Comment by Phil

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Phil
June 2nd, 2011 at 10:37 am

Dollar/Peedle – i don’t think you can think of the Dollar that way.  If anything is going to stick to moving on Fundaments, it should be the World’s largest currency, don’t you think.  It’s not like it has some arbitrary value – the value is set every day with $100Bn worth of transactions that set how many Dollars things are worth and, therefore, also set how many things a Dollar is worth – to say that it will break some technical spot on a chart and suddenly the price of a Pepsi will skyrocket pretty much ignores all the fundamental principles of economics.  What affects the Dollar is very simply the supply of Dollars relative to the demand for Dollars so we watch those factors and, of course, there has been no demand (slow economy) while the Fed and Treasury have been ratcheting up the supply.  That’s the major driving force and then there is speculation relative to the value of other currencies but, with the Dollar at 62% of the Global money supply and the Euro at 1/3 of that and the rest virtually meaningless, it really is all about US policy driving the Dollar so, without a drastic change – you just are not likely to get any drastic moves.  

XLF June $15 puts hit only .21 on that dip – we are still looking to sell 10 for .50 in the $25KP and 20 for .50 in the Income Portfolio but that’s not going to happen so let’s see if we can get that for the July $15 puts, now .36.  

Oil topped out at $100.92 at the open but is back to $100.45 now (low of $100.05 since the open), quite a wild ride but I’m still liking the short play below the $100.60 line with trailing stops (as usual). 

Trichet/Angel – Yes, the EU needs a Central Government to work but even a Central Government wouldn’t agree to what he’s proposing.  This is a power grab by the Banks, not a benevolent Government action.  Banks always want risk-free lending – it’s up to the borrower to draw a line and for the two of them to agree on an appropriate level of risk and an appropriate level of interest paid against that risk.  When the hell did society devolve into a system where banks could heedlessly lend money and then demand full payment no matter what the situation.  If that’s the case, and if inflation is 2%, then why should anyone pay a banker more than 3% for money?  

Oil/StJ – It’s simply too high.  You can push the Dollar down to 70 but oil won’t go up 10% because people just can’t afford it.  Oil is a demand commodity.  90M barrels of it will come out of the ground tomorrow and the next day and the next and if people don’t buy it – it quickly becomes the producers’ problem because another 90M barrels will come out of the ground the next day too.  OPEC has a meeting next week and if they don’t agree to cut production, we could have a serious glut on our hands.  

Gold/Angel – Well what do you think, is gold overpriced or are stocks undervalued?  

School stocks/Alik – I like DV best but I have not looked over what actually passed.  I picked DV a while ago when they went weak on panic over this nonsense and I’d say the move today shows that it was a good call.  I’d wait for them to calm down and maybe make a long-term play on them, they are the best of the bunch.    

NFLX back to $270 – all must be well…

FAS/$25KP, DC – Nope, we rolled back to July $27s so, if anything, I would take advantage of a sell-off to roll down the the July $26s first and THEN I would consider a sale but the roll is still over .35 so no point and we’re better of waiting until we are SURE things are breaking down.  Why is XLF down today?  Because Moody’s but BAC, C and WFC under review.  That doesn’t mean they will be downgraded, just that they need to be reviewed in light of new regs.  So, are they likely to go down 1% again tomorrow or likely to bounce back once this panic washes over the investors (traders, really) who act before they think based on squiggly lines on a chart because they haven’t done enough due diligence on their positions to have faith in the VALUE of the stocks they invest in?