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BOEasy Money Thursday – Greasing the Wheels

More free money!

That's the way we like to start the day as the BOE pumps another $75Bn into the mix and, best of all, their currency went UP on the news because "whisper numbers were for $100Bn."  Now that we know the magic formula, we can start a rumor that the Fed will print $3Tn and then, when they ONLY print $2.5Tn – the Dollar will become much more valuable.  See, I'm starting to think like a Central Banker!  

Also in the "bad news must be good news" pile as Greek Finance Minister Evangelos Venizelos (wouldn't it suck to live in Greece with a name like Bob Smith?) heads to Brussels with NO DEAL.  That's right there is still no deal on the Greek bailout that has boosted the markets by 22% since October.  They do claim that the only remaining issue is pension cuts but all the Florida voters who picked Romney will soon find out how easy that is to accomplish. 

Just last February, I was writing a Thursday post titled "Greece is the Word" where I warned that the 4.23% CDS rate hitting Greek bonds was unsustainable and that turned us bearish right at the top of the rally at S&P 1,344.  Yesterday, the S&P was back to 1,349 and I wonder if Greece never happened – would I have continued to be bullish with the markets at this level?  

On the whole, even WITH the snowballing Greek crisis, we "only" fell to 1,249 in March so, with Greece all fixed – maybe we can afford to be a bit more bullish.  I'll be more comfortable with the upside once we see that Greece is not a "sell on the news" event but, as I noted yesterday, our last 10 bullish picks did quite well and a few of them are still playable and certainly there are still opportunities out there to pick up good stocks fairly cheaply.  

Take DMND, for example.  Last night, the stock fell from $37 to $20.50 as the beleaguered company will have to restate their last two years of earnings and that sent the CEO and two CFO's out the door and does, in fact, constitute a "material adverse change" that will allow PG to, at their discretion, terminate their deal to merge their Pringles division into DMND in exchange for a 57% ownership in what was SUPPOSED to be a $2.5Bn valued company (so $1.4Bn of new DMND stock would be distributed to PG shareholders).  

With DMND valued (at $20) at about $450M with no CEO and no CFO – you can imagine that PG shareholders may not be too wild about handing over their $1.5Bn-valued Pringles division in exchange for 57% of the combined $1.95Bn (theoretically) entity or just $1.1Bn.  

Clearly DMND, at $20 is in no position to make up that missing $300M – HOWEVER, should they toss in $150M in cash then the very act of PG green-lighting the deal can pop them back to $35 and everyone's problem is solved.  The question is, will the restated earnings justify someone lending DMND $150M (because they don't have the cash on tier books and they are already $500M in debt.  

We have two contracts of a speculative DMND spread in our $25,000 Portfolio from the last time they crashed and that was the June $37/45 bull call spread at $2.24, selling the June $20 puts for $1.85 for net .39 on the spread.  I imagine we'll be back to scratch on that trade today, maybe even with a chance to sell a couple of more June puts for a good price as it's still a nice little company without the Pringles deal but it will be a while before all the disappointed investors find the exits.  

Financials are still my favorite upside play.  If Greece is "fixed" (8:30 update – it is!) and the rest of the PIIGS don't explode tomorrow, then XLF was $16.92 last February and now, $4Tn of Global bailouts later, it's not even back to $15.  BAC was already our One Trade to make for 2012.  Back on January 5th I pointed out that BAC was, by itself, estimated to contribute 14.1% of the S&P's entire earnings growth for the year.  Therefore, we decided, there was no real point playing anything but BAC as it gave us better leverage with better hedges than the S&P would and, anyway, I did think they would have a much better year.  

BAC was $5.75 at the time and is now $8.28 so a nice 44% gain in the stock already and our $5 Jan buy/write (buying the stock and selling the Jan $5 puts and calls for $2.55) netted $3.20/4.10 and is already netting $4.43, which is up 38% WAY ahead of schedule and very likely on its way to the full 56% gain for the year.  Using the very conservative spread we set up, $32,000 invested in the spread can already be cashed for $44,300 and the loss on the FAZ hedge is $1,000 so a net of $11,300 is an overall 35% gain in 34 days.  

I strongly suggest going over that trade if you like that kind of investing as that's what we'll be looking for going forward.  

BUT (and it's a big but) I am not interested in jumping into new trades today because Greece may indeed be a "sell on the news" event and, this being Thursday already, I think it would be prudent to wait for the weekend and, if we then see the S&P over 1,350 and the Russell over 833 and XLF over $15 then it's going to be easy to construct plays similar to BAC that should keep us nicely ahead of inflation in this seemingly bullet-proof market.  

We went over the usual TERRIBLE news in Member Chat this morning and I won't go over it here for fear of ruining the "soar and ignore" atmosphere that our Central Banksters have been working so hard to create this year.  Last year, the Dollar was at 78 – lower than it is this morning and it plunged all the way down to 72.70 (6.66%) in May – a move that saved the market from falling below 1,250 as the dollar devalued faster than stocks.   

Everything old is new again in 2012, with the Dollar down 4% in the last 4 weeks and the S&P up 6% so let's keep an eye on that critical 78.50 line on the Dollar, as a failure there can pave the way for another round of asset value destruction for the American people in order to prop up market prices.  That would mean $1.33 and higher on the Euro and $1.59 or better on the rapidly expanding Pound.  Without those benchmarks – stocks would have to advance based on economic outlook and expanding earnings and, as a poker player – I can tell you that those are not cards they are currently holding.  

So let's be careful out there – still.  


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  1. jmm1951

    Greek deal?
     
    http://www.youtube.com/watch?v=MA2hk_CIZeo

  2. stjeanluc

    Oil lines

    R3 – 101.93
    R2 – 101.01
    R1 – 99.94
    PP – 99.02
    S1 – 97.95
    S2 – 97.03
    S3 – 95.96

    Yesterday's high and low – 100.09 / 98.1

  3. jmm1951

    It is claimed that there is a Greek deal. 8:27 Eastern Daylight Time on Marketwatch breaking news.
     
    http://www.marketwatch.com/story/europe-stocks-move-higher-on-report-of-greek-deal-2012-02-09-82760

  4. houston

    could some one  tell  me  how  to start  the $500k portfolio  today or  soon 

  5. jmm1951

    houston/$500K
     
    There are several posts from Phil and other members addressed  to you in Monday's discussion.
    http://www.philstockworld.com/2012/02/06/monday-market-madness-whats-this-greece-thing/#comments

  6. exec

    Greek Deal

     
    This is truly comical.  I was watching one talking head yesterday who was commenting on the pending "Greek deal".  It was laughable…..he was explaining what was supposed to be in it, including some deficit reduction estimates, and before he even got the figure out of his mouth, he says "ya right"  making a joke of the number since everyone knows this it is a total bullshit fictitious figure. 
     
    I laughed….it reminded me of this scene in Liar Liar.
     
    I'm really not sure anymore what to believe anymore from the market manipulators.

  7. roberthjrfl

    To All Tech Guys on the Site:  I am looking into setting up a multiple monitor system for trading.  Does anyone have any recommendations on video cards?  Does anyone use a Matrox triplehead2go to drive the monitors.  This device lets you connect up to three monitors to one high end graphics card.  Seems like a good way to drive multiple monitors without the cost of multiple graphics cards.  I use a high end Alienware Notebook for my trading which keeps me somewhat mobile but doesnt allow for multiple graphics cards.  I would think this device should be good for that type of application.  TIA for the comments / recommendations.

  8. jmm1951

    houston/$500K
     
    Also see here.
    http://www.philstockworld.com/2012/02/04/income-portfolio-feb-update-the-joy-of-nothing/

  9. Lincoln

    Phil: short calls on momo's
    Thanks for the cautionary advice,  I start very conservatively with these and feel that I've learned a lot from you and having worked through the >%100 moves in GMCR/NFLX/OPEN last year also do much better at adjusting.  But, that said I hear you.

  10. freeflow

    New member… probably silly question… Is there another way to follow the comments besides logging into the website? I have email alerts checked off in my account settings, but I only get email alerts per day?  I've checked my spam folder already – no luck.  It appears the emails are just not being sent.

  11. Kwan

    Phil, you said DMND is valued at 450Bn in your post, off by about 3 orders of magnitude I think. (You reference it correctly later)

  12. stjeanluc

    Display / Roberthjrfl – My friend uses a DisplayLink USB adapter to add a monitor to his laptop and it seems to work well:

    http://www.displaylink.com/shop/adapters

    You can't play video games with it, but for trading it seemed like the cheapest solution. On your Alienware laptop you should be able to use the main screen, connect a monitor to the DVI/VGA output and use a USB adapter to add a third monitor.

  13. Pharmboy

    PP for today:

  14. stjeanluc

    It's getting hard to decide to be bullish or bearish… Analysts are downgrading more companies than they are upgrading, but earnings have been getting slightly better over the last couple of weeks.

    http://www.bespokeinvest.com/thinkbig/2012/2/8/consumer-discretionary-technology-and-industrials-lead-this.html

    Last Thursday we noted that the percentage of companies beating earnings estimates this season has gotten better as the reporting period has progressed.  After another week, the beat rate this earnings season has increased slightly from 60.7% to 61%.  As shown in the chart below, 61% is still not a great beat rate, but it's a lot better than the reading in the 50s that we saw a couple weeks ago.

    The beat rate is pretty good in consumer discretionary, tech and health care in particular.

  15. Pharmboy

    Free – there is usually only one alert or so to members in the early morning and one in the evening. Opt will send a few during the day as well.

     

    Houston – if you must jump in (from my last posting a few days ago I noted paper trading for a few weeks as least), do the DMND trade.  Sell some June $20 puts….there is your first PSW trade.  1/4 entry on $10K total.

  16. stjeanluc

    That seems wildly optimistic on Greece…

    http://ftalphaville.ft.com/blog/2012/02/09/874681/optimistic-forecast-of-the-day-greek-gdp-edition/

    The reforms outlined in the draft, which include trimming state wages, cutting 15,000 public sector employees this year and merging all auxiliary pension funds, will help Greece return to growth in the first half of next year, according to the document.

  17. Pharmboy

    If Greek deal is done….why is the s&P not at 1400….??

  18. kallenjr

    Phil,
    For existing DMND position, should we buy the short call spread back?

  19. Pharmboy

    kallen- U ain't gonna get dink for that spread.  Might as well see how it goes.

  20. JRW III

    Good morning, I guess Greece is fixed……………until the people revolt !!

     

    IWM     79.10,  79.53,  79.80,  80.46,  81.12,  81.41,  81.92,  82.42,  82.81,  83.07  and 83.75

     

    Good hunting !!

  21. stjeanluc

    Small correction on DMND Phil, we are in a June 37/45 BCS in the 25KP. Actually a better upside, but no big difference this morning though!

  22. jerconn

    Pharm – what's the deal on AGEN?  I have some stock from way back when PSW was touting AGEN and ONTY, but AGEN has gone down since then…what's the deal, hold on and wait or dump now?

  23. stjeanluc

  24. kallenjr

    Pharm,
    I misstated, I meant the short call, not the entire spread.

  25. stjeanluc

  26. Pharmboy

    I would still wait.  Those June $20 Ps can be had for > $3…..that was me!

  27. stjeanluc

  28. Phil

    Good morning!  

    Sorry but still bearish.  Just like we "knew" the BOE would ease so why should the Pound go down, we also "knew" Greece would be "fixed" because the alternative was unacceptable.  So it is prudent to see how the markets react to this new information before making bets.  

    Dollar stuck at 78.50, Euro $1.3285, Pound $1.586, 77.26 Yen, oil $99.85 (any excuse for them), gold $1,741, silver $34.07, copper $3.95 (big move up), nat gas $2.468 (sad) and gasoline is loving it at $3.0037 – first time back over $3 since August and up .50 (20%) since mid December – costing US drivers an extra $84Bn a year so, if you wonder where the money comes from to support these stock moves – $84Bn forcibly extracted from consumers is certainly enough to move XLE from $65 to $75 during that period. 

    833 has been the tough line to cross on the RUT and 1,350 is a good watch spot on the S&P and then we'll have 12,900 on the Dow and 8,100 on the NYSE (the Nas is already over 2,900) and the lagging sectors are SOX and Financials so let's look for bargains in those sectors for our next 5 long plays.  

    We'll be looking to short oil on the 10:30 nat gas report as long as the Dollar hasn't failed 78.50 and we have that 30-year auction at 1pm that needs to go well so the plan in the $25KP is to buy back our covers on weakness if we get a good price.

    Looks like we can buy back the TLT Feb $116 calls for $1.15 in the $25KP so let's do that.  Our $115s are $1.10 but let's hold those for a while.   

    DMND is opening at $21.50 and it looks like the you can sell the June $22.50 puts for $5 – I like that enough to sell 2 in the $25KP if we can.  We'll look for things to settle a bit but I want to pick up a spread for the $5KP here too. 

    IRBT is another fun one but they may fall further so it's a LONG-TERM speculation but I do like selling the Sept $25 puts for $3 as an initial entry.  

    Thursday's economic calendar:

    7:00 BOE Rate Decision

    7:45 ECB Rate Decision

    8:30 Initial Jobless Claims

    10:00 Wholesale Trade

    10:30 EIA Natural Gas Inventory

    1:00 PM Results of $16B, 30-Year Note Auction

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet 

    At the open: Dow +0.14% to 12902. S&P +0.15% to 1352. Nasdaq +0.33% to 2554.

    Treasurys: 30-year -0.26%. 10-yr -0.12%. 5-yr -0.05%.

    Commodities: Crude +1.1% to $99.8. Gold +1.1% to $1750.35.

    Currencies: Euro +0.3% vs. dollar. Yen +0.26%. Pound -0.29%.

    Market preview: Equities stir but then yawn on news that Greece's political chiefs agree to more austerity. Still, it's nothing but green in Europe and the U.S. with S&P 500 futures +0.15%. Taleo is+17% and taking other cloud firms higher, because its being Oracled, while Diamond Foods (-40%) is going rotten quickly due to restatements and management turmoil. Later: Wholesale Trade 

    Initial Jobless Claims: -15K to 358K vs. +3K consensus. Continuing claims +64K to 3.52M.

    Mark Hulbert finds it a "scary parallel" that corporate insiders are selling their companies’ stock at a rate not seen since late last July, since that summer selling spike came just days before one of the more painful two-week periods in the stock market in years.

    ECB press conference: Draghi says the ECB will announce new collateral rules at 9:30 ET. It's likely the already eased rules will be eased even further, allowing banks to present pretty much anything they can find on their balance sheets to the the ECB as collateral for further borrowing. 

    ECB press conference: Draghi confirms a Greek deal has been reached, saying he has just received a phone call from the Greek PM. He refuses to comment on stories about how the ECB will participate in the debt restructuring.

    QOTD: "Yes we take more risk, but this risk will be managed," ECB President Mario Draghi on the even easier collateral rules soon to be available to EU banks. QOTD pt. II: "Very short paper on collateral: anything you got," Kevin Ferry.

    ECB press conference: Draghi refuses to pre-commit to any more LTROs following the 2nd operation scheduled for February 29. "A well-functioning banking system doesn't need to go through the central bank."

    ECB press conference: Draghi shoots down a report the ECB will sell its Greek holdings at less than face value to the EFSF, saying the move would breach rules of monetary financing of EU states. The euro shoots higher – above $1.33 for the 1st time since early December – after he says the ECB is less pessimistic than the IMF on the eurozone economy.

    With ships backed up outside Iranian ports waiting for payment, the country is resorting to paying for grain imports with gold, non-dollar currencies, and even barter, according to European merchants. "Some of the major trading houses are involved," says a trader. 

    Crocs (CROXlaunches a number of global and regional licensing agreements in an effort to extend its brand beyond footwear. After selling 200M pairs of Crocs shoes, the company will try its luck with apparel, sunglasses, and other accessories. Shares +2.1%premarket.

    Apple's (AAPLprice target is upped to $665 at Cannacord, which cites monthly channel checks indicating "very strong sales trends" for the iPhone 4S at all three U.S. carriers and overall strong iPhone sales in international markets. The firm increases its March quarter iPhone estimates to 32.6M units from 30.1M. (also)

    Apple (AAPLplans to announce the launch of the iPad 3 in the first week of March, according to All Things Digital. Sources say the much-discussed next-generation iPad will feature a faster chip, improved graphics, and a retina display – falling in line with previous reports on the new device. Shares of AAPL +0.9% premarket.

  29. yodi

    stjeanluc
    FAS money did we not roll the 84c to Feb 90c ???

  30. Pharmboy

    Well, now we know why ARRY was moving on no news…..

  31. kustomz

    If Europe is really fixed we may see some capital leave our markets.

  32. lunar

    sold DMND purchased in premarket for +$1, replaced with 2013 $20 puts for $4.  will be fine with owning at $16 in a yr.

  33. button

    Pharm,
     
    I got lucky and sold half my ARRY position yesterday @ $3.20.  I assume you still like them and I am looking to buy it back here just above the secondary offering price of $2.60.  What do you think?

  34. dpastramas

    DMND / Phil – What about buying back the short callers on the spread? I have a BCs, thinking about it to benefit from any bounce (apart from your suggestion to sell puts)

  35. jabobeast

    new highs every day on CMG???
     
    FU CMG!!!

  36. Pharmboy

    Button, yes, I have posted to reduce ARRY and $3 and again at $3.15.  Now we can really start to reduce the basis since there are no options any more.  Wait for the $2.6 to be breached.  Put an order in for $2.5.

  37. mampcsA

    Big struggle in the market for direction right now inspite of Greece being fixed. Looks like a sell the news event again.

  38. stjeanluc

    Yesterday – Closed the XLF position and sold the GLL Feb calls. Bought a GLL Mar 16/17 BCS. I have only 10 of them as mampcsA mentioned that's all he was able to get for the price. Also, sold the TZA 23 calls and DD on the 18 calls to lower the average cost. Let me know if I missed anything.

  39. stjeanluc

    FAS Money / Yodi – The last word from Phil was that he was not making the move yet. It was a suggestion for those with large margin.

  40. mampcsA

    Stj, the remaining 10 filled at .30. So we have 20 at .63 and -20 and .30 for a net spread of .33

  41. jerconn

    PHarm – did you get my question about AGEN?  You may have answered it with "I would wait," but it wasn't clear…I want to know if to hold on to AGEN stock (don't see any options on them now…)

  42. Phil

    $500KP/Houston – It's a virtual portfolio and the idea is to follow it by paper trading and LEARN what kind of positions work for your trading style, timeframe and whatever other investing needs you and your financial adviser deem appropriate.  We put up trade ideas all the time, we have articles in our Education and Portfolio sections about building and managing portfolios with tons of valuable information but the key – as with anything you want to be good at in life – is practice, Practice, PRACTICE!  If you want the quick solution that lets you accomplish all your goals right away without any effort on your part – that's being promised to you at 1,000 other sites – but it's not what you'll get here.  

    Liars/Exec – Unfortunately, the truth will not set Greece or the rest of the EU (or us or Japan or China) free as we simply all borrowed more money than we can ever pay back.  It's not a complicated concept – there's a point where you can look at an individual or a business or a country and say "No way they can work their way out of this" and then you need to do a proper restructuring.  With individuals, all you can do is declare them insolvent and then their debts are wiped (well only mostly thanks to ridiculous new laws) and they can start over again.  With companies, some decide not to start again and they die – but the individuals get to move on with their lives.  With countries – the creditors have a captured population so they don't see the need to ever let them off the hook.  

    The rich and powerful in Greece don't care because they simply leave (or at least move their money out) and that leaves the rest of the population on the hook for the rest of their lives, paying a forever debt to rich and powerful lenders and their children will be born into poverty and debt as well as all must pay for the sins of their Fathers.  Is that a working model for the World moving forward – are humans really so domesticated that you can just build a path to the abattoir and we all shuffle in head to tail, happily moving one forward in line as one by one the ones in the front are killed off?  We're mostly Type-As here and of course we don't think that's us but it certainly is the vast majority if people are accepting this nonsense – what will we do when they finally come for us?  

    Monitors/Robert – I got a Toshiba 15" Portable LCD that plugs into the USB of the laptop.  I believe 2 can be attached at a time or you can still use the video output on the Laptop for a 3rd monitor.  The Toshiba works fine on the desktop too but I have a 30" Mac monitor in the middle on my desk flanked by 2 Dell 21" monitors all driven off the same HP computer (I have no idea how Tina did the cards) and then on my left of that I have an IMac as I find the performance drags if I have too many live feeds on the main system and on my right I used to have a laptop but now I have the HP Touchsmart running TOS with 12 charts up at all times (I run another TOS on my main system's left Dell for looking up quotes and 9 more charts).  

    MoMo's/Lincoln – That's good, just want to make sure you have your head on right before it gets chopped off! 

    $5KP – 20 DMND March $25/26 bull call spreads at .30 ($600) with a stop at .15.  

  43. zeroxzero

    Travel day, no time to play, checked the comments, and, Phil, your "How Bernanke Saves the World" was truly epic, I didn't know your eloquence peaked out past midnight — you seem the archtypical "morning person."  Anyway, it was just great, and all the guide to investing over the next few years that anyone would need if you can run out the implications, which are pretty simple, actually.  Maybe the cornerstone of a "Bernanke Saves the World" portfolio" that outperforms all the others.  

  44. mampcsA

    Aapl +10 helping the Nasdaq stay afloat.

  45. Phil

    $5KP – Scratch that!  Better to do 10 DMND March $22.50/24 bull call spreads for .65 with a stop at .35.  

  46. cwan120

    Hi, chaps and Peter D,
    I had a long meeting yesterday, and didn't read your comments until late in the evenings.
    I was surprised to read about "5 standard deviations" at IB.  What's that exactly??  Does it mean that IB increase margin requirement if your short position is with 5 std dev from market??  How much increase is that?
     
    BTW, chaps, how did you calculate the 30-day SPX std dev?  Is it something reported by TOS or IB platform?  Or did you compute it from data downloaded from yahoo or whatever?

  47. yodi

    stjeanluc
    Thanks

  48. stjeanluc

    Sorry, missed the TLT 116 calls in the 25KP. Correcting that now….

  49. scotbraze

    Message updates/Freeflow – some people use an RSS Reader (for example FeedDemon Lite is a free version).  Then you'd go to http://www.philstockworld.com/2012/02/09/boeasy-money-thursday-greasing-the-wheels/feed/ for example to gather today's RSS feeds.

  50. mampcsA

    For anyone interested, the 10 22.5/24 DMND calls in the 5KP went thru at .65.

  51. jerconn

    The AAPL train doesn't seem to have any stops…don't get in the way…

  52. stjeanluc

    25KP – Actually, since we closed the TLT 116 Calls this morning, only the P&L changes so no need to republish the entire position. These TLT calls were actually at $1.25 when Phil posted.

  53. 8800

    phil,
    Your thgts please on a new position in TLT @115.73 – just about at near term lows (155.55). With Greece fixed yet again, the current kneejerk weakness in TLT is understandable but looking further out, are near term increases in rates really plausible – given Fed's posture,etc?
    Thanks

  54. stjeanluc

  55. Phil

    $25KP Moves:

    • Buying back 2 DMND June $45 calls for .30.  Rolling 2 June $37 calls (.70) down to $29 calls for $1.10 and DD at $1.80.  Selling 3 June $22.50 puts for $4.  
    • GLL – Notice how ridiculous the balances on the bull call spread are with GLL at $37.69 with a week to go.  It actually shows that our $2 bull call spread, that is $2.69 in the money, has a net loss of $280 when, in fact, we paid net .90 for it and we are very likely to make our $1.10 target ($1,100).  This is why it is critical that you lean HOW options work because, if all you do is look at numbers on a spreadsheet, you may think you should abandon this position when, for net .62 – we should absolutely double down!  
    • FAS sucks but we'll wait. 
    • TLT we'll look at later.  
    • DIA if we can get .70, I would like to DD.  
  56. stjeanluc

    5KP / mampcsA – Can you tell me what you got for each strike in the DMND BCS? Thanks.

  57. revtodd64

    That DMND spread raced past .65 in a hurry.  Any upper limit or just set a limit order at .65 and see what happens?

  58. yodi

    Houston
    In deed true words from Phil, Do not rush in to things
    The play just enounced
    $5KP – Scratch that!  Better to do 10 DMND March $22.50/24 bull call spreads for .65 with a stop at .35.  
    Start with 2 or thee as well you can sell a Jun 12 20 Put against it.
    This is not a fast money making site or you are with JWR

  59. stjeanluc

    25KP / Phil – I am sure you meant the SCO spread, not the GLL spread. Of course, we would love GLL at $37   :-)

  60. Tarpoon88

    JR, 
    Yesterday you noted to exit shorts at 82.00 and that was spot on. Wash, rinse, repeat today, or do you think 82.00 wont hold it this time around? Thanks!

  61. yodi

    Houston as well you will not always get filled at the price Phil says I got a fill at .80 and sold the Jun put at 4.00

  62. stjeanluc

    Thanks mampcsA for the info on the GLL spread. I corrected the spreadsheet!

  63. mampcsA

    Stj, repeating my previous comment on GLL that you might have missed.
    GLL/ Stj, the remaining 10 filled at .30. So we have 20 at .63 and -20 and .30 for a net spread of .33
    On DMND, i got the following: +10 at 2.75, -10 at 2.10

  64. seer

    Phil
     
    Went the other way on DMND and sold the Jan 2013 18 puts.  15% on a cash basis and approximately 30% on margin (math may be off on margin).  Wouldn't mind owning them at net 15ish.

  65. Phil

    Comments/Freeflow – Each day, at the bottom of the post, is a link to an RSS feed.  I don't know which readers people have luck with but I know some work and some don't and then you can have comments sent to you via Email and filter for the people you want to see.  I generally send out one Alert in the morning and only if something strange happens do I send two.  We have so many trade ideas that it's like spam to send an Email for each one.  

    DMND/Kwan – Thanks.  At $450Bn I think I'd sell DMND and buy AAPL.  

    To correct or not to correct/Diamond – That is the question.  

    61%/StJ – Yes but for the exporters, they have highly favorable exchange rates as the Dollar was at 74 in Oct and below 78 until mid-December so, for example, one Euro paid in converted to 5% more dollars at the time but now, when they report, the Dollar is 5% stronger and, if they are smart, they held payments going the other way as the Dollar gained strength.  Not that this isn't smart business but it doesn't give us a real picture of what's happening inside the companies because we don't have a steady currency to compare reports to.

    Time to short oil again.  USO Feb $39 puts are $1.03, 10 in the $25KP.  

  66. One_T

    grant/Phil/kongen/Lincoln/diamond
    I wanted to say thanks to you guys for recommending places to see and things to eat for our trip to NY this summer! We plan to hit up as many of the diners as possible, and really look forward to everything! If there is anything else anyone wants to add to the places mentioned, I still value the advice!
    Lincoln, living in SEC football country, and working with rival Bama fans, you really get used to taking a ration of $hit from people…so I dont know how much worse NY'ers can be. Nonetheless, Thanks for the words of wisdom.

  67. kramer36350

    Were I DMND I would file slander/defamation suits against CNBS for alleging 'fraud' when this does not appear to be the case at this point.  In looking at the shareholder complaint filed, it looks like the the 2010 payment was to make the walnut suppliers whole as prices paid were lower than market at the time due to an unexpected rise in walnut prices and DMND should have perhaps issued a subsequent event notice/disclosure. For 2011, there should have been a contigency accrued for as walnut prices skyrocketed and there was a high probability that an extra payment would be made based on the 2010 experience and it again appears DMND was trying to keep walnut suppliers happy. 
    Odd that the auditors did not catch this – or they agreed with the bookings at the time. 
    To me, this does not look like fraud and I think any investigation will find it difficult to prove 'intent.'
    Unfortunate the CEO got canned, but I believe that was a Sarbanes Oxley sacrifice.  I also don't believe PG has anyone waiting in the wings for Pringles. 
    Anyhow, it will be interesting to see the price action post restatement and I don't expect any consumer backlash.

  68. stjeanluc

    Phil, I have to second Zero's comments on the "Bernanke saves the world" post last night. Wouldn't be funny to go from villain to genius in 20 years! How many times has that happen… You can go from genius to villain quite quickly – ask Greenspan for example! But as we said before, he seems to "understand" (maybe by default because there is no other solution) that only hyperinflation is the way out. We'll see how that turns out. We might see Dow 36,000 after all and where can be we by the Jan 2020 DIA 360 calls!

  69. pakdog

    Phil – Hope you post a pic someday of that screamin' set-up.

  70. rehat

    Phil/ lflan,
     
    I really think AAPL is topping out and in the overbought territory. I am looking to put a risk defined trade on, as there is a distinct possibility that it may continue the climb. but short term I am looking for a down move. 
     
    Was think of the MAR 490/475 PUT spread for about $6.8 on a $15 spread. And I may or may not sell the 510 calls to pay for it.
     
    What do you think. Any better risk defined trade?
    TIA

  71. kurtww

    Re: feed readers, RSSOwl works really well also. It can use the atom feed (just add /feed/atom to the end of the URL). It can do alerts, etc. It can refresh comments practically in realtime, if you want.

  72. dpastramas

    Comments – If it helps, you can add /feed/atom after the main url link of everyday's post.  This is what i copy everyday to my smartphone's web feed browser to follow the comments when on the move
    e.g.
    http://www.philstockworld.com/2012/02/09/boeasy-money-thursday-greasing-the-wheels/feed/atom

  73. morxlntway

    Craigzooka??? you there?
    I lost track of the IRA plan while i was waiting for the rollover to TOS. Is there anything you are looking at today? Would the DMND spread (5K) be worth a shot?
    thank you

  74. One_T

    JRW, is it 1030 again?

  75. Phil

    DMND/Lunar – Very nice.  

    DMND/Dpast – Ah, see – you are learning!  That kind of stuff needs to be a reflex when you get the opportunities.  

    CMG/Jabob – Surely you are not still shorting them?  

    DMND/StJ – I missed that one in the post but idea is the same. 

    FAS Money/StJ – Steady as she goes

    IWM Money/StJ – Steady as she goes

    $5KP/StJ – Added the DMND play. 

  76. rdn4evr

    7:30 bounce right on schedule?  Boy are people going to be surprised when (if?) this stops working.  Ooh, looks like might be having a little trouble even now…

  77. chaps

    cwan/ IB 5 SD:
     
    It means that they take 5 times the daily SD of whatever (SPX in our case) using the last 30 days of data. As you probably know, SDs are based on statistical sampling. So the last 30 days is their sample. So that gives you a number (131 is what it was yesterday). Then you add/subtract that number from current SPX price. You then see how much your current position would gain/lose at these two data points from where you are now. You take the max of those. If that number is higher than their normal margin calc (they call it an "extreme" calc), they'll use that as your margin hit.
     
    So that calc currently take you out about 9.7% on the call side, whereas the OCC norm for broad-based indexes like SPX is currently 6% on the call side.
     
    They also do another stress test based on implied volatility. You can read the details on their site. So if the implied vol calc is the highest of all, that becomes your margin hit.
     
    You can get the SPX SD number from TOS. In their charts, they have a SD function. So if you use that in a daily SPX chart (or whatever underlying you're interested in) with at least 30 days of historical data, you're good to go.

  78. Phil

    Nat gas fell only 78Bcf vs 88Bcf expected and over 200 draw this time last year so – Wheeeeeee!  

  79. kallenjr

    Bruce Krasting had a submission on ZeroHedge about Bernanke stating that he omitted TIP spreads info from his 2/7 testimony to Congress. He had it in his 10/4/11 testimony to prove that inflation expectations were tame. Bruce believes he is ignoring the data now since it does not tell him what he wants to hear. Krasting thinks Bernanke is making a'biblical' mistake – he omits critical information that would argue against his policies. Krasting believes that omitting that information is equivalent to lying.
    http://www.zerohedge.com/contributed/bernanke-talks-his-book

  80. stjeanluc

    Another day where I am glad to be taking off from the FAS Strangle trade… A $4 move in one hour. Unreal….

  81. jabobeast

    Phil--short the cmg feb 380 calls…so I cry every day when they hit new highs ;-)
     
    thought I was OK when they missed…
     
    oh well, gooble gobble…

  82. dpastramas

    DMND / Phil – Slowly (and painfully) but yes i am learning. If i had the cojones i would also double down the long calls, but i am not there yet :-)

  83. kustomz

    This is where one would go long..if its business as usual.

  84. scottmi

    TLT/25KP – Phil, can you expand on your thinking re buying back the TLT Feb $116 short calls? ar eyou expecting TLT to pop back up?

  85. mampcsA

    Phil, hold on to USO puts in 25KP?

  86. stjeanluc

    Jobs – Not great, but getting better…

    http://www.bespokeinvest.com/thinkbig/2012/2/9/jobless-claims-drop-to-early-2008-levels.html

    We are back to level comparable to the previous recession… after a wild ride though!

    It's still going to take some time!

  87. celesteschein

    That wasn’t much of a “wheeee” on oil. Is it coming later?

  88. lflantheman

    rehat…..10:27 post…..
    "You don't tug at Superman's cape"
    "You don't spit into the wind"
    "You don't pull the mask off the old Lone Ranger"
    "And you don't short AAPL"
    Jim Croce song  (modified)                  :)

  89. stjeanluc

    Are we repeating 2010?

    http://jerrykhachoyan.com/are-we-about-to-repeat-2010/

    2011/2012

    2010

  90. lflantheman

    rehat….seriously….find something else to short!

  91. Pharmboy

    10:30….low of the day??? Wash, rinse, repeat….every damn day (almost).

  92. kustomz

    Will the market pull AAPL lower or will AAPL continue to pull the market ever higher..the power of AAPL is simply amazing
    http://www.zerohedge.com/news/ieconomy-demonstrating-how-apple-distorts-market
     

  93. Phil

    Look at MON fall apart!  

    Thanks ZZ, that is a good idea for a portfolio.  If anyone is interested, my comments on Bernanke and the future economy from last night's chat.  

    Thanks Mampcs!  Looking good so far at $23.70 but I'm worried that it may be just short covering.  

    AAPL/Jerconn – Where would the Nas be if they were down 2% instead of up 2% this morning?  

    TLT/8800 – It's a function of trade-offs but the Fed can't allow our rates to creep up as each 0.1% of interest is $16Bn added to our Nation's interest payments.  Clearly we'll have to roll out to next week and maybe the next month but I don't see TLT staying below $116 for any length of time (and this is funny because I'm now making Pharm's argument for why TLT should be stronger!).  

    Oil contracts not too backed up at the NYMEX with expirations on the 21st (Tues) this month.  Still, close to 600M barrels total in the front 4 months indicates some early rolling to June was done and December is flooded with 197Mb already so that will be a fun finish to the year.  

     

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Mar'12 99.10 100.03 98.66 99.56 10:38
    Feb 09

    -

    0.85 99208 98.71 225025 Call Put
    Apr'12 99.50 100.41 99.08 99.98 10:38
    Feb 09

    -

    0.88 26524 99.10 160509 Call Put
    May'12 99.90 101.00 99.72 100.53 10:38
    Feb 09

    -

    0.81 23103 99.72 112698 Call Put
    Jun'12 100.61 101.60 100.42 101.16 10:38
    Feb 09

    -

    0.77 21219 100.39 113563 Call Put

    DMND/Rev – When a spread is moving your way like that you can pick up the calls first and then ask for your price on the short calls as they move higher.  If it moves against you, even .15 before you sell, then your spread is just .80 instead of .65 – not really a tragedy and you move your stop up to .50 and hope for the best (or maybe enter just 5 with a plan to DD at .55).  As I said earlier – the think is to understand WHY we make the trades and HOW to work into them – just sitting around trying to replicate trade ideas won't teach you anything.  

    Damn, Dollar being jammed down again.  78.56 but Euro below $1.33 so far.  Yen at 77.33 as they push the Euro back up.  

    10 more TLT tomorrow $15 calls at .80 in $25KP, that brings net down to about $1.10 so that's where we want to get 1/2 back out.  

     

  94. morxlntway

    celeste – the recent weees have to be done with your hand over your mouth and real quick.

  95. rainman

    roberthjrfl / video — I bought 3 of these for my 6 monitor system at about $30 each. Your motherboard will need 3 PCIx16 slots though. I put two monitors on each card using the HDMI and DVI ports.

  96. revtodd64

    DMND/Phil – Thanks, with all the movement on DMND I managed to get filled at .70.  This 5K portfolio is perfect for me right now, as one thing I want to learn is how to better manage spreads.

  97. sagemm1

    seems to me historically ANY trade I go back to the well such as TLT today/this week I get taken to the woodshed, I am thinking I get a false sense of being "right" and thats when Mr Market says you damn fool take that, and that!

  98. stjeanluc

    Try reading a signal from that… Looks very random to me! That tells you something about retail investors.

    http://www.bespokeinvest.com/thinkbig/2012/2/9/investors-getting-back-into-the-pool.html

  99. rainman

    Speaking of trading systems, anyone running multiple windows machines should have a look at Mouse Without Borders which allows your mouse and keyboard to span multiple systems. I use my desktop keyboard and mouse seamlessly with my laptop. There's another one out there for Mac as well.

  100. stjeanluc

    There has been some big winners on earnings… What NFLX at the top!

    http://www.bespokeinvest.com/thinkbig/2012/2/9/best-performing-stocks-on-earnings-this-season.html

    The average one-day change of the 1,041 companies that have reported earnings this season has been +0.56%.  Below we highlight the stocks that have had the biggest one-day gains on their report days this season.  (For companies that report after the close, we use the next day's change.)

    What's comes before, good moves on earnings or bull market!

  101. houston

    Thanks for all the info unfortunately i am not  new to trading, i have been trading for thirteen years, i used to day trade and did very well, until a so called friend who was the managing director of Mathesons bank in Jersey { channel islands } he started buying internet companies without my permission, he was given permission only to trade bank and building society stocks, i was the one trading tech stocks, i spent two years daytrading and made $850,000, when i found out that he had lost me several hundred thousand Dollars, i closed my accounts, the only other Dollar account i had at that time was my day trading account with then Datek, my huge mistake was while i was waiting to set up a Dollar based account with Merrill lynch to move my money, i spread the money out between twenty stocks, that week there was a stock market crash, I lost over $900,000 in one week, I brought in a lawyer to sue Mathesons but there head office was in Asia and it was not recomended to persue this. most of the bankers who invested my money must have all been trained in time share and second hand cars sales as i have never meet such ruthless people in my life.  todate i have invested  money with over ten financial  banks { always in private banking division } and several news letters, my losses to date are over $4.5 million Dollars. my problem has been trusting people with my money, and when i personally lost that much that week i tried to trade out of it and dug my self a hole that deep i was nearly in Australia by the end of it .
    I am not trying to rush into trading here i simply thought there was a portfolio i could get started in, my problem has been not being able to get on this members board as i have only seen your comments today 

  102. stjeanluc

    Mouse / Rainman – I posted that when it came out and I use that as well between my laptop and desktop and it looks like magic to me… But I have also had some issues with it. But in general, good stuff.

  103. rainman

    DMND — How long does DMND have to restate earnings?

  104. flipspiceland

    @Felipe
    "….CMG ,,,Surely you are not still shorting them."
     
    I am.
    Been 'shorting' the 3-12 month puts for a year and have never had a more consistent performer other than the CL trade you have been hitting nearly perfectly.
    "It's good to be Short". 

  105. cwan120

    Ouch!  I made a mistake of selling, instead of buying, USO puts!!
    Oh my!  Double-Ouch!  It was in an IRA account, eating away my cash margin.  Just exited with a small loss.
    Pharmboy, is there a emoticon for Double-Ouch??

  106. JRW III

    Tarpoon88
     

    I don't think we've seen the high today !!

  107. sagemm1

    TLT had no shot at .80 any one else get that?

  108. NF**X

    DMND – Also home to the world’s longest ever labor strike – 1991 to 2005. Walnut division workers walked the picket line for almost fifteen years. Great bunch of executives. On the bright side, however, the IBT beat them down and they are in the second year of their second CBA since the strike. Viva la union!

  109. craigzooka

    IRA portfolio update!

    Thanks morxintway!

    We are doing something a little different this time, as 2 separate trades,

    Buying 100 shares of DMND and selling 1 march 24 call for net $21.36

    Buying 100 shares of DMND and selling 1 Feb 24 call for net $22.35

  110. Phil

    SCO/$25K, StJ – Yes, sorry, that was SCO.  Nothing to do with GLL but wait to see if Greece being fixed removes the fear that drives people to gold. 

    DMND/Seer – That's good too.  

    You're welcome OneT.  

    DMND/Kramer – I agree and I'm sure if PG had another buyer, there'd be strong rumors by now.  I'm ignoring the nonsense with Pringles and just focusing on the value of DMND as a stand alone and it's a nice little business.  

    LOL – Lawyer on CNBC calling Rick an idiot.  

    Dow 36,000/StJ – Don't forget Buffett put $5Bn on a short S&P put at about 1,000 in 2015 – he's making that same inflation bet from the other side.  

    Oil at $100, good spot to short (/CL)!  

  111. button

    WFR up again today.

  112. rustle123

    A story you won't find on CNBC.com even if you search for it:
     
    http://www.usatoday.com/news/washington/story/2012-02-09/congress-insider-trading/53025930/1
     
    Eric Cantor is weasel of the year.

  113. Pharmboy

    Houson – horrible story….and you are not alone in your quests.  Just get a feel for the board, as well as Opt's portion and ease into this site.  More often than not, you will make money, but just jumping on trades for trades sake can lead to losses.  We have all been there when trying to keep up with the trades on here, and it is overwhelming the info that is gathered here.  There are a bunch of good traders here, and of course, lots of opinions!

  114. yodi

    houston
    Interesting Story But there is one thing you possible have not learn yet is patience. Looking at the market today and for the last week or so it is realy going nowwhere and every body is waiting. For what ? THE DOWN DRAFT. I can not see any one starting the 500k Port at these Hights. Look at apple 17$ up today! Are you going to buy long calls of apple now?
    Just sit back and smell the roses. There always will be better fish tomorrow.

  115. jromeha

    FU OIL!

  116. jabobeast

    FU Flip!!!!
     
    jk ;-)

  117. kustomz

    If AAPL reaches 500 today may be top of the market signal.

    JRW interesting to see IWM had more selling volume yesterday followed by light buying and a decent move higher. Today we have less selling volume with a lower low and higher buying volume with a lower high. Hope that made sense. Looks weak to me.

  118. stjeanluc

    Cantor / Rustle – He might win that often in the coming years…

  119. rpme

    Phil, caught a little Kudlow last night and they had a guy on who said that buying a one cup server from GMCR equates over time you paying $50 per pound for the coffee. A big cost for convenience.

  120. lflantheman

    AAPL port:   I've closed out the 5 April 425/475 bull call spreads for    72.85/35.35    Analysis:   These have gained a lot of value for us.   I expect a pullback.   We can re-invest in a better position later.   

  121. cwan120

    chaps,
    Thank you very much for your explanation of IB's 5 SD policy.
    So, IB starts imposing & increasing margin requirement as my short positions enter the 5 SD region?  Do they require more margins than other brokers such as TOS?

  122. kallenjr

    /ES, /YM, and /TF short term hourly averages are at/below longer term averages.

  123. Jbur

    Morning Phil. I sent you an email.

  124. hextra8

    Iflantheman/AAPL
    I'm still waiting for a fill on AAPL Jul 12 390/415 calls @ 23.75. Should I cancel this order or try for a different strike price? Thanks.

  125. Pharmboy

    USO now has 50c options on the strikes….more money for others to make. 

  126. stjeanluc

    Timely post on Apple:

    http://www.bespokeinvest.com/thinkbig/2012/2/9/aapls-morning-rally-all-of-gmcr.html

     

    Shares of Apple (AAPL) are in the midst of quite a rally right now as the stock steamrolls towards $500 per share.  Given its size, when AAPL rallies one or two percent, the increase in market cap is equivalent to the entire market cap of most mid cap stocks and many large caps!  For example, just today AAPL has seen its market cap rise by more than $12 billion.  That is greater than the market cap of every company in the S&P 400 Mid Cap Index (GMCR has the largest market cap in that index at $10.1 billion), and more than the market cap of half the members of the S&P 500!

    With the stock now above $490 per share, Apple is currently trading more than 2.5 standard deviations above its 50-day moving average.  Looking back over the last two years, there have been three other periods where the stock got this overbought on a short-term basis (red dots).  The stock did see modest pullbacks following these overbought readings, but it was nothing more than a small bump on the road of its longer term rally.

  127. jmm1951

    rpme/coffee
    That is a great business model. The greatest business achievement ever is that of the Coca Cola company in bottling local drinking water and selling it as Dasani water, especially if you are old enough to remember the days when no one would dream of charging for a glass of water.
     
    "Oh, I asked her for water, she brought me gasoline.
    Oh, I asked her for water, she brought me gasoline.
    That's the troublingest woo-hooman, that I ever seen
    "
    [Wolf, Howling]

  128. lflantheman

    AAPL port:   I've now closed the 5 April  400/475  bull call spreads for 95.05//34.45…..same reason

  129. revtodd64

    5k – I know these were not official 5K trades, but very similar trades from the past week were made on CHK and WFR trades yesterday and FAS last week.  All 3 are looking on track and like nice winners.  I'm liking this idea of ITM spread trades more and more.

  130. Pharmboy

    not sure how one can stick with SQQQ with AAPL making up so much of the QQQ share.  Losing battle IMHO.

  131. rustle123

    The Nasdaq is at its highest RSI in the last 3 years.

  132. lflantheman

    AAPL port:  I've now closed the  10 July  390/415  bull call spreads for 109.67/88.67    (21.00).    …….same reason as above.    We are now in CASH in this portfolio.   Now if AAPL continues to climb without hesitation we may lose a few bucks.  So what?   The portfolio is up more than 120% in 2 months and greed could get us in trouble.  So be patient for awhile now.  We will let the cash sit there for a few days and decide the next move.  And don't short this puppy!

  133. rainman

    Lbased on SPX, DJI and IXIC, looks like someone forgot to hit the up button on the RUT.

  134. exec

    JR/HOD

     
    Are you thinking we test 83.07?

  135. chaps

    cwan/entering 5 SD region:
     
    No. Your current position has a P/L curve (a function). If you use TOS, it's the "white line" in their Analysis tool. What they're doing is seeing how much you make/lose by taking the difference between your current P/L and what the P/L curve indicates at the +/- 5D points (i.e., the value of the function at +/- 5D.)
     
    The standard portfolio margin calculations are computed based on the same general principle. They take two price points, divide the line between the two points into a number of equi-distanct slices, and look at the P/L curve at each of the resulting price points. The max of all of them is your margin. Currently, those two points on broad based indexes like SPX are -10% and +6% of the current index price.
     
    What IB is doing is definitely using more margin that TOS. On SS, a lot more margin. Both are starting with the standard PM calculations. With TOS, that's all they do. If you get into trouble because your margin jumps 10X on a move, tough luck. Better luck next time.
     
    The extreme calculations IB does are in addition to the standard PM calculation. If their extreme calcs are greater than the standard PM calc (and they are on SS), that's what they use. So IB is putting more of a leash on you.

  136. jabobeast

    FU TLT!!!

  137. bobhu

    TLT LOD!

  138. Pharmboy

    XCO should be a good little company for the 5K portfolio.  Volatile, but one can do the stock with selling the June $8/7 strangle.

  139. jjflash

    What's up with TLT?

  140. JRW III

    exec / 83.07

    I hope so, I'm long   8-)

  141. stjeanluc

    Correction bobhu, TLT LOY!

  142. chaps

    Phil:
     
    If you've covered an AAPL ABW (long-term LEAP) trade with short term short callers, what criteria to you generally use for adjusting the trade (like rolling the callers out and up) or adding additional longs, like a bull call spread LEAP?
     
    It would seem overall trade delta would be most relevant for adding the BCS. If the short-term short callers are OTM (hence still all premium), would you roll those too to improve overall trade delta if your delta is getting too negative, or wait until they were, like 2/3 ITM?

  143. chaps

    Phil/Correction: Meant the short-term callers are currently at the money (still all premium).

  144. biodieselchris

    Wow, AAPL / market cap / that is impressive 
     
    A protective put can't hurt. It's not like they're an oil company!

  145. jmm1951

    Apart from a bit of turbulence over at AAPL, the market is almost eerily quiet like the eye of a hurricane, with everyone waiting for the second half to hit with the wind coming from the opposite direction.
     

  146. scottmi

    TLT/Phil – what's your thought process around TLT just now?

  147. morxlntway

    Thanks Craig. One question, the second entry, also selling the call? Just want to be sure. thanks

  148. kramer36350

    German FinMin: Greek deal on spending cuts appears to not yet fulfill bailout conditions

  149. freeflow

    Whoever is selling these TLT calls is making a killing off us…

  150. mrmocha

    EDZ painting a bullish engulfing candle today.  Dream On!

  151. JRW III

    There are no sellers, just the mutual depositoris and Lloyd; so this should NOT be a problem !!

  152. diamond

    houston – Sorry to hear about how "trusted advisors" have helped you lose money! That has happened to too many people. 
     
    stjeanluc keeps track of a number of PSW Portfolios. The link to all of them is here and at the bottom are tabs to each one.
     
    If you have ANY questions please ask as everyone here helps everyone else.

  153. Phil

    Screaming/Pack – It's just me surrounded by monitors, not too sexy since they don't match.  My desk is a corner desk so my far left and far right monitors are at the sides of my head like headphones and the main monitors are the normal \___/ configuration.  Still, even with 5 monitors I have 36 tabs open on 5 windows on my main 3 screens – I can't even remember how I dealt with things before tabs were invented and I sure never want to go back!  

    AAPL/Rehat – Selling calls against them is very scary.   The spread is fine and it pays very well if you are right so why be greedy and potentially get trapped in a nasty short call if you are wrong?  I don't know how bearish you are on AAPL but I'd go for the July $500/475 bear put spread at $12, selling March $460 puts for $5.70 for net $6.30 on the $25 spread that's $7 in the money and would be $25 in the money before you even have to roll the caller.  So if you are a little bearish, but not too bearish on AAPL (or you want to hedge long AAPL positions) – that's the way I'd go.  

    CMG/Jabob – Well they're not there yet.  

    TLT/$25KP, Scott – Yes, I was expecting them to pop back.  Sure taking their time about it.  We had a basis of $1.43 on our 10 longs and we sold 10 next week $116s for $1.53 so buying them back for $1.15 this morning dropped our basis to $1.05 and then doubling down at .80 drops us to .98, which is where we are now.  The point is to try to make reasonable adjustments to keep lowering your basis and, if you catch a break and things go your way again, you can score a very nice win and, if not, now our 20% stop loss is .80 (today's low), not counting the money we already made on the sale of 5 at the beginning of the trade.  If you can keep your losing trades at this level – then the winners will take care of the rest.  

    USO/$25KP, Mampcs – Oh sure, unless the Dollar breaks down, I'm pretty confident oil sells off. 

    Oil/Celest – Well, it depends if you are playing the futures or not, where .10 is $100 per contract!  For USO, we'd like to see $98.50 again. 

    Repeating/StJ – Of course we are.   Writing new Bot programs is expensive – much cheaper to run the same pattern over and over until people catch on.  

    Managing/Rev – Well not much managing in the $5KP, it's more of a hit or miss thing now since we can't day trade and can't have open short positions.  The $25KP is all about making adjustments.  

    Woodshed/Sage – Ah the pain of buying premium.  It's not that you have to just be right but you have to get the timing right too.  

    Sentiment/StJ – Well it looks to me like people still aren't too bullish.   Clearly it COULD go higher.  AAPL $500 should be a good story to max us out on bullishness.  

    Mouse/Rain – that's cool.  Especially with touch screens as it whips the mouse pointer where you want it fast and then you can work normally.  

    Earnings/StJ – What's interesting is how few guys are over 6% – makes a good case for selling 5% wide strangles on earnings.  

    Trading/Houston – Wow, that's intense!  Funny as I'm considering retiring to Jersey – I don't generally think of it as fully of nasty bankers but I guess there's bound to be a few as it's a major industry there.  So, new to trading or not – this is a different style of trading and I strongly recommend you go back at least a year on our Virtual Portfolios and track what we've been doing.  If you read the posts and the comments and watch the stocks over time, you'll get a handle on how we like to play our positions and you'll have a better idea of what our intentions are when we pick a play like IRBT or DMND or whatever goes on sale next.  

    DMND/Rain – Not a quick thing, could be a month or more. 

    CMG/Flips – I just find them too annoying to short (as does Jabob, obviously).  Of course, that could be said of the whole market at the moment.  

    TLT/Sage – A little patience and you can fill almost anything.  

    Cantor/Rustle – That's why he's the House Leader – it generally goes to the biggest bastard. 

    GMCR/Rp – Oh absolutely but rich folk don't care and poor people are historically terrible at making price decisions like that as they tend to only consider what's "cheaper" as in costing less money now so buying a box of 24 K-cups for $9 sounds like a better deal than a pound of coffee for $12.   

    AAPL/Iflan – Wise move.  I think they are jamming AAPL up to give the Nas a final goose.  

    Got it JBur, thanks!  

    AAPL/StJ – One day a company will perfect fusion and people will still call "short opportunities" along the way up using standard deviations and other such nonsense that completely ignores the fundamentals of the business…

    Seems to me that we must be about to have a pretty bad 30-year auction in 15 minutes.  

  154. danny3399

    TLT wont stop dropping

  155. danny3399

    Phil
    What do you think we should do TLT at 0.51 now

  156. Phil

    SQQQ/Pharm – Qs are straight up from $54 to $63 (16.7%) since Dec 19th and up from $50 (26%) since early October.  AAPL is up from $350 to $500 (42%) and accounts for about 5% of the Nasdaq's total gain.  I know you can justify AAPL up 42% in 4 months but 20% for the average QQQ stock otherwise is a bit stretched and $500 should be a bit of a pullback for AAPL and that should be a good time for the Qs to take a little break as well.  

    30-year went at 3.34% with 2.47 bid to cover (2.66 is avg) so pretty bad numbers but not so bad as to justify TLT this low.  

  157. button

    That was a heck of a reversal in TLT.  See if it sticks.

  158. stjeanluc

    Earning Strangle / Phil – I don't know about a 5% strangle… I tried a few condors last time and that worked out in 90% of the cases (NFLX blew up on me but I recovered) but I used 10% protection on each side. Much safer if less profitable! But if you have the margin, a 10% strangle would be manageable. Something to try I guess. We should start an "Earning Strangle" portfolio…

  159. rainman

    DMND was shorted so much that institutions own 120% of the company! That's F*cked. They're will have to be a lot more delivery failures!

  160. Phil

    XCO/Pharm – June is a bit far out, we want to be able to turn over pretty quickly and build our balance.  Also, nat gas not looking pretty right now.  

    AAPL/Chaps – I don't do it by formula, it depends on what you have and what you paid and what kind of rolls are available.  Generally, I prefer to layer up the spread and put stops on my lowest calls so I can catch a nice win on a turn but again – that very much depends on what the position is in the first place.  

    TLT/Scott – See above.  We're going to roll it to a spread most likely as I don't think we'll get out even now.  I'm waiting to see if the Dollar shows signs of life, now 78.65 with the Euro rejected at $1.33.

    TLT/Free – That's what I worry about, in such a thin market, if a lot of people are piling into the same trades – they could be targeted.  That move down in TLT was ridiculous, it had nothing to do with the Auction and nothing to do with the Dollar – not natural at all.  

    Earnings Strangles/StJ – No thanks!  That's just the sort of thing that can blow up on us.  

    DMND/Rain – Well a good chance to cover today.  

  161. rainman

    BTW: for those not aware, naked shorting is a means of of printing shares in a company. The fails to deliver data demonstrates that this is being done with DMND. Unfortunately, the public data on failed deliveries is only a fraction of the actual numbers.  I recommend that anyone that doesn't know how this works watch "The Dark Side of the Looking Glass" It is long but an eye opener.

  162. russellb73

    Phil
    I was wondering about short term play on AZN. 
    Right now  Feb 18 put strike 50 are about 4.30, and stock is around $47.60.  So seems like a LOT of premium…..AZN missed earnings and has long term pipe line issues but I like them, great balance sheet, stock buy back, huge layoffs announced (good for stock bad for people….always hate that).  I don't mind owning them with great dividend if the puts stay in the money.
    Is this a good way to enter position in AZN??  Seems like worst case I am buying AZN for about $2 off??
    How about selling 18 Feb 50 puts for around 4.30??
    Maybe vertical call too??… like buy 45 and sell 50 in April??

  163. rainman

    DMND — I decided not to get involved after seeing the shorting shenanigans but if you're still looking for a play on them, I was looing at the June 22.5/27 bull call spread for 1.90 and financed wtih the Jun 20 puts for 2.15 for a net credit of 0.35.

  164. mampcsA

    Here comes Oil again for a short in the futures. Let's see how high they can take it this time.

  165. bobhu

    stjeanluc, Earning Strangle portfolio.  Great idea. 
     

  166. stjeanluc

    The FBI releases it iFile on Steve Jobs…

    http://idealab.talkingpointsmemo.com/2012/02/fbi-releases-steve-jobs-file.php

    Some makes for interesting reading. That was one complex man!

  167. stjeanluc

    Strangle Portfolio / Bobhu – Phil is not that enthusiastic about it…. I think that he is rightly worried it could blow up quickly! But we can keep that in mind for when we'll run out of ideas!

  168. mrmocha

    Bot break…

  169. Pharmboy

    CRM – P/E of 12752….

  170. Pharmboy

    GWRE – not bad coming out of the gate at $12 last week, final trade when it was public was $18.   Now $21.

  171. stjeanluc

    Some notes from Barry's site on the auction:

    http://www.ritholtz.com/blog/2012/02/30-yr-auction-softanother-qe-keg/

    The 30 yr bond auction was soft as the yield was 1 bp above the when issued and the bid to cover of 2.47 was below the previous 12 month average of 2.68. Also, Direct and Indirect bidders took the 2nd least amount since Aug, leaving the rest to dealers. Bottom line, with another QE keg being brought today to the liquidity party, courtesy of the BoE and reminding me of,http://idiotflashback.files.wordpress.com/2009/12/belushi_in_animal_house-13.jpg, inflation expectations have been rising and the action in the 30 yr bond will reflect the most sensitivity to that. While statistically right now inflation seems benign to some, inflation in the quantity of money currently outstanding is unprecedented.

  172. jerconn

    Phil, those FEB DIA puts just about at .70, is this the DD that you mentioned earlier?

  173. joemayo

    I've sold short strangles with success on GMCR, CSTR and OPEN, however I have been going  about 15-20% out.  I have legged into different strikes trying to feel direction (I increased the strikes on the call side on GMCR thinking they might pop).  I had to close the call side for even on  part of GMCR  and also on a portion of the CSTR.  All in all profitable trades for a rookie.  

  174. kallenjr

    stjeanluc,
    Here is a quick method to determine where to sell strangles for earnings. The afternoon before announcement:
     
    Add the price of the ITM call and the ITM put together. 
    Add the price of the OTM call and the OTM put together. 
    Take the average of these two totals – that's your expected move in either direction – 1 std deviation, 2/3 chance of success. I double the expected move before I find the strikes for the strangle. That should get you up into the 99% success rate. And usually decent premium at those far out strikes due to IV in option before earnings announcement.

     

  175. revtodd64

    5K idea –  With Solar popping today, what about TSL March $9/10 @ .75 for a 33% that starts out more than 10% ITM?  TSL is currently $11.38.

  176. stjeanluc

    Strangles / Joemayo and Kallen – Thanks. You need to pick your targets to be able to get decent premium and evenly distributed strikes. It's the same with condors. I went with a 10 delta on each side and it seemed to work.

    As far your strategy Kallen, I am guessing you are going 1 strike above and 1 strike below the ATM strike for your OTM and ITM options. I usually go with an ATM straddle before the announcement to give me some guidance. It seems to work well as the MM are not wrong often! I would not sell the straddle, but selling a strangle outside the straddle break even lines should have a decent chance of success.

  177. dpastramas

    CRM / Pharm – Value stock…

  178. Weasle

    If bots can swap shares from their left to right hands to move the market at this constant unnatural rate, then how can ANY news or event make a difference.  Who is actually going to sell their holdings under any circumstance?  Who would need to?  Even if there's a temporary news setback, bots resume their "checkmark" pattern and keep pumping away.  I know, I know, I'm supposed to go along with it, but it's infuriating…

  179. stjeanluc

    CRM / Pharm – Common, the forward P/E is only 303. Practically a steal at that price!

  180. craigzooka

    @morxintway, oopsy there was a typo in my comment. We are selling both calls.

  181. kallenjr

    StJeanLuc,
    Here is how I apply that method to LNKD (Earnings After Hours today).
    LNKD at 76.87
    ITM Call (Feb 75 mid): 5.80
    ITM Put (Feb 77.5 mid): 5.15
    ITM Call + ITM Put = 10.95
    OTM Call (Feb 77.5 mid): 4.55
    OTM Put (Feb 75 Mid): 3.95
    OTM Call + OTM Put = 8.5
    Expected move = (10.95+8.5)/2=9.73
    Double Expected Move: 19.45
    Strangle: Sell 57.5 Put (0.10), Sell 95 Call (0.45), total of 0.55 credit.
    When doubling the expected move it does not seem as valuable in times of low volatility.

  182. 2can

    Anyone else having problems with TOS?  Taking a long time over (5 – 10 sec.) to populate screens and charts

  183. mampcsA

    And here comes the Oil stick into the NYMEX close. So predictable.

  184. button

    Oil heading back to $100 right before the NYMEX close I am going to double down on those USO puts here.

  185. Pharmboy

    ERY – just crushed….obliterated….buying some.

  186. kallenjr

    Pharm,
    ERY looks like Nat Gas.

  187. stjeanluc

    Thanks Kallen, that's what I thought! 

    Selling the ATM straddle (Feb 75) brings you $9.75 so the calculations in this case are close as it would price in a move of $9.75 on each side. Selling a 60/90 strangle is about 5% outside the straddle line and still brings you $1.30 of premium. The delta of the 60 is 06 so not much expectation that it will be breached. The 90 strike on the call side has a delta of 16 so a bit close. The 95 strike would be better and that would make an $0.85 strangle with some very good chance of success. Reg-T margin is about $7500 so better than a 10% return in a week if you hold to expiration!

  188. stjeanluc

    Gold down $22 since this morning!

  189. Pharmboy

    HUM – Feb 80/82.5 BCS is 2.2….30c for a week is not too shabby.

  190. stjeanluc

    An interesting take on taxes….

    http://rortybomb.wordpress.com/2012/02/08/fairness-the-buffet-rule-and-capital-gains-taxation/

     

    There’s one way of approaching fairness in the tax rate that involves two dimensions, and capital gains violates both of them.  That approach has a vertical and horizontal approach to fairness.  There’s vertical equity – where those with more pay more – and there’s horizontal equity, where people who are the same should be taxed the same.  (Whether these are necessarily two principles of equity or one is a debate for another day.) That capital gains are taxed less than income violates both.

    Everyone understands that Warren Buffet paying less of a rate than his secretary, who makes much less money than he does, is unfair.  That’s the vertical relationship.

    But let’s also consider the horizontal one.  Let’s imagine Warren Buffet’s gardener, and let’s make up that he makes $8 an hour.  Warren Buffet made roughly $63 million dollars last year.  Now let’s picture that the gardener, who has all kinds of cool incentives to make lots of money since he gets to see Warren Buffet’s example, also wants to make $63 million dollars in a year.

    At $8/hour, it takes him 7.875 million hours of work to pull that off in a year.  Technically it takes him working 900 years to make that kind of money – but he’s capable of doing it in one year because he is really tugging at those bootstraps.

    Now what’s his tax rate when he makes $63 million?  It isn’t 15% – it is much higher.  Even though they make the same money, the person who makes it from labor pays a much higher tax rate.

    There are reasons to violate horizontal equity – we give people with children a tax break over those without children, even if they make the same income, because we value that as a society and want to invest in young people, for example.  But what’s the reason to give Buffet a break over his multi-millionaire gardener?  That is also as unfair as the Buffet secretary example – and why it is important that income is taxed as income is taxed as income.

  191. Phil

    Looks like we need to spend $1.25 to roll our TLT calls (20) to the Feb $114 calls at $1.80 in the $25KP.  Our goal is to sell the $116 calls to pay for the roll but they are currently .70 so we're chancing they come back.  

    Naked shorting/Rain – Weren't they going to do something about that 3 years ago?  

    AZN/Russell – I like them long-term and they already had earnings, so you are right, a bit much premium on the puts, I'd sell them as it's net $45.70 so you save a buck on the entry.  As long as you REALLY want to own them, why not?  Perhaps wait and see if you make your $2 before spending more on a vertical though.   The Jan $45/50 bull call spread is $2.20 and won't go away anytime soon and you can sell $40 puts against that for $2 for net .20 on the $5 spread that's $2.50 in the money.  

    DMND/Rain – That works but, then again, almost anything works if they don't crash from here.  

    Strangles/Bob, StJ – I suppose if you were selective and looked for opportunities that paid better than usual (will take practice to find) for a wide earnings spread.  Still scary. 

    Barry/StJ – Can't argue with that, can we? 

    DIA/$25KP, Jerconn – Yes, that was a DD at .70 on those.  

    Good strangle rules of thumb Kallen.   Maybe you guys should put together a list we can test drive.  

    TSL/$5KP, Rev – I'd like them more if they weren't popping like this but you are right, it's exactly the kind of trade you want to look for so I like buying 5 of the March $9/10 bull call spreads if they can be filled for .70.  

    Bots/Weasle – They work until they don't and, when they don't, we tend to get an epic fail.  That's what I'm playing for now in the $25KP – might be wrong but the set-up is perfect for it.  

    TOS/2Can – A little slow but my real problem is their IPad app crashed.  

    Oil/Mampcs – Yeah but in the futures, that is your best friend as we had a nice dip down to $99.50 and now a nice reload opportunity back near $100.  USO puts are like watching paint dry by comparison.  

  192. 1020

    Phil - A couple last thoughts on XCO.  The company is trading below book (8.07) value, T. Boone has nearly 10 million shares and Wilbur Ross has been loading his shopping cart of late, adding to what he started picking up this past fall….

  193. Pharmboy

    1020 – thx on XCO.  I had forgotten about T. Boone.  I have a smallish position, but looking to add by selling puts. 

  194. Peter D

    chaps/cwan,
    The 5 SD test can result in margin a lot larger than Reg-T margin.  I will ask IB, but chaps, do you know if the margin requirement would be limited to Reg-T?

  195. stjeanluc

    Strangles / Phil – I think that Kallen's rules are pretty good. Using the deltas (looking for strikes at a delta of 10) works well too. But I am worried that such a portfolio will "work" for a while and then blow up on one stock! I guess we would have to limit the sizes to be able to roll 2x or 4x to be safe. This is what I had to to to salvage the NFLX blow up!

    But if Kallen and others are game, why not. I find experimentation fun!

  196. mrmocha

    Is my calendar wrong?  Looking at the charts you'd think it's Friday, with all the nice pin numbers lining up on techs: AAPL 495, AMZN 185, CMG 375, NFLX 125.  Of course, it could just be a random coincidence 8) .

  197. joemayo

    Bloomberg often posts a list like this.  Gives quick ideas for earnings strangles.
    http://www.bloomberg.com/news/2012-02-08/implied-stock-price-moves-for-u-s-companies-reporting-results.html

  198. jmm1951

    Stjean/horizontal tax equity
     
    Surely the solution is that people who have full time jobs are taxed less on their capital gains, but for people whose "capital gains" is really their full time job, it should  be taxed as income. This may sound wacko, but actually gambling winnings are already taxed as income, not capital  gains, and there is not much difference between gambling and playing the stock market. Also full time day traders are required to report their income on Schedule C as regular income and not at the lower rate for capital gains (unless they are trading in an IRA.)
     
    In the case of Mitt Romney, it seems clear that Bain Capital was his full time job, so he should have been taxed like a gardner and that this is exactly the kind of loophole that Congress should be eliminating.
    A distinction also already exists in the tax code between landlords who are classed as full time real estate professionals and those who are just renting out the basement. Also in bankruptcy law there is a differentiation between business debts and personal debts. A  person who goes bankrupt as a result of a business failure is automatically allowed to do a total liquidation, and not subject to a means test and having to make reparations for 5 years, whereas a person who goes broke by overspending his post-tax income is treated differently.
     
    Of course, with the mental retards we have in the Supreme Court, any distortion of reality is possible, but then that is the whole point.

  199. Peter D

    stjean, may be we do ratio spreads (shorts closer to the money than the longs) instead of straight short strangles to limit the damage from that one blow up.  When we have more longs than shorts, the extreme moves could be manageable.

  200. chaps

    Peter D:
     
    I went down that path in my head several months ago and compared the PM to Reg-T, based on what was happening then with the SPX SS trades I had on at that time. The answer I got (which could've been wrong), was that the PM was smaller.
     
    As to whether their margin algos have something that would automatically switch you to the cheaper of the two, I don't know.

  201. chaps

    Peter D:
     
    Oh, you're saying they can be in theory, which I'm sure is true – during/after a major sell-off in particular. Note the IV stress test as well, which is another way to blow you out of the water in a sell-off
     
    I was just looking at what was happening at the time.

  202. kallenjr

    stjeanluc,
    My experience in selling strangles around earnings is that you do them often and SMALL size. Not sure you would want to hold to expiration. In my opinion, you are trying to take advantage of IV crush. Get out the next day or two after the air has come out. Occasionally you will get burnt on one side or the other. Adjustment is buy back one side and resell it closer to current price to get remaining premium and then probably hold closer to expiration. 15% to 20% gain overnight (or two) is the type of returns we would be glad to get. Can also be done with Iron Condors, but obviously less net premium to sell.

  203. cwan120

    chaps,
    Thanks for the explanation on IB's PM policy.
    IB has another thing that bothers me: Their system automatically closes your positions at margin call.  I play extra safe in IB.  But still, what if we get another fat finger event?  When it happened, I watched my TOS account balance going into -200K, which meant I OWED TOS 200K.  TOS never did anything to my account.  And the market recovered in minutes.  I wasn't using IB at that time.  I'm guessing that I would be crushed by their policy.
    Sigh…  I moved parts of my cash from TOS to IB, because I don't want to put all eggs in one basket.  Now you mentioned their higher margin requirement.  Is there another broker we can use to trade SPX strangles?

  204. rainman

    Phil / naked shorting — They made it more difficult but mostly just drove it underground. Obviously with institutional ownership of DMND at 120% and insiders holding at 16% there is still a problem. Nothing like diluting a company by 36%! When they are actually reporting holdings are greater than 100%, someone must intentionally be rolling the fails to deliver transactions along long enough for the reports to reflect the problem. All they need to do is to buy shares on the open market to deliver and then naked short again and they get another 3 days to come up with the shares. I wonder what they do with all the extra votes?

  205. Phil

    11:37 AM European shares close mostly higher, after a day of being buffeted about by the ECB and Greece. Stoxx 50 +0.4%, Germany+0.6%, France +0.4%, Italy -0.1%, Spain +0.5%, U.K. +0.4%. The euro +0.3% to a 2-month high at $1.33.

    1:00 PM On the hour: Dow +0.18%. 10-yr -0.31%. Euro +0.26% vs. dollar. Crude +1.16% to $99.86. Gold +0.61% to $1741.85.

    1:08 PM The Treasury sells $39.5B of 30-year bonds at 3.24% (.pdf). Bid-to-cover ratio of 2.47, vs. a recent 2.60; indirect bidders take 29.2%, vs. a recent 31.9%. Direct bidders take 14.7%, vs. a recent 7.2%.

    1:26 PM Long-dated Treasurys cut their losses by about a basis point following the 30-year auction. The 30-year now +0.055 to 3.21%, the 10-year +0.032 to 2.05%, the 7-year +0.033 to 1.43%.

    2:00 PM On the hour: Dow +0.23%. 10-yr -0.19%. Euro +0.22% vs. dollar. Crude +0.95% to $99.64. Gold +0.17% to $1734.25.

    The AAII survey of investor sentiment surged to the bullish side over the last week with 51.6% of respondents now taking a positive outlook on the stock market for the next 6 months – up from last week's reading of 43.8%. Bearish sentiment fell off to 20.2%, 50% lower than the survey's long-term average for bears.

    Canadian investor sentiment rises to its highest since before 2008's financial panic, according to a Templeton survey, with 40% describing themselves as opportunistic. "It's the biggest change investor sentiment in 3 years," says CEO Don Reed. Still, 42% of those surveyed remain in the risk-averse "suspicious" and "timid" categories.

    Even as stock valuations seem modest, Bill Luby says more investors believe stocks have reached overbought levels. “Suddenly the general consensus seems to be that stocks just do not deserve their current lofty valuation,” Luby writes. But “if stocks are overbought and a correction is indeed just around the corner, the VIX does not appear to be aware of any such inevitability.”

    Warren Buffett still likes stocks as far better long-term investments than bonds or gold, two assets that “enjoy maximum popularity at peaks of fear.” Bonds and other “investments that are denominated in a given currency,” including money-market funds and mortgages, are subject to inflation risks, Buffett writes, while gold is an asset “that will never produce anything."

    Home values nationwide dropped 1.1% Q/Q and 4.7% Y/Y to $146,900, Zillow reports, while forecasting smaller declines through the rest of 2012. “While it may be disconcerting for homeowners to see values nationally fell at a fairly rapid clip at the end of last year, that trend won’t last through 2012,” Zillow says. "Many markets show signs of a bottom this year." 

    U.S. equity funds took a beating in the week ended Feb. 1, posting cash outflows of $1.8B, ICI reports. That’s a big reversal from the week before when investors steered $850M into U.S. stock funds. Bond funds continued to attract the most investors, drawing $7.5B in fresh inflows; nearly $5.9B went to taxable bond funds with the rest going to municipal bond funds. - Exactly what I've been saying – small money pushes the market up, big money comes out the other end with retailers left holding the bag.  Anyone notice how the VIX is rising today?

    It's the New Year holiday at work again as Chinese passenger car sales dive 24% Y/Y in January, the biggest drop in over 7 years. China's Passenger Car Association sees sales rebounding 30% in February.

    The Chinese New Year is wreaking havoc with the country's economic stats, which usually do not surprise. Last night's hot CPI number is one example, and a minister has indicated Friday's trade data is expected to show a plunge in export growth – flat in January vs. a 13.4% rise in December.

    S&P weighs in on student loan debt – noting that students face increasing difficulty in a tough economy to make repayments on the $1T in federal and private loans they owe. The ratings agency sees more defaults of student loan asset-backed securities and doesn't pull any punches on the outlook for the sector: "Student-loan debt has ballooned and may turn into a bubble."

    Mario Draghi looks to be a master at finding ways around the rules. The ECB can't buy bonds directly from governments, so it does LTRO instead; and the ECB can't sell its Greek holdings at less than face value to the EFSF, but Draghi says it is allowed to distribute the profit it makes from those holdings to governments.

    Greek deputy labor minister Koutsoukos resigns over the austerity deal, reports the Athens News Agency. In the meantime, IMF chief Lagarde speaks of "very encouraging news coming out of Athens," while Irish finmin Noonan sees "gaps in logic" from reports of a Greek political deal, and suggests it isn't yet done. Can't make this stuff up.

    "What exactly have the Greeks agreed to?" asks CNBC's Bob Pisani, saying that the government's statement on its austerity deal  "sounds like a random word generator." E.g., what will the Troika do if a newly elected Greek PM in April decides not to implement the terms of the bailout? Geman finmin Schaeuble is also skeptical.

    With an internal austerity deal finalized, Greece has now also reached a staff-level agreement with its Troika overlords on its 2nd bailout, finmin Venizelos says. And for the hat-trick, Greece has "the basic parameters" of a deal with its private creditors. The final step is for the official eurozone OK, after which we can panic about Portugal again

    This is "calm"???  The Portuguese bond market has calmed in recent trade,10-year paper off 18 bps today to 13.35%, nearly 4 whole percentage points lower than a late January panic. The 2-year is off 125 bps today to 15.09%, down about 6 full percentage points in 10 days. - This is INSANE, we are celebrating the fact that it's 15% and not 21% – and you guys wonder why I can't get long?

    "We'll pay our dues in full and on time," says Irish PM Kenny, making clear he has no intention of going down Greece's path, a view maybe not shared by his finance minister. With Irish 10-year yields back down to 7%, Kenny has his eye on returning to the international credit markets this summer. 

    Traders are growing confident the Greek restructuring dealwill trigger CDS payouts, but the months-long debate has damaged the market for sovereign protection. A Fitch survey finds 28% of European investors planning to reduce their use of sovereign CDS.

    Dick Bove is furious over "the mortgage deal from hell" thatprovides $25B in relief for distressed borrowers, states and the U.S. government. "Those people lucky or smart enough to stop making payments on their homes may get their loan balances reduced," Bove fumes; headline risk for banks – particularly BAC - will continue since the DOJ is sketching up another lawsuit over securitization irregularities.

  206. 1020

    Pharm – You betcha!  We are also headed towards a seasonal move up in energy, starting about mid-Feb/early March….

  207. stjeanluc

    Ratios / Peter – Could you give me an example using Kallen's LNKD? Would you for example, sell 1 75 call and buy 2 77.5? If LNKD does well, you close the position right away for a win and if they miss, you sell more 75 calls and get a bear call spread?

  208. 1020

    Phil! I think you got peanut butter on my chocolate!   :)

  209. Phil


    The 
    $25B settlement for foreclosure abuse includes 49 states – Oklahoma still holds out – and will enable 1M homeowners toreduce their deb t or refinance at lower rates. $5B will go to states and federal authorities, $17B to homeowner relief, $3B to refinancing and $1B to the FHA. The total could rise to $45B if all 14 major servicers participate.

    Shares in the four listed banks involved in the national mortgage settlement aren't showing a huge reaction to official news of the deal, but that's probably because it's been coming for months, and also because it doesn't put a cap on banks' legal liabilities. BAC+1.1%WFC -0.4%JPM -0.7% and C -0.2% 

    The State Department's watchdog dismisses allegations of a conflict of interest between the contractor brought in to review the Keystone oil pipeline and TransCanada (TRP), saying that the latter's "influence was minimal." The findings could help clear the way for GOP attempts to get the pipeline authorized.

    Buried in a giant Congressional bill is a clause requiring the FCC to ignore factors such as market dominance when determining a company's eligibility for a spectrum auction. The clause is supported by wireless behemoths Verizon (VZ) and AT&T (T) – the latter badly wants more spectrum after the FCC helped block the T-Mobile deal. Sprint (S), T-Mobile, Leap Wireless (LEAP), and others oppose it.

    CNBC's Mark Koba steps inside Ron Paul's fantasy of world of a world without a Fed and doesn't paint a pretty picture. A return to the gold standard, as Paul wants, would leave the dollar hostage to the whims of traders. Or, letting the Treasury manage the money supply would cause an "earthquake over who would be Treasury Secretary."

    More bleeding at the USPS: The nation's postal service lost $3.3B in FQ1 after weak mail volumes overran a better-than-expected holiday shipping season. Technology is the issue, according to Postmaster General Patrick Donahoe: "While it has helped us grow our Shipping Services businesses, it has had a significant negative impact on some of our much larger sources of revenue."

    Las Vegas Strip gambling revenue jumped 3.6% to $518M in December, with slot machine revenue up 6.4% and table games win up 1.7%. The Strip results "reflect the continued strengthening of trends with volume growth in tables without baccarat and slot," J.P. Morgan says, seeing the trends as positive for MGM +1.3%LVS+1.6% and WYNN -0.1%. (also)

    Boyd Gaming (BYD -2.8%) dips after being cut to Equal Weight on valuation at Barclays, citing increased competition in the Atlantic City gaming market.

    More dirty laundry will get aired at Wynn Resorts (WYNN+0.1%) after investor Kazuo Okada heads into court today to gain access to financial information and object to the casino operator's lavish donations. Though analysts are largely waiting to see if the smoke clears before jumping to conclusions, CLSA's Aaron Fisher steps in with a warning: "It [the lawsuit] does affect the premium. Wynn has had a premium over Sands and other operators because it is considered to be the blue chip operator with no corporate governance issues." 

    52% of TVs shipped worldwide in Q4 featured LED backlighting, according to Displaybank. This year, the penetration rate is expected to rise to 60%-70%. This growth, however, hasn't been enough to stabilize a very difficult pricing and demand environment for LED industry players; and now that TV penetration growth is slowing, the industry can only hope and wait that lighting demand will eventually pick up the slack.

    Some brokers appear to be playing a game of catch-up with iRobot (IRBT -32%) today, downgrading the shares on the back of its disastrous Q4 report after the close yesterday. JP Morgan cuts the shares to Underweight, Morgan Keegan lowers it to Underperform and EarlyBird Capital downgrades it to Hold, all citing weak guidance.

    In headline that should bring a smile to anyone holding shares of Starbucks (SBUX +0.1%), China Daily screamsStarbucks fever grips China. Even with the same lofty prices in play that U.S. consumers pay for their morning SBUX fix, Chinese customers appear to be just as willing to pay up as the populace starts to jump on the premium coffee bandwagon after eons of drinking tea.

    Yum Brands (YUM +0.5%plans to open at least 150 Pizza Hut restaurants in China this year as it sticks to a sweeping plan to expand overseas. An exec with the firm says it will spend 700M yuan ($111.2M) to open the pizza joints in "third- or fourth-tier" cities this year.

    Canaccord cuts its 2012 and 2013 financial estimates for Research In Motion (RIMM -2.4%) due to weak demand for the company’s BlackBerry 7 smartphone lineup despite increased marketing efforts. Facing iPhone 4S share gains, price competitive Android, improving Windows smartphones, and strong Kindle Fire sales, the firm sees "increasing competition across all tiers of RIM’s products.”

    A123 Systems (AONE -12.2%) is off sharply after Wunderlich, which upgraded the company in October and defended it 2 weeks ago, downgrades it back to Sell on account of customer Fisker Automotive's most recent woes. Wunderlich believes Fisker will slash its production forecast for its Karma electric car even further, thereby hurting A123's battery sales.

    Cisco (CSCO -2.2%) shares sag under the weight of doubts about the strength of its FQ2 and two analyst downgrades. MKM Partners notes Y/Y product order growth decelerated significantly, raising concerns about demand and explaining the "flattish sequential revenue guidance better than the ‘they are just being conservative’ line of reasoning we expect many will take.”

  210. Phil


    Mark Zuckerberg must be quite a persuasive deal maker.
    SEC filings reveal the Facebook (FB) co-founder and CEO owns 28.4% of all Class B shares, and through a chain of agreements with other shareholders, he has voting control over at least 57.1% of Class B shares. And what did shareholders get in exchange for ceding precious control? About $100 in cash apiece.

    With a $15B+ valuation going into earnings, Groupon (GRPN -10.7%) is receiving no mercy from the Street for its Q4earnings miss, even if it was accompanied by strong billings growth. Deutsche (Hold) is worried about a 48% drop in gross profit dollars per customer from Q1 to Q4, while SA's Tor Schoenmeyr notes that revenue growth, while still meaningful, is decelerating sharply as Groupon trims its marketing spend. (also

    Rocco Pendola highlights the power of investing even small amounts of money regularly by crunching the numbers to find that a canceled NetFlix subscription (what else?) invested monthly will compound to over $12K in 30 years if a 8% annual return is achieved. It's an old lesson on systematic investing – but one that never fails to impress.

    5 years after YouTube (GOOG) took off, U.S. online video use is still growing rapidly. According to comScore, 43.5B videos were streamed in the U.S. in December, up 44% Y/Y. Moreover, average video length and the ratio of ads to videos continue to rise. Google's sites (mostly YouTube) accounted for 50.4% of all views.Hulu only accounted for 1.8%, but as its revenue growth shows, it accounts for a larger chunk of ad revenue. (previously

    AAPL by the numbers: In another tip of the hat to the world's largest company by market cap, The NY Times's David Leonhardt crunches the numbers to find that Apple's (AAPL) total market value is now higher than that of Google, Goldman Sachs, GM, Ford, Starbucks and Boeing combined. 

    Diamond Foods' (DMND -36.4%restatements will likelylead it to default on its debt covenants, analysts believe. Such an event would lead Diamond, which had $531.7M of debt as of July 31, to pay higher interest rates. Nonetheless, KeyBanc (Hold) is playing devil's advocate today, arguing Diamond still has a break-up value of $44/share, and at least $1.80/share in near-term earnings power. (more)

    Three lunchtime reads:

    1) Why Wall Street should stop whining

    2) Taxpayers prop up California house of cards

    3) Advice from Charlie Munger: Read history

  211. 1020

    Phil – sorry, when my comment came up, it was located in your "box 'o comments"… nevermind…. :)

  212. stjeanluc

    Strangles / Kallen – Thanks for the input. The idea is indeed to take advantage of the volatility crush the day after and close the position (I closed my condors at the open), but if you play the weeklies, expiration is generally only a "hours" away…

    And yes, small positions! I wanted to try the condors because you could play them in an IRA account for example or for someone who is margin restricted. Obviously returns are not as good and I averaged about 5%. But it's not bad!

  213. 1020

    Outrage – You think "Dick" Bove and Rick Santelli share a cold one from time to time?….

  214. stjeanluc

    Portuguese bonds / Phil – I can't imagine that paying 13% on the 10 year bond is sustainable for Portugal. What kind of growth do they need to erase that debt. As it is, the interest alone probably grow faster than the economy so the debt to GDP ratio gets worse by the minute.

    What would our deficit be if we had to pay 13% on our debt!

  215. houston

    Thanks for everyones comments
    Phil the requirements for living in Jersey used to be really strict  and a lot of money also required , and the place is full of bankers not for me .

  216. stjeanluc

    Jersey / Houston – At least the requirement for "New" Jersey are not as strict apparently! And you don't need as much money but we still have plenty of bankers (but they work in NY)!

  217. stjeanluc

    Commodity snapshot:

    http://www.bespokeinvest.com/thinkbig/2012/2/9/bespokes-commodity-snapshot.html

    The metals seem to be overextended. Not the case with poor natural gas!

  218. chaps

    cwan:
     
    Yes, IB does everything automatically. At least that's my understanding. The system will just start closing positions on you when you have a margin call. IB says that doing things that way helps them keep commissions low. They have great commissions and fills. Their fills are the best I've ever seen.
     
    TOS and IB are the only two I know who offer PM to little retail guys like us. I think Peter used to be with another broker. Don't know who, but I'm assuming they offered PM. You'd have to talk to Peter about that.
     
    I called Fidelity awhile back. I used to do a fair amount of business with them. They only offer PM to institutions.

  219. stjeanluc

    And sector breadth:

    http://www.bespokeinvest.com/thinkbig/2012/2/9/sp-500-and-sector-breadth.html

    More at the link…

    But 98% of financials over their 50 day MA. Close with industrials and tech!

  220. mrmocha

    Does it seem just a little too convenient that all the techs are perfectly pinned today, so we merrily sell what look like easy premium straddles.  Danger Will Robinson…

  221. chaps

    cwan:
     
    IMO, having higher margin requirements is not necessarily bad. As you know, you can only survive over the long term using a portion of what TOS offers you. In other words, TOS will give you plenty of rope to hang yourself with. "The price of freedom is eternal vigilance" has to be your motto when using TOS.
     
    What I don't like about IB is that their stress tests are just a uniform wet blanket that they throw over everything. Both Reg T and PM margin rules are differentiated for different investment vehicles. Not so with the stress tests, IMO. Hence it cramps your style, even when you're trying to be conservative on margin usage.

  222. yodi

    Bloomberg One of the brokers expect a market drop of up to 7% !!! With in days !

  223. cwan120

    chaps,
    It may be worthwhile to check with Schwab.  I used to be with Schwab, and for a very long time.  After I started trading SPX strangles, I moved away.  But lately they called me and left a message (I wasn't there to answer the call).  The message seemed to say that they began to offer better margins, maybe PM.  They knew I moved away because I asked for PM and they didn't have it at the time.  So they called me to see if they could get me to come back.  I didn't check back, as I was in the middle of opening an account at IB.  Didn't schwab acquire OptionsXpress?  Maybe they changed their policies after that merger.

  224. cwan120

    chaps,
    Many thanks for your warning.  Yes, we have to be extra careful.  The whole game of short strangling is margin.  With margin, you can survive no matter what.  Without margin, you hang yourself.
     
    Pharmboy, where is that "hang myself" emoticon?

  225. Phil

    CMG coming back – all must be well. 

    XCO/1020 – It's going to be great if the market keeps going higher and nat gas stops crashing, just not appropriate to tie up money in the $5KP.  

    Fun/StJ – As long as I don't have to find the plays, fine with me.  

    Good list Joe, thanks. 

    Tax equity/StJ, JMM – I like that article, people need to understand how wrong this is.  As to the full-time job thing – I don't agree that should be a distinction because Romney can be the full-time mayor of some town (a position he could easily buy) and declare his stock income a side job.  All that would do is steer more money into hedge funds while rich folks buy themselves little businesses to keep themselves amused (and tax free) during the day.  Now, you can say it's "where most of your money comes from" but then you're just skirting around the issue – money is money and you can have SOME incentive for capital gains but 3:1 (as you get state tax breaks too) is ridiculous.  Dividends are even more ridiculous because you don't give people who put money in a savings account a tax break on interest or bond interest but money a company hands out gets special treatment?  Who in the bottom 99% has access to that?  

    I think (and this will piss people off) that there should be strong disincentives for ANYONE to earn more than $10M a year.  I think there should be strong disincentives for ANYONE to accumulate more than $500M.  If you want to earn $20M, $30M, $50M – have fun but the Government gets 75%, if you have more than $500M sitting around, the government gets 10%.  For corporations, earning maybe $1Bn – $10Bn is 50% tax and $10Bn + is 75%.  Same 10% penalty on cash over $10Bn.  The US Government prints and circulates money with the intention of having it actually circulate and providing a general benefit to the economy – they have a right to take it back if you are not using it.  For companies like XOM, who make $40Bn a year – they can pay out $30Bn in dividends to avoid the penalty tax.  For companies like AAPL, sitting on $100Bn in cash – it gives them an incentive to invest or, again, distribute the money to people who might actually spend it.  

    Putting more money in circulation would drastically lower the borrowing cost of money for all people and create opportunities for REAL CAPITALISM to occur.  It's these black holes of wealth, that produce little of value and simply suck in more and more capital year after year that are killing this country, and the rest of the World.  No one NEEDS $500M and, if you have another great idea that's going to make you another $500M – get partners, give it to your children and nieces and nephews and friends and neighbors – force people to find creative ways to make other people rich instead of just making themselves richer.  

    IV Crush/Kallen – I agree with that, you're just trying to get paid for the stock NOT moving 5%.  Also, you want to be mainly in cash and ready to do more the next day and the next because it's a volume vs. black swan game.  

    IB/Cwan – That's why I don't use them.   I have heard of people getting reamed by them.  TOS calls you up and gives you time to work it out although, like everything with TOS – they won't write it down so I guess they could change their minds anytime.  The worst thing with IB is they PUSH people to use margin and that burns a lot of people who don't understand what they are getting into.  

    Naked shorts/Rain – I don't think they can create voting stock, nor would the company count it against earnings but what the do accomplish is create a massive supply of shares for sale when there really aren't any and that's just ridiculous as it's straight-up stealing from the people who own actual shares.  

    Comments/1020 – Yes, when my news is too long (usually) after I do the first print I have to break it up to fix that problem.  As to whether Rick Santelli and Dick Bove have a dead hooker in the freezer – I don't know…  

    13%/StJ – There's no growth that could sustain that.  That would be like us having $2.5Tn annual interest payments – it's not even within the realm of possibility and this is the exact same reason (with Greece) that we went short last Feb.  

    Jersey/Houston – The requirements are what attracts me based on my outlook for the Global economy over the next 20 years.  Being full of bankers is a big negative though…

    VIX finishes up 2% at $18.50, was $16.50 on Friday…. I'm just sayin'…

    7% drop/Yodi – I've been expecting it all month.  

  226. cwan120

    chaps and Peter D,
    One more question, is there a way to simulate the fat finger event to see if any given set of positions would trigger margin call at IB?  I am confident that my current positions at IB are safe with a regular pullback.  But fat finger is a completely different animal.
    We could use TOS Analysis tool, if such analysis can be done there.  Just add a few more shorts to simulate IB's higher margin requirement.  I've yet to master TOS's Analysis tool, something I should do as my homework.

  227. stjeanluc

    Good list for the strangle Joemayo… We'll have to keep an eye for that!

  228. Canuck

    Houston/Income Portfolio:
    Sorry to hear of your experiences.
    I've been a member for about 9 months and was following Phil's site for quite a while before that.  It took me a lot of unlearning from my past before I could commence learning and moving forward here.  Each of us must find our own way and there is no shortcut, however, there are many great ideas put forth by many great traders here.  You will likely discover a strategy or two (tools) that will become your bread and butter.  Bull call spreads for me, financed by selling puts, and covered calls  are two of my main tools.  I never would have discovered BCS if not from being on this site.
    From the Apple portfolio Lflan explicitly stated and demonstrated something I had been leaning towards — leave you initial funds in cash and just keeping investing the gains.
    From Phil and others, look at the short and mid term technical indicators and buy stock, sell calls, puts accordingly.  As many have already said, the technicals are screaming overbought.  That being said I went short a month ago and my shorts are on fire!!  but I still have my cash reserves and am learning the rolls.
    Best wishes.

  229. stjeanluc

    Tax equity / Phil – Gee, that commie talk again!

    I have had that example before, but for example, Paris Hilton inherits $100 millions from her parents. Under the GOP proposed plan, she pays no taxes on the inheritance. She buys $100 millions in VZ shares, collects the 6% yearly dividend tax free (it's in their plan) and 25 years later, sells it for $200 millions and pays no taxes on the capital gains. So in 25 years, she has received a total of $350 millions (inheritance, dividend and capital gains) and has not had to pay any taxes. How on earth can someone think that it's fair and at the same time complain that hotel maids make too much money (like the guys in Fox Business) is beyond me! And how does that help to actually create jobs? Maybe someone can explain that to me.

    And BTW, she still uses public roads, is protected by military personnel who are in the majority on food stamps and goes to school where teachers make in one year what she makes in one day! Oh well, end of rant!

  230. rainman

    Phil / voting — I didn't think there would be a distinction of what kind of shares are created when shorting. I would think who ever buys those shares gets the right to vote them.

  231. stjeanluc

  232. stjeanluc

    Leveraged ETF performances:

    http://www.bespokeinvest.com/thinkbig/2012/2/9/2012-leveraged-etf-performance.html

  233. stjeanluc

    Something has to give… either gold is too expensive or platinum too cheap:

    Even though platinum is 30 times more rare than gold, as recently as January 6th, platinum was trading $212 an ounce cheaper than gold (a ratio of 0.87).  Since January 6th, platinum has made up quite a bit of ground on gold, however, and it's now just $70 an ounce cheaper than gold.  The platinum to gold ratio currently stands at 0.96. 

    http://www.bespokeinvest.com/thinkbig/2012/2/9/platinum-to-gold-ratio-pushing-up-towards-one.html

  234. stjeanluc

    What do you think of that Pharm:

    http://www.eurekalert.org/pub_releases/2012-02/cwru-dqr020512.php

    Apparently it's made by Eisai so I don't know how that could be played as it's a Japanese company. But this looked promising!

  235. dflam

    Phil/$500M: I like your idea that if you have $500m sitting around the government should get 10 %, but instead of you giving it to the government ,I think you should give it to the members  of PSW.I for one would definitely appreciate it.
    Seriously,your SLM Feb. $13/14 BCS paired with Feb. $14 P for net $.15 on $1 spread has worked out fine for me. Thinking of opening April $13/14 BCS with sale of $April $15 Puts for net $.28 on $1 spread.Any better ideas?

  236. Burrben

    AAPL  - Man I'm bummed that all of my AAPL positions are now closed.  They were the shining star in my portfolio recently, and I loved watching them everyday.   
     
    Thank you again Lflan for posting and helping all of us grow our capital and learn along with you.  

  237. Peter D

    stjean/kallen – short strangles on earnings
    Sorry, I got distracted in the past couple of hours.  The short strikes would be as far OTM as Kallen suggested, but we also buy the longs, just like iron condor, but will have more longs than shorts (say 1.1, 1.2 or 1.3 ratio).  What we are all worrying about is the black swan where one of the 50 times that we play that the stock goes up or down 50% (Bespoke would be able to research?), then it would blow through the short strikes and we'd make a catastrophic loss, taking years to recover.  Having more longs means we would be able to break even or even profit in such a spike, depending on the premium and strikes.

  238. chaps

    cwan/simulation:
     
    Yes. It can be done with TOS Analysis tool. If you're going to go the index short strangle route with PM long term, I highly recommend you (1) learn everything there is to know about that tool, (2) thoroughly understand how margin is calculated at every brokerage firm you use, (3) use the tool to get a handle on what changes in prices and volatility do to your trades at every firm, given the specific margin rules at that firm.

  239. Pharmboy

    StJ – Show me human data, and I will believe.  There have been several studies in years past that do the same thing (clear beta-amyloid plaques), and all have failed.  This compound has an acid on it, so I would also like to know the brain concentrations of it, since most acids do not get into the brain.  (Think ibuprofen, naproxen, etc.)

     

    Inhibitors of beta amyloid.

    gamma secretase inhibitors

    Any company or biotech out there that has these, I would be short…..

  240. Pharmboy

    1020 – U lived in the Bay Collection at one time…what do you think now of the Carlsbad area and property….lots of short sales around here….I am starting to look…

  241. Peter D

    chaps/cwan,
    Thanks for the info today.  cwan, you are correct that Schwab acquired OptionsXpress, who claims to have Portfolio Margin.  However OptionsXpress PM is not much better than Reg-T.  1 SPX short strangle would use up $11,000 to $15,000.  Well, the hope is that more players would come on board with PM, then IB would reduce their stress test from 5 SD to something like 2.5 or 3 SD.
     
    chaps, yes, that's correct that during the Aug 2011 crash, 5 SD would be 375 SPX points, which is roughly 33% margin.  That is more than the 20% Reg-T margin.
     
    I'm trying to see if our ratio spread with more longs than shorts would have reduced the margin requirement during the 5 SD stress test.  It certainly helped with the extreme ends, but the soft spot in the middle still requires a bit of margin.  May be we have a different type of plays for IB.

  242. chaps

    Peter/ put ratio backspreads at IB:
     
    My thought exactly. Looking at the same thing.

  243. Peter D

    OK chaps, just got off the phone with IB.  The representative answered that "yup, margin requirement for PM would easily exceed Reg-T margin in a crash", and they are not considering changing the 5 SD stress test any time soon.  We can change PM to Reg-T, and it takes 1 day to take effect, submitting prior to 3:30 PM central time.

  244. elliotteldrich

  245. pstas

    CCJ –
    Canada Allows Exports Of Uranium to China
    The pact cheered uranium producers in Canada. Cameco Corp., the world's largest uranium producer, based in Saskatoon, Saskatchewan, said it could now move forward on two contracts signed in 2010 to deliver a total of 52 million pounds of yellowcake to China by 2025.
    Together the contracts will bring in $2.5 billion to $3 billion in sales to Cameco, said Chief Executive Tim Gitzel.
    Speaking on the phone from Shenzhen, China, Mr. Gitzel said he was delighted with the agreement between China and Canada.
    "Today there are 14 nuclear reactors operating in China, there are 27 under construction today and many dozens more expected by 2020. That's growth we haven't seen [in the nuclear power industry] since the 1970s," Mr. Gitzel said.

  246. dclark41

    Phil:
    "…..force people to find creative ways to make other people rich instead of just making themselves richer."
    I like that comment.

  247. lflantheman

    Burrben……All of the AAPL positions are NOT closed.  It's a matter of semantics.  Cash is a position in any portfolio, and should be the position taken when one suspects that cash may retain the value of your portfolio better than any other position you can establish.  Holding a large cash position in a portfolio like this allows you to think, and develops patience.  It disciplines you to carefully consider your next move.    So AAPL is pushing hard toward 500, which may be a bit of a psychological ceiling.   But I noted today's volume on the stock…..extremely high.   Makes me think it might push a bit higher before it settles.  It will have to eventually settle, probably even pull back.  But now we know it can get over 490, and that's really important information.  That means whatever position we establish next will probably contain the number 490, or a number near it.    Remember last October when AAPL went to 422, then eventually dropped back to about 360?   I knew it would get back over 420, and probably within 3 months, and of course it did.   And now it's probably never going to see 420 again.   Now that it's kissing 500 I know it will be over that number  by at April expiration.   I just know it.  No matter where it goes in the next 2 months it will be over 500 by April expiration.   So let's think about it for awhile, let the mind and the markets settle, then we'll dive back in.  Certainly within the next few days we'll be re-establishing  positions other than cash.    

  248. Burrben

    Lflantheman / AAPL  - Thanks for the info, I know what you mean.  I guess I was just being a little sarcastic….   I wish you would have started a AAPL 500K instead of 50K.  I'd be able to buy that house hanging off of a cliff in pacific marlin :)
    (again said tongue in cheek….kinda….)

  249. lflantheman

    AAPL:   Anyone interested, take note of the following….If I believe AAPL is going to do tomorrow what they did today, I'll be looking to get in and "ride the wave".  To remind you of how I do this…….If I sense a strong upward move coming, by looking at market and AAPL futures in the morning, and overnight action overseas, I may enter something like the following:  I'd probably use the March 495s, which are about 15.00.  For the portfolio I would start with say 5 for 7,500.   Then if I get the move up to perhaps 16.00 I'll get 5 more for 8,300.   At that point I would put a trailing stop to get out of all if  it falls below  15.50  (break even).  If it then went to 17 I would then buy 10 more (DD) at 17,000.   I would trail the stop by 0.8 or so and would DD again at 18.  I would then narrow the trailing stop to .5 or less as we go up.  At some point I would be stopped out.  That's how I'll do it tomorrow if AAPL wants to turn on the steam.  I've done this many times before with AAPL.  I either get stopped out early and lose a few hundred bucks, or if the move is real and vigorous (like today) move up for big profits.  Don't participate unless you can remain glued to the screen.  I can, because I'm off my 'other job' tomorrow.   See you in the a.m.  !

  250. chaps

    Peter D:
     
    Thanks for makng that call. That means their algos won't switch you over to Reg T automatically when it provides the lower margin hit, I take it.

  251. chaps

    Peter D:
     
    Was just looking over Reg-T margin rules for index options at IB They drop the margin req down to 15% (it's 20% for stocks.) That's not the case at TD, where it's 20% for both. The plot thickens..

  252. oburlacu

    Interesting insights for gold vs equities from Warren Buffet:
    http://finance.fortune.cnn.com/2012/02/09/warren-buffett-berkshire-shareholder-letter/?iid=SF_F_Lead

  253. dclark41

    Iflantheman:
    Thanks for the heads up on your thoughts for tomorrow. Really have enjoyed watching and participating (in a very small way) in your success. If in fact AAPL marks 500 and then goes down, do you have any feeling for how much it will correct. Do you look back at its history (and if so what will you look at) or is it just instinct?
    This looks very similar to the run AAPL had Sept'10-Feb.'11 The pullbacks during that period were between 5-10% during that run. More recently, the pullbacks were between 10-15%. Of course, the Steve Jobs saga was playing out during that time. What do you think will happen?

  254. dclark41

    Iflantheman
    …the volume is certainly noticeable and impressive! Looks like you have many followers! :)

  255. Maya1

    Phil/Lflan
    The AAPL shareholders meeting is February 23rd.
    Some anticipation of at least the discussion of a ‘dividend’ is rumored.
    How does this information or rumor affect how you see movement in the next couple of weeks?
    BTW, Phil, liked your 12.43pm advice to Rehat on bear scenario protection that I have used with good results.

  256. Phil

    Shorts on fire/Canuck – This is very much a white swan bullish event.  If you are riding it out you are doing well:

    NYSI

     

    The Top Twelve Reasons Why You Should Hate the Mortgage Settlement

    As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York TimesFinancial TimesWall Street Journal) have details, with Dave Dayen’s overview at Firedoglake the best thus far.

    The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.

    The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.

    The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.

    The mortgage settlement terms have not been released, but more of the details have been leaked:

    1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.

    Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:

    “It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.

    The Times is also subdued:

    Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.

    2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.

    3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.

    4. The five big players in the settlement have already set aside reserves sufficient for this deal.

    Here are the top twelve reasons why this deal stinks:

    1. We’ve now set a price for forgeries and fabricating documents. It’s $2000 per loan. This is a rounding error compared to the chain of title problem these systematic practices were designed to circumvent. The cost is also trivial in comparison to the average loan, which is roughly $180k, so the settlement represents about 1% of loan balances. It is less than the price of the title insurance that banks failed to get when they transferred the loans to the trust. It is a fraction of the cost of the legal expenses when foreclosures are challenged. It’s a great deal for the banks because no one is at any of the servicers going to jail for forgery and the banks have set the upper bound of the cost of riding roughshod over 300 years of real estate law.

    2. That $26 billion is actually $5 billion of bank money and the rest is your money. The mortgage principal writedowns are guaranteed to come almost entirely from securitized loans, which means from investors, which in turn means taxpayers via Fannie and Freddie, pension funds, insurers, and 401 (k)s. Refis of performing loans also reduce income to those very same investors.

    3. That $5 billion divided among the big banks wouldn’t even represent a significant quarterly hit. Freddie and Fannie putbacks to the major banks have been running at that level each quarter.

    4. That $20 billion actually makes bank second liens sounder, so this deal is a stealth bailout that strengthens bank balance sheets at the expense of the broader public.

    5. The enforcement is a joke. The first layer of supervision is the banks reporting on themselves. The framework is similar to that of the OCC consent decrees implemented last year, which Adam Levitin and yours truly, among others, decried as regulatory theater.

    6. The past history of servicer consent decrees shows the servicers all fail to comply. Why? Servicer records and systems are terrible in the best of times, and their systems and fee structures aren’t set up to handle much in the way of delinquencies. As Tom Adams has pointed out in earlier posts, servicer behavior is predictable when their portfolios are hit with a high level of delinquencies and defaults: they cheat in all sorts of ways to reduce their losses.

    7. The cave-in Nevada and Arizona on the Countrywide settlement suit is a special gift for Bank of America, who is by far the worst offender in the chain of title disaster (since,according to sworn testimony of its own employee in Kemp v. Countrywide, Countrywide failed to comply with trust delivery requirements). This move proves that failing to comply with a consent degree has no consequences but will merely be rolled into a new consent degree which will also fail to be enforced. These cases also alleged HAMP violations as consumer fraud violations and could have gotten costly and emboldened other states to file similar suits not just against Countrywide but other servicers, so it was useful to the other banks as well.

    8. If the new Federal task force were intended to be serious, this deal would have not have been settled. You never settle before investigating. It’s a bad idea to settle obvious, widespread wrongdoing on the cheap. You use the stuff that is easy to prove to gather information and secure cooperation on the stuff that is harder to prove. In Missouri and Nevada, the robosigning investigation led to criminal charges against agents of the servicers. But even though these companies were acting at the express direction and approval of the services, no individuals or entities higher up the food chain will face any sort of meaningful charges.

    9. There is plenty of evidence of widespread abuses that appear not to be on the attorney generals’ or media’s radar, such as servicer driven foreclosures and looting of investors’ funds via impermissible and inflated charges. While no serious probe was undertaken, even the limited or peripheral investigations show massive failures (60% of documents had errors in AGs/Fed’s pathetically small sample). Similarly, the US Trustee’s office found widespread evidence of significant servicer errors in bankruptcy-related filings, such as inflated and bogus fees, and even substantial, completely made up charges. Yet the services and banks will suffer no real consequences for these abuses.

    10. A deal on robosiginging serves to cover up the much deeper chain of title problem. And don’t get too excited about the New York, Massachusetts, and Delaware MERS suits. They put pressure on banks to clean up this monstrous mess only if the AGs go through to trial and get tough penalties. The banks will want to settle their way out of that too. And even if these cases do go to trial and produce significant victories for the AGs, they still do not address the problem of failures to transfer notes correctly.

    11. Don’t bet on a deus ex machina in terms of the new Federal foreclosure task force to improve this picture much. If you think Schneiderman, as a co-chairman who already has a full time day job in New York, is going to outfox a bunch of DC insiders who are part of the problem, I have a bridge I’d like to sell to you.

    12. We’ll now have to listen to banks and their sycophant defenders declaring victory despite being wrong on the law and the facts. They will proceed to marginalize and write off criticisms of the servicing practices that hurt homeowners and investors and are devastating communities. But the problems will fester and the housing market will continue to suffer. Investors in mortgage-backed securities, who know that services have been screwing them for years, will be hung out to dry and will likely never return to a private MBS market, since the problems won’t ever be fixed. This settlement has not only revealed the residential mortgage market to be too big to fail, but puts it on long term, perhaps permanent, government life support.

    As we’ve said before, this settlement is yet another raw demonstration of who wields power in America, and it isn’t you and me. It’s bad enough to see these negotiations come to their predictable, sorry outcome. It adds insult to injury to see some try to depict it as a win for long suffering, still abused homeowners.

  257. scottmi

    Move over MLK – it's time for a new dream!

  258. Savi

    Good morning from Colombo
    Phil--I was assigned 1000 sh of HCBK at 10—-would I sell the shares and do a bcs?—any advice
    TIA

  259. Phil

    Hilton/StJ – Make that $10Bn for Bill Gates Jr and you'll see where the real problem is! 

    Voting/Rain – I've never heard of more shares voted than there are outstanding so SOMEWHERE there is a check sum in that system.  Since most traded share votes proxy over anyway, I suppose it doesn't really come up.  

    Platinum/StJ – Doesn't it strike you that there are simply too many anomalies in the data for comfort?  Not just this but so many indicators are at long-time highs or lows and they don't even match up to form a coherent story…

    SLM/Dflam – We had that negative story on student loan payments today and I do think SLM is a bit ahead of itself so I would wait to see if $16 breaks up or $14 holds on a pullback (which I think is more likely but being bearish has not really been working lately so call it 50/50).  

    AAPL/Burr – Always good to take a break and I think excellent timing by Lflan.  

    CCJ/Pstas – I love them long-term.  Still very cheap at $24.  We have short Jan $20 puts in the Income Portfolio but a more aggressive entry can be taken now by shorting the 2014 $20 puts for $3.40 and buying the 2014 $15/25 bull call spread for $6 for net $2.60 on the $10 spread.  TOS says net margin just $2 on the short puts so a very worthwhile ROI.  

    AAPL/Maya – I think the realization that AAPL is NOT a $450Bn company but a $350Bn company with $100Bn worth of cash may be what they need to pop $500.  Don't forget, I'm the guy that did the earnings math and said $700 was fair by Jan 2014 so you're not going to get any bearish bets out of me on them – just the little protection play from earlier is prudent if you have bullish positions you don't want to get out of in case there is a pullback short-term.  

    0%/Scott – I am NOT getting into that now – need sleep.  

    Later all!  

  260. Canuck

    Phil/shorts on fire
     
    thanks,
     
    I had a great Q4 thanks to you and many others here, and have had a poor month1 2012, mainly due to poor position sizes (too big), early shorts, … etc… but by learning how to roll out of these problems I am not panicking, not necessarily happy but have an exit strategy from a problem situation because of what I have learned here.
    Reminds me of a quote I read a few years back, roughly paraphrased:
     
    "It's not the things that you don't know that hurt you, it's the things you know 100% for sure that turn out to be not true that really hurt you."

    Last month I "knew: EDZ and SPXU were at there lows, so I traded accordingly and broke the position size limits you suggest — as such, what I knew turned out to be not true and I have a bit of a situation to deal with.  Nobody's fault but mine.  However, if some others can learn from it, that would make me feel better.
     
    Besides, the Canucks beat the Wild tonight!!

  261. Phil

    HCBK/Savi – 4.6% dividend is a keeper I think.  You say assigned at $10 so I assume net $9 and you can sell the July $7 puts and calls for $1.20 to drop it to net $7.80/7.40 and you'll pick up .32 this year so pretty close if you don't mind possibility of owning 20,000 at $7.40ish.  Not much else to do as options only go out to July at the moment but, if you don't want to be assigned another $10,000, you can cash out (down $20K) and do 5,000 buy/writes as above but re-entering at $6.96 less the $1.20 is ($28,800) and sell 5,000 extra puts for .65 ($3,250) and that drops you to net $25,550, which is net $5.11 and, if put to you at $7, then 10,000 at net $6.06.  If called away at $7 or better, you get $35,000 back plus 2 dividends ($800) is a $10K profit so 1/2 your loss back and only risking being back in 10K shares at net $6.06.  

    Very good quote Canuck!  Still hope as the Dollar back to 78.785 at the moment and Dow down 50 from the close but these things tend not to last so far.  

  262. angelcur

    i ve traded at ib for 10 years.they suit .for my style of trading futures and equities and .some underlying derivatives ..they are the best of class..pay you large interest for cash balances in excess of 1m..if you have a threshold prescence at ib (running it close alot) they don't want you..i ve had margin calls and as long as you have a plan and they confirm originating source of funds and they receive them quickly you are fine….i had a position knocked out because i wasn't paying attention..it was 100k of a 5 dollar stock that is thinly traded ..it wasn't pretty..the worst part was i had another account and i could have just linked the two..is this ibs problem i don't think so..you fuck up and have it cost you 100k you finely focus your attention going forwar….they are the best..not sure about options..just my take this is a subject that has been rolling on the site for 7 months..i am still short from an average of 1314..and have added vix longs alot of them i hope some of you bot nte a coucple months back..

  263. stjeanluc

    Gates / Phil – Actually Bill Gates said that he was leaving “only” $10 millions to each of his kids. The rest goes to the foundation. They won’t be hurting but no billions for them. That is the way it should be.

  264. 1020

    Pharm – I guess it depends on your price range. Homes at and over 1M have been slowly dropping and should continue to drop. Homes for 600k and less are moving fast, so it would seem that 600k to 1M would offer the best selection with the greatest opportunities for a smart buy.
     
    I like La Costa Greens community on Alga, east of the El Camino and La Costa Oaks off of La Costa and Rancho Santa Fe. (600-1M+)
    These neighborhoods were built from '05 to present and have a good feel of community with some nice amenities.
     
    Other than those two, Bressi Ranch and Aviara will have some opportunities, but at a bit lower price point. (500-900k)
     
    Other than Aviara, these neighborhoods were built during the final years of our peak cycle, but I'm afraid if the property is of high quality, someones already looking at it…..
     
    You live in a nice area and anywhere within walking distance to the beach should hold their value pretty well.
     
    Let me know if I can help!

  265. zeroxzero

    Stj:  Your "thats the way it should be" on Bill Gate's leaving a $10M maximum legacy to each kid is rather thuddingly lacking in nuance.  If your child chose to open a head shop and sell cool crystals, $10M might be too much.  If he were clearly a miraculous cross between Albert Einstein and Steve Jobs, he might solve world hunger or create the recipe for whorled peas with a few billion.  If your goal is the betterment of mankind as opposed to mindlessly leveling incomes, that's way too Commie an approach for me.  

  266. neverworkagain

    IB / chaps/cwan/PeterD:   Guys, I use IB and was with IB during the May 2010 flash crash. I had negative deltas going in, so survived. But the key was that IB's system did not go down, and you got the market quotes during the crash. With TOS, I'm guessing that your equity value collapsing to -200k was more because of bad quotes and system shutdown, even if just temporarily at TOS.  I actually am not doing short strangles right now as I'm waiting for the big correction off this "bull market" BS… but yes, if you use pure short strangles, unhedged, then your PM margin requirement will resort to the 'extreme' calculation. However, in a broader, well hedged stock, futures, options portfolio, i find the margin requirements really low. For buy-writes, the margin requirements are dirt low, dirt cheap. So I would surely advocate running a few strangles in IB, and then running your other long term stuff there.  Another factor is you can select which contracts / stocks are 'liquidate first'. So, as a precaution, you could set the most liquid stuff or stuff that will reduce your margin, to liquidate first in a crash, or if you are not available during a margin moving event.
     
    And a final point on IB.  I think they are the least likely 'little' broker to go the way of MF Global. IB is run by a billionaire trader who owns 70% and has a track record as a shrewd, conservative guy. I have IBKR's share price on my Trader Dashboard… if I ever see the IBKR share price start cratering, I will start wiring cash out immediately. I think if you are not with a TBTF broker (and who is, as their commissions and service are horrendous!), you have to watch this stuff like a hawk. With MF Global, you had about a week of warnings before they went the way of the Dodo.

  267. zeroxzero

    But, come to think of it, if you'd like to suggest to Bill that he leave a maximum legacy of $10 Million to Steve Ballmer, now that's the kind of Communist Doctrine I would fully supports, to wit,  "To each according to his need, From each according to his ability, no matter how limited."   :)

  268. zeroxzero

    Phil:  I had a talk with client manager from a large European bank this evening. He made a very interesting case for the sort of approach that might work as a "Bernanke Saves the World" portfolio.  He covers muc of Latin America, and said something reminiscent of Deep Throat's "Follow the money" admonition in respect of Watergate. In essence, he said "follow the bond spreads."
     
    He seemed genuinely surprised by the wealth and economic improvement manifested by countries like Colombia, Chile, Brazil, of course, and even Indonesia, as shows up in their improved credit ratings, at the same time that more developed countries' credit is worsening.  If Europe and the U.S.  continue on their present course to massively erode public and private indebtedness by debasing their respective currencies, which I think is arithmetically and socially necessary, perhaps the best investment defense is to latch onto the high growth, high resource, low population countries in South America, my chosen hemisphere for reasons I often discuss.  What precisely one should buy within those economies is not something that leaps to mind this evening, but it's pretty clear that enhanced credit goes with improved fiscal position, for which bond spreads are a reasonable index.  I'll go hunt around for some sort of credit heat map.

  269. kramer36350

    Greece Rebuffed on Aid Over Austerity Vote
     
    European finance ministers held back a rescue package for Greece in a rebuff that left lawmakers in Athens under government pressure to endorse a newly minted austerity plan or exit the euro.
    “In short: no disbursement without implementation,” Luxembourg Prime Minister Jean-Claude Juncker said in Brussels late yesterday after chairing emergency talks of euro-area policy makers. He set another extraordinary meeting for Feb. 15.

  270. kramer36350

    China Trade Contraction Adds Growth Concern

     
    China’s exports fell and imports slid more than forecast in January, the first declines in two years, as a weeklong holiday disrupted trade and commodity prices dropped.
    Overseas shipments decreased 0.5 percent and imports fell 15.3 percent from a year earlier, the customs bureau said on its website today. The median estimate of 30 economists was for a 3.6 percent drop in imports for the month, which had four fewer working days than January 2011 because of the holiday. The trade surplus widened to a six-month high of $27.3 billion.
    http://www.bloomberg.com/news/2012-02-10/china-s-january-exports-fall-0-5-trade-surplus-widens-to-27-28-billion.html

  271. Savi

    Thanks Phil

  272. Phil

    Good morning!

    Asia finished at lows with Hong Kong down 1%, Nikkei down 0.6%, Shanghai flat and Bombay off 0.5%.

    Europe down 0.3% on FTSE, 0.9% on DAX and 0.7% on CAC and our Futures off about half a point but looking bouncy as the Dollar drops hard from 78.90 at midnight back to 78.70 now and this line will either hold or it won't. 

    Looks to me like a 3am trade (bullish) with the BOJ stepping in and buying Euros off the floor at $1.324 and Pounds off $1.57666.  Yen is 77.68 to the Buck so huge move in the last few days of over 1% (and don't forget what a tough time they had getting back to 77 previously).  

    Gold bouncing off $1,720, oil bouncing off $99 but it's all just currency BS so I can't see going long here.  Just a watch and wait thing. 

    IB/Angel – As with many things, it seems that size does matter.  Helps to have a big account.

    Gates/StJ – Oh I know he's not doing that but the point is anyone concentrating wealth like that is just your Hilton problem on Steroids.  $10B that no human can possibly spend becomes $35B which is then left to 3 kids $10Bn each and that turns into $105Bn the next generation and $350Bn and $1Tn and $3.5Tn, etc – in 200 years you have individual people/families that are richer than nations and, as the Supreme Court says – more money means more power and anyone who doesn't think we're effectively creating a monarchy is kidding themselves.  

    The way it should be/ZZ – Doesn't everyone think their kids will solve World Hunger or make really tasty peas?  With my tax plan, you can leave it all to your kids, if Mark Zuckerberg Jr manages to end up with $50Bn, despite my best efforts to tax his Dad, then he'll have to make a lot of money to keep up with the $5Bn a year I'll be taking back until we achieve a fair distribution.  Now, if he can put that $50Bn to work in our society and make $20Bn a year, he'll keep his $50Bn but, otherwise, his ridiculous pile of cash will shrink until 49,500 other people get a chance to be millionaires and he'll have to learn how to survive off what he can make with $500M in cash.  The real danger here is this may damage the market for super-yachts and private jumbo jets and $100M paintings that are masterpieces of our culture that are taken away from the people and stuck on some rich jerk's wall instead.  Even worst, it may prevent people from spending $100M of their own money to get elected – oh the horror!  

    Good points Never.  

    Good plan ZZ, we do need to develop a long-term inflation portfolio and I do agree that South America is a good place to plant a few stakes, obviously Brazil but others are worth a look too.  Canada also will be very strong as their natural resources become more valuable and exports swamp their small populations' long-term needs.  Frankly, if you want to bet on $2,000 gold and $200 oil, EWC or CNDA (small caps) make for good plays on that premise. 

    Junker was the chair?  Wow, I wish I knew that, I would have felt a lot better about shorting into that meeting!  He's the head Bankster…  Feb 15th is already past the line at which point it is supposedly impossible for Greece to make their next payment in time.  

    China/Kramer – So much for the Chinese consumer turning into an engine for Global growth.  

    You're welcome Savi.  

  273. dpastramas

    Latest rumor from GR – The smallest party is walking out of the coalition and probably will vote against the measures on Sunday.  They account for 16 out of the total 252 parliament members of the coalition.  For the measures to be voted into law, it would require at least 151 parliament members to vote in favor.  But many others are expected to vote against.  
    Maybe some of you may want to go short into the weekend. 

  274. Phil

    3:06 AM Asian stocks are off this morning as Greece continues to dominate headlines and data shows a sharp drop in China's imports. Japan -0.6% to 8947. Hong Kong -1.4% to 20723. China+0.1% to 2352. India -0.9% to 17675.

    6:00 AM Overseas: Japan -0.6%. Hong Kong -1.1%. China +0.1%. India -0.5%. London -0.3%. Paris -0.7%. Frankfurt -0.9%.

    7:00 AM On the hour: S&P -0.69%. 10-yr +0.33%. Euro -0.38% vs. dollar. Crude -1.44% to $98.41. Gold -1.17% to $1720.75.

    Friday's economic calendar:

    8:30 Trade Balance

    9:55 Reuters/UofM Consumer Sentiment

    12:30 PM Bernanke: 'Housing Markets in Transition'

    12:50 PM Pianalto: 'Creating Value in Distressed Neighborhoods'

    2:00 PM Treasury Budget

    Notable earnings before Friday's open: ACIALUBPL,BPOCPNFLIRLHLNTLYBNYXPPL 

    A rare bird is spotted across the Atlantic in the form a selloff in shares that is not immediately being bought. Stoxx 50 at session lows, -1.1%, Germany -1.1%. S&P 500 futures -0.7%.Should that figure hold it would be the worst session of a 2012 that hasn't seen the S&P losing anywhere near 1% yet

    Just me and Rosie left:  David Rosenberg is sticking to his bearish story: "With this massive government incursion, wouldn’t it make sense that the economy would have at least some modest growth? The question will ultimately be answered down the road… at some point, the piper gets paid." As for Roubini and Fink leaving the bear camp: "When all the experts and forecasts agree, something else is going to happen."

    Our loyal opposition:  "(We're in) less than the 1st inning" of the stock market rally, says Ron Baron. Stocks, he claims, coming off the "worst decade in the history of our country," are the cheapest in his lifetime. "Greece is the size of Delaware, the size of Delaware, this is what everyone is talking about," he says, shaking his head. Warning: the bulls are out in this video

    Global oil demand will grow in 2012, says the IEA, but with a"two-speed" outlook that will see strong oil demand in emerging economies and falling demand in developed economies. The IEA expects 2012 global oil demand of 89.9M bpd (+0.8M bpd Y/Y) as non-OECD oil demand climbs 1.2M bpd and OECD consumption falls 0.4M bpd. Crude -0.8% to $99.05. - This is misleading news article as the IEA has CUT their forecast by 250Kbd from their last forecast.  

    China's imports fell 15.3% Y/Y in January, much more than the 3.6% drop economists had expected, while exports decreased 0.5%, widening the trade surplus to a six-month high of $27.3B. It's unclear whether this is an indication of a slowdown in demand, as a week-long holiday disrupted trade and may have distorted the data. - Notice how economists have been miles off in their optimistic projections

    India’s industrial production rose less than expected in December, climbing 1.8% Y/Y vs. +2.6% consensus and +5.9% the month before. The deterioration could add to concerns that India's growth is slowing, raising expectations that India's central bank may cut rates in the coming months.

    German inflation remained at an above-target 2.1% in January as energy prices continued to rise. Ex-energy prices, inflation would have been +1.5%.

    German manufacturing may have suffered in December, but Italian industrial production suprisingly rises 1.4% M/M vs. a consensus of -0.5%, led by the transportation and chemicals sectors. Y/Y, output fell 1.7% vs. expectations of -4.6%. (PR

    Two data points do not a trend make, but this week's shockingly weak December data (iii) from Germany suggest its economy hit a wall as 2011 ended, writes Larry Elliot. It's easy to see why exports hit the skids, but German imports dove as well, suggesting domestic demand is also taking a hit.

    "Never believe anything until it's officially denied," writes Mish, seizing on Angela Merkel's response to a questioner this afternoon: "I will have no part in forcing Greece out of the euro … we want to reach a point where Greece can, with European help, live off its resources." Maybe something was lost in translation, but that's an odd way to put it.

    European finmins hold back Greece's €130B rescue package, putting Greece under pressure to either formally endorse a new austerity plan or exit the euro. "In short: no disbursement without implementation," said Eurogroup chief Jean-Claude Juncker late yesterday, adding that another extraordinary meeting has been called for Feb. 15.

    "Greece can't be out of the EU, but (surely can) live without the German boot," says LAOS party leader Georgios Karatzaferis at a bridge-burning press conference complete with Beatles quotes ("It's been a hard day's night"). He says IMF mission head Paul Thomsen is persona non gratta in Athens. "Greek sovereignty is being handed over for aid."

    More from KaratzaferisHe says he cannot vote for the Troika accord as is. Risk markets are selling off a bit more in the wake of his comments. Stoxx 50 -1.8%, Germany -1.8%, S&P 500 futures -1%. Euro -0.8% at $1.3189.

    Greek workers go on strike today to protest austerity measures, just hours after eurozone finmins demanded more cuts as a condition of additional aid. Greeks, in their fifth consecutive year of recession, see little room for further austerity.

    Portuguese 10-year bond yields drop 25 bps to 13.1% – continuing this week's falls – after German finmin Wolfgang Schaeuble is caught on camera telling his Portuguese counterpart that if necessary, Germany "would be ready" to back an "adjustment" to Portugal's bailout program once the eurozone has made a decision on Greece. 

    "We are literally running out of superlatives to describe how much we hate bonds," writes Jeremy Grantham. Low yields, the chance of a slight economic recovery, and easy central bank policy are his key reasons to avoid the paper. Stick with high quality stocks, whose move higher is just in the early innings.

    The aussie tumbles from 6-month highs after the RBA cuts its outlook for inflation and GDP growth. The currency rallied earlier in the week after the central bank unexpectedly did not cut interest rates, but today's statement (.pdf) shows it a bit less sanguine than expected about the economy. The aussie -0.9%, buying $1.0690. Sydney-0.8%.

  275. Phil


    Hopping aboard a train that left the station ages ago – Goldman 
    ups its forecast for the aussie, expecting it to trade around $1.080 for the next year. The previous forecast had the currency between $0.9700 and $1.030. Trading at $0.9900 7 weeks ago, the aussie has just completed a straight line 900 pip move to $1.080. Very helpful call. (earlier

    Rep. Spencer Bachus is reportedly under investigation forviolating insider trading laws in a first of its kind case involving a member of Congress. Bachus is chairman of the House Financial Services Committee. (previously)

    More than three months after MF Global's implosion, sources say the criminal probe appears to be going cold, with investigators finding plenty of "chaos" but "no evidence of fraud" and no internal leads as not a single employee has come forward to cut a deal with the government. 

    Lehman (LEHMQ.PK), which recently said it would finallybegin paying its creditors, is filing a $2.5B suit against Citigroup (C), with the goal of recouping funds Lehman says it transferred to Citi prior to its 2008 bankruptcy filing. Citi calls the move "an unjustified attempt by the Lehman estates to renege on their obligations to Citi."

    Disney (DIS) sells $1.4B worth of bonds split into two tranches – a $1B tranche of notes due 2017 (1.32% yield), and a $400M tranche of notes due 2022 (2.63% yield). Disney, which joins along list of blue-chip names taking advantage of low rates to float debt, had total borrowings of $14.4B as of Dec. 31, to go with $3.8B in cash and equivalents. - Wow, they could have sold themselves the 2022 notes with 1/2 of the money they borrowed and the interest on that 1/2 would pay for all the interest of the $1Bn they borrowed for 5 years – BRILLIANT!  

    Total (TOT): Q4 EPS of €1.20 may not be comparable to consensus of €1.22. Sales +18% to €47.49B. Confirms its target of a 2.5% increase in output on average per year from 2012 to 2015. Shares -0.7% premarket, with investors irked by the company's failure to provide details on how it will hit its output target. 

    More on Total (TOTQ4: adjusted net profit +7% to €2.73B ($3.63B) vs. consensus of €2.56B. Production -1% to 2.35M barrels of oil equivalent a day. Weak refining market hurts earnings, forcing a write-down in the value of Total's crude processing assets. Aims to invest average of $23B/year in 2012-2014.(PR .pdf

    More on Total (TOT): The company wants to become aleader in the solar industry. CEO Christophe de Margerie admits the industry is currently "depressed" but sees "no reason solar can't be profitable."

    First Solar (FSLR +7%), which rallied today along with other solar names, falls 1.2% AH after disclosing the DOE hasn't yet provided initial funding for a 230MW California solar project that First Solar sold to Exelon (EXC) for $75M. If funding doesn't arrive by Feb. 24, First Solar could be on the hook to repurchase the project for its initial price, plus costs incurred by Exelon. (previously

    Solar stocks soared yesterday - FSLR +7%SPWR +12.5%,TSL +18.6%YGE +20.4STP +8.6% - perhaps due to a Deutsche Bank note suggesting that demand is increasing, as evident in rising utilization of solar module factories. But solar has been moving for a few weeks, and some analysts think it's all about short covering. 

    Siemens (SI), Alstom SA (ALSMY.PK), Hyundai and Samsung are among those expressing an interest in building and operating a $21B high-speed rail-link betweem St. Petersburg and Moscow in time for the soccer World Cup in 2018. OAO Russian Railways intends to name a shortlist in September or October.

    True Religion Apparel (TRLG): Q4 EPS of $0.62 misses by $0.09. Revenue of $119.4M (+7.7% Y/Y) misses by $9M. Shares-21.9% AH. (PR)

    More on True Religion's Q4: International sales were flat Y/Y, a drastic change from Q3's 30% increase. U.S. wholesale revenue fell 20% Y/Y, slightly worse than Q3's 18% drop. Gross margin fell 70 bps Q/Q to 64.1%. True Religion is guiding for 2012 sales of $450M-$460M and EPS of $1.88-$1.95, below a consensus of $494.4M and $2.37. TRLG -21.6% AH. (PR

    The rally in KB Home (KBH +9.7%) today coincided with anSEC filing indicating that investment firm BlackRock had recently increased its KBH holdings to 7.2M, a 9.3% stake. The move extended the stock’s YTD gain to 78% and moving it closer to a golden cross; DHI and BZH are other large home builders already reaching that level.

    Google (GOOG) is reportedly working on a home entertainment system that wirelessly streams music, and which would be the first consumer device marketed under the Google brand. The report comes a week after an FCC application for a Wi-Fi and Bluetooth-enable device triggered a flurry of speculation, and could be further evidence that Larry Page is intent on following in Steve Jobs' footsteps.

    EU antitrust chief Joaquin Almunia warns companies not to use their IP to curb competition, saying he'll fine firms for breaking EU rules. It's not just Apple (AAPL), Samsung (SSNLF.PK) and other cellphone players who are at it – the EU is also investigating Honeywell (HON) and DuPont (DD) over car air conditioners. 

    Intel (INTC) settles an antitrust suit filed by New York's attorney general on largely favorable terms. Though Intel will agree to pay the $6.5M in legal expenses incurred by the AG's office in pursuing its case, it doesn't admit to any wrongdoing or agree to any changes in its business practices. The AG was accusing Intel of abusing its CPU market dominance to the detriment of chief rival AMD

    As investors dumped Diamond Foods (DMND -36.9%) stock, a surprising number of traders took to the options market today to play for a reboundThe heaviest single-day trading on record in DMND puts and calls was split about evenly between bullish and bearish contracts, as plenty were willing to speculate that theaccounting woes and related problems are surmountable. 

  276. Phil

    Dollar 79 – look out below!!! 

  277. jmm1951

    I can't really see much difference between the vast bloated Greek civil service and the US military. Both provide a kind of welfare employment and both provide some services albeit of dubious value. The US seems to have deliberately modeled itself on the kind of world predicted in George Orwell's Nineteen Eighty-Four, in which it is one of the superstates that is continually in a state of war with a vaguely defined enemy, and is always close to overall success as symbolic victories pile up, without ever being able to deliver the knock out blow.  The most Orwellian moment of all was the arrival of The Coward George Bush in military uniform and codpiece with full fanfare on an aircraft carrier to declare victory over Terror.
     
    The sad irony is that when Orwell wrote Nineteen Eighty-Four (in 1948) it was intended as a grim warning of what the future might be if certain trends continued. The US ruling class has understood the book as a blueprint of how the world ought to  be.

  278. jmm1951

    Google (GOOG) is reportedly working on a home entertainment system that wirelessly streams music.
     
    I had one of these in the 1960's.It was called a transistor radio.
     
    http://www.1900s.org.uk/1940s-home-radio.htm

  279. Phil

    ROFL JMM!  

    As to Orwell, you might enjoy my oldie but goodies "1984 + 23"  

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