951

    Daimler overtime
     
    Mercedes sells a lot of cars to Greece, but although it is many years since I was there, most of them were diesel taxis. The question is whether orders represent affluent buyers wanting new Mercs, or increased demand for public transportation. What is the currency advantage or disadvantage for German auto makers versus their Japanese rivals? Most of the pick up trucks in Greece are Nissan, Mazda, or Toyota. Pick up trucks are the ultimate in low cost public transportation in rural areas, including in Florida, where seat belt laws are suspended for passengers (and dogs) in the back of pick up trucks as this considered an economically necessary form of transportation for agricultural workers. (In Haiti I have seen a ridiculous number of people clinging to pick up trucks, but let’s not even go there.)

  27. yodi

    Phil Good morning NLY I was call on NLY 2014 15c sold for 1.93 as expected actually NLY was 16.94 Today trading at 16.27 shall I wait for a further drop to refill ?

  28. exec

    Hi Phil,
     
    I hope you and everyone else had a nice holiday.
     
    Are you looking for a low volume Bot move up this week?

  29. Lincoln

     rustle123: generalities
    rustle, since I don’t see you making comments trying to fix hopeless positions or with a sense of panic I have the impression you know what the hell you’re doing so I pay attention to the ideas you are good enough to share.  I would like to know, in very general terms, what your overall position is generally.  I know you don’t trade futures but do you have a percentage mix of equities, bonds, options and cash that you would say is a fairly typical allotment for the funds you manage? If now is not a typical time how are you positioned relative to the norm?
    Thanks for your input. 

  30. microflux

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    Merry Christmas Phil. Hope you had a great weekend.
    I need advice though I should have asked this a long time ago.
    I got a tip from you a year ago to sell some puts for EGLE and leave then along.
    They were arounf $4 then now I am the happy owner of 1000 EGLE at $1
    The reason I didn’t panic is because how could a big shipper like them go under, but they price just keeps going lower. What gives ? are they going to 0 ? what should I do ? what should have done ?

  31. microflux

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    Merry Christmas Phil. Hope you had a great weekend.
    I need advice though I should have asked this a long time ago.
    I got a tip from you a year ago to sell some puts for EGLE and leave then along.
    They were arounf $4 then now I am the happy owner of 1000 EGLE at $1
    The reason I didn’t panic is because how could a big shipper like them go under, but they price just keeps going lower. What gives ? are they going to 0 ? what should I do ? what should have done ?

  32. jmm1951

    Phil/drugs
     
    Good points,and consider that here in the Dominican Republic people can buy most drugs over the counter without a prescription (of they are not narcotics) and buy only the quantity that they want, sometimes with advice from the pharmacist. "Given me 10 capsules of Amoxycillin for my sore throat." "You would be better off taking xyz." Consider simply the cost of a visit to the doc to get a prescription or a prescription refill, when they may also order some blood work (more money) before they will let you have the drugs. So you may be out $150 before you even get the medication.
     
    Not saying that the US system isn’t infinitely superior, but it does come at huge cost. Incidentally lab work is much cheaper in other countries too. Part of the reason for this is that companies like Quest Diagnostics can charge insurance companies and government providers very steep fees.
     
    We should probably adopt the Singapore health system in which everyone has mandatory payroll stoppages that go into medical expense accounts, but each patient/consumer is responsible for making his or her own payments out of that account. Apparently this keeps the costs down very effectively and they have world class medicine too.

  33. Phil

    DIA/Cjji – If they are a hedge, I would keep the hedge.  As you see above, we took advantage of the strong open to improve our losing DIAs but it’s an aggressive gamble.   You can sell the weekly $122 puts for .55 at the moment and you can roll up to the Jan $122 puts for .90 so I would do the roll and hold off on the sale as maybe you will get the chance to sell lower puts or maybe you won’t have to cover at all if the 600-point run in the Dow since last Tuesday has a good pullback.  

    I’m expecting the usual 20% back to about 12,200 on the Dow – anything below that would be a bonus but that’s where we should all be looking to get out of bear bets if it holds.  

    Meanwhile – Dollar 80.15, oil $100.54, gold $1,597.  

  34. hemas03

    Phil, unfortunately I missed buying back the WCP FAS JAN12 $72 short calls for a buck.  I am hoping for a dip next week. Any suggestions? 

  35. jromeha

    Phil- I’m sitting in a navy terminal in Norfolk waiting to begin my 3-day trek to Leipzig, Bishkek, Bagram, and finally Kabul. I don’t leave until after the market closes and so I’m looking for you to build on your legendary status today! :)

  36. roro

    Holding in cash, Phil………….no OIL shorts so far. patience is a virture, sometimes. Thx

  37. scottmi

    jromeha – have a good trip out there and get back safe.

  38. stjeanluc

    Have a safe trip Jrom… and keep in touch! Going for a year?

  39. stjeanluc

    Yup, computing is getting smaller and cheaper:

    http://www.engadget.com/2011/12/27/visualized-ibms-1956-hdd-packs-5mb-of-storage-requires-forkli/ 

    That would make my 64GB iPad at $500 millions! 

  40. pstas

    Jromeha- I am reminded of this quote:

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    “People sleep peaceably in their beds at night only because rough men stand ready to do violence on their behalf.”  — George Orwell
    Be safe and thank you for your service.

  41. nicha

    jrom – safe trip and come back soon!

  42. jromeha

    Scott/St John thx for the wishes…. I’m a finance dude so i definitely dont have a dangerous job. the most dangerous activities I’ll ever do is the travelling around the country for QA and inspections.. It is scheduled for a year but with our drawdowns etc i definitely could be come home early…

  43. rustle123

    Lincoln/Generalities
     
    I have some bonds but generally do not like them and think they are a waste.  There are safer and better ways to see much more income.  Bonds are probably only 3% of portfolio mix so very little anyway.     Generally I always like to have 30% in cash and right now that number is probably double in most accounts some even close to 70%.  I have some main equities I hold and write covered calls off every month like Merck, Sherwin Williams, Exxon and a couple of others but I trade a lot of ETF’s and write a tremendous amount of premium whether it’s open calls, puts or doing BCS.and then when I buy SCO or TZA and TNA or EDZ, I scale in at 1/4 to 1/5 of a position at a time.  95% of the time I never get to full position because I’m taking profits and sometimes (especially on SCO) I hold 1/4 to 1/3 of the position while trading another of the same amount constantly lowering my cost then when oil has it’s nice dump, I get rid of it all (recently sold all remaining stock at mid 43′s then started rebuying low 38′s and only have 1/4 position right now.)  Currently I have many 36 SCO puts for Jan, UCO 34 puts for Jan, UCO 45 calls for Jan and covered SCO 43 calls at a 65% profit that I wrote when SCO was in the 43′s.  I’m also hoping IMAX drops to 17′s or very low 18′s and will start writing 17 puts and buying some stock on that too.
     rustle123: generalities
    rustle, since I don’t see you making comments trying to fix hopeless positions or with a sense of panic I have the impression you know what the hell you’re doing so I pay attention to the ideas you are good enough to share.  I would like to know, in very general terms, what your overall position is generally.  I know you don’t trade futures but do you have a percentage mix of equities, bonds, options and cash that you would say is a fairly typical allotment for the funds you manage? If now is not a typical time how are you positioned relative to the norm?
    Thanks for your input.

  44. Phil

    Dr John/Rustle – I’m a little disappointed with that "let’s not argue with the price" attitude. While I agree it’s dangerous to bet against technical action, some of our best opportunities come from betting against hollow technical moves.  

    USO/DC – Good question.  As above, I’ll be happy to get out even there as I think the DIA puts have a better probability of coming back to a point we press. 

    Cars/JMM – Hard to get good overall data (another cool thing about having a fund is you can pay for research!) but let’s not forget all these individual car companies showing good numbers is partly the result of consolidation since the big crash.  Although they still exist, Saab, Mazda Subaru and Chrysler have lost significant market share that is being picked up by other brands so their "record sales" may not translate into record auto sales overall.  A lot of manufacturers slashed product lines as well and that must have reallocated some customers.  Taurus, for example, used to be Ford’s biggest seller – now gone.  

    SHLD still dropping! 

    NLY/Yodi – So you got net $16.93 for it, right?  If you buy back now ($16.33) you can only get .85 for the July $16s. which is net $15.50ish so not bad.  

    This week/Exec – I think they will try to push the markets higher.  The volume is very dead with 22M on the Dow at 11:15 but I also think it is madness for Funds not to cash and cover into the weekend so I think moves up will be sold into and today will give us a clue as to who has more willpower in that struggle.  As you can tell by the DIA adjustment earlier – I’m kind of still leaning bearish as long as the Dollar is holding up. 

    Europe seems to be flatlining into the close after being up almost 1% in their early trading.  

    EGLE/Micro – We gave up on EGLE, which were from our $25KP earlier in the year and one of our big losers.  There is a massive, generational glut of shipping capacity and, of course, low demand for the same and it is possible that this situation does not improve next year (or the one after that).  That’s why we finally gave up, EGLE didn’t have any real prospects in our time-frame of 1 year.  I still like EGLE and here’s a short illustration of why:  

    Company

    1-Month Price Change (%)

    Return on Equity*

    1-Year Revenue Growth

    Star Bulk Carriers (Nasdaq:SBLK  ) (18.7%) (2.4%) (8.3%)
    Paragon Shipping (Nasdaq:PRGN  ) (24.9%) 0.2% (18.2%)
    DryShips (Nasdaq: DRYS  ) (15.3%) 3.7% 14.9%
    Eagle Bulk Shipping(Nasdaq: EGLE  ) (19.6%) (3.5%) 34.5%
    Safe Bulkers (NYSE: SB  ) (6.7%) 25.2% 9.8%
    Diana Shipping (NYSE: DSX  ) (1.5%) 9.0% 4.2%

     Source: S&P Capital IQ. *Latest quarter.

    On the whole, it’s a price vs. value issue.  At $1, I find them super-compelling again, especially the June $1 calls for .17 and the June $1.50 puts can be sold for .55 to help pay for them but that’s an aggressive play.  You have the stock still and if your net is $4 then $1,000 more drops your net to $2.50 and, if you’re not willing to do that and do it again at .50 (4,000 at net .875 – you may as well walk with the $1,000 you have left because this is not likely to be a fast turn-around.  EGLE is losing about $1M a month at the moment but, in part, it’s because they are gaining market share by pricing aggressively.  They have $30M in cash and they ADDED over $200M of new ships this year – buying them from competitors who were in worse shape.  It’s a good, aggressive model but risky and it could blow up in their face but it could also pay off huge for them as their revenues are trending to over $300M, which is double where it was in 2008, when the stock was $6.  

  45. stjeanluc

    For the TA people out there…

    http://www.bespokeinvest.com/thinkbig/2011/12/27/dow-reverse-head-and-shoulders.html

     

  46. exec

    Phil/Higher,
     
    I agree….it seems they do it every year when the volume tapers out. 
     
    I guess the standard game plan is to run it up on low volume.  They’ll probably have there accomplices on CNBC talk it up the next few days, then pull the rug out in early January.

  47. rustle123

    Phil/Dr. John
     
    I agree with you completely and picked up some EDZ today.

  48. pstas

    CNQ- Canadian Natural Resources- I am looking at this for long term play on oil/oil sands. Anyone follow them or have an opinion?

  49. Phil

    Drugs/JMM – It’s not superior when, as you note, a pharmacist is perfectly capable of asking you the same 5 questions a doctor can to prescribe flu medicine but without all the expense.  If that doesn’t work ($10 worth of pills) THEN you can go to a doctor but our ass-backwards system has people lining up in doctors offices where they mix all their communicable germs for the hour-plus that they wait together in a tiny room (even if they have an appointment) only to have the doctor scribble on his little pad for $150 and then the pharmacy charges another $50 to fill it.  Multiply that extra $200 cost by 50M people and you get an idea of why health insurance is so needlessly expensive in this country.  

    I agree that Singapore has a better system but so does EVERY OTHER COUNTRY – we have the most expensive care by a mile and we’re not even near the top in outcomes – it’s pathetic.  

    FAS/Hemas – FAS is only at $66.87 and I’m a bit more bearish now over the next 3 weeks so I’d give them a chance to expire worthless or at least come back below $1.  The Feb $80s are a better than even roll so you do have a bit of leeway, even if FAS does pop 10%.  

    Legend/Jrom – LOL!  Well have a good trip and WTF with 3 days to get to Kabul?  Travelocity shows an Air India flight leaving from Newark at 8:37 that gets you to Kabul at 1pm tomorrow.  It’s $2,286 even with the last minute booking and I’ll bet the army is spending a lot more than that to ship you there.  

    As to a play for today while you wait at the airport, USO is testing $39 with oil at $101 and the weekly $40 puts are $1.20 so I like those for the day with a stop at $1.  Hopefully we get a little sell-off into the NYMEX close at 2:35. 

    Owell/Pstas – Paraphrased by Nicholson too:  

  50. Lincoln

     rustle123: Thanks
    Thanks for that answer.  I’m as interested in overall mindset of you smart guys as I am specific picks and pans.

  51. roro

    AUD/USD stuck at 1.0150ish, and NZD/USD trading lower against higher European and US equities………
     
    usually AUD/USD trades up with equities and the same for AUD/JPY trading lower near 79.00

  52. Phil

    Dollar getting smacked down to take us higher – now 80.10 – may have been the wrong time to go short on oil, now we’ll have to see if 80 holds up – I’ll be surprised if it doesn’t .  $101.22 was the top of the Futures earlier, now $101.10 – a double top would be nice. 

    Gold not moving at all so you know this is all BS.  

  53. exec

    Truth,
     
    That’s a great clip.

  54. microflux

    Thanks for the insight. i think it does make sense to but up another 1000 here.

  55. Canuck

    pstas/CNQ – my top pick in that sector is CPG, crescent point energy – but they only trade on the tse.

  56. Burrben

    Phil / Thoughts on OXY?
    I’m looking to sell some puts for good entries on some energy stocks for 2012.   OXY was reccommended by MHFT and doing some research on my own, there seems to be some upside.  Would you enter a position on them?

  57. stjeanluc

    We might eventually get back to a more balanced life…

    Under an agreement reached this week with organized labor representatives, staff members at Volkswagen will receive e-mails via BlackBerry from half an hour before they start work until half an hour after they finish. Beyond that, they will be in a "blackout mode" where they can’t be reached. Board-level executives, however, will still be attached to their BlackBerrys after-hours as the agreement only was made with unionized employees. Volkswagen is one of the very first companies to take such a drastic step to force workers toward a better work-life balance. 

  58. Phil

    BWLD making year’s highs near $70.  A bit much as they peak out into the end of football season.  I like selling the Jan $70 calls naked for $2 and buying the June $75/65 bear put spread for $5 for net $3 on the $10 spread as it’s a seasonal business and you just have to hit that spot before baseball, when people begin to worry about Q2 earnings. 

    CNQ/Pstas – Good growth prospects but environmental concerns are what keep me away from the oil sands people.  Also, if oil drops in price, they have a very high extraction cost compared to OPEC, who will cheat on their quotas because it doesn’t matter what the price of oil is – those countries need to sell enough to balance their budgets or they might be next on the revolution hit parade.  

    Oil topped out at $101.39 that time, now $101.24 with the Dollar holding 80.10.  

    USO Friday $40 puts down to $1.14.  

    Don’t forget our own put buying activity motivates someone to try to shake us out!  

  59. Phil

    CNBC flogging that same Iran story (that they will block Straight of Hormuz) and now they have some guy touting OPEC as trying to cap supply etc.  Same BS they always pull to jack up prices but look at gold at $1,595 – if Iran does warlike stuff, shouldn’t gold go up?  What about XOM?  They are flat despite oil jumping 2% today – you think they would be more excited – and they would be – if it were real.  

  60. scottmi

    Pstas – if you are looking at CNQ for dividend, might look at ERF as well.  COSWF may have put in a double bottom recently but at these prices, would consider more a diversification play and would certainly not enter with more than a 1/4 position if itching to cover oil sands…

  61. scottmi

    Oil/phil – yes, but can they keep it unreal through expiration this week?

  62. rehat

     Phil,
    Any thoughts on calendar PUT spread for LULU
    TIA

  63. Canuck

    SCO – sold Jan 36p for $1.70

  64. Phil

    OXY/Burr – They are a good, solid company and they just broke over the 200 dma at $95 with the 50 dma setting up for a bullish cross so, as long as it doesn’t fail – I think they are good for a run to maybe $110.  If you are willing own them for net $62.30 (1/3 off), then I’d sell the 2013 $67.50 puts for $5.20 as you should be very happy to DD if they fall to $40 for some silly reason (2009 low was $45) and you can be more aggressive by buying the Feb $80/90 bull call spread for $8.20 for net $3.20 on that $10 spread that’s 150% in the money to start.  If that’s not attractive – then you are not really bullish.  

    Don’t think of it as "only" making $1.80 at $90 on the Feb spread because you can recycle that play 5 times between now and next Jan and pick up almost $10 with nice, conservative plays PLUS you get to keep the $5 from the short puts.  

    Oil/Scott – On thin trading, maybe.  

    LULU/Rehat – I don’t like betting against them because they are a good business with good growth – just overpriced.  I certainly would not buy them.  

    SHLD still going down. 

    SCO/Canuck – I like that sale. 

  65. JRW III

    On December 12 I posted this:

    JRW III (premium)

     



     

    Good morning, nothing new……………….

     

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

    I have descending trend lines at IWM 72.96 and 72ish; the lower should hold.

    I expect a Santa Rally to begin later this week or early next; this from Bespoke:

    We just hit IWM 75.04, so don’t say you didn’t get anything good for Christmas !!  8-)

  66. TheChaser

    Phil, you said "Don’t forget our own put buying activity motivates someone to try to shake us out!"  Is there anything we can do to prevent this?  Thanks.  

  67. Phil

    Shaking/Chaser – Well scaling in is the key to any position you enter.  We talked about this in Vegas and if I were going to do an on-line thing, I’d like to do something with the futures on scaling in and out as that’s a very important skill to develop.  Even if you can’t buy multiple contracts, be it options or futures, then you can WAIT PATIENTLY for others to buy, especially if it’s something I picked and you know people will follow in – and then they act for you as the initial positions and perhaps you get a better entry.  If not – forget the whole thing and wait for the next one.  

    The less stock or contracts you can afford buy the less you can afford to chase!  As with micro earlier, if buying $4,000 worth of EGLE was his whole allocation, then a drop to $1 is pretty much a disaster (and he certainly should have stopped out long before losing 75% of a full allocation).  If however, $4,000 was the first 1/4 of a $15,000 allocation, then he’s THRILLED to buy 1,000 more shares for $1,000 (1/3 of allocation used for 2,000 shares) and another 2,000 shares for .50 (still only $6,000 of $15,000 used) to end up with 4,000 shares of EGLE for $6,000 when the original PRICE would have cost him $16,000 for the same 4,000 shares.  

    If he VALUES EGLE long-term at $4, then getting 4,0000 shares for $6,000 is thrilling and he can use the spare $9,000 for something else while waiting for the PRICE of EGLE to catch back up to the value.  Even if the position ends up being a total failure and drops to .25 and he ends up with $1,000 stopping out there – it’s "only" a loss of 1/3 of the original allocation.  

    ALWAYS buy positions with the assumption that they will move against you.  In the end, it’s arrogance that costs you money because a person who stays in cash, as Rustle was saying above, finds themselves flexible, adaptive and under considerably less stress than someone who feels the need to "go for it" with their entries.  

    "The man who begins to speculate in stocks with the intention to make a fortune, usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes get rich." – Charles Dow 

  68. terrapin22

    Phil / WFR – I sold ten Jan ’12 $6 puts for about 1k back in Oct.  would you roll these out or take shares and do buy/write?  Thx. 

  69. Phil

    WFR/Terra – The Jan $6 puts are $2.10 with little premium.   This goes right back to scaling in again.  If you are willing to do a buy/write by owning them for net $5, then what are you looking at?   Let’s say you sell the 2013 $5 puts and calls for $2.35 for net $2.65/3.83, which is not bad with the stock at $4.  On the other hand, if you roll the 10 $2.10 short puts you have to 13 of the short 2013 $5 puts at $1.65, it’s a better than even roll so your net, if assigned is $4.24 on 1,300 shares ($5,512) vs $3.83 on 2,000 ($7,660).  Also, the max profit on the buy/write is $2,350 at $5 vs $1,000 at $5 so the difference, for which you are getting paid $1,350 to take on the upside – is owning 700 more shares for a net of $2,148.  So, the question becomes, are you willing to risk buying 700 more shares of WFR for net $3.07 (24% off) to give yourself the possibility of making $2,350 at $5 or do you want to roll the $1,000 you collected down to 13 short 2013 $5 puts to hopefully make that $1,000 a year later?  See how easy it is if you think it through?  Keep in mind you can walk away with a $1,000 loss now and be done with it so, to me, if you are going to stay in it, the buy/write is the way to go and if you don’t like that plan, then why stay in at all as you tie up margin either way. 

    Damn, oil was down below $101 for a little while and now back near $101.20.  Lots of fun if day-trading the futures but annoying as we need to do a lot better than that.  Oil inventories are not Wednesday, they are Thursday this week at 11 so possibly that’s the reason for the bonus shenanigans.  

  70. Maya1

    Phil
    good morning from hawaii.
    What say you to an AAPL April 2012 $390/420 BCS, financed almost completely (net -$1.63)
    If you don’t like it, how should I watch it after getting into it today, if I like it?

  71. Maya1

    Phil/AAPL
    thats April $370 puts

  72. Phil

    10:00 AM On the hour: Dow +0.2%. 10-yr +0.08%. Euro +0.04% vs. dollar. Crude +0.75% to $100.61. Gold -0.62% to $1598.65.

    11:00 AM On the hour: Dow +0.01%. 10-yr +0.09%. Euro +0.07%vs. dollar. Crude +0.76% to $100.61. Gold -0.66% to $1597.95.

    11:41 AM European shares close mixed after a quiet session. Stoxx 50 flat, Germany +0.4%, France flat, Italy -1%, Spain -0.1%. U.K. closed. Euro +0.1% at $1.3070.

    12:00 PM On the hour: Dow +0.14%. 10-yr +0.12%. Euro +0.13%vs. dollar. Crude +1.39% to $101.25. Gold -0.85% to $1594.95.

    1:00 PM On the hour: Dow +0.12%. 10-yr +0.08%. Euro +0.12% vs. dollar. Crude +1.19% to $101.05. Gold -1.04% to $1591.85.

    Stagflation:  Dec. Texas Manufacturing Outlook: -3.0 vs. 3.2 prior. New Orders -0.5 vs. -5.1 prior. Production -1.3 vs. -5.1 prior. Employment 11.8 vs. 9 prior. Raw materials prices 26.6 vs. 19 prior. Future expectations 10.3 vs. 9.7 prior. 

    Dec. Consumer Confidence: 64.5 vs. 59.0 expected, 55.2 in October (revised). Expectations 76.4 vs. 66.4 (revised). Present situation 46.7 vs. 38.3 (revised). "Consumers’ assessment of current business and labor market conditions improved again," Conference Board’s Lynn Franco says.

    Dec. State Street Investor Confidence Index: 99.3,down 0.1 points from November’s revised reading of 99.4. 

    Heads up doom and gloomers, international bank analyst and market prognosticator Martin Weiss says 2012 is going to usher in "an historic world-changing event" that will "crush the U.S. economy and stock market." Right now, the gap between the super-rich and the other 99% of America is as wide as it was before the 1929 crash, Weiss says. Our fading democracy is giving rise to political anarchy and a new class warfare. Couple that with an exploding population battling over limited natural resources, and "it’s going to lead to the mother of all national security issues." 

    Doug Kass joins the 2012 prediction parade. Among his forecasts: U.S. equities will stage a strong 2H rally on the back of an improving economy; financials will outperform, while high-beta stocks underperform; Sears Holdings (SHLD) declares bankruptcy; 1/3 of all ETFs are forced to close; and China has a soft landing, while India has a hard landing. (previously)

    Dough better fix this first!  Amidst a busy week of Italian bond auctions, 10-year BTPs again nudge above the "critical" 7% level (this summer, 6% was deemed as such). Yields dipped to 5.8% earlier this month as the new Monti government pushed through austerity measures, but have risen sharply since as austerity without growth does little to help the country’s debt issue. 

    Before anyone can point the finger at his administration, incoming Spanish finmin Luis de Guindos gets the bad news out there, predicting the country will slip into recession in early 2012. "Make no mistake, the next two months are not going to be easy."

    The decline in Gilt yields – partly the fault of the BoE’s QE – have ballooned deficits at U.K. pension funds by £74B, estimates Pension Corp. Against hope of the central bank’s planners, pension funds have responded to the fall in yields not by moving into risk assets, but by purchasing even more Gilts (and surely turning them into major league risk assets). 

    Mizuho Financial (MFG) says it’s open to buying Asian assets put up for sale by European banks as part of their desperate efforts to raise capital, but isn’t interested in acquiring their Euro assets. The Japanese bank isn’t merely worried about Europe’s macro problems, but also about the potential for the yen/dollar swap market to freeze up during a crisis, the way it did following Lehman Brothers’ collapse.

    Selling at about 50% of tangible book value, Morgan Stanley (MS) is fending off pressure to return capital to shareholders as the firm husbands resources to purchase the rest of Smith Barney from Citigroup (C). And then there’s Europe: the company’s CDS are off of their October peak, but still among the highest of U.S. financials, suggesting credit markets don’t believe the company is overcapitalized.

    A just-released Justice Department opinion (.pdf) on online gambling provides a lift to select casino-related stocks after it clarifies that the Wire Act of 1961 only prohibits sports betting – not the whole universe of online gambling. Gainers: BYD +4.4%PTEK +11%,SGMS +6.8%MGM +4.5%WYNN +2.4%.

    What’s Korean for "fat finger"?Bloomberg reports that South Korea’s stock market was rattled by an "erroneous" trading order that contributed to a sharp plunge in the Kospi before the index recovered to close down 0.8% at 1,842.02.

    The debacle (III) at Sears taints shares of Whirlpool (WHR-6.6%) with the concern that fewer Sears stores could translate to less sales of the firm’s products.

    Unsurprisingly, iPhones and iPads appear to have been very popular Christmas gifts: app analytics firm Localytics estimatesnearly 16x as many iOS (AAPL) devices were activated in the U.S. last weekend than are activated in an average weekend. This eclipses the ~12x increase reported for Android activations, though Android saw stronger device activation growth in several international markets. (previously)

     Three lunchtime reads:
    1) 2012 Market Outlook: "Wear Sunscreen"
    2) Europe Cries Wolf, Britain Calls its Bluff
    3) Steven Drobny interviews Hugh Hendry (video)
     

  73. Phil

    AAPL/Maya – They aren’t going to go up if the market is going down – at $407, I’d wait for either some disappointment to send them back down or play MORE aggressively on the call spread, like the July $410/460 bull call spread at $20 and currently the 2013 $290 puts can be sold for $15.30 to pay for it but my attitude is either AAPL keeps going up and you don’t need to sell the puts to make 150% on the bull spread or AAPL sells off and you can sell the puts for a lot more money and over-cover the spread – maybe with enough extra to roll the calls you own and take off the caller if you think the dip is unwarranted.  Plan to fail – don’t fail to plan!  

    Poor SHLD still going down.   Of course, when’s the last time you got a gift from Sears or bought one there?  Eddie’s been running them like they’re going out of business for a decade – what did people expect?  

  74. Phil

    Oil at $101.50 (good short spot on /CL with tight stops) and USO $40 puts are still $1.08 so a surprising amount of negative sentiment in USO despite the move up.  

  75. Burrben

    Phil / OXY
    Thanks!  Sounds like a great plan.  And I FINALLY understand buying the BCS that’s fully in the money.  The $10 spread will be worth $10 if OXY stays above $90 on exp, and I’m only paying $8.20, which gets me the $1.80 "free".  
     
    Just re-stating in case there are other ppl who are Slow learners like me.  Only took a year……

  76. kramer36350

    Commodities Gone Wild-ish
    As WTI crosses $101 on its way to three-week highs (managing its largest 5-day rally in two months – above), we thought a reflection on the newsflow this morning would be both instructive and modestly humorous. At 1111ET, Bloomberg pronounced (on the loss of the $100 level, the drop in Commitment of Traders long positions, and impending doom that spells)…
        Oil Traders Flee as Crude Price Swings From $100: Energy Markets
    And then at 1131ET, 20 minutes later (as consumer confidence jumped and WTI breached above $100)…
        Oil Rises as U.S. Consumer Confidence Gains Amid Iranian Threat
    The Iranian threat headlines were, however, at 0944ET
        *IRAN TO CLOSE STRAIT OF HORMUZ IF OIL SANCTIONS IMPOSED: IRNA
    so what is driving oil now?
    It is evident that noone has any idea what is going on but for sure, the discussion we pointed to earlier that the equity market (and implicitly the macro-economy seemingly) can only go up if credit creation is ‘impulsed’ and with the baseline here for energy, we are becoming more and more sensitive to credit shocks and less and less capable of breaking into a virtuous circle of growth (as antithetically the energy ‘tax’ anchors us to low/no growth given the monetary drivers).
     
    We have seen bigger moves and more volume obviously but on a day with little real newsflow and macro data that is mixed at best, these moves are notable.
     
    http://www.zerohedge.com/news/commodities-gone-wild-ish

  77. jmm1951

    Phil/drugs
    It’s not superior when, as you note, a pharmacist is perfectly capable of asking you the same 5 questions a doctor can to prescribe flu medicine but without all the expense.  If that doesn’t work ($10 worth of pills) THEN you can go to a doctor but our ass-backwards system has people lining up in doctors offices where they mix all their communicable germs for the hour-plus that they wait
     
    Yes, a lot of this has to do with the US legal system, which needs a licensed physician to hold liable if a patient is prescribed something they are allergic to or that harms them. For example, maybe that person with flu is also an alcoholic, and has a damaged liver, so should not be given Tylenol, which is very bad for the liver, but whether it is worth paying ten times the price for such protections is very questionable.

  78. rustle123

    They will never do a QE3 with oil above or close to $100 a barrel.  The economy would crash if they did because oil would go to 115 and would cripple spending in food, retail, and travel industries to start with.

  79. Phil

    Topping out (I hope) at $100.72 and still I like the cross back below $101.50 if we get it.  If not – then we’re just in la-la land with this market move.  

    Dollar still $80.12 and you’d think it broke down to see this kind of reaction in oil but, of course, gold is down for the day and silver is down 1.3% and copper is down 1.5% and nat gas is down 0.3%.  Gasoline is up with oil but, at $2.69, just up 0.65% and of course they want to hold it up for the holidays so we should ignore that signal.  

    Euro at $1.307, Pound $1.5662 and 77.85 to the Dollar and Swiss at 1.22 Euros on the nose.  

    So, we just have to wait for the nonsense to subside.  NYMEX closes in 20 mins but won’t be much action after that so either a sell-off now or we’ll be waiting until tomorrow to see what’s real. 

  80. sagemm1

    Phil,
     
    I own some TSM from $10 any feelings about them going forward?

  81. Burrben

    Phil / OXY
    One more question, around your thought process.  Why do you think that selling a put, and buying a in the money BCS is better that doing a buy write on the stock.  Where we buy the stock and sell call’s and put’s against it, to collect the Div?  
    Trying to wrap my head around the "why’s" for those two strat’s…

  82. Phil

    Slow and steady wins the race Burr.  ;) 

    Good point Kramer. 

    10x/JMM – Can’t all that data be put in a computer?  That’s a project Jobs was involved in as he thought the IPad would eventually be part of a system hospitals could use which would be part of a larger, national database project to track people’s medical history.  It’s interesting how the law is an excuse for the high cost of everything in this country but why can’t people opt out or cap claims under their health care and let doctors etc. reduce their fees accordingly?  Wouldn’t that be Capitalism in action?  Yet that’s a "choice" that Congress isn’t going to let you make because that would turn medicine into a truly free market – kind of like they have in Mexico or Singapore and we certainly can’t have that in America!  

    I was, at one point, looking into starting a medical tourism company that catered to F500 corporations.  By removing dozens of potential operations from the health care coverage they would be able to negotiate much better rates on the basics and self-insure the catastrophics or we could have arranged to pool it – perhaps it’s still worth discussing under our Build a Berkshire Workshop as we certainly have a variety of medical experts and people with great contacts in foreign countries.  

    QE3/Rustle – What do you think Bush did when he dropped $160Bn in tax refunds?  That’s how they got oil from $115 to $140 so don’t think "they" won’t do it – they already have.   

  83. rpme

    Phil, what do you think about buying RIG here, selling the 2013 $40c & 32.50p @ $10.41 and collecting the 8% div in the interim?

  84. rustle123

    QE3/Phil
     
    But we were at 140 for about a week, think right around Memorial Day if I remember then quickly came down and the economy is in much worse shape now.  115 would feels like 140 now.  I think the powers that be will intervene before QE3 and get oil back to low 90′s or high 80′s.  All they have to do is say, we’re tapping the reserves which they should do now and buy it back 10-15 bucks cheaper a barrel anyway.

  85. grenowoods

     Environmental concerns about Canadian oilsands – I found this interesting a few months ago - http://www.nationalpost.com/sands+necessary+Greenpeace+founder/5462081/story.html

  86. snow

    Health professions – I’ve been wondering where pharmacists would go as they moved into professional pill-counting – now being made obsolete by mechanical pill-counters. Nurses seem to be in a similar flux, moving from the (male) doctor’s right hand to……who knows what? patient care specialists? researchers on patient care?…especially with the burgeoning use of ‘techs’ for damn near everything, including specialty surgical or obstet techs.

  87. jerconn

    PHil, silver down to $28.67, and those March AGQ $75 calls down to .95 (was $2.00 when you mentioned them a couple weeks ago) – is that worth a play?

  88. zeroxzero

     Ah, the pharmacist trick!!  I should have known you’d figure it out, O Seeker of Superior Values Everywhere!  Yeah, if you don’t have weird allergies or poor health, pharmacists see enough throughput to be right on top of it.  In the "barely emerging market" countries, where there is a serious profit motive in over-prescribing o the foreigner, pharmacists are much more reliable — they don’t get a cut of the profits.  Even in the U.S., a Russian pharmacist gave me a more coherent explanation of a problem than the "on the one hand, on the other hand" doctor’s explanation.  Apologies to the doctors on the site, but pharmacists probably see fewer hypochondriacs and hence sample a more representative population.

  89. yodi

    Phil on your OXY recommendation I am looking to buy the stock and sell the May 87.5 call for 13.00 having a premium of 5.10 giving you a return of 1% for each month and aswell sell the Jan 13 67.5 put for 5.20 reducing the cost of the stock purchase. In case the stock goes below 90.00 I still can sleep at night. any thoughts on that thks?

  90. jerconn

    Phil, also BTU screaming cheap at this level ($33.91) – would you suggest a buy-write?

  91. yodi

    Phil cost comparis on surgeries. All very well I had simular ideas on dental work here in Mexico. But after you count the stay and travel it just does not look so good any more.

  92. rustle123

    Surgeries/Phil
     
    No offense to the other countries listed but I’m feeling way more secure having a heart bypass in the US then in Thailand.

  93. pstas

    DEPO- an exorcism?

  94. Phil

    Nice little dip back to $101.30 (so far) – not bad for a quickie on a slow day.  USO $40 puts back to $1.15 already but hopefully this is the big one as NYMEX traders get rid of the barrels they never wanted in the first place over $101.  

    LOL – CNBC back with the Iran story and the woman just said oil was "close to $102" as if she’s reading off a failed script they prepared as they held $101.75 for about 90 seconds and are now at $101.30.  

    That’s why you have to listen to CNBC – the only reason oil is bouncing now is over that bogus report so I’d widen my stops on the futures shorts as $101.30 may pause but likely won’t hold as the whole move up over $100.50 has been fake, Fake, FAKE!!!  

    RIG/Rpme – Living on the edge but I do like them.  Earnings/outlook are likely to be impacted so make sure you have a position you want to add to on a 20% drop but the buy/write makes good sense with the $3.16 dividend (assuming they don’t cut it, of course).  

    $140/Rustle – I’m not saying the $140 will last but I’m saying the Government (or at least the Reps) has no qualms about risking a consumer disaster by adding stimulus with oil over the top.  Look how much money some Congressmen made in the last collapse – don’t you think some of them might see a big opportunity in causing the next one?  

    Greenpeace/Greno – That is interesting

    Pharmacists/Snow – What I find strange is that doctors don’t just dispense the pills themselves.  Why do this inefficient system of sending people to a store to buy drugs when the actual space required for the drug part of a pharmacy is about the same as two offices for a doctor so it would seem that any group of 10 doctors should pay 20% more for office space, hire a person on site and sell the drugs they prescribe.  Nice benefit for the patient actually leaving the doctor’s office with the stuff you need.  

    AGQ/Jerconn – As I said this morning, I’m getting a bit deflationary in my outlook so that one’s lost it’s appeal to me.  As a long-term hedge, I’d go to June but without QE3, I think we have a nice down move ahead of us.  

    OXY/Yodi – They don’t pay enough of a dividend for me to like parking $95 in the stock, that’s what I don’t like about it.  How about buying the 2014 $80 calls for $25.25 and selling the $70 puts for $10.20 and the May $90s for $11.30 for net $3.75 on the $10 spread with 18 months to roll if all goes well.  Your buy/write is $77.20/72.35 with a call away at $87.50 for a $10.30 gain plus $1.84 dividend on a 2x commitment) while the spread pays $6.25 at $90 (at least) with just a 1x entry at $73.75 if put to you (also worst case assuming you sell no more calls and don’t take the long calls off the table at some point).  I’d rather go 2x of those for $12.50 as it’s more flexible and has more upside potential than your 2x commitment to the stock in the buy/write.  

    BTU/Jerconn – You are right, screaming but, as with OXY above, they don’t pay you enough to own it.  Since BTU has big upside potential (and I don’t feel OXY does), I like selling the 2014 $30 puts for $7.60 (net $22.40 is 1/3 off) and buying the 2x the 2013 $30/45 bull call spread for $5.70 for net $1.90 per $15 spread that are $3.89 in the money to start (up 100%).  So your worst case is owning 1x BTU at net $33.80 (today’s price) while the upside is 2x every penny they gain between here and $50.  

    Of course, as with all plays like this, if you pull the spreads with a 50% loss ($5.70) and apply that to the 1x on the puts, then you’ve still sold the $30 puts for net $1.90 and your 1x put-to price on BTU is $28.10, which is still 17% off the current price.  If you manage these trades properly they work MUCH better! 

    Dental/Yodi – Yes, dental is too cheap but saving $27,000 on a knee replacement pays for quite a nice vacation in Singapore! 

  95. jerconn

    Rustle – what EDZ did you pick up today?

  96. yodi

    rustle123
    Surgery, on the surfice many people think like you, however you will be surprised what up to date equipment they have in other places.
    Further more you have an operation done in Germany for example you may find an Indian or African doctor will be operating on you. I am not so sure about your place.

  97. JRW III

    I’m not seeing an EOD Stick, so taking profit here !!

  98. stjeanluc

    FAS Strangle Experiment – Unless we see a big move in the next 30 minutes, I am tempted to leave the position open overnight. I don’t expect much in the way of news this week (unless you listen to CNBC and expect a nuclear showdown in the Middle-East!) so there should not be durable violent moves either way. And in that case, we’ll adapt.

    This is a short week so we need to squeeze as much premium as we can from our setup. More risky of course…

  99. deano

     Seems like good practice – doing nothing!

  100. yodi

    stjeanluc
    FAS strangles I like these plays enteres the 71c and run up already a nice profit

  101. grenowoods

     Greanpeace/Phil – I have no idea what the link in your response is supposed to mean. Sarcasm perhaps?

  102. Canuck

    Phil/SCO -,
    Jan BCS on SCO?  35/38, 35/40 or 37/42?

  103. jerconn

    Phil, thanks on the BTU play, I do need to learn how to manage spreads and I value your advice.  While we’re at it, what do you think about FCX?  It’s not as cheap as BTU but the technical setup looks like it may break out to the upside…would you suggest a play on them?  Thanks in advance…

  104. jmm1951

    Phil/health care data
     
    Yup. In France everyone has a thingie like a credit card and when they go into ANY doctor’s office, the doctor swipes their card and their entire medical record pops up on the screen. No need to sign five consent release forms and fax them to another doctor’s office and wait for 100 pages to be faxed back (if lucky). At french pharmacies everything is prepacked in boxes for a week’ supply, month’s supply, or whatever, so no need to count.
     
    Some busy medical practices in the US do have their own onsite pharmacies, but it needs quite a bit of infrastructure so that it is set up to do billing through numerous different insurance companies, medicare, medicaid, etc. A cash on the nail pharmacy service would not work in the US. In countries like the UK it is much simpler, because in pharmacies it is all cash and there is no third party billing.  Hospital pharmacies in the UK do not have to handle money at all or bill anyone, so much simpler.
     
    There are numerous stupid reasons why these things cannot be rationalized in the US. States can’t even get it together to have a pharmacy database so drug addicts and dealers don’t go from one doctor to another and from one pharmacy to another getting prescriptions for excess drugs to sell to other people like your kids! Basically what it comes down it is it is the CULTURE OF THE USA that is just as irrational as that of Iran, but where people suffer from the unfortunate delusion that their culture is rational.

  105. JRW III

    And all things Euro:

    Enjoy Mario Draghi’s Santa Rally while it lasts. The euphoria is likely to dissipate once markets remember the sheer scale of the task at hand.

    The banks are under massive pressure to raise their core Tier 1 capital ratios to 9pc by next June. This requires a €2.5 trillion adjustment according to the BIS’s Global Stability Board. Most of that is going to be done by slashing loan books – deleveraging in the jargon – since they cannot raise fresh capital at a viable cost and don’t wish to be nationalised.

    So will this extra €200bn be used to buy Italian and Spanish bonds, or instead to plug a frightening number of leaks across the financial system?

    "In a deleveraging world, we doubt that this will be used in any meaningful way to buy sovereign bonds… given the amount of scrutiny under which banks are regarding their sovereign exposures," said Nick Matthews from RBS.

    "The operation is thus unlikely to have a long lasting confidence boosting impact, in our view."

    Eurozone sovereigns must raise €1.6 trillion in 2012, and banks must raise another €700bn.

    Here is the redemption calendar for Italian debt, if you like such stuff.

    More here !!

  106. rpme

    Phil, when I lived in San Diego and Cleveland, strangely they both had bus trips to the respective Foreign Country we were closest to, during the week, and these trips would be loaded with seniors off to get their drugs. Everyone knows it goes on but our elected representatives are afraid to take Grandma and Grandpa off to jail.

  107. Canuck

    Burrben/BCS’s on 3x etfs’
     
    Like many others, when first using triple levered etfs in a BCS, I did not understand that you needed to be BOTH in the money AND at expiry to get the payoff.  However, the flip side of that disadvantage when trying to close out the spread at max profit is that you can turn that to and advantage when entering the spread. 
    For example, and this is not a trade recommendation, look at Apr TZA 40/45 bcs — fully in the money and about $2.80 to enter something that pays $5 if mkts do nothing but go sideways.    And the trade only gets better if you sell an offset.  My two cents worth anyways.

  108. exec

    JR/Euro
     
    They sure do have a mess over there.

  109. acobra65

    Phil/Surgeries
    From what I have read over the past couple of years, the two main hospitals in Thailand and India rate as high in quality of care as the top ten hospitals (ie Mayo etc) .  Two points, the doctors were trained in the USA and nurses are RN’s not lower staff assignments.
    Personal note: This past summer I was in Russia (Kaliningrad).  I have an eye condition called Keratoconis from early years.  It is necessary for me to wear "gas permeable hard contacts"). For the past 9 years, my eye doctor in Scottsdale has fitted me with very small lens (due to trijium-muscle growth on right eye) at $500.00 per year (she wants t see me every year).  Sooo, I went to a private clinic in Russia to a well known specialist.  After examining my eyes, they recommended larger contacts, they told me the small lens were ruining my eyes.  They told me to have the trijium removed which was contrary advice from eye doctors in Phoenix.  They spent 9 hours total in fitting me with lenses which are the best I have ever had (presription the same but fit is 1000% better). Their advice, these will last for 5 years if you wash tem EVERYDAY.  Cost in USA for eye exam and 2 pairs of lenses for me.. $1,000.00.  My cost in Russia $175.00.
    There is more to this story… but bottom line…. they did not give me a "sales pitch" just sound advice on this and other surgeries I discussed with them (intac implants).   Soon, people similar to Rustles "reaction" will do their homework and figure it out.  From my readings the hospital stays in India and Thailand possibly include time for recover or the cost is not much more than what Phil stated.  Also, they told me most medical advancements and research are happening Brazil not USof A. 

  110. lflantheman

    AAPL portfolio:   Sell to close 1/2  (10) of the Jan 390s.   

  111. pat_swap

    Phil/BTU spread,
    What was your premise for selecting the 30-45 BCS and 30 Put for BTU? Do you look at
    1) The price range of BTU for the last year? It has been above $30.
    2) Delta of $30 Call and $45 Call to get the desired movement in the spread if BTU moves up. It looks like the 30s are twice the 45s
    3) Total position Delta, Gamma and Theta
    4) Liquidity at the strike prices and the open interest.
    5) Volatility of the stock
    Does the longer time period selection is only to help adjust the spread or is there any other purpose?
    I am trying to learn to select better spreads and understand your thought process. Thank you!

  112. lflantheman

    Analysis for above trade:    Portfolio up considerably.  May get a pullback.  When in doubt sell 1/2.  Can’t remember where I learned that   :)      It isn’t quite half, but you get the idea.  

  113. yodi

    Interesting horse game on OXY with TOS sell a Jan14 65p indicated to be working for 8.85 I offer 8.80 down it gows to 8.15 The same selling 70p showing 10.90 I offer 10.60 down it goes to 9.87 Taking the 55p showing 6.20 I offer 6.10 down it goes to 5.45 I put all of them in, nothing buying quite some rip off.

  114. rustle123

    I will research hospitals more but no hospital should be compared to the Mayo Clinic.  I’ve been there and they are second to none.  They are the most efficient hospital on the planet.  I could go into very long detail how they operate but just trust me if you have never been there, you are in awe of how well that hospital is run and the quality of doctors.  They have everything in 7 or 8 languages on the walls there because every country knows about them.

  115. acobra65

    Rustle/Mayo
    My neice worked at Mayo in Rochester and now Scottsdale… Yes, they are one of the best…. But, you need to do your research on other world class hospitals… they don’t all exist in the GOOD OLE USA… LOL. We are conditioned to think "no other place can do it better than we can"….. I think we are slipping………

  116. Phil

    Stick/JRW – I agree, not much behind this push.  

    Link/Greno – Not at all, just reminded me of that clip.  Stream of consciousness on a slow day.  

    SCO/Canuck – I like playing oil not to hold $100, so under $38 but it’s tough to play them too low.  The $34/38 bull call spread is $2 and, if you wan to be more aggressive, you can sell the $35 puts for $1.30 to drop the net to .70 on the $4 spread.  

    FCX/Jercon – I’m too worried about China to play copper up.  FCX fell to $10 in the crash so $35 is hard to justify and China stockpiles copper and buys almost 1/3 of the global output so, if we assume they have stockpiled a year’s worth of demand and if we assume they decide that’s 6 months too much and try to unload 15% of the global supply – we could quickly see prices on copper sink below $2.50 so I’d LOVE to buy FCX if they fall back to $25 (with hedges below $20) but $35 just doesn’t have enough cushion heading into the new year’s uncertainty.  

    Billing/JMM – Would it not be the same billing BS the doctors go through anyway?  So that explains why they do it but it just goes back to why our system needs an overhaul in the first place.  You’re right about the culture thing – they do keep people in fear regarding privacy to the point where they are unwilling to do things to make their lives better to safeguard some imaginary privacy they think they have.  That’s another thing that pisses me off in the schools – they don’t teach the kids anything about life in the 21st century – as if it doesn’t matter about your on-line identity and how it’s used etc.  Perhaps get back the 500 hours my kids spent practicing cursive writing and teach them something that can be used in the current century!  

    Nasty numbers, JRW.  

    Drug trips/Rpme – The fact that it’s illegal in the first place is ridiculous.  How is this a defense of free markets to not allow people buy drugs where they are sold cheaply?  We don’t defend ourselves against any kind of import EXCEPT that one – isn’t that kind of strange?  

    TZA/Canuck – That’s the way I like to play them.  Down or flat wins and a move against you can be adjusted.  

    Surgeries/Acobra – Oh of course it would be only the best places and people stay in the best hotels etc.  That’s the point of starting a company that specialized, if we handle all the leg work for companies with 20,000+ employees and save them millions a year – what’s not to love?  Not included in those numbers are alternatives for long-term care like dialysis, which my Dad needed.  His insurance was paying about $70,000 a month to keep him alive but the same treatments in Thailand were about $3,000 a month.  Had the insurance company said to him – we’ll pay you $250,000 a year to live in Thailand – I’m sure he would have been fine with that!  400,000 people are on dialysis in the US and, although we have, by far, the most expensive treatments in the World, we also have some of the worst outcomes.  As you note, many countries offer experimental alternatives that they US just won’t do but some of them work quite well (and some kill you but that should be up to the patient to decide).  

    BTU/Pat – I look at all the spreads and find the one that has the best risk/reward, also taking into account which one we would be likely able to pull before losing 50% so as to leave that worst-case $28.10 entry (I like to have that 15-20% discount in the worst case, so that drives a lot of positioning).  I don’t want to say I don’t look at the Greeks because I used to obsess over them so I kind of know them without looking now but I don’t look at anything other than Delta and then only to determine expectations for day-trading.  Liquidity is less important with longer-term commitments and, in the case of BTU, I see coal beaten down on environmental concerns but, long-term, it’s a power source we need or, more accurately, China needs and BTU is down nicely vs the 200 dma but at a nice consolidation line around $35 (since 2009).   

    Good lesson Iflan!  

    OXY/Yodi – I’d leave the legs at the price you want and just see which fills first.  Of course, if that’s how the MM is playing it, you need to be aware they will screw you around on the sells too so make sure you REALLY like OXY long-term as there will be no easy exits.  

    Mayo/Rustle – There are good hospitals in every country.  I haven’t been to Mayo but the Children’s Hospital in Denver is the best I’ve seen here.  Of course, it depends what you have but Bumrungrad Medical Center in Thailand is supposed to be the best in the World and then there’s Matilda in Hong Kong, Parkway in Singapore, Centro Medico in Mexico City and I’m sure plenty of Europeans will tell you that their top hospitals are every bit as good as anything in the US.  If you are impressed by languages – try the London Clinic – they give you a translator as part of your care team if you don’t speak English… "languages on the walls" – HA!!!  8-)  

    And what Acobra said!  

    OK, markets closed while I was writing that.  Little sell off at the end but oil held $101.20 with the Dollar at 80.15 so tomorrow will be interesting.  

  117. flipspiceland

    Anyone who signs up for a heart valve replacement in a foreign country, is desperately in need of a Wernicke/Broca area transplant as well.

  118. rustle123

    Here’s one report I found done by an independent research body in Spain ranking the top 2000 hospitals.  The USA has 18 of the top 20, the top 21 out of 25 and top 33 out of 50.
     
    http://hospitals.webometrics.info/top2000.asp

  119. stjeanluc

    lflan – what price did you get for the calls you sold? Thanks. 

  120. stjeanluc

    FAS / Yodi – Yes, the calls came up winners today! They could have been closed for a 60% win at least. But I’ll ride that strangle until tomorrow. Decay works day and night!

  121. revtodd64

     Hospitals – I find this a fascinating idea to break the health care monopoly in the US.  It is killing our economy as the baby boomers age.  I think the quality of care is quite good around the world and I am interested in research to back this up.  I have certainly heard anecdotal evidence of people with wealth going around the world for certain kinds of procedures.  I’m not sure the web report from Webometrics tells us much, since it is based on the number of research papers put out by the hospitals.  It doesn’t include any patient outcomes or satisfaction data.  I think a go-between medical procedure/travel company is a phenomenal idea.  Why not work with a small health insurance company and subcontract with them as well as looking for individuals?

  122. elliotteldrich

  123. lflantheman

    stjeanluc…..AAPL 390 calls were sold for 22.70.   stj, re your post yesterday about porfolio postings getting lengthy……is there a way to post only the last 2 or 3 trades, plus the summary totals during the week?    Then on the weekend perhaps the entire porfolio histories could land somewhere on the site.  Also, some might be interested in knowing how much capital is tied up in each portfolio.  Thanks again.

  124. Phil

    Hospitals/Rustle – Not to bust your chops but this is the problem with lists, rankings and popular opinion in General.  If you read what the ranking is – it’s not AT ALL about quality of health care, on the "About the Ranking" link, it says:  

    The original aim of the Ranking was to promote Web publication, not to rank institutions. Supporting Open Access initiatives, electronic access to scientific publications and to other academic material are our primary targets.

    As other rankings focused only on a few relevant aspects, specially research results, web indicators based ranking reflects better the whole picture, as many other activities of professors and researchers are showed by their web presence.

    Notice the rankings page included weird headers like "Size, Visability, Rich Files and Scholar"  - aside from the fact that it seemed ridiculous that the US could score so well, those headers made me want to double check your facts.  It turns out that what these hospitals are ranked on is:  

    Size (S). Number of pages recovered from four engines: Google, Yahoo, Live Search and Exalead.

    Visibility (V). The total number of unique external links received (inlinks) by a site can be only confidently obtained from Yahoo Search, Live Search and Exalead.

    Rich Files (R). After evaluation of their relevance to academic and publication activities and considering the volume of the different file formats, the following were selected: Adobe Acrobat (.pdf), Microsoft Excel (.xls), Microsoft Word (.doc) and Microsoft Powerpoint (.ppt). These data were extracted using Google.

    Scholar (Sc). Google Scholar provides the number of papers and citations for each academic domain. These results from the Scholar database represent papers, reports and other academic items.

    The four ranks were combined according to a formula where each one has a different weight but maintaining the ratio 1:1:

    formula

    So, without a doubt, US hospitals are excellent at promoting themselves but the report says nothing at all about medical care.  Don’t worry, Rustle, it’s not just you – then we find an article by Geoff Willis at the Orange Juice Blog that uses the same study to "prove" that Socialized medicine doesn’t work.  If I wasn’t off to go skiing, I’d love to track this down and find out how many times Conservatives erroneously used this study to "prove" their point.  That’s the problem with so much in the information age – something is mis-sighted or mis-quoted but then it’s passed along by 1,000 other people who didn’t check the facts and then it’s read by millions more people who don’t check the facts and then people like Flips begin spouting off some BS about how great America is when it’s all based on BS – the thing America is really good at is being misinformed.  

    No action on the Big Chart – makes the double-top mini-"M" more likely.  

  125. rustle123

    List/Phil
    When I looked at the top hospital, I knew that list wasn’t that accurate but it was all I could find when I looked.  No one really ranks hopitals worldwide.  Wish US News & World Report did since they are excellent at ranking hospitals in the US.

  126. jmm1951

    Phil/Medicine
     
    If you read the American Airlines flight magazine, you will find that there is always a section entitled "America’s Best Doctors". America’s best doctors are apparently those who pay to be in a flight magazine and pose either in newly starched white coats with their names embroidered on the breast pocket, or else in suits with designer ties.
     
    Regarding hospitals, it is really hard to rate hospitals as many of the most famous are university hospitals with a reputation for research, etc. However any ratings really ought to be based on death rates for comparative conditions, rates of hospital acquired infections, and so on. Hospitals in the US devote a massive amount of their resources to keeping Medicare patients alive for a few more weeks at the end of their lives, and to keeping premature babies alive, so it may be hard to make comparisons with hospitals overseas that have a more laissez faire attitude towards the terminally ill or those with little chance of survival. The "right to life" is very prevalent in the US, though I have ambivalent feelings about keeping very premature babies alive as for every Tim Tebow miracle there are many who survive, but with impaired brain function of some kind or cerebral palsy. There may be a correlation to the huge increase in diagnosis of Attention Deficit Disorder in recent years which was previously known as "Minimal Brain Damage Syndrome."
     
    Having worked in some hospitals in the US, it amuses me to sometimes read about how bad things are overseas, where perhaps it is reported that in Russia patients do not eat unless their relatives are there to feed them. It is often the same in the US. On the other hand I would say that staff are usually very well trained and technically competent in US hospitals and they are very well equipped.

  127. lol730

    I lived in Canada and I’ll tell you that socialized medicine in Canadian version isn’t that great.
    waiting times sometimes unreasonable at all.
    Yes,
    when you are unemployed – it’s better then US (where you’d have nothing)
    But when your company in US pays for your health insurance – you are getting much much better service then in Canada.
    That’s from personal experience.

  128. lol730

    jmm1951 – in Russia (I have relatives there) patient often won’t get medication unless their relatives buy and bring it into hospital

  129. nicha

    Phil – you would be interested in this.
    India tycoon’s got tons of cash, nowhere to invest domestically. Like you he seems to think there are better opportunities in the US.
     
    A satirical look at the year 2011 in India.

  130. Burrben

    Yodi / OXY
    With IB I got filled on the Feb 80-90 BCS for $8.20.  I got filled on the Jan13 67.5 puts for $5.25.  Net $2.95 on the trade.
     
    Jercon / BTU
    Damn, I thought I finally had a good idea on a stock and there you go, showing me up with BTU and Phil liking it more!  I’ll hopefully get into that tomorrow.
     
    Spread Mgmt
    So I’m trying some alerting with these trades this time.  For OXY I setup alerts if:
    OXY is under $90 (meaning my spread is in danger).  If the BCS is negative 45%, and if the sold puts are negative 45%. Hopefully this will help me remember to roll the options out.   I also set alerts if OXY moves more than 10% in one day.  

  131. roro

    no trades today. stayed flat and in cash.

  132. roro

    nice map, diamond.

  133. roro

    OIL getting to the top of a range from back to Nov 15 where it hit $103 and then sold off to $95 before hitting $101 and $102 again followed by another BIG drop to $93.
     
    next, the run back up to $101.70
     
    Technical indicators looking O/B

  134. roro

    having said that OIL just popped back up to $101.60

  135. jromeha

    Phil- I know, we are probably paying 10k mInimum per person… We do have body armor and other gear we pick up in Bishkek before we head down range but still…
    Pstas/nicha- thx for your wishes! On the plane now, next time I check in here it will be from Kabul… Have a happy New Year all!

  136. l4real

     Phil,
    Refer to the World Health Organizations 2011 published list of health care systems in the world. The list placed the U.S. at  
    # 37, with Canada not much better at #30.
    For the record, it is quite interesting that we are one of the only G-20 nations without universal health care and one of the only countries that spends more than 16% of our GDP on health care!

  137. roro

    sold OIL at $101.50
     
    sold NASDAQ at 2290
     
    sold Dow at 12, 290

  138. grenowoods

    As a Canadian I hate it when our medical system is called socialized medicine. They do their very best to provide the best care they can for everyone. And we have pretty damn good care and it gets better all the time.  I have a number of doctor friends who curse the government sometimes but they do their very best – they are the good guys. I used to make six figures for many years until my career was unexpectedly destroyed by a combination of ridiculous oil prices and the banking crisis in 2008. My age (50s) prevented me from recovering and now I’m in an almost hopeless situation financially (although I’m still on this site). After a lifetime of being very healthy some serious medical conditions have suddenly appeared. I am very glad this happened in Canada. If I was in the US I’m convinced that I would be dead now.

  139. Phil

    Good morning!  

    Futures dipping us down to around the morning lows of yesterday.

    Asia is down about  a point but recovering from a big lunch dip.  

    Japan’s November industrial output comes in at 2.6%, well below forecasts. Household spending also fell more than expected, down 3.2% Y/Y, with a big hit in recreational spending leading the decline. The yen has weakened slightly on the data.

    Also, what have I been saying for 2 years now?  The Treasury’s graph of the year shows GDP resuming its trend growth following the steep drop amidst the financial crisis. Unfortunately, something greater than trend is required to bring GDP back to its potential track. The difference between potential and actual GDP today stands at more than $1T, a number the power of compounding is sure to expand unless the unused capacity in labor and machine is put back to use.

    Hospitals/Rustle – I know it’s tough to find data and it’s also tough to compare.  As noted by JMM, there are even cultural differences in what constitutes proper care as this country is psychotic about keeping people alive – no matter how miserable they are.  I had an interesting discussion with one of my Dad’s doctors who had consulted for the military regarding the fact that what they do to keep people alive in US hospitals would be considered torture under international law.  Another example of why we need to teach philosophy in schools.  Unfortunately, philosophy doesn’t tend to conclude that might makes right or that whoever dies with the most toys wins so it’s been dumped from the US systems – you can’t even take it in many colleges anymore.  Anyway, your survey was just a classic example of why people need to look underneath the surface of any data that is presented to them and that’s why I wanted to point it out.  

    Hospitals/JMM – As I said above, it’s very hard to compare.  US hospitals are, of course, generally good but so are hospitals in Europe and Asia.  As noted by L4 – probably the best overall indicator is the WHO study, which has some shocking stuff like we rank behind Cuba and Canada with 8 child deaths per 1,000 in our own region and behind about 35 European Nations and in Luxemburg it’s 2 so we’re 4x worse than the top and twice as bad as most.  Hungary (6), Lithuania, Poland, Croatia, Malta, Serbia and Slovakia all beat us as well as the more obvious countries.  Asia also has 7 Nations above us led by Japan and Singapore at 3 but Korea beats us too at 5.

    To me, this is a very telling statistic because it’s about the probability of a child under 5 dying in our country.   These children are not lazy, they are not cheating on welfare, they are not goofing off – 8 out of 1,000 kids are dead by age 5 without ever having a chance – how can it be acceptable to US to rank in the bottom of developed Nations?  Maybe it’s just because I’m a bleeding heart Liberal but I can’t even see another side to this one – it’s just unacceptable.  

    Also crazy is that, even on our own continent, we rank near the bottom in percent of 1 year-olds immunized for measles.  REALLY?  How is it only 92% when 10 countries on our own continent are at 99% – including Nicaragua!  Argentina, Brazil, Honduras…  There are, in fact, 8 African Nations that do better than us!  

    We have 24 maternal deaths per 1,000 births.  That’s even worse than our infant mortality ranking and, in Europe, places us in the bottom 3rd, behind Turkey but above the Ukraine.  In Greece – it’s 2, 3 in Ireland, 5 in Austria, and 7 other countries – so 24 isn’t just bad – it’s TERRIBLE.  It should be unacceptable but to fix it you need to educate the children and provide proper care to pregnant women regardless of how rich they are and you have to make sure people have adequate nutrition, despite the fact that they may not be able to afford it.  

    I think it’s also telling that over 99% of all births in the US are attended by "skilled health personnel" so it’s not that women are having babies at home and having these awful outcomes – it’s a pretty clear indicator that our care level is, in fact, inadequate.  

    We rank below 3 African Nations in prevalence of HIV – that’s really amazing.  We are above average (the bad kind) for our continent and, in Europe, we’d be in the bottom 5 of 40 rankings.  In Asia, only New Guinea is worse than us.  

    One thing for sure though, across the Globe – even more important than where you get your care is how much you have.  If you have a high income – your life expectancy is 80 and neonatal mortality is 4 per 1,000.  Upper Middle incomes live to 71 and 11 children die at birth.  Lower middle income live to 68 and 26 of 1,000 die at birth but, whatever you do – don’t be poor – because poor people don’t live long enough to collect Social Security (57 average) and 36 of 1,000 children die at birth.  

    That’s a pretty amazing disparity.  No wonder they don’t publish these statistics – poor people might get pissed!  

  140. Phil

    Nice sells Roro – I hope you were up to take advantage of the dips in the Futures.  Feels like a little panic back to the Buck into New Year’s.  

    $10K/Jrom – Yeah, I think they could have Fed Ex’d the gear to you so you wouldn’t have to carry it around although I guess you want to be wearing it as you get off the plane….  Have a Happy New Year and a safe trip/tour.  

    16%/L4 – That figure drives me nuts.  Also, it’s growing over 15% a year and sucking up money from other sectors – along with oil, it’s about the worst single drain on our economy.  

    Canada/Greno – That’s what I’m talking about.  Needing health care is, in large part, just bad luck – it could happen to anyone so it’s rational and civilized for EVERYONE to pay into a program that covers anyone – just in case.  If you are rich and you don’t like everyone’s program – no one stops you from buying better coverage but you contribute to basic care so that all people, in any situation, can receive adequate treatment.  I don’t know if they have it in Canada but in Europe you can purchase additional health insurance for very little (maybe $200 a month), that provides a sort of concierge care if you do get sick with access to the best doctors and hospitals.

    Oil (/CL) at $101.43 – If I wasn’t going to bed, I’d short it with a stop at $101.53.  Hopefully we get a drop back to $101.20. 

    For reference, Dollar at 80.195 so over 80.20 is good to short anything.  Gold $1,589, silver $28.66, copper $3.14, nat gas $3.14, gasoline $2.67.  

    Euro at $1.306, Pound $1.565 and 77.8 Yen to the Dollar with no need to even look at the Franc anymore.  

    Dow 12,188 (futures are quite a bit lower than actual Dow but a good indicator of FUTURE movement), S&P 1,256, Nas 2,279, RUT 744 (below 745 is bad).  

  141. grenowoods

    I couldn’t have said it better Phil. A perfect health care system is unattainable but what you describe comes damn close in a free society. I’m no expert but I think the rules here, that vary by province, say that a doctor must perform all his/her services according to the provincial rates. A doctor is free to operate outside the provincial plan but if they do so they cannot claim any money from the government for their services. Obviously these are the doctors who cater to the rich only. I have to say that I am one of the lucky ones as I have a fantastic family doctor who I have been a patient of for a few decades. Sadly, many people,  and my community is a good example, do not have family doctors so they have to go to walk in clinics or the emergency room (but of course there in never any money involved – just flash your provincial health card) . That situation is changing for the better though. As I said, I’m sure glad I’m in this country right now after years of hardly ever seeing a doctor. I now have to see mine at least monthly and I call him Tim, not doctor – LOL.       

  142. kramer36350

    BRIC Decade Ends as Growth Peaked: Goldman
    In the past decade, mutual funds poured almost $70 billion into Brazil, Russia, India and China, stocks more than quadrupled gains in the Standard & Poor’s 500 Index and the economies grew four times faster than America’s.
    Now Goldman Sachs Group Inc. (GS), which coined the term BRIC, says the best is over for the largest emerging markets.
    BRIC indexes may fall another 20 percent next year, buffeted by the liquidity squeeze stemming from Europe’s sovereign debt crisis, Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, which oversees about $499 billion, said in an interview. Nations such as Indonesia, Nigeria and Turkey may overshadow the BRICS in the next five years as they expand from lower levels of growth, he said.
    http://www.bloomberg.com/news/2011-12-27/bric-decade-ends-with-record-stock-outflows-as-goldman-says-growth-peaked.html

  143. jerconn

    Burrben – LOL, hopefully this kind of competition will make us both wealthy!  I’ve done a lot of stock picking (I’m better at buying than at selling or managing spreads) and I pretty much agree with Phil’s choices when he says to go for the best stock in the sector, such as CHK in nat gas and BTU in coal…and AGNC in REIT’s, etc, etc…so it was sort of a no-brainer…but will love to hear your thoughts today!

  144. Phil

    Good morning again!

    Holy Cow, nailed it on oil – bad timing that I was sleepy and couldn’t play it as we literally topped out at $101.51  and then plunged back to $101, made a feeble bounce and now back to $100.65.  

    Very good news for the USO puts, which we did not double down on, but not so good for the Dow puts, which we did.  Ah well – c’est la vie….

    Obviously, in the Futures, we’re taking the money and running here ($100.60) and we can play a cross below $100.50 again but more likely we re-test $101 and we can play there.  I’m not leaving until 9ish so we’ll see.  

  145. Phil

    BRIC/Kramer – And more reasons to love EDZ!  

  146. jerconn

    PHil – for a spread-challenged guy like me, what kind of EDZ play would you suggest?

  147. flipspiceland

    @Felipe
    When you have a heart valve replaced in a foreign country you can spout off about having it done. Until then you don’t know what the hell can happen when to you.
    You might even ask someone who has had a heart valve replacement what their experience was like when they returned home to their country, 5,000 miles away from the cardiologist and surgeons who performed the operation and two months later came down with a FUO. Fever of unknown origin before encouraging people to go anywhere but the closest really good heart valve replacement center in or near their town.  It might save their life insead of forfeiting in ignorance of what is truly involved in post-op care.
    Felipe, you DON’T know everything, ESPECiALLY" about health care.
    The U.S. is THE place for heart valve replacements.  How likely is it that the top 10 %V are likely to go to Mumbai for it?
    How likely is it YOU will go?  I’ll tell you: Nil, nada, nein.
    Thanks for the Oil trade, again,  THAT you know someting about.

  148. roro

    took the OIL money at $100.75 and a bit of a loss on the equities so up overall, and back in cash as of 05:40

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