by Phil Davis - June 18th, 2014 8:36 am
It's a Fed day today!
That, of course, means MORE FREE MONEY and the markets are giddy with anticipation ahead of the meeting – especially since we had more poor housing data yesterday and that's exactly the kind of bad news that is good news as it keeps the Fed in easy-money mode a little longer.
As you may have guessed, we shorted oil this morning. The July contract (/CLN4) expires on Friday and, as you can see from the chart, we continue to find great profits in the sell-off that we predicted would come last week. We went over some Futures Trading Tips in yesterday's live Webinar as well as the new, bullish positions we've added to our Long-Term Portfolio. Much as we rail against what we firmly believe will ultimately be a disastrous policy – you simply can't fight the Fed and we're not trying to – it's much more profitable to go with the flow.
Going with the flow is exactly what we're doing with our oil trades as they STILL have 103M barrels worth of FAKE orders open for July delivery (actually, about 20M will actually be delivered so "only" 80M are fake at the moment) and that is down from the 172M FAKE orders that were open on Friday morning (see chart on Friday's post).
|Current Session||Prior Day||Opt's|
by Phil Davis - September 20th, 2011 8:28 am
Yay! Another crisis averted.
Well until next quarter, at least, when we can begin the "crisis" cycle all over again. As it stands, after much hand wringing yesterday, Greece will get the $11Bn they need to fund their nation for another 3 months. Yes, as I noted yesterday, this is not a typo – Greece needed $11Bn and the global markets gave up $1Tn in value because we weren’t sure if they were going to get it on Monday morning.
To meet their budget goals in a declining economy, Greece is being pressure to cut 100,000 public jobs by 2015. With just 11M people in Greece, cutting 100,000 jobs is like asking the US Government to cut 3M jobs – isn’t that insane? And by insane, of course, I mean – isn’t that the Republican platform? Yes, nothing say "economic recovery" like firing 3M people in this topsy-turvry World.
We expected this, of course, and we got very bullish with our picks yesterday morning and were handsomely rewarded into the close and hope to be even more handsomely rewarded this morning as QE FEVER once again takes over the nation (see November’s "POMO Fever" article to review the scam).
Interestingly, my main suggestion for playing QE2 last year was: "We can bet on inflation with our gold plays with potentials for 923%, 309%, 3,900%, 567%, 276% and 46%." Gold was "only" $1,300 last November and I was still enthusiastic about it at the time. Yesterday we shorted it with the GLD Nov $180/174 bear put spread at $3.30, selling $193 calls for $3 for a net .30 trade that bets gold won’t hold $2,000 through Thanksgiving.
Also different this year is that we are betting against TLT (also in yesterday’s main post) and we got fabulous prices for our short play yesterday as TLT ran all the way up to our goal at $115. As we got a nice sell-off at the open, my morning Alert to Members had trade ideas to go long on Oil Futures (/CL) off the $85 line (now $87, up $2,000 per contract) and we sold some DIA Oct $111 puts for $3.10 in the Income Portfolio, which are already down to $2.70 (up 13%) – simply following our rule of ALWAYS selling into the initial excitement.
by Phil Davis - August 1st, 2011 8:11 am
Oh what BS!
Still, it’s BS we expected, isn’t it? What did I tell you in Friday Morning’s post? I said: "Our plan for the day (as we’ve been short all week) is to get back to cash for the weekend but I’m sure we’ll find some speculative upside plays (like USO at $37) to play (we already went long on Silver in the Morning Alert to Members)." I followed that up with my 9:40 Morning Alert to Members, where my specific trade ideas for the morning, while the market was plunging, were:
- USO Next week $36 calls are $1.45 so 10 of those in the $25KP with a stop at $1.20.
- TNA Aug $69/73 bull call spread is $2 and you can sell the $51 puts for $1.20 and that’s my favorite index play at the moment. Of course any bullish offset would work but this one is focused on the RUT and betting it won’t drop another 8% by Aug expiration (725).
How’s that for a bottom call? That was right into the panic lows and, at 9:48 I reiterated my call right at the dead bottom, saying to Members: "Volume is not very high – this is a retail panic so far. If you have short positions, strongly consider put tight stops on them (this includes the $25KP and Income Virtual Portfolio) as they put plenty of cash in your pocket and we can always find another layer of shorts if the RUT can’t hold 775."
At 9:50 my trade idea was selling PCLN weekly $545 calls at $3 which expired worthless that day for a 100% gain. At 9:52 we picked up the weekly (that day) QQQ $57 calls at .72 and we had a 100% gain on those by 11. At 9:56 we went short on the VIX with the Aug $19 puts at $1, at 10:16 we even made 5 bullish adjustments to our fairly conservative Income Virtual Portfolio, including selling 50 DIA Aug $116 puts for $110 ($5,500) and we’ll be pulling those right off the table this morning – but I’m getting ahead of myself…
At 11:25 we went for a Jan bull call spread on UNG and at 1:20 I put up my last long trade idea of the day, selling YRCW Jan $1 puts for .70 for a .30 net entry on the trucker. …
by Phil Davis - July 26th, 2011 3:22 am
Hey buddy – would you like to buy a rally?
For just $2,000,000,000,000 I can give you a 2% pop on the S&P, what do you say? Am I talking about QE3? No, QE3 would be cheap compared to the gang-rape that the Dollar is enduring this week at the hands of the Europeans, the Australians, Canadians, the Swiss (all-time high today) and the Japanese – who have been taking their turns pushing our beloved dollar down to the ground and having their way with it. Not a pretty picture? How about picturing the loss of 2% of your net worth in 5 days?
That’s where we are this morning as $2Tn of US wealth has been extracted this week (via political dithering over our debt ceiling) and shipped overseas in the form of relative buying power for or foreign friends while our stock indexes and commodities "rally" – which is to say they re-price higher to reflect the lower buying power of the currency they are priced in – the ever-declining green-back.
As you can see from the above charts, which are our major indexes and oil adjusted for the Dollar – we’re critically close to failing our 20-day moving averages for the first time since early June, when the markets went into free-fall – also on the heels of an end-of-month run-up that took the S&P from 1,311 to 1,345. 1,345 just so happens to be where we topped out last week and where we topped out yesterday and where we popped to on the futures early this morning (3am, of course) as the Dollar was shoved a full percent lower in overnight trading.
We were all over this, of course, and I sent out a 3:55 am Alert to Members saying:
Dollar bottomed out at 73.69 and that should be it for our 3am "rally" with the RUT (/TF) at 835.6 and S&P (/ES) at 1,340, Dow (/YM) at 12,600 and Nas (/NQ) at 2,435 – all make good shorts here as long as the Dollar goes no lower (and I’ve already started the morning post with a chart that shows how dangerous this is getting).
by Phil Davis - July 20th, 2011 8:13 am
Here we go again!
We blew right though our expected bullish levels of Dow 12,500, S&P 1,317, Nasdaq 2,775 and Russell 825 but failed to make 8,300 on the NYSE so, as usual, our biggest and most difficult to manipulate index is holding us back – flashing a warning sign while the other indices scream for us to "party on." Fortunately, as I mentioned in yesterday’s morning post, we had already gone aggressively bullish with the SPY Aug $128/131 bull call spread at $1.83, selling the Sept $120 puts for $1.57 and that net .26 spread is already net $1.86 – up 615% since I posted the trade idea at 12:53 in Monday’s Member Chat.
It’s good to have a few aggressive trades like this to take advantage of market bounces. Before that we had taken the SSO Aug $51/53 bull call spread at $1.05, selling the Sept $44 puts for $1.07 for a net .02 credit at 10:46 in Member Chat (the SPY play was for late-comers who missed out on SSO). The Aug $51/53 spread finished the day yesterday at $1.35 but the real win comes from the short $44 puts, which fell to .70 so the .02 net credit is now a .65 net credit for .67 total profit, up 3,350% in less than 48 hours. See, options are fun!
The only other trade ideas from Monday were a long-term bullish play on RIMM (selling 2013 $22.50 puts for $4.20) a long futures play on the Russell Futures (/TF) off the 810 line (now 835) and I reiterated our bearish spread on CMG as I felt they would disappoint on earnings (they did). Yesterday we picked up a long-term longs on GLW, RYAAY and WFR, half covered our FAS longs (iffy so far), took a poke at shorting the DIA that worked for a quick 10%, shorted oil with a DUG spread (futures too scary) and picked up another short spread on CMG – selling 3 Aug $330 calls for $16 ($4,800) against 2 long Dec $360 calls at $18 ($3,600) for a net $1,200 credit – those should be nice winners this morning!
In the afternoon we flipped more bearish and picked up 10 SPY weekly $133 puts at $1.15 ($1,150 of our virtual dollars) for our $25,000 Virtual Portfolio and those are probably going to hurt this morning as the Dollar has been…
Greek Sovereignty Massively Limited; You Cannot Roll Over What You Do Not Have; Railing Against the Truth; EU Seeks to Curb Big Three Rating Firms
by ilene - July 7th, 2011 2:11 am
Courtesy of Mish
Jean-Claude Junker, the man who says "When it becomes serious, you have to lie", apparently has had a sudden splash of honesty, stating Greek sovereignty to be massively limited.
Greece faces severe restrictions on its sovereignty and must privatize state assets on a scale similar to the sell off of East German firms in the 1990s after communism fell, Eurogroup chairman Jean-Claude Juncker said.
"The sovereignty of Greece will be massively limited," he told Germany’s Focus magazine in the interview released on Sunday, adding that teams of experts from around the euro zone would heading to Greece.
"One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone," Juncker said.
Massive Loss of Sovereignty is an Insult
If I was Greek, I would take a statement regarding massive loss of sovereignty as an insult, not help. Thus, true to form, in aggregate, Juncker’s statements are a collective lie.
EU Seeks to Curb Big Three Rating Firms
Bloomberg reports EU Seeks to Curb Big Three Rating Firms After Portugal Downgrade.
European policy makers lashed out at rating companies after Moody’s Investors Service cut Portugal’s debt to junk, reviving calls to curtail their clout.
German Finance Minister Wolfgang Schaeuble said the grip of the big three rating companies had to be broken when asked about Moody’s downgrade. “I have said before that we have to curb the influence of the rating agencies,” Schaeuble told reporters in Berlin today. There’s a need to “break up” the companies’ dominance, he said.
European Commission President Jose Barroso said he “deeply” regrets the timing and magnitude of Portugal’s downgrade by Moody’s and said proposals for increasing regulation of the rating companies in Europe would come out this year. The moves by Moody’s “do not provide for more clarity. They rather add another speculative element to the situation,” Barroso told reporters in Strasbourg today.
The commission, the European Union’s executive arm, “is looking into the regulation of rating agencies to determine whether there are some measures that need to be taken with regard to the prevention of possible conflicts of interest and other matters,” he said. “Developments since the sovereign- debt crisis show we need to take a further look at reinforcing our rules.”
Truth Not Appreciated
by Zero Hedge - May 21st, 2011 8:18 am
Courtesy of Zero Hedge
The book "Confessions of an Economic Hit Man" by John Perkins is easily one of the most engrossing pieces of non-fiction one can read to learn about the true drivers behind globalization, espionage, corporate cronyism, the emergence of such "artificial" organizations as the World Bank and the IMF, and most importantly, debt "enslavement", all as seen from an insider’s view. It explains in simple words why over the past 40 years the developing world paradigm has been exploited as heavily as it has, why the BRIC concept was instrumental as a Red Herring to perpetuating the myth of endless growth, and why credit must always flow no matter what to keep the status quo in power.
For those who have read the book, and for those who are on the fence about reading it, below we present the three part presentation by John Perkins at the 2006 Veterans for Peace National Convention in which he expounds on all the key ideas in his book, and does an extended Q&A covering topics not discussed previously. We urge everyone to spend at least a few minutes listening to Perkins who gives a unique and non-conflicted expert opinion on the primary force for why the the modern equivalent of enslavement is not by force, but by debt.
And for the truly time-constrained we recommend the following blurb which encapsulates the key elements from the book, and Perkins’ life.
by ilene - May 4th, 2011 12:45 pm
Courtesy of The Epicurean Dealmaker
This is the true joy in life, the being used for a purpose recognized by yourself as a mighty one; the being thoroughly worn out before you are thrown on the scrap heap; the being a force of Nature instead of a feverish selfish little clod of ailments and grievances complaining that the world will not devote itself to making you happy.
Beware of the pursuit of the Superhuman: it leads to an indiscriminate contempt for the Human.
— George Bernard Shaw, Man and Superman
Steven Davidoff opens a recent piece at The New York Times DealBook blog with the following words:
This is powerful language. What does he mean?
Well, for one thing he means that the reputations of individual investment banks are no longer coterminous with the reputations of their executives and employees. He ascribes this to the tremendous growth in scale and complexity of financial markets over the past three decades:
Today’s Wall Street is not the Wall Street of 1907 when J.P. Morgan single-handedly used his reputation and wallet to stem a running financial panic.
Until the 1980s,… Wall Street was made up of traditional partnerships. These were small groups of investment bankers who represented companies in offering and selling securities and occasionally acquisitions. These bankers put their individual reputations on the line, because there were so few of them. Morgan Stanley, for example, had only 31 partners in 1970 and fewer than 1,000 employees.
But this began to change in the 1980s. Trading markets became much more sophisticated, and trading and brokerage became the investment banks’ primary business. This is a technology game. The better the technology, the better the trading and brokerage operation. Individuals became less important.
The growth of more complex capital markets and a global economy also created much larger financial institutions. Morgan Stanley now has more than 62,000 employees. These banks could use their assets and position to compete in the market for finance and trading. Again, individuals were less important as size dominated. A client now trades or does business with a bank based on its positions or ability to make a market or loan. The executive at the bank executing the transaction is unimportant.
In one respect, this is true. Lazard is no longer Felix Rohatyn. Goldman Sachs is no longer Sidney Weinberg. The
by ilene - March 17th, 2011 3:45 pm
THE BANKS MUST BE RESTRAINED, AND THE FINANCIAL SYSTEM REFORMED, WITH BALANCE RESTORED TO THE ECONOMY, BEFORE THERE CAN BE ANY SUSTAINED RECOVERY – Jesse
I have long been a fan of Jesse’s Café Américain. Jesse is a brilliant writer and a deep thinker who uniquely transcends politics, easily seeing through lies and disinformation. He has a great feel for what really matters, and the courage to speak out about it. Jesse and I have spoken before about the economy, markets and politics, and being at a crossroads once again, it was a perfect time to catch up.
Ilene: Hi Jesse, since our last interview, I would guess that we’d both agree that nothing has been done to clean up the financial system – the banks and government interconnectedness, conflicts of interest, and out-and-out fraudulent activities. Are things better or worse, or in line, with what you were expecting over a year ago?
Jesse: I think things are progressing in line with what I had expected, with the Fed and the government trying to prop up an unsustainable status quo by monetizing debt. I am still a little shocked by the brazen manner in which the financial markets are being conducted and regulated, and the news is reported in the US. It is one thing to hold a theory that says something will happen, but it is quite another to see it actually happening, and so blatantly, almost without a word of protest.
Ilene: How do you view our financial system and the global financial system now, with no progress towards any kind of reform?
Jesse: The US is now being run by an oligarchy, with lip service being paid to the electorate in allowing the people to vote for the candidates that the parties and the powers will put forward. There will be no recovery for the middle class until they assert themselves. I know I have stated this often in my tag phrase, “The banks must be restrained…” But it is the case.
There are areas of resistance to this trend on what one might call ‘the fringes of Empire,’ those client states which have been ruled by powerful cliques with the support and the protection of the US. Although certainly not a great analogy, it does remind one of…
The Next Borrow-Short Lend-Long Guaranteed to Blow Up Bank Lending Scheme; Citigroup, Chase, Bank of America CD Ripoff
by ilene - February 16th, 2011 4:23 pm
Courtesy of Mish
Borrow-short lend-long strategies have caused more pain and grief than nearly any play in the book. They are virtually guaranteed to blow up given enough time if the duration mismatch and leverage is too great.
For those who do not know what I am describing, a couple examples below will help explain. The first example is a look at "cost of funds" and guaranteed profits that banks can make. It is not a borrow-short lend-long strategy but will morph into such a scheme as I vary the parameters.
Inquiring minds investigating Citigroup’s cost of funds note that Citigroup 5 year CDs yield a mere 1.5%. For this example, Citigroup’s cost of funds is 1.5%, the rate it pays depositors. Here are a few snips from Citi’s website.
Who said there are no guarantees in life?
Some things in life are a sure thing. Like a Citibank CD, which offers a guaranteed—and highly competitive—interest rate. You also get a wide range of terms, from 3 months to 5 years.
Citigroup has the gall to brag about "guarantees in life" when the "guarantee" in question is a complete ripoff. It’s a ripoff because 5-year US treasuries currently yield 2.35%.
Anyone buying CDs at less than the treasury yield rate is a fool.
Rates at Bank of America, Northern Trust, JPMorgan Chase
I will tie this together shortly, but first make note that the Northern Trust, Bank of America, and JPMorgan Chase offer even lower 5-Year CD rates.
Here are some rates courtesy of Bankrate.Com as of 2011-02-15.
According to Bankrate, national average for 5 year CDs is 1.61% and the rock bottom low is .95%. The site average is 1.98% and the top yielding 5-year CD yields 2.75%. Thus Citigroup’s claim of competitive rates is absurd.
Although Bank of America makes no such claims, its CD rate is priced so preposterously low, that Bank of America must not even want to deal with them. Alternatively, B of A has an incredibly large pool of moronic depositors begging to be ripped off.
Guaranteed Free Money
Anyone buying 5-year CDs from Citigroup, Bank of America, Northern Trust, or JPMorgan Chase is giving those banks a shot at guaranteed free money.