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Wednesday Wheeee – No More QE For You!

SPY 5 MINUTEI hate to say I told you so but…

Oh, who are we kidding?  I could not be happier saying I told you so and neither could our Members as our "Sell in March and Go Away" strategy seems to have hit the nail on the head – and it's only April 4th!  

Back then (2/24), we were still bullish but the plan was to let the rally run its course and cash out ahead of earnings and our plays from that Wednesday (2/22) which I posted right in the morning post for all to see, have performed very well, of course.  

We had April SQQQ and DXD hedges that failed, of course, but those were paid for by the short sale of AAPL 2014 $300 puts for $15, which are already $10.75, so up 28% already on those pays for a lot of protection.  

Another offset we had looked at was the short sale of FDX April $80 puts at $1.10, which expired worthless (up 100%).  We also looked at longer-term put sales on SKX, with the Oct $12 puts fetching $1.55 per contract, now $1.25 (up 19%), and the T 2014 $25 puts at $2.15, now $1.75 (up 18%). 

Along the same vein, the XOM 2014 $65 puts at $5, now $4.05 (up 19%) were sold to pay for the SU 2014 $25/37 bull call spread for $6 for net $1 on the spread.  The bull call spread is still $6 but that's net $1.95 now – up 95% on the combo.  Our other bullish play on oil was the USO June $40/46 bull call spread at $2, selling he SCO Oct $26 puts for $3 for a net $1 credit.  The USO spread has fallen to $1.40 but the short SCO puts dropped to $1.65 a net gain of .75 – up a quick 75% on a fairly neutral oil play, which was BRILLIANT as it covered many, many of our aggressive oil shorts over the month that went VERY well

Our other trade ideas from the morning post (and the logic and strategies are detailed in the post):  

  • AA 2014 $10 puts sold for $2, still $2 – even
  • X at $28.49, selling Jan $25 calls for $8.50 and 2014 $20 puts for $2.95 for net $17.04/18.52  (see "How to Buy A Stock for a 15-20% Discount" for details on this strategy), now net $18.98 – up 11.4%
  • PEG Sept $30 buy/write at net $27.07/$28.53, now $28.54 – up 5.4% (plus .355 dividend) 
  • HOV 2014 $2 puts sold for .90, now .80 – up 11%
  • BAC 2014 $3/7 bull call spread at $2.75, selling 2014 $10 puts for $3.30 for net .55 credit, now .75 – up 36% 
  • HCBK Jan $7 buy/write at net $5.14/6.07, now net $5.80 – up 12% 
  • FTR 2014 $5 buy write at $2.43/3.71, now $2.24 – down 8% (plus .10 dividend) 

TLT WEEKLYOf course we got much better exits than yesterday's prices as we took the money and ran in last week's cash out but these 10 trades will be good to cycle back into (not HOV or BAC as we're concerned with both now) when we find a bottom to this dip.  There's no shame in going back to the well – especially when the well is filled with gold!

In yesterday's aptly titled "Double Toppy Tuesday" post, we discussed our "sell the rips" strategy as well as buying the QQQ May $67 puts for $1.08 and they actually opened at .96 on the morning rip and finished the day at $1.07 (up 11%), which made them pretty good protection for the against the day's 0.5% drop.  

I made a quick comment in Member Chat as the Nasdaq opened up 0.33% on yet another AAPL run, saying to our Members at 9:41:  

The S&P is not playing and the NYSE is down 0.25 and the SOX are down 0.42 and the Transports are flat so I'm still thinking toppy here – so be careful – this could be just a blow-off top this morning. 

We used the same 836 line on the Russell Futures (/TF) that we used for shorting last week and, as of this morning, we're down to 821, which is a very nice $1,500 gain per contract.  Oil (/CL) of course, we shorted from $105 to our usual $103.50 line, then again below $103.50 (now $102.75) and those contracts are $10 per penny per contract so another $1,500 per contract gain just to $103.50.  

At 11 am we held fast to our bearish short-term portfolios at the market topped out and even added (or rolled to for people in other puts) the PCLN July $560 puts at $7 as PCLN ran up to $730 on a C upgrade.  If they are going to keep offering cheaper puts on PCLN ahead of earnings – we'll take 'em!  My comment on Fed expectations at 11:09 in Member Chat was a pretty good preview for the afternoon:  

Fed – 2pm.  Just the minutes of the last meeting, where they said no QE3 for now.  I don't understand the fuss – they gave us their formula and clearly we're not there so why do people think the Fed is going to lay out the conditions for more easing for the first time in their history and then break those conditions within a few months – even The Bernank is not that crazy.  

That cartoon is from last February – the more things change, the more they stay the same…  

Of course all of our bearish bets were in place, so there wasn't much to do but sit back and watch the carnage.  We did have a good conversation about Star Trek in the afternoon and how far people drive for groceries but things got serious again when I noted to Members it was "80 minutes to Bernanke."

Stock World WeeklyWe were thrilled to have the Fed minutes confirm our bearish outlook at 2pm (public version of my commentary on the Fed for Members is up on Seeking Alpha but, sadly, they don't have color capability, so a little harder to follow – I'm sure the full version will be up in Stock World Weekly this Sunday – and you can get a Free Trial now).   Speaking of Stock World Weekly, they featured my Long Put List this weekend – what fantastic timing!

As the market collapsed, TLT did a funny thing and dropped to $110.50 and my 3:31 response to Button, who asked in Chat why TLT and the 30-year were dropping on the Fed statement, was:  

 

TLT/Button – No more twist.  First reaction is dumping out of Treasuries on fear that the Fed (essentially the only buyer) may not cover the auctions.  Now we need a bit of panic into the Dollar and TBills to take us the other way.  

Let's DD on the TLT April $110/111 bull call spread at .57 in the $5KP (5 more).  

That TLT bull call spread pays .43 (up 75%) if TLT simply holds $111 through April expirations.  I imagine by this morning they should be good for 20% or better gains already as TLT comes back on the expected Global panic.  This is one of the reasons I drone endlessly on about market Fundamentals to our Members – if you UNDERSTAND why something is happening, then rather than panicking with the herd – you can calmly jump in and take advantage of opportunities when they present themselves.

    Now we will watch and wait and see how far this correction will take us.  Since we already have plenty of bearish bets, we'll be looking for bullish ones and our old top 10 list is going to be a fine start but who knows what stocks will go on sale as we head into earnings season.  Europe is already off 2% this morning and our Futures look to be opening down 1% (9am) despite a pretty good ADP report.  Since China was closed today and is missing all the fun (they were UP 1.3% on Tuesday), if we finish down 1% or lower, we can expect them to snap down harshly tomorrow morning and that won't be pretty for the EU open so lot's of fun in store.  

    Wheeeeeeeeeeeeeeeee!  


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    1. stjeanluc

      Oil Lines

      R3 – 106.27
      R2 – 105.72
      R1 – 104.68
      PP – 104.13
      S1 – 103.09
      S2 – 102.54
      S3 – 101.50

    2. stjeanluc

      Looks like we might have an exciting open this morning which might help some of our portfolio positions… 

    3. Pharmboy

      PP for today:

    4. JRW III

      Good morning,

       

      IWM     79.10,  79.29,  79.56,  79.82,  80.17,  80.46,  81.04,  81.41,  81.64,  81.94,  82.10,  82.34,  82.66,  82.82,  83.18,  83.33,  83.55  and  83.74

       

      Please draw your own conclusions:

    5. JRW III

      And for those of you who are not chartists, a clue:

    6. stjeanluc

      S&P futures are below 1400 which held over the last couple of trading days…. Oil is hovering around S2 now having bounced off a bit. But looks weak right now and S1 which is resistance now is only $0.50 up.

    7. dpastramas

      Commodities / Phil – Do you think its too late by now to short any commodity out there following yesterday's FOMC? I shorted oil at 104 yesterday night (and feeling really proud of my shelf  :-) ), but was a bit late to jump on gold or silver.   Do you expect further drops? Cheers!

    8. stjeanluc

      JRW – With declining volume like we have (or at least weak volume) this is the perfect rising wedge setup… Statistically speaking there is a 94% chance of a 10% correction following that pattern. But then again, statistics have a hard time fighting central banks right now!

    9. stjeanluc

      That is of course 94% if we breakout of the wedge on the downside….

    10. yshenhar

      Phil – looks like another brilliant call on the DD of the TLT spread. On such spread do we take 1/2 out (assuming it hits my average price) or leave it to expiration?

    11. stjeanluc

      The short FAS calls expire tomorrow, not Friday so they might decay fast today.

    12. stjeanluc

    13. stjeanluc

    14. kustomz

      Thanks for the clue JRW! ;-)

      Cramer says MS is a buy and Bob Pissani needs a set of pom poms..

    15. Savi

      Phil—take out 1/2 USO puts ?—did anyway

    16. lflantheman

      AAPL portfolio:  Trade trigger placed on the short April 600 puts.   Buy to close at market if AAPL last sale less than or equal to 618.  This is a precaution lest AAPL for some reason follow the market down and take these short puts with it.

    17. stardawg

      is anyone going long on IWM with the morning drop? 

    18. stjeanluc

    19. Inkarri1982

      What the?  What happened to the Dow jumping 50 points up in a split second?

    20. mrmocha

      Pharm - read an article in SA explaining with ACAD will be the next ARIA, any opinion?

    21. Pharmboy

      Ah, and VRTX goes green!

    22. scottmi

      DOW/ink – wolatility.. you would never know it from the VIX, but expect some fast action.

    23. Burrben

      Any puts out there look cheap if we do break down from here?  Something to play a "hard 6" with?

    24. scottmi

      Wolatility.. LOL!  – that would be 'volatility'..

    25. gmarts

      Took the money and ran on the DIA and USO puts looking to reload on a bounce

    26. stjeanluc

      The last week has been quite good…. Some positions should be protected with stops like GLL and DIA for example.

    27. Phil

      Good morning!  

      We're holding up well, all things considered so we're not going to be greedy – tempting though it may be.  We have oil inventories at 10:30 and we can't be too bearish with oil holding $102.50 but copper failed $3.85 (now $3.83) so, if they don't get that back – we have no reason to be bullish either.  

      That means cashy and cautious is still the way to go but, when we see cool opportunities like yesterday's TLT spread – that's what cash is for.  Oil $102.80 at the moment with the Dollar at 80.01 (definite bear line) with the Euro at $1.312, the Pound at $1.5855 and the Yen back to 82.45 but not helping the /NKD Futures, which are in epic fail mode at 9,755.  

      Gold is $1,623 so congrats to all who put their foot down on that silly run back to $1,700.  

      As we can see from the Big Chart, we have support lines on the Dow (13,200), the S&P (1,400) and the Nas (3,075) that will all be tested this morning – the Dow will open below and the Nas and S&P will be right there so it's all about the Dow taking 13,200 back to get the bulls back in the game.  Obviously, failure by either the S&P or the Nas makes a 4/5 level fail and that's going to be a pretty good indicator that we're looking at another 2.5% ride down.  

      In the Futures, that 820 line on the RUT is key (we're there now) as is 13,000 on the Dow (and a great BULL line on /YM, playing for a very likely bounce).  So far, volume not very exciting to the downside so all can be reversed with a kind word from the Fed.  Williams speaks at 11 and, of course, oil inventories at 10:30 and another big build may send the markets tumbling (about a 2.5Mb build is expected).  If oil blows $102.50, then the whole energy sector might follow it and then the miners follow, etc…  That's the most likely fundamental thing to knock us down today. 

      CNBC announcers are apoplectic this morning – I had to turn down the volume for Cramer and Pisani as they seem to think that if they scream bullishness at us, they can stop the sell-off!  Let's just keep our eyes on Europe – if they don't turn back up – why should we?  

      Wednesday's economic calendar:

      7:00 MBA Mortgage Applications

      7:30 Challenger Job-Cut Report

      8:15 ADP Jobs Report

      10:00 ISM Non-Manufacturing Index

      10:30 EIA Petroleum Inventories

      At the open: Dow -0.93% to 13077. S&P -0.87% to 1401. Nasdaq -0.2% to 3114.

      Treasurys: 30-year +0.59%. 10-yr +0.35%. 5-yr +0.21%.

      Commodities: Crude -1.28% to $102.67. Gold -2.93% to $1622.95.

      Currencies: Euro -0.86% vs. dollar. Yen -0.51%. Pound +0.36%.

      Market preview: U.S. stock futures continue yesterday's sell-off despite a decent and in-line ADP jobs report, with the S&P 500 benchmark -0.9%. The action's back in Europe today, where shares are lower, and Spanish and Italian bond yields are surging following a poor auction in Spain. Later: ISM Non-Manufacturing Index, EIA Petroleum Inventories 

      March ADP Jobs Report: 209K vs. +230K prior (revised from 216K) and expectations of 208K.

      Something Strange: The Economy Is Behaving Badly In The Least Expected Way.

      Fed's Lockhart Says Sustained Job Gains Reduce Need for Easing. “I would have to see some pretty severe circumstances before I endorse for another round of quantitative easing,” Lockhart said today on Bloomberg Radio’s “Hays Advantage” with Kathleen Hays.

      The WSJ's Jon Hilsenrath confirms the market's read on the FOMC minutes as indicating the central bank is in no hurry to launch more stimulus, and in fact, is more worried about inflation than previously thought. Meanwhile, Goldman Sachs reads the tea leaves and shifts its expectation for a QE announcement from April to June.

      T.Boone Pickens: Oil Could Hit $148 Per Barrel. Tightening oil production worldwide could mean prices hitting $148 per barrel this summer, Texas billionaire investor T. Boone Pickens said Tuesday. Not even spare capacity from Saudi Arabia would be enough to make up the difference amid increasing sanctions against Iranian oil, Pickens said in an interview to be aired on “The Kudlow Report.”

      The U.S. apartment vacancy rate in Q1 fell to 4.9%, its lowest level in more than a decade, and effective rents rose to $1,018/month, the biggest jump in four years, real estate research firm Reis reports. But those numbers may be peaking, as 150K-200K new units are expected to be built next year, and the added supply likely will dampen rent growth. 

      Spain's poorly received debt auction is not a sign of market fragility, but a reminder of continued pressure for governments to reform, says Draghi. Europe is at session lows, Stoxx 50 -1.7%, Germany -2.2%, Spain -1.1%. (earlier

      Austria's central bank follows the Bundesbank example from last week and will no longer accept bank bonds from Greece, Ireland, and Portugal as collateral for borrowings, reports Dow Jones.

      Methinks Draghi protests way too much:  The LTRO is not QE, says Mario Draghi, pointing out the ECB is not purchasing bonds, but lending money against collateral. Technically correct, but the collateral is suspect and the central bank balance sheet is still exploding. (earlier)

      "Any exit talk is premature," says ECB chief Draghi of the central bank's current easing stance. In fact, he says, another LTRO is a possibility if the conditions warrant. Euro near session lows, -0.8%to $1.3125.

      We don't see any signs that banks are addicted to ECB lending, says President Draghi. This chart shows that while the first LTRO served to narrow all bank credit spreads, LTRO #2 created a divergence, with those banks who partook seeing their spreads widen vs. those lenders who did not.

      Draghi brushes aside any worry about the Bundesbank and Austrian central bank no longer accepting bank bonds from Greece, Ireland, and Portugal, calling the amount of paper involved "peanuts." Key is sovereign debt, which is still being accepted. (earlier)

      Draghi says the capital of Greek banks has been wiped out by the PSI and the ECB is assessing which ones remain viable as counterparties in monetary policy operations – which sort of sounds like he's saying some won't be. (earlier)

      Draghi Tested as German Pay Deals Add to Euro Divergence ThreatWage moderation in Germany may be coming to an end at precisely the wrong time for European Central Bank President Mario Draghi. As nations from Greece to Spain battle recessions and record unemployment, workers in Germany are winning some of the biggest pay increases in two decades, with public service staff set to gain 6.3 percent more by the end of next year. That’s widening the gaps between Europe’s largest economy and its euro- area peers, making the ECB’s one-size-fits-all monetary policy less effective.

      Taiwan Bourse Says Likely Tax on Trading Will Cause Stock SlumpTaiwan is likely to impose a capital-gains tax on share transactions to bolster revenues, causing equities to decline, said Schive Chi, the chairman of the island’s stock exchange. “The market will certainly react to this but I think that is because how the capital gains are going to be taxed is still not clear,” Schive said yesterday in an interview in Boao, China. “That will cause some kind of concern for uncertainty.”

      SEC Probes Ties to High-Speed TradersU.S. securities regulators are conducting a wide-ranging investigation into the complex relationships between rapid-fire trading firms and stock exchanges, according to the official overseeing some 20 probes into computerized trading. The inquiry into ownership and other ties is part of a broader probe into whether high-speed traders have unfair advantages over other investors, according to people familiar with the matter.

      Monsanto (MON): FQ2 EPS of $2.28 beats by $0.17. Revenue of $4.75B (+15% Y/Y) beats by $220M. Shares +1.7%premarket. (PR)   More on Monsanto's (MON) FQ2: Net sales increases driven by global gains in corn and a strong selling season in the U.S. R&D expenses increased to $353M based on investments to support future growth opportunities. Soybean Seed segment revenue grew 12% Y/Y, while Vegetable Seed fell off 6%. Raises full-year EPS guidance to $3.49-$3.54 and sees free cash flow of $1.6B-$1.8B for FY12. Shares +1.1% premarket. (PR

      McDonald's (MCD) is removed from Goldman's conviction buy list, the firm saying there is little visibility towards near-term catalysts and better opportunities elsewhere. Shares -0.9%premarket.

      Shares of Sears Holdings (SHLD) trade 3.7% lowerpremarket after Eddie Lampert hits the CNBC airwaves (video) for a rare TV appearance that covered macroeconomic topics more closely than life at Sears – although he did tip off that he sees trends in retail favoring consumers over businesses.

    28. Phil


      Not good for PCLN shorts:
        Shares of US Airways (LCC) move up 2.5% premarket after the carrier reports March traffic was up 4.5% and steps up its rhetoric over the benefits of a merger with bankrupt American Airlines (AAMRQ.PK).

      San Disk (SNDK -8.8%) shares slide after last night'sdownside Q1 guidance due to weaker than expected pricing and demand, and a downgrade to Outperform from Top Pick at RBC. The firm says accelerated pricing declines are stripping out EPS leverage, but it likes SNDK longer term "given second-half demand drivers, including return of smartphone, tablet and ultrabooks." 

      Biogen (BIIB +0.4%) is upgraded to Buy from Neutral by Goldman Sachs, which says the risk/reward ratio is still attractive despite the stock's recent outperformance. The firm sees success of its BG-12 multiple sclerosis treatment supporting the current valuation, with "multiple optionalities for upside that are underestimated in Street estimates."

      Walgreen (WAG -0.95%) March same-store sales -4.3% Y/Y to $6.02B. Comparable store front-end sales +1.2%, comparable customer traffic -1%, basket size +2.2%. Comparable prescriptions -11.4%; the negative impact of no longer being part of Express Scripts (ESRX) network was 10.7 percentage points. (PR)

      Not NFLX!  Don Corleone comes to YouTube (GOOG) after the company lines up a deal with Paramount Pictures (VIA) that flies in the face of ongoing litigation between the two firms over patent infringement. The new licensing arrangement adds another 500 titles to YouTube's arsenal of full-length features.

      Zynga (ZNGA+2% premarket on a NY Post story suggesting the company is in talks with Wynn Resorts (WYNN) about a possible online gambling partnership. ZNGA, which sees huge revenue potential in moving to real wagering, needs to form partnerships with casino operators in a number of states if it is to cash in on an expected boom in internet gambling. 

      Yahoo (YHOO -0.2%) confirms a report that it's to lay off2,000 employees. "Today's actions are an important next step toward a bold, new Yahoo – smaller, nimbler, more profitable and better equipped to innovate as fast as our customers and our industry require," CEO Scott Thompson says. (PR)  Yahoo (YHOO) expects annual savings of ~$375M from thelayoffs, but will take a pretax charge of $125M-$145M and may incur more related charges. Yahoo says it's identified "a select group of core businesses" that it will focus on," although it doesn't reveal what those ops are. What a tease. Shares reverse premarket losses and are +0.5%

      The reviews are coming in for Nokia‘s (NOK) Lumia 900, running Windows Phone 7 (MSFT), which goes on sale exclusively at AT&T (T) next Monday. They're all over the map: It's a "mixed bag" (WSJ); a "decent offering" but "too plain, too ordinary" (Engadget); "a phone every single person should consider owning. It’s so quick and elegant" (Gizmodo). Also: IIIIII

    29. stjeanluc

      Phil – I am out all day in a meeting in NYC. I won't be able to update the portfolios throughout the day.

    30. mrmocha

      scottmi / vol – Sure is a crazy market – I awoke to a double on my GRPN puts, went to make coffee, came back and the stock was up almost 4% in minutes, bye bye profits.

    31. dclark41

      Phil:
      The worse the news gets the greater the chance of more QE. Is all we have to look forward to on the short side quick ins and outs? It just seems no matter how bad the news the reaction is fast and thin before we start moving back up knowing that the FED is lurking around the corner ready to throw their pixy dust on the markets.
      Thank you for the great trades on the short side, but this is exhausting knowing that as soon as you get a decent drop you better head for the exits before your gains disappear.

    32. Phil

      2nd chart clears things right up JRW! 

      Dollar did not hold 80 despite Draghi indicating further easing.  I think Goldman's "waiting for QE" extension still fools some of the people all of the time.   This is the 4th consecutive Fed meeting where GS has said – "definitely the next one."

      Oh no, now ISM Service disappoints at 56 (57 expected).  

    33. 1020

      Interesting article – I like SPWR below six….
       
      http://www.fool.com/investing/general/2012/04/03/california-solar-auction-crushes-grid-parity.aspx

    34. Phil

      Commodities/Dpast – I think oil can go much lower.  It's dangerous to short into May but I do like the SCO July $30/36 bull call spread at $3, selling the April $35 puts for $1.30 for net $1.70 on the $6 spread and you either have to roll the short puts (SCO now $35.25 with oil at $102.90) or sell new ones to further reduce the basis.  Meanwhile, it's the kind of trade that, if it moves against you, you can roll and adjust so great fun and excitement if you scale in.  If we have a big crash, those GLL calls in the $25KP are good too.  

      TLT/$5KP, Yshen – I see .66, which is a nice one-day gain off .57 (17%) but really it's just "on track" I think as the risk of loss is not so much that we shouldn't want to play for that extra .34 (50%) in 12 more trading days.  

      USO/Savi – Proper conservative way to play.  I'm going with my gut and leaving them on.  

      IWM/Star – I'd take them as a momentum trade over $82 ($82.20 now) and the weekly $81 calls  have very little premium at $1.25 but, at this exact moment, I would wait until they prove they can hold the line because it still feels down to me.  

    35. Phil

      Does anyone see a fat-finger type dip in the Dow to 500?  

    36. Pharmboy

      SHJ chart, in conjunction with JRWs….1440 on SPX first, then down?

       

      ACAD – yeah, I saw that as well.  Their primary drug, pimavanserin, is in Phase 3 trials for psychosis in Parkinson's patients. It failed 1 of 2 Phase 2 trials.  I need to dig and ask a few Drs. about it, but I am leaning to a not gonna happen (being another ARIA), but again, I need to ask around.

    37. Inkarri1982

      Dow/Phil – I saw a fat finger something maybe about 10-15 minutes ago. 

    38. Phil

      Dow/Ink – I think someone is messing with it.  One reason they do that is to squash your charts – makes it hard for a lot of retailers to follow the intra-day action.

      VIX over 17!  

      Puts/Burr – That's what the Long Put List is for.  TZA still cheap at $18.13.  May $17/21 bull call spread is $1.25 and I wouldn't even sell a put unless they go down, then you can probably sell the $15 puts for $1 (now .40) or you can find a nice, bullish offset once we stop falling.  

    39. kustomz

      Bill Gross will be on CNBC shortly and he has been betting heavily on more QE.

    40. Phil

      FAS Money – Wow, nice improvement!  Funny what happens when you don't panic.  

      IWM Money – More conservative than FAS Money and fine for now, we wanted to sell puts on a dip so we just have to wait now.  

      $5KP – PROFIT!  I guess we'll let these play out through oil inventories at least.  

      $25KP:

      • DDM – It was the May $70 calls, which maxed out at $2.90 yesterday so I have no idea why they were booked at $3 and we shorted the APRIL $71s, which filled at $1.40 and are now .60 so net $1.40 is almost $2,000 better than net .55 showing.  Unfortunately, these things can usually slip by me but I was like WTF on the number this morning and I caught this one. 
      • DMND – June 
      • XRT – $61.22 still a long way to go – makes a nice put with the May $59 puts at $1.03 if anyone is interested.  
      • BBY – Backed the wrong horse there but June
      • SCO – Looking good
      • SQQQ – Much improved 
      • FAS – We're kind of neutral there now – maybe protected too much and we'll have to see how it plays but I think it's a good mix.  
      • TLT – Fine
      • VXX – Getting better
      • GLL –  Let's take the $1.05 calls off for $1.85 and leave the others with the $1.50 base so we're reminded of where we want to stop out.  
      • DIA – Can get much better 
      • USO – Risking inventory
      • PCLN – Love them
    41. Phil

      Oil up 9MB!!!!!!!!!!!!!!!!!!   ROFL!!!!!!!!!!!!  Gasoline down 1.5M (less than expected), Distilates up 19K (drawdown expected). 

      Muhahahaha – Down goes oil, down goes oil!!!!!!

    42. rsaxton

      Oil inventories / Phil – any insight into the generally muted price reaction to significant inventory build? 

    43. Phil

      Updates/StJ – That's OK, I'm fine with one a day but please note DDM error.  Let me know next time you're in NYC – very close.  

      More QE/DC – True, we don't want things to get so bad that bad news is good news again.  Sucks trying to trade when you constantly have to worry about Government interference at any moment.  You're right though – hit and run is the way to go.  

      SPWR/1020 – I like them long-term but the Asians are just wrecking margins on solar and without EU subsidies, a lot of panels will rot in warehouses.  The problem with solar panels is they are subject to sort of a Moore's Law, where they get cheaper and more efficient every year so once they make one and don't install it, it begins to lose value faster than a new car you drive off the lot.  

      SOX hit the 2.5% rule at 420 – nasty if they fail that.   

      I love the way Bill Gross finds a way to say QE over and over again, like he's trying to hypnotize the listeners.  

      10:00 AM On the hour: Dow -0.79%. 10-yr +0.31%. Euro -0.74% vs. dollar. Crude -1.01% to $102.95. Gold -2.8% to $1625.15.

      EIA Petroleum Inventories: Crude +9.0M barrels vs. consensus of +1.7M. Gasoline -1.5M in-line with the expectations. Distillates Unchanged vs. consensus of -0.4M.

      Mar. ISM Non-Manufacturing Index: 56.0 vs. 57 expected and 57.3 prior (>50 denotes expansion). Prices index fell to 63.9 from 68.4. Employment rose to 56.7 from 55.7. New orders fell to 58.8 from 61.2.

      Stocks sink further following the ISM services (slight) miss. Of particular interest are backlogs of orders dropping into contractionary territory (to 49.5 from 53), suggesting last month's solid activity/production figure (58.9) may have come at the expense of future work. S&P 500 -1.1%.

      Real disposable income is contracting, housing market data keeps missing expectations, Europe is slowing, the government is about to start cutting backBAML takes issue with yesterday's headline - Economy of U.S. Enters Sweet Spot. "The range of plausible outcomes is very wide and includes some very ugly outcomes." 

      Uh-oh!  Could we be on the verge of a Greek or even a "Eurozone Spring?" A march is planned for later today in Greece following the suicide of a pensioner outside the parliament in Athens. Before shooting himself, he shouted, "I have debts, I can't stand this anymore." It was over a year ago that Mohamed Bouazizi's self-immolation in Tunisia sparked the Arab Spring.

      Ow, my wrist!   As expected, the CFTC files and settles charges against JPMorgan (JPM) for including Lehman Brothers' customer funds in its calculation of the bank's net free equity during a period from at least 2006-2008. The CFTC also slaps a $20M fine on JPMorgan, although there's no word of whether the bank admitted wrongdoing or not.

      Southwest Airlines (LUV +2.3%) trades higher after Barclay's boosts its rating up to Overweight from Equal Weight on a valuation call. Shares of LUV briefly touched $8.50 after being range-bound for close to a month.

      Piper survey of 5,600 U.S. teens finds 34% claiming to own an iPhone … and 40% of those who don't planning to buy one in the next 6 months – an encouraging figure for Apple (AAPL), even if intent and action are different things. On the other hand, while 34% of respondents say they own a tablet, only 19% of non-owners are looking to buy one in the next 6 months. For e-readers, the figures are a mere 17% and 5%. (previously) - Yeah, my kids PLAN on owning lots of stuff too!  

      Shares of Micron Technology (MU -4.9%) tail off after SanDisk cuts its outlook and shines a spotlight back toward Micron's own problems. RBC Capital's Doug Freedman warns on the outlook for flash memory demand, saying anyone who is not an Apple or Samsung is burning through current inventory instead of placing new orders. 

      Gaming consoles are another Microsoft (MSFT) business for which China presents a challenge (previously). Not only are console sales banned (leading most consumers to rely on PC games), most of the consoles purchased illegally are "grey-market" systems running pirated discs. TechinChina speculates Microsoft could nonetheless generate some revenue from China if it supported day-one downloads for all Xbox 360 titles.

    44. pat_swap

      Phil,
      Any trade suggestion for GLL, USO or DIA at this point?

      Thanks

    45. Jordan

      Fat finger messing the charts – by the way, I think on TOS there is a way to exclude one tick from the chart, so it does not get squished.  Try right-clicking on a tick and selecting "correct this bar" then you can drop it, or correct the high or the low.

    46. rsaxton

      Oil inventories / Phil – question withdrawn. 

    47. Pharmboy

      Bill Gross also went short treasuries last year, now he is pumping them?  Let's just say by June, 100% short t'will I be.

    48. kustomz

      Phil.. Gross, not just saying QE over and over but telling viewers with no QE the Dow will plunge 1400 points.

    49. morxlntway

      Phil – i have EDZ short Apr $15s rolled from the Feb 17s. Should i think about rolling on a day like today or just hold til the 20th?
      thank you

    50. yshenhar

      Is this drop real this time

    51. stardawg

      mmm….has the carnage ended?  is this the low of the day :-)

    52. jabobeast

      yshenhar--can't open your post?

    53. pstas

      Pharm- so, you are switching to the dark side on T's? Unless I missed something in the conversation you have been consistently calling for lower yields on the 10yr?

    54. flipspiceland

      "Does anyone see a fat-finger type dip in the Dow to 500?  "
      I sure don't.

    55. Peter D

      Hey short strangle players,
      We are back in business!  Start scaling in those short sells.  VIX may and can go higher, so don't go crazy with large positions yet.

    56. shadowfax

      Fat fingers
      FWIW These things ar red flags in my book of indicators, not to move on but wake up, pay attention. If they are 100 shares no big deal, but yesterday a 100,000 share about 3:45 and I said to my self under bid, gap down open most of the time.

    57. kustomz

      Europe is fugly…

      JRW went below 81.65 but bounced off 81.49 (81.41 target line) are leaning toward a bounce here or stick with the trend this morning?

    58. stjeanluc

      NYC / Phil – I was thinking about trying to meet but tight schedule today.

      I will correct the 25kp when I get home tonight.

    59. shadowfax

      Kustomz
      The trend is your friend. Look for another bounce off that low or 2.

    60. Phil

      Shorts/Pat – A little chasy at the moment as 1.25% is a bounce zone as well as being down 2.5% from the top so we're looking for a weak bounce (20% retrace of dips) at least and maybe a strong one (40% retrace) as there are still many dip buyers and the volume is still pretty low.  Spreads like SCO and TZA above are the way to go and we just adjust them if we get burned.  

      Correct the bar/Jordan – Thanks, that's very cool!

      Dollar back over 80.  Euro languishing at $1.3125, Pound $1.5875, 82.60 Yen to the Dollar but big news on EUR/CHF as they fall to $1.20 (stronger Franc) and that means the SNB is probably buying Euros trying to prop them up and hold that $1.31 line so the support here may be artificial.  

      Europe closing down 2.5% – not a good sign for our afternoon!  Nor is failing 13,000 on the Dow and we're very close.  

      Down 1,400/Kustomz – He's probably right about that but why is that bad.  Lord knows we need a little correction on this huge run.  That would be healthy – crazy of the Fed to try to stop it.  

      EDZ/Morx – If we can't turn it around, EDZ should have at least one more good day in it.  I don't see any reason to change your stance, if not Apr $15 puts then June $13 puts or whatever – EDZ bottomed back in Feb and is due for a run, I think.  

      Back in business/Peter – About time.  

      PM still making new highs. 

    61. kustomz

      Shadow we always get short covering into Europe markets closing….so far no different than any other day.

    62. Phil

      Here's our bounce – first Bill Gross and now John Williams:  

       

      "It's essential that we keep strong monetary stimulus in place," John Williams, president of the Federal Reserve Bank of San Francisco, is scheduled to say, according to the text of a speech to be delivered as part of the SPUR Business Breakfast Series in San Francisco.

      "The recovery has been sluggish nationwide, not just in states hit hard by the housing bust," Williams plans to say. "High unemployment, restrained demand, and idle production capacity are national in scope. These are just the sorts of problems monetary policy can address."

      Williams, a voting member of the monetary policy-setting Federal Open Market Committee, delivered a similar speech at the University of San Diego School of Business Administration Tuesday. He did not lay out what else the Fed might do to support the economy.

      With people talking things up, anything less than a strong bounce is very lame.  I'm not feeling any conviction to the weak move up so far.  

       

    63. Lincoln

      Phil: adjustments to short calls
      As per usual I appreciate your thoughts yesterday re: positions I had in LOW and LULU.  You indicated that I should have been selling way OTM puts as I scaled in the second and third moves.  I guess my concern is that selling puts at that stage could quickly put me in a position of dealing with short puts on a stock I really don’t want to own before I have made much on the short calls, particularly on momo stocks like LULU that can make violent turns down .  Could you expound on the proper way to balance short puts during the scaling in of short calls?  TIA

    64. Phil

      Is the trend our friend?  

    65. JRW III

      kustomz / Position

      Trendline Resistance at 81.84 (hard to get back over) and 82.42 in addition to R/S lines

      Europe is down 3% and still trading so bias is still down;  Good hunting !! 

       

    66. kustomz
      • UK FTSE -2.5%
      • German DAX -3%
      • French CAC -2.8%
      • Spain IBEX -2.1%
      • Italy MIB -2.4%
    67. stardawg

      lincoln: if i may chime in,,,,,,,NEVER sell puts on a stock you don't love and want to own.  IMO…

    68. rustle123

      We Are the World

      From Doug Kass:

      Apr 4, 2012 | 10:39 AM EDT

      • The relationship between the European markets and our S&P 500 suggests as much.

      The European markets are starting to break down.
      Courtesy of "Fast Money's" Steve Cortes, check out the chart below,  which shows the relationship between the European markets and ourS&P 500.

      http://realmoneypro.thestreet.com/sites/realmoneypro.thestreet.com/files/article_charts/CortesKass_0.png)

    69. Phil

      Adjustments/Lincoln – You are already behind so the LOSS you already have on the long calls protect your short puts.  For one thing, you can't play this game if you only will sell premium in one direction – you leave yourself no outs if/when you are wrong.  You need to consider this experience and rethink what you do the first time your first entry goes 20% against you because, if you are not prepared to follow the trade through to it's logical conclusion (widening short strangle), then you have only one way to win – and that's being right about the stock going down.  Once you let the callers go in the money, then you can't possibly win unless the stock goes back below the strike (net of sale) – now you only have one way to win.  That would really suck if you shorted PCLN at $400 with that attitude or AAPL at $250…  Also, keep in mind you can just get out of the stock, take the loss and go short something less insane.  

      11:00 AM On the hour: Dow -1.37%. 10-yr +0.37%. Euro -0.88% vs. dollar. Crude -2.37% to $101.55. Gold -3.42% to $1614.75.

      11:39 AM European shares close sharply lower as the Fed and ECB momentarily sit on their hands, and and an auction of Spanish debt is noteworthy for the buyers who failed to show. Stoxx 50 -2.5%, Germany -2.8%, France -2.7%, Italy -2.1%, Spain -2%, U.K. -2.4%. Euro -0.8% to $1.3133.

      12:00 PM On the hour: Dow -1.17%. 10-yr +0.33%. Euro -0.80% vs. dollar. Crude -2.25% to $101.67. Gold -3.14% to $1619.45.

      Wave 5 Of The Cyclical Bull Market (Adisor Perspectives)

      The Fed has trapped itself in a conundrum of providing cheap liquidity, Bill Gross tells CNBC. He doesn't believe yesterday's FOMC minutes lowered the chance of additional QE as today's market slide shows what will happen without continual pump-priming. It's QE or else.

      CoreLogic's U.S. home price index fell to a new post-bubble low in February, as prices fell 2% Y/Y and 0.8% M/M for the seventh straight monthly decline. But the pace of decline slowed, "a first step toward ultimately growing again,” CoreLogic's Mark Fleming says. “Excluding distressed sales, we already see modest price appreciation month over month in January and February.”

      Mortgage lending standards continue to tighten, with the average borrower credit score for closed loan in February hitting 750 from 740 6 months ago. The average score for a "conforming" refinance hit 770, while the average scored of someone denied was 720 – in the past a number considered good credit

      Today's surge in Italian bond yields – the 10-year is +22 bps to 5.37% – comes despite the country's Q4 budget deficit narrowing to 2.8% of GDP from 4.2% a year earlier. With the country's austerity program taking hold, Italy even ran a primary budget surplus (net of interest costs) of 2.6%, while tax revenues rose 2.9%.

      Spanish PM Rajoy tells party members the country's situation is one of "extreme difficulty … anyone who doesn't understand this is fooling themselves." Starting to sound uncomfortably like the crew running Greece, he says the alternative to government austerity – bailouts – would be even worse. 

      Greece prepares to stand firm in the latest round of poker with private creditors later today, when some of those holding $26.8B of bonds governed by foreign law have to decide whether they'll accept a bond swap and a 75% haircut. The rejectionists, which are expected to represent around $5.5B, are betting that Greece et al will eventually cave in.

      Signs of a New Tiananmen in China (Diplomat)

      The world's largest solar power project, the 1,000-megawatt Blythe Solar Power Project in southern California, could be in jeopardy after Solar Trust of America filed for bankruptcy protection. Solar Trust holds the development rights for the project, which has a $2.1B government loan guarantee. 

      Bill Ackman – fresh from working out a deal to take Burger King public – takes a shot at McDonald's (MCD -1.4%), calling the company "enormously bloated" in a conference call aimed at justifying his big bet on the hamburger chain. Being bloated apparently isn't the issue at BK, where its own 10-K tips off that comparable-store sales fell off 0.5% last year. (Previous: MCD downgrade)

      Opportunity may be presenting itself in certain rail stocks, beaten up lately as low natural gas prices are sapping demand for thermal coal, says RBC's Walter Spracklin. "A disconnect has emerged between current trading multiples relative to (their) earnings power," he argues. Favorites: Norfolk Southern (NSC), Union Pacific (UNP), Canadian National (CNI), and Canadian Pacific (CP).

      Southwest Airlines (LUV +2.1%) CEO Gary Kelly says the carrier plans to keep capacity flat in 2012 and possibly into 2013 with its expectation that the U.S. economy will sputter "We definitely want to grow this airline…but not until we are hitting our profit targets and have an outlook that really supports that."

      Much of the commentary regarding SanDisk's (SNDK-9.5%Q1 warning involves the solid-state drive (SSD) market. While NAND flash demand for smartphones and tablets is healthy (though SanDisk's lack of exposure to Apple and Samsung could be a problem), the SSD picture is complex. Raymond James thinks SanDisk and Micron (MU -5.1%) are seeing mere short-term weakness ahead of ultrabook launches, but Jefferies is worried ultrabook demand could disappoint. (previously)

      Chips Forecast a Slowdown Is Coming (WSJ)

      Over 1M U.S. cable subscribers cut the cord in 2011, estimates Convergence Consulting. It also thinks U.S. pay-TV providers only had a net gain of 112K subs last year – far less than the 380K estimated by Leichtman Research, which believes a 1.6M drop in cable subs was offset by satellite and telco increases. From 2000-2009, pay-TV providers added an average of 2M subscribers/year. (previously)

      Larry Page, increasingly under fire over recent moves viewed as taking Google (GOOG) away from its roots, tells Bloomberg Businessweek his company is about using "technology advancements to help people," That's a vaguer and broader mission than Google's historical goal to "organize the world's information." Page also sounds unenthusiastic about following Apple's lead in paying a dividend. "Apple has more cash than we do," he observes.

      US draws up plans for nuclear drones (Guardian)

    70. scottmi

      Wierd -when loaded up TOS this morning, i swear i could here a tinny little whine coming out of my speakers.. "Make it stop, Uncle Ben! Please please for the love of incumbents MAKE IT STOP!"

    71. shadowfax

      rustle123
      That chart was great and it illistrates the 5% rule applies all around. We are down app. 2.5% and another 2.5% sounds healthy. 10% would be better. We are about 2 weeks behind so maybe you have found a leading indicator. Excellent!

    72. JRW III

      Well, this IS exciting !!

      I have a hunch we get some excitement around 1:05 – 1:20; I just don't know if that would be a Buy program from Jamie's people or a Fund deciding to deleverage !!  Or maybe………………………………………………..

    73. rustle123

      I picture Phil as Darth Vader talking to someone bullish in this clip:
       
      http://www.youtube.com/watch?v=mI8GEidaMMI

    74. JRW III

      Thanks rustle !!

    75. jabobeast

      7:20 (Dow Jones) Goldman Sachs says as stock multiples for quick-service restaurants have risen back to their long-term average, "we expect shareholder returns to come primarily from compounding earnings from here." In such an environment, the investment bank likes Chipotle (CMG) and Starbucks (SBUX), "with 25%+ average EPS growth likely from each over the next three years." Goldman upgrades SBUX and adds it to the America Conviction List, which CMG is already on, while boosting its price target to $66 from $49 and increasing EPS estimates. Goldman also pulls McDonald's (MCD) from the list as it sees "little visibility towards meaningful EPS upside in the near-term" and downgrades Tim Hortons (THI) to neutral. The companies' shares are inactive premarket.(kevin.kingsbury@dowjones.com)

    76. shadowfax

      JRW
      I did have a cat hit the mouse for a large hit on me. The question now is the next close move. I had that support at at 81.42, my next strong one is around 80.48. Wondering what you have? Maybe that is tomorrow's target or 1:30 to close today?

    77. jthoma

      Let's hear a big wheeeeeeeeeeeeeeeee from Jabobeast!!!!!!!

    78. rustle123

      From this morning:

      The Liquidity Rally Is Over

      Apr 4, 2012 | 7:24 AM EDT

      • Absent more easing, investors are about to experience natural price discovery in stock prices.

      "When economies stumble, public policy (fiscal and monetary) comes to the fore and defends against an acceleration of economic and corporate profit weakness and often inhibits natural price discovery."
      -- Doug Kass, "In Defense of Short Selling" (April 2, 2012)
      Over the near term — stock, bond and gold prices are now in jeopardy of falling after the FOMC minutes were released yesterday afternoon. Those minutes emphasized that unless the economy cools, there will be no more (immediate) cowbell in the form of QE3 or Twist III.
      From my perch, the liquidity rally, which has been in place for several years now and is responsible for some of the rally off of the generational bottom, is now over.
      The U.S. monetary cliff at June's end has grown ever more pronounced with yesterday's announcement — and ever scarier for investors in many asset classes. (The ECB's full allotment policy also ends this summer.)
      Absent more easing, investors are about to experience natural price discovery in stock prices. (While the Bernanke put is still out there, it now far more out-of-the-money than the markets believed prior to yesterday's release of the FOMC minutes.)
      I fully recognize that the market rally has been based on more than liquidity; it has been based on a slow (but steady) emergence out of the 2008-2009 recession.
      Where I have disagreed with bulls (recently) is that, though now several years of age, the U.S. recovery has been subpar in a "new normal" challenged by secular headwinds (of structural unemployment and fiscal imbalances). And what makes me even more concerned over the next few months, is that there are growing signs of ambiguity with regard to the trajectory of future domestic economic growth:

      • Warm weather has pulled forward retail sales.
      • The 100% tax credit (which was reduced to 50% on Dec. 31, 2011) has likely pulled forward business spending.
      • Though labor growth is healthier, weak (relative to expectations) industrial production, durables, personal income, high manufacturing, burgeoning automobile inventories and so on all point to moderating domestic growth.
      • Current political gridlock and likely continued gridlock following the November elections could result in undesirable, growth-deflating and higher interest rates, as bond vigilantes rebel against deficit inaction. Rising interest rates will continue to hurt the refinancing market (already refi applications are down seven weeks in a row), which serves as a source of consumer comfort (and spending) and could hamper the nascent recovery in housing.

      Worse yet is that a potential growth slowdown could be occurring at a time when U.S. corporate profits are trending at all-time highs and in which profit margins are vulnerable at 57-year highs.
      And over there in Europe, the so-called recovery is much more fragile and more vulnerable than in the U.S., serving to adversely impact those U.S. multinationals that serve that market.
      Finally, yesterday's announcement has occurred following a persistent and record-breaking rally in world equity prices that has worn out just about every short-seller and has led to expanding long exposure out of the hedge fund community (but has not yet brought in the retail investor).
      In summary, the forward looking outlook is not pretty for the U.S. stock market, as the liquidity rally is now over.
      Get defensive as investors face the newfound reality of natural price discovery.

      Douglas A. Kass
      Seabreeze Partners Management Inc.

       

       

    79. jabobeast

      no whee until after 4pm and I need to wait until PCLN and CMG are actually down for the week--if that is possible?

    80. JRW III

      shadowfax / 80.48

      I've got 80.33;  BUT I ALSO HAVE P-Bars to 83.31 !!

    81. jthoma

      Jabobeast- we will allow that sir but at least it feels better today than at anytime this calendar year!

    82. Phil

      Yes, nice chart Rustle.

      SBUX/Jabob – I like SBUX but now GS is trying to justify their existing ridiculous calls (CMG) by making more of them – very much like in the dot com days when it was also GS doing the same crap and explaining, in very detailed reports, how it was a "new environment" blah, blah…. It's like no one has ever been through a market cycle before – every friggin' time – amazing! 

      Speaking of CMG – $411!  Going to have to call 911 if this keeps up…

      PCLN hanging tough so far.  

      Weak bounce didn't hold so far, now retesting floors.  Dollar still at 80.  

      1:00 PM On the hour: Dow -1.13%. 10-yr +0.42%. Euro -0.75% vs. dollar. Crude -2.33% to $101.58. Gold -3.13% to $1619.65.

      The chance of additional QE is downgraded to 1-in-3 by Morgan's Vince Reinhart (who 30 days ago thought it was coming in April). The FOMC minutes, he says, makes clear the decision will be not be pre-emptive, but instead data dependent … which sort of makes forecasts like this not of a whole lot of value. 

      Fodder for the technicians: Microsoft (MSFT -2.7%crashesbeneath its 50-day moving average at the same time its chart forms a nasty head and shoulders pattern. (h/t John Melloy)

      pic.twitter.com/7AHpVYze

      Finra fines a bond dealer and its head trader for charging customers excessive markups on more than 1.5K municipal bond and 1.7K CMO transactions over a 2-year period. "Precisely why retail clients should never buy actual bonds (use ETFs and closed-end funds)," suggests a trader.

      U.S. regulators are finalizing a process to spotlight some nonbank financial companies for tougher oversight, a key step before formally identifying which firms pose a threat to the financial system. KBW says this poses questions for Hartford Financial (HIG -2.4%), saying it's not clear whether HIG will be considered systemically important based on its derivatives liabilities. 

      Did I mention the miners would take a hit next?  Jaguar Mining (JAG -9.5%) takes a hit after being downgraded to Underperform at RBC Capital on the back of disappointing 2012 production guidance. The miner noted earlier that the ongoing transition at its Paciencia facility, as well as difficult ground conditions at Turmalina and record levels of rainfall will continue to impact production and average costs in the quarter.

      "The worst part has got to be over," says Wilbur Ross of natural gas, conceding his purchase of Exco (XCO) was a bit early. "(It) doesn't give cancer… very cheap per Btu … and is less pollutive than oil or coal." Not only will it become a bigger portion of domestic energy supply, but the export possibilities are outstanding.

      Best Buy's (BBY -1.4%) online prices averaged 4.2% higher than Amazon's (AMZN -3.1%), according to a Barclays survey that does not paint BBY in a flattering light. Best Buy could claim thebest buy on just 4% of products, while AMZN offered a better price on 54%. BBY also offered free shipping on fewer items, and was less competitive on taxes.

      Shares of Idenix Pharmaceuticals (IDIX -12.2%) sink after Abbott Laboratories (ABT +0.6%) releases positive results from studies of its experimental hepatitis C treatment. Other Hep-C companies vying for a piece of the rapidly-growing multi-billion dollar market: Gilead Sciences (GILD -2.2%), Vertex Pharmaceuticals (VRTX -1.2%), Bristol-Myers Squibb (BMY -0.5%), BioCryst Pharmaceuticals (BCRX -3.4%).

      The re-release of Titanic in 3D has opened up a slew of possibilities for the 20th Century Fox (NWSA -2.2%) film to once again smash box office records, with expectations that it may even beat The Hunger Games blockbuster receipts. The 15-year-old classic was not originally released in 3D or IMAX (IMAX -3.5%), so the new format gives movie-goers a powerful new reason to re-view an already epic movie classic.

      Google (GOOG) shows off a demo video for Project Glass, a previously-rumored initiative to create Android-based display glasses that stream a variety of personal, social, and location-specific information. Are the glasses a compelling new gadget, or something only a "total dork" would use? You decide. - I vote dork!  If that demo is the best they can come up with – no thanks…

      Apple (AAPL) might be planning to make a big investment in Foxconn parent Hon Hai (HNHAF.PK). A Chinese site reported Apple is preparing to invest $9.76B in Hon Hai, which would be good for a ~20% stake, while another report suggests Apple will invest courtesy of a $3B stock offering. Foxconn/Hon Hai recently struck a deal with Apple to address labor issues brought up by the FLA, and has also made large investments in fellow Apple supplier Sharp.

      Three lunchtime reads:

      1) The congressional power shift and what it means for stocks

      2) Fed stays in a holding pattern

      3) Low-cost era over for China's workshops to the world 

    83. shadowfax

      JRW
      A quick look back and 80.30s are better place. I added S4 into my thoughts and that is simple math, not based on market activity. Thanks so much, that is why I asked!

    84. crussell14

      Phil
      I missed the DDM trade you recommended the other day. Is there a DDM trade you would still recommend? Thanks

    85. jabobeast

      Phil— are you expecting mr stick again?

    86. Inkarri1982

      Mr. Stick cometh…

    87. jthoma

      I believe Mr. Stick will be absent and unaccounted for today on this 3rd day of April unless the dollar sells off – FWIW

    88. Phil

      By the way, I totally love how calm this board is during a sharp market decline – makes me feel like I'm doing a good job!  8-)

      Kass/Rustle – Good summary of the situation. 



      Click to View

      That's a great one, Jabob – Too bad we don't have avatars:  

      Interesting report from Brookings:  

       

      While our analysis underscores the importance of governments pursuing sustainable long run fiscal policies, it suggests the need for considerable caution regarding the pace of fiscal consolidation in depressed economies where interest rates are constrained by a zero lower bound.  

      There is, moreover, reason to fear that the investment shortfall is not the only factor through which the current downturn casts a shadow on the long-term future of the American economy. Large recessions may create labor-market as well as capital-stock hysteresis. Reacting to the long and large increases in the unemployment  rate in Western Europe from the early 1970s to the mid-1980s, Olivier Blanchard and Lawrence Summers (1986) raised the possibility that “hysteresis” links between the short-run cycle and the long-run trend might play an important role in macroeconomics: that cyclical increases in unemployment from recessions “might have a direct impact on the ‘natural’ rate of unemployment” around which an economy would oscillate. 

      That's a point I've made here before – we need to rethink our entire concept of society because we are attempting to fix problems that may, in fact, be unfixable.  There simply is no need for more than 140M people to work to provide everything 300M people could possibly need and, as productivity increases, there will be no need for more than 120M, then 100M, then 75M, then 50M, etc.  You can't just force people to work (and penalize non-workers) just because you don't like the idea of them not working (in the traditional sense) – it's silly….  

      ROFL: Jim Sinclair blames manipulators for the DROP in gold prices:  

       

      On the heels of the release of the Fed minutes, today legendary trader and investor Jim Sinclair told King World News the release of the Fed minutes and subsequent market reaction in gold was orchestrated. Sinclair also said this is government manipulation against the tide of the bull market and it will be overrun. Here is what Sinclair had to say about what transpired today in the gold market: “The tactic is always the same. The gold banks enter the COMEX and offer more gold for sale at the market than has been mined in the last five years. Immediately, the locals (pit traders) try to run in front and hit any bids they happen to have on their book or are out there in order to get the price down.”

      “Gold tanks down to the $1,640 level and now the brokers for the gold banks begin to enter the market to cover shorts to reduce the short position taken, and most likely to completely flatten it on the day. This has been going on from 1968 to 1980 and it’s also been going on from 2001 to today.

      This failed to support the Qs this morning:  

      pic.twitter.com/uUf8OJ9

      Nice IWM breakdown chart:

      Dow volume still lame at 67M coming up on 2pm.

      DDM/Crussell – You didn't miss much as the Dow went the other way but the May $69/72 is $1.45 and you can offset that with anything you REALLY want to own on a dip or be aggressive and sell the $63 puts for $1.05 to net .40 in the $3 spread as DDM is currently $69 so the bet is the Dow is over 13,000 and a $5 drop that costs you money is 7.2%, which is 3.6% lower on the Dow or 12,532 is what you're betting will hold up. 

      Stick/Jabob – Unlike the Spanish Inquisition, we should always expect Mr. Stick. '

    89. rustle123

      Think 13000 will be safe today but we are still have a lot more catching up to Europe tomorrow, especially if they go down hard in the morning.

    90. Inkarri1982

      Rus – Don't forget China. 

    91. morxlntway

      while were on the DDM, any thoughts for those who weren't so lucky to have missed it? The good news is i only bought 3 and only sold one MCD put to offset, so far. Saving ammo for a day such as this.
      thanks again

    92. rustle123

      @Ink
       
      Good point, they have a lot of catching up to do.

    93. Lincoln

      Phil: Adjusting short calls
      Hope you don't mind my continuing on this topic with one last comment. What I'm really trying to figure out is what should I be considering  in general when selling puts in this circumstance? What # of contracts to sell- in relation to the short calls?  What timeframe- expiry before, after or same as short calls? how far down in price, 200 dma?. Or does it simply come down to selling enough premium to finance the roll of the calls to wherever I want to roll to?  TIA 

    94. scottmi

      Dollar/Phil – so what might we expect with the dollar/yen/euro tonight?

    95. Pharmboy

      T-bills/pstas – I think they still go lower.  Would you rather have your money in T-bills or Euros?  Dollar gains strength, T-bills follow the trend (yields lower), and the market holds water for now.  13000 is going to be a tough nut to crack, but if it does, then the yields will soar.  Big co.'s have been selling debt like crazy to buy back shares as well as refinance old debt…..now it is just a wait and see.

    96. Phil

      If this all holds up, it's actually a nice gap fill back to the 23rd.  Just watch the SOX, they're the ones that have broken down but if they can hold that 420 line, then the Nas can bounce – especially if we get some good AAPL news and the QQQ $66 weekly calls at $1.16 have just .02 of premium and they can be stopped at $1 (QQQ $67) as a proper breakdown – it's a good way to protect short profits into a possible stick.  

      I'm watching Dow 13,000 on the Futures for a bull sign, that should be big Dow 13,067.  RUT Futures right on the 815 line (/TF) and those are good for a bullish toss with tight stops, of course.  

      I'm not bullish, I just don't wan to have Mr. Stick blow our short profits so I'd rather risk losing a bit on a cover than get out of all the shorts ahead of a possible move even lower (we are now more than 1% over Europe's close on no particular good news).  

      FXI still no major capitulation and the April $36 puts are interesting at .50.

    97. Kwan

      More bad news for Google. An Australian court rules Google is responsible for misleading search ads that allows one company to masquerade as another. Google, of course, thinks advertisers should be responsible for their own content.

    98. exec

      Phil

       
      I'll bet you a big….fat…juicy….2" thick…cholesterol loaded….artery clogging…bone-in RIBEYE…..that QE-3 will be on again in the near future.

    99. Pharmboy

      Exec – and I have some pink slime to add in for an even exchange – lb for lb!

    100. jthoma

      exec- I think it would only be fitting to cut it into strips and have it served to us at CMG after we book our flights on PCLN to gather together.

    101. craigzooka

      IRA Portfolio update!

      Buying 200 shares of ACI (bringing us up to 500 shares total) and rolling all of our short options to the JUL 11 calls.

    102. jabobeast

      PCLN up 23+ yesterday with mkt down 65
      PCLN down 8 today with mkt down another 113
      FU PCLN!!!

    103. dpastramas

      And i was worried i sold my DIA puts too soon.  Bring it up again boys…

    104. Phil

      Great prediction Jthom – and you are already right, there was no major stick yesterday, the 3rd. 8-)

      Adjusting/Lincoln – I don't have a formula.  It depends on the stock and the situation.  If it were GRPN or NFLX, then the number of puts to sell would be zero because both stocks are worthless over time, if it's CMG, then I'd love to own them at $200 so there is actually a point at which I get comfortable selling puts.  LULU too, gets interesting in the $40s – just because something is overpriced at it's current level, doesn't mean it's long-term worthless but you have to EVALUATE each situation – there's not going to be a cheat sheet with some formula you can apply to whatever mess you got yourself into.  Every time I make a pick my PRIMARY reason for selecting a strike and time-frame is where I expect the stock to be over time and I don't know that until I take a fresh look at the stock, the news, the sector, the market, the competition and even the charts and THEN I look to see if there are any good options to sell that fit my probable range.  

      Currencies/Scott – We've been here before.  $1.31 on the Euro is hugely defended BUT they have now blown the 50 dma at $1.3216 and the Pound is right on the 200 dma at $1.5861 and the 50 dma is below that at $1.5814 but below that is some very ugly possibilities.  Europe has earnings too and who on Earth thinks those are going to be pretty?   We are coming off some major irrational exuberance that has taken the Pound up from $1.52 in mid Jan to $1.61 last week (6%), which was probably a 20% overshoot of 5% so let's say $1.60 is the 5% line and $1.58 is the expected pullback which makes the 50 dma at $1.5814 what SHOULD be VERY STRONG SUPPORT.  

      So, if that fails, we have big trouble in the UK.  The Euro moved from $1.26 up to $1.34 (6.3%) so about the same story and the 4% line is $1.31 (funny how that works out, right?) and the 5% line is $1.323 and there's that 50 dma that already failed.  Since the Euro already failed, unless they take it back, there's nothing bullish there and the Pound is likely to get sucked down as well.  

      SNB will spend money to support $1.31 until they run out and they do run out – as in they have to get authorization to print more and even a small pause in their support can tank the Euro (see very sharp breakdowns after first week of Feb and first week of March) and now they don't even have dma support so this could be worse.  BOJ is tougher to call as they seem to have ditched the Euro and without their support, SNB can't do it alone.  

      With the Nikkei at 9,740, we can expect the BOJ to do something and their support is the 50 dma at 9,558 and they will freak out if they have another day of dips as they are, of course, a lot more sensitive to China slowing than we are.  So, I expect an attempt to pump up the Euro and the Pound and the Yen but I expect them to be conflicting and we don't get back those critical lines and, if that happens – then the Dollar heads back to 81 and maybe 82 (2.5%) and, if the markets are slipping and people begin running to the Dollar as it rises – then we could be entering a major correction.  So a lot riding on the next few days – too bad we're closed Friday but that makes it more likely we don't get a major fail until next week (if at all).  

      GOOG/Kwan – Good, someone needs to crack down on that BS.  It's like Twitter – they refuse to police the system so people abuse the hell out of it.  Some girl on Howard Stern had her account hacked and the guy who did it has been speaking for her for a week and Twitter won't do anything about it – it's total BS.  She's a porn star but a business is a business and I know I would be very pissed if someone was answering questions under my name.  

      QE/Exec – Sorry, you lost me after artery clogging.  Good thing I'm already planning on having a steak today or I'd have to change my plans now.  As it is, I'm really in the mood now.  

      75M on the Dow at 2:45

    105. ban2

      Phil/EDZ
      I have 20 short EDZ Apr 14 P sold for $2.65 now $1.45 (I was real happy with a $11.35 entry for EDZ
      I watched these go up and down the last couple of wks waitng for the great fall — which seems more eminent at the moment.
      They're up nicely today and I'd would like to protect the profit against possible EOD stick save while keeping this hedge.
      Would you just cover and take the profit and start over tomorrow?

      tia

    106. craigzooka

      IRA Portfolio update!

      Rolling our MT APR 20 calls to May 20 calls collecting $0.90

    107. jthoma

      Phil- LOL- at my age only being off one day is not bad-LOL- hope I go 2 for 2 today the 4th.

    108. zeroxzero

      Phil:  I have always been intrigued by your notion that many, not to say most, people don't need to work.  A kind of "Jetsons" world where machines scurry around taking care of most things [of course, they become conscious at some point and take over, but that's a bit down the road].  
       
       But what would they do?  There's nothing more destructive than a bored monkey — I had one, trust me.  These are not the "Denker und Dichter" of society — they are, or will be, the "Betas" of Brave New World. Given time — it's probably already taking place — this will take on a permanent genetic aspect.  Perhaps that is, and has always been, evolution's path.  But my guess is that it's not what you had in mind.

    109. craigzooka

      IRA Portfolio update!'

      Woops, typo in that last post.  

      Rolling our MT APR 20 calls to MAY 18 calls collecting $0.90

    110. jthoma

      Forgot to say- your put list is beautiful today- 100% even better than the market

    111. Phil

      PCLN/Jabob – Better to compare it to the RUT as they are both around 800.  Notice the major divergence began around early Feb.

      2:00 PM On the hour: Dow -1.06%. 10-yr +0.4%. Euro -0.71% vs. dollar. Crude -2.13% to $101.8. Gold -3.14% to $1619.55.

      3:00 PM On the hour: Dow -0.92%. 10-yr +0.36%. Euro -0.73% vs. dollar. Crude -2.13% to $101.79. Gold -2.98% to $1622.15.

      Ceridian-UCLA Pulse of Commerce Index: +0.3% Y/Y in March, vs. +0.7% in February, -2.2% Y/Y. The index generally has been weaker than the ATA trucking index and reports for rail traffic; the high cost of fuel may be shifting some long haul traffic from trucks to rail. 

      Ford lifts its seasonally adjusted rate of auto sales to a range of 14.5M-15M from a previous level of 13.5M-14.5M. The upward revision follows yesterday's strong (sans GM) reports on March sales from manufacturers. Sector-play ETFs VROM and CARZ are both up over 20% YTD after a couple of years in the doldrums.

      This is total BS!  Continuing with financial "reform," a measure in a recently passed bill will take down the Chinese Wall between bank research and underwriting arms. VCs heavily lobbied for the rule change, arguing analysts were ignoring "emerging" companies (and maybe making it too difficult for them to unload their stakes!).  When it becomes law, regulators will no longer be able to write or maintain rules that restrict investment bankers from arranging communications between analysts and investors when dealing with firms with less than $1 billion in gross annual revenue.

      General Mills (GIS) is the most reputable company in America, according to a study (.pdf) of U.S. consumers conducted by the Reputation Institute. General Mills unseated former top finisher Amazon, which fell to #5. KFTJNJ, and K round out the top 5. AIGand XOM saw major improvements in reputation, while TWC and BAC saw major declines.

      Rebounding component demand from TV OEMs (previously) is providing a lift to Taiwanese LED chipmakers, reports Digitimes. Firms are said to be posting utilization rates in the 70%-90% range – a positive for an industry hit hard by oversupply. The report could be contributing to the healthy performance of Taiwan's SemiLEDs (LEDS+2.3%); U.S. rival Cree (CREE -4.2%) is following the tech sector lower.

      Game on: A note from Societe Generale to clients tips offsthat the biggest beer industry deal ever – the rumored Anheuser-Busch InBev (BUD)-SABMiller (SBMRF.PK) marriage – could still be in the offing as it reads the tea leaves after A-B passed on exercising an option to buy StarBev in advance of the brewer getting snapped up by Molson Coors.

      Monsanto (MON -1.5%) shares have turned sharply lower despite beating FQ2 earnings estimates and posting a 15% Y/Y revenue increase. MON raised its full-year EPS guidance to $3.49-$3.54 vs. $3.39-$3.44 prior, but it wasn't enough to please some analysts. Belittling the guidance hike, S&P Capital IQ points to "early spring weather that pulled some seed deliveries forward." 

      Smart:  Delta (DAL+2.6%) is interested in buying ConocoPhillips' (COP) idled Trainer refinery in Philadelphia as the airline aims to reduce its jet fuel costs. It would be the fist case of an airline owning a refinery and industry experts say a best-case scenario could see production starting up again as early as July.

      Gap (GPS +1.6%) may "disproportionately benefit" from a recovery in teen apparel spending, Piper Jaffray says in upgrading shares of the retailer to Overweight from Neutral. The firm says spending on fashion for both upper- and average-income teens is posting double-digit gains for the first time since 2003-04, and the trend could mean "we are entering a multiyear apparel recovery cycle."

      Oh come on!  S&P places Best Buy's (BBY) BBB- rating on a credit watch with negative implications due to a business model that it says "is not working" and a lack of progress by the retailer to improve its performance. The ratings agency will meet with company management before issuing a final determination on whether Best Buy's rating will fall into junk status. Shares broke lower off the news and now stand down 3.3%.

      Credit Suisse issues cautious comments on Darden Restaurants (DRI -1.4%), saying the company has been sending out email coupons from the Olive Garden for $5 off two dinner entrees. The firm notes that similar coupons in the past have been issued after periods of traffic and comp weakness, which could bode ill for 2-year trends and weakness at the family-style Italian eatery.

      Motorola (MOT +0.4%) says it's targeting May for the launch date of its Razr Maxx in the United Kingdom, Europe and the Middle East. The phone packs close to double the battery capacity of the original Razr, and was launched last year to much fanfare, however the device has received a muted response in the U.S., largely due to competition from Samsung's Galaxy Nexus.

      Here's your mandatory AAPL booster for the afternoon:  New iMac models featuring Core i5 and i7 Intel (INTCIvy Bridge CPUs will be arriving in June or July, claims awkwardly-named enthusiast site "How to" Arena. A recent report suggested Apple's (AAPL) next-gen iMacs will feature anti-reflective glass from Taiwan's G-Tech Optoelectronics. Many expect new MacBook models to arrive ahead of the iMac refresh, perhaps even later this month. 

      Even better (for AAPL):  A number of regional U.S. carriers will begin selling the iPhone on April 20 at prices $50 below the typical retail MSRP. The list includes Alaska Communications (ALSK), Virginia's nTelos Wireless, and Wisconsin's Cellcom. U.S. Cellular (USM) appears to remain a holdout; the carrier has suggested it will offer the iPhone (AAPL) after an LTE model is released. 

    112. shadowfax

      Sure looked like a push was on until Mr Big Sell BOT came back taking those better numbers. The battle is not over till it's over.

    113. jmm1951

      Twitter/law enforcement
       
      It can be enforced if they want to. In the UK last week a soccer player of African origin collapsed with a cardiac arrest during a Premier League game and his heart stopped for several hours. Unbelievably, he received prompt treatment on the field, with cardiac resuscitation and oxygen and is now reported to be recovering in hospital (though whether he has brain damage or is permanently incapacitated remains to be seen.).  Some twat posted obnoxious racist comments about his "death" on Twitter and was very promptly sentenced to 56 days in prison. His defence that he was drunk was not accepted by the court.
       
      http://www.guardian.co.uk/uk/2012/mar/27/student-jailed-fabrice-muamba-tweets

       
      I bet that if Julian Assange was posting stuff on Twitter, they would miraculously find a way to police it. Really this is like Amazon not being able to collect state sales taxes in the US because it is too complicated for them. Boo bloody hoo! Why not move some of the programers they have in other countries to the US to teach their US programers?

    114. dflam

      Phil/TKR:
      Been busy w/the new bus brokerage company. What do u think of TKR Sept. $50/55 BCS paired with sale of Sept.$45 P for net $.20 credit on $5 spread  or  Sept. $50/$52.50 BCS with sale of $45 P for net $1.50 credit on $2.50 spread? Thnaks

    115. rustle123

      They just don't want to let 1400 on the S&P slip away

    116. jabobeast

      WTF — does PCLN have its own mr stick??

    117. cwan120

      Hi, Craigzooka,
      You are rolling down the MT calls from $20 strike to $18 strike??
      I don't know your cost basis.  But aren't you going to lose $2 (the diff between strikes) if called away at $18?

    118. JRW III

      What we need here is THE…………………………………………………………………………………………………………………………….

    119. lflantheman

      AAPL portfolio:  Bought to open 10 May 625 calls.

    120. Phil

      EDZ/Ban – I would not do anything as they are only worth $1 so there's .45 of premium protecting you anyway.  Would you spend another .50 to protect a $1.20 gain trying to go for another $1.  If you don't have faith in EDZ enough to say that, if they turn back down, then you'll just roll to May, then take the $1.20 profit and run.  I don't see why EEM would turn back up until we show some spine in our own markets though.  

      2 for 2/Jthom – I hope so as I haven't taken profits in our virtual portfolios yet.  I think we're good for at least another half-point down tomorrow.  

      Bored monkeys/ZZ – That's just your own prejudice about what constitutes "worthwhile" pursuits.  They had a similar problem in ancient Athens as a combination of military conquests, trading by sea and the beginnings of craft "workshops" powered by slaves left most of the population with nothing much to do other than supervise slaves.  Since there was no regular work for young Athenians who didn't want to be in the army, the state paid one Drachma per day (a decent amount) for anyone who did anything which included being an artist or a musician or a philosopher or a teacher or a performer – you had to actually work but it was whatever you felt like doing and it was a golden age that led to a large percentage of humanity's cultural and technological advances up to that point.  

      Only because you don't value the common man do you not see the tremendous potential in simply letting millions of people pursue their own interest.  People working on an assembly line or mopping floors 8 hours a day and getting paid only enough to make their minimum credit card payments are not very likely to solve the energy crisis but, as they say, if you give a million monkeys a million typewriters to play with – eventually you'll get all the works of Shakespeare out of them – we've devalued people and created an elitist society where only people who make money are perceived as having "value" – it's BS but it's going to be a long time before we can re-educate our population (look at you, you are turning your nose up as you read this!) to value "non-productive" pursuits like art, science, philosophy, education for it's own sake (not so you can learn to perform a function), etc.  

      Thanks Jthom.  It's all about making sure you put yourself in the right place and then hanging around there until it's finally the right time.  

      82M on Dow at 3:26

      Good point JMM.  

      TKR/Dflam – I like them, it's a nice, boring business that plays on an overall rebound.  P/E is low enough that you can work into them over time but I'd go more conservative on the entry as the broad market is weak so how about the short $45 puts but the $40/45 bull call spread at $3.60 for net .90 on the $5 spread and all you need to do is hold $45 for a $4.10 gain and your break-even is way down at $42.95.  

      1,400/Rustle – Well if they're going to defend anything, they'd better defend that as it's a huge International bearish signal if we fail it. 

    121. zeroxzero

      Coming soon to a picnic near you! "Scientists at the Defense Advanced Research Projects Agency, for example, are working on ways to create insect cyborgs, by incorporating mechanical elements into larvae and then using them to control the fully grown insect when it emerges." http://www.washingtontimes.com/news/2012/apr/4/scientists-build-robot-jellyfish-fueled-sea-water/

    122. flipspiceland

      @Iflantheman
       
      …… and I hope many many more at even higher prices…..

    123. lflantheman

      29.45 on those calls stj……

    124. Phil

      Oil having trouble taking back $102, gold going nowhere at $1,620.  VIX smacked back down near $16 on tiniest sign of life in the market.  As we expected, the Qs are the start of the show with AAPL up $4 from the bottom and the QQQ $66s are already $1.37, up .21 in just over an hour (18%) – that really takes the sting out of the little stick, right?  

      RUT Futures (/TF) are 817.50 so $250 per contract there is not so terrible and, of course, there's no way we want them over night and I'm happy taking the money and running on both as the point was simply to take the edge off a move up against our short positions. 

    125. jabobeast

      wtf is PCLN at an all-time high now?

    126. Inkarri1982

      Mr. Stick strikes again Jabob…sorry buddy.

    127. rustle123

      Today was about getting to support lines, tomorrow hopefully we will break them.

    128. flipspiceland

      @Felipe
      We have had many disagreements about, mainly, politicians,  but I have been writing and saying the same things for 20 years about exactly the point you are attempting to make that there just isn't enough work (that mankind has yet invented) for the people to do, at meaningful production.  I know this because of my former life as an Exec Recruiter.
      I roughly calculated that there is 1/4 of a job to be done by each of the 6-7 billion people on this planet.  We theoretically could do ALL the work to be done with 3/4 less people. It's an exaggeration since that would mean full employment, everyone working, which realistically would never happen. But the point still remains.
      There have to be people in government who recognize this and have for a very long time. There must be think tanks that can demonstrate the futility of an economy based solely on producing something in order to live, survive, and maybe even prosper.
      The mystery to me is why a loud mouthed politician like Ron Paul, for instance, won't tell this significant truth.  He has nothing to lose.  Everything to gain by saying it out loud:  The U.S. Government— elected and appointed officials must begin the drumbeat for a different paradigm,  figuring out a way to get into the hands of people what they need to live on,  to have them NOT to enter the workforce, those that are not able to be trained, don't want to be trained in something they cannot do well, a hundred million people just in the United States eventually, that could be given vouchers, other currency, or means to live out their lives as they choose if they cannot meet the demands of production as it now stands.
      In your next appearance on some TV program, maybe you could open up this Pandora's box once and for all to at least let loose those demons that need be tamed, the ones that say you must produce something in order to live.
      We are in the post-work world and hundreds of millions of people do not seem to understand it.
      Kurt Vonnegut was right.

    129. craigzooka

      @cwan,

      Our cost basis on MT was $16.97 before the roll down to the 18's.

    130. scottmi

      that was one lame stick on a sick market day.

    131. newbie

      JRW  /  cartoon
       
      That's my new all time favorite cartoon!
       
      Shouldn't it say "Waddell Reed Trading Room" ?

    132. JRW III

      flipspiceland / Kurt Vonnegut was right

      Yes, about a great many things !!  Have you seen Prometheus V ?

    133. cwan120

      Craig,
      My cost basis is a little higher.  I was thinking of selling puts.  Even in an IRA, selling puts might not be a bad idea.  But, I had some second thoughts, and hesitated.
      What's your take on MT now?  Still bullish long-term?

    134. Phil

      Robo Bugs/ZZ – I knew that was coming for years.  Nanobots will one day clean our teeth and scrape out all the crap from our blood vessels – going after bugs is stage one.  Best way to kill cockroaches is with tiny little terminators that hunt them down – no chemicals and nothing to build up resistance to (well, maybe super-hard shells but I think tiny robot weapons will keep pace).  Unfortunately, they've already designed the ones that hunt people…  

      Wow Flips – I agree with you 100%.  I think we should have this post bronzed.  You're right, I should say something next time unemployment is an issue of we have some excuse for it.  I have one daughter who wants to be an artist and one who wants to be an actress and both are pretty good and both are honors students but it would be nice if I could tell them that those were realistic pursuits that they can concentrate on since it makes them happy but we have to be "realistic" and make sure they have a career to fall back on – how sick is our society that being an artist or an actor is not a legitimate career (only for the top of the top, of course)?

      LOL, nice sell-off in the last few minutes and volume ended up at 125M on the Dow so same BS as usual.

      What should young people do with their lives today? Many things, obviously. But the most daring thing is to create stable communities in which the terrible disease of loneliness can be cured.

      The feeling about a soldier is, when all is said and done, he wasn't really going to do very much with his life anyway. The example usually is: he wasn't going to compose Beethoven's Fifth.

      Human beings will be happier – not when they cure cancer or get to Mars or eliminate racial prejudice or flush Lake Erie but when they find ways to inhabit primitive communities again. That's my utopia.

      True terror is to wake up one morning and discover that your high school class is running the country. - Vonnegut 

    135. jabobeast

      why the f did PCLN jump 17 points in the last 2 hours with this weak market? News? Margin calls? Squeeze? even aapl and cmg were down?

    136. zeroxzero

      Phil:  It's a very interesting discussion.  Again, your tendency to impute "beliefs" to anyone who [may] disagree with you is misplaced. I maintain no "beliefs" at all.  I know certain things to a substantial certainty, there's lots of stuff I don't know, lots more stuff I don't know I don't know, and I am always open to suggestion.  "Belief' is an emotional need, not a state of knowledge.
       
      Your "plutocrat attack" is tiresome.  I know a lot more "common men" than you do, because I have spent more than half my life in countries with much less educational attainment than you have.  And I don't float above it — I know them personally, I care for their families, I create work projects when there is no work – I had 35 families fed last week because it was Easter and they needed worked, so I dreamed up a worthwhile project and hired them.  I respect them for their good characters – and have no trouble distinguishing.   I have lived in jungles with people who have never held a cigarette lighter and have only seen airplanes in the sky, worked on cattle ranches and every kind of menial job alongside them  -- and still question your notion that removing the pressure of making a living from the majority of the world's citizens would be an unalloyed good.  Although Flip seems to agree with you, a rarity worth noting.
       
      You have always shown a reflex toward deprecating the speaker rather than addressing an argument.  You should not be afraid of debate — often the debaters arrive at a "third" place in which both incorporate aspects of the other's thought.  In the present context, I cannot imagine why you have such certainty on the subject.  Most people define themselves through their work, their contribution, irrespective of whether it is sitting in an office, constructing a fence or teaching their children.  
       
      I do see the potential of letting people seek their own interest.  I am also not naive in respect of what that might turn into — the unemployed Germans in the 1930's took up politics, as I recall. Yes, I'm aware that no one was sending them free money, but the Athenians were being paid from wealth gained through conquest, not trade.  Work confers social status in our "modern" world.  Changing that would take much time, and lots of weird things could happen in the interim.   You should try to be self-critical, if you cannot abide the criticism of others.  Choking off debate with  imprecations seems an odd pastime for someone with your obvious attainments.

    137. flipspiceland

      In re: Happiness:
       
      I don't' think it can ever be a permanent state, nor can it be pursued in itself. Nor should we have ever wanted to do so.  Including it among those 'truths that are self-evident' was a huge mistake, which did not recognize the inherent conundrum of living:  We are going to die. There are tragedies, disappointments, frustrations and many other things which constitute a life.
      We needed to inculcate into our very being the truth that happiness is something that is occasional, fleeting, and will come and it will go.
      AND that we should expect to be unsatisfied as a NATURAL CONDITION OF LIVING, and not some huge burden we must carry.  Unhappiness should be as adoptable as a chia pet, rather than seen as a scourge on mankind and us individually.
      I have told my own that, "I wish I could say that everything will be alright, but I cannot tell you everything is going to be alright.  That would be a lie, and you probably don't like hearing me say it.  But this also I will tell you: that no matter what 'happens', I will be there for you, to help in any way I can that makes sense to us". 
      I have awakened and my High School classmates, some of them, have run some small part of the country. Ine is doing so now.
       NO MG!

    138. flipspiceland

      JRW III
       
      I haven't seen it.  Got a link?   I can't seem to google it.

    139. JRW III

      Flips,

      http://www.amazon.com/Between-Time-Timbuktu-Or-Prometheus/dp/0440007194 It;s also available as a movie (made for TV)

    140. jthoma

      Phil- You might have to do what I did. My daughter wanted to be an actress so I told her if she would get a dgree in somthing that would get her a job I would send her to any graduate school she wished. She got an undergraduate degree in nursing them upon graduation went to the big city to the American Academy of Arts. After 1 1/2 years she decided it was too cut throat and asked if she could come back home and be a nurse? I told her no- she could come back home and get her nurse practitioner's license- then she could be a nurse. She did and loves it and very happy. Dad is happy too in that she has a job rather than a degree in Fine Arts and nothing to do. She decided I was not quite as stupid as she had thought- LOL!

    141. drmtv10

      Hi Phil,
      Need to roll TZA April 16C (x25) bought for about $2.98 (currently about $2.38).  This is my main hedge, and so far, for the year, it's down about $2k, net, including previous roll and April 23C, which expire, next week.  I sold tomorrow (weekly) TZA 18/19 (x15) credit spread for about $0.39, which will possibly require a roll if market goes down, but it is a side trade to cover while I decide what to do with the above position.
      In short term, would you recommend moving to lower strike calls (e.g. moving to 18C from 23C nets about 0.8 in additional credit, likely to get called away on 16C or roll whatever's left)?
      Looking at May 17/21 spread ($1.35) as a likely roll strike.  Want to know if as a hedge, I should consider something longer term.  
      Thanks in advance.

    142. stjeanluc

    143. dflam

      PhiL/TKR : boring is nice.thnanks

    144. ceegee

      Phil,
      As the proud owner of a SVU Jan13 $5/$7.50 bcs with short $5 puts, I'm looking for some guidance. The bcs is about 45% down at this stage - would you advise rolling it, selling some more puts (either $2.50 or $5), or both or neither. Or something else? I was thinking to roll down and out to the Jan14 $3/$7 bcs and leave the Jan13 $5 puts as they are. Or is it just too early to roll even though the BCS is almost 50% down?
      Would much appreciate your thoughts!

    145. exec

      Jthoma

      That’s a great story.

      Are you starting to feel like your Dad yet?

    146. jmm1951

      Unemployment in the Dominican Republic
       
      There is no unemployment benefit in the DR, so there is hardly any unemployment. People wash windshields at traffic lights, rent out pieces of cardboard to keep the sun out of vehicles that stop for a few minutes, peel and sell oranges, set out a few potatoes for sale on the sidewalk, or go to the disco at night to see if they can find a tourist to pay them for sex. There is a grocery store for about every 20 families, within walking distance of homes, where you can get the essentials of life, such as drinking water, carrots, potatoes, rice, cigarettes, rum, Clorox. Each of these businesses supports a family. Very few people have cars, but the roads swarm with motor bike taxis, which wait at every road junction, hospital, or store for passengers. Each motor bike operator is an independent small business. The most frequently seen vehicle on the main roads in the public taxi, a small car that carries up to 6 passengers for a small fee. Each driver is an independent small business.
       
      There could be jobs for everyone in the US if the big corporations would just stop hogging all the best locations and people just made enough money to feed their families.
       
      You can laugh, but this is probably the long term future for the US if current trends are projected into the future.

    147. stjeanluc

      Just updated all the portfolio spreadsheets – what a come back in the 25KP. Now down only $3400 coming back from down $32,000 last week or so. I guess a good rescue story.

    148. jthoma

      exec- I feel older than my Dad- I was very lucky- he was a bright and hard working man. Also my Mother told me when my daughter was very young- " teach your children confidence above all else, and if they ever want something bad enough they will be able to achieve it"- maybe the best thing she ever taught me. Unfortunately she is 93 and lives in a nursing home now- not a good way to go out for someone who lived a very lively and vivacious life.

    149. stjeanluc

      Spain is in the tank…

      http://www.bespokeinvest.com/thinkbig/2012/4/4/spain-continues-to-tank.html

    150. stjeanluc

      Despite the last 2 days, a lot of large stocks are still overbought:

      http://www.bespokeinvest.com/thinkbig/2012/4/4/trading-range-screen-for-the-30-largest-us-stocks.html

    151. stjeanluc

      We keep on piling up the crude….

      http://www.bespokeinvest.com/thinkbig/2012/4/4/another-surge-in-crude-inventories.html

      What are we going to do with it?

    152. kongen

       
      Xerox (referring to Phil): “Your "plutocrat attack" is tiresome. … You have always shown a reflex toward deprecating the speaker rather than addressing an argument.”  
       
      It seems to me, Xerox, that you exhibit a very high SI (Sanctimony Index).  I won’t say “always”.

    153. diamond

      Apple, Priceline and Google race to hit $1,000-a-share mark – USATODAY.com

    154. Pharmboy

      TrimTabs Investment Research estimates the U.S. economy added 187,000 jobs in March. In the past three months, TrimTabs says, employment growth has averaged 172,000. Meanwhile, the consensus view is that the U.S. Bureau of Labor Statistics (BLS) will report 200,000 new jobs on Friday for a three-month average of about 245,000.

      TrimTabs’ employment estimates are based on an analysis of daily income tax deposits to the U.S. Treasury from all salaried U.S. employees.  They are historically more accurate than initial estimates from the BLS.

      “Real-time tax withholding data says employment growth is anemic and real-wage growth is barely positive,” says Madeline Schnapp, Director of Macroeconomic Research at TrimTabs.  “The real-time data supports our view that the U.S. economy is stuck in slow-growth mode. This view runs counter to the results from the Bureau of Economic Analysis (BEA) and the BLS, whose survey-based data point to faster wage and salary growth and employment growth.”

    155. Pharmboy

      Was this not a problem a few years ago, and has now resurfaced?

    156. diamond

      VIVUS Inc. (VVUS):
       
      New diet drug Qnexa awaits FDA approval amid safety questions – USATODAY.com

    157. Pharmboy

      Diamond – we will be taking a short position tomorrow….FWIW.

    158. diamond

      Pharmboy –  OK … what month and what strike?

    159. Pharmboy

      Oh, and they pumped VVUS into the close on a GSK offer.  Why would GSK do that?  They have an ED drug already (VVUS has one), and why would they go after them for the distribution rights, when all anyone has to do is take the two drugs, show that the PK is the same (it is called bioequivalence) and then market it. 

       

      VVUS – I am looking at the April $20/15 BPS for 1.50 or so.  Just a few.

    160. Pharmboy

      Bioequivalence – upon approval of course.  And when someone has a heart attack, accident from the memory issues….watch that thing fall so fast that they will not know what hit them.  I call BS, let's see what the FDA thinks! 

    161. Phil

      PCLN/Jabob – Why not just go long?  You could be so much happier…

      Plutocrat attacks/ZZ – LOL!  I forget how sensitive you are – sorry.  I also forget you have no sense of humor and take everything very personally – I will do my best to try to remember in the future to treat you with kid gloves so as not to impute beliefs on you although, in my defense, when you say things like "there is nothing more destructive than a bored monkey" to denigrate your fellow man (oh sorry, don't want to insult you by suggesting you have anything in common with "them" – you are clearly superior and have every right to look down on people) or my fellow man anyway – is it really a stretch to infer you are a bit elitist?  You say "These are not the "Denker und Dicheter" of society and I'm sure that comes from your vast wealth of experience that enables you to pass judgement on a hundred million people at a clip – what was I even thinking to question your impeccable judgment?  

      I think if that were all you said, I wouldn't have concluded you were an elitist at all but then you say "they are, or will be, the "Betas" – the underclass of the Brave new World and that this will become genetic (not for you of course, yours are the genes they will distill and save to preserve the best of the race) and that this is evolution's path and OH MY GOD DID YOU REALLY SAY ALL THAT CRAP IN JUST ONE PARAGRAPH AND THEN HAVE THE NERVE TO BE INSULTED WHEN I SAY "it's just your own prejudice about what constitutes worthwhile pursuits" and "you don't value the common man"???  

      Oops, sorry, meant to be an apology to soothe your delicate, but clearly superior, ego.  I guess I shouldn't have looked back to see what the Hell you were so upset about.  So, moving on –  I'm sure we are all very impressed with your work with the Beta Monkeys – it's very nice and I'm sure there's much, much more since you know "a lot more "common men" than I do" – which is probably true because I don't have a class of people I consider common.  

      I've employed hundreds of people, I've taught high-school dropouts everything the needed to move on and earn six-figure salaries, I've helped single moms buy their first homes and they have stayed with me long enough that I ended up hiring their children as well but you are right, I wouldn't call any of them "common" and I don't respect them for their "good characters" – I just respect them because they are human beings who are every bit as deserving of respect as I am and I recognize that I hire people because I need to get a job done and when those people do their job, I am not doing them a favor – I am in a mutually beneficial relationship with a person who is helping me for an agreed upon price.  

      If you watch a show like America's Got Talent or one of those singing shows or even Jeopardy – you'll occasionally see truly exceptional people who are talented or intelligent at levels far beyond those of "common" people but they don't pursue the things they are great at because they are busy working at a car wash, or doing a desk job or any number of other "common" things because our society doesn't really seek to elevate people of talent – except through the game-show lottery system – rather we squander it and hammer those square pegs back into round holes so they can stay "common" and fill our needs as they tend the machine.  Yes, exactly like the Betas in your brave new world, who are purposely retarded in utero by the state to make sure the elites are not threatened by the lower caste.  If you want to "debate" the merits of that system – go ahead – I promise not to "choke you off."

      Happiness/Flips – Good point.  Back to philosophy, I think.  We need to start teaching it in schools again.  After all, it was Jefferson who said: "The care of human life and happiness, and not their destruction, is the first and only object of good government."  I guess he would have been in favor or Universal Health Care…

      Daughters/Jthoma – I'm on a similar path.  I just told them they need to be realistic.  Jackie (10.2) has already been in movies like Doubt, Motherhood, It's Complicated and on TV in Nurse Jackie, Gossip Girls and a few others as we wanted her to understand the reality of the business but it hasn't dissuaded her.  Her backup plan is to be a trial lawyer as it involves performance and she loves to argue (don't know where she gets it from) and is damned good at it too.  Madeline's (11.8) back-up plan is to be a scientist and I'm not going to discourage that but she has just as good a chance of getting rich as an artist as she does as a scientist and I'm pretty sure she'll meet more interesting guys with the art stuff…

      TZA/DrM – If it's a hedge, what's the time-frame you're hedging.  Going month to month is riskier (and fee intensive) than just placing a bet where you really need to be protected.  April $16s are $2.38 and you can sell the July $20s for $2.20 and roll to the July $14s at $4.70 for net .12 and then you are down $2 in strike and in a $6 spread that's $4.23 in the money for about $3.  Keep in mind the hedge is a bet you EXPECT to lose so, if the $2K loss is not very well covered by your long gains – you are likely over-hedging.  Oh, and it's 2 more weeks to the April $23s expiring (now .15). 

      Big Chart – I love it when we kiss our lines like that.  Notice that when our lines fail – we go right down to the 50 dma support.  Good illustration of how real those 5% Rule levels are.  820 on the RUT is still super-key as it's the 50 dma AND the 2.5% line.  

      You're welcome Dflam – it was a nice pick by you. 

      SVU/Ceegee – You are wise to adjust while you still have money in the long spread.  The Jan $5s are $1.15 and they can be rolled to the 2014 $3s ($2.70) for $1.55 and the short $7.50s (.30) can be rolled to the 2014 $5s ($1.65) for $1.35 so net .20 drops you $2 and buys you a year of time but does knock .50 off your max gain.  I would do that though because, if SVU goes up, then the short puts expire worthless and you'll be able to sell 2014 puts for more than .50 anyway.  If SVU goes down, you'll be thrilled with the protection and you can roll the Jan $5 puts ($1) down to 2x the 2014 $3 puts (.70) and there's your .40 picked up anyway.  I don't think there's any real urgency but just keep an eye on your potential rolls and don't let them get away from you.  Of course $5 is a logical line at which you should probably take action if it fails.  

      Employment/JMM – You are right, that is the problem.  Big Business has crushed Capitalism in America.  

      Thanks for update StJ – I guess we're still very bearish then….

      Oil chart/StJ – Wow!  That's really getting out of hand.  

      Trim Tabs/Pharm – Is that news bad enough to be good?  

    162. dclark41

      Phil:
       "By the way, I totally love how calm this board is during a sharp market decline – makes me feel like I'm doing a good job!  8-)"
      Your comments from earlier today. You are doing a fantastic job. I think most of us our very well balanced and consequently have learned how to manage through these ever so short declines in the market without panic. Now, if you could improve our ability to prognosticate the forthcoming reaction from the FED!

    163. craigzooka

      @Cwan, what is your cost basis?  In the IRA there no difference between selling puts and selling the corresponding covered call.  Except, collecting the dividend.  That is why I own the shares.  My Philosophy with managing this portfolio is that I always leave room to double down should my stock suddenly drop.  You need to have the ability to lower your cost basis enough that you can sell calls with some juice in them.  I would never be fully invested unless we get another opportunity like we did last AUG-OCT when the VIX was up around 50.

    164. zeroxzero

      Phil: Now that was a blowoff top of Sturm und Drang to end a good week.   Always a pleasure  pitting my sanctimonious ubermensch against your brotherhood-of-man working class sentiment.   I am unshakeable in thinking that the creation of a legal entitlement to not work and be paid would be an experiment in social engineering that you may think worked out perfectly well in Athens, but then no ones buying Greek bonds with any enthusiasm these days, so I maintain that the matter is not free from doubt.  Karl Marx commented on the same issue, but came out somewhat differently in his conclusions.
       
      So let me roll into my next question — this "intelligence" you refer to. Intelligence, as a quantity to be measured or a quality to be described in the human beings.  I've always thought that a healthy population would contain is a broad range of "intelligences" that apply themselves usefully to a variety of situations and studies.  I've never known any two identically talented people. It isn't all wheat or rice.  It's wonderfully nuanced, and gets back to the hippie-ish notion of everyone "realizing their potential." 
       
       Or not, in a certain number of cases.  And therein lies the politics of the thing.  Any political system, and the legal system that proceeds from it, contain a range of incentives and proscriptions that guide societies, and these would have to be reconsidered in the context of a substantial percentage of the population having the right to share the "production" of those who work. [a universal problem in all human societies[.  What are the rights of working people?  And of those that don't work?  What rights do these groups have over each other?  How is wealth distributed and re-distributed?  
       
      I'm all for a hippie-ish solution.   But this notion of national subgroups having the right/option not to work — and be paid a certain income standard — is a challenging one from a political standpoint.  I agree with Crosby, Stills & Nash's notion that "We've got to get back to the garden" but the human lifespan is relatively short and man has traditionally survived and evolved in response to competitive pressures.  This would involve be changing some very old rules of the survival game.

    165. Phil

      Good morning!  

      So much for that pre-market pump job!  

      I guess we're back to game on for the 3am trade as Europe opened up about half a point (BS pre-market gap up) and promptly fell over 1% and is already down half a point, mostly on this:  

       

      • Manufacturing Falls Sharply in U.K.

        The U.K.'s manufacturing output fell at the sharpest annual rate in more than two years in February, highlighting the fragile state of the economy.

      Doesn't matter why, does it?  Euro just failed $1.31, as we expected (but not so fast) and Pound at $1.585 with the Dollar flying up to 80.155 and the Yen dropped like a rock on this news, down from 82.8 to 82 (stronger) on this news:

      Japan's upper house of parliament rejects Ryutaro Kono's nomination to the Bank of Japan board, a strong message from lawmakers who want more monetary easing to spur growth.

      The Nikkei had taken back 9,800 but the Futures are now down 100 at 9,710 on the drop and even the Swiss have lose control with EUR/CHF down to 1.20 (6-month high) in a super-sharp drop.  

      It's actually kind of exciting!  

      That's gotta get a reaction from the SNB but, with BOJ out of the picture, let's see if they can get the Euro back over $1.31 and rally us but if that line becomes resistance from above – look out below!  

      Oil $101.59, gold $1,622, silver $31.28, copper $3.77 (blew $3.85 at yesterday's open), nat gas $2.14 ($2.13 still bouncy for now) and gasoline finally failed $3.33, now $3.32. 

      Thursday's economic calendar:

      Chain Store Sales

      7:30 Challenger Job-Cut Report

      8:30 Initial Jobless Claims

      10:30 EIA Natural Gas Inventory

      4:30 PM Money Supply

      4:30 PM Fed Balance Sheet 

      6:00 AM Overseas: Japan -0.5%. Hong Kong -0.9%. China +1.7%. India closed. London -0.6%. Paris -0.8%. Frankfurt -0.9%.

      Office vacancies declined slightly in Q1 to 17.2% from 17.3%, but the sluggish rate of growth reflects broad uncertainty about the country's economic outlook.

      The REAL Fed meeting:  After completing a series of public lectures as part of the Fed's new policy of openness, Bernanke slipped up to NYC for a private lunch with a slate of Wall Street honchos on Friday, reportsFortune. The Chairman reportedly spoke at length about monetary policy and made an effort to convince attendees to take a more active role in dealing with the EU debt crisis.

      In his annual letter to shareholders, Jamie Dimon says 2011 was a "year of challenges." Ongoing global economic uncertainty and various traumatic events have impeded financial recovery. In the face of these setbacks, frustration with — and hostility toward — the financial industry continues. "We acknowledge it and respect people’s right to express themselves," Dimon says. However, "we all have an interest in getting the economy and job creation growing again."

      Jose Antonio Ocampo, one of three candidates for the World Bank presidency, pens an FT op-ed calling for more funds for the lender, as the World Bank's "recent response to the global financial crisis, in the absence of a substantial capital injection, has diminished its lending capacity."

      Germany launches a probe into whether subsidiaries of 5 major oil companies (BPCOPRDS.ATOTXOM) conspired to price small gasoline stations out of the market. The accusation says independent operators were charged wholesale prices greater than the retail prices charged at the majors' own stations.

      "The medicine didn't work," writes Antonis Samaras – possibly Greece's next PM – of 2 years of severe austerity which has brought the country's debt/GDP ratio from 120% to 168%. In what sounds like the beginnings of a push to redo the rescue program, Samaras says austerity cannot work without "measures to assist recovery and promote sustainable growth."

      Greece again extends a deadline, this time until April 20, for holdout private creditors who own bonds governed by foreign law to accept a debt swap. The cut-off date had already been put back once to yesterday, but authorities need to work out what to do if the creditors refuse to take part. Still, Greece will settle the exchange of €20.27B of bonds, or 72%, next week. 

      Companies may finally be starting to spend some of the $1.24T they were sitting on at the end of 2011. An NFIB survey of small businesses shows 57% of firms have made a capital expenditure over the last six months, the largest percentage since March 2008. Another survey of execs finds they expect to increase spending by 5.9% this year, likely a lowball estimate. 

      NY's top financial regulator is issuing new subpoenas to several insurers, sources say, expanding an investigation into whether insurers overcharged clients on homeowners policies. Firms that received document requests reportedly include Assurant (AIZ) and QBE Insurance. 

      Bed Bath & Beyond (BBBY): Q4 EPS of $1.48 beats by $0.15. Revenue of $2.73B (+9.1% Y/Y) beats by $70M. Shares +5.1%AH. (PR)

      More on Ruby Tuesday's (RT) FQ3 report: Gain in revenue primarily due to fiscal 2011 franchise partnership acquisitions, offset by a 5.0% same restaurant sales decrease. Plans to close 31-33 underperforming stores in FQ4. Lowers guidance for FY12 EPS to $0.43-$0.48 vs. $0.55-$0.65 prior. Sees same-store sales tailing off 4.0%-4.5%. Expects free cash flow to be $75M-$85M. Shares -10.1%AH. (PR

      Costco (COSTsame-store sales +6% in March, with total sales +9.6% to $9.13B. 

      After rocketing higher for nearly three years, gold prices finally appear to be falling back to earth - gold fell 3.5% to a 12-week low, and silver sank 6.7% – and here come the shorts. Gold is typically seen as a safe-haven investment, but lately it has acted as a more traditional commodity, suggesting it is still mainly driven by speculation.

      This is from last night – didn't help:  Saudi Arabia is in no position to replace Iranian crude because it's such a large user of its own product. Its population and industrial base rising, electricity demand there is growing 10%/year and the country consumes more than 25% of its oil production. This puts spare capacity at risk in the short term and threatens exports themselves within 10 years.

      Royal Dutch Shell (RDS.A) is considering building a giant plant in Louisiana that would convert natural gas into diesel fuelWSJreports. The plant, which could cost more than $10B, would be similar in size to Shell's new gas-to-liquids facility in Qatar, which turns natural gas into enough diesel to fill more than 160,000 cars a day.

      Momentum traders were all over SmartHeat (HEAT +46.3%) again yesterday after shares spiked 91% yesterday, even as Q4 results were dismal vs. 2010 due to "a very challenging sales environment." The move even spilled over to some rivals: THTI +80.5%CLNT+157.8%. But it could end up ugly: "When the music stops, don't be the last one standing."

      Amazon's (AMZN -2.8%tax issues extend beyond the U.S.: British authorities are investigating why Amazon's Luxembourg-based Euro subsidiary paid no taxes on its 2011 U.K. sales, which totaled over $5.3B. It's added Amazon's U.K. ops paid less than $5M in taxes from 2003-2011, and that its corporate structure allows it to charge a VAT of just 3% on local e-book sales, rather than the 20% charged by British rivals. (earlier)

      Investors underestimate the variable costs in Amazon’s (AMZN -2.9%) business, costs that could hold back margins for longer than expected, Morgan Stanley says in reiterating an Equal Weight rating on shares. While investors are dazzled with the “incremental gross margin” AMZN achieves, those figures “exclude relevant variable costs, which artificially inflate reported gross margins.” 

    166. Phil


      Though many have been 
      questioning Groupon's (GRPN-3.2%) trustworthiness and maturity in the wake of its Q4 restatement, Wall Street has only itself to blame for the company's recent issues,argues Sarah Lacy. Pressured to go public less than 3 years after being founded, it was inevitable Groupon would have some serious growing pains. The same would hold for Facebook if it went public at a similar point in its history. (more)

      In spite of all the hype surrounding its U.S. launch, Spotify has only obtained 3M users and 600K paid subscribers within the country, reports the NY Post. Restrictions on Spotify's free service have alienated users, and the $10/month charged for mobile streaming is too rich a price for many. Pandora (P), which had 47M active users at the end of January, must be pleased to see the report.

      In the content-sharing world, all roads lead to Facebook (FB). The social networking behemoth, which controls over a quarter of the web's referral traffic and roughly 1/6 of U.S. Internet usage, has provided a major traffic boost to video sites leveraging its Open Graph social sharing tools. In addition, Vevo has seen a 3x increase in daily registrations since requiring Facebook logins. Legal issuesprevent Netflix (NFLX) from joining in on the fun, at least in the U.S. (also)

      JP Morgan says the total equipment and data networking market should grow 2.4% in 2012 and 5.3% in 2013. The firm expects U.S. carrier spending to accelerate in the second half of 2012 with enterprise spending improving slightly. Its favorite plays in the space: Ciena (CIEN +0.4%), Cisco (CSCO -2%), Ericsson (ERIC -2.1%) and Riverbed (RVBD -2.5%). 

      Following a selloff possibly intensified by the ambivalent reviews given to its high-end Lumia 900 phone, Nokia (NOK -4.5%), which sports a market cap of $19B, has lost its status as Finland's most valuable company. That honor now goes electric utility Fortrum. Though the way things are going, Angry Birds creator Rovio, which has now given its brand to a soda line and a TV show, may eventually take the crown.

      46% of corporations now issue Macs to workers, estimates Forrester, more evidence of how corporate America has come to embrace Apple (AAPL) hardware. 25% of Cisco's 63,870 employees now use Macs, says CIO Rebecca Jacoby, though she adds their higher cost has resulted in Cisco requiring Mac users to partly rely on each for tech support. (also

    167. Phil

      ROFL – Goldman has been privately predicting S&P 1,250 while publically telling the sheeple what a great time it was to buy (weren't we just making fun of Abbey Cohen last week?) and, of course, upgrading every stock they are in the process of dumping.  Sure I say this a lot but here's the smoking gun:  

      chart

    168. Phil

      No wonder they are rioting in Greece!  This is what OWS is going to look like when they make a push this summer and run into Bloomberg's jack-boot squad….

       

      The BBC reports hundreds of protesters gathered in the square just hours after the suicide of Dimitris Christoulas, with petrol bombs thrown at police and tear gas fired in return.

      Athens News reports that the demonstrators had organized themselves with social media, appearing under a banner that read "Let's not get used to death".

      At the site of Christoulas' suicide sit many tributes, with flowers and one note reading "enough is enough".

      The head of the Attica Pharmacists' Association Kostas Lourantos (of which Christoulas was formerly a member) released a statement that read:

      "The way he chose is a statement of a political position and stance. If this man had killed himself at home there would not have been such a stir, as there had not been for the previous 1900 suicides. It is an incident that we must look at among many other incidents of suicide in our country, the country of sun and laughter."

      Reports last year suggest that the Greek suicide rate rose at least 17% during the financial crisis.

    169. Phil

      Frontline documentary coming up looks like it's going to be good: 

      Watch Money, Power and Wall Street on PBS. See more from FRONTLINE.

    170. exec

      Phil,
       
      Futures pushing through the channel.  This could be an interesting day.  Do or die for the BTFDers.
       
      What is your view….fall or bounce?
       

    171. jmm1951

      Goldman has been privately predicting S&P 1,250 while publicly telling the sheeple what a great time it was to buy…
       
      This is no doubt true, but since Goldman Sachs is a huge multinational organization with tens of thousands of employees and different divisions, isn't it likely that there are differences of opinion within the organization and that some parts of the company have no idea what other parts of the company are up to? And then take into account that individual employees may not agree with official company policy. Even communist parties are not completely monolithic.

    172. jmm1951

      Paying people not to work
       
      Difficult to implement in effect, because people will take the shilling and then work on the side for extra income. Could work to some extent by giving people more interest free loans or grants to go to college full time, or enabling them to retire earlier to free up jobs, or paying mothers with young children to stay home and take care of them. The tax code could probably be tweaked to facilitate the latter.

    173. Phil

      Thanks DC! Hard to predict the Fed as they are not rational people but, fortunately, my faith in Global macros has been somewhat restored and we are now seeing the limitations on what even the CBs can do – even with all of their money printing.

      Shortage Scrambles Egg Hunt in Europe 

      With Easter coming and egg prices surging, people in Central and Eastern Europe are traveling to neighboring countries, visiting rural markets and raising hens for less-expensive supplies.

      Spying/Diamond – It looks to me like the people in power are preparing for massive civil unrest.  That's why rights are being suspended and the Supreme Court just rushed through a decision allowing you to be strip-searched if you so much as spit on the sidewalk – they aren't cracking down on terrorists, they are cracking down on OWS and anyone else who complains about the system.  Oh, and I see you read that Fronline article too….

      Greek bonds/ZZ – So we now have a 2,000-year window between cause and effect to prove your points?  As to intelligence – good topic for the weekend but short story is Einstein was a patent clerk, Hawking has ALS but, fortunately, he had it in the UK, where he was able to be cared for by that awful health system.  As a college student in America with the same disease, his life may have taken a much different path.  You talk about a bell curve as if all those in the lower class are properly placed there but I thing it's more like the population is fairly arbitrarily segmented into the top 1% and the bottom 99% and, within each class, you then have a bell curve of people who have actual talent/intelligence/whatever and those who don't.  

      What happens when people who do not actually have any potential end up with Billions of Dollars through inheritance or luck etc?  That deprives 1,000 deserving people of Millions of Dollars.  How does this benefit society?  The underlying Conservative (and I'm not labeling you) assumption that there can't possibly be any worthwhile people who are not wealthy is why we have such a poor system of wealth distribution in this country and the constant attempts to dehumanize people simply based on how much money they have is nothing more than a justification for what are clearly (to us Marxists) acts of class warfare against the poor.  We already have a sub-group of people who have the right/option not to work – they are called women and children.  It's been that way for decades – have you seen them slump down the evolutionary scale?  Have women become useless?  Are children worse off because we don't stick them in a factory or out in the fields when they're 9?  Why do you have such an aversion to offering all people the same choice that over 100M women and children make voluntarily?  

    174. Phil

      Fall or bounce/Exec – It's a long weekend with thin trading today so probably they prop us up today as much as they can.  NFP tomorrow is a real wild-card so no one is going to want to be too bullish or too bearish – we could gap 1.25% either way on Monday.

      Goldman/JMM – Well that's their excuse for these things but there is always a difference between what they say to their HNW people and what they say to the general public and, coincidentally I'm sure, it never seems to work out that the public gets the right information.  I suppose that GS can argue that that's because they save their "best" analysts for their best clients and the public gets what it pays for…

      Shilling/JMM – I think the UK system of providing minimal housing and, of course, medical care for all who need and a very small stipend for food,etc. prevents too much abuse.  The UK has had the Dole (which means "one's allotted portion") since 1911 and it's about $90-160 a week depending on age and other stuff but they are very strict as to your assets so, if you want to collect, you have to really be living on that money.  That's in addition to the housing and free health care and, as far as I know, the UK hasn't exploded into flames over it and they still rank as a major World power and they have a very strong capitalist system full of hedge funds and banks and insurance companies and mega-corps – pretty much the opposite of everything the Conservatives predict would happen if you stop and actually nurture your population. 

      People WANT to work.  People WANT to contribute and those that don't shouldn't be forced because there aren't enough jobs to go around anyway.  This is not a complicated concept.  

    175. jmm1951

      Shilling/Phil

      Yes, you are right, but the issue of illegal immigration and people coming to the UK on fake political asylum grounds, etc. is a massive political hot potato.
      http://www.dailymail.co.uk/health/article-2010934/Milking-health-service-NHS-pays-200k-Nigerian-health-tourists-babies-provides-free-IVF-single-mother-39.html

      The UK did explode into flames a few months ago, and many of the participants in the rioting were unemployed youth living in subsidized government housing.
       
      However, in the US all politics is tribal and no matter what anybody claims the biggest issue on the right hand side of the political spectrum is that a significant number of white Americans don't want descendants of slaves to benefit from government largesse. This is always hidden under the rubric of "state's rights", "small government", etc., but it is there all the same.

    176. yodi

      Good Morning every one Somebody knows when the market will close today?

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