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Wednesday: Wages (or lack thereof) are Killing this Country

Waiting.

For what, I don't know.  Who cares if the Fed raises rates by 0.25% or not?  We all know it's coming and whether it comes tomorrow (it won't) or October (it will) has nothing to do with the health of the economy or earnings for the last 3.5 months of 2015.  

We know the Fed can't lower rates below 0, so they have nowhere to go but up and it's just a matter of when, not if, rates are going to rise.  No jobs will be gained or lost, no factories will be opened or closed, no ditches will be dug or filled in based on what the Fed does tomorrow.  The Fed has not in any way, shape or form done anything to help the real economy in 7 years – why start now?  

Yes, they've made interest cheap so you could refinance your house and buy a new car (ie. take on more debt for the Banksters who own the Fed) but they've also destroyed the value of savings and incentified our Corporate Masters to leverage, merge and lay off workers, which has the net effect of driving wages to record lows in relation to Corporate Revenues and Profits:

Do you see that red line on the top chart?  That's ZERO – you can't go much lower than zero unless you figure out how to get the employees to pay you for the privilege of coming to work (I know, we shouldn't give them any ideas!).  NO Corporate profits are shared anymore, workers are paid as little as possible and given no credit whatsoever for a company's success and, thanks to drastic cutbacks in pensions and benefits – they are discarded like a broken machine after a lifetime of service to the company.  

It's no wonder Bernie Sanders is striking a resonant chord among the voters.  While most candidates have tin ears when it comes to the state of the real economy, Sanders knows how bad conditions are for the majority of the people in this country and he's willing to point the finger at the people who are grinding them down.  

60% of the people in this country work their whole lives and have NOTHING to show for it – not a house, not one share of stock, not even money in the banks.  They are born, they work, they consume and they die – and even that is expensive

Yet there is an entire political party in this country that thinks they are not paying their fare share of taxes, that their kids shouldn't get a free lunch in school, that if they can't afford college it's their problem, that if they get sick – it's tough luck.  There's even talk of a $15 Minimum Wage and that's being fought tooth and nail yet $15 an hour is $600 a week and $30,000 a year (if they dare to take a vacation) yet that's just $24,602.83 take-home, less than $500 a week.  

Image result for bernie sanders quotes wagesIf you can live on $500 a week, God bless you, you're a way smarter consumer than I am.  I'm not sure one of my teenage daughters could get by on that – certainly not where we live.  That's not even the Minimum Wage, that's the wage they are fighting against.  If you have a wife and a kid (or should those things be denied to people?) how do you house, clothe and feed them while saving for college and retirement?  And remember – $15/hr is DOUBLE what millions of people are actually making under the current rules.

If you have a Big Business, that generates a lot of revenue overseas, you don't have to worry about this.  The nice thing about the Top 1% is there's 70M of them on this planet.  So many, in fact, that Apple can sell them each a new phone every year and even some watches that require the phone to operate (why not?).  Catering to the rich is the only growth segment left in this World because the rich are getting SO MUCH richer while the bottom 80% have almost no disposable income left – so all you can sell them are the things they absolutely need to survive.   

This chart isn't that interesting because it's obvious from the wages chart above that workers have no money but, if you have a busisness that depends on customers in the bottom 80% – you'd better be concerned with this trend!  It's not just the workers that are suffering from runaway Capitalism in the US but small business owners as well – who can't rely on growing overseas profits to offset the fact that their customers simply can't afford to buy as much as they used to.  

Where is a real recovery supposed to come from on this chart?  Certainly not from cutting Social Programs and cutting Jobs Programs and cutting Benefits to pay for another round of tax cuts against those record Corporate Profits.  That's just common sense, something there's not much of in this country since it was cut out of the school budget under Bush II.  

It's not just our country, of course.  The whole World is run by these multinational Corporations.  Wal-Mart (WMT), for example, has 300 stores in China and 85,000 Chinese employees and about the same in Chile, Canada, the UK and Brazil while Mexico has 1,500 stores with 170,000 employees.  In the US they have 8,400 stores and 2M employees.  In each country, the pay the minimum legally allowed and, of course, they pay the least taxes allowed as well.  

It's not just WMT, of course, many other stores, fast food, endless service jobs – all pay below poverty wages and funnel money out of the local communities and into the hands of far-away owners who create enormous pools of wealth for the very few people lucky enough to own these companies.  

Sure, as investors, we can say "well, if you can't beat them, join them" but how is that good for this or any other country in the long run?  Perhaps, as Bernie Sanders contends, we CAN beat them.  Teddy Roosevelt and his "Trust Busters" broke up the big corporations over 100 years ago and the Unions beat them back after World War II 60 years ago – maybe we're about due for another round...

Meanwhile, back in the markets:  Japan had their debt rating downgraded by S&P this morning and that's one of the major dominoes yet to fall in the Global economy.  I have long warned that if people begin to understand how server Japan's 250% debt to GDP ratio really is, confidence in the entire global financial system could begin to unwind.  In fact, the main reason we were worried about China was that it would have a spillover effect that would push Japan's economy over the tipping point.  

Shanghai Sept 16China is still doing their part by faking the closes, as illustrated by today's 5% jam-up into the close. We can't really point fingers as yesterday's US "rally" was nothing but low-volume BS and the only people being fooled by this are the hapless retail investors, who have been brainwashed into buying every dip and are now ready to be the ultimate bag-holders when the Top 1% have finished unloading their shares on them.  As noted by Dave Fry:

Of course in this environment you either surrender to the dictates of the tape or you probably won’t make any decent returns. Clearly we’ve entered an Orwellian period the past 7 years.

The Fed has given bulls everything they want with low-zero interest rates. This has permitted massive stock buybacks and M&A given cheap financing to do so. But the stock market is not the economy. For a rally to continue from here it won’t be supported by fundamental economic data or even good earnings for that matter.

Tuesday given the worse than weak economic data (Retail Sales, Empire State Mfg Survey, Industrial Production & Business Inventories) the “bad news is good” pimps rushed to seize the tape believing the Fed won’t be raising interest rates any time soon—perhaps not in my lifetime.

SPY  5  MINUTE

Is this time different historically? It could be since I’m not aware of any historical period where there’s been 7 consecutive years of nearly uninterrupted returns. Even the dotcom period lasted just 6 years by my reckoning. And of course we’ve not seen this type of central bank manipulation ever.

As Dave notes, it's almost impossible to play the market in the midst of Global manipulation by our Central Banksters so we're sitting on the sidelines, mainly in cash, but we did up our index hedges into yesterday's silly rally.  I expect the Fed to state tomorrow that they will raise rates in October, which is a wishy-washy way to kick the can down the road.  I don't see how that will take us to new highs though – so I'm leaning short

 


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  1. Some more fighting words Phil… But something must be done. I really find it hard to understand how conservatives could look at the income inequality facts (or wealth inequality) and not think that we went wrong somewhere! When you see the income of the top 1% rise so much faster than the bottom 90%, you don't propose tax cuts for the top 1% unless you have an hidden agenda. And you cover up that agenda with culture wars to take advantage of the ignorance of so many voters! It's really shameful! Go back to the 50's when this country was growing much faster and look at the income inequality then. The top 1% paid 90% taxes and yet they kept working. Now we need to pay CEO $20M per year or they will just quit! Hedge fund managers will not work if they have to pay more than 15% taxes? People in this country were told a supply-side fairy tale starting in the 80's and until we break the spell, we'll be on a road to the destruction of our society. There, I feel better too!


  2. Got stuck in meetings but trying to catch the UK's first PMQ since Jeremy Corban was elected to the Opposition.  Looks like it could be fun to watch.


  3. NBIX…. crying


  4. Good Morning!


  5.  It's not just the workers that are suffering from runaway Capitalism in the US….

    I'm in agreement with all your points, but Phil… this is not capitalism. There are no free markets, and the problem is bad enough without embelishment. If it was, banks would have failed, assets would have been bought at market prices and we would have had a real recovery with real market interest rates. They must have awesome steel toed boots, because the can is huge and the road is becoming an uphill battle yet it still moves… the day of reckoning is coming, the cliff is just ahead of us. It will not be a "soft" landing.


  6. Pharmboy,

     

    What do you think of ONCE


  7. Good morning! 

    Fighting/StJ – I don't think Conservatives get that, if they prevent the fight in the legislature – they'll get it in the streets.  

    Corbyn/Malsg – Send me a link if you get one.  I love Parliament! 

    NBIX/Pharm – What?  

    Capitalism/Mkucstars – I agree, we live in a Corporate Kleptocracy:

    I try to find "green shoots" but they are few and far between and then you see Japan hitting the fan and China blatantly manipulating the market without a word of complaint from any of our 100 different media outlets (all owned by the same 6 people) and how can you play the game?  I don't mind a little cheating but this is now getting silly – it began when China was going up as they changed the rules every week to goose the market and, now that it's crashed, they are changing the rules almost daily to try to keep plates spinning.

    One can only hope your US Dollars are as good as gold but, according to Zero Hedge, someone has cleaned out the Comex gold warehouses to the point where the gold contracts outstanding are clearly undeliverable.  

    Once again the culprit for the decline was JPM which saw not only a 122,124 ounces of Eligible gold be withdrawn, reducing the total by 13% to 750K ounces, but 8.9K ounces of registered gold was pushed into the Eligible category, in the process reducing total JPM registered gold by 45% overnight to a paltry 10,777 ounces: this amounts to only 335 kilograms of gold, or just 27 bricks of "good delivery" gold.

    Finally, since aggregate gold open interest continues to remaing consistent at just about 41 million ounces of gold, today's latest ongoing reduction in deliverable Comex gold means that as of yesterday's close, there was a record 252 ounces of gold paper claims to every gold physical ounce of currently available and deliverable gold.

    This is why we went long on gold in the 5% Portfolio last week. 


  8. Oh, by the way, in 2014, when the COMEX had to re-stock, gold shot up from $1,181 to $1,392 in Q1.  


  9. Phil / GLD = Oct 16 104/108 BCS ( 2.5) should we close out 1/2 the short leg?


  10. Good Morning all!

    The webinar replay is now up on YouTube, here:

    https://youtu.be/rSs3WuiG4cY


  11. Phil-You have been saying for a long time that you expect the Fed to raise in October which I think looks like a pretty great call. If they don't hike tomorrow and hint at October, what do you think will be the immediate reaction to that? Do markets relief  rally briefly on the news? Will it cause any move of the dollar?


  12. /CL even though there was a draw down of crude the total inventory was up 8.5 million barrels. Shouldn't this be bearish?


  13. Oil inventories a net build, disappointing after draw was expected from API data:

    • EIA Petroleum Inventories:
    • Crude -2.1M barrels vs. -0.2M consensus, +2.6M last week.
    • Gasoline +2.8M barrels vs. -0.9M consensus, +0.4M last week.
    • Distillates +3.1barrels  vs. +0.75M consensus, +1.0M last week.
    • Futures +2.18% to $45.54.

    Nice head fake to $46 but should come down from there – shortable below any 0.50 line with tight stops.  


  14. sure looks like someone doesn't want markets down today with the dollar action we are seeing


  15. "~~This is why we went long on gold in the 5% Portfolio last week."

    What does that say about ABX, now @ $6.50, as a punt?


  16. CPB – new all time high… because of K-Cups!?


  17. CPB – or more likely, super low cost of goods, and new Goldman 'valuation' of food companies. Looks like a muppet setup to me.


  18. The reporter on Bloomberg is saying that the oil inventory is indicating higher oil prices. Do they not look at the whole report? Are they so lazy that they will say that without really seeing that the total of commercial petroleum inventories rose by 8.5 million barrels and that in reality it is not a draw but a build. Not only that but domestic production INCREASED and it is not decreasing as they keep saying. Imports were down and yet there is still not a decrease in supply so it must be that demand is in the toilet. Seems to me that prices should go down at some point on this report. I am short oil and hoping we see prices back down under 44 at some point. I haven't been very good at forecasting this lately, so it sure would be nice to get it right again.


  19. /CL of course while I wrote that prices shot up over 46, so I obviously don't know squat!


  20. /RB- Gasoline inventories increased by 2.8 million barrels, yet price is up 4%, WTF? Phil since you agreed that oil was shortable, can you see any reason for this action? Did we miss something in this report?


  21. Phil – The BBC is probably your best bet (hope you can get it in the US – it should be BBC world).  There are some key video highlights as well as tweets.  JC wants to take the dramatics out of Parliament which might be a bit of a shame but if it stops the cost of living hell for people then it will be a good thing.

    http://www.bbc.co.uk/news/live/uk-politics-34263142


  22. GLD/Batman – Huh?  It's a $4 spread and it's at $2.50 with GLD at $107.18 a month ahead of time – why on Earth would we be doing anything other than waiting patiently?  

    Wow, that was an easy call!  

    /SI blasted through $14.50 this time, very nice gain there, too.  

    DMulligan  - 

    Futures/Phil;

    Are you staying away from the futures until Fed speak on Wednesday Phil?

    phil  

    Futures/DM – Not on purpose but it certainly hasn't had any easy set-ups lately (other than /YG at $1,000 or /SI when it pops back over $14.50). 

    Dollar/Tommy – Yep, that's how they play the game.  

    October/Craigs – I think we sell off no matter what.  Dollar may go down a bit but, as I noted earlier in the week – it's already baked in.

    Oil/Craigs – You have to let them have their head-fake, especially with the Dollar going down.  Anyway, I believe I attempted to explain that oil was pretty much unplayable here (in the dead middle of the range) last week BECAUSE it can be so easily manipulated between $42.50 and $47.50, didn't I?  Yes, I did, there was a visual aid and everything!

     In fact, it was essentially the same exact spot oil is in now.  Then it did this:

    The middle of the range is a TERRIBLE place to play oil – you can't have any conviction and you MUST use very tight stops if you insist on playing here.  Logic will not help you.  That being said, I'm happy to test $46.50 or $47 short and, by the time they get to $47.50 – I'll have a bit more conviction on the short side – especially if the Dollar stops falling. 

    ABX/ZZ – Didn't we just talk about them in the Webinar?  You know I love them and you can do a long-term inflation hedge by selling the 2018 $4 puts for 0.85 and buying the 2018 $4 calls for $3.45 and selling the Jan $7 calls for $0.75.  That's net $1.85 on the $3 spread that's $2.50 in the money to start and you have 2 years to roll the short calls if all goes well and you're already paying half price for the long calls if it doesn't. 

    So let's say you have $500,000 in cash.  You can promise to buy $40,000 of ABX by selling 100 of the puts and 100 of the spread give you at least $11,500 of upside which is a 2.5% hedge against a sliding Dollar.  If gold stays low, the Dollar stays strong and your cash is safe and if gold goes lower because the Dollar goes up 5% (to 100), then your buying power is up $25,000 on the cash and you can afford to own a little ABX betting on the recovery.  As with many of these plays – you can win both ways!  

    CPB/Scott – Low cost of ingredients, I think.  New rule of labeling sodium content in NY starts in Dec and that's not too good a trend for these guys. 

    Bloomberg/Craigs – Even worse, they just call a guy like me and ask what it means and a lot of those guys have their own agenda and spin the story.  You have no idea how many things I read and don't submit because they are BS.  I'm rooting for higher so we can do another USO play.  

    /RB/Craigs – More BS.  This is why I haven't been calling them.  Just an excuse to pump things up but we are coming into refinery maintenance season and that will cut production so I sure wouldn't be shorting gasoline this time of year.  StJ and I were just discussing that on Tues.  

    Thanks Malsg.  


  23. Volume on this pump up seems less than yesterday.



  24. AAPL paid $13.97B on $52.5B net last FY (26.6%), unless they are lying on their 10-k that's a lot of taxes paid, no?

    http://finance.yahoo.com/q/is?s=AAPL+Income+Statement&annual


  25. TWTR – doing a new 'cashtag' thing with Square. Hoping the election mania will induce people to use the cashtag to make donations to candidates/causes "in the moment" and be a proof of concept. Will it work? (I'd be amazed…) If it fails, will TWTR take another dive?


  26. LL having a nice day.  


  27.  This mornings market action a repeat of yesterday.


  28. PCL – well..ZOOM!  


  29. PCL – http://www.bizjournals.com/seattle/morning_call/2015/09/seattle-companies-launch-1-billion-timber-fund-for.html 

    “It’s new to have public pensions partner with a publicly traded timber company,” said Bob Ratcliffe, Silver Creek managing director. “What pensions like about timber is that it isn’t correlated to other investments, it produces a very consistent cash flow and it’s a good hedge against inflation. What we tried to create here was something more direct, with lower fees and higher performance.”


  30. F – someone buying back in? Who?


  31. Parliament/Malsg – I love it!  Wish we did this – it would make it so much harder to have dumb leaders.

    AAPL/BDC – Apparently that's not including money they keep off-shore.  These tax loopholes are super-complex.  In fact, check out WMT's:

    walmart-TH-chart-for-web

    It's like a huge, global shell game where regulators have to chase money around which is wired by armies of expert tax lawyers and accountants who exploit the loopholes the lobbyists paid to have inserted in the rulebook.

    PCL/Scott – That's the only way they can pop the stock – change the nature of the company.  Of course they are taking short-term money but selling off primary assets – doesn't make me like them more but a nice short-term cash fix.  

    The joint venture, Twin Creeks Timber LLC, will have the objective of growing the portfolio’s valuation to about $1 billion through acquisitions from third parties. Plum Creek will manage the holdings and will also sell timberlands valued at about $420 million to Twin Creeks.

     

    “What Plum Creek is trying to do is to tap into some of these alternative sources of capital,” Steven Chercover, an analyst with DA Davidson & Co, said in a telephone interview from Portland. “It’s just Plum Creek being innovative.”

    Silver Creek Capital Management will act as the fund manager with Plum Creek owning a 25 percent in Twin Creeks. Institutional investors will own the rest, the statement said.

    PCL lists $4Bn in assets so $420M is 10% of this $6.7Bn companies assets and they will no longer get revenues from those assets going forward.  Maybe they have an opportunity to use that cash and replenish the assets – I don't see any particular plan for the cash.  

    F/Scott – Too cheap under $15.

    Submitted on 2015/08/27 at 9:52 am

    F/LTP, DC – Yes to buying back the October $15 calls at 0.10 in the LTP but, with F at $13.36, the only move I want to make is to roll the 2017 $15 calls (0.90) to the $13 calls ($1.70) at 0.80 to go $2 more in the money is quite reasonable and, if F goes lower, THEN we can sell Nov $13 calls (now 0.99) for about 0.80 and the roll is paid for.  ?


  32. These VXX short calls looking good now! Up 34% in 3 weeks… Slightly ahead of inflation even if they raise rates. I unloaded some yesterday as they were up more than that and to get ready for the next spike down that is sure to come!



  33. It is good TV on a Wednesday – but the US gave me Alpha House so I am a happy camper!


  34. Interesting Scott:

    Embedded image permalink

    Obama doing a one-man show in stark comparison to Cameron's riot.

    VXX/StJ – Amazing!  

    Obama essentially saying GOP childishness is the biggest threat facing our nation, not Russia, China, etc. I can't believe we're actually talking about a Government shutdown again (Oct 1st!).  

    The 6 issues that could cause a government shutdown

    Suddenly, abortion is back in the political debate in a big way. A group of Republicans want to pass a budget without funding for Planned Parenthood, but that's a major non-starter for Democrats, who have promised to hold up budget proceedings in the Senate until Planned Parenthood gets funded. President Obama has also said he'll veto any budget that doesn't have money for Planned Parenthood.

     Most everyone in Washington agrees that the automatic spending cuts (a.k.a. the sequester) that were implemented after a 2012 budget debate need to be replaced with actual spending policy. But there are major sticking points between the White House and congressional Republicans over how much to spend on military and domestic programs. Democrats want equal increases to military and domestic spending, while Republicans just want to increase military spending.

    The Iran deal could end up being a negotiating chip in the budget debate much like Planned Parenthood. If there's enough will, opponents could try to cut off State Department funding to implement the deal, theorizes prominent budget analyst Stan Collender.

    The debate over the Import-Export Bank is really about businesses' role in government, and for now those who want government out of the free market appear to have won. But bank supporters include Democrats and pro-business Republicans — a potentially powerful alliance — that could make the Export-Import Bank yet another sticking point in the budget debate.

     The Highway Trust Fund is tied up with a number of potentially volatile debates. Within the Senate's plan to extend it for six more years (only three of which identify funding sources) is a measure to revive the Export-Import Bank. The fund also opens the door to a tax debate and a debate on federal government's role in paying for transportation projects. In short: Perfect shutdown material.


  35. Mkucstars1,

    "I'm in agreement with all your points, but Phil… this is not capitalism. There are no free markets, and the problem is bad enough without embelishment. If it was, banks would have failed, assets would have been bought at market prices and we would have had a real recovery with real market interest rates. They must have awesome steel toed boots, because the can is huge and the road is becoming an uphill battle yet it still moves… the day of reckoning is coming, the cliff is just ahead of us. It will not be a "soft" landing."

    SPOT ON, YOU GET IT. As I have Nattered many a time in many a missive. The capital has been perverted, diverted and inverted.  Nature was not allowed to take its course. Adam Smiths hand was severed through massive intervention.  The patient has been in an economic coma due to QEZIRPIOER. There never was a recovery and what we have left is a ZOMBIE economy with no little hope of recovery. There is something in this more than natural….

    Rather than going to public auction and providing real people with needed affordable housing, the tax payer bailed out housing ghost inventory, which most counties WAIVED the bulk of property taxes for the LLC holding companies the banksters set up, and after all the WRITEDOWNS was sold to hedge funds for pennies on the dollar. So they can rent them and collect SECTION 8 funding. 3/2/2 in LA County $2400 a MONTH, raising rents in all the other hoods, while limiting the market float and artificially manipulating the housing prices back up and resell them.  Not even a reach around on that one. 

    The TRADE in the form of currency (dollars) and debt (bonds) IS OUR economy and primary export. How do you think the budget and trade imbalances get financed? The largess of others? Nobody makes more money out of thin air than "they" do with financialism. "They" are the masters of smoke and mirrors; M&A, leveraged buyouts, junk bonds, arbitrage, securitization; all with no tangible process or end product needed.
     
    For lack of providing a traditional "retain and reinvest" strategy, which would be "value creation", our corporate (outsourcing to labor at the margin), government (corrupt gridlock and kick the can deficit budgets) and monetary (serial asset bubbles) policies seem to provide for a "value extraction" strategy.
     
    Gecko's mantra "greed is good" permeates this strategy, based upon the worship of promised (P/E), unrealized (EPS) or false profits. And the pun is well intended, remember? Debt pulls future profits forward into current cash flows, mortgaging the serf's and their childrens future's. We dont need to raise taxes, that's your FUTURES tax baby.

    What is coming? At the moment, global contractionary economic trajectory seems headed not for an explosion, but an implosion in Q4. Lacking a durable economic base to fall back on, which was outsourced to labor at the margin, and until real jobs with decent wages, not service sector McJobs, are created domestically, there shall be no meaningful recovery and all else is an illusory perpetuation of the status quo, as in smoke and mirrors.  Please do click on the link, like I tell the MRS, I promise it will be quickie… 

    https://youtu.be/3bQnxlHZsjY


  36. Phil,

    Now that I feel better. Again, the two up started at 1867, appears to be a 1-5 and must breach 1993.48 to complete.  This should occur at 16.18034 trading days after 10AM on Aug 24th, which would be, right about now……….


  37. How much more helium can this market balloon hold?


  38. 1993.60 at 12:36PM


  39. denlundy:  I don't see your point.  The market was over 18,000 three weeks ago, and the Fed has made it clear that the rate increase is once-and-done, so the question is really, why won't it go back to 18,000+ from it's current 16,700, no?


  40. SCO options aren't very liquid.  But had you been bullish on oil, you could have bought the SCO Sept 79 puts yesterday for .10.  Today they are up 1600%.  Not a bad one day profit. :-)


  41. Phil/Parliament   We can only wish…..


  42. AAPL has been trading in a very narrow range after gapping up Monday morning.  Watching AAPL today as a tell on which way this market might head next.  If the stock strengthens here, I think it could propel the market higher.  Maybe, maybe not.


  43. Phil,

    And NO, you do not count the day of occurrence as in the 24th, that is day ZERO.  Fibonacci was precise. And NO I don't believe ANY of this voodoo bullshit, but I know a guy who could make your head spin with differential equations and calculus that swears by it.  

    I call him Captain Numerica and I have seen him make market timing calls and trades based upon them that would blow your mind.  On too many occasions to count or remember, with my jaw still dropping, after he places a sell or buy order within minutes of the market turning in a forceful way…and he told me sometimes DAYS IN ADVANCE it was going to happen… How did you know?  I didn't, the math told me. Consistently, I would check other macro events, sometimes a report or news event coincided with his market call, sometimes nothing,  NO SHIT. You can't make this stuff up.  

    One day this guy asks me, why do you think those numbers keep popping up in everything (phi and little phi). What do you mean everything? All of science, physics, chemistry and the math used to prove it.  I just tell him well, if your in a boat and you fall out, what are you going to hit?  He says water.  I tell him, unless your boat is in dry dock or on the trailer, you would be correct. And if I was the master programmer, and I used many similar algos in my construct? He just grinned and howled… yeah NEO.

    Now lets see what it does until the Fed announcement tomorrow.at 2PM EST.  My guess, sideways churn.


  44. ZeroZero 

    When I see data like Tuesday’s worse than weak economic data (Retail Sales, Empire State Mfg Survey, Industrial Production & Business Inventories) and see the “bad news is good” pimps rushing to pump the tape on low volume, I expect the hot air to blow off at some point. 18,000 is unsustainable. This interest rate madness is going to catch up to us. Can Japan support a debt load that’s 250% of GDP and growing?

    I don’t believe this time is different historically, even given we’ve not seen this type of central bank manipulation ever. Contrary, I believe the bankster jugglers are going to mishandle some of the bowling pins that result in a massacre between now and October month end.


  45. From Chief Algo Developer Brad Matheny at Algotrades.net:

    https://image-store.slidesharecdn.com/3f68aab0-397c-4c0c-a886-be4455fdf163-original.png


  46. Ghost inventory/Naybob – Very good point on that.  We never let the free market act on the most significant part of our economy and still, 7 years later, haven't had any proper price discovery on housing.  Great rant!   I like that 1,993.48 – it's good to have the target down to 2 decimal places. cheeky

    I believe that was 1,983.60 though…

    18,000/ZZ – Too many macro global issues have reared their ugly head since Dow 18,000.  Shanghai began falling mid-June (now down 35%) and we eventually followed and Nikkei lagged but fell 15% in Aug and DAX was our leader, beginning a 20% drop from 12,500 in April.  

     

     

    The Dow isn't even down 10% but the others haven't recovered from 20% drops.  It's much easier for the Dow to join them down there than it is for the other major markets to come back to where the Dow is. 

    SCO/Albo – That's my go-to play for shorting.  UCO is the ultra-long – up the exact same 9.17% at the moment that SCO is down.  

    AAPL/Albo – Well it's a major part of the Dow, S&P and the Nasdaq so it has a ridiculously outsized influence on market direction now.  It's almost too big to fail as a significant drop in AAPL would take the whole market with it for sure.  

    Algos/Naybob – That's the basis of our 5% Rule as well – we're playing for the algo moves. 

    Nice rejection on oil now.  See, it works perfectly – just takes a while.  

    Brent rejected right at the 5% line and does the obligatory 1% weak retrace.

    Gasoline harshly rejected at $1.40 after a brief move over:

    And now nat gas has a bad day (2.5%, of course):

    And what Den said!  


  47. Phil   If I want to GAMBLE on oil going lower in the next 6 months,should I buy puts on USO ,SCO or ?THX


  48. Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said he hopes Donald Trump’s popularity indicates voters are looking for someone willing to negotiate across the aisle. That doesn’t mean he wants it to be Trump.


  49. Take a breath and consider this: Deaths caused by outdoor air pollution are already shockingly high, and they’re expected to keep rising. That’s despite efforts to clean up the world’s factories, roads, and energy supplies.


  50. Some perpetual bonds are more eternal than others.


  51. U.S. Census Bureau data out Wednesday underscore just how lousy the recovery has been if you aren’t rich.


  52. Oil rose the most this month after a government report showed U.S. crude inventories declined as refineries bolstered operating rates.


  53. Tesla Motors Inc. has built a cult following in the U.S. for its high-powered electric sports cars. In Europe’s biggest car market, consumers are proving harder to convince.


  54. Apple Inc. delayed the first major software update for Apple Watch because of a bug it discovered in the operating system that couldn’t be fixed before Wednesday’s planned release.


  55. The share of people without health insurance in the U.S. fell to 10.4 percent last year as Obamacare’s expansion of public and private coverage programs took effect, the Census Bureau said Wednesday.


  56. Confidence among U.S. homebuilders rose in September to the highest level in almost a decade, signaling momentum in residential real estate will support growth in the second half of 2015.


  57. Prices paid by American households declined in August as cheaper gasoline helped keep inflation below the objective of Federal Reserve policy makers.


  58. Standard & Poor’s cut Japan’s long-term credit rating one level to A+, saying it sees little chance of the Abe government’s strategy turning around the poor outlook for economic growth and inflation over the next few years.


  59. FedEx Corp., considered a bellwether for the U.S. economy because of the range of products it moves, cut its full-year profit forecast just three months into the company’s new fiscal year.


  60. Citigroup Inc. Chief Financial Officer John Gerspach said third-quarter trading revenue will decline from a year earlier amid increased volatility.


  61. Hyperloop Technologies Inc., a startup trying to develop Elon Musk’s idea for a high-speed transportation system, named former Cisco Systems Inc. co-president Rob Lloyd as chief executive officer.


  62. Goldman Sachs Group Inc. says financial markets are vulnerable because nobody can agree on what the Federal Reserve will do. Treasuries whipped around amid the debate.


  63. Any way you slice it, a combination of Anheuser-Busch InBev NV and SABMiller Plc would mean the big get bigger.


  64. The Federal Reserve will have to confront the costs of its massive balance-sheet expansion when policy makers raise interest rates.


  65. The U.S. is readying measures to show China that computer hacking for economic advantage won’t be tolerated, President Barack Obama said, for the first time publicly acknowledging the possibility of imposing sanctions and exposing a serious point of conflict between the world’s two largest economies.


  66. It’s been a brutal year for just about everything in the world of emerging markets and commodities. Copper, oil, nickel, the Turkish lira, the Malaysian ringgit, and so on have all been getting slammed ahead of a potential rate hike in the U.S. and the slowdown in China.


  67. The surest path to political power, at least in Australia and New Zealand, may be to spend most of your working life avoiding it. Preferably at an investment bank.


  68. Oil/490 – SCO is ultra SHORT, not long so if you buy a put, you are expecting oil to go up and SCO to go down.  

    I'm looking at the SCO Jan $70s at $21.50 and the short $100s at $10.75 for net $10.75 on the $30 spread that's on the money.  You get all the benefit of a move up and a bit of a buffer on the way down.  On a sharp move up (oil back to the $30s) you can sell $140 calls (now $5) for maybe $10+ and then you have no cost basis (0.75) and the only way you get burned is SCO over $170, which is up 100% which would be oil down 50% at $23ish (super not likely).  Even then you can roll. 

     

     


  69. Index hedge/Phil – Today you said you upped the index hedges into yesterday's silly rally".  I don't have any index hedges yet because I am not that active, what would you recommend at this point to protect around 10K in long exposure?  -Thanks


  70. Phil, it was 1993.60 at 12:36PM today…breaching 1993.48 which was hit on Aug 28th

    ZeroZero,

    "I believe the bankster jugglers are going to mishandle some of the bowling pins that result in a massacre between now and October month end."

    Bingo. Quarter end repo should spike week of Sept 28th, quarterly window dressing you know and there is a dearth of on the run short term collateral AKA HQLA. Concomitant with a seasonal downturn in monetary flows, albeit not as large as what is coming in DEC. the synergism sets the stage for early Oct stock market liquidity issues and the consequences thereof. And if you want to peek a copy of the early edition…

    on Aug 6th I posted an SP500 chart overlaying the net large commercial positions in ED eurodollar futures, sliding the ED futures forward 52 weeks gives one a pretty good indication of where the SP500 is going.  The initial dip and rebound are just about over, the market will react to the upside on the FED doing nothing, until Sept 22nd and that is right about the time the quarter ending window dressing starts. Then you can see where it goes from there: http://seekingalpha.com/article/3407786-contractions-in-money-flows-and-market-liquidity-part-6

    IMHO on OIL, it will get a dead cat bounce along with the SP500 in anticipation of tomorrow's NON event.  If they raise, down we go, if they don't a small skip up, then down we go. Gravity will not be defeated.  In any event, mid DEC seasonal downturn in monetary flows concomitant with a flight to safety in 10 yr UST's from equities, and a dearth of on the run short term UST's, market liquidity is going to get squeezed.  All of the above, despite China and other EM's liquidating longer duration UST's to prop their carry trades gone bad, will cause a shortage of dollars, the dollar spikes, a flash crash in commodities results and oil sees its bottom revisiting $35 conservatively, could land in the $20's, but not for long, should stabilize back in the $40-55 area, where it has been historically on average.

    For 140 years, oil prices averaged $30/bbl, since 1946 $42/bbl; since 1980 $53/bbl; since 2000 $64.50. From 2010-2015, a 4Mbpd increase in North American shale oil production caused the price of crude to fall from $120/bbl to $35/bbl without a concomitant economic decline.  With a concomitant economic decline, $25 is not imaginary in the above flash crash scenario.  

    Further,Its called GLOBAL RECESSION and really a depression since we never recovered, confirmed in the US on Jan 30th when Q4 advance GDP is NEGATIVE and Q3 is revised down.  Take it will a grain of salt, as I'm just an idiot, albeit a useful one who on occasion has been known to get a glimpse of the early edition and McFly's Almanac.  And no my name is not Biff.  


  71. Naybob,

    If we get a rate decision the market likes, at what number does the rally stop, and for how many days?


  72. Phil / Port Updates – i saw the butterfly email – did you send the other one as well?


  73. Hedge/HWM – Well $10,000 is not a lot of long exposure so it depends how much of your portfolio is in cash or shorts.  What's important is to have a handle on what you expect to lose on a 10% market drop and have a hedge that would pay you back about half of that for a reasonable fee.  So let's say you would lose $1,000 on a 10% drop – then you want to find a hedge that pays you back $500. 

    Then there's a question of time-frame but let's say between now and Jan and I see the SDS Jan $21s are $2.20 and the $25s can be sold for $1.20 so net $1 on the $5 spread is $100 per contract and it pays back $500 at $25, which would be a 20% move up in SDS ($21.85) which would be caused by a 10% drop in the S&P (as it's a 2x ETF).  

    So your cost of insuring $10,000 against a $1,000 loss (since it's cheap) between now and Jan would be $200.  Now, there's no point in having a hedge unless your $10,000 will be making some money for you in a flat or up market.  Hopefully you are being the house and selling premium and 3 months flat or up will make you $500-1,000 on that same $10,000 so the $200 will cost you some of the gains but not just be money thrown down the toilet in and up market.  

    1,993/Naybob – Ah, so it was.  You are correct sir!  I keep hoping we'll escape the inevitable but it does look kind of inevitable.  

    Portfolios/Batman – Was just going to get to the STP next.


  74. Oil prices / Naybob – Do you have production cost averages to go along with the prices? I imagine that on average they have gone up as well given that the low hanging fruits get collected first. Deep sea drilling is quite expensive as opposed to poking holes in the Arabian peninsula. I am just wondering if prices have actually kept up with the costs.


  75. Phil HOV…are you still hating it? I have 2017 4 Puts sold at 1.40 (now 2.40);  So net basis would be 2.60.

    Instead of capitulating I was thinking of rolling down when the 2018s come out. 2018 2.50s ought to be about 1.20.

    So I could then be in it 2x at 1.80 net.  (New 2.50  strike less the original 1.40 premium divided by 2, since its spread over twice the shares.)

     

    Or do you just hate it down here.


  76. As promised, here's the Short-Term Portfolio (STP) Update:

    • FAS – I figure we may as well stay bullish on the Financials into the Fed.  This is the leftover leg of our FAS Money spread, which we will, of course, rebuild but probably with 2018 backstops.  
    • SDS – We just did those, down already.  
    • SQQQ – Teeny, tiny chance the Nas falls hard and we get more than 0.05.  
    • TZA – We sold those to help pay for the Jan spread and we're way over-covered so I'm good with them for now.  
    • BWLD – Still having trouble at $200 so I still like the puts.

    GLL – I'm confident those will expire worthless (ultra-short gold would only hurt us under $1,000)

    • TSLA – Waiting to collect that last $1.29 and what a relaxing way to make $4,400 – these were never in trouble.
    • SQQQ – These are well in the money yet the net shows $15,500 though, at $23, we'd close at $25,000 so I love these for protection with another potential $25,000 on top of that at $30 (a 10% drop on the Nas).  We don't really need these if we're not going to re-up on AAPL ahead of earnings (10/20ish). 
    • TZA – We sold the short calls against them so nice $3,750 off our $6,500 spread and I think we did that before as well so probably these are all paid for and, if not, then still very cheap for $35,000 worth of protection that's in the money.
    • FXP – So deep in the money we're just waiting for it to expire.  The 20 $25/34 spreads pay $18,000 in Dec but currently priced at just $9,100 (by the broker, we could probably get $12,000 to sell them properly).  
    • LL – I forgot I was so bullish I wanted to keep these.  Nice move today, let's hope it continues.  
    • SLW – We're just hoping for less damage as silver recovers.  We already took a bigger position in the LTP.

    Gosh, you can see why we're up so much in this portfolio – some really epic calls here!  cool

    That was an easy review – remind me to always have just a dozen positions…


  77. Phil, Unfortunately, I'm still long some CHK and a few other medium sized MLPs with good hedging strategies but still being treated as if they're going out of business.  Would like to hedge against the possibility that this might actually happen.  If margin is not an issue, what do you think of just selling the SCO Jan 70 puts and the Jan 100 calls ?


  78. I acknowledge the rationality of the foregoing arguments as to why the market can't really go much higher.  But I am reminded that the market can stay irrational longer than you can remain solvent, and this cuts in both directions, perhaps against short positions in this case.  The psychology of the last five years of gains leaves a lasting impression on investors, more so, I would wager [and am wagering] that this conditioning will override caution, however arithmetically justifiable, through the end of the year.  Apple will provide the touchstone, however tenuous the argument for continuing gains in the market as a whole.  It will take time and blood for equity investors to accept sub-2% debt rates on anything under a @ 7 year commitment.

    Of course, there will be blood.  But that's what makes a market.  Bonne chance, gents.


  79. Fed guess – Yellen either raises tomorrow, or says "not yet, but will in October" is the prevailing sense. Either way, the VIX collapses as everyone will "know" and your long calls and puts will go worthless while your short calls and puts will "pay off."  Stocks won't move much either way except for some intraday volatility. Who sees anything different through end of this week?


  80. Have owned UA now for some time.  Certainly can't justify the multiple, but will keep holding the stock.  Good video with CEO Kevin Plank.

    http://finance.yahoo.com/video/under-armour-forecasts-7-5b-174100383.html


  81. The markets won't get help from these people:

    http://www.motherjones.com/kevin-drum/2015/09/poverty-still-winning-war-poverty

    Here's the nutshell version: Since 1970, thanks to Social Security, we've made steady progress in reducing elderly poverty. Among all other age groups, we've made no progress at all. In fact, poverty has increased. These numbers might look a little different if you use a different measure of poverty, but not by much. If you're under 65, it's safe to say that we fought a war against poverty, and poverty won.

    Thankfully we have not gotten rid of Social Security yet. How much worse would we be without that! Now on to minimum wage…


  82. Tough to raise rates:

    http://www.washingtonpost.com/news/wonkblog/wp/2015/09/16/the-federal-reserve-is-trying-to-do-what-nobody-else-has-been-able-to-do/

    Remember, zero rates themselves mean that the economy probably isn't getting the stimulus it needs today. But by all-but-promising to end zero rates before the economy is ready for them to end, central banks are saying that it won't get the stimulus it needs tomorrow, either. That only slows down an already slowed-down economy even more, which, in turn, keeps rates low—as in zero. Now, there's a chance that the U.S. economy, with its steady 200,000 jobs-a-month growth, is strong enough to stay out of this trap. But there's also a chance that the U.S. economy, with its well below target 1.2 percent core inflation, isn't. Even worse, neither wages nor inflation have increased at all the past year. Raising rates to head off inflationary pressure you think will be there but isn't now is, as other countries have shown, a risky thing to do when rates are zero.


  83. zerozero  Round 1 today goes to you and irrationality.


  84. Enfilade,

    "If we get a rate decision the market likes, at what number does the rally stop, and for how many days?"

    Cannot predict now. It could jump till around the 22nd when window dressing starts it could run up till the 29th, if theres enough monetary flows even the 6th .  Tomorrow's H.3 release will give some clues.  Ask again later. Phil, stop laughing and consult your eight ball.

    SJL,

    Production costs really soared since 2000.  However, I believe there have already been 10-15% declines in 2015 and if $45 is persistent, then 30% declines are not out of the question. Beyond 40% won't happen, it will be shut in time. Remember, production costs are lifting costs usually 12-17bbl for majors, OPEC 5-10bbl. Breakeven is much higher as it considers up down and middle stream costs.  Cash costs or shut in costs are the bottom line.  I have been looking at total costs and deducting depreciation, just like a good underwriter should know, on paper their paupers and thats hidden cashflow.  The bulk of the shale (tight oil) actual costs are between $20-$45/bbl, some are $10. Most everyone in oil has cash costs under $35.  Some oil sands and shale producers  are over this number and when their hedges run out, if Daddy Warbucks says no, they will be absorbed.  There's going to be a consolidation period, from which the bigger fish and more efficient fish will survive. 


  85. StJ,

    And thats why the Fed could raise tomorrow and again in Dec.  So that when they are "surprised" on Jan 30th by negative GDP, they can then lower without going negative.  When your out of ammo, who you gonna call?


  86. TAP – jumping 17% on news that BUD is interested in buying SBMRY. was it really so undervalued before this announcement? Good grief.


  87. LOL – and we touched the STP less than we touched the Butterfly Portfolio!  

    HOV/Rexx – I never hate them.  I'm annoyed that they stay so cheap but this is one of the stocks I consider ridiculously undervalued.  Unlike a $1Bn "unicorn" stock that has never actually made money, HOV actually made $300M last year yet is priced at $285M – that's a p/e of 1.  This year they will lose a little (maybe $60M) but they have $240M in the bank and they've added $300M to land inventory, so they are gearing up for some building.  

    Clearly very few investors are willing to give these 3rd generation family builders the benefit of the doubt but, as I said, they made more money than their market cap last year so I'm inclined to stay bullish.  

    We are waiting for 2018s to come out for an LTP position but people who are in a hurry can sell the 2017 $2 puts for 0.85 and buy the $1 calls for $1.40 and sell the $2.50 calls for 0.60 and then you have an 0.05 credit on the $1.50 spread.  Worst case is you own them at net $1.95 vs $1.55 return at $2.50 or better.  

    The Street.com – U Jin Lee – September 9, 2015

    http://www.thestreet.com/story/13281419/1/hovnanian-enterprises-hov-stock-tumbles-on-earnings-miss.html?puc=yahoo&cm_ven=YAHOO

    Seeking Alpha – Stephan Alpher – September 9, 2015

    http://seekingalpha.com/news/2768256-hovnanian-slumps-after-disappointing-quarter

    24/7 Wall St. – Paul Ausick – August 18, 2015

    http://finance.yahoo.com/news/homebuilder-hovnanian-soars-housing-market-171859248.html

    CHK/Albo – Yeah, I just don't like them anymore.  I don't like a $30 short strangle on SCO either as it JUST dropped $50 in a week and you're giving it 3 months to hopefully (not a valid trading strategy) stay in your range.  I think if you want to hedge, just hedge OIH or some ETF that's closer to your sector or do the oil short play.


  88. Big push into the close, we're sure looking pretty for Janet tomorrow.  


  89. Naybob – Thanks for the information on oil prices. It does confirm what I saw about the oil sands though. I understand that it's tough times out there in Canada now!

    As far as the Fed is concerned, it does look like the perfect scenario – it happened in Europe exactly like that. They though that they could get away with raising rates which boosted the currency and then killed the economy. Unless everybody will raise at the same time, currency fluctuations will have an impact that will be difficult to overcome for the first one out of the gate… Of course zero interest rates all the time would be OK if we would guarantee low inflation I guess! And if the benefits of low rates could be spread around, not just to the bankers!


  90. VXX / Phil – I know I harp on that much but really it would almost make sense to just play that instrument over and over. How often do you have a stock where you know exactly where it will be 2 years from now? At least under what level it will be so that you can sell calls. And it's stupidly margin efficient – the last set I sold for $7.30 required about $3 of margin and I bought it back for $4.00 so more than 100% return on margin in less than 10 days! It looks like I will return 10% on my portfolio using less than 10% of my available margin at any time during the year just with VXX! Sure margin requirements might increase. But if you sell on VIX spikes, you already absorb a big part of the sting.

    I really have to do some more backtesting to see how aggressive one can be to improve the returns but once that's done, I might start a portfolio to track here!


  91. stj// looking forward to the vxx trading portfolio and trading lessons.


  92. Speaking of backtesting, just ran a quick one in my charting software on VXX. Only going short and using an ATR system. This one keeps you slightly ahead of inflation since 2010 (in Zimbabwe):

    Now, past performances do not guarantee future results but it's pretty profitable year after year. And it's not using options (I can't simulate that). But shorting calls using the signals generated by the system should work pretty well if you have the available margin.


  93. Backtesting/Stj – heard a comment the other day that backtests fail to give valid info (usually overstate positive returns) due to survivorship bias. Do you know if your backtest data source includes all data including companies that no longer exist, merged, etc?


  94. Phil / CIM – Thinking the run here is getting tired.  I'm doing the wash rinse thing ( up 800 + dividend)

    My Current position:

    Long 1K Shares @ 14.

    Short 10X Mar 18  14 puts ( .94)

    Looking to go sell  10X Dec 14 Calls @ (.50) 

    thoughts?


  95. Backtesting – not sure how that bias would apply to a single ticker test, but indexes, for sure.


  96. /CL- I could use some help from the collective wisdom here. I took a shot earlier at shorting after inventories showed am 8.5 million barrel rise in total petroleum product inventories when Phil mentioned it. Of course we know the opposite has happened and oil is up big today because of the draw in just crude supply. I know Phil will say it was a no play as he wrote a bit later, but it was too late for me. So, would it be wise to look for a drop tonight/tomorrow or am I going to get hurt further? I really would like to try and get this right and not hold a short if we are going to $49, but I would hate to give up now if the damn thing is going to come back to under $46. So, does anyone think today's action is a fake before another drop based on the oversupply or are we looking at a further run up on rates and the general oil situation. I keep thinking we have further to fall, but I keep seeming to time it wrong, so what say you?


  97. Backtesting / Scott – The biggest problem with backtesting actually if curve-fitting since the system will always pick the best possible system which you cannot be sure will work going forward. In this case, I evaluated over 6000 possible scenarios and picked the best one. On the other hand, it's also possible to enhance the results of the backtests with smart stops. I can also optimize for that but not really needed for VXX! 

    Actually working with indices might be better than individual stocks because you don't have to worry about earnings move that might compromise your results. Sure, some components disappear and there are mergers but in the long run it all even out somewhat. I still would not rely solely on backtesting to validate a strategy, you have to go over the results and analyze the possible trades. And finally, even a system that is right 50% of the time will be very profitable if you sell premium as long as you manage the stops properly and scale in and out of positions as needed.


  98. One more thing, my software allows me to do walk-forward analysis where you can test a system going forward and optimizing it on a regular basis. I didn't do that for the analysis above but once again, VXX is just such an easy target that could almost shoot dart at a calendar and sell calls on these dates and still make money. A good system will only improve on how much money you will make.


  99. zerozero    More "bad news" to push the market higher  -  Hewlett-Packard is planning to slash another 25,000 to 30,000 jobs to put its new enterprise business on a stronger footing as a standalone company.


  100. Craigs- I also am short in UCO & have been trying to extricate myself. After Labor day and the surplus I thought it would go down again. Hadn't thought about fall "maintenance" filling this balloon, but since it is so inflated I am presuming at some point it will go down, fast. I'm beginning to think that things are so manipulated globally that it maybe wise to go long on a few stocks just to catch that move up in the short term. My account looks mighty sad with these shorts dragging it down every day. I know we are in protection mode  but the longs I have aren't moving except for gld. No one seems to care about the macro anymore, or else how can this market soar with such horrible stats? Defies all logic so swing with the trend I guess.


  101. Reading all the financial experts advising against the Fed raising interest rates tomorrow you would think a raise would lead to the destruction of the planet. All the heavy weights have been called on – Larry Summers, Morgan Stanley interest rate guru Matthew Hornbach , Goldman's Jan Hatzius and Zach Pandl, Mohamed A. El-Erian,  Lloyd Bankfein, etc

    I guess if someone  in the financal industry came out in favor of a raise they would be treated as if they had a contagious variety of malaria that was distorting their mind.


  102. In a note to clients this week, Joe LaVorgna at Deutsche Bank moved his expectations for a Fed rate hike back to maybe the October or December meeting.

    And basically, LaVorgna's argument was that the Fed won't act until the market gives them permission, writing:

    "Most importantly, the financial markets have to be discounting a reasonably high probability of an interest rate hike. In other words, the Fed will not surprise the financial markets with a tightening in policy."

    In other words Janet, sit tight until we give you the nod.


  103. Texas/1020 – Moral of the story:  Don't live in Texas!  How disgusting.  I hope someone sues the crap out of the school.  That's the kind of thing that can actually scar someone for life – you don't get redos when you have the police cuffing a kid – it's an experience he will live with forever and for what?  

    Of course, what do you expect when the party in power spends so much of it's time vilifying all brown skins, which is great because they're not allowed to vilify blacks anymore but "you know what they mean" when they say "them".  

    Texas: Most Racist States In the U.S. | TheTopTens.com

    Image result for GOP racism

    VXX/StJ – It's a fantastic play.  I don't talk about it because you do!  Perhaps you can do a set-up on the next spike for the 5% Portfolio (up net 9.8% today!). 

    CIM/Batman –  We have almost the same position in the LTP and we haven't sold calls yet because we've been waiting for a breakout.  At $14.15, if we can sell the Dec $15 calls for 0.50, that's $500 right in our pocket, which is as much as the dividend so, if called away at $15, we make 0.50 for the call, 0.50 for the dividend an 0.85 for the stock, which is 13% in 90 days – how could we possibly not be satisfied with that?  It is our JOB to sell premium – as much as we can, whenever we can.  If we remember that and DO OUR JOB, we will make more money or, failing that, lose less (just as good).

    The puts are a bit aggressive, by the way, unless you REALLY want to own 1,000 more at $13.06 – then fine.  Just keep in mind that we have $14,000 in so an assignment at $13,060 does very little to lower our basis which means an actual 20% drop to $10ish would put you out of position to sell calls (becuase if you sell the $10s or $11s you get called away with no profit) so, unless you would be HAPPY to have 1,000 more assigned to you at $13.06 and average $13.53 on 2,000 shares when the stock is at $10 and then you would have to sell 20 $10 puts for $1(ish) and $10 calls for $1(ish) to drop your basis to $11.53/10.76 at which point another 20% drop to $8 would put you in 4,000 shares at $10.76.  If that's not your goal, then you need to rethink those aggressive put sales.

    /CL/Craigs – Geez, after all that you were short and didn't stop out?  Here's that chart again:

    Where is oil now?  $47.13 

    Has anything happened to make us rethink our lines?  Nope.  Fed skip tomorrow may knock down the Dollar and spike oil but EVERY WEEK it tends to go up into the inventory report and stay up until the Nat gas report in case that too indicates demand growth except in weeks near the rollover IF they have too many barrels and NO, this is not set in stone because it all depends on dozens of other factors each week.  

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Oct'15 45.16 47.35 44.82 47.13 17:15
    Sep 16

    47.15
    2.56 396264 44.59 139701 Call Put
    Nov'15 45.53 47.73 45.20 47.51 17:15
    Sep 16

    47.51
    2.51 222891 45.00 436629 Call Put
    Dec'15 46.05 48.22 45.75 47.99 17:15
    Sep 16

    47.97
    2.44 133671 45.53 272768 Call Put
    Jan'16 46.50 48.79 46.35 48.60 17:15
    Sep 16

    48.50
    2.36 43765 46.14 106193 Call Put
    Feb'16 47.11 49.35 47.11 49.05 17:15
    Sep 16

    49.04
    2.28 22996 46.76 70742 Call Put

    At the moment, there are 139Mb left to roll and contracts close Monday or Tues next week so 3-4 days left to cut 120Mb and if we assume 4 days, they can do that pretty easily but there's still going to be pressure so I would be inclined to stay short but not if I couldn't afford to DD at $47.50 and again at $50 because then the average (from $46) would be $46.75 and then $48.37 on 4x and, since the run from $45 to $50 would be $5 it's 10% with a 10% overshoot and $50 is tough to crack so a 20% retrace of the $5 run is $1 and back to $49 so at least there's a good chance of that and the loss would be 4x $630 if it doesn't go any lower.

    So that's the likely alternative if you choose not to take the loss now and plan to stick with it but it would have been SO MUCH EASIER if you had used tight stops or waited until we got to where we're willing to short with a bit of conviction (around here, actually).  

    And watch our for Brent because, if they get over $50, you're probably screwed.  Fortunately, there's already a lot of contracts in December (all fake, of course) and, as a rule of thumb, more than 650,000 open contracts in the front 3 months is downward pressure.  This is more like 850,000 so we're still expecting a great capitulation in oil (though OPEC can F you over any time they want to – remember that – and they are up when you're sleeping!).  

    Rates/Den – So you say all the guys who make money off of low rates think raising rates would be bad?  Well, can't argue with that logic…. cheeky

    The problem is they've got almost over 5 years of low rates so every bond they hold less than 10 years ago is going to lose money fast if rates rise because rising rates push up the rates of new bonds and that makes the old bonds worth less (worthless?) than the ones people will be buying.  

    So anyone sitting on bond paper (like PIMCO's $1Tn) will not only be bleeding value but they'll have a very hard time unloading their low-interest bonds and then they will have to compete with Treasury, who still sell $50-60Bn a month of new paper and it's an auction (which the Fed bids out entirely to fake the low rates) and that means $100Bn, $150Bn, $200Bn a month of notes will flood the market – all having to offer higher and higher interest rates (discounts on the value old notes to compensate for the low rates they pay) to attract scarce capital.  

    Unless the Fed triples down on their monthly buying (still $65Bn/month) there will be real price discovery for the first time in 7 years!  The potential for a huge disaster will be there for a few months at least – until rates normalize a bit.  

    December/Den – Not a chance.  That meeting is Dec 18th, one actual week before Christmas Day in a very thin market – the potential for a disaster would be more than double, I'd say 4x vs raising rates on 10/30.  There's no way they'd risk that and I really think they MUST raise this year to maintain some semblance of legitimacy so – October it is!  


  104. Tight stops- The damn thing shot up to $47 so fast there was barely time to pull the trigger, and I kept thinking it was a fake before the drop! It went from 46.25 to 46.80 in less than a minute. That is the problem with trying to have tight stops. I blinked and it was too late, so I just decided it would be best to hang in and double up when it stopped climbing. I did believe that it would drop the whole time because I saw that 8,5 million barrel total build which has dropped the price in the past even with crude having a draw, so I was concerned that if I did get out it would be right before it turned back down, which it never did. Also I saw Brent was up 3% and RB was up less than 3% while WTI was up 5.5% so that added to my theory that WTI was overshooting. So now I need to get back to 46.50 and all will be well. Which is why I was asking, so I could know if I was completely crazy looking for a drop. I think we agree that there is a good chance it could come down, so I will sleep with one eye open and add if it goes above 47.50 and hope it doesn't go all the way to $50 because that will be too hard to take. I will get out before then and take a loss. I had done so well trading /CL until July racking up profits for 6 straight months, but I seem to have lost my mojo now. Hopefully I will get it right again one day. 


  105. 1020 – Ahmed – At least we have one grown up in the govt.  Obama invited Ahmed to the white house – asked him to bring his clock cause he thought is was pretty cool.


  106. BTU approves a 1:15 Reverse Split set for Sept 30.

    BTU down -1.2% after ours.


  107. I should add that I shorted a bit before 11am, before I got your answer for the reasons I mentioned and then  when you commented that you liked a short at 46.50 , yes with tight stops, it had already raced up to 47, so I was pretty much screwed. Still can't believe that with an 8.5 million barrel total build that we raced up 6% or more. The last time we had the exact same type scenario I only saw the draw on crude and it wa the exact opposite. Oh well here's hoping war doesn't break out over night and OPEC announces even more production! 


  108. Wow, BTU will climb over $10… Oh wait!


  109. Here’s what to look for when the Federal Open Market Committee releases its policy statement along with quarterly economic projections at 2 p.m. Thursday in Washington, and Federal Reserve Chair Janet Yellen holds a press conference at 2:30 p.m.


  110. There was one more candidate than the last debate, and a lot more blood on the floor.


  111. Anas Al-Asadi spent three months and 6,000 euros ($6,785) making his way from his home in Damascus to Germany, braving the frigid waters of the Mediterranean aboard leaky, overcrowded ships on three separate occasions, culminating in a rescue by the Italian Coast Guard and finally a bus across the Alps. For the next four months, he was bored stiff.


  112. As hedge fund managers take a beating from the slowdown in China, Ray Bakhramov is flying high.


  113. A China Railway Group-led consortium and XpressWest Enterprises LLC will form a joint venture to build a high-speed railway linking Las Vegas and Los Angeles, the first Chinese-made bullet-train project in the U.S. 


  114. The retrenchment in drilling for U.S. oil is threatening to leave a different market short: natural gas.


  115. An 8.3-magnitude earthquake struck northern Chile on Wednesday, killing at least five and prompting authorities to evacuate more than a million people from coastal areas.


  116. U.S. equity-index futures dropped and the yen weakened as investors remained split on whether the Federal Reserve will opt to raise interest rates Thursday.


  117. Oracle Corp.’s fiscal first-quarter revenue fell short of analysts’ projections, crimped by a slowdown in software license sales amid a shift to Web-delivered cloud products.


  118. Japan’s export growth slowed for a second month, signaling waning overseas support for an economy that’s already beset by weakness at home.


  119. Twitter Inc. has been slammed by investors since its initial public offering for slowing user growth. On Wednesday, Chief Financial Officer  Anthony Noto tried a new defense: Comparing Twitter to the world’s largest social network.


  120. Two of Uber Technology Inc.’s fiercest rivals are teaming up to challenge the ride-hailing company in the world’s largest markets.


  121. Ahmed Mohamed thought he was building a clock, but it turned out to be a magnet for fear and misunderstanding. Now he’s got an invitation to tell his story at the White House.


  122. Southeast Asian currencies are tumbling, and that may be a good thing.


  123. On the stage at the Reagan library Wednesday night, even the most hawkish candidates chirped only modest ambitions. The Republican Party is no longer the party of regime change, no longer the party of wars of liberation.


  124. HelloFresh GmbH, a German food-delivery startup backed by the Samwer brothers’ Rocket Internet SE, raised 75 million euros in funding, lifting its valuation to 2.6 billion euros ($2.9 billion) as it seeks to increase its market share and expand further.


  125. Uber, in many ways, embodies hyper-capitalism. The app’s “surge pricing” algorithm, which automatically raises fees when the weather is bad or demand is high, is a constant source of sticker shock and an occasional source of outrage. Some critics say the company is squeezing driver pay, others that it’s running roughshod over government regulators. Travis Kalanick, Uber’s confrontational chief executive officer, compares his job with running for public office, and it hasn’t been a smooth campaign. Protesters have disrupted corporate events, marched outside the San Francisco company’s headquarters, and interrupted an interview with Kalanick during the Sept. 10 taping of Stephen Colbert’s new late-night talk show.


  126. It’s more golf cart than VW Golf, but this self-driving two-seater “pod”  represents the cutting edge of the emerging British  industry.


  127. So the current the Congress thinks you should cut education when present day teachers cannot tell the difference between a sophisticated explosive device and a clock?  Nothing to see here.  Everything is fine.  

    Imagine if it had been powered by a lemon … that would be a WMD!


  128. Hidden away on 300 tropical acres between Miami and Fort Lauderdale off the coast, Turnberry Isle is a Mediterranean-style resort where you can reap all the benefits of a remote wellness getaway in just a few days. The 408 spacious, serene rooms look out over the resort’s two championship golf courses.


  129. House Republicans will test Thursday whether a once-unthinkable goal of U.S. energy producers could become reality: the end of a 40-year ban on exporting oil.


  130. U.K. retail sales increased in August, as purchases of school uniforms bolstered clothing. Food sales declined.


  131. Chinese President Xi Jinping will give a speech to U.S. business leaders including Apple Inc.’s Tim Cook and Warren Buffett of Berkshire Hathaway Inc. as part of an exchange between top Chinese and American companies in Seattle.


  132. Standard & Poor’s placed China’s largest brokerage Citic Securities Co. on a credit watch list days after the firm said some employees including its president were being probed for alleged insider trading.


  133. Chinese investment into the U.S. will grow strongly regardless of the Federal Reserve’s decision on interest rates, a senior Chinese trade official said.


  134. Altice NV, billionaire Patrick Drahi’s European cable operator, agreed to acquire Cablevision Systems Corp. in a $17.7 billion deal to create the fourth-largest cable provider in the U.S.


  135. On a day when investors finally find out whether the Federal Reserve will move to raise rates for the first time in nine years, European stocks fell.


  136. Switzerland’s economic growth will stay below its potential this year and next, the government said.


  137. Emerging-market stocks advanced to a four-week high and Asian currencies climbed as investors assessed whether the U.S. will raise interest rates for the first time since 2006. Malaysia’s ringgit gained the most in five months.


  138. A glut of crude may keep oil prices low for the next 15 years, according to Goldman Sachs Group Inc.


  139. Stephen Diggle, who co-founded a hedge fund that made $2.7 billion over 2007 and 2008, said he will buy dollars if Federal Reserve policy makers signal Thursday that the central bank’s prepared to raise interest rates more than once in the coming months.


  140. What you need to know about this week’s economic data from Singapore:


  141. The great European revolt against austerity is already withering.


  142. Two opposition leaders looking to unseat Prime Minister Stephen Harper in Canada’s election are heading to the battered oil patch to pitch what has long been political heresy: higher taxes.


  143. Investment in renewable energy in Canada almost doubled last year as developers largely in Ontario and Quebec built solar, wind and hydropower projects, Clean Energy Canada said.


  144. Equity investors have been anticipating this moment with all the excitement and tension of a prizefight. But bets on the outcome from the Federal Reserve’s rate decision are far more complicated than simply “win or lose” for stocks.


  145. /CL- $46.40 GOOOOAAALLL! Whew. Feeling better and going back to sleep.


  146. Good morning! 

    Nice job Craigs!  

    LOL Malsg. 

    Boy I'm starting to love Bernie – he is so popular that he got bored talking to Democrats and now he's out talking to Conservative crowds and handling the toughest questions like a pro:

    This guy could actually win!  


  147. By the way, notice how the media generally ignores him still – hoping he will go away…


  148. Morning Phil – To you think the TLT short still has some legs? OR would you reduce(close) as we get closer to the FED decision?


  149. TLT/Delboy – Into the Fed it could go very sharply either way.  I wouldn't play it.  

    By the way, on that Billionaire chart above – those aren't even the 36 richest, just a set of the Forbes 400 – $1Bn doesn't even make the list anymore.  So, if we keep going at this pace – just those 36 guys will turn $300Bn into $5Tn in the next 30 years.  That means in EACH subsequent year, they will remove $156Bn from the American Pie under the current tax policies.  That's $1,000 per year from EVERY SINGLE working American going to just these 36 people.  When you do that math on the whole 400 – it costs the American Worker about $5,000 a year in that completely unequal distribution of profits I talked about in the above post.  

    THAT is the Republican platform and THAT is what I'm very firmly against.  This country barely survived the last 30 years but that's NOTHING compared to what's in store for us if we keep heading down this path.  This growth is EXPONENTIAL and we're not even talking about the 500 richest Corporations and what they've accumulated over this time period – this is just a snapshot of some of their owners.  

    That Monopoly thing above is very apropos, this is the game we'll all be playing if we let this continue.  Well not all – I know at least one of you guys is on the other side of the board and congrats for that but the rest of you are mainly deluding yourselves if you think you're going to win this game.  Those of us in the top 1% know how hard it is to make further headway – it didn't used to be like that but the game is closing out and the winners are the winners and they are not keen on sharing and, in fact, they want more – so they are only going to take it from each other (hard) or us (easier) or the people below us (piece of cake).  

    As long as those of us in the top 10% keep getting crumbs, we're happy enough to play along because the crumbs from a $150Bn annual transfer of wealth to the top 400 can be maybe $15Bn divided by 150,000 of us top 1% workers is another $100K a year falling in our pockets, so we're "doing better" but even within the top 1% there's a really wide margin.  The bottom half of the top 1% earn $368,000 a year while the top 1/10th of the top 1% make $1.7M a year but, as you can see – all of us appreciate another $100K or our share of it – so we mostly shut up about this insane system and enjoy our crumbs. 

    But the beast we are feeding in the top 0.0000027% (the top 400 out of 150M workers) gets bigger and hungrier each year.  They want their wealth to grow too so, even when they have $5Tn, they want to make 10% (clearly they never want to lose, right) an that means they'll need $500Bn a year contributed by the rest of us to be content (and keep in mind they are currently averaging 50% a year so this is VERY CONSERVATIVE) and that means 150M bottom 99.9999973% workers will have to send $3,333 each up to the top each year.  And that's only if "THEY" are content with 10% growth and again, we're not counting corporations.  Clearly the bottom 80% don't have $3,333 to give, so who do you think they'll turn to for their tribute?  

    That's why, over the next 20 years, those crumbs we get will get smaller and smaller and eventually reverse and we (in the top 1%) will scramble and eventually turn on each other as we fight over our ever-smaller slice of the pie.  That's the Future we're creating for our children – right here, right now – and THAT is why I don't like the GOP or their programs or their phony bastard representatives who are clearly nothing but puppets for the 400.  They WILL destroy this country and they WILL sell your children and their children into economic slavery.  

    The time to stop them is now – in 20 years it will be far too late. Maybe it's already too late but I'd like to at least try…


  150. And by the way – the reason "THEY" want less Government is because the Government is the only thing big enough to compete for the money they want to take from you as well as the only thing big enough to be able to take money away from them (if anyone ever wakes up in time and sees how ridiculous this imbalance is)!  


  151. GOP passes massive tax break for millionaires, billionaires …

    The House voted Thursday to repeal the estate tax, a longtime priority of Republicans that also spurred Democratic charges that the GOP is in the pockets of the rich. […]
     
    The White House has threatened to veto the measure, and the bill does not appear to have the 60 votes necessary to break a Democratic filibuster and get through the Senate.
    The final tally was 240 to 179, with nearly every GOP lawmaker voting for it and nearly every Democrat voting against it.
     
    When describing Republican tax proposals, it’s not uncommon to talk about policies thatdisproportionately benefit the very wealthy. GOP proponents will say a bill benefits all taxpayers, but they’ll brush past the fact that the rich benefit most. This, however, is altogether different – today’s bill, called the “Death Tax Repeal Act,” quite literally benefits multi-millionaires and billionaires exclusively.
     
    It’s not an exaggeration to say House Republicans, en masse, voted for a $269 billion giveaway to the top 0.2%. Under the plan, GOP lawmakers, who occasionally pretend to care about “fiscal responsibility,” would simply add the entire $269 billion cost to the deficit, leaving future generations to pay for a massive tax break for the hyper-wealthy.
     
    Even by contemporary GOP standards, today’s vote is pretty obscene. At a time of rising economic inequality, House Republicans have prioritized a bill to make economic inequality worse on purpose. At a time in which much of Congress wants to make the deficit smaller, House Republicans have prioritized a bill to make the deficit much larger.
    At a time when prosperity is concentrated too heavily at the very top, House Republicans have prioritized a bill to deliver enormous benefits to multi-millionaires and billionaires – and no one else.
     
    Asked to defend this, Republican leaders – the same leaders who balk at all requests for public investment, saying the nation is too “broke” to fund domestic priorities – say it’s only “fair” to approve a $269 billion giveaway to the hyper-wealthy.
     
    It’s like Lewis Carroll and Charles Dickens got together to write a novel, and Congress’ majority wants Americans to live in it.

    The only thing standing in the way of this bill passing is a few Democratic Senators and, of course, Obama's veto.  Of course the Senate passed the bill (54-46) but they need 2/3 to override a veto (66) – maybe next election…  They need either 12 more Senate seats or one President and there's another $269Bn transferred to the rich, keeping us on track for my doomsday scenario.  
     
    Cutting out estate taxes will allow the wealth accumulation to increase substantially and notice, by the way, this is all happening in a virtual media blackout because it benefits the owners of the media – so they don't even want people talking about it! 
     
    What's it cost for the 400 to buy 12 Senate seats or one President vs this immediate reward they are going to get.  That's what this GOP vote is – they're flat out saying we'll give you $269Bn if you give us more power!  
     
    Grouped By Vote Position

    YEAs —54
    Alexander (R-TN)
    Ayotte (R-NH)
    Barrasso (R-WY)
    Blunt (R-MO)
    Boozman (R-AR)
    Burr (R-NC)
    Capito (R-WV)
    Cassidy (R-LA)
    Coats (R-IN)
    Cochran (R-MS)
    Corker (R-TN)
    Cornyn (R-TX)
    Cotton (R-AR)
    Crapo (R-ID)
    Cruz (R-TX)
    Daines (R-MT)
    Enzi (R-WY)
    Ernst (R-IA)
    Fischer (R-NE)
    Flake (R-AZ)
    Gardner (R-CO)
    Graham (R-SC)
    Grassley (R-IA)
    Hatch (R-UT)
    Heller (R-NV)
    Hoeven (R-ND)
    Inhofe (R-OK)
    Isakson (R-GA)
    Johnson (R-WI)
    Kirk (R-IL)
    Lankford (R-OK)
    Lee (R-UT)
    Manchin (D-WV)
    McCain (R-AZ)
    McConnell (R-KY)
    Moran (R-KS)
    Murkowski (R-AK)
    Paul (R-KY)
    Perdue (R-GA)
    Portman (R-OH)
    Risch (R-ID)
    Roberts (R-KS)
    Rounds (R-SD)
    Rubio (R-FL)
    Sasse (R-NE)
    Scott (R-SC)
    Sessions (R-AL)
    Shelby (R-AL)
    Sullivan (R-AK)
    Thune (R-SD)
    Tillis (R-NC)
    Toomey (R-PA)
    Vitter (R-LA)
    Wicker (R-MS)
    NAYs —46
    Baldwin (D-WI)
    Bennet (D-CO)
    Blumenthal (D-CT)
    Booker (D-NJ)
    Boxer (D-CA)
    Brown (D-OH)
    Cantwell (D-WA)
    Cardin (D-MD)
    Carper (D-DE)
    Casey (D-PA)
    Collins (R-ME)
    Coons (D-DE)
    Donnelly (D-IN)
    Durbin (D-IL)
    Feinstein (D-CA)
    Franken (D-MN)
    Gillibrand (D-NY)
    Heinrich (D-NM)
    Heitkamp (D-ND)
    Hirono (D-HI)
    Kaine (D-VA)
    King (I-ME)
    Klobuchar (D-MN)
    Leahy (D-VT)
    Markey (D-MA)
    McCaskill (D-MO)
    Menendez (D-NJ)
    Merkley (D-OR)
    Mikulski (D-MD)
    Murphy (D-CT)
    Murray (D-WA)
    Nelson (D-FL)
    Peters (D-MI)
    Reed (D-RI)
    Reid (D-NV)
    Sanders (I-VT)
    Schatz (D-HI)
    Schumer (D-NY)
    Shaheen (D-NH)
    Stabenow (D-MI)
    Tester (D-MT)
    Udall (D-NM)
    Warner (D-VA)
    Warren (D-MA)
    Whitehouse (D-RI)
    Wyden (D-OR)
    Those 46 guys and our President are all that stands in the way of 400 people with $2.3Tn to spend when the stakes are $260Bn (10%) and growing each year with their wealth.  
    All together the 400 wealthiest Americans are worth a staggering $2.29 trillion, up $270 billion from a year ago.That’s about the same as the gross domestic product of Brazil, a country of 200 million people. The average net worth of list members is $5.7 billion, $700 million more than last year and a record high. An impressive 303 of the 400 saw the value of their fortunes rise compared to a year ago. Only 36 people from last year’s list had lower net worths this year.
    Where do you think this money comes from?  That one really cracks me up when people talk about a "growing pie" when we MEASURE the GDP and the money supply  and everything else and it sure isn't growing 10% a year!   
     
    So, if the pie isn't growing at 10% and these guys are taking 10% more pie – where do you think it comes from?  And again, these are just the top 400 and we're not even counting the companies they own that have socked away another $2.1Tn in cash (AAPL alone has about $70Bn overseas, GE $119Bn, MSFT $93Bn, PFE $74Bn…).
     
    So:

     

  152. Pitchforks. When money buys politicians, that's all the people have left. I thought the death tax was 50% over 5 million… I would personally benefit from this, but I'm with you. This is crazy, and I truly believe nothing short of rebellion will change anything. The tree of liberty must be watered from time to time with the blood of tyrants and patriots. It's been far too long. Go Bernie.


  153. If you want to avoid a lot of estate tax, set up companies for the people you want to leave money to.  The problem rich people have is they don't trust their own children so they want total control until the day they die.  Your charitable donations aren't taxed so you just need to look at your will and if you intend to leave your kid $2M in 20 years, then set up a business with him that he'll own after you die.  Then he keeps collecting revenues and eventually pays just capital gains if he wants to cash out.  

    People screw around with IRAs and 401Ks but how many of them pay better than a commercial property (simple LLC) with tenants where you put $200K down on a $1M 15-year mortage that's breaks even on $10K/month ($6K payments, taxes, etc)?  Even if you KNOW it's losing a few thousand a month - there's your tax-deductible losses (as good as an IRA) while you build up to $1M equity that is cleanly passed to your child (with a built-in revenue stream too!).  If you are rich enough, you can have a bunch of these and have them administrated professionally and it's great passive income for decades to come.  

    Your kid can manage a hedge fund and you can put your money in and pay them as little or as much as you want as a management fee which is currently taxed at just 20%, so you can transfer massive amounts of money to your kids (or whoever you want) at a 20% rate (and they can deduct things like school, rent, phones etc. to run the business).  

    It always amazes me how uncreative people with a lot of money can be.  Makes you wonder how the Hell they made the money in the first place.  Of course some estates are not so liquid but still, even if you have a farm, you can have your kids set up a trust to buy it from you and share in the profits/labor for a good price over time instead of inheriting it flat out but again – it's that trust thing.  If you live too long, the kids will own the farm and you won't.  If you can't live with that – pay your taxes because you need the Government to protect you from your evil children!  


  154. "God fearing"

    More fear. I do not fear God. I don't feel guilty. That is what organized religion uses to extract it's pound of flesh. God is love, he's on your side. There was only one group Jesus went after… the money changers. End the Fed. Break up TBTF corporations. End unfair advantage, bring back competition. Allow and protect free market competition, capitalism is not a dirty word, but help and protect the poor and disadvantaged.


  155. Oh, forgot to mention an easy one.  If you are going to give a lot of money to charity, set up a foundation and put your wife or kid in charge.  Again, nice salary, a job for life…

    God fearing/Mk – Oh I just thought it was a great video despite the religious undertones.  Really great selection of images to go with the song and could have done without the sermon but still found that interesting (don't forget what a huge percentage of our countrymen feel that way).  And you're totally right, Jesus would be hanging with Bernie and Liz today…

    And don't forget the Pope is coming next week!  This is going to be great – I hope he doesn't wimp out because there's no way the media can ignore him (as they usually do) if he goes off on Capitalism in a US address.  

    I tell you, this guy makes me want to convert!  


  156. LOL, total control. I know it well. It's been used against me for as long as I can remember, but I have enough that I don't need, so I ignore it. Mom passed on her mother's estate to us, 3 million split 3 ways simply because she couldn't stomach the thought of "Obama getting any of it". Seriously. She has voiced regret ever since, and still tries to control everything. Put my sister in charge because she is the most compliant, the house sits and rots because my mother won't allow it to be sold… and my brother and sister are afraid they will be out of her will if we do anything but pay the taxes on it and wait. It's ridiculous.


  157. Any idea what the reaction will be after the fed announcement?