Archive for 2011

Epic Failure: The Supercommittee Was A Super Joke

Courtesy of Michael Snyder of Economic Collapse 

Does anyone need any additional evidence that our political system is completely broken?  The bipartisan congressional supercommittee that was given two months to come up with at least $1.2 trillion in deficit cuts over the next decade has failed to reach an agreement.  It is an epic failure and a national embarrassment.  The truth is that they never even came close to an agreement.  In fact, as you will read below, the two sides on the panel have been barely even talking to each other.  In the end, the supercommittee was a super joke. Meanwhile, the U.S. national debt has passed the 15 trillion dollar mark and we are facing trillion dollar deficits as far as the eye can see.  We are heading directly for a national financial disaster, and our "leaders" seem powerless to do anything about it.

According to the supercommittee’s rules, any plan would have had to have been submitted to the Congressional Budget Office by Monday in order to give the CBO 48 hours to analyze how much the plan would reduce budget deficits over the coming decade.

When the supercommittee was announced, it made headlines all over the world, but now it is ending with a whimper.

The supercommittee was never a good idea in the first place, but you would have thought that they could have come up with something over the course of two months.

But instead all they are giving us are a whole bunch of excuses and a whole lot of hot air.

What a joke.

Is it really that difficult to come up with $1.2 trillion in cuts over a decade?

It isn’t as if they would even be cutting very deeply.  $1.2 trillion in cuts would not even cut the budget by $150 billion a year.  We would still be talking about trillion dollar deficits way into the future.

But instead of agreeing to some token cuts, they have chosen to do nothing and to blame each other.

So now $1.2 trillion in "automatic budget cuts" will go into effect starting in 2013.  But even that $1.2 trillion figure contains a lot of "fuzzy math".  For example, it includes $169 billion in "projected savings" from "reduced interest costs" on the national debt.

I would love to see how they came up with that figure.

In any event, the truth is…
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Precious Metals Charts Point to Higher Prices – Part II

Courtesy of Chris, the Gold and Oil Guy

Precious Metals Charts Point to Higher Prices – Part II

Over the recent couple months the precious metals charts have made some sizable moves. Most investors and traders were caught off guard by the sharp avalanche type selloff and lost a lot of hard earned capital in just a few trading sessions. Gold dropped over 20% and silver a whopping 40%.

The crazy thing about all this is that these types of moves in precious metals can be avoided and even taken advantage of in certain situations. There is no reason for anyone to continue holding on to those positions after they pullback 6% of more because of the type of price and volume action both gold and silver had been displaying in the past few sessions.

I warned investors on Aug 31st that precious metals were about to top any day and that protective stops should be tightened or taking profits was also a smart move. It was only 2 trading sessions later that precious metals topped and went into a free fall. You can get my detailed analysis if you read my report “Dollar’s On the Verge of a Relief Rally Look Out!”.

A couple weeks later once precious metals has found support and the uneducated investor’s were licking their wounds wondering what the heck just happened to their trading accounts… I put out another report but this time with a bullish outlook. Silver was currently trading at $29.96 and I had a $35-$36 price target over the next two months. Gold was trading down at $1611 and I saw it heading back up to $1750-$1775 area before finding resistance and pulling back. Both these forecasts were reached over the next two months. You can quickly review the report called “Precious Metals Charts Point to higher Prices” for more info.

With all that said, what exactly are the charts saying right now?

Current Precious Metals Charts Summary:

The past 6 weeks we have been watching both gold and silver struggle to hold up but they have managed to grind their way to my price targets. After reaching those targets a couple weeks ago sellers have stepped back into the precious metals market and put pressure these metals.

Last week gold and silver started to pullback in a big…
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The Coming European Superstate That Germany Plans To Cram Down The Throats Of The Rest Of Europe

Courtesy of Michael Snyder of Economic Collapse 

A lot of people were puzzled about what German Chancellor Angela Merkel meant when she recently stated that the ultimate solution to the financial crisis in the EU would "mean more Europe, not less Europe".  Well, now we are finding out.  A leaked internal German government memo entitled "The Future of the EU: Required Integration Policy Improvements for the Creation of a Stability Union" actually proposes the creation of a "European Monetary Fund" which would be given the power to run the economies of troubled European nations.  This "stability union" would be quickly followed by the creation of a full-fledged "political union".

Essentially, this leaked memo proposes the creation of a "European Superstate" which will be crammed down the throats of the rest of Europe whether they like it or not.  National sovereignty would be a thing of the past and European bureaucrats would run everything.  Of course this will never be accepted by the people of Europe until they feel the bitter pain of the coming financial collapse, but we are starting to see that there is already a clear plan for what the Germans wish to implement in the aftermath of the coming crisis.

A lot of people have just assumed that if there is a massive financial collapse in Europe and the euro crashes that it will mean that end of the euro and potentially the breakup of the EU.  But that is not what the Germans have planned at all.

An article in the Telegraph has posted details about the leaked internal German government memo mentioned above.  It really is startling to see that a full-fledged "political union" in Europe is being discussed at the highest levels of the German government….

The six-page memo, by the German foreign office, argues that Europe’s economic powerhouses should be able to intervene in how beleaguered eurozone countries are run.

The confidential blueprint sets out Germany’s plan to tackle the eurozone debt crisis by creating a “stability union” that will be “immediately followed by moves “on the way towards a political union”.

It will prompt fears that Germany’s euro crisis plans could result in a European super-state with spending and tax plans set in Brussels.

Can you imagine what Europe would look like under such a plan?

National sovereignty would be a thing of the

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Japan’s Kokusai Liquidates Remainder Of Euro Sovereign Exposure, Just As European Primary Issuance Supply Surges

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

When we discussed the specifics of the ongoing European bank run, we cited from the NYT which noted the actions of a core Japanese mutual fund with European sovereign exposure, namely that “earlier this month, Kokusai Asset Management in Japan unloaded nearly $1 billion in Italian debt.” The Nikkei has just reported that this was merely the beginning: “Kokusai Asset Management Co. has sold all Spanish and Belgian government bonds that were part of its flagship fund, Global Sovereign Open, The Nikkei learned Monday. As of Nov. 10, Spanish and Belgian bonds accounted for 1.8% and 3.1% of the fund, respectively. The share of the bonds in the fund’s portfolio fell to zero as of Thursday.” Just what prompted this drastic move and very loud slap in the face of the European confidence building exercise? “A Kokusai Asset Management official said the company sold off the bonds, amid widespread concerns about the outlook for Europe’s sovereign debt crisis to avoid hurting the value of the fund, given volatile prices of the bonds. The mutual fund operator had already divested the fund of all its French government bonds in October and all Italian bonds in early November.” It is safe to say that where one core asset managers has been (and no longer is), everyone else will shortly follow. For the simple reason that it is now if not cool to not have European exposure, it is certainly required by one’s LPs to cut down on all European bonds. Kokusai is merely the canary: expect everyone else to go ahead and dump the €741 billion in non-domestically held Italian (and then all other European sovereigns) bonds. Good luck ECB buying these in the secondary market. And one market where the ECB can do nothing by charter, is the primary issuance one, where as the following update from Morgan Stanley shows, things are getting from from bad to worse.

Issuance between now and year-end


A near-term silver lining for many countries is that their 2011 bond issuance programmes are drawing to a close in many cases (see Exhibit 4). France, Netherlands and Portugal have all completed their bond issuance programmes. However, Germany, Italy and Spain still have a fair way to go. In 2012, of

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Vix to 40+

Courtesy of ZeroHedge. View original post here.

Submitted by South of Wall Street.

SocGen’s news flow index suggests the VIX is headed between 40 and 50.  They arrive at this by counting “the number of newspaper articles highlighting themes related to economic strength…
Historically they have proven highly sensitive to financial assets pricing, and
often lead trends by a few months.”



With the VIX holding 30 (twice the level we started the year mind you) on every ‘confidence’
rally, I won’t be surprised the day she blows.  Whether it is China, Germany leaving the EU, or Israel lobbing one at Iran … we are in a very fragile environment, and I’m convinced that risk assets will not be able to handle any type of shock. 
This is for a variety of reasons: confidence, liquidity, regulation,
solvency, etc. 

The composition of this index from SocGen is not as important as the message that
we are in an extremely volatile environment – and volatility is
lagging.  Be prepared.

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Expect A Global Recession No Matters What Happens In The Euro Zone

Courtesy of

By EconMatters

After MF Global went bust, most people believe it was an extreme "spectacular recklessness" under Jon Corzine, and that the U.S. banks should have only "moderate" European Exposure.  However, banking stocks have been under pressure with increasing investors worries.

Jefferies Group, for example, eventually disclosed detail position it held on European debt earlier this month after its shares plunged more than 20%.  But other banks have not followed suit as Bloomberg notes that since it is not required by the U.S. regulation,

"Firms including Goldman Sachs and JPMorgan don’t provide a full picture of potential losses and gains in the event of a European default, giving only net numbers or excluding some derivatives altogether." 

U.S. stocks took a beating after Fitch Ratings said on Wed. Nov. 16 that Europe’s debt crisis may pose a “serious risk” to U.S. banks, driving investors to safer bets such as U.S. Treasurys.  Fitch also notes that although U.S. banks have been reducing their direct exposure for well over a year, but they haven’t clearly disclosed the extent of their holdings of European sovereign debt or their trading positions with European counterparties.

There are clues to somewhat quantify the potential exposure on a global basis and of the U.S. banks.

Reuters cited a report by the IIF that European banks hold some $3.5 trillion of euro-zone sovereign bonds and U.S. banks have significant direct exposure to their European peers.  U.S. banks had about $180.9 billion of debt from GIIPS on their books at the end of June.  Guarantees and credit derivatives added another $586.6 billion, bringing the total to $767.5 billion based on Bank for International Settlements data.  But the exposure does not stop there,

" There is a secondary level of exposure that is potentially more worrying — through international banks lending to each other. Here the greatest risk stems from Italy and France. International bank claims on Italy total $939 billion, and French banks account for well over one-third of that, BIS data show… If Italian debt slumps even further, causing deeper losses for French banks, international banks could stop lending to France. The losses would ripple through the whole global financial system."


Chart Source: NYT, Oct. 23, 2011

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Jim O’Neill Describes Europe’s Surreal Times, Asks If Germany And The Euro Area Even Want The Monetary Union Any Longer

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Among the traditionally meandering permabullish ramblings of a man who continues to ignore the disconnect between reality and his view of the world, tonight’s note by GSAM loss leader Jim O’Neill “Surreal Times” has a very ominous rhetorical question inbetween all the bullish propaganda: “The ECB doesn’t seem to regard 10-year Italian bonds as a bargain and, of course, it is rather tricky as they need to be sure that Monti will deliver. In turn, this means that what is really important is that Mario gets support from those in the background and, ultimately, the Italian voters. And then there is Spain. And still, of course, the troubling Greek situation. And ultimately, the complex world of Berlin and Frankfurt. As many European newspapers are asking in recent days, does Germany actually really still want the EMU? And, as I shall now provocatively ask, does the Euro Area? All very surreal.” No Jim, all very logical, because for the first time in decades, Europe is finally starting to do the math and realizes it is failing miserably. It is those stuck in a world in which combined total exports are greater than total imports by over $300 blilion: a mathematical lunacy, who think that what is happening is “very surreal.” To everyone else, the right phrase is “very much expected.”

From Goldman’s Jim O’Neill

Surreal Times.

Another fascinating week passes with the European mess understandably dominating the minds of everyone around the world. It is quite surreal. There are no signs of any real collective central leadership, many key players are hardening their positions, other regions of the world are increasingly worrying about it, and markets ended the week with a sort of eerie silence.

As I often have said since the European troubles escalated in August, there is life outside of Europe. That remains the case. But virtually wherever and whoever I talk to or with, people are so focused on the European issues. In the week ahead, I will be participating in a board meeting of BRUEGEL, the European think tank, which will be most interesting. Anyhow, more of this topic and others below.

Good Lord – Gaylord!

My last week started with a brief 2-day trip to Maryland and back. I thought I was going to Washington DC, but, in fact, it was…
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Occupy LA Teach In William K Black

Occupy LA Teach In William K Black

(H/tip Jesse)

China’s Vice Premier Sees “Chronic Global Recession”; Why this Astonishing Admission?

Courtesy of Mish

It’s not often we hear candid talk from global leaders about the economic realities that lay ahead. This is one of those rare times.

Please consider China vice premier sees chronic global recession 

A long-term global recession is certain to happen and China must focus on domestic problems, Chinese Vice Premier Wang Qishan has said.

"The one thing that we can be certain of, among all the uncertainties, is that the global economic recession caused by the international financial crisis will be chronic," Wang was quoted by the official Xinhua news agency as saying at the weekend.

Wang’s comments were the most bearish forecast ever by a top Chinese decision-maker about the world economy, and Beijing’s worry about a worsening global environment could translate into an impetus for pro-growth policies at home.

Why this Astonishing Admission?

Regular Mish readers will not find that forecast surprising in the least. What is surprising is the high-ranking official who makes that forecast.

In a world of global economic denial about the Euro, about deficits in the US, about housing bubbles in Australia, China, and Canada, and in general denial about every economic woe the world faces, one might ask "why this astonishing admission?"

I have a 3-part answer

  1. As China shifts from an untenable infrastructure model to a consumption model, as Europe faces a Eurozone breakup and harsh recession, as the US faces a deficit crisis (albeit halfheartedly at best), much global pain is in order.
  2. By framing the problem as a global problem, the vice-premier gets to blame the world economy for the internal strife in China.
  3. This is an indication that China is falling apart right here, right now, much faster than the Western world believes.

The admission by the vice-premier simply reflects the demise of China’s export model in the face of a rapidly slowing global economy accompanied by a regime change in China that will be forced to shift its internal priorities.

These thoughts echo comments I have made previously in …

Europe Undeniably in Recession; Germany Manufacturing PMI Contracts for First Time in Two Years, New Orders Collapse

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Presenting Russell Napier’s Greatest Hits

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Two weeks ago, courtesy of Gresham’s Law, we brought to our readers Jim Grant’s greatest hits: a compilation of the most memorable TV appearances by the famous newsletter writer. Today, we are happy to present another controversial luminary – Russell Napier: the renowned financial historian and consultant for CLSA, as well as author of the engrossing Anatomy of the Bear, who only together with Albert Edwards, has predicted that the S&P would eventually drop to 400. Napier has articulated some fantastic insights on the generational cycle, bear market bottoms and currencies in recent years. His insights, unlike those of TV pundits whose soundbites are only there to fill the gap between two ad segments, are always something to look forward to.


Zero Hedge

London Real Estate Prices Are Crashing

Courtesy of ZeroHedge. View original post here.

... And the easiest way to confirm it, is to look at recent (and not so recent) home listings in Kensington and Chelsea, where we find something stunning: out of 130 pages of adverts, with 15 ads per page, nearly half of all properties, or 53 of the pages show price reductions.

Page 1

... through ...

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Phil's Favorites

Cybersecurity's weakest link: humans


Cybersecurity's weakest link: humans

By Arun Vishwanath, University at Buffalo, The State University of New York

There is a common thread that connects the hack into the sluicegate controllers of the Bowman Avenue dam in Rye, New York; the breach that compromised 20 million federal employee records at the Office of Personnel Management; and the recent spate of “ransomware” attacks that in three months this year ha...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Investors are fleeing stock funds at the fastest pace in over 5 years (Business Insider)

Retail investors seem to have cooled on the stock market.

According to a note from Bespoke Investment Group, equity mutual funds have experienced their largest weekly outflows since August 2011.

Deutsche Bank's earnings call was the most brutally honest, angsty thing we've heard in a long time (Busines...

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Jury Nullification Frees Illegal Malheur Refuge Occupiers

By JOHN F. BANZHAF. Originally published at ValueWalk.

Malheur Refuge news stuns lay people and legal scholars

Jurors Exercise Fundamental Right They Cannot Even Be Told About
WASHINGTON, D.C. (October 27, 2016): In a stunning loss for federal prosecutors, the leaders of a 41-day armed standoff at the Malheur National Wildlife Refuge were acquitted of virtually all of the charges brought against them although the undisputed facts seemingly established their guilt.

The most reasonable – and perhaps the only – explanation for this shocking result is that the jurors exercised a right which, though fundamental, is one that lawyers cannot urge the jurors to exercise, says public interest law professor John Banzhaf.

Malheur Refuge

Photo by USFWS Pacific ...

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Digital Currencies

Needham Raises Bitcoin Price Target To $848: Here's Why

Courtesy of ZeroHedge. View original post here.

With bitcoin breaking out of its recent trading range as Chinese buyers once again flock to the currency as the Yuan slides (as we predicted over a year ago they would), even Wall Street analysts are starting to pay attention, and in a recent report by Needham's Spencer Bogart, the analyst has raised his price...

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Kimble Charting Solutions

London- 4th attempt to breakout in 16-years, results different this time?

Courtesy of Chris Kimble.

Four months ago the world seemed scared that the Brexit vote would be negative for Europe and potentially around the world. Four months later, almost the polar opposite deserves discussion.

Below updates the FTSE -100 Index on a monthly basis over the past few decades.


FTSE Index is now testing a resistance zone for the 4th time in the past 16-years at (1), as well as testing the underside of line (3) at the same time.

Monthly MACD has created a series of ...

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Members' Corner

Heil The Candidate?

Courtesy of Nattering Naybob.

Remember the 2016 Presidential Election is only thirteen days away. During this election campaign, both 2016 election candidates and the incumbent President, have been amongst other things, vilified as Hitler-esque.

Above Heil Hitlary! courtesy of LULZY T-Shirts

Above Heil Trump! image...

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Chart School

Tech Hold Breakout,.but S&P Wedge Bound

Courtesy of Declan.

It was a mixed day for indices. Large Caps remain bound by wedge support/resistance, but Tech broke upside yesterday from similar wedges and held those breakout today.

There was little change for the S&P over the last couple of days. The one technical change was the MACD trigger 'buy' as other technicals stayed on the bearish side.

Meanwhile, the Nasdaq cleared wedge resistance yesterday, and was able to hang on to the breakout despite today's loss. It too enjoyed a MACD trigger 'buy', but had an On-Bal...

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Swing trading portfolio - week of October 24th,2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Epizyme - A Waiting Game

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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PSW is more than just stock talk!


We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more! features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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