This week, Damien Hoffman founder of Wall St. Cheat Sheet talks with me about the stock market, the economy, politics, corporations, and about his plans and aspirations. Hope you enjoy our interview as much as I did.
Ilene: Hi Damien, can you tell me a little about yourself, how you got involved in Wall St. Cheat Sheet, and what your goals are?
Damien: I am an entrepreneur at heart. I graduated college during the height of the dotcom boom and started a successful company with a few friends. When they decided to manage the company indefinitely, I decided to move on to build my skill set.
To make a long story short, I went to law school, clerked at the Florida Supreme Court, and worked at an investment bank. With my newfound skills and relationships, I got involved in some very cool consulting projects for several years.
Then, after the big crash, my brother and I thought it was the perfect time to get into financial media. We are both successful traders and come from a family which is passionate about investing. So, we launched a newsletter in November 2008 to meet the demand from friends and family who were screwed during the crash. It was an instant success.
In the summer of 2009, we ramped up the blog. It's caught on like wildfire. We are very humbled by how many people support what we're doing and have appreciated our work.
Ilene: Yes – I very much enjoy your site. What are your plans for Wall St. Cheat Sheet?
Damien: We have a lot of exciting plans for 2010. The head of our Board of Directors is Larry Kramer, the co-founder of MarketWatch. Larry has been very active in helping us execute our business plan.
In the next couple quarters, you can expect some awesome new resources like TV, educational webinars, and a few novel tools which I cannot reveal yet.
Many financial shares tanked yesterday after President Barack Obama proposed rules that would limit the types of trading banks can do with their money.
Tightening the rules on risk-taking and trading will likely hurt profits at some banks. But the pain won’t be spread evenly across the financial sector.
Some banks, especially smaller regional banks that haven’t gone in for the prop trading and hedge fund investing that forms the core of some Wall Street banks, probably won’t be touched by this
Obama also said he would crack down on bank consolidation and seek to limit the size of banks.
All eyes immediately turned to big financial institutions like Bank of America, Citigroup Inc. and JPMorgan Chase & Co. are structured. Each of their stocks dropped more than 4 percent.
But what about Morgan Stanley and Goldman Sachs? Can they abandon their prop trading? Can they avoid the regulations?
We delved into the regulations to see who we think will come out ahead and who will take a beating.
Details of Obama’s new proposal are still hard to come by but this looks huge.
Sources inside major financial institutions are saying that they are scrambling to see if they will have to spin off operations, change their regulatory status, and perhaps find new business models.
Here’s the AP’s report:
President Obama is calling for tougher regulations on banks that would limit the size and complexity of large financial institutions.
The proposal would also limit banks’ ability to engage in high-risk trades. Restrictions would be placed on proprietary trading by commercial banks to separate those institutions from investment banks.
Obama said Thursday that without these regulations, the financial system will continue to operate under the same rules that led to its near collapse.
The announcement comes as Obama renews his calls for financial regulatory reform, which is being negotiated on Capitol Hill.
Obama’s announcement comes as the White House renewed Obama’s demand that any overhaul of banking regulations contain an independent consumer financial protection agency. The proposed agency is one of the major sticking points in the Senate and the central focus of negotiations between Democrats and Republicans on the Senate Banking Committee.
"The president is not going to compromise because lobbyists tell somebody that we shouldn’t have an agency that protects consumers," White House spokesman Robert Gibbs said. "That’s something the president’s not willing to give up."
The tougher measures to be announced Thursday aim to limit speculation by commercial banks and to keep financial institutions from becoming so big that they pose a risk to the overall economic system.
In focusing attention on Wall Street,however, the administration is also seeking to halt a wave of public anxiety that is benefiting Republicans and undermining Obama’s agenda.
News of the announcement came shortly after Treasury Secretary Timothy Geithner had a private dinner Wednesday night with chief executives from some of the top Wall Street banks.
There was also a new urgency in the Senate to move on the legislation — an attempt to respond to voter anger at Wall Street and bank bailouts that helped propel Republican Scott Brown
A senior U.S. counterterrorism official confirmed the terror plot to a number of news outlets, including the Daily News and Fox News.
The intelligence doesn’t provides specifics about time, place or method of attack. But officials are taking the threat seriously. The Yemeni group is said to have been emboldened by the Christmas Day attack.
"Our concerns have intensified," the official told The News.
Frighteningly, Fox reports that some of the suspected terrorists may have US passports.
From Fox:
Al Qaeda in Yemen and the Al Qaeda affiliate in Somalia, known as Al Shabaab — translated as Mujahadeen Youth — are described as having "shared interests and shared goals."
U.S. counterterrorism officials say clear connections now can be traced between the two terrorist groups and they are not ruling out the possibility that they are working together to attack U.S. interests.
U.S. officials also remain concerned about two dozen Somali Americans who disappeared into the Al Shabaab training camps in Somalia in the last 18 months. Their American passports would allow them to reenter the United States.
When the Treasury announced on Christmas Eve that it was lifting the limit on how much Fannie Mae (FNM) and Freddie Mac (FRE) could receive, one point that may have been lost on people was that neither of the GSEs were yet anywhere close to the $200 billion they’d been alloted.
It’s not like there was a need, under the current system to give them a permanent, unlimited blank check to cover their losses.
The government’s decision to provide unlimited support to Fannie Mae and Freddie Mac probably presages more aggressive action to prop up the U.S. housing market.
The government may put a mortgage-modification effort, called the Home Affordable Modification Program, or HAMP, into overdrive in coming years, pushing for reductions in the principal outstanding on home loans overseen by Fannie and Freddie Bose George, an analyst at Keefe, Bruyette & Woods, wrote in a note to investors Monday.
So basically, Fannie and Freddie will be called on to do everything humanly possible to prop up the housing market in the coming years. Mortgage purchases, principal reductions… everything. And as it goes nuts in its efforts, it will need a blank check so that its lenders don’t even get slightly nervous.
Another serious dip in housing would be killer to this recovery and Obama’s Presidential career. That can’t be let to happen.
I am not sure I buy Meredith Whitney’s assertion that the government is “out of bullets” in its quest to prop up the economy. It’s a matter of political will more than anything else. Nevertheless, I do agree with her basic premise in the CNBC video below that the financial sector is likely to see a more unfavourable economic climate in 2009 than it has done in 2009.
In particular, a looming crisis at the state and local government level, coupled with continued distress at regional and local banks will mean a deadly combination of higher taxes, fewer jobs and less credit for households and small businesses. Unless we see a change in the political climate in Washington, now oriented toward deficit reduction over jobs, we are likely to see a double-dip recession late in 2010 or 2011.
Whitney says “the component parts don’t add up” in addressing the Obama Administration’s conflicting rhetoric on jobs, stimulus and deficit reduction. I have said Barack Obama gets it because we have confirmation that he understands that raising taxes or cutting spending is what leads to a double dip recession.
I will accept that not everyone believes we should avoid recession if it means more government spending because of the enormous debt loads in the private sector and the unfunded liabilities in the public sector. Fair enough. I have my own doubts due to concerns about crony capitalism. That is an ideological debate about the role of government.
But in executing actual policy, I believe the President’s words and actions are at odds in part due to the political landscape and the wishes of the corporate interests to which he is beholden.
Continuing his crusade against Wall Street, Matt Taibbi takes aim at the Obama administration. He accuses the President of running as a progressive, but then allowing Robert Rubin and various Wall Street allies dictate policy. Can’t say we disagree. (video via ZeroHedge)
Courtesy of Bill Black, posted originally at New Deal 2.0, and later at Clusterstock as a guest post.
Tom Frank’s book, The Wrecking Crew explains how the Bush administration destroyed effective government and damaged our social fabric and our economy. The Obama administration has chosen to reward two of the worst leaders of Bush’s crew — Geithner and Bernanke – with promotion and reappointment. Embracing the Wrecking Crew’s most destructive members has further damaged the economy and caused increasing political and moral injury to the administration.
Last week was a bad one for Geithner and Bernanke. Senator Dodd said that Bernanke’s confirmation was no longer a done deal. The House Financial Services Committee revolted against the administration, the Fed, and Chairman Barney Frank. It voted for a strong bill to audit the Fed. Senate Banking Chairman Schumer went to a conference at Columbia University — where a generation of students salivated at the prospects of Wall Street wealth — and was overwhelmed by an audience denouncing the continuing stranglehold of the finance industry over successive administrations and the Congress. Neither Barney’s blarney nor Schumer’s schmooze was any avail before an outraged public.
The administration promptly secured a column in the Washington Post claiming that the effort to fire Geithner “buoy[ed]” him because, as the subtitle to the article explained: “Even ex-Bush aides sympathetic, sources say.” The article didn’t note that Geithner is an “ex-Bush” senior official who, with his fellow “ex-Bush aides” (particularly Bernanke and Paulson) produced a chain of disasters: the bubble, an “epidemic of mortgage fraud” by lenders, the Great Recession, and the scandalous TARP and AIG bailouts. Of course they’re “sympathetic” to a fellow member of the Wrecking Crew that destroyed effective regulation and turned the nation over to Wall Street. The craziest part of the story is that the anonymous Obama administration flack that spread this anecdote believes that we should support Geithner because his fellow members of the Bush Wrecking Crew empathize with him because they, too, have been criticized for wrecking the economy.
The Washington Post article then offers a metaphor that serves
Give me
Your dirty love
Like you might surrender
To some dragon in your dreams
Give me
Your dirty love
Like a pink donation
To the dragon in your dreams
I don’t need your sweet devotion
I don’t want your cheap emotion
Just whip me up some dragon lotion
For your dirty love
Frank Zappa
"Dirty Love"
Kudos to The Wall Street Journal, which scooped the rest of the Big Media last night by reporting that GMAC Inc. is asking for yet another $3 billion bailout from the US Treasury. If Citigroup (NYSE:C) is the Queen of the Zombie Dance Party and AIG (NYSE:AIG) the King, then GMAC is certainly one of the children. In relative terms, GMAC has received far more subsidies than any other zombie and seemingly has no access to the private markets in terms of raising new equity. Of the 19 banks subject to the Fed’s stress tests earlier this year, GMAC is the only bank that has not raised the required private capital.
Looking at the latest 10-Q from GMAC filed with the SEC, the only question we have is why isn’t GMAC already in bankruptcy? In Q2 2009, GMAC reported a net loss of $3.9 billion on $3.6 billion in net revenue. We can’t wait to read the Q3 10-Q. Even if you back out the $1.3 billion in depreciation expense for GMAC, the picture remains pretty bleak. Revenue and total assets are down significantly from a year ago, a characteristic that GMAC shares with C and other zombie banks. Most important, the fact that GMAC as a whole is shrinking makes a lie of claims by the White House that this hideous zombie needs to be kept alive to provide credit to the US economy.
Looking at GMAC’s bank subsidiary, Ally Bank, the picture is even more alarming. As of Q2 2009, Ally Bank was rated "F" by the IRA Bank Monitor. The chief reason for the poor rating is the negative score for ROE, but defaults are also elevated compared to the US industry average. The Q2 2009 Banking Stress Index is shown…
Nouriel Roubini used to be known Dr. Doom. These days, however, he insists he is a "realist."
What does that mean? Well, it means that he doesn’t think we’re in for a V shaped recovery but he doesn’t think we’re going L shaped either.
Appearing on CNBC’s Squawk Box this morning, he said we’re headed for an anemic, U-shaped recovery. Why not a V? Here are his reasons:
1. Labor market is still awful, labor income and consumption down.
2. U.S. consumer is shopped out; they save more, consume less.
3. Corporate sector- glut of capacity. Utilization is 69%
4. Financial system is damaged, credit growth is limited, can’t finance residential investments
5. Fiscal stimulus will be a drag, and lead to crowding out of product spending
6. Overspending countries like U.S. are now spending less, and oversaving countries like China, Japan, Germany are not increasing their private domestic consumption to compensate for falling U.S. demand.
To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...
While US banks have been busy refocusing their "creative financial products"-time over the past two months, instead defending against allegations of muppetism, or explaining how hedging is really betting it all on red, and then doubling down (just because the casino supposedly has the bank's back), Europe has been busy coming up with new and creative ways of betting on the demise of FaceBook. While official shorting of the most overhyped and overvalued company in history only became a reality for most investo...
Rich Adamonis, NYSE (NYSE: NYX) spokesperson told Benzinga "In response to incorrect reports re: NYX and Facebook (NDAQ: FB): There have been no discussions with Facebook regarding switching their listing in light of the events of the last week, nor do we think a discussion along those lines would be appropriate at this time.”
First we'll go to the technicals. Back in mid April I had opined a 'bear flag' formation was being created. [Apr 17, 2012: Potential Bear Flag Forming] But the market being the difficult beast it is, head faked everyone and rather than a break down from said flag it first went UP and nearly touched yearly highs. This caused everyone to think the bear flag had failed…. only to lead to a horrid May in the market. Generally a bear flag will resolve relatively quickly but the longer...
Despite the fact that U.S. equities are well-positioned and well-supported to go up, once again it is the headlines out of Europe—especially Greece—that are scaring off investors. Some are saying that it is now likely (and even desirable) that Greece will default on all its sovereign debt, withdraw from the euro, and severely devalue its domestic currency (Drachma?). This will allow them to operate a balanced budget while pumping cash into growth initiatives, rather than suffer the ravages of Germany-mandated austerity.
Some say, so what? Greece makes up only about 2% of the Eurozone’s overall economy. Nevertheless, you might say that this new “Grecian Formula” is creating the opposite effect to the men’s hair product, i.e.., rather than losing the gray we are al...
Markets died and then rallied to flat again as European leaders “prepared contingencies” for a possible Grexit
Markets died hard and fast earlier today as major indexes registered as much as 1.5% of losses after news that Euro zone officials were unofficially “preparing contingencies” for a Greek exit from the Euro. Unofficial statements were not enough to keep markets down however, as major indexes rallied back to flat levels by the end of the day.
So the world continues to wait on Europe, as the SPDR S&P 500 ETF (NYSEACA:SPY) gained .05%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:...
T - AT&T, Inc. – U.S. equities are on the decline as Europe’s woes once again take center stage. Shares in AT&T, down 0.90% at $33.24 this afternoon, are faring better than most of the other Dow components so far, though options activity on the wireless carrier suggests some strategists are bracing for further declines ahead of the long w...
Reminder: OpTrader is available to chat with Members, comments are found below each post.
This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.
To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here
NEW: Ilene is available to chat with Members regarding topics presented in SWW, comments are found below each post.
Here is this week's test version of the latest newsletter. We apologize for some formatting issues that need to be worked out. Please tell us what you think.
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
In this article, please revisit an article written two years ago titled, "The Calm Before the Storm." This article focused on the patent cliff that was looming in the pharmaceutical industry, that was later picked up by the New York Times and several other bloggers! Subsequent articles were written about big pharma company's revenue streams, and the pros and cons of of their later stage pipelines. Other articles have also attempted to identify smaller biotechs with the potential to reap big reward...
My last weekend update is dated from January 30 so after a long hiatus, here is an update of our virtual portfolio. Since the last update, we have closed the AA Money portfolio due to a lack of enthusiasm (and activity) and I have stopped tracking the FAS strangle as the low VIX makes it hard to get rewarded for the risk! But we have added a small $5KP virtual portfolio which does not use any margin.
FAS Money
We have had to recover from a big move up by FAS and a low VIX which keeps option prices low. But the portfolio has gaine about 10% since the last update.
Last update P&L - $5499.00
IWM Money
Not a lot of activity in this portfolio where the main focus is on the large IWM BCS. But the portfolio has grown over 20% since the last update.
Last update P&L - $1998.00
$5KP Portfolio
This is the virtual portfolio that replaced the AA Money portfolio. It does not use margin and we will keep holdings under $5K.
AAPL $50K P...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(blogroll, archives,
more).
Contact Ilene to learn about our affiliate and
content sharing
programs.
By 
Facebook
Twitter
LinkedIn 
del.icio.us
Digg
Credible intelligence has emerged that the branch of 
When the Treasury announced on Christmas Eve that it was lifting the limit on how much Fannie Mae (FNM) and Freddie Mac (FRE) could receive, one point that may have been lost on people was that neither of the GSEs were yet anywhere close to the $200 billion they’d been alloted.
German
Spanish
French
Italian
Portuguese
Japanese
Korean
Russian
Chinese
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(
