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Testy Tuesday – You Call this a Pullback?

Come on bears, is that all you've got?

It's getting so we can't even see the bottom on these 3-month charts and it takes us two days to drop half a point?  You can't even get a proper correction at that rate!  Cyprus "confiscates wealth" – so what?  The Wealthy have lots of money and it's time for the people to take a little back – didn't the US just have an election that decided exactly that point?  

As I said yesterday, Americans WISH only 10% of our wealth was confiscated through taxes and currency devaluation over the past 5 years but it was a lot more than that and there's a lot more to come before we even come close to balancing our own budget.  

Cyprus is only a symbol – but it's more like a warning siren for those who have much, from those who have little and simply have no more to give.  While the Conservative media may be telling you it's the end of the World as you know it, the World keeps turning for the bottom 80%, who could care less if someone "confiscates" 10% of what they have in the banks because, as the Wall Street Journal just realized this morning, 57% of US Workers have less than $25,000 in total household savings.

imageIt's hard to get people all worked up about losing their savings when they don't have any and it's laughing to see the talking heads on Fox saying "a guy who only has $10,000 in the bank should be just as upset if the government takes 10% as a guy who has $10M."  No, Mr. Idiot, he should not.  

They guy who loses $1,000 loses the same 20 dinners for his family that you do – only his are at Olive Garden or Pizza hut but it's still a dinner to him.  Only the guy who loses $1,000,000 loses – well, a Million Dollars – even for rich people – that stings.  

So, the rich people are FREAKING OUT that a country would DARE to charge their deposits to balance the books.  In the US, for example, there are about $140Tn of total Financial Assets in the US and, of all that, only $4Tn of that is insured (under the FDIC limit) and the rest is held by "rich people," who have so much money they can't even be bothered to open separate accounts to keep the money insured or it's at play in the markets, etc.  

The majority of that money, $60Tn, is held by "The Financial Sector" – ie, exactly the kind of people who might get 10% of their money "confiscated" if they Government ever decides it would be a fun way to quickly pay down half it's debts.  

Most of the rest of the money is held by what we call "Households" but, as the WSJ points out, 57% of those households have pretty much NONE of the money and, even within that top 43%, the top 57% of them (24%) have the vast majority of that money and then again it can be broken down until you get to that top 1%, who control 43% of all the Wealth in America.  Now THOSE are the people who don't want the Government to come and take 10% of their $60Tn!  

chartLet's say there's 100M heads of household in the US and that means 1M households have an average of $60M each (stunning, isn't it) and they think it's a TERRIBLE idea for America to take 10% of their money to help pay down the debt – even though that would still leave them with $50M each – still enough to stay out of Olive Garden, one would think.  

Those rich people do get a lot of sympathy from the next 4%, who have 29% of the wealth ($40Tn), as that's $10M per household and those guys would be really pissed if the Government said to them: "Hey, you know how we taxed you 25% less for the past 12 years and how it helped you become really wealthy?  Turns out that was a mistake and we're going to need 10% back to balance the books."  Yep, that would suck!  

Even the next 5M heads of household may be concerned because they have scrimped and saved at their upper-management positions and those families have accumulated 11% of our Nation's Wealth ($15Tn) and they have $3M tucked away and the next 10% rounds out the top 20% and those guys also have almost $1M in assets and they'd hate to lose 10% of it.  

However (and here is the problem of Wealth Inequality for the Wealthy), the bottom 80M households have been left with a total of 7% of the Wealth of the Nation ($10Tn) and they have an average of $125,000 and it's very hard for them to get all upset about the Government coming for their $12,500 if it ends up paying off the National Debt, giving them access to affordable health care (because they sure can't afford the care they're getting now!) and guaranteeing them the retirement accounts they were promised they were working for their whole lives.  A $12,500 one-time tax kind of sounds like a bargain for all that, doesn't it?  

Even with the Supreme Court granting citizenship to immortal Corporations (and I created 2 dozen Corporations since then and they're all voting Democrat, you rat bastards!), that bottom 80% is 80M families with about 160M voters, voters who have, relatively, NOTHING compared to their masters in the top 10%.  When given the choice between having what little they do have left being slashed away through ruthless austerity programs or just voting to take it back from the rich guys – what do you think is going to happen?

Keep in mind also that what you call austerity, a poor person calls "one more damn thing I have to pay for" as we cut back services they are used to receiving.  In fact, a liberal-minded sort of fellow may even say these are services they have a RIGHT to receive.  He might go so far as saying that this is a Democracy (of sorts) and that, over the course of a couple of hundred years of voting, THE PEOPLE have decided that there are basic, human, inalienable rights that our citizens have like the right to education, food and health care and perhaps even the right to live out their lives in dignity when they are no longer able to work – even if we did pay them so little while they worked that they became one of the 57M families who didn't have enough money left over to save for retirement. 

The World was not always this way, this is what has happened to the World slowly over the last 40 years and then very quickly over the past 12 – as is clearly evidenced from this chart.  Cyprus should not be looked at as something to fear by the bottom 90% of our population but as a viable solution to help re-balance a system that is clearly failing them.

As the great Henry Ford once said:

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."

Perhaps what's happening in Cyprus is merely a sign of mornings to come and, rather than try to fight it, perhaps the wealthy need to go with the flow because – as the French Revolution demonstrated in 1787 – there are far messier ways of confiscating wealth when the rich people begin to take so much for themselves that the majority of the population begins to suffer from austerity/poverty.  

Those who make peaceful revolution impossible will make violent revolution inevitable. - John F. Kennedy 


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  1. lionel

    Phil/
    Thanks for your edito.
    Re cash confiscation in Cyprus should be "financial assets" positive.
    Cash was already a bad investment vs inflation. Now cash credit risk is being repriced.
    If cash is less "safe" then bonds and equities and RE properties become more attractive options.
    Bank stocks could lag behind if cash savings go down (in Europe at least) and therefore bank funding cost become dearer.
    I am still hoping for a strong leg up when the drama unfold.

  2. stockdoc9999

    Rule of Law = Obliterated
    Unintended Consequence = Social Chaos along with huge disincentives for saving and investing
    Final Result = Less job creation, lower absolute and relative tax collections, a push to send more through the undergropund economy
     
    Stealing innocent people's money is a crime.

  3. stjeanluc

    Oil Lines

    R3 – 97.12
    R2 – 95.72
    R1  - 94.94
    PP – 93.54
    S1 – 92.76
    S2 – 91.36
    S3 – 90.58

    Yesterday's high and low – 94.32 / 92.14

  4. cdtbud

    Stockdoc9999/Stealing money
    Unless, of course, one is doing God's work.

  5. stjeanluc

    It makes you wonder about these countries like Cyprus (or Ireland) that maintained a very low (below 10%) corporate tax rate with the hope to attract businesses. The problem with that is that you don't collect much from the corporations while your obligations are not reduced! And eventually, these guys leave for greener pastures – look at Ireland and you get stuck with higher unemployment, unpaid pensions and no money! Cyprus is slightly different as it is only used as a tax haven by many of these corporations but apparently, there are still consequences to these policies!

    Another reason why they also might want to try to harmonize tax rates in Europe… 

  6. 1020

    Good Morning!

  7. stjeanluc

    Interesting:

    http://ftalphaville.ft.com/2013/03/18/1427472/first-they-came-for-the-deposits/

     

    Cyprus could in this way end up marking the point that the western world discovered we don’t need deposits or banks the way we used to. That banks are now infrastructure providers and utilities rather than maturity transformers.

    The moral of the story being: if you hold money in a weak bank — especially one with no hope of nationalization — better to withdraw your money and spend it on longer lasting durable options instead. That includes everything from durable goods to equities of companies that make durable, long-lasting or innovative goods which are likely to be needed by you and the population in the future — ideally in sustainable and resource efficient ways.

    Same applies to banks currently nationalised but which risk being transferred back to private hands — unless they have indeed been properly restructured and are now making profitable investment decisions. In which case holding their equity shouldn’t be a problem.

    Either way, in the current economic environment, deposits = loss absorbing equity already.

  8. yodi

    oil 93.98

  9. ariveraA

    Siri w/i Books/ diamond:  Voice over (Siri predescessor) can be used to read emails.  Just make usre to set the triple click on/off feature since regular Voice over mode is a pain.
    http://isource.com/2011/11/12/tip-how-to-make-siris-twin-voiceover-read-your-email-on-iphone/
    Still can't believe Siri won't read my emails directly!

  10. Pharmboy

    March Madness Brackets have been sent out.  If you want to play for bragging rights, send me an email.  pharmboy123 gmail.
     

    SPY 159 March Q End calls 7c.  20 of them.

  11. stjeanluc

  12. Pharmboy

    For those that sent emails, i got them.  You should have an email coming back from CBSports.

  13. stjeanluc

  14. jabobeast

    FU CLF!!!!!

  15. stjeanluc

  16. Pharmboy

    If you sent me an email, watch your inbox…otherwise check you spam JIC.  I sent them out fairly quickly.

  17. stjeanluc

    An AAPL a day….

  18. millcreek

    phil,
    morning, would like your thoughts on the following.
    tks for keeping me in the vmw trade.  i evidently missed the sell the 80's and have the 72.5 -80 bcs and was thinking of rolling the 72 to 77 to take some money off the table and keep the 75 short put. 

    secondly i sold the gdx 45 puts and had 1000 shs put to me.  that said i am either looking to sell calls vs the stock or sell stock and go back in and sell the apr 45 puts. 
    im also holding the gdx 35 -45 bcs (jan15) with the 35 put sale.
    would like your thoughts as to the best approach and if sell calls how do you decide which ones  ……tks

  19. stjeanluc

  20. scottmi

    CLF – wow! those 2014 $23 puts are, ahem, an even better price today at $5.45

  21. stjeanluc

    New positions in the Strangle portfolio – the spreads are wide so you might get different prices… But these are just "virtual" portfolios!

  22. wombat

    jabo // CLF
    I DD'd yesterday on the PUTS, brought my basis up to $4.20. If the Chinese artificial suppression lifts, you're golden.
    albo // Shaken, not stirred.
    No problem man. Curious though, sometimes when people drink they just say things they normally wouldn't say. What did you mean when told me to 'slow down b/c it gives you a headache' . I only invest in the Income port, spend most of my time reading through the threads and understanding strategy. Just curious.
    Yodi // AAPL 
    Took your advice but I landed on the 460's – I was also uncomfortable with the 450's becasue the coverage would have come from a change in the 'one trade' and the theo didn't work out to my advantage. I did get stopped out at open today though. Oh well, that will teach you to short AAPL ; >

  23. stjeanluc

    Sorry, my other tasks have kept me away from the Income Portfolio but I should have it updated tonight!

  24. phil

    Good morning! 

    Been a while since I had a nice, liberal rant – feeling much better now.  

    Markets still boring and flat and there's a very good chance we just consolidate from here into the end of the month (only 8 sessions as my birthday is a market holiday).  

    AMZN still going down, AAPL still going up – who'd have thought that pair trade would have finally worked – shorting the company with a 600 p/e and going long on the company with a 6 p/e???  Those wacky Fundamentalists – when will they ever learn?

    PCLN struggling like hell to hold $700 but no particular reason to be long on them other than $700 is a nice bouncy line to day-trade off.  

    Dollar 82.95 but the problem with all short-term trading at the moment is you have Cyprus rumors, Fed Rumors and AAPL rumors all able to smack the market around in random directions, so you're just fooling yourself if you think you can call the movement for the next couple of days.  

    Oil $94 on the button and we expect to go a bit higher into inventories tomorrow (10:30) so, other than playing the lines for crosses (experts only), it's not a good day for oil trading.  Gasoline continues to fall, $3.08 now and nat gas stays strong at $3.92 so the Pickens plan is working, I guess.  

    Gold $1,602, silver $28.81 and copper $3.42.  Euro $1.294, Pound $1.51 and 95.28 Yen to the Dollar.  

    Bob Pisani on CNBC is SHOCKED that people only have $25,000 saved up to retire and, EVEN WORSE, they are expected to live for 20 years (to 85) on average.  Obviously the solution is to kill them – I'm just waiting for some upstanding Capitalist to say it…  ;) 

    Of course another solution would be to pay them more money while they're working, so they can save – but that's Commie talk!  

    Cash/Lionel – Stagnant cash is never a good thing and that's why the pooling of wealth is so horrific for society at large.  Only people who feel the comfort of having large piles of cash in the bank don't see that.  

    Unintended Consequences/Stock – We're at the point (see charts above) where we need Social Chaos to re-balance the system.  It's not going to get better on it's own and we're on an unsustainable path as it stands.  You're right, more tax isn't a good answer (not for the bottom 90%, anyway) but the confiscation of existing wealth might be.  

    Not reduced/StJ – Not only are your obligations not reduced but you end up attracting people and corporations who USE more infrastructure than average and yes, like locust, once they have destroyed one nation, they simply pick up and move on to the next tax haven and, should one of their victims – like Cyprus – try to ask for some of it back – they scream that "innocent people are having their money stolen", right Stockdoc?  

    Book reading/Diamon – Wow, that's just a dreadful idea.  How can someone listen to a whole book like that?  

    Speaking of things that are still cheap – DBA.  

    CLF/Jabob – I don't see a reason for that, do you?  

    VMW/Mill – You're welcome.  I think we took the money and ran on that one last week, not because we don't like VMW long-term, but because $85 seemed like enough for the moment.  Unless they fail to hold $82 (50 dma) I don't think I'd worry about the spread (April?) and I certainly wouldn't worry about $75 short puts unless you are terrified of owning them long-term.  GDX is a different problem.  I don't know what you sold $45 puts for but let's say $5 so your net is $40 and GDX now $37.25 and you have 1,000 shares AND you have the 2015 bull call spread, which is kind of a separate issue but you already sold more puts there so I think, with your net $40, why not just reduce your basis by selling the Jan $40 calls for $3 because that drops you to net $37 and then you make $3 at $40, which isn't much but you also have your longer spreads that will be doing well and that way you are getting an additional 10% downside protection for free and not obligating yourself to buy too much more.  IF GDX does drop another 10% and you STILL want to stick with them, THEN you may want to sell more puts but, otherwise, when you are behind – the best way to play is to try to get even, not ahead.  

    Income Portfolio/StJ – No worries, we're still at the top at the moment.  Good time to take what I think were 50 DIA June $138 puts, now $1.75 and spend .70 more to roll them up to the $141 puts ($2.45) and let's add 50 more at that price as we've added more longs since taking those hedges.  

  25. jabobeast

    FU GOLDMAN!!!!
    GS reduced target to $20, a near 17% reduction from the last reduction

  26. tommyt

    hi phil any reason not to sell 2014  18 dollar strike puts on clf at 2.56 or so
    thanks

  27. stjeanluc

    Krugman:

    http://krugman.blogs.nytimes.com/

    Ugh. And I say that advisedly. John Cogan and John Taylor have a piece in the WSJ (where else) arguing that the latest Ryan budget would actually be expansionary, because confidence! It’s as if all the experience of recent years, in which the confidence fairy has yet to make an appearance, hasn’t happened.

    And DeLong on why these 2 jokers writing in the WSJ are wrong:

     

    They are highly likely to be wrong for three reasons:

    1. It is in the Wall Street Journal, hence presumptively wrong.
    2. They were wrong in 2009, and hence likely to be wrong now.
    3. They have made no effort to figure out why they were wrong in 2009, hence they are very likely to be making the same mistakes still.
  28. dawnr

    CLF—
    The price of iron ore may average just $139/ton this year, says Goldman, cutting from a previous forecast of $144 amid expectations of slowing steel production in China. Prices have already fallen 7.1% YTD to $135 as Beijing tightens housing policy. Maybe more leveraged than most to ore prices, Cliffs Natural Resources (CLF) -43.6% YTD.

  29. dawnr

    30 VXX April $19 puts @ $.56 this morning…someone stupid will fart today/tomorrow for some volatility

  30. diamond

    Phil – RE: Siri & audiobooks …
     
    People like Richard Branson (who is dyslexic) might have difficulty in learning to read or interpret words, but might have high intelligence and near total recall of what they hear. Listening to an audiobook might not be for you, but others might have a different opinion. That is another great thing about AAPL: it does many things many different ways for people to enjoy and benefit. Children might also learn to read by following along as the book is being read to them by Siri. This was just posted more as a PSA …

  31. albo

    wombat – Was looking at yesterday's entries.  Your posting on ZAAP, and  spirited engagement with rustle123 about who knew more about ZAAP, a penny stock that has issued more than 50 million in debt over the past 3 years and has a 126/1 debt/equity ratio, has over 300 million shares outstanding, and whose operating margin has declined for 5 years in a row struck the two martini man the wrong way.  Again, I apologize.

  32. phil

    FAS Money – XLF flew up again but April's a long way off so just a waiting game at the moment.  

    AAPL Money – Despite selling a few calls, we're up another $16K today.  Making 20% a day is very good – let's just hope it continues to be that much per month and we'll be very happy.  

    $25KPM – Back to a more neutral stance.  No changes for now but I would kind of like another bearish bet.  

    $25KPA – Ah, that GOOG trade looks so much nicer now – thanks StJ!   And we gained another $9,000 on the day – that's a good thing too…  Also here, I'd feel better with another bearish position – I'm just a bit baffled by the April 1 changes in our usual ultra-shorts but I'm mulling it over, maybe SKF would be fun. 

    Dollar over 83 so down we go – where we stop is what matters.  

  33. Burrben

    FYI, if you're OIH Income Port trade didn't get filled, it should get filled today as OIH is lower than the rec.
    —-
    I must do a terrible job of teaching people how to sell options if they would pass up a simple ETF like OIH, which diversifies your risk and allows you, at $42.46, to sell the 2015 $39 puts and calls for $13 for a net $29.46/34.23 entry, which makes 32% if called away at 10% lower than the stock is now with a break-even 20% lower, in favor of a bloated dividend stock that pays just 5%.  Well, at least I know well enough to put 10 of the OIH spreads into the Income Portfolio so we can look forward to a very dull $9,540 profit – not to mention short calls we end up selling if the mood ever takes us. 

  34. 1020

    diamond/PSA  Thanks for that – Only those with dyslexia, can relate…..
    http://www.hbo.com/documentaries/the-big-picture-rethinking-dyslexia/index.html

  35. chasw

    Phil,
    "I'm just a bit baffled by the April 1 changes in our usual ultra-shorts but I'm mulling it over." Could you explain what the change is that is bothering you please.

  36. dawnr

    Chatter about Cyprus quitting the euro weighing
    By Adam Button  || March 19, 2013 at 14:35 GMT
    || 3 comments || Add comment
    There is a rumor that Cyprus’ central bank says that if the deposit levy bill is not passed then Cyprus will leave the euro. It’s not on the main newswires so take it for what it’s worth.
    Spot at 1.2924 after touching 1.2912. There are mid-sized bids at 1.2900 with better support at the 200-day moving average.

  37. button

    chasw / ultrashorts,
    Many of these ultrashorts including favorite TZA are being reversed split on Monday April 1.  When this happens there will be a new set of options traded on the ETF.  We have found in the past that the old options – those in place now- become very thinly traded and spreads are widened.

  38. 1020

    Phil/ "Obviously the solution is to kill them – I'm just waiting for some upstanding Capitalist to say it…"
     
    Yeah, I know of one a**hole who might….
    http://www.foxsportssouthwest.com/fox-sports-networks/story/Cuban-Trump-Twitter-battle-flares-up-aga?blockID=880959&feedID=3742
     
    …Hint: It's not Mark Cuban…. :)

  39. jabobeast

    Phil-- do you like that OIH trade that Burrben mentioned? Seems like it goes against your thoughts about oil/energy, no?

  40. samz3700

    OIH – Just broke through 50 DMA – was all the way down at 33 earlier in year – not sure I would choose this as my moment to step in.

  41. dawnr

    EUR down almost 300 pips!

  42. dawnr

    sorry decimal wrong place (TS goes 5 digits)…EUR down only about 30 duh

  43. yodi

    Burrben
    What do you want to say with the OIH trade ???? looks to me like you missing a long call to set up a long play. Further I would short the 42 or 43 caller and not the 39 even you get less cash???

  44. jabobeast

    Cliffs Natural Resources Inc. shares shed 5.7, down for a second day. An analyst at Bank of America cut the price target on Cliffs to $25 from $30, Benzinga reported Monday. The stock of iron ore producer is the biggest loser so far in 2013, down 47% year to date.

  45. 1020

    CLF @ 20.20….could be an ironic spot to go long….

  46. angelcur

    PHIL/ none of the money being confiscated is going to any of the poor its being used to beard the idiocy of c team banktards.
    GOVT taking bank deposits to cover bad bets is not a stunningly smart idea..imagine Madame LeFarge crocheting if there was a HINT of real revolution on the horizon I fear both of our names would make her blanket..so I dont' think we will be "writing our way out of that one' should it come..but I will ask you to write my brief should it!!

  47. chasw

    Button,
    Ultra-shorts. Tks

  48. angelcur

    THE IRISH EVERY MAN WOMAN AND CHILD I THINK THE NUMBER IS NOW 600k EURO IN DEBT PATHETIC

  49. angelcur

    LET ME SUM IT UP THIS WAY
    https://twitter.com/elreystadesnudo/status/314015586160099329/photo/1

  50. rperi

    gimme an FU CLF Jabo ~

  51. angelcur

    hearing there was a chemical weapons attack in syria..didnt assad go to yale?

  52. 1020

    angel – that was damn funny….

  53. 1020

    ….and I wasn't referring to the pencil-neck-geek in Syria… :)

  54. albo

    Phil – FTR below $4.  Too speculative at this point ?

  55. phil

    LOL – Now they are putting up rumors that Samsung is working on a cheaper smart-watch than AAPL is – vapor-ware wars! 

    This is a true advance in hedge fund manipulation – now we can knock a company down by floating rumors about margin compression on products that haven't even been announced yet!  Maybe we can start a rumor that the TSLA bus won't be able to cool the compartments lower than 80 degrees when the outside temperature is 100 or more!  We can crash the stock and make a fortune!  (kidding of course, don't do this or, if you do, don't mention me!!).  

    That's the key to any good rumor – find some bit that seems realistic and then construct the rest around it.  

    CLF/Jabob – Well that's good (not that GS downgraded them but that it explains the drop).  

    CLF/Tommy – Other than the fact that everyone hates them – no.  

    LOL StJ – That sums it up nicely. 

    CLF/Dawn – That's just good old-fashioned extrapolation: 

    TLT up even more today. 

    Audiobooks/Diamond – I'm not down on audiobooks – it's just that they have excellent professional readers who make the books come alive while Siri makes Melville sound like Deville when it should sound like this.  Down the road, I'm sure Siri will be able to read with the best of them but, for now, she should stick to making reservations and telling me where to turn…

    OIH/Burr – Thanks, been waiting for a pullback for a while. 

    Change/Chas – On April 1st a lot of the ultra-shorts are going through splits and reverse-splits, which will make a mess of all current option positions on them so we're not too keen on holding them over that weekend.  

    And what Button said. 

    Cyprus/Dawn – As I said, too many possible rumors to try to bet the market for the moment.  

    Trump & Cuban/1020 – Now there's a steel-cage match I'd pay to see.  This has been going on for a while, here's Trump calling Howard Stern to bitch about Marc Cuban.  

    OIH/Jabob – Actually I like the service sector as there is more fracking and more difficult (expensive) drilling going on than ever before and that's good for OIH but, it's been trading off with the sector so a nice entry here but they will go down if oil really tanks so it's an early entry on a long-term scale.  

    Jeez – CNBC now interviewing people about iWatch wars.  

    OIH/Samz – Yep, doesn't look pretty but when do you think you're going to get a good price selling puts?  

    Money/Angel – Ah, there's the flaw in the plan.  At least the money goes to pay off debts, which is the country's main problem.  Chopping off rich people's heads and ransacking their homes wasn't a very effective way of distributing wealth either – I guess there's no perfect solution…    As to the rest, as Catwoman said to Batman, "there's a storm coming Mr. Wayne, and you and your friends better batton down the hatches because, when it hits, you and your friends are going to wonder how you and your friends ever thought you could live so large – and leave so little for the rest of us."  

    LOL on that picture, Angel: 

  56. Burrben

    On the OIH trade, all I'm saying is that the price of OIH is lower than Phil's original price.  
    OIH is trading at 42.48, and the Jan15 Straddle is trading at $12. It's not as good as a deal, but a entry point.  

  57. angelcur

    1020 you gotta admit it:" WOULD BE FUNNY IF IT WEREN'T SO FUNNY"
    its going to be governments not fat cats that finally detonates the pent up fury of nearly every class to coordinated anarchy..

  58. yodi

    The OIH trade I enter in is
    Jan15 bull call 36/43 cost 4.15
    With a sell of a 37 or 38 Jan15 p for 3.90 or 4.60
    with that you will be able to sell monthly callers as you are waiting

  59. rustle123

    Albo/Zaap
     
    Also should note the company recently received a million dollars when they had no money left by selling I believe a piece of their company to a Korean firm.  Think about how many billions Tesla has invested in electric vehicles, yet here's a company with less than a million dollars left to their name now that is going to produce vehicles for the Chinese government with nothing spent on R&D.  You can't even have an advertising campaign for what they have left.  The stock might continue to go up but even on a million shares, it is only 250,000 dollars traded and the stock tends to be double printed so really that would be 2mm shares.  It is generally illiquid and like most penny stocks, if they go up, problem is still getting out without destroying the price by 50% in a day.  There's a reason companies on the pink sheets are on the pink sheets and a reason why many brokerage firms will not let you purchase them through them.

  60. 1020

    angel – I'm one of those who can always find a little humor in tragedy….not much for crying in public….

  61. phil

    Cool, we're having a lightning snowstorm!  

    FTR/Albo – As long as you don't expect much out of them, they aren't likely to disappoint.  At $3.97 you can buy the stock, sell the 2015 $3.50 calls for .75 and the $3.50 puts for .60 for a net $2.62/3.06 entry and that makes the .40 dividend 15% while you wait, which means your net/net after two years (assuming .80 collected) is $1.82/2.66 – what's not to like?  In fact, let's add 5,000 to the Income Portfolio for $13,100 and that will pay us a lovely $500 per quarter in dividends.  

    128893 600 Cyprus cartoons

     

    128871 600 Tough Bracket cartoons

     

     

    For want of better covers at the moment, let's add 10 of those DIA June $141 puts ($2.60) to the $25KPM and 20 to the $25KPA and 20 in AAPL Money. 

  62. albo

    rustle123 – I have to admit that I'm a sucker for penny stocks with good stories, but learned a long time ago, only go into those with very small or no debt, and already profitable.  That cuts down the number of candidates by about 99.2% ! ! !   A very good investor/speculator once told me, "I invest in "what is", not "what if".   That's saved me a lot of money.

  63. snow

    CLF – I'm happy – I picked up the stock coupla weeks ago and sold some of those nice expensive calls against it this morning as soon as I saw it falling.

  64. albo

    Speaking of rumors :
    March 18: Blackstone (BX) Private Equity is reported to be considering a bid for DELL

  65. angelcur

    1020 I AM WIF YOU
     
    PHIL THAT IS HILARIOUS!!!!

  66. 1020

    I'd enjoy seeing a 'lightning snowstorm'……the sunshine gets old after a while….. ;)

  67. dawnr

    Phil I am playing volatility, already up over 25%…
    Apparently the Cyprus Finance Minister just resigned…

  68. yodi

    No one playing USO today, I held mine overnight and closed them just now for a view hamburgers more at .72 bought them yesterday at .63
    I must say I am still practising with the /CL which I bought the Apr put yesterday on paper and closed it with a profit Paper! for 650.00 But need more practic and guidence.

  69. denlundy

    Out of TLT at $3.50

  70. dawnr

    closed out VXX up 30%—pigs get slaughtered, right? 

  71. phil

    Well, that was a timely addition of DIA puts! 

    Certainly not rocket science to make that call – Dollar was breaking over 83 so we added more of a cover we already liked. 

    Dow volume 46M is higher than the normal very little we have at noon.  Maybe 25-35M is normal.  

    Oil back to $93.50 but gold going the other way ($1,613).  

    XLF all calmed down again ($18.14).

    Good strategy Albo. 

    Sunhine/1020 – I personally love weather, especially lightning storms.  One of the things I don't like about southern CA is lack of variety.  

    Cyprus/Dawn – I'd resign too!

    Oil/Yodi – Well, the first thing to learn is not to risk it while you're sleeping.  That's why I get up early if I want to play.  Topped out at $94.50 at 8:30 (NYMEX open) but that was just a pump job so they could sell off the last of their April contracts and now we're getting a nice dip.

    Oops, AAPL back to $450, that was a fun visit to $460 – at least now we know what it looks like.  

    TLT/Den – Very nice.  

    PCLN $689 now – $700 was not bouncy at all today.  

    HOV is up. 

  72. chasw

    Phil,
    TQQQ – what are your thoughts on TQQQ? It seems to have volatility and covers a broad range of stocks.

  73. yodi

    Sleeping on oil very good Phil, that is why I hope to learn more in AC as I will be in Europe fom May and I can do the trade as you are dreaming of!!!!! OIL

  74. newt

    SVU: do we have any plays on with them?

  75. zeroxzero

    Stockdoc:  Not that I want to add any fuel to the fire, but I live in a tax haven populated by "expatriated" Russian money — the same class with their money deposited in Cypriot banks — and "innocent" would be a tough case to make.  Somone once stole money from them here. They sent a "fixer" from Moscow, and solved the problem very quickly.

  76. angelcur

    dutch fin min cyprus on verge of bankruptcy ( A DUH!)
     
    GO ICELAND

  77. Pharmboy

    Southern California Variety:

  78. wombat

    Phil // FTR
    I've noticed that more often than not you will ( at least with div stocks ) strangle a stock
    I've also noticed that your calls are really ITM – what is the rational for going so deep.
    For example – with FTR you sell the $3.50@.75, which would get you called at $4.25, effectively, when you bought the stock at $4
    If a big reason is the div cap, why not sell the $4's and collect .40, thus getting you called out at $4.40 and able to perhaps stay in the trade longer ?

  79. wombat

    FU AAPL !!!!

  80. diamond

    Phil – Yes, Samuel L. Jackson does beat Siri on this one! ;-)

  81. zeroxzero

    Do we have an AMZN trade on?

  82. Pharmboy

    ISCO – starting a small, speculative play in them.  I am NOT a stem cell person, but the data look promising for Parkinson's. 

  83. dawnr

    Hey boss—on CLF what do you think of selling april 19 puts for $80 or may $19's at 1.42?  RSI is at 18…stupid now

  84. angelcur

    ZZ I AM SHORT
    and gross is telling the world he did DD on cypress banks (remotely bill?)

  85. grant

    Phil – I think here in Chicago we call lightning while snowing – Thunder Snow.

  86. angelcur

    i wonder when we get to here what is moving the markets right now lol

  87. wombat

    zero // AMZN
    I'm holding a Jan15 BRPS $220/260 // Jan14 $200 Short PUTS
    I don't think this was a PSW play.

  88. phil

    $22.19

    $20.61 and 8% March 2014

    VXX/Dawn – Check out VIXY, it's a VIX futures ETF that's not too terrible at tracking it short-term (long-term it decays) and could be useful for something like the May $9/12 bull call spread at $1.80 with $1.20 upside and break-even at $10.80. 

    TQQQ/Chas – It's just a Nasdaq ultra, nothing special about it.  We use SQQQ (the opposite ETF) to short the Nas all the time and nothing wrong with TQQQ other than it's not very interesting to go long on the Nas at this level. 

    Oil/Yodi – Good, you can scout out some nice villas for me.  

    SVU/Newt – Not interesting anymore with an offering coming at about $4.  We cashed out when they popped.  

    Going deep/Wombat – Because I prefer to play conservative.  Craig did an excellent presentation in Vegas in November outlining how, using that kind of system, he was able to reduce the basis of most of his holding by 40% over the first couple of years.  That's our goals with dividend payers – initiate a position – spend 5-10 years getting our money back through premium selling until the basis is zero – then collect dividends off free positions forever and take the repatriated cash and start the cycle again.  Do that for 20 years and you will never ask why you would want to do it again!  The only thing that can mess you up is greed – taking unnecessary 'risks to make an extra, what, .15 in your example?  So you collect .35 less in order to make .50 more IF the STOCK doesn't go lower, of course.  As I'm sure I have said to you before:  HandBirdHand  = BushBirdBirdBush.  

    AMZN/ZZ – No current trade.  As with NFLX, I was hoping they'd go a bit higher so we could short them again.  

    ISCO/Pharm – Yes, very exciting stuff if it works.  

    CLF/Dawn – I like any long-term position in them.  Not sure what they'd do between now and April but you can always roll to something more sensible.  

    Thunder Snow/Grant – Whatever you call it, I like it.  

    Oil $92.73 now – much bigger dip than I thought we'd get today. 

  89. angelcur

    commodity stocks crushed today

  90. dawnr

    CLF—I wound up doing May 19's at $1.39…worst case I own it at $17.61…If it does 'nothing' because it is exhausted I clip my premium…I am hoping for it to show capitulation soon with a big spike up…cross fingers.
    this thing is outside of weekly and daily bollinger bands, RSI stupid low AND I am seeing some hidden positive divergence on the CCI…Took the shot.  Will look at TVIX--thanks!
     
    FYI on AAPL  It only retraced less than 38.2% (which would be $447)…this is also the 60m 20EMA and a good buy zone.  If it could hold…bullish still! ($443 is 50% retrace.  Still bullish if holds)

  91. yodi

    Boy did I sell USO to early have to learn more of that crooked game!!!!!
    Villas Phil what price range????

  92. jerconn

    Nice "whee…" on oil…

  93. yodi

    Phil USO what now buy the call???

  94. rperi

    yodi I'm in the same boat.  Sold half the USO puts at $.94 and held on to half, sold the other half at $.78 and now they are $.90 an hour later.  Net $.68 so either way got out with a profit on both halves.

  95. mrmocha

    Pharm / AFFY - A week ago someone was buying like crazy, they just got slaughtered.  Wasn't me, hopefully not you either!

  96. phil

    12:04 PM Stocks turn decidedly lower as Cyprus' ruling party will apparently abstain from the bailout vote, thus assuring its failure. The ball now moves back to Brussels, where the ECB has threatened to withhold funding from Cyprus' banks if the bailout (and depositor haircut) isn't passed. Stoxx 50 (FEZ-1.5%, S&P 500 (SPY-0.5%, the euro (FXE-0.5%.

    12:47 PM Europe closes with sharp losses, but middling stuff compared to some of the panicky days of 2012 and 2011. Cyrpus' parliament is currently debating Brussels' plan to bailout the banks by imposing losses on depositors, but the votes to pass it don't appear to be there. Stoxx 50 -1.2%, led by Spain -2.2%. Performing best is the FTSE, -0.2%. Spanish 10-year bond yield +6 bps to 5.03% – about where it started the year. 

    1:00 PM Midday top 10 gainers: EFUT +53%ATOS +29%GST+20%KYTH +14%DWCH +10%

    NPSP +9%SHIP +9%CSTE+8%OPXA +8%LTRX +8%
    Midday top 10 losers: AFFY -64%MTSL -33%HNR -33%WSCI-23%WAC -19%INTX -19%

    STSI -17%TWER -14%CLWT-13%GMXR -13%.

    JP MORGAN(JPM): Here Are 15 Stocks That'll Save You From A Market Sell-Off.

    The Fed's move to start the chairman's press conference just minutes after release of the policy statement is seen as Bernanketightening control over the bank's message. Markets have been sent scurrying upon a couple of recent Fed releases in which focus landed on the hawkish views, forcing the doves to take to the media in ensuing days to nix any tightening worries. The Fed begins a 2-day meeting today.

    In addition to deciding on monetary policy when meeting today and tomorrow, Fed policy makers will update their economic forecasts, a skill at which they don't particularly excel. "These 19 economic policy makers can't forecast their way out of a paper bag," writes the WSJ's "Ahead of the Tape" column more bluntly. It's a bit worrisome, as the Fed has linked the end of QE to precise measures of unemployment and inflation.

    The market (SPY) is still a buy, says Investors Intelligence's Tarquin Coe, monitoring the "need vs. want" trade. The ratio between the consumer discretionary ETF (XLY) and the consumer staples ETF (XLP) remains in an uptrend, he notes, with a test of the 2007 peak in sight.

    The new hedge fund hotel is U.S. dollars (UUP), writes Josh Brown, noting BAML data showing large specs are net long $2.6B in the dollar index. It's near the level at which it can be called too crowded of a trade, says BAML

    Dollar (UUP) bullishness of 72% of respondents reached the highest level in the history of BAML's fund manager survey. At the same time, bearishness on U.S. stocks (SPY) reversed, with a net 5% calling the U.S. the market it most wishes to overweight vs. 19% underweight in January. (PR) 

    Redbook Chain Store Sales: +2.9% Y/Y vs. +2.7% last week.  More on Redbook Chain Store Sales: On a month-to-month basis, sales were up 0.7% in an early indication of a decent March for retailers as the month is expected to be heavily back-end loaded in front of Easter. 

    ICSC Retail Store Sales: +1.4% W/W, vs. +0.7% last week. +2.3% Y/Y vs. +1.8% last week. The report cites special strength at grocery stores, apparel stores. 

    More on the BAML survey: Just 14% of respondents expect the Chinese economy to be stronger a year from now, representing "one of the sharpest falls in this reading in the survey's history." The thinking is behind a shift out of emerging equity markets (EEMDEM,VWO) and into developed – notably the U.S. and Japan. It also coincides with a sharp correction in Chinese stocks (FXICAF) over the last month.

    The ZEW survey of German investor sentiment rises to 48.5 in March from 48.2 in February and vs consensus of 48. The current situation reading jumps to 13.6 from 5.2 and vs forecasts of 6. However, the outlook for the EU drops to 33.4 from 42.4 and vs predictions of 43.7.

    The EU's decision to impose losses on Cyprus bank depositors may be the moment when the eurozone finally took a big step towards ultimate recovery, writes contrarian-minded Simon Nixon. The message sent is the burden of tackling unsustainable debts will fall on a country's creditors rather than be passed to other members. It's probably the same thing Paulson thought when he let Lehman go.

    "What we are witnessing is the slow death of the European project," says Athanasios Orphanides, former Central Bank of Cyprus Governor. What we have, he says, are decisions being taken in Germany sequentially spreading misery to the periphery, and now it's blackmailed the Cypriot government into confiscating its citizens deposits. No one in a small or weak country should feel safe.

    More on Cyprus: The country's finance minister – Michalis Sarris – has submitted his resignation, reports both Bloomberg and CNBC. He looks to be the President's fall guy for accepting Brussels' weekend demand for the bailout to be taken out of the hides of bank depositors. (Previous: The bailout – as currently formulated – looks doomed) Spain (EWP) leads on the downside for Europe, off 2.4%.

    "We might actually have a STD (sell-the-dip) situation brewing" in regards to Cyprus, writes Jefferies' David Zervos. Even if the bailout is approved, Thursday's reopening of the banks is going to see billions in withdrawals, he writes. Unless the ECB violates every collateral rule it has, the Cypriot financial system is poised to collapse.

    North Dakota crude oil production averaged an all-time high 770K bbl/day in Dec. 2012, trailing only Texas among U.S. states and more than doubling in annual output in two years. North Dakota continues to enjoy the lowest U.S. unemployment rate while California is tied for the highest at 9.8%, but it doesn't need to stay that way; California's economy could surge if the state tapped into its huge Montney shale fields.

    Oil companies are increasing tanker bookings to haul Persian Gulf crude to the U.S. at the fastest pace since September, spurring a threefold surge in shipping rates by the end of April for Frontline (FRO) and other owners. Charters doubled to 26M barrels in the latest four-week period, and daily revenue for VLCCs will reach as high as $30K within six weeks, from $12.8K now, Morgan Stanley estimates.

    Petrobras (PBR -2.6%expects to raise a net $4.3B in global capital markets each year to fund its investment plan over the next five years, its CFO says, as increased crude oil production during 2013-17 covering the $236.7B investment plan allows it to reduce net financing needs by 50% vs. the 2012-16 plan. 

    Oilfield services companies suffer another down day after Schlumberger (SLB -1.3%sounded an alarm for the sector, warning that customers have reactivated fewer rigs than expected and pricing is still an issue. It was a “clarion call of realism," Simmons says, virtually ensuring negative Q1 guidance from SLB and making positive revisions from other oil service firms "a steeper climb." HAL -1.9%,BHI -1.3%. 

    Blame the dead guys:  Transocean's (RIG) crew on the Deepwater Horizon “should have done more" to prevent the rig’s explosion in the Gulf of Mexico in 2010, CEO Steven Newman says at the trial over the disaster, faulting it for accepting the assessment of BP's well site leaders. RIG was responsible for safely performing its own operations on the rig, but overall responsibility for well safety rested solely with BP, Newman says.

    Chesapeake Energy (CHK -2.3%) is downgraded to Underperform from Neutral at Sterne Agee, which criticizes CHK's hedging strategies and cautions that the pricing of upcoming asset sales could underwhelm. Spending plans are highly dependent on further asset sales, the firm says, and it believes 2013 guidance could be at risk with a $3B-plus funding gap remaining.

    Citi cuts its PT for Suntech (STP -11.4%) to $0.50 from $1.50, and warns the company's equity will be worthless if the Chinese government doesn't offer support to bondholders. However, the firm considers this an unlikely scenario, and still thinks the Wuxi, China government could buy Suntech's assets. Shares have fallen to $0.57 today. (bond default) 

    The Chinese government might restructure its solar subsidies to abolish one-time subsidies in lieu of feed-in tariffs, favor smaller projects, and promote construction in areas with power shortages, says an industry official. The remarks follow media reportsof pending feed-in tariff cuts, and dovetail with new Premier Li Keqiang's push to introduce a fresh round of market reforms. "The wave of solar industry consolidation that’s hit Europe and the U.S. is coming to China," says industry observer Nathanael Greene. 

    Another day, another new 52-week low for Cliffs Natural Resources (CLF -7.2%) after Goldman Sachs cut its price target to $20 from $24. CLF has more problems than just weak iron ore prices, the firm says, most notably the inability to control costs at its Bloom Lake mine. Yesterday, BAML cut its price target to $25, and shares plunged through BAML's barrier before the report's ink was dry.

    Rio Tinto (RIO) is downgraded to Conviction Sell at Goldman, which notes the company's overwhelming dependence on iron ore prices. "We see minimal free cash flow and significant earnings declines if the company goes ahead with the Pilbara 360 project in a declining iron ore price environment." Shares -3.2%premarket. BHP -1.8%. Earlier: Goldman cuts its iron ore price forecast.

  97. zeroxzero

    Joe is fair enough to point out that's it's easier to achieve equality [or any other political effect] in an absolute dictatorship.  He doesn't point out the relative difficulties of achieving egalitarianism in a racially and cuturally homogeneous country like Sweden [population 9M] versus a heterogeneous country of 300+Million like the U.S.   But he still has a point.

  98. zeroxzero

    Wow, now that was a cool trick!!

  99. phil


    Rising crop prices, particularly corn, have 
    sent the cost of farmland soaring, with prices in Iowa, for example, doubling to an average of $8,296 an acre since 2009. The trend has prompted farmers to expand and has attracted investment companies, but with data about rural debt incomplete, economists fear that the boom will at some point turn into a bust, leaving a trail of bankruptcies and out-of-pocket creditors.

    Automobile sales fell 10.2% Y/Y in Europe during February to 829K, according to the Association of European Car Manufacturers. Volkswagen (VLKAY.PK), Ford (F), General Motors (GM), and Fiat (FIATY.PK) all had another tough month on the continent, while South Korean automakers Hyundia (HYMLF.PK) and Kia (KIMTF.PK) tread water with sales. By region, sales in Germany and Italy were disappointing again while the U.K. is a bit of an outlier with car sales up 10.3% YTD.

    California officials OK $8.6 bln in debt for high-speed railCalifornia officials approved on Monday the sale of up to $8.6 billion in state bonds to help build a planned high-speed rail system projected to cost $68 billion. 

    The FDA is in receipt of a letter from a group of doctors and researchers urging the agency to take action on the caffeine levels in energy drinks. Though large-sized coffee drinks contain a much higher level of caffeine, data on emergency room visits suggests more complications are seen from the consumption of energy drinks than other caffeinated drinks. Shares of Monster Beverage (MNST), up 2.5%, remain unfazed by the most recent attack on the energy drink industry.

    No retail chain has more outlets than 7-Eleven and the convenience store operator is still growing. The company says it added 5K stores in 2012 and will hit 50K stores by the end of Q1. It's a pace of expansion which should draw the notice of quick-stop rivals Dunkin' Donuts (DNKN -0.2%), Starbucks (SBUX -1.2%), and McDonald's (MCD -0.2%). 

    The gambling revenue numbers out of Macau continue to look strong, according to RBC Capital. For the first 17 days of March, the average daily win rate was up 34% Y/Y even with the Chinese New Year over. The key stat in Macau: Mass market demand growth still outpaces supply growth by 10-15 bps. Melco Crown (MPEL), MGM Resorts (MGM), Wynn Resorts (WYNN), and Las Vegas Sands (LVS) hope the trend continues.

    The outlook for luxury spending in China looks promising, according to analysts. While the pace of luxury retail sales growth slipped in China from 2011 to 2012, the forecast for 2013 is for solid gains again. Chinese tourists taking advantage of a weak euro is also a factor. Luxury stocks to watch: Prada, Louis Vuitton (LVMUY.PK), Coach (COH), Ralph Lauren (RL), Michael Kors (KORS), Swatch (SWGAY.PK), Burberry (BURBY.PK), Estee Lauder (EL).

    Teen-oriented retailers trade weak with negative news out on Lululemon and Kohl's tipping sentiment in the sub-sector. Decliners: American Eagle Outfitters (AEO -2.9%), Abercrombie & Fitch (ANF -3.3%), Aeropostale (AEO -2.9%), Zumiez (ZUMZ -2.7%), The Bucke (BKE -2%), Urban Outfitters (URBN -2%). 

    Reaction to Lululemon (LULU -4.7%): Calculators are burning up as analysts try to compute the impact of the retailer's yoga pants fiasco on short-term profits and on the long-term reputation for the brand. A potential sticking point for the company is that selling men's clothing may he harder after the recall of  the "too sheer" pants. Look for a spirited defense from Lululemon CEO Christine Day during the firm's post-earnings conference call on Thursday. (Previous:guidance cutfallback)

    Electronic Arts (EA -7.7%) is now seeing big losses, as the Street concludes its March quarter warning takes priority over John Riccitiello's resignation. Game developers Activision (ATVI -2%), Take-Two (TTWO -1.8%), Zynga (ZNGA -1.7%), and Glu Mobile (GLUU -6.8%) are also lower, as is retailer GameStop (GME -2.3%). EA's warning comes a few days after NPD provided more downbeatretail sales data for the industry to chew on, as aged consoles and ashift to mobile gaming continue taking a toll. (earlier)

    JMP launches coverage on the Internet sector with a bullish bias. Google (GOOG), Priceline (PCLN), AOL, eBay (EBAY), and Zillow (Z) have been started at Outperform, while Amazon (AMZN), Facebook (FB), and Expedia (EXPE) have been started at Market Perform. FB +0.8%GOOG +0.5%Z +1.3%EBAY +1.5% with the help of Cantor's upgrade. 

    In a development that could rattle the job security of social media gurus, Coca-Cola (KO) says a study by the company found no measurable impact on short-term sales from online buzz on sites such as Facebook and Twitter. On the other hand, the same study did find digital display advertising was about 90% as effective as traditional TV advertising in churning up sales.

    More dysfunction at NBC (CMCSA): The network is reportedly discussing an exit plan for Jay Leno which would see the entertainer give up his late-night time slot. Leno hasn't been helping his cause by calling out the ineptitude of NBC execs and the network's ungraceful fall to 5th place in the ratings. The bigger picture: Look for Comcast to make same big changes at NBC and potentially raise the stakes in the licensing of its streaming content. (Previous: The lure of SVOD profits) 

    eBay (EBAY +1.4%) is eliminating listing fees for most items and simplifying its commission fees, as it tries to sustainMarketplaces' resurgence and slow down Amazon's (AMZN -1.2%) rapid 3rd-party sales growth. Lower-margin items such as electronics will sport lower fee rates than higher-margin items such as clothing. eBay claims the moves, its first fee changes since 2010, will provide more transparency for merchants, who have complained of overly complicated pricing. Yesterday, Reuters reported of discontent among Amazon merchants over rising fees.

    Morgan Stanley is becoming more positive on America Movil (AMX +2.1%) and Telefonica (TEF +0.9%), upgrading the former to Equalweight and the latter to Overweight. MS thinks Mexicanregulatory fears are now priced into AMX shares, and argues near-term results could be propped up by lower customer acquisition/retention costs and price hikes for the carrier's least profitable customers. As for Telefonica, the firm thinks the carrier's home market of Spain has become "more attractive," thanks to Telefonica's end-to-end service offerings. 

    A harsh downgrade to Sell from Goldman sends Juniper (JNPR -4.5%) lower. The firm is worried about share loss and margin pressure in the carrier router space (42% of 2013E sales) thanks to Alcatel-Lucent's (ALU2012 arrival, sees Juniper's switching share flattening thanks to Cisco's Nexus 6000 launch and the impact of software-defined networking, and expects "continued share loss" in security hardware thanks to "product feature gaps and the cannibalistic effect on sales from the transition to a software model." 2013-2015 estimates have been lowered.

    H-P (HPQ) wants a whopping $4B in damages from Oracle (ORCL) over the software giant's decision to discontinue support Intel's Itanium server CPUs. Look for H-P to point to its plummeting high-end server sales (-24% Y/Y in FQ1) as evidence of the damage Oracle caused. Look for Oracle, which resumed supporting Itanium after a judge ordered it to, to argue demand for "Itanic" was diving anyway as enterprises embraced x86 servers, and that Intel's own commitment to the platform is lukewarm. 

  100. yodi

    rperi USO trust we see you in AC to learn some more tricks. Just bought the USO 33.5 call again as it looks as the oil is going up again in the close??? Just testing putting my toe in the water nothing more, lets see if we get an other hamburger for dinner!!!

  101. phil


    Federal regulators are 
    investigating Microsoft (MSFT -0.1%) and its business partners over bribery allegations. Microsoft says it's cooperating with the investigation.

    More on Microsoft: The WSJ reports the DOJ and SEC are examining allegations from a former Chinese Microsoft rep that he/she was told by a local Microsoft exec to "offer kickbacks to Chinese officials in return for signing off on software contracts." Also being reviewed are allegations resellers offered bribes to score software deals with the Romania's communications ministry, and that Italian consultants lavished gifts and trips on procurement officials to win government deals. The probe is said to be in the preliminary stage.

    Millions of Google (GOOG) users may soon be babbling endlessly. Multiple sources tell Geek.com Google plans to unify its numerous messaging platforms, which include Talk, Voice, Hangout, and Google+ Messenger, into a single service called Babble. The site observes Babble would extend Google's efforts to organize user-to-user communication by conversation rather than underlying technology (IM, VoIP, video chat, etc.). Larry Page has been all about fostering product integration lately.

    With iWatch rumors barely a month old, Reuters reportsSamsung (SSNLF.PK) is working on a "wearable digital device similar to a wristwatch." A source claims the device will perform many smartphone tasks, but doesn't elaborate. Last week, in tandem with the Galaxy S IV launch, Samsung introduced the S Band, a wristband accessory that counts calories and tracks steps. The product bears a strong resemblance to Nike's (NKEFuelBandUpdate: Samsung confirms it's building a smart watch.

    From World's 7th Richest Man To Margin Calls In 15 Months.

  102. yodi

    From World's 7th Richest Man To Margin Calls In 15 Months
    could not happen to a bastard like Carlos Slim. They find to many sucker here in MX.

  103. Pharmboy

    AFFY – ouch. Not me, but not what i expected.  Small option position that does little damage.

  104. phil

    AAPL/Dawn – I thought you were waiting for $400?

    Villas/Yodi – Depends, under $2M on the sea would be nice but you know I'll probably end up in Jersey – I'm too old to learn a new language.  

    Dollar 83.25, up half a point, markets not down much more than that.  

    USO/Yodi – Better to worry about playing when you're sure.  Rather put together a string of small wins than gamble on uncertainty.  As to buying – it's a viable gamble into earnings but, as I said earlier, Cyprus and the Fed make too much of a wild-card so it's just gambling at the moment.  Obviously, though, our range is still pretty reliable and $92.50 on the new contract is the old contract's $92 line, so a good chance it holds.  

    Stiglitz/ZZ – I like that guy!  He and I bonded at the Buttonwood Conference a couple of years ago.  We sat next to each other and made wise-assed comments while people were speaking.  Mervyn King was cracking up.  

  105. angelcur

    Sen waffles, and drops assault weapon ban from gun legislation

  106. angelcur

    cyprus bill defeated euro thrilled

  107. yodi

    Phil Villas Every one speak English in Europe. In Belgium you could not even find a job if you do not speak at least 5 linguas.
    USO Thanks I am still learning this one. Need to have some fine tuning of the Master. Not playing CL for real before the time that I feel good about my practice rounds. This for sure is a different game than my usual runs.

  108. jromeha

    I think oil is going down further, I was so pissed at yesterday's pump of oil (was taking my annual fitness test and couldnt sell when it collapsed). Sold 1/2 today…. Still heavily short though… FU oil!

  109. rperi

    trust me yodi I'll be all ears when it comes to the Futures part of the AC Conference.  

  110. Pharmboy

    SGEN….selling a few calls, June 30s.  We had these at a 2:1 ratio with the June 35s STO.  So, more like 6:5 now. 

  111. dawnr

    Phil-AAPL-I am already in at $360 from a month ago.  I took off the ones in my trading account and now looking for an entry that makes sense…if it is still showing bullishness bouncing off the retracement levels…then, like you said, I may never see $420 again…and will pull the trigger…agree?

  112. phil

    Gasoline $3.04 – that's going well, at least.  Weren't they just warning us about $4 gas wrecking the market on CNBC yesterday?  Shouldn't they be talking about what a boost $3 gas would be?  

    Villas/Yodi – True and my thinking is old-fashioned anyway because when I do retire, I'm sure Siri will be able to give me running translations of anything I need to hear anyway and, of course, it doesn't matter what language newpapers, magazines and books are written in as that's also going to be fully translated on my iPad.  Hmm, maybe I'll go to Japan then

    AAPL/Dawn – As we still haven't had a real market pullback, I'm still more in favor of selling those long puts than gambling on what AAPL will do between now and July earnings (both weak quarters for them). 

    GOOG, meanwhile, has parked itself at $808.  

  113. phil

    Let's sell 5 LULU April $62.50 puts for $2.50 in the $25KPA. 

  114. phil

    Would have been nice to hit that one this morning at $3.50 but it took me this long to decide impact to sales from bad pants not likely to hit them for a 10% loss of revenues (most people will just buy another color).  Much ado about nothing on this story – might go lower still, though, so 5 is a good enough start and a quick $1,250 if it works out.  

    Dow volume 80M just past 3, that's healthy and not very good for the bears if this is all the damage they get.  

    Keep in mind GS brought out the downgrade whip today – certainly timed to kick the market while it's down.  

  115. zeroxzero

    Phil:  A travelogue of Japan, for your retirement planning: http://www.youtube.com/watch?v=gEmJ-VWPDM4

  116. dawnr

    AAPL-think we are misunderstanding eachother—I am SHORT 2015 $360 puts at $34.70 and just want to see if I can add more if it proves itself bullish…

  117. angelcur

    OK MEREDITH WHITNEY IS " THE MOST BULLISH EVAIRRRR"
    WHY DO WE LISTEN TO THESE DWEEBS AND SOOO MANY OF THEM THERE ANALISTAS ARE BULLISH NOW
    AND THE EURO IS UNIMPRESSED NOW..WHEN MARC FABER GETS BULLISH 

  118. qcmike

    rperi / yodi
    I am with you on the futures at AC 

  119. rustle123

    Phil/$3gas
     
    $3 gas is still not good for economy.  Many people still have cars that average 24mpg and gas being over $3 for such a prolonged time has not only affected many in the lower mid and lower income area but also all goods that need transporting which as you know trickles down to food prices and so many other goods.

  120. angelcur

     i swear officials Kno how dumb the algos are and design statements just to take advantage of that…its funny
      these silly statements always come out in final hour of our market hours from europe…and they usually work!
      ladbrokes:cyprus now odds-on to leave euro, 4-5 to default

  121. phil

    Japan/ZZ – Another classic.  

    AAPL/Dawn – Well I guess we're saying the same thing – more 2015 $360 puts is a good way to go as it's still a nice buffer – just in case.  

    Meanwhile, I'm mostly worried about our GOOG short calls as this is, so far, the weakest pullback EVER.  If the full-blown attempt (not approved) confiscation of wealth by a Government can't panic the markets – what will?  They'll just laugh at other austerity measures now…

    Whitney/Angel – I listen to Whitney – and do the opposite! 

    Gas/Rustle – I meant that, since we were at $3.34 last month and they were predicting $4 gas would "ruin" the economy, then shouldn't they be running back on the air at $3.04 saying that $3 gas would boost it.  Obviously, gas can and should be a hell of a lot cheaper than it is now – as should oil. 

    2:35 PM As expected, Cyprus overwhelmingly rejects Brussels' bailout plan which would have haircut bank deposits, the 56-seat parliament voting 36 against and 19 abstaining (1 member wasn't present). Stocks are bouncing off the lows, the S&P 500 -0.3%.

    The bailout rejected, what's next for Cyprus? Open Europe suggests the EU will allow a few days for Cypriot MPs to get their minds right before the ECB thinks about cutting off funding for the country's banks (which would lead to their collapse). Or not. Reuters' Anatole Kaletsky notes the ECB needs two-thirds of its board to cut off ELA funding, and the Germans don't have the votes. "Time to get bullish … German U-turn ahead!"

    Pimco is a seller in Europe, according to managing director Saumil Parikh, who tells Reuters the firm cut exposure to the euro in the last 24 hours due to Cyprus. "It makes sense to think about this as not only a policy mistake but also a recognition that the euro is far from being a perfect reserve currency."

    The low volatility space continues to be a popular one with PowerShares' SPLV surpassing $4B in AUM in its less than 2 years of existence. The fund holds the 100 stocks in the S&P 500 with the lowest volatility over the previous year, and has outperformed the SPYby more than 600 bps since inception. Competitors include: USMV,IDLVEEMVSMLVLGLV.

    A little breathing room for home owners on the equity they hold in their houses is helping motivate them to jump into more serious home improvement projects, according to an academic study. Spending could climb 20% this year (Sept. to Sept.) despite credit conditions which are still tight. Home Depot (HD -0.8%) and Lowe's (LOW -1.3%) would be pleased to see more kitchen remodels and wine cellars than simple paint jobs and tiling.

    Despite Schlumberger's near-term concerns, Credit Suisse is convinced the U.S. rig count is going higher and thinks investors should be overweight in U.S.-focused companies leveraged to the rig count or completions. CS likes manufacturers HALSPN and FET that supply equipment for drilling and producing the tight reservoirs, plusBHIWFTNOV and FTI.

    The $265M Sanchez Energy (SN -1%) is paying Hess (HES-3.5%) for 43K acres of south Texas shale is much lower than the $820M Tudor Pickering expected, which "highlights softness in non-core Eagle Ford" shale market. The firm says the deal does not bode well for Chesapeake (CHK -5.2%); applying the price Hess received implies a $600M value to CHK's land vs. Tudor's earlier estimate of $1.25B.

    And then sometimes these companies don't work out:  It's a bad day for Affymax (AFFY), with the stock plunging64% and hitting a new year low after announcing late Monday that it's slashing 75% of its workforce and considering filing for bankruptcy protection. The company is hiring a bank to look at strategic options, including a possible sale, a restructuring, or a winding down, but many are concerned that it may be too little, too late.

    At its annual GPU tech conference, Nvidia (NVDA -0.9%) has: 1) Introduced its own enterprise server for its GRID graphics virtualization platform (allows remote access to GPU resources). 8-16 GPUs are supported, and pricing starts at $24.9K (software licenses are extra). A GRID cloud gaming system was launched in January. 2)Announced Dell, H-P, and IBM are selling GRID servers, and that virtualization leaders VMware, Microsoft, and Citrix are supporting the platform. (live blog)

    Digital video recorders are responsible for 29% of the viewing that cable and TV subscribers undertake each week, according to fresh data from Motorola Mobility. The twist: It's another paper cut for a broadcast industry (CBSAMCXTWXCMCSA,OUTD) desperate to keep hold of advertising revenue despite the DVR trend and the advent of Dish Networks's (DISH -0.1%) ad-skipping Hopper service.

     A backlash continues to brew among Facebook (FB -0.6%) developers over policy and algorithm changes that can lead app traffic to crater. In some cases, apps are blocked due to spam complaints, but in others, Facebook cites the fact they duplicate (some would say compete with) its own services. The WSJ reports MessageMe, an app blocked on Friday for duplicating Facebook Messenger, "had recently rebuffed takeover interest" from Facebook. Facebook defends itself by arguing most of the 10M sites/apps that use its services aren't complaining. (Reuters column)

  122. wombat

    Phil // Deep
    I understand the theory – chipping away at cost basis long term on holds.
    Funny, I thought my question was the more conservative ; > My point was by selling a slightly higher call, you might take in a little less cash but also decrease you're chances of getting called away ex div //

    I'm just not clear on why you sell the calls so close to the strike. 

  123. phil

    2013 State of the News Media Overview Infographic

  124. angelcur

    GS PINNED TO LOWS

  125. aussie260

    SGEN/Pharm -to clarify, are you selling additional  June 35 calls to cover the June 30 calls you are holding??

  126. phil

    Algos/Angel – I agree.  One day someone will spill the beans on some official who purposely makes statements after placing huge bets in the market (I hope!).  

    Calls/Wombat – There's nothing wrong with getting called away.  You are collecting a .15 premium from the caller and the dividend is .10 per Q so why would I care if the guy calls me away and sacrifices his .15 to make .10?  What I am doing is COLLECTING .60 that PROTECTS my $3.95 stock to $3.35 vs .30 that protects me to $3.65.  At the end of the period, I am almost certain to roll the puts and calls anyway to 2017 because all I care about is collecting that little .75 dividend that I sold (puts and calls) every two years until my basis is zero.  Meanwhile, I choose to be more conservatively protected as a bonus.

    While we have 2 rules at PSW, Warren Buffett has only one:  "Don't lose money."  Start out with that as your guideline and you'll do very well over the long run.

    WFM has been sneaking down lately. 

  127. Pharmboy

    Buying back SGEN Jun 30 calls for $4 or so, aussie.

  128. aussie260

    Thanks Pharm

  129. phil

    Dow is green!  

    98M shares into the close.  

  130. Pharmboy

    Damn…selling…selling SGEN calls.

  131. phil

    VIX 14.40, TLT 117.43 so people are still worried – no need to close DIA puts, of course (they're June).  

    Volume looks like it's surging to maybe 120M on close so pretty light day overall but a lot of buyers on the dip is the volume story of the day. 

    More fun and games tomorrow. 

  132. pstas

    Bullish is the word lately but it would be wise to heed some words from old hands at Sequoia Fund. Following is from their 2012 Shareholder letter:
     
    In the fourth quarter of 2012, we were modest net sellers of equities for the first time since 2008, in response
    to specific situations at several of our portfolio holdings. In particular, we exited Target Corp., the discount retailer
    we’d owned since 2006, as we became increasingly concerned by its lackluster sales growth and vulnerability
    to competition from online retailers.
    Given the huge run up in equities since early 2009, we are no longer finding compelling valuations, either
    for our existing holdings or for new ideas we are researching. Our current portfolio seems fairly valued today. That
    said, anyone who has paid attention over the past 15 years knows equities can trade at extreme levels, both of
    overvaluation and undervaluation.
    Valuations for stocks are heavily influenced by interest rates, and particularly by the risk-free rate of return
    on 10-year and 30-year United States Treasury bonds. Relative to the current return on Treasury Bonds, stocks
    continue to be quite attractive. However, the current risk-free rate of return is not a product of market forces. Rather,
    it is an instrument of Federal Reserve policy. As long as these policies remain in place, and stocks trade at higher
    levels of valuation, it will be more difficult for us to find individual stocks that meet our criteria for returns on a
    risk basis that incorporates substantially higher interest rates than exist currently. Just as we think it would be a
    mistake for investors to buy bonds at current levels, we believe it would be a mistake for us to buy stocks on the
    assumption that interest rates remain anywhere near current levels
     
     
    Full text here: http://www.marketfolly.com/2013/03/ruane-cunniff-goldfarb-sequoia-fund.html

  133. snow

    News/Phil – fascinating chart. I moved to LA in 2002, and immediately subscribed to the LA TImes, then a really good paper. Since then the Chandler family  squabbles led to its being bought by the Trib group, huge cutbacks in reporters. By 2008 or so, each page of the paper was 3/4 ad, most "reporting" was wire stuff, a lot of it trash. Local news was really hurt, and the local cities like Bell got away with major corruption in part because the LA Times didn't have the staff to keep an eye on them. I haven't subscribed to any paper for some years – I figure why pay for something that's almost entirely advertising and fluff. My local, and I mean really local, news source in my town, Altadena, is here…http://www.altadenablog.com/
    where we kept each other much better informed about, for instance, the Station Fire in Sept. 2009 than any other media.
    My news sources in Korea, on the other hand, are actually pretty good, including print, despite the country being hyper-wired. Interesting, eh. When my brain's not in shape to handle Korean, I like this source: http://www.arirang.co.kr/index.asp

  134. rperi

    Calls/Phil – that's a really good explanation and to honest, something I had to get used to as well.  I think it may be because most all of the training information out there – options books, articles, brokerage videos – mainly teach selling covered calls giving examples of selling just out of the money calls.  Rolling is taught as something you do when your hand is forced, and not part of a long term plan. This is a different way of approaching a long-term investment plan and because it is unique it took me some time to stop wanted to habitually use the other way.  Good point and a topic to delve into for the book.  As a matter of fact, Wiley published the first options beginner book I read, and I can almost guarantee if I went back to it I wouldn't find any examples of what Phil is talking about, selling deep in the money calls with the intention of rolling and rolling to reduce cost basis.

  135. boltdude

    Hello all, hope everyone is doing well.  
     
    VIX versus VXX — I know this topic has been discussed in the past, but could someone knowledgeable give an explanation of why/how the VIX can be up 8% on the day, but VXX is virtually unchanged?

  136. zeroxzero

    From MS, March 18th: I generally agree with it [for the little that's worth]
    Excerpts – If it's too long, just delete it, Phil:  Any critiques would be of interest.
     
    "Alpha to trump beta in 2013. After four years where beta dominated, we believe alpha will make up a bigger slice of the (smaller) returns pie in 2013. Asset classes, regions and countries will be less correlated, in our view, with lower systemic risk and higher company-specific risk."

    We maintain a strategically constructive view on equity and credit markets, as neither are structurally expensive, implying that additional moderate gains are likely over a 6-month horizon. Our view also rests on central banks’ determination to maintain highly abnormal monetary policy despite a gradually normalizing macro environment. Bull case: investor flows turbo-charge and front-load risk asset returns, with equities the key beneficiary. Bear case: any sign of global liquidity withdrawal earlier than we expect would roil all markets."
     

    "Near term, risk markets are fully valued and sentiment excessively bullish, making them vulnerable to a tactical correction. Two potential triggers: a fiscal tightening-driven shortfall in 2Q13 US growth (we forecast 1% growth in Q2 vs. 2% consensus) and a return to the CRIC cycle in Europe. However, we view both factors as temporary and would consider such a correction as ‘a pause that refreshes.’
     

    "Our strategic preference is for equities over credit over government bonds. Equities are cheap relative to credit on risk-adjusted valuation. Within equities, we strongly reiterate our preference for quality growth and income. Japan is our most favoured equity market and Europe now least favoured. Core government bonds should generate negative total returns over the next six months, but policy limits downside."
     

    "Upgrading the US. We remain bullish US housing and boost our 2013 house price forecast from +4-6% to +6-8%. Securitized products levered to rising house prices are our favorite credit play. We increase our price target for the S&P500 from 1434 to 1600, driven by further liquidity-fueled multiple expansion."

  137. dawnr

    Phil-on VIXY-First, thanks for looking at this and suggesting it.  I took a look and some things that trouble me on this one is the average daily volume under $2mm while VXX is about $44m+.  Also, the ATR on VIXY is 1/2 of VXX ($.55 v $1.05).  So I am inclined to instead try to do your bull call spread with VXX instead…
    Thinking VXX May $18/22 (or $23)—Spreads right now ridiculously wide so need to look at net debit tomorrow. 
    Why would you do the bull call (with a debit) instead of selling puts at $18 for May at $.75 (or wait for retrace get closer to $1?)…I actually put a GTC order in for $.95 on these right at the close today…
    comments?

  138. zeroxzero

     And for anyone still scratching their head about "Cyprus!!!", I was sent the following comment:
     
    ""For the time being we would keep powder dry; anyone determined to make a trade should be buying the defensive names (HSBC, Swedbank) rather than shorting the industry, as we believe that this is an eminently resolvable issue where the contagion risk is less than the market perceives.  The Cypriot deposit solution is probably unique, as every other peripheral economy has substantial bank bondholders to haircut and therefore no need to touch insured deposits"

  139. dawnr

    Bolt Dude-VXX v Index discrepancy…Primarily because the VXX attempts to track the index with futures.  It has horrible contango as they need to roll the futures and buy higher ones (right now).  Also, Tuesday is shenanigan day because it is last day of trading and they paint the tape with what they want to print on who they want to screw calls or puts…
    http://seekingalpha.com/article/1233251-vix-what-is-it-what-does-it-mean-and-how-to-use-it
    http://seekingalpha.com/article/1257471-the-art-of-trading-volatility
    Two articles (and the comments are helpful within) to shed some light. 
    hope that helps

  140. wombat

    rperi / phil / Calls
    thanks for the chime in. rperi is right – i've been hammered the other way – hence my discomfort and unclarity on why you would sell such deep ITM calls for a long position trying to collect a div. I was thinking ' how do I hold onto the stock longer, and you 're saying, get the best premium to decrease you're basis and who cares if you get called, because you're looking at the div as a quarterly breakdown.
    I THINK THIS IS IMPORTANT FOR BEGINNERS TO GROCK. This just clicked – you break things down in q's – it's an entirely different way of thinking.

    Also, my bad, I was thinking about covered calls a different way. If I collect .60 on my $3.50 calls – the $3.95 stock, I was taught, is safe until $4.10 ( there's your $0.15 ) – after which it would be called away, taking the div with it. Your point, if I understand it correctly is who would assign for $0.10 in div costing them $0.15. Wow.
    Completely different mode of thinking.
     
    What I am doing is COLLECTING .60 that PROTECTS my $3.95 stock to $3.35 vs .30 that protects me to $3.65.

  141. stjeanluc

    VXX / Dawn – My only strategy with this horrible instrument is to buy 2 year LEAPS Put and wait for that sucker to decay. Buy more puts when they spike which they have not done yet. I am in the 2015 20 Puts now. I went back and over the life of VXX, they have reset when reaching around 10 twice and it usually only take about 16-18 months to get there!

  142. phil

    Thanks for sharing that Pstas.  

    LA Times/Snow – I agree, I was hugely disappointed with the LA Times the last few years vs when I used go to CA when I was younger.  I had always hoped the Web would improve the quality of journalism – but it hasn't worked out that way so far. 

    Rolling strategy/Rperi – You're right, no one really looks at a trade as a long-term position that evolves over time – it's all about winning or losing THE TRADE – that's just not realistic – especially if you are trying to learn to be the house and not the gambler.  Thanks for pointing that out.  

    VXX/Bolt – VXX is a rolling average of the front two-months of the VIX futures so it's smoother than VIX, which jumps up or down based on a single day's action but also decays faster as it carries a lot of friction costs. 

    And what Dawn said!

    And what StJ said – great strategy with many of these poorly-structured ETFs.  

    MS/ZZ – Sounds reasonable to me.  I hope things decouple, so boring with everything moving in lock-step all the time.  

    VXX/Dawn – I like the bull call spread because it's a nice, no-premium bet that the VIX will simply be higher than it is now in May.  I'd rather get 5 of those that pay $1.20 than sell 10 puts for .75.  

    Banks/ZZ – I agree, it's ridiculous to think this will spread – nothing but media hype.  

    Congrats on clicking Wombat – lots of those as you move to 10,000 hours.  

    3:24 PM "The ECB reaffirms its commitment to provide liquidity as needed (to Cyprus banks) within the existing rules." Previous: The ECB Governing Council may not have the votes to cut off funding.

    At the close: Dow +0.03% to 14456. S&P -0.25% to 1548. Nasdaq -0.26% to 3229.

    Treasurys: 30-year +0.61%. 10-yr +0.25%. 5-yr +0.08%.

    Commodities: Crude -1.69% to $92.52. Gold +0.44% to $1611.6.

    Currencies: Euro -0.48% vs. dollar. Yen -0.15%. Pound +0.04%.

    Market recap: Stocks cut their losses late to close mixed after lawmakers in Cyprus voted against the proposed levy on bank deposits, but the modest volume yesterday and today makes the market action look like profit-taking rather than a fear-based trade. Despite a solid U.S. housing report, consumer discretionary, energy and materials seen as tied to economic growth led decliners. 

    WTF?! Sequestration Slashes Scholarships for Children of Iraq and Afghanistan War Casualties (ABC)

    Political blowback from Cyprus (FT Alphaville)

    On the Brink? China’s Solar Industry Debt Drama (The Diplomat)

    Williams-Sonoma (WSM): Q4 EPS of $1.34 beats by $0.05. Revenue of $1.41B beats by $0.01B. Shares +5% AH. (PR)

    Adobe Systems (ADBE): FQ1 EPS of $0.35 beats by $0.04. Revenue of $1.008B (-4% Y/Y) beats by $22M. Shares +5.5%AH. (PR)

    More on Adobe: FQ2 guidance is for revenue of $975M-$1.025B and EPS of $0.29-$0.35 vs. consensus of $1.02B and $0.34. FY13 guidance is for revenue of $4.1B and EPS of $1.45 vs. consensus of $4.12B and $1.41. Paid Creative Cloud subs +153K Q/Q to 479K, annual recurring revenue +$80M to $233M. That helped deferred revenue rise 13% Q/Q to $700M. 31% of FQ1 revenue recurring (was 26% in FQ4). ADBE +6% AH to new 52-week highs. CC at 5PM ET (webcast). (PR) (datasheet) (slides/remarks)

    A little more on Adobe: Free cash flow was $261.8M, well above net income of $178M. Marketing Cloud (online ad tech) revenue +20% Y/Y to $215M (21% of total). Digital Media revenue -5% Y/Y and digital marketing +1%, both affected by shift to subscriptions. EMEA was soft, -10% Y/Y. Americas -1%, Asia -1%. Opex +16% Y/Y thanks to cloud software investments. Gross margin was 84.4%, -530 bps Y/Y (due to cost of supporting cloud services).

    The CIA has agreed to a 10-year deal with Amazon Web Services (AMZN) that's worth up to $600M, trade publication FCW reports. AWS will reportedly build a private cloud for the CIA to help it "keep up with emerging technologies like big data in a cost-effective manner." While not as big a validation of AWS as having the CIA use Amazon's public cloud (that could be a while), such a deal would still be a major talking point as AWS tries to expand its enterprise/government base. (Macquarie estimates) (more)

    When Mom and Pops Battled Five and Dimes (Echoes)

    Shrugging off Atlas - Exactly how did once-respectable conservative economists get swept up in “moocher class” mania?

    74 Things Every Great Star Wars Movie Needs (Wired)

  143. dawnr

    stjeanluc-That's def an alternative strategy…for me, I don't have patience to watch it drip monthly and instead will do these short put plays ONLY when VIX is at stupid low extreme and then when it spikes (like end of Dec) at a good technical level buy the put (I like 90 days-that is how I was taught).  End of Dec I had the darned area marked to do a $38 put but I hesitated to pull the trigger. Really pissed me off! Next time that order is gonna be placed in the market!  Otherwise It likes to follow the 60m and daily charts so my bias is to short at supply due to the natural decay (with TIGHT stop) (unless, like now, it is too low to short for my liking) and I won't keep 'em out more than a couple days…its either gonna move, or not…quickly, or I am out.
    I always have the SPY chart in front of me to time my entry/exits.
    Phil may disagree and I know he does not like VIX plays…Not a good long investment vehicle due to the decay (I think .5% monthly) but for trading intraday it is fun.

  144. stjeanluc

    VIX / Dawn – I think that the VIX is too complicated to play for most people due to the way that options are calculated. You have a rising VIX and options go down because of the ways the futures move! The only people making money on a regular basis are the brokers with the transactions fees… 

  145. dawnr

    STJ-Agree. confession—Myron Scholes was my direct boss when I was at his hedge fund Platinum Grove (the one after LTCM)…so I understand enough to potentially get me in trouble but am comfortable trading them…But I am here so that Phil will keep me off the rails when a trade goes sideways or upside down!

  146. denlundy

    Adobe/Phil    5:14 PM  Adobe (ADBE) CTO Kevin Lynch has resigned, the software vendor discloses in a 8-K filed in the wake of its FQ1 report. CNBC reports Lynch is leaving for Apple (AAPL). He joined Adobe in '05 following the acquisition of Macromedia, and was once a staunch defender of Flash, which Steve Jobs wasn't the biggest fan of.

  147. stjeanluc

    If you are going to drop names Dawn, I guess you might as well go for the Nobel Prize winners… Of course, you have now removed about 3 degrees of separations between me and a Nobel Prize winner, so thanks!

  148. stjeanluc

  149. dawnr

    Stj-not sure it is boasting because he did manage to effectively blow up that fund too during lehman crisis.  did not mean to drop names.  

  150. jfawcett

    SCO / Phil – Thanks again for that  advice on SCO.  I do work at understanding /CL and its movement.  I save every oil post and replay that daily.  I want to one day to retire (soon I hope) and trade for a living.  I did get out of SCO today with a slight profit, at least paid for the bookie.

  151. stjeanluc

    Just pulling your chain Dawn… 

    Were you around when it blew up? That would be a fun tale to tell.

  152. dawnr

    stj-ohhh yes…interesting times. cant say much more non disclosure etc.

  153. Burrben

    StJ / Dawn
    I was gonna say…  he is a bit of a joke in vol arb circles, thinking that markets follow a normal distribution and std deviation events are predictable statistically.  In fact options were totally repriced after Black Monday leading the "vol skew" and the "smiles" that we know today.  It's so cute how he also though curve fitting would work as a trading model.  Reminds me of my econ teachers telling me that "free market capitalism" was alive and well…..BS.  Ok, back to my wine…
    —-
    A long long time ago, before Black Monday in 1987, people didn’t know how to price options. Then Black-Scholes came out and traders started using the Black-Scholes (BS) formula and it worked pretty well, until Black Monday came along and people suddenly realized the assumptions in BS were ridiculous. Ever since then people have adjusted the BS formula. Everyone.
    Read more at http://www.nakedcapitalism.com/2013/03/cathy-oneil-black-scholes-and-the-normal-distribution.html#bMGv1o8bHq84Wi46.99 

  154. jfawcett

    USO / Yodi – Trying to be a student of the /CL play. Note the dollar's double top and if the dollar breaks, /CL should go up to make up for less dollar value, correct?  I am in Tampa next week for a vacation, see the grand kids.  I would like to play USO/SCO in my cash account since the mornings are usually free while I am down there.

  155. Peter D

    Virtual Short Strangle Portfolio – Thanks, stjeanluc for the initiation of the April positions.  I'm just checking in.  Looks like we sold the puts a couple of hours early!  Well, at least we have started our position for the month and can add more or make adjustments as we go.  It's not until Friday that I'll be available during market hours!!

  156. edro00

    /CL – Those using TOS – look at the Renko charts at 0.10 or 0.20 cents, combine with stochs and/or PSAR.
    Let me know what you think

    EDRO

  157. jabobeast

    PCLN PAY YOUR TAXWS PLEASE!!!
     
    http://finance.yahoo.com/news/court-tells-travel-sites-pay-034945634.html

  158. phil

    Good morning!

    Nothing surprising-looking in the Futures, flat again.  

    ADBE earnings were so good AAPL stole their CTO:

    Apple (AAPLconfirms it has hired Adobe (ADBE) CTO Kevin Lynch. He'll be the company's VP of technology, and report to wireless hardware/chip engineering chief Bob Mansfield. There's some speculation Lynch's role in spearheading Adobe's successful cloud software push may have appealed to Apple. Adobe says it won't be hiring a new CTO; Lynch's responsibilities will be doled out to other execs. A source tells AllThingsD Lynch wanted to be Adobe's CEO. 

    Dollar 83.17, Oil $92.94 (inventory today), gold $1,613, silver $28.92, copper zoomed up to $3.43, nat gas $3.954 and gasoline held $3.04, now $3.055 also likely to move up into inventory at 10:30.  

    Euro $1.2884, Pound $1.509 and 95.17 Yen to the Dollar and that got the Nikkei back up to 12,455 so everything getting back to normal already. 

    Big Chart with a lovely pullback to consolidate on 4 support lines at the same time and, even on the S&P, 1,540 was a 1.25% line and 1,560, where we were rejected, was a 2.5% line and the more liquid an index, ETF or stock, the more it's going to obey those smaller lines as well. 

    Don't forget it's Fed day today – ANYTHING can happen:  

    Wednesday's economic calendar:
    7:00 MBA Mortgage Applications
    10:30 EIA Petroleum Inventories
    2:00 PM FOMC Announcement
    2:00 PM FOMC Forecast
    2:15 PM Bernanke Press Conference
     

    Notable earnings after Wednesday’s close: GESJBL,ORCLPSUNSVM 

    3:13 AM Chinese shares lead parts of Asia higher, with banks rallying following a report that authorities may ease loan regulations on smaller lenders. Investors are also hoping that the eurozone will find a solution to the problems in Cyprus and once again muddle through this latest crisis, as it has done in the past. Japan closed, Hong Kong+0.8%, China +2.6%, India -0.4%.

    The Fed's FOMC Meeting Ends Wednesday — Here's What We Expect Them To Say.

    Two-Year Swap Spread in U.S. Surges to Highest Since SeptemberThe U.S. two-year interest-rate swap spread, a measure of debt market stress, surged to the highest level in six months as European policy makers struggle to forge a bailout plan for Cyprus

    OECD cuts French growth forecastThe OECD trimmed its growth forecast for France and said it must do more to boost competitiveness and create jobs, but recommended the government avoid more spending cuts to meet it EU deficit reduction pledges.

    Europe Weighs Cyprus’s Fate After Lawmakers Reject Bailout DealEuropean policy makers must weigh how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro. Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible” to cobble together a new package. The European Central Bank, whose Governing Council meets today in Frankfurt, will also have to decide whether to give Cyprus more time or consider cutting off liquidity to the country’s banks. “This is not a good result — neither for Cyprus, nor for the euro zone, and we have to look together for alternatives to the negotiated package,” Frieden said yesterday in a phone interview from Frankfurt. He called the vote “very sad news,” though said the decision by its parliament must be respected. 

    Austerity in action:

    Cyprus warned over parliament's bailout rejectionGermany's finance minister has warned Cyprus that its crisis-stricken banks may never be able to reopen if it rejects the terms of a bailout. Wolfgang Schaeuble said major Cypriot banks were "insolvent if there are no emergency funds".

    REPORTS: Banks In Cyprus Could Be Closed For Another Week, ECB Working On 'Insane' Plan.

    Nigel Farage Message To Europeans: "Get Your Money Out While You Can".

    Cypriot Business Owner: The Germans Want To Destroy Us Like They Bombed London In WWII.

    NEXT!  Moody's downgrades four Hungarian banksMoody's Investors Service said on Wednesday it downgraded the ratings of four Hungarian banks, citing a weak economic environment in the country. 

    China may lower threshold for short selling and margin trading, citing people from securities companies.

    Beijing May Tighten Home Buying Restrictions for Singles. Beijing may allow single or divorced local residents to own only one home, citing people who participated in drafting the rules.  Local governments await Beijing's new rules on housing marketLocal governments in China are still awaiting the implementation of housing market curbs at ministerial level before they announce their own policies, despite allegations that a leaked copy from the central authorities has surfaced recently, the Guangzhou-based 21st Century Business Herald reports.

    Ow, my wrist!  J.P. Morgan(JPM), Trustee for MF Global Reach PactJ.P. Morgan Chase & Co. has reached a settlement that will return an estimated $546 million to MF Global Holdings Ltd. customers, likely bringing an end to a major chapter in customers' effort to recover money from the securities firm's 2011 collapse. J.P. Morgan, the trustee for the failed company's brokerage unit, and lawyers representing customer plaintiffs in the case filed their settlement agreement after finalizing terms in recent days, according to a person familiar with the process.

    Wells Fargo(WFC) should have failed the stress test.

    Visa(V) May Have to Buy Europe SystemVisa Inc. could be forced to pay billions of dollars to buy the Visa Europe payments system, under a plan being discussed by the European banks that own the business. The shift would significantly expand Visa's footprint as it battles for a bigger share of the international market.

    Freddie Mac sues more than a dozen banks over LiborU.S. mortgage finance company Freddie Mac is suing more than a dozen banks for losses from the alleged manipulation of the benchmark interest rate known as Libor. Bank of America Corp, JPMorgan Chase & Co, UBS AG and Credit Suisse Group AG are among the banks named as defendants in the lawsuit.

    And more oil:  Anadarko(APC) makes large oil find in Gulf of Mexico. "The successful Shenandoah-2 well marks one of Anadarko's largest oil discoveries in the Gulf of Mexico," Bob Daniels, Anadarko's head of exploration, said in a statement. Log and pressure data from the appraisal well indicate excellent-quality reservoir and fluid properties and more drilling will be done to advance this "potentially giant project," Daniels said.

    Copper Seen Dropping as Stockpiles Increase. Copper is poised to decline 2 percent this year as supply outpaces demand and boosts stockpiles, while aluminum may advance as demand gains, said Australia’s Bureau of Resources and Energy Economics. World inventories may surge 16 percent to 1.3 million tons in 2013, or three weeks of consumption, it said. That compares with a December forecast of 1.1 million tons

    Adobe(ADBE) raises profit forecast as subscription model gains traction. Adobe Systems Inc, maker of Photoshop and Acrobat software, raised its full-year adjusted earnings forecast after reporting first-quarter results above Wall Street estimates as more customers chose its subscription-based model. The company raised its full-year adjusted earnings forecast to about $1.45 per share from about $1.40 per share, above analysts' estimates of $1.41 per share. Shares of the company, which said Chief Technology Officer Kevin Lynch would be leaving, rose 7 percent in extended trade.

    China Telecom (CHA): Q4 net profit -17% to 2.36B yuan ($380M) vs consensus of 2.04B yuan. Revenues +17% to 73.1B yuan vs 73.2B yuan, with wireless data sales boosted by iPhone use. ARPU 53.9 yuan, stronger than expected. Mobile subscribers +8M to 160.6M. To boost capex 40% this year to 75B yuan. (PR)

    Here's What Furious Sellers Are Saying About Amazon's (AMZN) New Fees.

  159. dawnr

    burrben-models pretty much ignore fat tail events and the global relative value strategy pretty much blows up every ten years or so when spreads widen due to these events.
    what is the lesson here? even geniuses fail…because 'its all about managing the (market) risk, stupid'!

  160. yodi

    jfawcett
    /CL in this field I am a student as well watching the daily moves. Following Phil's comments it is a big swindle on a daily basis. Pumping up the price of the oil during the early hours of the morning and finaly dumping them at a later time during the day. But there is a lot more to it which we can only learn through experience. I play a view USO in the real account which should not burn your fingers, however the play with /CL as such is a complete different play and can run very quickly up to a good amount of money on the up as well as on the down side. Obviously the dollar as well as happenings in the world as such plays an important role in the entry. I can only recomment to be at the AC conference, as future trading will be high on the agenda, and it should easy pay for your trip in little time, if you did not cover with the CZR play already!!!
    So my comments patience and learning, paper trading OK for any one entering this type of trade. But do not forget our main objective to build up long term plays on solid stocks.

  161. Canuck

    Phil/"Cruise to the Edge" -
     
    just saw this in the S.Florida news – if you want to get a Prog-Rock fix, there is a 5 day cruise from Fort Lauderdale, leaving next monday — bands playing on the cruise are:  Yes, UK, Steve Hackett and band, Carl Palmer and band, Saga, Tangerine Dream,… and others.

  162. lotter

    PGH,
    They actually have a monthly dividend payout (15th of each month), not quarterly.

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