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Tumblin’ Tuesday – Keep on Rolling

Got to roll debt baby, call it the tumblin' default

That's the theme for the week as Greece gets yet another final deadline extension to come up with more and more concessions so they can borrow even more money that they will never be able to pay back.  "Honey, got no money" is the line that should be obvious to EU Stones fans as the IMF's chief economist insisted that Greece must cut wages to boost competitiveness and pull the country out of its economic quagmire.  "Either you basically increase productivity growth a lot and quickly, and you keep wage growth moderate, or you decrease wages," said Olivier Blanchard

"It is a pretence that the measures are taken to forestall bankruptcy," Communist party leader Aleka Papariga told the gathering crowds at today's National Strike.  "On the contrary, they will lead the people to misery to benefit the plutocracy and capital," she said.

Sadly, only the Communists are telling the people the truth in Greece – the people are being sold into decades of wage slavery as a population that has already voluntarily accepted 25% wage cuts is now being forced to accept additional 30% wage cuts while the ECB and IMF shove another $192Bn worth of debt down their throats that is ONLY to be used to pay off bondholders who took advantage of them in their time of weakness to force them to roll over their debt at record high rates.  

Sacrifices MUST be made, says the former VP of the ECB – who is now the Prime Minister of Greece (unelected as Papandreou was forced out) – but he's not talking to the creditors, but the Greek people, who will still, even if they work for 1/2 wages for the rest of the decade, be 120% of their GDP in debt by 2020 (down from 160% today).  So the Greek people are being asked to sacrifice their own retirement and their children's future rather than telling the Banksters to take a hike.  

And people wonder why we can't get a deal passed?  As I said in yesterday's post, either Greece passes a debt deal and Athens will be in flames (strike began at midnight) or Greece will not pass a debt deal and Europe will be in flames (DAX down 1% at 8:05).  That simple logic allowed us to go short on the Futures in Member Chat this morning as the Dollar tested 79 and my 4am comment to Members was:  

Dollar bouncing off 79 is going to be bad for the indexes.  Looks like fake pumping to me and Greece not even fixed yet.  I am literally scared to short these days but 2,525 is a good line to watch on the Nas (NQ) and 825 on the RUT (/TF) and $1,725 on gold (/YG) should be good for a little ride down if the Dollar can get over 79.15 (now 79.12) so let's call that the bear line with 79.20 confirming Dollar strength although not meaningful until over 79.50. 

Already the Nasdaq is down to 2,517 and, at $20 per point, that's a quick $160 per contract.  The Russell is down to 822 but that one pays $100 per point so $300 per contract there and gold is our star, with a drop to $1,715 at $33.20 per contact, edging out the RUT shorts with gains of $332 per contract – not bad for a morning's work, just in time to pay for 200 Egg McMuffins.

Percentage-wise, we did better with our TLT trade, also detailed in the morning post as I said there (also in conjunction with my prediction of strife in Greece: "I am liking those TLT longs (we picked up the weekly $115 calls for $2)!

As you can see from our chart on the left, even those late to the party in the morning were able to get in on the fun as TLT dropped down to $1.85 and didn't get back over $2 until after 10 and continued on to our initial $2.50 target (up 25%) and made it all the way past $2.80, for a 40% gain in a day.  This was a great start for our new virtual $5,000 portfolio as we picked up an aggressive TLT spread in the morning on that one as well for our first trade.  

As long as we can keep making quick, little, hit and run trades like this – we really don't care which way the market goes, nor do we care if the VIX wants to pretend that this market isn't volatile.  In fact, in this trade, we took advantage of the low VIX to buy a relatively low-premium call (the $115 for $2) which gave us tremendous leverage on this 10% move in TLT.  Generally, we prefer to be sellers of premium but, when the premium is so cheap it's not attractive for us to sell – we know how to climb over to the other side of the table and make a few bets for ourselves.  

If all goes well, we're get a chance to reload on TLT this morning as we get the usual Dollar dump into the morning's open as they pump up the Futures to bring in the next round of suckers.  Of course, we are now those suckers as well as we're doing our best to be more bullish as long as the technicals hold up and this morning's little dip is NOT capitulation by the bulls.  

Both of our other trade ideas were bullish ones yesterday, one on CSTR and one on AMX.  The CSTR trade was at 9:27, just ahead of the bell and made for an easy entry as the stock traded to lows of $48.66 at 10:20.  My trade idea was just to sell the Jan $42.50 puts for $6 and we also discussed adding the Jan $45/60 bull call spread for $6 as well as a riskier way to go for a $15 profit, rather than $6 but we felt the numbers justified $60 ahead of earnings.  It seems the markets already agree with our assessment as CSTR is already at $60 this morning.

We're trying to ignore the news but: "You could sell your home, owe nothing more on your mortgage and get $30K," goes a letter from JPMorgan to a delinquent homeowner. With the foreclosure process gummed up, banks are finding it less expensive to allow short sales, forgo their right to pursue unpaid debt, and even offer cash.  This should really piss you off if you're paying your mortgage like a good little drone but the same bank (Chase) won't refinance you at 4% because – for whatever ridiculous excuse – "you don't qualify." 

What we need in this country is for some Communists to come over and teach the people how to organize themselves to stand up to these Corporate Monsters but, oh yeah – just the mention of the word Communist puts most of you into a Pavlovian frenzy as you've been conditioned your whole life to think anything Communist (ie. anti-Capitalist) is somehow evil.  I guess bending over and taking it IS our only option – Yay Capitalism!

If the people in this country had any balls (or actual leaders of their own and not just the Corporate puppets we're allowed to vote for), we'd have a mortgage strike and simply not pay this month.  That would choke off about $200Bn in monthly mortgage revenue from the Banks and I'm pretty sure it would only take one month before the banks capitulate and come back to the table with a reasonable way to share the 0.25% borrowing rate they get from the Government with those of us they are currently squeezing for 5% and higher loan payments.  

Ireland is currently trying to organize a Mortgage Strike: "The nuclear weapon is for borrowers acting in concert and to say that unless proper and sustainable solutions are put in place which are fair and reasonable, then we should not continue to pay under these current conditions," says Ross Maguire, of the New Beginning Trade Union. "It is radical but it is where we are going if things don't change. It's the last option but it is better that people like us have control over it because the danger is that if that kind of people power was misdirected it could wreck the financial system. New Beginning doesn't want to smash the financial system; we merely want to reform it and re-balance power between banks and borrowers."

This is the tightrope being walked in Europe and this is the fire that may fan the flames of Global revolution.  What's going on in Greece is a practice run by the power elite to see how far they can push the masses into servitude before they show a little backbone and rise up.  So far, the Greek people have been surprisingly docile as their retirement programs, health care, current wages and Government Services have been slashed, even as their tax rates have risen by over 30%.  In the US, the middle class sheeple are also dying the death of 1,000 cuts with thousand more yet to come.

Should this make us bearish?  Of course, not – it's a huge victory for Capitalism as getting back to free labor has been our goal ever since Lincoln screwed it up in 1863.  This time, there won't be a war to defend the Capitalist's right to own slaves – this time we will get the people of nation after nation to "volunteer" to spend the rest of their lives living in squalor and servitude as our children and our grandchildren will pay for our excesses.  

Because, after all, it was our own fault for buying that couch on layaway, right?  


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  1. stjeanluc

    Oil lines

    R3 – 98.89
    R2 – 98.28
    R1 – 97.59
    PP – 97
    S1 – 96.29
    S2 – 95.68
    S3 – 95

    Yesterday's high and low – 97.68 / 96.38

    Breakout lines – 99.78 / 92.97

    That dollar smack down just pushed oil over the S1 line!

  2. jmm1951

    Phil/WHR
     
    A few weeks ago I opened a very small starter position in WHR in my IRA account as follows:
    Buy 100 shares @ $48.34
    Sell 1 2013 $45 call
    Sell 1 2014 $40 put.

    I didn't pay much attention to this position as I was not intending to trade it, but I note today that the stock closed yesterday at $70.74.  I am up $2240 on the stock, $184 on the put, and down $1696 on the call. So overall  I am up $700 (plus dividend) on a cash outlay of about $3000 in a few weeks, which is a perfectly good outcome.
     
    However I am wondering how best to tweak this, as I would rather keep the stock long term than sell it now for a small profit. Clearly there is no really adequate way to roll the call and the calls have very little premium in them anyway, and the negative premium in the short call does provide some nice protection if the stock does a wheeeeee back in the other direction. But I was thinking maybe it would make sense to roll both the call and the put to an intermediate position, something like the 2014 $55s and snare a bit more premium. On the other hand the stock may well have peaked at $70.74 and maybe I should just wait for a pullback before rolling the put up?

  3. stjeanluc

    Speaking of the dollar, here are a few lines:

    R1 – 79.61
    PP – 79.35
    S1 – 79.06 and this is where are now

  4. stjeanluc

    That should help us read the next Fed reports – an academia translation guide from Barry:

    http://www.ritholtz.com/blog/2012/02/academia-translation-guide/

  5. stjeanluc

    This is the new plan for Greece:

    http://globaleconomicanalysis.blogspot.com/2012/02/new-merkozy-proposal-i-will-give-you.html

    Essentially, the EMU is taking 130 billion out of their wallet, putting 110 billion (or whatever) right back in their wallet and calling it 130 billion in "new funding".

    The only thing that can be construed of as "new funding" is the additional amount that actually goes to Greece. 

    Why the Mathematical Farce?

    I suspect the answer is to make it appear as if Greece is paying back debts, when it isn't. 

    This is what it has come down to – smoke and mirrors. Not sure that helps Greece much…

  6. acobra65

    Employment
    Guess Zero Hedge did not like the Barry Rieholtz "smackdown" … so they did some simple math….. According to established data and Treasury, there were 1,953,000 jobs created between 1/31/11 and 1/31/2012 and tax witholding per person decreased from $4,545 to $4,476 per person a decrease of 1.5%.  Therefore, with the current percentage of labor force participation dropping (to 63.1% – Goldman Estimate) with lower taxes being collected…. this is not a good trend… .  After all this analysis by the experts this past week, Isn't this the bottomline…???

  7. roma_

    oh oh commy's talk again :)
    Phil/ FTR
    what is your thoughts about 500% dividends payout ratio? do you think it is safe and sustanable?

  8. Pharmboy

    PP 4 2day

  9. lflantheman

    5k portfolio:   For all interested, we are ready to embark on growing 5k into 25 (or more!) within a year.  Here are some guidelines.  We will run the portfolio together.  Feel free to post your ideas about trades and methodology.  We cannot and will not daytrade.  We have no margin (yet) in this account.  We will have to concentrate on straight-up calls and puts, and spreads.  We are looking for high-probability trades only.  We must not lose money!   I would suggest we divide our 5k into 5 portions of a grand each, and allot no more than a grand to any one trade in the beginning.   If you make a trade suggestion, provide some supportive evidence for doing the trade and outline your analysis of the methodology for the trade.  Do this as succinctly as possible.  No rush.  Patience and thoughtfulness will be paramount for this portfolio.  Thanks!

  10. stjeanluc

    Portfolio / lflan – Can you suggest another name for the portfolio as Phil is also starting a 5k portfolio. Maybe the "Community" portfolio if we all get involved!

  11. Maya1

    Phil
    Good morning.
    Sad reality on Greece in your commentary.
    Everyone has been waiting for AAPL to drop post earnings ” as it always does”.
    Before earnings, everyone was convinced it ‘could not go up, given the run up from $363 to $420′
    I have my own opinion, but would value yours!
    Assuming it DOES go down 10%, any play now?
    Thanks!
    BTW, tried to buy you a cup of tea, but the powers said no.

  12. stjeanluc

    Dollar taking another turn for the worse… Next lines are:

    S2 – 78.81
    S3 – 78.52

  13. Burrben

    LF – I would suggest that either you or Phil are the only ones that can "officially" add trades to the 5K though.  Too many head chefs never work well…

  14. stjeanluc

    And gold is up about $10 in the last 90 minutes or so on that dollar weakness. Apparently that interview on CNBC last evening about that fact that Saudi Arabia would not let oil prices go over $100 has put a damper on oil today….

  15. JRW III

    Good morning, still nothing new,

     

    IWM     79.10,  79.53,  79.80,  80.46,  81.12,  81.41,  81.92,  82.42,  82.84,  83.07  and 83.75

  16. peedlew99

    If only we were engaged in Capitalism… instead of high tech wealth transfer to the banks.

  17. lol730

    lflantheman
    Another proposed rule – there should be minimum time frame when proposed entry was possible. Timing shouldn't be TOO important.
    (If position was proposed at 9:45am and by 9:51am it already got away and never looked back … That's too much emphasis on timing to be really educational)

  18. stjeanluc

  19. lflantheman

    stj/Buurben……Comminity 5k is OK with me, unless someone has a better name for it.     Phil can decide who runs it.  Doesn't matter to me. 

  20. jmm1951

    lflantheman/Community portfolio
     
    Great idea, I am with you on this.

  21. lflantheman

    lol…timing will not generally refer to time of day but rather to entry and exit prices. 

  22. stjeanluc

  23. lflantheman

    lol…I see what you mean.   I think most trades will not be subject to such narrow entry/exit.

  24. stjeanluc

    This is the new $5KP portfolio started yesterday. It looks like yesterday entry point is valid again this morning.

  25. Phil

    Good morning! 

    Looks like we'll get a chance to re-up TLT at $2 or less so we go back to 10 (adding 5 more) in the $25KP and then run the same game plan as yesterday.  

    That 78.85 line on the Dollar is our break point but, so far, it's held up well and this morning it's lining up with 76.75 on the Yen (and we assume BOJ wants 77 at least), $1.32 on the Euro and $1.585 on the Pound so those are all good watch levels.   EUR/CHF is up to $1.2095 so it's the Swiss that are moving us at the moment, finally waking up and pushing the Euro up and the Dollar down.  The question is – will the BOJ stand back and let it happen?  It's possible because I have decided that an interesting proposition for Japan is to convince them to screw America and concentrate their firepower on boosting the Euro.  The BOJ just needs SOMEONE to buy their exports and Europe is as big of a market as we are so it can be in their self-interest to write the Dollar off as a lost cause and do what they can to keep a strong Euro. 

    At the moment, the Dollar is at 78.92, down from 79.40 at 5 and it's NOT turning the indexes green, which is pretty bad with such a big Dollar dump.  

    Overall, I'm still bearish but Greece can be pronounced "fixed" at any moment so shorting is a very dangerous thing – however, with the Dollar over 79, it can be game on for the RUT (/TF) below 825 and gold (/YG) below $1,725 so we can play with those but be very happy with small wins today!  

  26. stjeanluc

    Phil, the MON calls were bought back yesterday for $0.35 (if was there most afternoon) and we sold 1/2 the TLT position at $2.50. It's back at $2.00 this morning on the gap down (I guess that's the problem with stops overnight). The SLM position is now showing a $410 profit so based on your comments yesterday we could unwind it.

  27. Phil

    Tuesday's economic calendar:

    7:30 NFIB Small Business Optimism Index

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

    10:00 IBD/TIPP Economic Optimism

    10:00 Hearing: Economic Outlook (Bernanke)

    10:00 Job Openings and Labor Turnover Survey

    1:00 PM Results of $32B, 3-Year Note Auction

    3:00 PM Consumer Credit 

    At the open: Dow -0.17% to 12824. S&P -0.24% to 1341. Nasdaq -0.14% to 2525.

    Treasurys: 30-year -0.54%. 10-yr -0.31%. 5-yr -0.15%.

    Commodities: Crude -0.49% to $96.44. Gold +0.06% to $1725.85.

    Currencies: Euro +0.5% vs. dollar. Yen +0.32%. Pound -0.07%.

    Market preview: U.S. stocks look set to continueyesterday's losses and follow EU shares lower as the Greek soap opera drags on, with S&P futures -0.2%. "It has been a pretty dull last 24 hours for market direction and volumes as investors are probably awaiting clarity on Greece before committing at the moment," says Deutsche Bank's Jim Reid. Later: Hearing: Economic Outlook (Bernanke) 

    Through Monday’s close, the S&P 500 has gone 27 trading days without a 1% or more decline, its longest streak in more than a year. While one might think we're overdue for a big down day, "from a longer term perspective, there is plenty of precedent for a much longer streak to occur,” Bespoke says, as longer streaks were more commonplace during the 1980s, ’90s and 2000s. 

    Redbook Chain Store Sales: +2.5% Y/Y vs. +2% last week.

    ICSC Retail Store Sales: +1.8% W/W, vs. +0.1% last week. +3.5% Y/Y, vs. +3.9% last week. 'Unseasonably warm weather has hurt the sale of goods so far this winter but, is now helping sales of spring goods which are now appearing in stores'.

    Shhhhhhhhhhhh!  German industrial output plunges 2.9% in December vs. expectations for no change. It's the biggest fall in 3 years and brought output for all of 2011 to +0.9%. It's likely Germany's GDP contracted in Q4, but ING's Carsten Brzeski believes that will set the economy's bottom.

    China's government and Fitch join the increasing chorus of voices, including the IMF, warning about the country's economy. A trade ministry says industrial production is likely to slow this quarter, due to the EU debt crisis and a weakening global economy, while Fitch cautions that a "hard landing" for China is a big global risk.

    The euro (FXE) moves up to 1.2080 vs. the Swiss franc (FXF) after interim SNB chief Jordan says the bank won't tolerate trade below the CHF 1.20 floor. "This commitment applies at any time, from the moment the markets open in Sydney on Monday to when it closes in New York on Friday (doesn't Monday trade actually begin in Wellington, NZ?).

    The RBA unexpectedly keeps policy on hold, leaving its benchmark rate at 4.25% instead of a 25 basis point cut. The bank alludes to measures taken by the Fed and ECB in December as relieving "acute financial pressures." The aussie shot above $1.08 for the first time in months, now buying $1.0767, +0.5%. Aussie shares give up their gains on the news, -0.5%

    France's 2011 trade deficit widens to a record €69.6B from 2010's €51.5B, underscoring a drop in competitiveness that's been going on for a decade. EMU was thought by Paris necessary to contain Germany, but realization is growing among the French that France has come out on the short end of the deal.

    The value of Canadian building permits rose 11.1% in December to $6.8B, confounding expectations for a 0.5% fall. It's the highest level since June 2007. A sharp increase (28.9%) in apartment and condo projects in Ontario (Toronto) was behind the big print.

    A minor economic statistic from Ireland yields a graphic indicator of the "new normal." Irish vehicle registrations have moved nicely higher since the lows of the financial crisis, but remain so far below levels seen earlier in the decade, one wonders whether they can ever return.

    The Greek government is putting the final touches on the text of an agreement necessary to accept €130B in funding (can we stop calling it a rescue?) from the EU/IMF. The terms will still need to be ratified by the leaders of the 3 parties of the coalition government.

    The Greek debt wrangling continues unabated: Greek PM Lucas Papademos spent hours with the Troika last night and he'll spend more quality time with government leaders today. Meanwhile, Greeks are holding a one-day strike against austerity. With the deadline for a deal not till Feb. 15, the protagonists face days more of this.

    "A wall of money was put in place," says the CIO of $668B BNP Paribas Asset Management, explaining why the fund beganbuying European shares after the ECB's December LTRO. "Three months ago we were very cautious … now we are just cautious. It's time to be less defensive."

    More than 40 states have signed on to the mortgage settlement, bringing the deal to "the very final stages of remaining work,” Iowa AG Tom Miller says. But California’s Kamala Harris and New York’s Eric Schneiderman, outspoken in pushing for changes to the deal, are among those who hadn’t joined the agreement as of yesterday’s deadline for states to decide.

    Holding America hostage for their Corporate Masters:   House Republicans are going to try to push through approvalof the Keystone pipeline using a highway funding bill, after Pres. Obama blocked TransCanada's (TRP) $7B project last month. A key House panel will vote today on attaching approval to the highway bill; failing that, they may try to tack it to must-pass payroll tax cut legislation instead.

    President Obama will lay out yet another budget plan next week in which he'll propose $3T in deficit cuts over 10 years, including $1.5T in tax hikes. If it sounds familiar, that's because the program is based on one that Obama detailed in September. With the GOP against tax rises, nothing is likely to be passed until after the election.

    The Senate approves a sweeping aviation bill authorizing $63B in spending for FAA programs. Also included in the bill is a statement opposing the EU's controversial law that makes airlines pay for carbon emissions from their aircrafts that fly over Europe.

    Farmers will this year sow corn, soybeans and wheat on 226.9M acres of land, up 2.5% from last year and the most since 1984, a Bloomberg survey predicts. Such growth would mean an expansion the size of New Jersey as farmers attempt to exploit the highest agricultural prices in four decades.

    Facebook's (FB) definition of an active user appears to be very broad, according to details sifted out of its prospectus by the New York Times. Users that click on the "Like" button or share content are counted as active, as well as anyone that uses their Facebook log-in credentials on other sites. The distinction has important considerations as analysts play around with monetization models based on a hyped-up 483M daily active users metric. 

    Global energy giant Halliburton plans to phase out use of employee Blackberrys in favor of using the iPhone and iOS platform, according to a leaked internal memo. The loss is a hit to Research In Motion's (RIMM) goal to keep a decided edge over rivals in the enterprise market, as well another confirmation that Apple (AAPL) will be able to compete for large corporate accounts. - Don't you think this is making a pretty big deal about one company deciding to switch?

  28. samz3700

    Having  a hard time drinking the Kool-Aid.
    I can understand investors not wanting to sell, but who the hell is buying anything?
    Market is very overbought and Europe is clearly not fixed and any fund manager knows it. 
    a little WEEEEE on that last drop.

  29. rustle123

    Let's see if this is like yesterday, market goes down roughly the same amount and in last hour we're flat and possibly close down 10 points.  This market needs a black swan to burst this bubble.

  30. jmm1951

    iflan/Community portfolio
     
    Seems difficult to find $1000 trades without risk that could pay off well. This is just for discussion purposes.
     
    MSFT $27 April calls are $3.20/$3.25 and the stock is $30.14, so there is only 11 cents of premium. If stock goes over $31 at any time we might see a 30% gain and could attach a trailing stop. Selling the $32s for 30 cents would tweak entry to net $2.95 for options that are $3.14 ITM. A stop loss order if the stock dips below $29.50 would prevent serious loss.
     
    Is this the kind  of thing you are looking for? Would welcome any critiques or suggestions to improve this trade.

  31. stjeanluc

    if the facts don't match your ideology, just change the facts…

    http://economix.blogs.nytimes.com/2012/02/07/tilting-the-budget-process-to-the-g-o-p/

     

    In other words, it is an issue of credibility. Republicans don’t really care about accurate revenue estimates; they just want them to show that tax cuts pay for themselves, so they can pass more of them without constraint. As my fellow Economix contributor Simon Johnson has noted, the corruption of the agencies that produce budget data is a crucial cause of Europe’s debt crisis.

    Confirmation of this fear is the fact that the House-passed legislation would not require a dynamic estimate for appropriations bills, no matter how large. Republicans want the world to know that tax cuts expand real G.D.P., the capital stock and labor supply, but if spending has any such effect they don’t want anyone to know. Implicitly, Republicans want everyone to think that spending never raises growth because it’s their dogma.

    But in the real world, everyone knows that government investments in the national highway system, medical and other scientific research, and other programs unquestionably add to growth. And there are times when government spending can provide macroeconomic stimulus, which the C.B.O. has repeatedly documented, to the consternation of Republicans.

    I am not sure it's helpful in the conversation about priorities!

  32. stjeanluc

    And gold is on a nice ramp up this morning, now up almost $20 since 7:30 AM! Unreal…

  33. jmm1951

    Phil/RIMM to  AAPL
     
    One also has to consider what terms AAPL is offering Halliburton. I'm sure they are not paying full retail. This is like the advertisement about Tylenol being the medication hospitals prefer most. It is kind of true, but hospitals used generic brands of acetaminophen (the drug in Tylenol) or if they do use Tylenol brand, they do not pay anything close to the retail prices the public pays, which are a significant premium  over generic brands.

  34. jmm1951

    Phil/ RIMM to AAPL
     
    It would be more interesting if Halliburton published their rationale for making the change.

  35. flipspiceland

    @Felipe/  anyone
    What is it in our CONgress that permits the attachments to a bill— originally written with no mention of the attachment?
    Why is this even legal?? 

  36. stjeanluc

    And oil is finally waking up to the weak dollar, zooming up all the way past PP (small stop there) and R1…

  37. peedlew99

    Any guess what this US$ selling is?

  38. peedlew99

    Cus I actually think we're at fairly good support around here.  "greece fixed" maybe going to break it thru lower?

  39. rainman

    Phil / jmm / RIMM — I think the most important part of that release is the movement from RIMM to AAPL in a business setting. Slap in the face for RIMM and feather in the cap for AAPL.

  40. yodi

    Phil Do you have any take on YPF for a buy write ? thanks

  41. peedlew99

    Or is Uncle Ben going to use some dovish verbiage?

  42. Phil

    WHR/JMM – You were in for about net $30 with a call-away at $45 so $1,500 is your max gain.  Now that gain looks very safe and the same $3,000 tied up will (assuming no catastrophe) generate $800 more (26%) over the next 12 months with very little risk.  What you are asking is how to now risk money because 23% of already unrealized gains and on track to make another  26% is not enough to satisfy you – do I have that right?  On that premise alone, I would cash the stock for $7,000 and buy 4 of the 2014 $50/70 bull call spreads at $11.50 ($4,600) and sell 1 2014 $45 put for $4.75 ($475) and roll the 2013 $45 caller ($25.50) to 2x the 2013 $62.50 callers at $12.50 for a cost of about $100.  So you drop net $2,775 in your pocket and you are left with 4 long $20 spreads that are $10 below the 2 short calls.  You will be $8,000 in the money on the spreads before you owe the callers $1,500 so you can always add some 2014 $80 calls to cover (now $8) if WHR goes over $75.  Your worst downside case is you have 200 WHR put back to you at $42.50 average but even if you cash out what you have on the table for 50% off, you'll be in very good shape.  

    Fed speak/StJ – That's like the stuff I highlight in purple!   Greece is all mirrors – what else can it be in a totally bankrupt country with $500Bn in debt.  They are not lending them money to build things and pay back creditors later – they are paying them money to pay off their debts while continuing to destroy the economic capacity of the country – it's a total scam that has zero possibility of giving Greece a positive outcome and the people of Greece see this but are being vilified by the Corporate media so the rest of the World's citizens sit complicitly by while their brothers are sold into slavery.  How?  Step one – dehumanize the people who are being attacked.  Make jokes about them, stereotype them, accuse them of crimes and poor moral behavior – it's a very old playbook these guys are running – sad to see how well it still works….

    Bottom line/Acobra – The numbers changed based on a census.  We kicked millions of illegals out of the country over the past 10 years and birth rates are down and we're not letting people into the country so the math changes and this was a drastic one due to the 2010 census finally being taken.  So the punditocracy can play all sorts of games to their heart's content but I think the ADP number, which simply measures how many people are having paychecks processed from one month to the next is a better indicator than any of this government BS.  

    500%/Roma – I'll take that!  Unfortunately, FTR is only paying .75 and I doubt they'll get to .15 on the stock anytime soon.  On the other hand, you can buy them for $4.30 and sell the 2014 $5 puts and calls for $2.55 for a net $1.75/3.38 entry and that makes the .75 dividend 42% against your $1.75 cash outlay.  If the dividend holds up for 2 years, your net becomes 0.25/2.63 and if those short puts expire worthless (FTR over $5) and you don't sell new ones, you're left with just the stock at net .25 and 300% annual dividend returns (assuming they hold up).  So, let's say you have a $100,000 portfolio and you want to end up making 3.75% a year in this rosy scenario.  

    Your goal is then to buy 5,000 shares for $21,500 and sell 50 puts and calls for $12,750 for a net cash entry of $8,750 and your worst case is you are obligated to own another 5,000 shares of FTR for $25,000 more, which is then $33,750 committed for 10,000 shares.  Assuming ordinary 50% margin, this would use up $16,875 of your buying power which wouldn't be terrible but only if the dividend stays.  

    So probably, on this trade, you want to keep a stop on the $5 puts, now $2.10, at $3, which would net you into 5,000 shares at $4.75 with a call away at $5 and then you could stop out at $3 on the stock for an approximate $10,000 loss so that's your risk outside of a sudden bankruptcy against the potential upside of owning 5,000 shares for net $1,250 (after collecting $7,500 in dividends between now and 2014 and having the short puts expire worthless) and then collecting $3,750 a year for the rest of your life (hopefully moving up over time).  It's a good risk/reward and even better if you don't mind starting with 2,000 shares (which still bring in $1,500 a year) and scaling in on a downturn.  

    The biggest problem with this trade is that, if it works out with 2,000 shares, you'll be kicking yourself that you don't have 5,000 – that's why we aggressively doubled down in the Income Portfolio after taking a small initial entry.  

    5K/Iflan, StJ – Is it not the same thing?  

    AAPL/Maya – Undervalued until they get to $600 so I would not be enthusiastic betting against them at $466.  They won't be immune to a broader market downturn but how likely is that the way things are being pumped up.  So no, if I were going to be shorting something – AAPL would be in the bottom 100 of 9,000 stocks I'd be looking at.  

    Speaking of things that are going down.  Dollar just tested 78.80 as Bernanke hints at QEternity.  

  43. Peter D

    Community 5k,
    That's a big challenge to get to 25k within a year.  For the first "conservative" $1,000, we can sell 1 RUT March 690/680 bull put spread for $0.35, getting 3.5% without commission for the 5.5 weeks.  The adventurous can sell 740/730 bull put spread for $0.85 (8.5%).  This one is only 10% OTM versus the first spread that is 16% OTM.  There is a chance that we'll get better pricing on a 5% drop, but we might not get one.
     

  44. stjeanluc

    Speaking of portfolio, the AA Money virtual portfolio has been closed so anyone still holding any position should unwind them. We are about even now so it was a good time to bail out of a boring trading setup!

  45. Phil

    FAS Money/StJ – Can't make a decision while Ben is speaking.  Could go either way but it's all the same BS.  

    IWM Money/StJ – Same 

    $5KP/StJ – Still a good entry for new players.  

    $25KP – No changes but we do want to sell MON calls again if they pop in this silliness and yes, we do have a plan to kill SLM.  Especially when you are behind, it is best to narrow your focus when possible to a few things that CAN get you even – at this point, there's not enough reward left in SLM to take up 3 spots of our attention.  

    GLL went from on track to off track with gold flying back from $1,715 to $1,735 on Gentle Ben's outlook.  

  46. bobhu

    TLT weekly $115 Call holders, warning…. TLT is getting another leg down.

  47. jabobeast

    why did the market erase its losses? Bernank QEternity?

  48. stjeanluc

    Oil has now breached R2… Quite a run this morning!

  49. peedlew99

    WHO DOESN'T KNOW ABOUT QEternity?!!!!!!!!!!!!!  When will this bullshit finally not be a surprise!!!!!!

  50. roma_

    Phil / FTR
    500% dividends payout ratio means they pay 5 times more than they make (net income), and i am in doubt they can continue to do that for long term…..
    just think your math is too good to be true…….:)

  51. acobra65

    Phil/Mortgages
    Withholding a months mortgage payment….. reminds me of growing up on the farm.  Back in the 50's and 60's my father belonged to the NFO (National Farmer's Organization). NFO would attempt to get members to withold products (milk, hogs or corn) from the marketplace to raise prices.  If you walk into a store, the vendor tells you what you MUST PAY for the product.  On the farm, slaughter houses etc would TELL YOU what they would pay for your product.  There were always those farmers, the more well to do that would sell anyway around a withholding action.  The same would be true for mortgages….. they wouldn't want to have a "late pay" by the 15th or God forbid a 30 day late on the credit report….

  52. stjeanluc

    25KP / Phil – OK, the SLM position only got better over the last 30 minutes so good timing to unwind that. As far as MON is concerned, might be tough sledding for them as they were downgraded yesterday (therefore the timely hit they took). On the other hand, farmers are planting more this year than last year so who knows!

    MampcsA, can you let me know what prices you get on the SLM exit? Thanks.

  53. peedlew99

    I'm frankly shocked that anyone wants to buy up here.  Yesterday I sold calls against everything.  What is different from 4 months ago?  To me, the only difference is the blather out of pundits.  

  54. craigzooka

    IRA portfolio adjustment!

    There are no rolls available for our FITB position so I am going to close it out and collect $12.95 per share out of a maximum of $13.00 at expiration. 

  55. Inkarri1982

    peedlew99 – and a few hundred billion in more debt stateside

  56. peedlew99

    I guess… but they overplayed the doom and gloom… and I suspect they are overplaying the wine and roses.

  57. Phil

    $98.50 on oil – Ben just cost US consumers an extra $50M a day/$18Bn a year – nice job!  

    Gold $1,740 – Dollar 78.73, TLT back to $116 with the $115 weekly calls down to $1.60.  All this is driving the VIX down (of course) since a 100-point swing in the Dow in 30-minutes is the very opposite of volatile.  

    12,875 was the Dow high Friday morning, 1,346 on the S&P, 2,908 on the Nas, 8,065 on the NYSE and 833 on the RUT, which is showing the most weakness still below 830.  I don't thing Ben repeating justifies us popping those levels but we'll see – clearly someone wanted to make it seem like he just delivered QE3 in this testimony.  

    Volume just 36M on the Dow at 11, which is better than yesterday but that doesn't say much at all. 

  58. scottmi

    TLT is what's tumblin'…!

  59. stjeanluc

    Whoops… Oil now at the R3 line (98.89) ! That didn't take long…. only as long as Ben's little chat!

  60. stjeanluc

    Next (and last) dollar line is S3 at 78.52….

  61. rustle123

    Phil,
     
    When is Ben's Reign over?  Do you think Obama will reappoint him?

  62. sagemm1

    Phil still ong TLT…ouch, but I have faith this will turn around after this conference and Europe closing. Would you entertain dd here, as I went into a smaller position than yourself. TIA

  63. alik

    Hello Pharm, what do you think about CVM and CYTR?

  64. angelcur

    look at the euro! this is why we can't break free from this destructive cycle….central banks blow up their balance sheets and short-term currency traders cheer it…until they dont

  65. rossmanmd

    Phil,
    TSCO – need some help as it took off on me. Through some earlier rolling, I am at the following. Any suggestions. are aoppreciated
    -10 Feb 75C @ 6.55
     7 Apr 80C @ 3.98
     3 Jul 85C @ 2.40
     

  66. stjeanluc

    You are right Angel, huge euro move and I can't think of anyone happy in Europe about that! And keep in mind, the ECB balance sheet is now larger than the Fed's… They are going to run out of paper soon!

  67. mampcsA

    Stj, SLM trade went thru. 3/2.02 on the calls, .02 on the puts.

  68. stjeanluc

    For once I am happy not have sold a FAS strangle today as it's a runaway train as well….

  69. stjeanluc

    Thanks mampcs…. 

  70. Phil

    And oil pops $99!  I'm hoping for $100 to short them again.  

    CHK still very cheap at $22.19, you can sell the 2014 $20 puts for $4.10 for a net $15.90 entry (1/3 off) and that can be paired with a reasonable Jan $17.50/23 bull call spread at $3.10 for a net $1 credit on the $5.50 spread that's $4.70 in the money to start.  

    Without risk/JMM – There's no such thing, that may be the problem.  Also, if you go out to April to make 30%, you're not going to get a very exciting overall return for the year if the intention is to make 300-500%.  As I happen to be on CHK, it's more like putting $670 into 10 CHK Feb $21/22 bull call spreads and making $330 (50%) if CHK holds $22 for 2 weeks.  If I get away with that in March and April as well, we turn $670 into $1,660 and THEN we're making some progress.  

    78.60 seems to be holding on the Dollar so let's add 10 more TLT $115s to the $25KP at $1.46 and get 1/2 back out even at $1.73 (hopefully).  

    Also in the $25KP, let's go for 10 Feb $128 puts at $1.10 with a stop at .95.  

  71. kustomz

    rustle, Ben forecasts rates will remain exceptionally low till 2014…I think Ben fired Obama.

  72. stjeanluc

    25KP / Phil – I am assuming DIA Feb 128 puts at 1.10. 

  73. Pharmboy

    When was the low put in?  Just sayin'….

  74. mrmocha

    Pharm / ARIA - I'm almost fully covered on this one right now to protect my gains, in your estimation what's my tail risk that they get bought while I'm covered and I miss out?  Are they too early in the bio lifecycle to have a high probabiliity of buy-out, or should I protect with puts rather than covers just in case they moonshot?  TIA.

  75. jromeha

    Phil, you like 78.6 for doubling down on /dx? I closed out /dx yesterday at 79.5 but bought back in today at 79.07….. Thinking of doubling down to try to get back to even… Or Ill just wait for one of your sick oil calls! lol

  76. Pharmboy

    mrm – I don't think they get bought out just yet.  The only one that could is MRK, and maybe a few puts rather than covered calls is the way to go (that's what I am doing with CRIS.   Also, maybe a mix of covers as well as cheap puts.

    CVM – interesting.  If they get below 40c, worth a flier, but I don't understand the mechanisms just yet. 

    CYTR – not interested right now, as I need to look at the product portfolio.

     

    WTF is up with this market.  I now reflect on the picture many moons ago that JRW put up with a chart and a moon.  I did not think that the cow could jump over…..the moon.

  77. Phil

    Terms/JMM – There's always a ton of factors, of course.  I'm just saying that I'm sure RIMM won some contracts this year and AAPL won some but the press is so anti-RIMM that any negative news on them is immediately trumpeted as more "proof" of their  demise.  Meanwhile, they're up 2% today, I really do think they have bottomed finally.  

    Attachments/Flips – That's just a BS political process that simply ruins Democracy.  It used to be if you had a bill and it was voted down, that was it.  Now they get to try to stick it into the next 20 things that NEED to get passed.  What's really wrong is that no one calls them out on this – there is no political backlash to this kind of behavior because, on the whole, Conservatives are thrilled that their Boys are "sticking it to Obama" by forcing him to sign a pipeline bill.  This isn't about merits, it's not about what's good for the country – it's about winning at all costs and the pipeline is just the obvious one – these favors are done for Corporations every day and that's how this country is sold down the river day by day by our "lawmakers".  Have I mentioned how nice the beaches are in Jersey?  

    YPF/Yodi – I don't even know what Anomina means!  As a nat gas play they are on shakey ground and these guys are always volatile but – and I will emphasize I have no opinion on their prospects as they are not on my radar – if you think they are interesting then you can take advantage of the drop and sell the July $30 puts for $2.80 as that's net $27.20, which is an additional 15% cushion from here.  If they head higher and you just end up with the cash, that's 10% in 6 months anyway, nothing wrong with that.  

    Selling Feb TZA $19 puts for $1.22 is very attractive with a stop if the RUT goes over 833.  They can be paired with 2x the $17/18 bull call spread at .66 for net .10 on the $2 spread that's fully in the money with TZA at $18.34.  

  78. Pharmboy

    Selling Mar $5 puts on CRIS for 35c or better.

  79. Phil

    Income Portfolio:

    50 DIA June $112 puts, now $1.50, can be rolled up to the $119 puts for $1.10 ($5,500).  

    50 SDS June $18 calls, now 1.12, can be rolled down to June $15 calls at $2.24 for $1.12 ($5,600)

    That's the cost of locking in some of the gains this month.  

  80. angelcur

    what is that lovely place?..are those hydrangeas?

  81. yodi

    Phil Thanks on YPF ANONIMA in this case means they have anonimous sponsors

  82. lflantheman

    AAPL portfolio:   I've bought to close the 10  April 450 covers at 30.28 each.

  83. JRW III

    Pharm,

  84. One_T

    Phil/RIMM,
     
    Thinking that RIMM may have bottomed, what do you think of the Jan $15/20 BCS at $2.15 selling the Jan 13 P for $1.80? This puts owning RIMM at $13.35 if put to you. Also, the BCS is currently 40% in the money.  Is this a good way to play RIMM bullish/bottomed. Or do you think the Jan 15/17.5 BCS at 1.15 be a better play?

  85. Pharmboy

    Yeah, that one!  Thanks for the memories JRW…..brings tears to my eyes.

  86. Phil

    Didn't I just say this?  Discrediting the recent jobs report by pointing to big one-month drops in labor force and participation rate is simply wrong; critics seem to forget adjustments made for the prior year show up all at once in the month of January. “It is statistically invalid to compare December to January monthly changes," Economic Populist writes, "when one of those months includes a year of population adjustments." 

     

    10:00 AM On the hour: Dow -0.39%. 10-yr -0.29%. Euro +0.43% vs. dollar. Crude -0.08% to $96.83. Gold +0.1% to $1726.55.

    11:00 AM On the hour: Dow +0.23%. 10-yr -0.46%. Euro +0.99%vs. dollar. Crude +1.91% to $98.77. Gold +0.95% to $1741.25.

    U.K. retail sales fell 0.3% in January, according to the BRC Sales Monitor. "Customers parked their worries in December and spent — in the new year, reality has bitten again," says the BRC. "Many retailers are rethinking their entire business models in a desperate attempt to adapt to this low growth environment."

    U.S. job openings in December totaled 3.4M, up from 3.1M in November, the Labor Department reports. Although the number of job openings remains well below the 4.4M openings when the recession began in Dec. 2007, the number has increased 39% since the end of the recession in June 2009

    All measures of unemployment are falling (Washington Post)

    The IBD/TIPP Economic Optimism Index improves by 1.9 points, or 4.0%, to 49.4 in February, vs. 47.5 in January. "While the recent job report was a catalyst to boost confidence, the report does not adequately reflect the dark side of the job situation in the country,” IBD's Terry Jones says.

    Ben Bernanke takes questions from the Senate Budget Committee about the Fed's economic outlook. His prepared testimony - "Recovery now, thrift later, generic speeches in the meantime" – matches that of last week in front of the House. Watch livehere.

     "I want to disabuse any notion there is a priority for maximum employment," over price stability, says Bernanke, responding to a Senator's question. The Fed chair offers little to add to last week, but stocks have turned green as the hearing progresses. DJIA +0.2%. Europe: Stoxx 50 rebounds from a 1% loss, now +0.1%.

    Admit It: Countrywide Is Bankrupt (American Banker)

    The downward mobility of the American middle class. (CS Monitor)

    "The simple fact is that consumers are consuming more than they're earning," says BoC Deputy Governor Tiff Macklem, explaining the bank's concerns over rising indebtedness. His comments came in Q&A following a speech on an unrelated subject in Toronto. 

    Lenders in Tianjin – a key Chinese export city – are cutting exposure to Europe by slowing or halting trade finance and suspending derivatives trade with EU banks. Instead, exporters are focusing on selling more product at home. The news is a reality check following a week's worth of pablum (coinciding with Merkel's visit) that China was again to come to Europe's rescue.

    China Risks 4-Point Growth-Rate Cut in Case of Europe Worsening: Economy (Bloomberg)

    While gold does not have its real value reduced by inflation, it has not proven a great inflation hedge, according to a study by Dimson and Staunton (giants in this field of research). The metal's real return since 1900 has been 1.1%, with the main strike being that gold does not provide an income flow. Equities have returned 5.4% annualized over the same period.

    Another bank walks away from their mortgage (called a "strategic default" when they do it):  Atlanta's 55-story Bank of America Plaza, the tallest building in the Southeast, goes up for auction today on the steps of the Fulton Country Courthouse. The property has lost 54% of its value since peaking shortly after being purchased in 2006 for $436M. The CMBS delinquency rate for Atlanta stands at 25.3%, more than triple the national rate.

    Old mortgages rise from the dead, haunt homeowners (Reuters)

    The meaning of the Transports’ weakness (Market Watch)

    BroadVision (BVSN -10.4%) has yet another volatile day featuring no news of importance. To recap, the e-commerce software firm: a) rose 309% from the end of 2011 to its Jan. 24 high, b) fell 55% over the next 4 trading days, partly thanks to a poor Q4 report, c) subsequently rallied 99% over the next 6 trading days, before selling off today.

    SuperValu (SVU -0.1%trims its workforce by 800 positions with a majority of the cuts set to take effect by the end of the firm's fiscal year on Feb. 25. The company reiterates its goal to emphasis "hyperlocal" retailing and remain focused on investing capital into the growth of discount chain Save-A-Lot.

    Research In Motion (RIMM +2.1%) is trading higher, possibly due to remarks made at its DevCon Europe event. RIM, whose European share hasn't been crushed as badly as its U.S. share, claims 6M apps are downloaded from its app store each day, and that 13% of BlackBerry developers have made more than $100K. Nonetheless, RIM's library of 60K apps remains far smaller than the ones for iOS and Android. 

  87. Inkarri1982

    JRW – You forgot to add Newt's American moon base to that picture.

  88. jmm1951

    Phil/WHR/MSFT
     
    Thanks for the advice on WHR. Due to this being in my IRA account, had to make slight adaptations,  but you sure did put me on the right track with that one. The key point is replacing the stock with options when the increase in the value of the stock has made the dividend a moot point.
     
    Re: MSFT options play. I take your point, although my thinking was that since the premium on the April $27s was so small, the option is really a stock substitute and need not be carried until April, but could possibly be cashed in for a nice profit any day the whole market makes a sharp move up, which might happen any time depending on how the market reacts to the Greek tragedy (or comedy).

  89. lflantheman

    AAPL portfolio:   Sold 10  April 475 calls to cover @ 16.08 each.

  90. samz3700

    Anyone with TV coverage – how do the demonstrations in Greece look?

  91. cwan120

    StJ,
    I just got in, as I was busy with other stuff in the morning.  Just saw your comment on FAS strangle.  Yeah!  I am glad that I was out of FAS 93/84 expiring this Friday strangle yesterday.  I was lucky to get some small profits.  But it's way too risky.
     
    Peter D and chaps had some very interesting discussions on SPX strangles.  I have not finished my reading of yesterday's comments yet..  But I think it's worth your while to read those comments.  They are GREAT stranglers!  And they've been strangling for years.  It may be a good idea to strangle SPX, instead of FAS.  Less risky and probably equally profitable.

  92. lflantheman

    AAPL portfolio trade analysis:   Widening the spreads gives us increased profits on the upside while preserving some downside protection.   

  93. Inkarri1982

    samz – looks like there are clashes between protestors and police.

  94. cwan120

    Question: Is TLT 1x? 2x? 3x?  Does it have decay?  Thanks.

  95. Phil

    FTR/Roma – Ah, is that based on one quarter or two of observation?  They did a huge acquisition so things are a mess but income is holding steady and this is a company that pays a set dividend – it's the same one they always pay and they are making the same money they always make with the same cash flow and essentially the same balance sheet but they added a bunch of debt ($3Bn) as well as $500M in Receivables that they haven't booked to earnings yet.  There is nothing I like better than companies that tank after making sensible acquisitions when people who fixate on this or that metric freak out and panic out of their positions.  That's another reason this country is doomed – outside of very early stages, growing a company is frowned upon – only squeezing operating efficiency out of existing businesses is rewarded and God forbid a company does $1Bn in sales and drops $200M a year to the bottom line for 10 straight years – they call that "dead in the water."  

    Credit reports/Acobra – Ah but if you really got everyone in America to do it then our relative scores would all go down the same and they'd have to adjust their criteria if they wanted to make loans.  Anyway, that's just one of the weapons they use to keep the consumers in line – mysterious ratings that mark you for life.  

  96. revtodd64

    $5K Portfolio – I like the idea of doing trades like Phil's CHK Feb $21/22 spread.  It seems like an easy, low cost way to make an aggressive portfolio for those of us that can't be day trading all the time, yet still want a little action in our portfolio.  One place to look for trades might be some of Sabrient's ideas.  Dave Brown's "what the Market Wants" picks do well.  We could pull some of those that have adequate options volume for spread trades.

  97. stjeanluc

    FAS / Cwan – It's getting ridiculous now and I was looking back at what has been killing us and it's the huge gaps in the morning… either up or down. I have read most comments from Peter in the past and Peter always makes good points. But we might have a slightly different setup – for example, in most cases, they plan for a DD or 2x or even 3x the position. We could certainly do that as well and it would have made it OK to roll last week then as we could have roll far that way. For example, we could start with 1 contract and scale all the way to 10 if we can. And that is a very different setup and the risk/reward factor will change as well. But up to now I didn't want to play it that way because of the margin involved with FAS. But that might be another idea as well. In the meantime, I am taking the week off on that trade….

  98. stjeanluc

    Cwan / TLT – Straight up 1x

  99. augrusot

    lflantheman, are you expecting AAPL to not pull back at all?

  100. Gingbaum

    Phil,

    I am interested in going long on a RIMM trade. Would you wait until after earnings on march 15 or would you execute now?  What option strategy would you put on now for RIMM instead of simply buying the stock?

  101. stjeanluc

    I guessed they programmed the lines carefully in the oil algos today…

  102. lflantheman

    augrusot….oh, I suspect it will eventually.

  103. lflantheman

    But who knows.  It's one of the best companies out there and still only has a PE of 13

  104. Burrben

    lflantheman / aapl  -  So now we have a Long 10 Apr 425/475 BCS, right?  

  105. lflantheman

    Compare to AMZN for instance, PE of 134 and it's going up too!

  106. lflantheman

    We have for April spreads   5   400/475s and   5   425/475s.  Plus the Julys

  107. lflantheman

    I'm holding some cash back in the AAPL port.  If we ever get a dip I'll buy back some calls and/or buy some more longs. 

  108. Phil

    MON/StJ – Well, as you know I'm pretty set on my $80 valuation but not so much that I want to short $80 calls but if they run back to $82.50, THOSE I would love to short again.  If not  - I'm sure we'll find something else to trade.  

    Buying/Peedle – No one is buying.  50M shares on the Dow at noon is not buying.  30M per hour is "normal" and that normal is way down from pre-crash days.  So noon should have you at 75M – 100M, 50M is just bots trading shares with each other.  However, until things change, those Bots take us up and up and up every chance they get.  

    78.70 with oil back at $98.50.  Gold $1,741 and TLT $116.12 – just a bit shy of what we need to get 1/2 out.  

    Bernanke/Rustle – I'm pretty sure he's a keeper through Obama's term.  Maybe 2014 the spot comes up again.  

    TLT/Sage – Our premise remains that the Fed can't allow it below $116 and, of course, even that is low in the range with auctions coming up this week.  We're in a zone of competing forces now with some factions wanting the Dollar to die and the Fed needing people to buy long Treasuries (they are buying all the short ones) and the Swiss wanting a strong Euro and who knows what the BOJ is doing now but they got to 76.95 while the Dollar was crashing so my theory that they have dumped the Dollar and are buying Euros with the SNB is intact for the moment and that could be a huge game-changer for the Dollar if the Euro and Yen team up to bring it down.  

    Speaking of the Dollar – Rejected at 78.75 is really pathetic.  

    TSCO/Ross – Bad stock to be bearish on.   Fortunately, you have time and the Feb $75s ($10.80) can be rolled to 20 April $85s ($4.60) and that will cost $1,600.  Then you can roll your 7 Apr $80s ($7.70 = $5,390) to 12 July $85s ($7.30 = $8,760) and you spent net $4,970 less your original $3,044 credit means you are in the 15 July/20 April $85 spread for net $1,926 with the stock at $85.69 and if you set a reasonable stop on 5 of the short calls at $6 (now $4.60) then your worst case is you get hit for another $3,000 and that nets you $4.926 on 15 spread is net $3.28 while the current price of the spread is $7.30/4.60 or $2.70 so not too far off base there and a few months left to roll.   If you had a trading plan like that BEFORE you set up the trade, you'd probably have a nice winner now..

    ECB/StJ – Yes but the EU is bigger than we are and less in debt.  I don't know why this sudden mantra about the ECB's balance sheet is suddenly going around – they are so much better looking than Japan is or we are.  

    DIA/$25KP, StJ – Oops, yes that was DIA!  Bad thing to leave out but fortunately, still $1.10.  

    TLT coming up and we don't want to jump right out, let's give it a little chance to do better than $1.75.  

  109. terrapin22

    SONC making a big move upwards this month so far….don't see any news. 

  110. cwan120

    SONC up nicely!  What's the news?  I don't see any.
     
    Phil, on Jan 3, you suggested the following trade on SONC: "sellne $7.50 puts for $1.15 and buying the June $7.50 calls for .55".  I did that trade.  Keep it?  Or take profits and run?

  111. Burrben

    Phil / TLT BCS  in 5K
     
    I'm assuming we are holding on to the 115/116 BCS.  I see lots of TLT action in the 25K, so I was just wondering.

  112. roma_

    Phil / FTR
    Thanx, this is what i tried to find out (reason for messy ratios)
    and i guess if they pay this dividends at least for one more year with short options it still will be very good deal, thanks

  113. Pharmboy

    EU total debt Phil – I believe including their unfunded pension liabilities, it equal to our slightly higher than ours…..Looking for the data….

  114. mampcsA

    Phil, GLL is a mess in the 25KP today. If your theory is that they all want the dollar down, won't that be terrible for GLL?

  115. revtodd64

    SONC – cwan
    I set a limit order at $1.20 to sell half the calls, since that would be a double on the calls.  When in doubt, sell half, right?  

  116. terrapin22

    Phil -  How do you decide between doing a long call / short put play or the bull call spread and short put play?  The former has worked well for GLW, SONC and EGLE.  The latter is doing well on SKX.  What would you recommend here for RIMM?  Thx. 

  117. rainman

    Don't know if this link passed through PSW or not: Banks Paying U.S. Homeowners Cash to Avoid Foreclosures
     
    Amazing:
     
    Offering enough for the homeowner to put down a deposit on a rental apartment is reasonable, said Sean O’Toole, chief executive officer of ForeclosureRadar.com, which tracks sales of foreclosed properties. Giving tens of thousands of dollars to delinquent homeowners sends the wrong message, particularly if they got into trouble by running up home-equity loans during the housing boom, he said.
     
    The "tell":
     
    Cecala of Inside Mortgage Finance said he wonders whether lenders are making big payments on properties with underlying title problems. Evan Berlin, managing partner of Berlin Patten, a real estate law firm in Sarasota, Florida, said representatives of a large bank told him the incentives are primarily given to borrowers when it doesn’t have the proper paperwork needed to win its foreclosure case. He declined to name the bank for publication.

  118. rpme

    Phil, I missed your DD on TLT at 1.46. Should I hang on to the whole vs 1/2 out at 1.75?

  119. samz3700

    I have been thinking about DEBT to GDP figure -
    It seems like a much better metric is Interest on DEBT to GDP or Interest on DEBT to tax receipts.
    Japan and US might have more debt than other countries but the interest costs are lower.
    Yes, this could all change and will at some point but just looking at National Debt to GDP seems to be misleading.

  120. scottmi

    Rolling 101/Phil – i have the happy situation of CSCO actually showing some black! Long the CSCO Jan 2013 $15 calls @ 4.85 and a while back sold the FEB $20 calls against that @ .49 with the idea to roll for credits all year long…  the lesson i'm seeking is a remedial "when do i roll the shorts"?  and all things considered, do i want to jump up to May $21s which i can get today for .05 credit? and work from there with hopefully another $100 per set payout at end? or stick with rolling to next month same strike…  my thinking is not to roll up to higher strike until stock actually achieves it, and looks to stay there…  so mainly.. when should i be looking to roll? NO later than the wednesday of expiration week… but anytime sooner? What should i be looking for, taking this set as an example?  thanks..

  121. rainman

    Phil / "mysterious ratings that mark you for life." — Don't get me started! FU credit scores! What a scam. What ever happened to building a "credit history"? (queue 1950's vintage video of teens learning about building a credit histroy).

  122. Phil

    DX/Jrom – I wouldn't play that currency for anything but yes, I think it should hold.  78.585 was the low on the last blast down, very ugly.  Buy bot seems to have gone – maybe it was an EU Bot but that means maybe inside info that Greece is fixed so big speculation that the Dollar takes a massive dive as Euro flies back to $1.35 (2.5%).  

    Lovely place/Angel – That's my future home in St. Brelades Bay.   Couple of nice hotels there, good little town, plenty of restaurants and an airport right there (JER) that takes you anywhere in Europe in a couple of hours (no customs as you're already there).  

    Anonymous Sponsors/Yodi – Well that's not exactly comforting….

    Moon/JRW – Why stop there?  

    RIMM/One – I like the play but RIMM truly, truly sucks lately and I certainly wouldn't call it "safe" by any measure.  I think I'd rather take a flyer on the 2014 $20/30 bull call spread at $2.20 with a stop at $1.10 on the hopes they get bought or turn around.  If they get bought for $25, for example, you get a quick cash-out at $5.  If they move up, you can cash 1/2 with a double and let the rest ride so a fun way to take a long-term gamble on them without saddling yourself with the stock in case they have an epic fail. 

    No problem JMM, you're certainly getting it.  

    Strikes/Samz – This seems to be from today.  Not much action so far.  

    Greek politicians refused to yield to severe austerity demands, even as German Chancellor Angela Merkel warned the refusal threatened "the entire eurozone."

    "I will not contribute to the explosion of a revolution from destitution that will burn all of Europe," George Karatzaferis, leader of Greece's radical right-wing populist political party LAOS, said Monday, even as Greek officials agreed to cut 15,000 state jobs this year and 20 percent from the minimum wage.

    RIMM/Ging – See above. 

    SONC/Cwan – Congrats!  Well the $7.50 puts are down to .60 and the calls are $1.10 for net .50 off the credit spread (unless you bought 2x) and that's a huge win already.  The move up isn't earnings, which were so-so on Jan 4th but more to do with bringing in a new Marketing guy, which is what investors think the chain needs (really no marketing to speak of).  The guy they got came out of YUM, so that is pretty exciting but, of course, will take a long time to really have an effect and then they have to spend money to make money so the resistance at $8.50 (200 dma) should be taken very seriously.  On the whole, I'd keep it but that's because I consider them a long-term hold and would have no issue rolling it along for a few years.  If your time-frame is shorter – this was a nice score already. 

    Bad 3-year auction.  Rick says C+ – not surprising with Dollar in the dumps except the Fed is supposed to be buying 3-years.  That's sending TLT back to $116 and now they HAVE to get the Dollar back up or the 10-year will be ugly tomorrow.  

  123. stjeanluc

    Debt / Phil – I don't know that there is much to separate Europe from the US in the debt department. Here is a chart published by the Economist that takes into account public and private debt in selected countries.

    It's from 2008 but I doubt that the ratio has changed much since then as actually it was recently pointed out that the American consumers and companies have deleveraged faster than their European counterparts. That should make up some for the accrued government debt! Of course, there are trillions in unaccounted for liabilities but it's the same in Europe. In a lot of cases, their retirement plans are in worse shape than social security here. 

    But to make it simple, we are all in a world of hurt…. especially Japan!

  124. rustle123

    So just to get this straight, if I was explaining the market to an alien, I would say the stock market is going up because the economy is improving faster than expected and there might be more quantitative easing because the economy is not doing as well as expected.

  125. peedlew99

    A thought on the back and forth on labor participation.
     
    In a world where one bawdy tweet out of hundreds of millions can be tracked, and TSA agents can be dispatched to boot an unsuspecting young British guy out of the country… don't you think we can know exactly what the real employment picture is?
    The answer is, of course yes.  This archaic system is used precisely because it can be manipulated.  It's not so much political left-right.  It's political in the sense of establishment interests vs. the right to know reality.
     
    Very similar to the Nielsen ratings for TV show.

  126. mrmocha

    BDI ultra-low, TBSI just went bankrupt, but dry shipper stocks like DSX and DRYS soared in the last three days — what's not right with this picture?

  127. lflantheman

    Phil……I read many years ago the following (paraphrased):   "When a recession ends the first sign is a recovery of the stock market, which usually precedes the economic recovery by at least 6 months."    What say? 

  128. 2can

    Oil / Phil,  Seems to me like there should be a good sell off before the close today.  What's your take?

  129. yodi

    Dealers in New York made ??speculation responsible for an early end to the negotiations in Athens for the gains. A Greek government officials said that a written draft negotiated by the points should still be submitted in the course of the day the leaders to sign.

    With the € stock prices also moved to Europe. The Dax just before the end of 6757 points again close to its previous close. Previously, he had dropped by as much as 1.2 percent to 6682 points.

  130. stjeanluc

    TLT 115 are back at about 1.45 where we DD last time… They ran up quickly to 1.55 while Phil was posting so maybe another chance now? But the momentum on TLT is clearly down now! And if we have a bad 10 year auction tomorrow, that could be painful.

  131. yodi

    Phil,
    These are guys like Carlos Slim but we will see
    Anonymous Sponsors/Yodi – Well that's not exactly comforting….

  132. angelcur

     anonymous just released personal data on oakland officals..

  133. chaps

    Short stranglers:
     
    FWIW, thoughts on stopping out on losses: I've come to believe stopping out, versus always rolling immediately when in trouble, can be valuable. If the VIX is spiking from 18 to 40, like last summer, there's something to be said for waiting to roll until the VIX has stopped climbing.
     
    So how do you do it? When do you get back in? How do you get back in?
     
    One option: I call net premium the premium I've sold minus what I pay for covers (insurance), and NP ratio is the ratio of the current market value of net premium to what I received for it. So a smaller ratio is better. My rule is to start stopping out when the NP ratio gets above 1.5. I close out my biggest losers, which reduces the ratio. I close out enough to get below 1.5.
     
    If I've stopped out, I work back in when the ratio has settled to below 1 (due to premium decay.) And I try to get back in only to make up my losses, not shoot for the gain I would've made if the original trade had worked out.
     
    So these are like "slow motion" rolls over longer time periods. And I'm rolling for a debit, the debit being the original gain I'm now forgoing. Last summer, you would've been stopping out on short puts at a fraction of what they eventually became worth as the market fell from 1340 to 1120 over 10 trading days, and hopefully getting back in when only after the VIX had made significant gains.
     
    My premise is that such a system helps you when the market is going through a major transition. You take your lumps in an orderly, controlled fashion (hopefully) and live to fight another day.

  134. angelcur

    SHOCK! greek meeting will be wednesday please..break out the ouzo and windex!

  135. yodi

    MT is on the up today my CC Feb 20 is on the table

  136. mampcsA

    Guess Phil was right. They have to take the $ up now. Big upward spike already.

  137. Pharmboy

    Um, anyone notice ARRY?  I did….selling another 1/2.  1/4 in now, letting it ride…

  138. rpme

    Phil, caught the second chance DD on TLT.

  139. zeroxzero

    Euro looking a bit queasy on the blowback from "see you in Athens on Wednesday."

  140. Phil

    $1,750 gold – World officially going to Hell, gotta short them here (/YG)

    TLT/$5KP, Burr – Sure, that's just a targeted trade that says TLT holds $116 for 10 more days.  Maybe in question now!  

    EU debt/Pharm – Yes but their GDP is bigger.  Official EU debt to GDP about 87%, ours is over 100% – simple.  

    GLL/$25KP, Mampcs – Oh this is TERRIBLE for that trade.  It's still early in Greece and there should be flames and riots by evening and probably still no deal so hopefully this all flips over tomorrow but tomorrow we have to capitulate if it doesn't improve.  

    SONC/Rev – Good plan. 

    Decisions/Terra – Whichever seems to give the most favorable risk/reward based on what I think the stock will do over the time period.   For RIMM, as noted above, I think the risk of them diving and ending up owning them at $15 with the stock dead in the water at $8 is too high so, for a new trade, I prefer the speculative bull call spread.  

    Incentives/Rain – That's interesting.  Are they proactively targeting people who can beat them in court?  

    TLT/Rpme – I still like the DD at $1.46 (there now) but this is based on our faith that the Fed won't let tomorrow's 10-year auction go off at a bad number.  I'm already surprised at what's going on today but I can't imagine anyone is going to risk the consequences of rising US borrowing costs becoming a topic.  

    Debt/Samz – I think that you should assume, over the long haul, that the mismatched rates will even out.  Japan was able to operate in a vacuum because they have a small (relative) economy and a small (relative) currency AND a very strong export base that has always (until last Q) run at a surplus so there was always money coming in (cash flow) to keep borrowing costs down.  That is not the case with Europe and MILES from the case for the US.  Interest rates in the US are only low now because the Fed and China buy up all the TBills to prevent a catastrophic failure as we have no possible way to service our $16.5Tn debt at 3% ($500Bn), let alone 4% ($660Bn) or 5% ($825Bn) – we can't even find $150Bn worth of annual budget cuts to get our deficit below $1Tn more each year!  

    And wheeeeeeee!  

  141. cwan120

    SONC / Phil & revtodd:
    Phil: Thanks for the analysis!
    RevTodd: Thanks for the suggestion.
    After reading comments from both of you, I decided to cash out the calls but keep the puts.  My rationale is that we are BUYING premiums on the call side, and SELLING premiums on the put side.  So, the long calls are somewhat more short term, and the short puts are long term.  Besides, PSW is in the business of selling premiums, right?
    Thanks!

  142. rainman

    Phil / Incentives — I don't play banks because I'm too stupid to understand their books but it sure seems as though the banks haven't really repaired their balance sheets. Doesn't it?

  143. Pharmboy

    Sittin' on the dock of the bay….wastin' time….

  144. scottmi

    lflan – market recovery? hardly. there is no 'market' participation here. it is just low volume price increases based on QE this and QE that.. no volume = no substance. truly like a soap bubble.. and those go "pop" pretty easily and dramatically. A recovery of the market will be evidenced by volume participation, demonstrating substance and support to the prices then obtained.   so yeah, it sucks to watch this..but really, cash is good there (and i'm not nearly in enough cash!)

  145. scottmi

    cash is good 'here' i meant to say!

  146. Canuck

    Phil/SPXU roll:
     
    sold Feb 12p for $0.90 initially, now $1.55 – buy back and sell June $11p for $1.70?

  147. rainman

    0×0 / Gee tar — Hey, if you haven't checked the Axe-FX out yet, you should. I think it's worth every penny, especially in portability and versatility. All your amps and pedals in one box (well, modulo an expression pedal). I paired one up with a Tyler Variax and it's amazing the tones you can get out of the pair. …but then again, my music tastes are varied.

  148. angelcur

     greece's laos party chief now questioning legality of troika measures.
     
    i c you ridin round town with the girl i love (merkel)

  149. peedlew99

    pharm… feel the same way!
    pick a lousy day to sit at my computer!  Tomorrow on a flight, so that will probably be the fireworks day!

  150. yodi

    Phil AGNC assit me in my thinking I hold 1000 shares x 29.36 now 29.95 paying 1.25 for holders at 7th March sold 2014 10 calls @ 2.10 now 3.37 . Buying the calls back I actually forfoot the div. selling the stock as you surely can buy it back after 7th March for a lower price is one option. Stock however might still go up higher. Diverence between my stock purchase price and the sale of the 27 Jan 14 call is a loss of .26. What would be my best move. thanks

  151. stjeanluc

    On the march again…. Just relentless. This is the terminator of markets. Can't kill that sucker!

  152. Peter D

    chaps,
    That is deep!  I'm sure you've worked out an example.  Could you post it?
     
    I couldn't get the numbers to work out, so an example would be helpful.

  153. stjeanluc

    Just what we need, volatile stocks….

    http://www.bespokeinvest.com/thinkbig/2012/2/7/looking-for-action-sp-1500-most-volatile-stocks.html

    Although maybe good candidates for the aggressive portfolio!

  154. stjeanluc

    Apparently dividend (not just yield but quality income) is in favor…

    http://www.ritholtz.com/blog/2012/02/dividends-are-all-the-rage-the-clamour-for-equity-yield/

  155. Phil

    Well that didn't last long (but long enough when you're playing the futures!).  

    CSCO/Scott – Rule of thumb on rolling is when they are down to 25% premium.  So, with CSCO at $20.25 and the Feb $20s at .80, they are still mostly premium so too early – you are better off letting the premium burn.  That's outside of any other expectations, of course, like the likelihood that CSCO will pin $20 next Friday and the callers expire worthless.  May $21s is my big problem with your statement – you're missing a lot if you do that (or consider it).  The Feb $20s are worth .25 – the rest is just premium that WILL expire in 10 days.  So you are looking for those .80 calls to lose 10% of their .55 premium each day going forward and that's about .05 a day so tomorrow, if these calls are .75, you are "on track."  The MARCH $21 calls are .50 but they have 38 days to expiration so they will lose .02 per day.  That means, in 10 days, the March $21 calls should be .30 and Feb $20s should be .30 and you should get an even roll.  That then, becomes your goal – to get an even roll to the March $21s and, since any crazy thing can happen – if your broker lets you, you can offer to do it as an even roll right now, good to cancel and maybe you luck out and get it early.  If not, at least it reminds you what your goal is and you can track the spread over time so see if you are on track or not.  On the other hand, you paid $4.85 for the Jan $15 calls and they are now $5.85 so, when those Feb calls expire, you need to consider that you need $21 just to justify not cashing out now with a $1 gain.  The short calls you sell offer very little protection as your delta is about .85 vs the .55 you'd be selling and that doesn't even tell the whole story as a .50 caller obviously only covers .50 at the best of times, so you have less than 10% downside protection on the trade.  Selling the July $20s for $1.55, on the other hand, drops your net (assuming $20 caller expires worthless) to $3.30 and then you have a $1.70 gain at $20 in the end and still rollable calls that at least offer you some protection against a short-term dip.  

    Credit ratings/Rain – Makes individual integrity a worthless commodity, doesn't it?  

    Debt/StJ – That's 2008, a lot has happened since then.  Japan is just incredible though – a complete catastrophe, Greece times 3 and yet we all ignore it like it's going to go away somehow…  

    Alien/Rustle – Don't do that!  That would prove there's no intelligent life down here and they may decide it's OK to strip away the resources.  

    Shippers/MrM – Maybe happy to have less competition?  

    Recovery/Lflan – Sure, that is often the case but this low-volume, Fed-funded recovery is not natural.  It's not a sign of money coming in because people are going back to work and factories are expanding and warehouse are getting back-ordered because they ran out of stuff.  This is about money being pumped in first, inflating the markets and hoping it trickles down and gets all that other stuff to happen.   Like Reaganomics – it sounds good but it's a total disaster.  

    Oil/2Can – Not ahead of inventories tomorrow.  Hopefully we get a nice run up tomorrow and then we can have fun shorting again,.  

    Gold testing $1,750 again in case anyone likes to play the short there (/YG).  Dollar 78.73 might make it over this time.  

  156. stjeanluc

    TLT showing signs of life again….

  157. Pharmboy

    Just eating away premium….no, gobbling premium….no, swallowing it whole.

  158. Pharmboy

    I keep selling the Apr $30 VRTX puts for 80c or better, and buying back for 70c.  Wash rince, repeat. 

  159. Phil

    Spiegel/Angel – That's a good article!  

    Graphic: Athens' Debt

    Graphic: The Greek Dilemma

     

    For the past two years, Greece has wrangled with the euro-zone states and the International Monetary Fund (IMF) over its so-called "rescue." Austerity measures have been agreed to, aid has been paid and private creditors have been forced to accept "voluntary" debt haircuts. Despite all this, Greece is in even worse shape today than it was then. Its economy is shrinking, the debt ratio is rising and the country and its banks have been cut off from capital markets. There isn't even the slightest sign that the situation might improve. Something has gone very wrong with this rescue.

     

     

    But none of the protagonists seem to have grasped this. They continue to negotiate as if things are business as usual, they let one "final ultimatum" after the other pass and they persistently fail to realize that their discussions have started to verge on the absurd. It would be a lot better to end this farce.

  160. jabobeast

    WTF is CMG still moving higher every day??? Didn't they disappoint last week??
    FU CMG!!!
     

  161. stjeanluc

    Apparently, there is no need to hedge as this market never goes down….

    http://sentimentrader.com/blog/archives/131

    We are getting  a bit complacent I think….

  162. flipspiceland

    "…their discussions have started to verge on the absurd".
     
    Like saying, "Brady could have used some receivers with hands."

  163. stjeanluc

    Debt / Phil – This is another reason why austerity can't work… it's a death spiral. If your GDP shrinks, all the debt ratios become worse and you need to impose more austerity to balance your budget! Rinse and repeat….

  164. roro

    Phil………Speigel is calling the deal ABSURD……..IF, and that is a BIG If it seems. …if the market gets a hold of that notion that the debt negotiation is ABSURD and hopeless and really just a lie on top of a lie on top of another lie i don't think i want to be long this market……….it is all bullshit.
     
    this thing could unwind so fast who knows, and then it starts getting real complicated as the other players like Portugal, Spain, Italy and Ireland line up and try figuring that out as Speigel writes
     
    everyone is pointing out that there is NO VOLUME………

  165. etradingsignals

    Phil: How do you like VALE? They have a dividend yield of close to 7%. Is there a trade idea you would suggest, which allows one to keep the dividend and add to it, with a buy-write or something?

  166. stjeanluc

    Pretty effective critic of a business model…

    http://www.thereformedbroker.com/2012/02/07/about-that-business-model/

  167. Phil

    Volume 67M at 2:20 – that's 17M since noon!  You can't look at a chart and think it means anything when it's based on such thin trading the same way you can't check the next 10 people who walk through the door at a shopping mall and predict the male to female ratio of the US population.  Even worse, the way the market operates – there's a guy on the other side of the door with plenty of men and plenty of women and he can choose to send through any ratio he wants to make you think you see a trend.  They can control dozens or hundreds or thousands – that's why surveys have statistical error rates and why the market does too and until you see some reasonable portion of the Dow component's 50Bn shares turn over (maybe 2.5Bn) it's pointless to draw conclusions.  So, at 200M a day – any pattern that doesn't last 10 days is pretty much meaningless.  This is our 3rd day over 12,750 but, if you handicap for the Dollar, which is down 1% or 125 Dow points, we're still under.  

    TLT – and thank goodness we get a chance to get back to 10 – don't blow it!  

  168. sank1

    Gold Short / Phil,
    What would you target on this? Would you consider adding short contracts were /YG to move up some? Thanks.

  169. yodi

    Greece dept. I am just asking myself one question are they blind, stupid, or just dumb? Any school boy can tell yo they will not and can not pay!

  170. zeroxzero

    Nat. Gas:  Phil was liking CHK at it's recent price.  Any idea of the nexus, if any, between European and U.S. supplies?
     
     This, from FT today: "Italy said it was experiencing “critical” shortages of Russian natural gas, as abnormally cold weather pushed up demand for the fuel to all-time highs.  A brutal cold snap in Russia has forced Gazprom to divert some supplies destined for Europe to meet domestic demand. Last week, some of its largest European customers said gas supplies from Russia were down 30 per cent on normal levels."

  171. pstas

    TLT- out with 2%; after a DD , I will be content with that.

  172. roro

    Merkel, "The debt crisis won't be solved overnight", and "We need GB in the European Union".
     
    Laugh or cry?

  173. stjeanluc

    Nat Gas / Zero – Well Europe will soon find out that their nat gas suppliers i.e. Russia might not be as reliable as they thought on many levels…. They were talking about plans for LNG terminals in the US using our gas surplus but it's quite expensive and our reserves might not be as large as first thought. 

  174. chaps

    Peter D/Stop Loss Example
     
    Let's say you sold (a) puts at one strike for $900, (b) different puts for $1,300, and (c) calls for $1,000. Total of $3,200.
     Then the market tanks and the mkt values become respectively (a) $2,500, (b) $2,200, (c) $300. Total of $5,000. So NP ratio is 5,000/3,200 = 1.6.
     
    You want to get it down to 1.5. Looking at individual NP ratios of the puts, you have (a) 2.78, (b) 1.69. So the (a) puts are the worst on a ratio basis. After doing the algebra, you would need to sell about 17.4% of your (a) puts to hit the 1.5 target. Doing this reduces the sold value of (a) puts to about $743 and the market value to about $2,065 (in other words, 82.6% of what they were before.)
     
    This reduces the total sold to about $3,043 and the market value of what you've sold to about $4,565. The ratio of the two is 1.5

  175. chaps

    actually, you're buying back short puts, not selling.

  176. dflam

    PhiL/Houston survey:
    Been back in bus. brokerage for a month now & visited about 20 bus owners. All are busy & looking for help.

  177. chaps

    Peter D/stop loss:
     
    I've actually been doing this for about 5 months.

  178. Phil

    SONC/Cwan – Very good solution.  When you have cash, there's always something to trade tomorrow.  

    Banks/Rain – Oh but they have.  Those books have been hidden since 2008 and believe me, they are much improved but, if people had known how bad they WERE, you would now be calling an AK47 your best friend and trading bloody clothing for food and ammo (no questions asked) at the 7-11.  

    Cars/Angel – Yep, that's diving the "great" vehicle sales.  If they let everyone qualify for a 3% home loan, that would drive great home sales too….  

    SPXU/Canuck – You have 10 days, what's the hurry?  It's not like you'll be more screwed by waiting.  

    AGNC/Yodi – I assume you sold 10 March '14 $27 calls, now $3 as I see them.  Well, that's $27 back in your pocket plus the $2.10 you sold them for is net $29.10 and you bought the stocks for $29.36 so you screwed yourself the second you sold the calls and you are no more or less screwed now, are you?  The dividend is $1.40 so would be amazing if they don't call you away.  I don't know what you want me to say, AGNC is a crappy stock to sell calls against, that's why we're uncovered in the Income Portfolio (also on NLY).  If you are going to sell calls, you need to wait for the stock to hit $30 and then sell $30 calls (Jan) for $1 and that's going to be as good as it gets.  At least that way, if you get called away, you end up with $1 vs the $1.40 dividend you hoped to collect.   As it stands now, if they go up and you get called away, then buy more stock for next time (or, better yet, sell the 2014 $27 puts for $5.70 and stop worrying about the silly stock).  If it goes down, have a price in mind at which you want to take out your caller, maybe back at $2.10 but the key here is if you have faith in AGNC to sit on them uncovered – if not, it's always going to be a total pain to own.  

    Lies/Roro – Tsk, tsk, that's what reading the news and thinking will do to you….  

    VALE/Etrad – They're running up with the sector and could do well if they hold $26.50 (200 dma) but they are a bit overbought with the rest of the market and not one I'd like to chase when they're moving up.  The 2014 $25s can be sold for $5 and that makes for a good net entry.  Delta is .40 so figure if VALE does drop to $21.50 (20%), those puts are only $7 anyway (and worth $3.50 at expiration at that price) so selling the puts is risking $2 on a $5 drop and you make $5 (which is 20% of the stock price) if they simply don't fall more than 5% – that's a nice ratio.  

    Yellow pages/StJ – They still have those?  I haven't seen them in years.  

    Gold/Sank – On the futures? No way, that $1,750 line is a dead stop.  Look how crazy gold moved today off $1,715 – you don't want that kind of risk in the futures.  

    Greece/Yodi – Of course they know it but they are essentially going to go into default and collapse in 30 days if they don't get this loan.  At this point, they are like a business that can't get a bank loan turning to the Mob for assistance.  In the end, someone is going to get their legs broken and it won't be the IMF or the ECB – the people in power now are selling the Greek people down the river but they are all 50+ and I'm sure they'll be long gone by the time Greece is in flames as the new loan kicks the can down the road to 2020 and I'm some of these morons even think they will be looked on as saviors of the Greek people.  When slavers first used to go to Africa, they didn't hunt down people on their own – they simply paid one tribe to capture another tribe and hand them over.  That's what's going on in Europe now – the other countries, even the PIIGS don't give a crap what happens to Greece as long as their head is not on the block at the moment.  They don't realize there will be a next and a next and a next as each tribe turns on the next until they are all in chains.  

    At the moment, Greece is HOPING to be Chamberlain.  As Churchill said:   

    "An appeaser is someone who feeds others to a a crocodile, hoping they will be last…"

  179. stjeanluc

    Extrapolation really works well…

    http://pragcap.com/germanys-dax-on-pace-for-143-return-in-2012

    But the real story for equities has been in 2012.  So far this year the S&P 500 has yet to experience a single -1% down day.  And while the S&P 500 is up almost 6% YTD, its performance is nothing compared to German equities which have been the primary beneficiary of healing in Europe.   The Xetra DAX is up 14.5% year to date!  For those playing the trend following game, that’s a 143% annualized return….My guess is some German equity traders are packing it in the for year after a very healthy gain….After all, 145% annualized isn’t exactly sustainable and 14.5% is a pretty good year given the way this market has yo-yo’d these last few years….

  180. zeroxzero

    Rain;  Thanks, great looking machine.  It's the price of a dozen pedals, so it better be good.  Which seems likely since there's a waiting list to buy it.  I threw my name in the hat, we'll see what happens. Rock on, bro!

  181. kustomz

    market bots reacted to this news at 2:54??
    WASHINGTON, Feb 7 – U.S. consumer credit expanded much more than expected in December, a positive signal for the economy as people borrowed money to buy cars and go to school.
    Total consumer credit grew by $19.31 billion, more than twice the $7.7 billion increase that was expected by analysts in a Reuters poll.
    Nonrevolving credit, which includes auto loans as well as student loans made by the government, accounted for the bulk of the increase as outstanding credit rose $16.55 billion during the month. That was the biggest increase since November 2001.
    Revolving credit, which mostly measures credit-card use, rose by $2.76 billion in December.

  182. dclark41

    Hey Phil
    I bailed on that TLT with a $5 gain. But I didn't lose! Thanks for your guidance on the trade. It sucks when they don't go the way you want, but it's great when you can recover and not lose money. Thank you.

  183. David Ristau

    Fossil (FOSL) options are showing way too much implied volatility going into earnings. That is why we are selling puts at the $80 level for a quick 7-8% scalp by next Friday. Over past eight quarters, excluding disastrous August 2011, the stock has never had a max draw of more than 15%. Only twice has it dropped more than 10%. For the aggressive trader, sell the $85 puts. For someone more conservative, sell the $80. We sold the $80.

  184. zeroxzero

    Stj:  Europe is very dependent on nat. gas, right?  More than the U.S.?  A Spaniard who would know once commented to me, "our coal is basically sand, we import from Wyoming."

  185. mampcsA

    Taking the $ to the cleaners today. Guess Greece is fixed.

  186. stjeanluc

    I have not checked lately, but look where crack spreads are again now:

    http://www.bloomberg.com/apps/quote?ticker=CRK321M1:IND

    Going back to the highs of last year. I guess good times for VLO and other refiners are back!

  187. Phil

    Nat gas/ZZ – Nat gas is local until they get LNG working (something they should do with all this empty tanker capacity).  I wouldn't expect it to come back anytime soon but I do like CHK as a 20-year play and I think they are fairly priced with the outside possibility of a sharp upside.  

    Houston/Dflam – Good to know but, of course, we know Texas doing well with booming oil markets.  

    Extrapolation/StJ – Wow, and we're only tracking a 72% gain – I'd guess we then must have 72% more upside to catch up on!  How much are AAPL $750 calls?  

    Dollar being smacked back to 78.63 again to prevent drop – only 3:11 so I'm not sure how long they can keep masking the selling.  76M on the Dow at the moment.  

    Credit/Kustomz – People going $12Bn into debt to pay for Christmas is now bullish?  Wow are we insane!  

    TLT/DC – Well the point was to end the day with 10 at a lower net ($1.73) but getting out even if good if you don't believe in the Fed tomorrow.  

  188. stjeanluc

    Nat Gas / Zero – Actually the US is the biggest consumer by far in the World – 650 billion cubic meter per year compared to 500 billion in Europe. I think that we use more in the electricity generation. But our sources are more secure – domestic and Canada… Europe buys from Russia and North Africa mainly. Great democracies all….

  189. stjeanluc

    These TLT calls are still 1.73 right now if people are still holding on to the 10 we got earlier!

  190. roro

    Phil, and/or others
     
    What do you make of this article about CFDs?…….Charles Hugh Smith – Two Minds
     
    the premise is that deleveraging of Credit Default Swaps is causing the price of stocks to rise as the players know the music will stop ………."wise guys realized they weren't limited to selling CDS to the owners of Greek bonds--anyone could buy a CDS on Greek debt. So why not sell $1 trillion in CDS against Greek bonds? That's ten times the premium."
     
    "Some of these CDS are written against various swaps or stock indices, meaning that the asset to be delivered upon default is ultimately a claim against stock indices, currencies, etc."
    "That means that those holding the CDS obligations have to acquire these assets so they can pay off their obligation when Greece defaults."
     
    http://www.zerohedge.com/news/guest-post-has-derivatives-deleveraging-fueled-stock-rally

  191. Phil

    Financials not responding so far to "fantastic" markets.  Let's pick up 10 XLF March $13 calls at $1.75 in the $25KP as that's not even a dime of premium and we need to tilt a little more bullish – just in case.  

  192. mampcsA

    Phil, stop out on the DIA puts in the 25KP or hold overnight?
    The XLF calls went thru at 1.75.

  193. rustle123

    From Doug Kass:
     
     

    Sell Everything?

    Feb 7, 2012 | 3:01 PM EST

    • Dr. Nouriel Roubini has turned bullish on stocks.

    Why, you might ask?
    Because, according to CNBC.com, Dr. Nouriel Roubini (who has been bearish since the generational low in March 2009) has turned bullish on stocks.
    You can't make this up.
    Barron's' Alan Abelson once told me that he only read nonfiction books because in life (and especially on Wall Street) the truth is almost always more amazing than the made up.
    Amen to that, Al.

    Position: None

  194. bbates

    Phil is there a SQQQ BCS that you like saying this is the top in the Nas for the short term

  195. stjeanluc

    25KP / mampcsA – What prices did you get on the TLT trades today? Thanks.

  196. rustle123

    James Bond's reaction to the pump job at EOD:
     
    http://www.youtube.com/watch?v=QtkFmufS6k8

  197. Peter D

    Thanks, chaps.  Did you start in August or September?  Did you get whipsawed when trying to re-enter?

  198. Phil

    Crack spreads/StJ – The scary thing is the refiners did not do that well this year.  

    CDS/Roro – Sounds like a bit of a stretch but who knows what kind of insane swap arrangements people get themselves into?  

    DIA/$25KP, Mampcs – I would rather get out even or better but, if not, that's why I added XLF – for balance so we either get a nice dip into the close or I'd be willing to hope we open down 50 or more points tomorrow with no Bernanke to talk up the markets and 10-year notes that aren't going to sell themselves.  

    SQQQ/BBates – One would think!  At the moment, I'd sell the March $14 puts for .90 and buy the 2x the $13/14 bull call spread for .50 for net .10 on the $2 spread that's 100% in the money at $14.11

  199. chaps

    Peter D:
     
    It was around mid-September. So I think that was after all the craziest up-down rebounds after the big fall, if I remember correctly. But in any event, I haven't been whipsawed. I think the threshold has only been broken like three times, and nothing very dramatic. And all events were spaced out. In other words, it wasn't like I got stopped out three days in a row.
     
    But of course, the markets have been settling from a volatility perspective during that period. I'm sure I'll learn a lot more during the next crash.

  200. rainman

    0×0 / fx — It's not just pedals , although there are a lot (21 different drive units alone), it's amps as well (and cabinets, and mics). One thing I love about it is I can get that cranked amp sound at any level (modulo feedback at low levels) and through headphones! Nice for that 1 am jam session. I run mine through FRFR monitors and flat cans. It continues to give me that grin when I find something new with it  (you know — "that grin").  It's like being a kid in a candy store. This guy did a pretty good series of videos walking through the presets: http://www.youtube.com/watch?v=ZaioXb3ewMU but those are just the unmodified presets and are from an older firmware revision (newer firmware has improved dynamics and feel not to mention more amp models and fx added). The support for this thing is top notch and it is constantly being improved. I highly recommend checking out the community forums. I know I probably sound like I'm plugging the thing but I have no interest in the company, just an extremely satisfied owner (hard to do) and I think it's the best thing since… well… amplified guitar! OK, gotta go jam now 8)

  201. mampcsA

    Stj, DD on TLT at 1.45 (at 1.10 pm) and got out of 10 at 1.80 at 3 pm.

  202. stjeanluc

    Thanks mampcs!

  203. rainman

    rustle / Dr. Nouriel Roubini has turned bullish on stocks. — I about fell off my chair! The world really is ending this year isn't it?

  204. Peter D

    chaps, that's good as you survived early October low, the quick drop from 1292 in early Nov, and the decline into Thanksgiving.  I'll do more analysis and will try to implement.
     
    Do you calculate at the close and take action the next day, or you do it in real time?  On big down days, the puts can double in value in the last hour of trading.

  205. Phil

    12:00 PM On the hour: Dow +0.24%. 10-yr -0.44%. Euro +0.88%vs. dollar. Crude +1.88% to $98.73. Gold +0.95% to $1741.25.

    12:04 PM European shares bounce back from significant early losses to close mostly green on the session as Greece edges closer to a deal (how big of a "sell the news" moment might that be). Stoxx 50+0.3%, Germany -0.1%, France +0.2%, Italy +0.7%, Spain +0.2%, U.K. flat. Euro +0.9% and buying $1.3245. 

    1:00 PM On the hour: Dow +0.3%. 10-yr -0.43%. Euro +0.99% vs. dollar. Crude +1.84% to $98.69. Gold +1.38% to $1748.75

    2:00 PM On the hour: Dow +0.3%. 10-yr -0.51%. Euro +0.88% vs. dollar. Crude +1.61% to $98.47. Gold +1.5% to $1750.75.

    3:00 PM On the hour: Dow +0.33%. 10-yr -0.44%. Euro +0.94% vs. dollar. Crude +1.89% to $98.74. Gold +1.5% to $1750.75.

    Dec. Consumer Credit: +$19.3B (annual rate of +9.3%) vs. expected $-4.0B to $15.0B. Non-revolving debt, such as auto loans, personal loans and student loans, rose 11.8%. Revolving debt up 4.1%

    The powerful churn higher in equities has turned Nouriel Roubini bullish, with Gina Sanchez from his group saying, "We're a believer; we're celebrating. We think the rally has legs." Celebrating? Who's left to buy? "This could be what my Grandma Koufax used to call 'an oy vey moment,'" tweets Doug Kass.

    The DJIA lost ground in 10 of January's 20 trading sessions, but still had its biggest point gain ever. From Jan. 20, the index was red in 8 out of 11 sessions, yet gained 1%. "What's a bear to do?" A Street adage says if you sell and sell and the market doesn't go down, turn around and buy. 

    The "classic short squeeze" must not have run its course, as Sears (SHLD +7%) shares again spike higher on no real news. No stock is more subject to rumor mongering and takeover talk than Sears; today, speculation has the retailer working with Goldman Sachs (GS) to find a buyer.

    Escrow accounts, budget commissars … if not already there months ago, "rescue" operations in Greece have truly reached the absurd stage, writes Stefan Kaiser. Let the country go bankrupt, help the Greek banks back on their feet, and focus energies on preventing contagion to the rest of the EU. 

    Support for the ruling Greek coalition has sunk so low that if elections were held today, it might not have enough votes to support formation of a government. That would mean bringing in yet another partner that hasn't yet been tarred with the brutal austerity measures facing the country. Elections could come as soon as 60 days from now. 

    While Greece's economy truly crumbles with maybe worse yet to come, cheapened Greek shares continue to see the other side of the chasm. The Athens composite gained another 2.2% today, bringing its gains to 28% in the last month. YTD: Greek ETF (GREK)+38%, National Bank of Greece (NBG+106%, Coca-Cola Hellenic (CCH+20%. 

    Doubling his estimate of the likelihood of a Greek exit -Grexit - from the eurozone to 50%, Citi's Willem Buiter believes it would only be a moderate negative for the rest of Europe. A sharp difference from the "very high" cost of 6 months ago. The difference: EU banks have offloaded most of their Greek exposure (to whom?), and an ECB willing to step in. 

    Though MyPlanIQ acknowledges that a diversified ETF is a better bet than investing in a one stock, it can't help running through the exercise to find the single name to own. After breaking down the charts, it tags McDonald's (MCD +1.5%) as a perpetual outperformer – noting that "the world appears to have a love affair with fast food."

    The plunge in the Baltic Dry index to multi-decade lows has some warning about a economic slowdown and a hit to equities, but a check of the record shows to index has little correlation to stocks. The dive in shipping rates is what it is – a response to too many ships being built over the past years. – but, not much more. 

    New Halliburton (HAL -1%) director Murry Gerber just spent $1.1M to buy 30,000 HAL shares, the largest insider purchase at the company since at least 2003, according to InsiderScore.com. Gerber "knows the energy space, and it’s good to see him step up with more than a token purchase,” InsiderScore.com comments.

    LivingSocial CEO Tim O'Shaughnessy claims that 80% of its merchants asked to do another deal on the firm's website agree to do so, in contrast to previous reports that daily deal sites struggle with repeat customers. He also notes that the site has 60M members and has improved its ability to target users with relevant emails. 

    Coinstar (CSTR +18.3%) makes new 52-week highs after delivering strong earnings and guidance (III), and acquiring NCR's DVD kiosk business. Bill Wolf believes Coinstar can earn $5/share in 2012, well above its $3.80-$4.30 guidance range, thanks to surging per-kiosk sales and steady per-kiosk expenses. But Needham is concerned about the end of Redbox's wholesale deal with Time Warner, and the pending renewal of a similar deal with Universal.

  206. Phil


    A day after Best Buy may have inadvertently leaked detailsabout Apple's (AAPLmuch-rumored TV set, The Globe and Mailreports Apple is in talks to sell the device through Canadian cable/wireless providers Rogers (RCI) and BCE. It's claimed Rogers and BCE already have prototype sets, and that the device can be controlled by either voice (Siri) or hand gestures. 

    As Apple (AAPL +1.1%) TV talk runs thick this week (III), Barclays' Ben Reitzes weighs in with thoughts on the potential impact: It could contribute $17B in revenue and $5.40/share in profits in FY 2013, or 11% of his current EPS estimate of $48.46. "Apple’s eventual television could be so much more than a TV… it is really not fair to compare it to products already on the market.” 

    A rather grumpy Neil Young isn't giving up on the idea (video) that a new music player can be created that cuts into the sub-optimal way of listening to music that Apple (AAPL), Pandora (P), and Amazon (AMZN) has pushed the masses toward. He notes that MP3s and streaming music lose 95% of the data originally recorded in the studio and contends that a market exists for a higher-end device that allows listeners to hear music the way they artist intended. His answer to who will make the player: "Some rich guy."

    Three lunchtime reads:
    1) Peak everything: Can earth keep up with our demand?
    2) Investing for the long term: Dividend growth stocks or S&P 500
    3) India awakens to need for foreign investment

  207. mampcsA

    Might be able to get out even on the DIA puts in the 25KP. Let's see.

  208. zeroxzero

    Interesting piece by George Friedman [Stratfor] on youtube, a main point being that we will likely continue to see Arab ferment in the Middle Eastern countries, and perhaps further regime chance, but the assumption that these will lead to constitutional democracies is quite misplaced — these dictators are part of a superstructure of power [my word, not his] that are quite entrenched, and, if overthrown, will likely be replaced by Muslim Brotherhood/ Islamist-type regimes. You can draw a number of conclusions about oil, none of them necessarily accurate.

  209. Phil

    While CNBC says things are going well and they expect deal overnight: 

    Greek strike protesters burn German flag, chant 'Nazis Out'


    DigitalJournal.com‎ – 1 hour ago
    Police turned tear gas on protesters who burned the German flag in anger over apparent German domination of Greece. As thousands of strikingprotesters 
  210. Phil

    Blast from the recent past, by the way:  

     

    Greek debt talks to resume Wednesday in Athens | Reuters

    http://www.reuters.com/article/…/us-greece-idUSTRE80F0H120120117

    Jan 17, 2012 –  back to the negotiating table with Greece to resume talks that broke down  the scene of anti-austerity strikes and street protests on Tuesday.

  211. chaps

    Peter D:
     
    I did well this fall on SPX SS. Everything is real time. All my trades are in Excel and linked through DDE to TOS to get real time quotes. I've built in a lot of logic into the spreadsheets. That real-time NP ratio number, and others, is in front of me all the time when the market is open.
     
    The software is also tracking my P/L progress through time and what I project to make with current open positions. So, if I've done alright, I may just take the loss on a stop-out. That's actually what I've done so far, because I could see the loss wasn't significant in the big picture.

  212. stjeanluc

    Greece / Phil – Can we then conclude that Greece will be fixed tomorrow!

  213. rustle123

    Phil,
     
    Can't Greece just say ok, we'll accept your measures, give us the money then turn around and say, screw austerity, not going to happen.

  214. Phil

    Close but no cigar and we're stuck with the DIA puts.   Added the XLF calls and we are back to 10 of the TLT calls, now with a $1.73 basis but we also already sold 5 for a profit so very nice repositioning on that trade.  

    Dollar finished at lows but market not at highs.  Dow volume finished at pathetic 115M, gold $1,748.50, oil $98.75.    

  215. zeroxzero

     Deutscheland uber alles vs. Latin Reticence.  I think russell's right.   The Greek politicians just need to say "yes, we'll sign whatever you want" and not do it.  Whose gonna make them do it?  The wording of any document is irrelevant in practice.  It's all about, keep the combined populations of Europe, the U.S., China and Everybody Else calm.  No shooting or killing while we reduced the real GDP of all nations measured in the price of essential resources, oil being way up on the list.  Seven billion.  Lotta people to  make poorer at the same time without having them at each other's throats.  Good luck to 'em.

  216. Phil

    Greece/StJ – Not sure it matters.  Looking at the 18th, Greece was not fixed in a similar Tues/Weds deadline and the Dow popped 100 points.

    Greece/Rustle – No, they are essentially rewriting their constitution with "no backsies" clauses so the EU has some extremely nasty rights should they try to ditch – like essentially taking control of all their Government, services, ownership of land, etc.  In other words, the way the EU wants this written, Greece ceases to exist if they don't live up to terms.  No one in their right mind would go along with this BS and it's not going to stop a new Socialist party from coming in and telling the EU to stuff it and then what – does the ECB March on Greece?   Would the US be obligated to send in troops to knock down the doors of Greek homes and repossess their belongings in preparation for the World's biggest bankruptcy auction?  

    Think about what the IMF is asking Greece to do – Cut the minimum wage from $979 a month to $685 (30%).   That's PER MONTH – for a human being to work!  What the F business is it of the IMF what private Greek companies pay employees?  Well it's because the IMF works for Big Business that likes to use Greece for cheap labor and by crashing the pension funds and raising the retirement age from 55 to 65, they get themselves a workforce of millions of slaves.  

    Actually, that's unfair – slaves are much more expensive because you have to feed, clothe and house them and good luck doing that for $685 a month.  This is much better because you pay the people so little, they pile up debt just so they can live long enough to get to work – it's a Capitalist Paradise!!!

    It's even better because, in Greece, Private sector salaries are based on multiples of the minimum wage so even top 90% employees are reamed by this deal.  Imagine an American President announcing we borrowed another $2Tn and now everyone in America gets a 30% wage reduction?  Great if you are an employer, not so much if you are not…  

    Cuts have also been promised in Defense (in case the IMF needs to march in with troops, they don't want Greece putting up a fight), Education, Health Care and, of course, Social Security.  Tens of Billions of state assets (mineral rights, islands, farmland..) are being sold off for pennies on the Dollar to Europe's rich and powerful.

    One civil servant watching the protests expressed a weary anger at the austerity imposed already, which has almost halved her monthly pay to 900 euros, and higher taxes.

    "I wouldn't mind paying for the next two years if I knew austerity would take us somewhere," said 32-year-old Leto Papadopoulou. "But this crisis seems endless. In 10 years from now, I will be a lost case for the labour market."

    Panos Bessis, 42, a cameraman at the TV station, says he knows of colleagues who are now homeless because they've gotten kicked out of their apartments after falling behind on their rent. He says these colleagues sleep at the station, which the workers have occupied in a sit-in protest to force the owner to pay them. Bessis worries that he may find himself in the same situation: because the station hasn't paid him for so long, he's fallen behind on his mortgage. A recent poll found half of Greek homeowners saying they won't be able to pay their mortgages this year. "My wife hasn't been able to find a job for three years, and we also have a 5-year-old daughter," Bessis says. "Our savings have run out, and our options are running out too."

     

    Even if Papademos persuades the coalition to sign off on the new bailout, he must then face Parliament, which also must approve the deal. In addition to slashing the minimum wage, the coalition government announced Feb. 6 that it would cut 15,000 civil service jobs this year.

    Parliament will, of course, face the same tough choices as the coalition leaders. It too faces a public that resents austerity but overwhelmingly wants to stay in the euro zone. "It feels like we are damned either way," says Petros Koutsovoulos, 36, who runs a small shop in Plaka that sells handmade products fashioned out of the wood of olive trees. His business has dropped in half since the crisis. "If we give up and go back to the drachma, will it be a new start?" he says. "Or will it be the beginning of a poverty we can't even imagine?"




  217. stjeanluc

    No matter what, I don't think that there is a good solution anywhere in Greece short of turning it into Europe's sweat shop… And maybe that's the goal! It looks like Greece will soon be back to pre-Europe level of living. Not much progress as far as I can tell!

  218. zeroxzero

    On the bright side, global populations should peak around 2070 and there will be more to go around at that point.

  219. BertII

    BWLD up $12.00 to 82.58 after after hour with earning

  220. Phil

    At the close: Dow +0.26% to 12879. S&P +0.23% to 1347. Nasdaq +0.07% to 2905.
    Treasurys: 30-year -0.8%. 10-yr -0.46%. 5-yr -0.23%.
    Commodities: Crude +1.93% to $98.78. Gold +1.34% to $1748.05.
    Currencies: Euro +0.97% vs. dollar. Yen +0.31%. Pound -0.47%.

    Market recap: Stocks turned higher, with the Dow reaching its highest since 2008, as Greece reportedly neared accord on budget cuts and Bernanke renewed his pledge to stay accommodative. U.S. job openings rose, and consumer credit crushed expectations. The euro rallied vs. the dollar, climbing near eight-week highs. NYSE declining issues narrowly outnumbered gainers.

    Everything old is new again:  The chase for yield has banks buying CMOs - those dreaded securities backed by mortgage loans sliced and diced into many tranches – by the billions, increasing holdings by 20% in the first 3 quarters of 2011. CMOs now take up 3.47% of bank balance sheets vs. U.S. Treasurys which have declined to just 1.25%.

    Bernanke: Fed Policy’s Encouragement of Risk Is by Design (Real Time Economics

    Investors Place Their Money on Fed (WSJ)

    "If the results in Greece were disastrous, without a doubt they will be no different here," says Armenio Carlos, the head of Portugal's largest (700K) labor union. He's calling for a restructuring - including haircuts – of his country's debt. His power, however, has been cut a bit by Portugal's 2nd largest (520K) union breaking ranks and signing onto the government's austerity efforts. 

    Buffalo Wild Wings (BWLD): Q4 EPS of $0.73 beats by $0.06. Revenue of $220M (+34% Y/Y) beats by $10M. Shares+12.5% AH. (PR

    More on Buffalo Wild Wings (BWLD): Q4 blows out across the board on nearly a 34% jump in Y/Y revenue, with strong sales coming from both new and existing franchises. Same-store sales grew by 8.9% at company-owned and 5.9% at franchised locations, surpassing $2B in total FY11 system-wide sales. Shares +13.4% AH.

    Disney (DIS): FQ1 EPS of $0.80 beats by $0.09. Revenue of $10.78B (+1% Y/Y) misses by $400M. Shares -2.5% AH. (PR)

    More on Disney's FQ1: Growth was fueled a 10% Y/Y revenue increase for the Parks & Resorts division, and hurt by declines of 16% and 10%, respectively, for the Studio Entertainment and Interactive Media (gaming) divisions. After respectively growing 9% and 14% in FQ4, the Media Networks and Consumer Products divisions only grew 3% each. A 7% drop in broadcasting revenue (ABC) hurt Media Networks. DIS -2% AH. (PR)

    OpenTable (OPEN): Q4 EPS of $0.37 beats by $0.07. Revenue of $37.2M (+21% Y/Y) beats by $0.4M. North American revenue +22% Y/Y, international revenue +15%. Shares +6.8% AH. (PR)

    Credit Suisse joins JPMorgan in arguing Cisco (CSCO) will report solid earnings tomorrow on the back of relatively healthy enterprise IT spending. The firm also asserts Cisco won't be as badly affected as Juniper and others by weak spending among top North American carriers, given lower exposure and the strength of the company's ASR5000 and ASR9000 routers.

    Are Republicans About To Commit Medicare Suicide? (TPM)

    Truth, lies and Afghanistan (Armed Forces Journal)

    And, very good note from Barry:  

     

    Resistance, however, is futile.  Try as I might not to opine on the 1.2-million-one-month-drop-in-the-labor-force, I cannot help but spill a few pixels of my own.  So here goes.

    Let’s start with last month’s BLS Employment Situation release.  It contained a box, on Page 4 (of the PDF), that included the following heading and text (emphasis mine):

    Upcoming Changes to the Household Survey

    Effective with the release of The Employment Situation for January 2012 scheduled for February 3, 2012, population controls that reflect the results of Census 2010 will be used in the monthly household survey estimation process. Historical data will not be revised to incorporate the new controls; consequently, household survey data for January 2012 will not be directly comparable with that for December 2011 or earlier periods. A table showing the effects of the new controls on the major labor force series will be included in the January 2012 release.

    So right there, in black and white, BLS explicitly told its users that January 2012 and December 2011 (and earlier) simply would not be comparable — and that would obviously be the case notwithstanding how the various numbers broke.

    Overlooking that caveat is one thing, I guess.  Being corrected all over the web and then not correcting and/or retracting is something else altogether.

    ADDING:  For what little I’m sure it’s worth, whenever I have had a question about an economic release — and that’s dozens (hundreds?) of times — I have picked up the phone and inquired directly of the issuing agency.  Guess what?  They’ve always been happy to help.  Point being, there’s no need to go out with bad information or run your mouth when you have doubts.  Of course, this will be of no comfort to the tin-hatters who claim the agencies are in the bag.

    Source:
    December 2011 Employment Situation
    BLS Employment Situation News Release, Friday, January 6, 2012
    USDL-12-0012

  221. roro

    Phil……..how can i possibly get bullish about what you just wrote for Greece? seriously, this debacle is a crime against humanity and your analogy to Chamberlain and the appeasement is on the mark just as Coulter as Sec of Labor (Camps) makes sense for later when the power gets consolidated.
     
    the situation is pathetic……….and this not the end of either. done with the rant……..sorry.

  222. cwan120

    Hi, chaps,
    Great strategy!  A few questions:
    (1) How much margin do you reserve per strangle?  Let's say you have $500K, if you sell 5 strangles, then you reserve $100K per strangle.  If you sell 10, it's $50K per strangle.  I wonder if you actually sell more strangles because you have this strategy in place.
    (2) Do you automate the strategy?  It seems like you can at least automate the stop-out part.
    Thanks!

  223. barfinger

    chaps: your premium ratio calculation is in fact a value ratio? your case of $900 puts going to 2500 ignores any intrinsic component of the new value?
     
    While I can't say I've tried absolutely everything strangling SPX, I have evolved several hedging strategies which reduced losses and surrendered potential gains, although I gave them all up over the years. I am interested in exploring a change in strategy based on the VIX. For instance, would we be better off buying spreads instead of selling nakeds?
     
    Last week, I was short 1330 calls going into Fri, and we know how that worked out…. I tried to avoid the initial excitement at the open and therefore avoided closing them for $7.50 or so and wound up escaping for $12.50. The roll strikes into this week were unattractive because of the low VIX. I wound up selling 3.5x into this week at strikes that aren't exactly safe. I increased my put contract count for this week, since I believe balance is vital when strangling, but I had trouble sleeping Sunday night.
     
    Generally, naked puts and calls, no adjustments, no fancy stuff has worked the best over time. Always interested in hearing about a hedge, however :)
     
    Pharm: where do you get those oversized, complex emoticons?
     

  224. barfinger

    I need an emoticon that shows strangling oneself.

  225. i zega

    barfinger,
    When you find it, share… I could use one of those too!!

  226. barfinger

    ADDING:  For what little I’m sure it’s worth, whenever I have had a question about an economic release — and that’s dozens (hundreds?) of times — I have picked up the phone and inquired directly of the issuing agency.  Guess what?  They’ve always been happy to help.  Point being, there’s no need to go out with bad information or run your mouth when you have doubts.  Of course, this will be of no comfort to the tin-hatters who claim the agencies are in the bag.
     
    Man. Talk about nailing it.
     
    But just because you're paranoid doesn't mean you are wrong.

  227. peedlew99

    So, Roubini's gone bullish!  Now if we can just get Pharmboy on board we can have a proper crash.

  228. barfinger

    OH, and Chaps? you can use DDE to feed a spreadsheet through TOS? is that something TOS provides explicitly? I used DDE back when I had eSignal years ago. I didn't know it was a generalized tool.

  229. chaps

    barfinger:
     
    Not sure what you mean by "intrinsic component." Intrinsic to me means intrinsic as in option price = intrinsic + extrinsic. Under that meaning both the price you sold something for and it's current value are all intrinsic, since the options are OTM both when you sold them and after the market downturn.
     
    Maybe you mean something different.

  230. chaps

    barfinger/TOS DDE:
     
    Yes, TOS provides DDE. So does IB. I use both brokerage firms.

  231. barfinger

    Chaps: thanks for the response. You felt the need to move a position still OTM? To me, I consider an OTM premium to be 100%, but when it dips underwater, some of it is intrinsic.
     
    I am at BrokersXpress because I managed accounts back in the day. I am negotiating with them now regarding features and costs. They used to be cheap, now, not so much.

  232. chaps

    cwan:
     
    How much to sell. The eternal question for all of us. :)
     
    As I mentioned last night, my current take is to start with a profit target and work backwards. So if I'm comfortable with 20% a year, that's like 1.7% a month. Then, given the kind of spreads I want to enter, i look at the ratio of the premium to margin. Let's say that's 8.5% for trades with a month duration. So that's 5 times as risky as where I want to be, so I'd enter trades until I've used 20% of my margin.
     
    I tend to change my trades relatively frequently. For instance, in a steady bull market like this, I will take profits on puts and then eventually convert put verticals to naked puts when the verticals lose 2/3 of their value, while entering a new put vertical at higher strikes. This can happen several times in a month. Given my rules on profit taking (buy back for $.30 or less for what you sold for $1.00), the goal is to have your insurance end up costing you nothing. All this means that relatively static calculations of how much margin to reserve per strangle is less meaningful to me, because my positions are evolving.
     
    With software and rules learned through hard experience, I think it's fair to say I'm nimbler. But I still tend to more cautious as time goes on, because I perceive the markets as being increasingly unhinged.
     
    Over the past months, my margin usage has rarely gotten above 25%. I'm "looking forward" to a crash like we had last summer to see how the stop-out stuff works. Like I said, it's worked so far, but it hasn't really been stress tested.

  233. chaps

    barfinger:
     
    Oops, screwed up my response to you.  I meant that OTM options are all EXTRINSIC (all premium). Intrinsic, of course, is how far the option is ITM.
     
    The discussion with Peter about stops wasn't about where to roll something, it was about when to stop out on some trades. The numbers I used were option prices (intrinsic + extrinsic). You sold a put for a price and that price goes up because of a downturn. Doesn't matter if the put option is ITM or OTM before or after the downturn. You can got paid up front, now this is your obligation to get out of the position.

  234. lflantheman

    OPEN….We discussed earlier as a possible post-earnings play.  They are up 4% this evening on strong Q4 earnings.  Not quite enough to suggest shorting.   We'll see what tomorrow brings.  I suspect it may slowly ramp up some more for a few more days.   Not likely to be a good short term play there.

  235. roro

    short Euro at 1.3245, stop at 1.3405………..premise; Greek revenue collapse is contagion

  236. elliotteldrich

  237. Maya1

    Phil,
    Trying to grasp a concept and getting confused:
    If I have 10 AAPL Mar 460 short calls now $18 ($9 premium), should I hold on to these? I think AAPL has catalysts for a move up to $480-490 in coming weeks with ipad3, etc..
    Or, should I roll to the July $500 calls, for even (now $19.20 and ALL premium) ?
    Please advise and why, or if you think another scenario is better.
    BTW, these are covered calls.

  238. peedlew99

    I wonder why there is no popular movement in Greece to leave the euro… I'm amazed at how much pain the people will take. I think if I were a Greek I'd be taking up arms.  

  239. jmm1951

    Greece
     
    I first went to Greece in 1969 and the Greeks seemed to be doing just fine then. I spent about 2 months there and lived on a dollar a day. My favorite places were Crete and Santorini, which were quiet and charming, particularly the latter where I remember spending the whole day going on a mule trip to the monastery on top of the mountain at a cost of a dollar or two. The cost of living was cheap as long as you stuck to bread, wine, tomatoes, cucumbers, eggplants, figs, watermelons, feta cheese, and retsina wine. I was able to sell a half liter of my blood in Athens and live for a week on the proceeds.
     
    I went back to those places in the early 90's and it was like South Florida with roads everywhere full of traffic, hamburgers, pizzas, processed foods, and miles of half finished concrete high rise blocks anywhere there was anything like a beach. And Germans. Germans everywhere.
     
    The Greeks should consider themselves lucky if they have to turn the clock back 40 years. If I was them,  I would throw the rascals out, go back to the drach(ma), and start over again. They still won't be anywhere near as badly off as Haiti, where most people are surviving and getting on with their lives.
     
    Then:
    http://greececyclinggoddess.files.wordpress.com/2008/11/rethymno-43.jpg
     
     
     
     
    And now
     
    http://www.dilos.com/region/crete/rethymnon_on_the_beach.html

  240. roro

    peedlew……….there probably is one, but just not seen in the msm, yet.
     
    a simple concept and i bet many many people will buy into it; take responsibility, be responsible. believe in something of value, again.
     
    that is my guess……….Sarkozy and his 121 cars are on the way out.
     
    jmm……….i was living in Lexington Mass during the Cuban Missile Crisis……….

  241. Kwan

    Not that it matters too much now, but Yahoo ousts three of its board members, including the guy who rejected Microsoft's bid for the company back in 2008.
    It also looks like LinkedIn may have just paid 15M to acquire of a company that tracks your social contacts/networks in GMail.(Rapportive)

  242. kallenjr

    So Phil,
    Is there some point where fundamentals don't matter? Looks like capital flight from Europe to US, S&P is under average P/E ratio (a fundamental?), and most 'western' governments are easing/printing. Many raw agriculture commodity indices are trending higher. The GSCI Agricultural Index (GKX) is up 6% in the last 3 weeks, perhaps ready to launch higher still. It feels like none of it makes sense except all prices are higher except /DX. Can you look at markets through a 'fundamental' magnifying glass when all prices 'seem' to be rising higher? Hard to make sense out of it.

  243. cwan120

    Hi, Peter D, chaps, barfinger, pstas
    First of all, many thanks for sharing your ideas in such details.
     
    I virtually stopped playing SPX strangles for the most part of January for personal reasons.  I just began to scale in 2 week ago.  So, I can only talk about my experience for 2011.  Up to December, I had been selling weekly puts and monthly calls.  My profit targit had been very low key, around 6% annual.  So, I tended to sell further away from market.  Luckily, I hardly ever had to roll.  For the 2nd half of 2011, the weekly puts usually had pretty good premiums, and I was able to sell at least 8%-10% away from market.  I sold MONTHLY calls to keep the strikes at least 6% away from market.  Now, of course, it's a different story.  I sold a very low key Feb 1400 call for $0.70 2 weeks ago.  I hadn't even begun to sell any puts yet, because the premiums are so low.  If VIX stays low for an extended period, I'll begin to experiment with the $50 bull put spreads 2 months out.
     
    I believe that barfinger sell weeklies on a regular basis.  I wonder if Peter & chaps have considered weeklies.  You'll be amazed how fast they decay.

  244. scottmi

    Oil – looking like time to short CL here at 99.15…

  245. scottmi

    Oil – or look for the 99.25..?

  246. lionel

    Roro/ Sarkozy and its 121 cars
    Please don't fall for the pre election slanders.
    Rene Dosiere's book dwelves in the French Elysee (Whitehouse) budget during the years 2007 and 2008.
    His book is the source of all these amazing lifestyle revelations. It has just been published now…just before April Presidential election!
    Rene is a socialist MP and as such has been voting each year the Elysee budget since it is voted by the French Parliament.
    Also It is not Sarkozy's budget per say. It is the French Whitehouse' s budget.
    And the mentioned luxury cars, jets belong to the state of France.
    Yes France has always been treating their Presidents from the Left or the Right like kings.
    Now British tabloids have made a big story out of a 0.03% discretionary spending in the French government budget.
    Funnily, what seems to have outraged the Daily Mirror the most is that the "President's house wine" is a 2006 Crozes-Hermitage worth 160 pounds a bottle.
    Uhh, it is France? I hope they serve the best of their exports to visiting heads of state. 
    And lastly if Hollande get elected, he will most definitely enjoy the same benefits … unless the French Parliament votes differently in 2013…
     

  247. roro

    thanks lionel

  248. Phil

    Good morning! 

    It's another bright and sunny day in the Futures as we have the Dollar down to 78.54 on growing excitement that Greece is going to be fixed.   

    Our Futures are up about 0.35% and Europe is up half a point and climbing at their open and the Nikkei hit 9,000 for the first time since November and Shanghai gained 2.5% with Hong Kong gaining another 300 points (1.5%) to break 21,000 and, to top off the Global madness – RICK SANTORUM swept the primaries last night – winning Minnesota, Missouri and Colorado!

    Oil is $99.35, gold $1,752, silver $34.42, copper $3.91, nat gas $2.479 and gasoline $2.934. 

    Unfortunately, I've been reading the news so it all seems completely ridiculous to me and I'd say shorting the RUT (/TF) below the 830 line (just tested 833) and shorting the Dow below 12,850 (now 12,854) look like the most attractive plays in addition to same old shorting gold at $1,750 line.  I would love to have a bullish play but I just can't do it – I'm sorry, I'd rather be in cash than pay these prices just because the Dollar is driven down to ridiculous levels against a currency (Euro) that is 1/3 it's size and just did a $750Bn round of QE and is about to do another $1.5Tn round and all that, so far, has barely "fixed" their smallest member state.   This is like us fixing Rhode Island and the rest of the World declaring America all fixed…

    Obviously, we need to watch that 78.50 line on the Dollar – below that and we can't be bearish but it should hold. 

  249. Phil

    Wednesday's economic calendar:
    7:00 MBA Mortgage Applications
    10:30 EIA Petroleum Inventories
    1:00 PM Results of $24B, 10-Year Note Auction

    7:47 PM Japanese stocks are higher this morning, with an upbeat earnings report from Toyota (TM +3%) helping to lift auto makers. The Nikkei Average is currently up +0.6% at 8,975: Honda (HMC +2%), Mitsubishi Motors JP:7211 +1.05% (MMTOY.PK +1.1%) and Mazda (MZDAY.PK +3.7%).

    Japan's current-account surplus widened to ¥303.5B ($3.95B) in December, up from ¥138.5B in November but much narrower than the previous year's ¥1.198T. The merchandise trade account however, saw its first annual deficit in almost half a century as exports for December declined 7% and imports rose by 9.8%. - This wouldn't matter in a country that didn't already have a 220% debt/GDP ratio.

    Bond-Buying Japan Banks Snub Downgrade Threat: Chart of the Day. Japanese banks are ignoring the threat of more cuts to the nation's debt rating by boosting holdings of government bonds to a record, helping to prevent any jump in the country's borrowing costs. The value of Japanese debt held by domestic financial institutions, including commercial banks and insurance companies, reached $7.5 trillion at the end of September, according to the Bank of Japan.

    Notable earnings before Wednesday's open: AGUAINV,AIVAUOCSCCTSHCVHCVSELNICE

    IRLVLTMCOPLD,RAIRLSTWXUMCWYN

    Notable earnings after Wednesday's close: AKAMATML,BDNBMRCBLCINFCSCOCVA

    CXWEFXFMCFNFGGP,GRPNILMNKIMMTDNWSAONNNORLYPAAPRURE

    TCO,VWFM

    Iran Anxiety No Match for Central Banker CashIran’s nuclear ambitions, Syria’s bloody crackdown and Greece’s potential default are leaving markets unfazed as central bankers take unprecedented steps to prevent the global economy from crumbling. The balance sheets of central banks in the U.S., Switzerland, U.K., European Union, Japan and China have swelled from a collective $4.99 trillion in May 2006 and $10.1 trillion in December 2008, two months after the collapse of Lehman Brothers Holdings Inc. spurred the worst financial crisis since the Great Depression, according to Bianco Research. China’s central bank holds about $4.5 trillion of securities, the most of any such institution in the world, Bianco Research’s data show. The ECB has about 2.7 trillion euros ($3.6 trillion) while the Fed holds $2.9 trillion, up from $898 billion in 2008.

    Dow Theorists tell you a lagging Dow Jones Transport Average is an ominous sign for the future health of the stock market, says Mark Hulbert. Unfortunately, for the moment at least, that's what's happening right now. As the story goes, the transports are usually more sensitive to changes in the market barometer, so weakness, even just relative weakness like we're seeing today, could hint at bigger trouble down the road.

    The stock market’s fear gauge is fast asleep, as the VIX registers its 14th-straight close below 20, considered the long-term average for the measure of market volatility. The VIX came close to 50 over the summer, and was above 30 as recently as December but has since dropped more than 40%.

    Thanks to macro woes and tablet cannibalization, Western European PC shipments fell 16% in Q4, estimates Gartner. That's a decline worse than Q3's 11.4% drop, and much worse than the 1.4% drop reported last month for global shipments. H-P (HPQ), with a regional share of 22.2%, has plenty to lose from collapsing Euro demand. However, Apple (AAPL), which actually saw healthy shipment growth in the U.K. and France, is bucking the tide.

    BHP Billiton(BHP) First-Half Profit Drops 5.5%. BHP Billiton Ltd., the world’s biggest mining company, reported a 5.5 percent drop in first- half profit, the first decline since 2009, as rising costs and lower output and prices halved base metals earnings. Net income was $9.9 billion in the six months ended Dec. 31, from $10.5 billion, a year earlier, the Melbourne-based company said today in a statement. That compares with the $10 billion average estimate of seven analysts surveyed by Bloomberg. Metal prices in London declined 20 percent in the half on reduced demand in Europe and slowing industrial production in China, the world’s largest metals buyer.

    China's Copper Demand Growth May Slow to 4%, Wanxiang Forecasts. Copper demand growth in China, the world's biggest user, may decline by half this year as the economy slows and subsidy programs end, according to the metals trader that's owned by the country's biggest auto-parts maker. 

    Uptrend in Gold to Continue; Next Target $1,880: Charts.

  250. Phil


    Backlog Sees Canadian Crude Price Tumble. Crude oil from Canada is being offered for half of international prices as increasing output from the world’s sixth biggest producer threatens to overwhelm regional pipelines and refineries. Western Canada Select, blended from heavy tar sands crudes, this week sold for $62.42 a barrel, according to data from Platts, the energy information service. Brent crude, the global benchmark, on Tuesday topped $117 for the first time since August. This also represents the deepest discount to US crude in more than four years, reflecting Canadian producers’ few options for delivering their oil and problems at refineries in the region.

    Groups Ask Court to Block CFTC Position Limit RulesThe financial industry asked a federal court late on Tuesday to temporarily block regulations approved by the U.S. futures regulator aimed at preventing excessive speculation in commodity markets such as oil and gold.

    Chinese Electricity Consumption Fell Massively In January, And The Chinese New Year Doesn't Explain ItUltra-brief note here from Nomura's Zhiwei Zhang : According to the China Securities Journal,China's electricity consumption in January fell by 7.5%We estimate this may be the first decline since 2002 (excluding the financial crisis period in 2008-09), indicating industrial production may have slowed sharply in January. They don't have any more answers here at the moment, except they say that if you're thinking it has something to do with the New Year, then you are incorrect.

    Greek Haggling Drags on as Meeting to Seal Terms of Second Bailout DelayedGreek Prime Minister Lucas Papademos is set to negotiate with leaders of the political parties supporting his caretaker government after Athens missed another deadline to secure a second aid package. Papademos will see the chiefs in Athens today after delaying the meeting for a second time in as many days while Greek officials and international creditors haggle over the terms. Late last night, he held an unscheduled meeting with the so-called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches on terms required for a 130 billion-euro ($172 billion) rescue package. Yesterday’s delay was yet another hitch in completing a package that’s been on the table since July. The government is struggling to arrange financing to avert a collapse of the economy, risking a new round of contagion in the euro area. With the country facing a 14.5 billion-euro bond payment on March 20, German Chancellor Angela Merkel warned this week that “time is running out” to reach an accord. The tussling in Athens threatens to hold up a critical element of the second financing package, that of a debt swap that will slice 100 billion euros off more than 200 billion euros of privately-held debt. The rescue blueprint includes a loss of more than 70 percent for bondholders in the voluntary debt exchange as well as loans that will probably exceed the 130 billion euros now on the table.

    Concession Smooths Way Toward a Greek Debt DealThe European Central Bank has made key concessions over its holdings of Greek government bonds, which will contribute to a reduction of the country's debt burden and smooth the path toward a new bailout for the country, said people briefed on Greece's debt-restructuring negotiations.

    German taxpayers may face at least $33 billion in losses on Greek sovereign bonds, citing its own calculations and those made by the IfW economic think tank. A waiver of part of the aid granted to Greece, which is being discussed, could further increase the amount.

    Greek Economy Implodes: Budget Revenues Tumble 7% In January On Expectation Of 9% Rise.

    Rick Santorum causes a shock in the GOP nomination race by surprsingly winning Colorado, Minnesota and Missouri, although none of the contests will result directly in the awarding of delegates. Nonetheless, the votes spark doubts about the claim of Mitt Romney, the Wall Street favorite, to be the unstoppable front-runner. (previous)

    House Panel Moves to Fast-Track Keystone Pipeline Plan. A plan to fast-track the stalled Keystone XL pipeline was passed by a key committee in the U.S. House of Representatives on Tuesday, as Republicans made yet another attempt to spur approval of the project that has become a major issue in the 2012 elections.

    And, if that doesn't work, here's plan B to drain oil out of Cushing and cause weekly draws in oil inventories to increase dramatically:  Plains to Boost Cushing Oil Deliveries With New PipelinePlains All American will build a new crude oil pipeline from a booming U.S. shale oil play to the largest U.S. oil hub at Cushing, Oklahoma, the company said on Tuesday, potentially boosting Cushing deliveries by 175,000 barrels per day (bpd).

    With all the problems in the economy, this could someday prove America's saving grace: The U.S. is closer than any time in 20 years to achieving energy independence. Domestic oil output is highest in eight years, natural gas production is hitting records, and the efficiency of passenger cars has helped limit demand. The transformation could mean the U.S. becomes the world’s top energy producer by 2020.

    U.S. Market Shines BrighterU.S. companies, facing slowing markets and rising costs around the world, are taking a new look at their home marketWith growth slowing in China and a slump gripping much of Europe, companies are adding capacity in the U.S., replacing aging equipment and even moving overseas production back from low-cost labor markets, a sign that corporate America could be poised to take a bigger role in the economic recovery.

    Unadjusted Consumer Credit Soars By Most Since Peak Of Credit Bubble In August 2007, Third Highest Ever. (graphs)

    US Banks Snap Up Bundled Mortgage ProductsBanks have been responding to low interest rates by snapping up billions of dollars of bundled mortgage products that resemble the sliced-and-diced debt some blame for the financial crisis. The products, known as “collateralised mortgage obligations,” or CMOs, group together securities backed by mortgage loans. These securities are then sliced into various tranches, with each portion being paid out to investors at a different time.

    RBS's (RBS) restructuring since it almost collapsed in 2009 has so far cost £38B ($60.5B), CEO Stephen Hester tells employees in an email. The money includes loan losses, disposal costs and restructuring charges. Still, Hester says, "We are ahead of schedule in (our) clean-up." 

    Annaly Mortgage Management (NLY): Q4 EPS of $0.54 misses by $0.03. Shares -0.1% AH. (PR

    More on Annaly (NLY): The flattening yield curve is crimping earnings – the average interest rate spread of 1.71% in Q4 is down 37 bps from Q3, off 14 bps from 2010 Q4. The company remains one of the more conservatively leveraged mortgage REITs, reporting a ratio of 5.4:1 vs. 5.5:1 in Q3, 6.7:1 in 2010 Q4. Dividend of $0.57/share vs. $0.60 in Q3, $0.64 in 2010 Q4. Annualized dividend yield is 13.3%.

    Small biotechs are almost always highly speculative, so it's essential that any investor who seeks to venture into those murky waters start with informed research of the sort analyst Ohad Hammer provides in his overview of five biotechs to watchEXELCLDX,SGENARRYSNTA

    China Fines Parents of Hong Kong-Born Second Child. Mainland Chinese who have a second child in Hong Kong will be fined for breaching China’s one-child policy, Chinese media quoted a family planning official as saying, as mainland Chinese women flock to the former British colony to give birth. Hong Kong’s maternity wards are booked until September, pressured by the growing number of mainland Chinese seeking to circumvent the one-child policy and gain residency rights in one of the country’s wealthiest cities.

  251. pentaxon

    Morning Phil,
    I would really like to know if Ben really believes what he says:
    http://www.bloomberg.com/news/2012-02-08/bernanke-led-economy-proving-critics-clueless-about-federal-reserve-policy.html
    is this a great scam or a great stupidity?

  252. Phil

    He's an educated man, how could he?   But, then again, economists are like religious fanatics – they believe what they believe and they sit and stare at those numbers until their brains get fuzzy enough to see some justification for their theory and they latch onto that and ignore everything else.  Why did Bush pick "Helicopter Ben" in the first place?  Because he was the guy who believed that money printing was the answer to everything.  The guy was a joke with other economists but he's just what a politician wants – a fanatic who you can count on to do what he believes is right, no matter what the consequences are.   

    See my macro rant in the morning post, in progress.  

  253. pentaxon

    Unfortunately you might be right. On TV he does give this impression of a naive complacent specialist having no clue of live
     

  254. scottmi

    lionel – good points on sarkozy… 
    " I hope they serve the best of their exports to visiting heads of state" i found curious though. is that because you think visiting heads of state are somehow worthy of it, or deserve "the best" (when paid for by the people) ? 

  255. newbie

    Phil/Bernanke
    I have not read most of the posts today, yet. Don't know if you've addressed this topic within the last year or so – I'm a newbie here, Doh!
    Question for you, and I think many members would be interested in your view on this………
    At these specific time intervals from now>  5 years  ,  10 years     ,   and 20 years …………
    how do you think the Bernank will be viewed, historically? In other words, we now see (well , some of us) Greenspan differently now than we did while he was in office. Over time, and with backward vision sometimes people and experts see policy makers differently, and evaluate them differently, with historical perspective.
    Many people look back at Volcker's time and see it with a different perspective now (the a**h*le ruined my life, at least in that time period, because of his induced recession of 1980-81, which was brutal for me, as I was essentially homeless part of that time – THERE WERE NO JOBS,PERIOD.
     
    So, how do you think the experts and economists will view the Bernank at those specific 5-10-20 year intervals (if we survive  that long)?

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