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GDPhursday

Here we go again!

I could just reprint Tuesday's morning post because we're right back at Tuesday's levels but today is GDP Day so nothing matters until those numbers are released.

Tuesday's post was about denial but it was easy to call a drop that morning because there was no data and no market moving news that I thought would save us that morning.  Today we have The GDP and the deflator but tomorrow we hear from the big Kahuna – Uncle Ben addresses the nation to wrap up a week of sun and fun and economic chit chat over in Jackson Hole.

Ben had better mind his Ps and Qs when he speaks because we've already gotten the warning I mentioned from the German Economic Advisory Board and today the language was taken up a notch by OECD deputy director, Adrian Blundell-Wignall, who said: "The US Federal Reserve should not cut interest rates in response to the recent turmoil in financial markets.  The Fed should only cut rates to meet its fundamental objectives of controlling inflation and maintaining the health of the US economy.  If the US economy is threatened by a slowdown in activity, then a rate cut would be justified.  But if this is not the case, then a rate cut would merely help to bail out investors who have taken ill-considered risks."

We are not the world's #1 economy anymore, we need to get used to being treated like this!

It's just 5 minutes until the GDP as I write this so I'll get the fact that Asia rallied back (woo-hoo!) and Europe had a weak finish, making it all the more baffling how the big boys on Wall Street knew to start rallying almost an hour before the Senator from New York announced he had a letter from the Chairman of the Federal Reserve (what time does mail get delivered?) that said (but not really) they will come to the rescue.  Just remember boys, when the SEC asks what prompted your buying remember to DENY, DENY, DENY!

GDP is up 4% vs. 4.1% expected vs. 3.4% last quarter.  The PCE index is up 4.2% but don't worry, the "core" is just 1.3% for all you non-food eating non-energy consuming investors.  DENY, DENY, DENY!  The GDP chain deflator, which measures the change in prices in total GDP came in as expected at 2.7%, not terrible as it's the broadest measure of inflation BUT it includes housing prices, which are heavily weighted and dropping like a rock:

  • Government:  "Good news citizens!  Although the food and energy you MUST buy every day are up over 6%, the value of your home (possibly your only asset) fell 3.3% so we're going to call it a win at 2.7% – now get out there and gas up the car!"

I thought that a GDP over 4% would give us a rally, silly though it may be with everything else falling apart, but the 8:45 market reaction makes it seem kind of like they would have preferred a weaker number, which would give the Fed a proper excuse to cut.  As our French friend pointed out: We can't give a rate cut to that would merely help to bail out investors who have taken ill-considered risks!  Well can't is a funny word, shouldn't – really, really shouldn't – really, really, REALLY SHOULD NOT – that's the right word…

Ah well, back to the news:

Australia's Basis Capital Fund Management hired BX to sell its assets and filed for bankruptcy protection for it's second biggest fund.  The Yield Alpha Fund has assets of $100 million. That's down from $436 million on Jan 31st, according to Bloomberg data.  Creditors of the Basis fund include JP Morgan Chase Bank NA, Goldman Sachs International, Citigroup Global Markets Ltd., Morgan Stanley, Lehman Brothers International (Europe) and Merrill Lynch International, according to court documents. Those creditors all issued default notices to Basis Yield following its June 2007 devaluations (while telling you the sub-prime issues were "contained.").

In a separate report, Moody's Investors Service estimated revenue losses of 10 percent or less due to loan markdowns for the five largest U.S. investment banks in the second half of 2007.  “These funds are coming out of the woodwork and you have so many of them, no one is really sure how much exposure to the subprime market is out there,'' said Charles Wiggins, senior dealer at Custom House Global Foreign Exchange in Sydney.  Investors in the Yield Alpha Fund should know within two weeks if they have "any hope'' of a return on their investments, said Paul Billingham, a liquidator for the Basis fund at accounting firm Grant Thornton.

 

German state-owned wholesale bank WestLB AG, who presumably are NOT a hedge fund, still managed to lose $826M in "proprietary trading losses." "This figure is depressing," Chief Executive Alexander Stuhlmann said, referring to the charge. "On the other hand, it would have been wrong to delay our withdrawal from proprietary trading with spread positions, as it would have exposed WestLB to dangerous and incalculable risks of destabilization," he said.  Wow - these guys don't get that denial thing at all!

In the "sorry to be right" department, our friends at Carlyle Capital Corp (who we discussed Tuesday) "Wednesday said it will seek new forms of financing and reduce its target leverage after problems funding its virtual portfolio of U.S. residential mortgage-backed securities."  Mr. Stomber said the fund's assets are now limited to the Triple-A-rated agency securities and to about $125 million in bank loans it expects to hold onto – that's after raising $880M in their July IPO!

China's finance minister, who had warned of runaway markets, resigned for "personal reasons" today.  Mr. Jin will be reassigned to be the deputy chief of a cabinet think thank called the Development Research Center — a far less senior position than finance minister…

FRE (our Monday put play) posted a 45% drop in earnings with a $320M loss on new mortgages and warned for Q3 but we stopped out of them already, HRB also took a hit as perhaps expanding into the mortgage business may not have been so clever!

On the whole, I'll be impressed if we hold our levels:

  • Dow 13,100
  • S&P 1,440
  • Nasdaq 2,500
  • NYSE 9,350
  • Russell 775
  • SOX 486

 

Let’s be careful out there!

 


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  1. i thought this was good to start off the day:

    http://www.comics.com/editoons/stein/archive/stein-20070825.html


  2. Good morning everyone
    Phil Thanks for listing the Closing trades done yesterday.



  3. atleast Erin looks hot!!!!!!!!


  4. Good morning all. It looks like up is down and black is white again.


  5. TASR – up $0.60 (and the rest are in red :-) ) and the fun never ends.


  6. VIP-up 4% in Sh*tty market. Remember 5 for 1 stock split


  7. Serious server errors this morning!


  8. Phil, along the same thinking as COH to buy the 09 leaps and sell near term calls, would you look at HAL as a same type of trade. Buy the 09 35′s and consistently sell the near terms – thanks


  9. SHFL

    Earnings are on 9/7. Can’t help to think that since they’ve been beaten down and the casino stocks are doing well that they may be a decent play…for a little gambling money anyway.


  10. SHLD – this wasn’t what I expected.


  11. we got some volume this morning.


  12. Great Comic Fish – I used it above, thanks!

    MDR – I like it but option prices are outrageous. This is one of those rare occasions where I would endorse shorting the stock and selling the Oct $90 puts for $5.25, which gives you 6% upside protection and a 6% 50-day return if it goes down. You can also take the Oct $90 puts at $3.40 and stand ready to sell Sept puts if it goes the wrong way (currently $3.40 too).

    AAPL going well, I’m getting out of Sept DIA puts but will rebuy if we break back below -100. XXX


  13. NCTY – up + $0.89 to $37.41 Nice


  14. Wow, AAPL turned in granny smith aaple.

    j


  15. Celg-acting well Optrader congrats


  16. TH mortgage halted pending good news???


  17. Yep, those trader abort their vacation? I’m going holiday starting tomorrow, woohoo!


  18. why is the market so bullish?…


  19. HAL – it is too volatile vs. what you get paid for selling calls for my taste. Also it’s the kind of company that could erupt in a devasting scandal and take you out so I just can’t sleep with this one in my portfolio. SLB is a far better company.

    GRMN, TASR, CROX, AAPL, RIMM – nasdaq is flying so I’m going with QQQQ $46s as a mo play, $2.60 with a .15 stop. XXX


  20. Bear Sterns just went positive – buying PUTS Sep 110′s look good @ 8


  21. Phil – When you type “xxx” does that usually mean you are making the trade for your own account or just endorsing an idea/suggestion (or both!)


  22. Phil,
    This may be a bit much for this time of day, as it is long. The quote is from another option site, Option Investor.
    Do you have any thoughts?

    Have you heard about the Bin Laden Trade? There are currently several billion dollars in option bets that the global indexes will fall 15-35% in the next 24 days. These are not just any option bets or a total of all the puts in the option chain. These are specific bets of a magnitude never seen before. The existence of these bets has prompted chat rooms all over the Internet to label them the “Bin Laden Trade.” The challenge is in the quantity and valuation of the trades. Normally somebody buying 10,000 out of the money puts 3-weeks before expiration is either a gambler speculating about a dip or a hedge fund trying to protect long positions. This time of year either of those scenarios are normally valid tactics.

    Unfortunately the bets causing consternation on the Internet are much larger and more diverse than just a few thousand out of the money puts. For instance, last week somebody sold short 61,730 SPX 700 calls. Selling calls short has the same result as buying puts but a lot more dangerous. If the market goes down the call value shrinks and you buy them back to cover your shorts at a cheaper price. If the market goes up the value of your calls goes up and you lose money on the trade, sometimes a lot of money. Somebody shorting 61,730 deep in the money calls is taking a monstrous risk but this is not the end of the story.

    Those calls are worth $768 per share, $76,800 per contract. Shorting 61,730 contracts produces premium income of $4.74 BILLION dollars. Yes, billion. 61,730 contract times $76,800 per contract equals $4,740,864,000 in premiums. This is not idle chump change and not a frivolous bet. Reportedly this transaction was coded as a spread trade so I went looking for the offsetting entry. Why anyone would want to go that deep in the money for any kind of spread is pure lunacy but stranger things have happened. I found the offset in the SPX 1700 puts where 61,740 contracts were purchased long according to various researchers into the transaction. At today’s value of $230 x100 = $23,000 times 61,740 equals $1.42 billion in option premium. Now, if the assumptions are correct the trader has roughly $3.6 billion in premiums sitting in his account and he has a massive short position worth a huge amount of money if the market tanks. How many players are there that can risk $1.5 billion on an option trade?
    JB


  23. conceivable, xxx is actually a safe trade Phil’s recommend. Well not actually “safe” since there’s no such thing as “safe” investment. It’s just a trade that gives a good risk and reward ratio. Phil, I think you should put this on your FAQ since there’s quite alot of people asking about


  24. Phil,
    Do you have any guidelines on stop loss for our short term callers (which we sell against our leap)?


  25. Servers are very bad! Remember to go to my last post at http://www.seekingalpha.com/author/philip-davis for comments in an Emergency. It is VERY important to bookmark this because – if the server goes down – WE CAN’T NOTIFY YOU! New server Monday and it better work!

    I am not buying into this rally, just playing the motions so please note that a lot of moves I am making here are quickie trades where I’m very happy to make 10%. If I do not XXX a trade, then it is a trade I am discussing or telling you about but not a trade I think would be good for the average person and, if you are a $10KP player, then you shouldn’t be doing those either in this market.

    Home prices flat to last year.

    SHFL – I like those guys, they provide a very expensive, disposable product to casinos and there are more casinos every day. My issue with them is that table games have taken a backseat in a lot of the plans I’ve been looking at for new space but that doesn’t mean they have none and it’s all incriimental revenue. The ’10 $20s are $2.70 and I like that better than risking .65 on the current $15s, just in case….

    Down 50 is not bullish and I said yesterday thad GDP 4+ would rally (or was it 3.9) but now we have a battle between traders who think the economy is fundamentally sound and will grow its way out of trouble and the ones who think we are dying and we need a shot of Fed relief, which is less likely to come with good growth. We held our levels on that drop and I said I would be impressed so I am for now.


  26. APPL & RIMM acting like brothers
    ISRG- sweet


  27. Thanks Oskar. Yes, that would be a good idea.


  28. SHLD said they were disappointed but they did beat expectations so very mixed signals but I love the leaps on them, 2 years in a row they’ve been one of my biggest winners.

    Bin Laden Bets – we talked about those SPX puts last week and decided they were offset by other plays and did not necessarily constitute an actual bet on a major decline. I’ve got $200K worth of DIA puts and I’m bullish! It doesn’t mean as much as people would have you believe…

    Stop losses, I’ll make a post this weekend but we’ve been discussing it in each day’s comments and it’s in the strategy section… 20%. Don’t lose more than 20% if you can avoid it but that includes factoring in your gain on the leap, otherwise, don’t worry about it. When you stop out a caller who is in the money you are REMOVING your downside protection. So you have a life insurance policy but you are having a good day so you call your broker up and pay him how much premium to cancel it?


  29. AUY is being very friendly again today.


  30. JB, if your information is correct! It is very scary!!!

    Gmiles


  31. I have always interpreted XXX to mean a trade that Phil will try to do, if he can, or has just executed. Phil discusses a lot of possible trades, but XXX means that it is the right time and he will actually attempt to do it or has done it at the price specified.


  32. COH-OMG not going out of business today


  33. Q’s – there’s your +10% Phil. I don’t see how you get those fills. Could have @ 2.7 – 2.73.


  34. Stops – oh sorry , that is assuming you can’t roll! Otherwise, here’s one from the Education section (which I know you’ve read because that’s what all new members do!):

    http://www.philstockworld.com/2007/07/16/saving-trades-by-rolling-options/

    OMG – Yahoo is moving! The end is near…


  35. Buying AAPL puts. This is my daily trade, hoping that it will be better than yesterday’s…Huge profits on Leaps that I need to protect anyway. Glad I am not holding any of those overnight and making big money in the morning :) $112 to $138 in 2 weeks. That’s 25%. Just amazing.


  36. Nice cartoon Fish.


  37. Also sold some calls against my CELG leaps. That was a good run.


  38. KC- CMED acting well for you. If it stays above $35 looks interesting IMO


  39. XXX – they used to be trades I executed but my porfolio has too many open positions right now (in number but not $$$ amount) and I am loathe to add new plays so it’s morphed into more of a reccommendation but I will always drop anything to handle follow-up questions on those trades as I take my picks very seriously. That’s one of the reasons I want to do a purge, which I usually do in January, I want to get back on the same page with the members but the markets have been too crazy for me to do a massive cash-out. My interim plan is to start a new $25K portfolio after expiration day, that will replace the free picks portfolio, although that one has been so lucky I hate to let it go…

    QQQQ was going up as I wrote unfotunately but I wouldn’t have X’d it if I didn’t think it remained a valid mo play. One problem I notice is that often I put a play in and SOMEONE jumps in and overpays. We will have to have a private member chat about this as it is VERY uncool…


  40. Do you reccommend selling the QQQ and DIA puts now?


  41. Phil -

    I have AAPL OCT 145 calls and I sold SEP 130 calls yesterday at 6.9 – now 10.5 as a hedge (loss of 3.6). Should I let both options run up together or should I exit one leg (i.e. time it and then buy back the SEP 130s) and let the 145s gain back my 3.6 that I lost on the short side? Or should I just hold it and let the time value decay from the SEP 130 calls?

    Thanks.


  42. Good morning all – hope everyone is doing well.

    I just got back from vacation – toured and hiked up in the Tetons and Yellowstone, and met my daughter in Jackson Hole. Strange being back in Atlanta and seeing Leeseman on TV with the Tetons in the background.

    Also drove through the Salt Lake area — I think I found where im going to move to. Gorgeous, with mountaions all around — a skiers paradise that im gonna have to at least sample.

    Ah well. Back to steamy Georgia reality.

    Is there any new news on the investment club ? Im about to move from my horrible 3-day a week job to a real M-F gig (yeah, horrible…right) and wont have as much time to play in the markets and am interested in looking at the investment club as an alternative – is it still in the planning stages, or did it get stopped for some reason ?

    Thanks in advance, and hope everyone is doing well.


  43. Jacox Boy, Jon “DRJ” Najarian posted an answer;

    The issue of why someone would buy a put this far out of the money is not because they are looking for a 50 percent drop in the S&P 500 by September expiration. Instead this is part of a “BOX”, or a four-way trade where there is a call spread married with a put spread, thus creating four sides of the so-called “BOX”.

    Here is how and why traders would do this:
    Trader A wants to borrow money and negotiates a rate to borrow money from the crowd. They negotiate the rate and then put on a BOX in the S&P 500 options.

    Why The SPX Options? They choose the SPX because these are European Exercise options, meaning there is no early exercise. Rather the in the money calls and puts turn to cash on expiration day ONLY.

    What is a BOX? The trade in this example is the purchase of the September 700 call and the sale of the same number of September 1200 calls. Next the purchase of the September 1200 put and the sale of the September 700 put. This would be an example of a 500-point BOX.

    At expiration this BOX will be worth 500 come hell or high water. If the SPX is at 1400 the 700 call will be worth 700. The short 1200 call will be worth 200. The put spread will be worthless, thus that 500 price. At 1000 the 700 call would be worth 300, the 1200 call will be worthless. The 1200 put would be worth 200 and the 700 put would be worthless. Thus, at any price level of the SPX, the spread will be worth and cash out at 500.

    Knowing this, the borrower sells this box for 498.50, a discount to 500 of 1.50. That discount is the interest the seller will earn over the next 23 days for taking in this huge credit into his or her account. The lender(s) buy the BOX for 498.50, knowing that it will be worth 500 in 23 days and effectively lending cash for whatever the negotiated rate was. The discount varies based on that interest rate they negotiate and the time the money will be leant out for.

    So, when you see spreads going up on multi-hundred dollar in the money calls or puts in the SPX, you can be the smart person at the cocktail party that knows the reason the trade went up was simply a banking function. On the floor of the CBOE hundreds of millions of dollars of such trades happen every day. Arguably the CBOE is one of the largest banks in the world and since all options on this or any of the six U.S. options exchanges are cleared through the Options Clearing Corp. (OCC), there is NO CONTRA PARTY RISK. The full faith and credit of Goldman Sachs, Lehman Brothers, Deutsche Bank, UBS, etc backs each and every trade with full transparency.


  44. Another nat gas build, 44BCF and they are OUT OF ROOM to store it. We could be heading back down to $4 if there is no hurricane season.

    I’m mildly concerned about the Qs if the Dow doesn’t catch up so half out with a .10 stop on the rest. XXX


  45. NOV-keeps running, sold a few more of Feb 100 before numbers. $1480 gain per contract. Still have some left along with Nov for split and earnings $$$$$


  46. DRYS flying. EXM might breakout soon.

    j


  47. Phil – got a buddy who wants to sign up, but obviously there’s a waiting list now. Is there a “time frame” for when he / others can sign up? Does it depend how “far down” you are on the list? he just tried a few minutes ago…


  48. Demetrius, if that came off OptionMonster, there may be rules against posting it, especially verbatim. Does anyone more knowledgeable than me know such things?


  49. Do you reccommend selling the QQQ and DIA puts now? – I sold the DIA puts near the open, and the Qs were calls just to be clear…

    AAPL – see my earlier comment re. losing 20% net on a spread.

    Be careful, looks toppy now… Working my way back into DIA $133 puts now at $2.83 and $132 puts at $2.42, saved about .20 by dumping earlier and stepping back in so I don’t have to be too careful. XXX


  50. Phil, are you still holding GE Oct 140? Did not see it in your list


  51. djczing, email dday97@yahoo.com and tell him you’re interested in the investment club. Give him your name and your “djczing” handle so he knows who you are.

    I think he said the minimum was $5,000 and the max was $25,000. (Please confirm!)


  52. It did come from Option Monster, I should’ve summarized it. It wasn’t a trade (which is the point of OM’s service), so I assume it would be ok. I apologize.


  53. AAPL- Phil you selling any Sept covers? $140 look sweet but greed is setting in! LOL


  54. AAPL spread – if it were my play I’d hold up at the moment but, if it keeps going, I’d bite the $3 bullet and roll the caller up to the $135 calls once they hit $7 as that’s plenty of downside protection. You don’t want to do it right now because your giving up delta to your caller by moving him to a higher bracket and there IS a chance, that a $10 run-up in Apple in 25 hours may be a bit overdone… You can also spend $2 to roll yourself down to the $140s as the spread from the $140s to $135s is $2.50 and the next spread is $3 so, if you’re that bullish, this makes sense.

    Welcome back DJ! DDay is in charge of the investment club and had some kind of contact mail set up (I think it came up in yesterday’s comments). He seems to be ready but needs enough firm commitments to make it worthwhile.

    AAPL – actually for $7 I’m selling those $135s myself against 1/2 of my longer plays! XXX


  55. BBD, congrats on NOV, I have watched that trade you did, and it is impressive. I wish I followed LOL!!


  56. doubleclick: yah your min/max sound right.

    Thanx for the info !


  57. demetrius, speaking of. how do you like optionmaster? i never really looked into much after i found this site but i guess it could be cool to learn about other strategies and such. what are you thoughts on it?


  58. sorry optionmonster


  59. I just don’t want any trouble for any of us Demetrius, I don’t know how proprietary they are. I appreciate your passing on the information, there has been a hell of a lot of blog buzz about the position.


  60. Phil, do you like inter-dealer treasuries broker espd. There seems to be an unsual open interest in nov for the 7.50 calls and there is news of an acquisition of BGC. Are treasury exchanges going to benefit from this market ?

    Appreciate your insight
    -t


  61. IRF

    Phil, need your advice. I have (4) ’09 45′s and (4) ’09 40′s covered with (4) Sept 40′s. IRF dropped 7% today due to continued audit issues (CEO put on leave). As it stands, my Sept 40′s have no premium left and I would be up just a few bucks if I exited the entire position now. I’m worried about being naked on my LEAPS, but hate to sell any cover at this point.

    Thanks much .. Brian


  62. Keeping a close eye on the Ten Year, I think if it breaks and holds below 4.50 that this market is going to break hard down, looking at S&P futures to 1445 maybe 1435.


  63. Honestly? I like them, it’s like having you’re own trader in the pits… He tells you what’s hitting hard in options and why (earnings, etc)… Most of his options are like 20-80cents, so they’re either a double or you lose all your money.

    Most of the time you can come out with 20-50%.. But recently when the market slammed, so most of his options expire worthless in that time. But it’s nice to have fun with them in bull markets… He does recommend puts too, but not as often (even in this weather).

    They’re 500 a month.

    Bloomberg offers a similar thing called an “option block trade monitor” on their terminal… I like that feature a lot, because i’m pretty active… But bloomberg is 2k a month, with a 2 year contract. If you break 2 years you have to pay 50% of the remaining. And they don’t exactly give you advice on which option is part of a box trade, straddle, hedge, etc… So you’re more in the dark.


  64. OM doesn’t show a track record, which is sketch at the same time.. You have to be conservative with their trades, and you will be profitable.


  65. Thanks Demetrius, great note!

    Pushing back to neutral at the moment and bulking up my squeeze as Bernanke can send us below 13K tomorrow or back to 13,500 with a single word (Imagine the power!).

    Buddy sign up – as this does not happen that often I see no reason why Jared can’t give him a pass. I’ll send him an Email.

    Yes it is PSW policy that you shouldn’t post things that you shouldn’t post… I find it’s rare that I can’t take something like that and google a significan part of it and find it for free, which is why I prefer to post links.

    GE $140s? Goodness no! The $40s however, I have 50 of.

    We’re still holding up very well but I can’t really bring myself to buy calls…


  66. Thanks Phil (and of course dday!)

    Ill send along an email as soon as I figure out what got disconfabulated with it while I was gone.

    This is a heckuva market environment to be putting together a portfolio.

    Looks like 20 may be the new bottom on the VIX !


  67. BillBigD – CMED. Funny you should mention this. I didn’t enter the trade as the long call price shot way higher than I thought reasonable before earnings. Looks better now, but busy playing AAPL, MICC etc.


  68. DE going up nicely. They announced stocksplit yesterday. Hope it will have a pre-split run.

    j


  69. ESPD – I would like them better if they were still at $7, where they started the month but $8.29 just makes it too risky for my taste.

    IRF – so the initial audit concerns weren’t enough to concern you? Cramer just said yesterday that accounting issues are the one thing he will run screaming out of a stock over and rightly so (by the way, he took my advice and went back to a more fundamental/educational format and I already like the show better). Well you have 18 moths to recover so it’s a tad early to panic over a day drop but this could be worse than you think as THEY PUT THE CEO ON LEAVE! Of course buy out the caller on a drop like this but wait and see if they bounce before you run. If it were me, I’d roll the 4 $45s for $1.50 to the $40s and pray for a bounce and sell 4 Oct $35s for $2.50+ (when it looks like it’s going back down) to start making back some money.


  70. GO Dow!!!!

    Picking up QQQQ $48s at $1.55 with tight stops and will turn around and sell these on a pullback very quickly. Rolling up my DIA calls per mattress rules (what the hell?)


  71. Najerian $500 a month??? Holy cow – call my agent!

    Boy those AAPL $135s at $3 were some $10KP pick – like I said yesterday, better to make 1 bet a week you’re almost certain of…


  72. JBL- Thanks! I know you followed the trade. I stepped in pretty big and still half 1/2 left. Did I think it would be here in two weeks NO. But knew it would be by Feb. and was hoping November. LOL


  73. BG- picking up speed


  74. Phil: I have stuck to my guns on my QQQQ Sept puts, still think we will retest lows (less confident now though), wondering if I may need to roll to Oct in order to salvage this heavy position. I have QQQQ Sept 20-48′s, 50-47′s, 20-46′s, and 20-45′s.

    Would you roll, if so when and to what strikes? Thanks for the help.

    I feel like George Costanza explaining “shrinkage” to Elaine. Kind of embarassing.

    Greg


  75. AAPL-You can buy the Jan $140′s for $15.40 and sell the Sep $140′s for $4.80. Seems like a pretty good deal to me, especially knowing that we have macworld and earnings in January.


  76. Optrader,

    Just an FYI, December is generally a dead month for Apple, for the last 3-4 years the stock price has been either flat or down for almost entire month of December. In addition the last week or two of December brings a lot of volatility. Last year was the iPhone announcement/Options scandal, but prior years to that December has been dead.

    The major run-up usually ends before Thanksgiving and continues after first week of New Year. So I would either sell or seek protection before Monday after Thanksgiving on any Apple positions.

    Other than that at this point the trade you mentioned sounds good.


  77. QQQQ – now I’m squeezing the Qs with the $48 puts at .70 in a 2:1 ratio to the $48 calls if they can’t hold 2,585

    Ahh, it’s the NYSE that’s bothering me. I really want to see them get positive or I’m worried.

    BG and ADM – something up in biofuels?

    Shrinkage – LOL! Rather than “ladder” positions I always prefer to take my loss and transfer it to the basis of the next position so I know how stupid I’m being when I’m fighting the tide. It’s a good thing you caught me on a rare Q watching day.. We broke HUGE upside resistance at $48.50 and I have been saying for ages that tech must set us free, this 2 day run has me thinking that the Fed is “in the bag” and we may finally be ready to rotate.

    Step should be to sell the $50s against the $47s to stop the bleeding (only because you have 50 of them) then watch that 2,585 line along with the other indices for a sign of pullback. You want to have a tight stop on the sold $50s but this gives you time to think.

    Step 2 I would cash the $45 and $46 puts for more $48s and stand ready to DD at .85 if they turn or sell more $50 puts if the other indices start to run, taking the Qs with them. Those $48 puts were $1.45 yesterday so you’re effectivey hoping for either disappointing noises from the Fed or simply a sell program to kick in later, either way would work for you. Non-greedy exits are key, you want to get even now, not win!


  78. Thanks Phil!


  79. Phil,
    Is LFC leap good for LTP?


  80. Phil – Great call on the Qs!


  81. Why do I get the feeling that this market is gonna dump tomorrow when Bernanke remains in status quo monitoring mode. Am I wrong in feeling that a rate cut (at this point) is only about a 25% probability ?

    Hes on a tight-rope. To me if he lowers rates itll have more dire connotation than if he doesnt.
    -He may be seen as catering to the markets
    -He’ll further devalue the dollar and infuse yet more liquidity
    -He’ll stimulate further commodity (and other) inflation
    -He’ll paint the picture of a contrived market

    I think at this point that the weight is more towards /no/ cut tomorrow, or at least until further data indicates a material slowing of the economy.

    I think our government now looks at our markets as a major underpinning of our country’s welfare, rather than a risk/value machine. More and more the market is counted on to fund everything from our spending to our retirement and any destabilization is no longer viewed as normal and acceptable adjustment. The problem is the more they try to regulate and control its movements, the closer they drag the whole financial system to the edge of a cliff.

    Instant gratification has a dire price. While I would love to see the markets zooom on a rate cut tomorrow, in the long run it wouldnt bode well at all. I think we need to take the (big) pain now rather than the bigger pain later.

    IMHO, of course…


  82. ALBO- Keep VIP on your screen it isn’t over.


  83. Thanks Phil


  84. SNDK was a good play as usual Phil.


  85. Another biotech fav
    PHRM
    BofA Says Pharmion Shares Undervalued
    Friday August 24, 1:27 pm ET
    Pharmion Shares Likely to Benefit From Increased Sales of Vidaza, Thalidomide, Says Analyst

    NEW YORK (AP) — With sales of drugs Vidaza and thalidomide likely to generate $270 million in revenue in 2007, Pharmion Corp. shares are currently undervalued, Banc of America Securities analyst William T. Ho said Friday.
    ADVERTISEMENT

    Boulder, Colo.-based Pharmion is a drug development company focused on acquiring or in-licensing compounds for the treatment of blood disorders and cancer patients.

    Ho started coverage of Pharmion with a “Buy” rating and $59 price target, implying the stock will rise 53 percent over the next year from its current level of $38.46. In the past 52 weeks, shares have ranged between $17.49 and $45.25.

    “With five products on the market or in development, we believe Pharmion is undervalued,” Ho wrote in a note to clients. “Despite a potentially unfavorable survival outcome for satraplatin in late 2008, Pharmion has two significant catalysts that could drive upside to shares.”


  86. yes, thank you for the info. I will keep it in mind, even if I am not a very strong believer of “seasonality”. I think the market can be affected in so many different ways….


  87. PHRM contd

    “With the recent release of positive top-line survival data for Vidaza in MDS, we feel confident that the EMEA submission for EU approval in the fourth quarter should be successful by late 2008,” Ho said. “In the meantime, we believe data presentations potentially at the American Society of Hematology meeting in December will be a catalyst that drives increased U.S. demand and market share gains.”

    With EU approval, Ho thinks Vidaza sales can rise from an estimated $169 million in 2007 to potentially $700 million worldwide by 2011. The analyst also believes investors aren’t full appreciating the sales potential of thalidomide in the EU, which he thinks will rise to $139 million in 2008 from $81.7 million this year.


  88. BTW, anyone seen FSLR flying today?!?!


  89. AAPL Jan $140s – absolutely, especailly as you get a look at earnings too.

    LFC – combination of limited data points, insane volatility and the fact that it can gap up and down while you sleep do not make this a good LTP play. Also, at $71, up for $25 in early ’06, they may be a tad overvalued (but it’s hard to tell reading only semi-annual income statements (and nothing since last December). If you are going long on a 2 year option, you’d better be damn sure the stock has a better than 50% chance of making your strike price by then. The Jan ’10 $75s are $19.15 so you need another 100% increase off the ’06 base to get you there. You need to DENY, DENY, DENY the drop to $50 on the 17th as well as the fact that had you sold a $3 $55 call on that day, you would now owe your caller $17.50. The LTP plays should be things I can walk out the door and not worry about, even in this market…

    DJ – very likely! We’re in a downtrending channel that tops out at 13,300 with bare resistance at 13,000 and I’m upping protects (no Q calls now, just puts) to the downside. When we were healthy we had a 400-point channel so I’d say 12,900 should be good support. It would be AWFUL to break below there for more than a bit as we’ll start to drag the 50 dma into a death cross (where it goes below the 200 dma) and that would be time to fold up the tents for this party.

    The question is: Does Bernanke have the cajones to let the market test 12,900? I doubt that Paulson does or he wouldn’t have felt it necessary to posture last week. I would be thrilled if the Fed told us to “take a hike” and the market retests and holds that level as THAT would make me confident. Anything else is just manipulation.

    I’m not rushing out of regular calls as Bernanke won’t be on until later tomorrow (I think) but I am taking plenty of index puts. Also, I have a meeting tomorrow morning so revenue neutral would make me happy (especailly after today’s gains).


  90. a lot of bargains in biotech.

    a good sector to be in if a consumer slowdown begins snowballing


  91. Just noticed this article out there today on green power companies…

    http://www.theglobeandmail.com/servlet/story/LAC.20070830.RGREEN30/TPStory/Business


  92. I don’t think Bernanke doesn’t care much about the dollar, and he’s not here to save the market, but i doubt he’ll tank it either…. Not once that I remember has Bernanke spoke and the market tanked.

    With that, I’m shorting the market. The fundamentals are bad, like look at today. H&R Block Q1 loss, Tiffany Profits declined, Sears Holdings Net income and profits down, Walmart Downgraded by Lynch. I doubt Dell will have anything good to say other than “we’re restructuring”..

    The market is acting like a kid with ADHD. We can’t just briefly touch 1370 on the S&P, and be like “Oh there’s a our correction, time for bull mode”… While the rest of the economy is tanking. Rate cuts take at least 6 months to realize, we know this.

    VIX is still in the mid 20s, if you look at the daily for it, it looks like it’s trying to consolidate.

    Nothing shown this week means anything either. The low volume heading into labor day allows hedge funds to impress investors by moving stocks up and down. When the gray beards are back next week, I’m thinking we’re in for another decline.

    I would be careful with your trading, or not trade at all… There’s a reason why CNBCs Fast Money is on vacation.


  93. *I think Bernanke doesn’t care much about the dollar,


  94. Optrader …. good AAPL ideas. I bot the Jan 140 for 14.90; sold the Sept 140 for 4.40.
    Also hedged my 600 long shares w/ Sep 135 puts & traded them twice already.

    Shorted RIMM near top; covered. May hit it again on rally.

    TMA; caught a break; sold my shares bot in $11′s for $13 on convert news. Will stay away from this for a while. Convert deal very dilutive. I don’t see how TMA moves beyond say $12-13 short term, or even longer. Maybe a big short cover ahead of Sep 17 divvy payment. Fed did not come to their rescue. Too bad.

    AHR starting to tick up a wee bit.

    Phil, or anyone, looking for info on Trader Status procedure, implications. Any suggestions as to where to look ?


  95. BDC – re:Biotech – any names you follow for shorter term moves?


  96. Waiting to see some “XXXXs” behind an index put suggestion, Phil.

    “SAFETY PAYS”


  97. Which ones apply to our current market:

    Bad news = Good news
    Good news = Good News
    Bad news = Bad news
    Good news = Bad news

    (I’ll throw in a couple more)
    No news = Good news
    No news = Bad news


  98. One other thing to keep in mind for today and tomorrow … month end mark ups / mark downs.

    I don’t even want to try to handicap what happens tomorrow; think I will go back to the beach and forget about it until Tuesday.


  99. Demetrius – What about “All of the above”?


  100. PHRM – Interesting but do you think they are market proof? They are already up 40% since 8/1 so not the kind of play I like to chase. It’s sad because I remember that thalidomide story from ages ago and I thought it was totally out of left field that they were rehabilitating that drug and it would make a good LTP play as so many people wouldn’t touch it until they see the numbers.

    12,900 is NOT tanking the market. We were thrilled to make 11,500 last September! On the whole, you shouldn’t (and I won’t say can’t because can’t would imply there were some rules or logic governing market behavior) have a market that grows faster than your economy plus exports. That’s pretty much a “Duh” observation and it was true for the first 150 years or so of the markets but it’s been thrown out the window sinde the mid 90s.

    Cap – it’s some kind of IRS filing thing, I posted links wherever it was you asked about it earlier.


  101. Demetrius –

    You forgot some:

    Good news = no news
    Bad news = no news


  102. AGIX – Wish I’d bought the early move when I asked a couple days ago! Story of my trading life. The win is, I’ve been safe, covered and played Phil’s AAPL call on the safe side.


  103. Thanks Phil … I will check there (yesterday’s posts I think).


  104. Just heard that the UN was (or is being) evacuated due to “Nerve gas”.. from a co-worker who’s wife was also evacuated from a nearby building.. can’t find confirmation on cnn, or 1010wins as of yet.. but also heard it had passed through AMEX a few minutes ago..


  105. confirmed – ABC news.. http://abclocal.go.com/wabc/story?section=local&id=5619175

    --
    ABCNews has learned that United Nations weapons inspectors discovered six to eight vials of a dangerous nerve gas, phosgene, as they were cleaning out offices at a U.N. building in New York Thursday morning.
    --


  106. FWIW, after a 2 week wait, E-Trade got back to me and lowered my option contract rate to 6.99/0.55.
    Better than it was …

    Schwab next for renegotiation.


  107. Phil -

    Yup – I drew the trend lines when I was lookin at the charts last night. Pretty distinct and should hopefully make for some good clean signals either way.

    The DIA is rubbin its head on the top line now – with the 200-day MA at 129 !

    With the light volume ya gotta figure any bias other than meandering wait-mode is gonna drive it hard in either direction.

    As far as Paulson is concerned, I dont like him being on CNBC. Ya gotta also wonder how much stake he still has in GS — geez talk about a motivation to manipulate the markets…


  108. Cap: Is that 6.99 on stocks and .55 per option contract all in?


  109. Index put Xs – they are very dangerous plays and are Xs for people who are too heavy with calls but I do not generally recommend them as a trade. The Qs seemed like a very high probablility to the upside, which is the only reason I hit those earlier. If the Dow breaks 13,260 then you could do a mo play on the DIA $132 puts at $2.35 but you have to be really careful until we get below 13,250 where a bounce back and a break back over 13,260 should have you taking the money and running. If you can’t accept a quick loss like that and move on, these plays are not for you as there are too many random factors that can hit you at any time. Also, if you can’t say I made 10 cents as happily as you can say I made a triple then this also is not a trade for you.

    No news is good news (because you REALLY don’t want to hear the actual news!) If you hadn’t added that I would have said it anyway…

    This is the market reaction to a 9% improvement in GDP with no sign (cough, cough) of rising inflation – imagine how bad news will be taken! If Santy Clause doesn’t come down the chimney tomorrow the market will throw a tantrum but Mommy (Paulson/Schumer/Bush) will tell us that Santa may still show up on the 18th if we’re good so it’s likely to be chop, chop, chop if we don’t get a hike.

    There’s news on CNBC that the market dropped on nerve gas found at the UN so now I have to cover the upside again! This is getting annoying but I’m going to even out (against my will) with DIA $134s, mainly because they’re just $2.10.


  110. HRB just Broke day High recovering from my 17s puts :-)


  111. Hmm, spoke too soon, not looking neccessary on the $134s but it’s tee’d up.


  112. Sounds like the nerve gas was either a sample used for calibrating sensor equipment, or a long held (and stupid) keepsake from pre 1991 IRAQ.. Definitely not good, but also not a new threat other than it being discovered..

    Given the timing, it’s probably what caused the drop right at noon, and subsequent recovery once disseminated that it’s not a terrorist action.. -Peter


  113. Am I losing my mind or did CNBC just say the three ways of valuing securities are

    1. Mark to Market
    2. Mark to Model
    3. Mark to Make Believe


  114. come on mr dow industrials! wake up!!


  115. Phil – Would you advise an index straddle as a play on Bernanke’s speech tomorrow? After all, the “non-event” of the release of the FOMC minutes moved the market 300 points. If Bernanke sneezes tomorrow it could move the market 500!


  116. Day trading CWTR, might be an interesting play.


  117. lol all of the above, tell me about it.

    Well it’s good that no news is good news… It’s bad that there’s no no-news in 1st week sept. Which is bad news…. Maybe i’ll eventually I will start making money on my shorts :/.

    Here’s the news for next week if anyone’s wondering.
    http://forexfactory.com/calendar.php?c=2&week=1188691200&do=displayweek&month=9&year=2007


  118. I wonder what the perimiter is for evacuating nerve gas?

    Per the ABC article: It seems like its not terrorism, just some dumbass decided he would tuck the bottles in his desk drawer for safe keeping! If it is properly sealed, it should not pose much of a threat unless it is dropped,” said former New York City emergency services director Jerry Hauer, an ABC News consultant. . “It shows immense stupidity to have that kind of thing sitting around as a souvenir.”

    Well, that should make us all feel better!

    Damn, that was an expensive bit of hesitation on the DIAs…

    Index Straddle – well I have a couple of hundred K on it so, yep, I would advise it! It’s also nice as we’re volatile enough and the expiration is far enough away that you can viod it for a relatively small loss if nothing happens.


  119. 6.99 on stocks.

    6.99 on options + 0.55 per contract.


  120. Hey Phil looks like Bush found his WMD from Iraq!!!lol


  121. Phil – Thanks. It does seem like a pretty good volatility play.

    Dragon – Judging by his popularity, Bush is his own weapon of mass destruction


  122. Why don’t you trade SPY? You seem to get clearer signals on it… Look at the volume reversals between the two.


  123. wow have you guys seen the blonde bombshell on bloomberg?! Wowzers! She rivals Erin for sure.


  124. lol Erin was on Bloomberg before.


  125. I don’t pick on Bush anymore – now it’s just pathetic…

    UNH looking a little interesting again. I was wondering if they would hold $48.50 but they are breaking back with authority and over $49.50, IF the Dow gets going, then the $50s at .70 are a pretty good deal.

    The market internals are weaking so now I’m glad again that I didn’t hit the additional DIA calls… very schitzo day so far.


  126. Maybe we should start a Hedgefund, and our only strategy would be to mass-start rumors across the internet.


  127. Scratch that last one.

    Maybe we should start a Hedgefund, and our only strategy would be to get the most predictable person -ever- as president. And just buy war stocks and oil…

    Wait, this has been done before no?


  128. SPY – I did the math at one point and decided the DIAs pay better. Also, the Dow is always top of the list and in your face wherever you go so I like it better as I can watch it all the time. I know that’s a little old fashioned but I’ve been doing this since you had to read the paper to find out how your stocks did so it’s not a habit I’m likely to break.

    Rumor fund – that’s what hedge funds do! Cramer did an actual interview where he admits to blatant market manipulation (was very insulting to Bob Pisani, effectively saying he was an idiot who would repeat whatever “scoop” Cramer fed him).

    GOOG fading – Buh bye Nasdaq, it’s been fun!


  129. 2:1 puts!


  130. Looks like I am done for the day … going to take the kids to Coney Island to the Aquarium.
    GL all…..


  131. YES Darkside! Loving the ratio.


  132. Interesting that gold is not going up, big disappointment for the miners but a Fed cut should change that. Brokers turning down, Apple must be covered, $135s are my choice. GOOG $510s are always a fun sell…

    Sold FXI $146 calls for (LOL) $8.30 – these things were only $9 when the FXI was at $154! XXX if you have that kind of account.


  133. Cap -

    http://www.traderstatus.com/ has a lot of good info about selecting trader status. I have not used their services, so have no opinion there.


  134. IRF

    Thanks Phil,

    yes, the audit did concern me, but they looked to have stabilized quite a bit when I bought. I was up 30% on my LEAPS .. until today. My covers have left me perfectly even (can’t complain). Given the market conditions, I’m going to chicken out and dump it all. If this market tanks, they will drop like a rock. Low risk tolerance right now.


  135. Heh – ive just been looking at the chart for the SDS – its an inverse SPY x 2 instrument.

    Its interesting to see the uptrend its in and compare it to the downtrending charts of spy and dia.

    Right now its on the bottom of its distinct uptrend channel… Its sitting just below its 200-day MA, with the 50-day beginning to trend up towards the 200-day. If you are long the SDS then you hope for that 50/200 cross – if you are long the market, well… then its time to gird up your loins…

    Speaking of leverage on leverage – itd be funny as heck if SDS and its ilk were optionable…


  136. I don’t really understand the purpose of ultrashorts… If you want leverage there are options… If you want liquidity, then use futures.


  137. I use the ultra’s to hedge in a trust fund I manage, can’t do options or futures in that account.


  138. Have fun Cap.

    From the WSJ: Artist Damien Hirst sold a diamond-encrusted skull for $100 million. In commentary today, Breakingviews.com says this may “signal a turn in the art market,” because there was no “bid and ask” spread — he got the price he wanted, whereas previous mega-art sales went for much more than originally asked

    I’m telling you, they’ve already moved the NY Post staff in!

    Also: http://blogs.wsj.com/marketbeat/2007/08/30/brokers-target-their-rivals/

    “The one-upmanship continued today, as Lehman Brothers lowered earnings estimates on Bear Stearns, Goldman Sachs, Merrill Lynch and Morgan Stanley, citing the “dislocation in the credit and asset backed/mortgage markets.

    ”The moves by analyst Roger Freeman come amid the eruption of credit problems in various markets, and Mr. Freeman calls the revisions “no surprise that published earnings estimates have started to come down in earnest given that broker earnings can be impacted materially by just a few days of results.”

    “His move comes just after Merrill Lynch’s Guy Moszkowski downgraded the ratings of Bear Stearns, Citigroup and Lehman Brothers on similar concerns, as well as lowering estimates on Goldman and Morgan Stanley. Goldman Sachs got the party rolling over the weekend with estimate revisions on Morgan, Lehman and Bear also. (Note to Morgan Stanley: it’s your turn at the plate.)”

    Here’s my man Herb reacitng to Bernanke/Schumer:

    http://blogs.marketwatch.com/greenberg/2007/08/creative-mortga.html

    Herb doesn’t get it, you can’t “fix” this problem by being realistic, realistic is that a guy earning $50,000 a year should be able to find a NICE $175,000 home for his family, we left realism 20 years ago. It’s like saying to GM – just start making cars that people like at affordable prices and don’t promise your employees benefits you’re in no position to fund and then deny it for 30 years… it’s all a bit late.

    SDS – if those things had real options I’d have a field day! The purpose of these is for 401K and other restricted investors who can’t do options or short and need coverage. They are very liquid and useful enogh for that purpose and were almost a no-brainer at $50 when we topped out on the indexes but puts are MUCH more rewarding…

    Ah, see, Denver is case in point.


  139. SPY; triple bottom, or break?


  140. Ultrashorts might also be an idea if you dont want to buy options at a 25-30% implied volatility.

    My view is the more choice and flexibility the better — as long as you completely know what you are getting yourself into, having lots of choices can be nothing but a good thing.


  141. Don’t know if someone already posted this here, but, FYI, the Bernanke speech is at 10 am Eastern tomorrow. Phil mentioned that the speech might be late in the day in an earlier post.


  142. S&P popping up…


  143. 100 million skull cap?… Or biggest tax deduction ever…. You know, work related expenses.


  144. Phil, are you in on the BSC Jan 10 leaps?


  145. Europe had a strong close (1%+) but we are LAME… They are up becuase they think the ECB won’t raise rates to allow our Fed to lower them. Thanks JE, the timing of Bernanke’s speech is interesting as the EU will go into the close on it.

    Iran warns agaiinst sanctions and oil goes down – interesting: http://online.wsj.com/article/SB118842562383512687.html?mod=hpp_europe_whats_news

    Now I have to cover closer to even, maybe 60/40 on the index put/call ratio, which does little more than protect my calls on the whole… Can’t risk it since I won’t be back until noon I think.


  146. Sorry, meant BSC 110 Jan 10 leaps


  147. Where are you going? TRIX crossed years ago, we’re heading lower! Or i will lose my shorts in this tide.


  148. Demetrius,

    I’d ask the same question about XLF.


  149. Phil,

    Don’t you feel that all markets eventually revert to their mean so maybe that guy making 50K might not get the house for 175K but he may get it for 190K. Instead of the +350K where we live in NJ.


  150. BSC – just 10 of the $120s. Haven’t seen anything yet to entice me to take another round and plenty of time to wait.

    Where am I going tomorrow? Project meeting. Where am I going with my DIA direction, I’m trying to stay on the right side of a pop but I don’t want to get overly bearish. Also, sometimes you can overprotect, the STP made a 30% (of the original basis) jump this week so really all I should worry about is not losing that. At a certain point, you are covering the gains on gains and putting more and more capital at risk when you only really win when you cash out.

    On that note, I’m out of winners like SNDK, TGT here, not going to wait for them to drop, and I’m going to try to whittle my way back to more cash.


  151. test


  152. Phil –
    Remind me, when you’re not sitting in your chair the market goes down, right? Just lets us know what time you’ll be sitting down tomorrow morning !


  153. Reversion to mean – I’m a very big believer in basing a home on income. I posted an article a week or so ago about wage slavery and that was, in effect the net result of the depression. If you are forced to pay 5x your income for a home at 7% and your income goes up 3% you will, in effect, never own it until you die. Without appreciation, it’s an equation that simply doesn’t work so, if rates go up, either wages have to go up or home prices have to come down but even 350% of income is painful (and we’re not even discussing runaway utilities and taxes).

    The last report I saw said that personal income is up only because hours worked is up, not wages, which actually fell. I’ve written extensively about the destruction of the middle class (defined as the “bottom” 90% of the people in this country) and it simply isn’t a sustainable economic model. Just as in the 1920s, you have a very select group of ultra-rich people (who I call the 1,000) who suck the global economy dry and really don’t care if the bubble bursts because they are very confident they will float under their own power while the other 5,999,999,000 of us get crushed under the reality of the market at which point the 1,000 get to step in and buy out our assets (especially land, they love land) for 10 cents on the dollar.

    It’s a game plan that has been repeated by the wealthy in country after country for thousands of years and I don’t even think Europe is immune in this round…


  154. Herb Greenberg is the man! I love his typically bearish attitude in commentary and interviews. I really like the Street Fight episodes when he battles the nimrods of Fast Money. It’s always amusing watching poor Herb getting abused on that show – barely able to finish a sentence without being cut off. And then the Winner is voted on and nearly always comes up to be the Fast Money Team. Yet Herb apparently just laughs it off and keeps coming back for more and more – on Fast Money and Cramers show.

    $50,000 salary and a $175,000 home? Heck, I know plenty of $50k earners on the west coast sitting in $300,000-500,000 shoddy condos that they signed their life away on – interest only ARMS, huge prepayment penalties, la la la la la…. It really as if people will just sign anything without reading or caring what the details of the agreement are. I’m still a happy renter living on the west coast.


  155. if nasdaq goes red i think we may get a few panickers


  156. Sold 1/2 AAPL puts. That was much better than yesterday :)


  157. Nice roll down with SNDK phill, good earnings :-)


  158. LOL Optrader – you’re doing better than me so far, only up $1 on sold Apple calls… Check out AAPL and RIMM day charts – almost looks like theres a mistake when you flip them!


  159. I have read somewhere a “conspiracy” theory that a depression is in the process of being engineered by those “1000″ in order to do just that, their 10 cents on the dollar ploy.


  160. Phil, I’m sitting on a few calls (that have finally passed my 30 day window) for AAPL at various strikes (140, 150, 200).. All are currently 2010s.

    Do you have any thoughts to what strike/expiration would be good to consolidate my LTP aapl position to?

    And would now be a good time, or would I be better off waitting for a pullback given recent strength?

    I’ll likely sell calls against the position in the future as a way to protect/profit WRT the 30 day window.
    Thanks -Peter


  161. Yummy XOM puts – going to go for it with the $85 puts at $1.75 with a .25 stop. XXX


  162. naked puts?


  163. and lol to your response, that was hilarious.


  164. AAPL 2010s – I think I like the 150s best, you can always roll up and out later but if you have window issues, you can use the mix you have to aggressively sell the Oct $140s at $7.40 against the lower two with the $200s offering some degree of upside protection. That’s a 20% ROI plus $6 of headroom for 50 days – not bad…


  165. “When there’s blood in the street – buy real estate”

    After “the 1,000″ single handedly caused WWII to happen the cycle was compete:

    1) profit from the bubble (commissions and fees) – 1920′s
    2) profit from the crash and depression (shorting and real estate) – 1930′s
    3) profit from the war (war profiteering – everyone’s favorite!) – 1940′s
    4) profit from real estate in Europe and Japan (nukes have a way of ‘resetting’ property values) – 1950′s


  166. Why xom vs. cvx puts?


  167. Naked XOM puts – yes. I was going to short oil into a run-up over the weekend (my plan from Monday) so I’m starting with them. Once they make me a dime I’ll be brave enough to add the CVX $85 puts, now $1.20, which were $2.40 on Tuesday and haven’t been lower than $1.20 since early July (although they are, of course expiring now so not entirely comparable). XXX


  168. Phil, AAPL Do you prefer ’10s over ’09s at these prices & VIX levels? rough check says the 10s have a 25% higher vega, so they’d be hurt more by vix dropping.. Thanks -Peter


  169. I like that trade, this will be the first trade I’ll be joining you with… It’ll be fun, I’ve been shorting oil since last week (talk about being a week late and a grand short), so another position won’t hurt…. Plus if oil drops, then so would the S&P!… Are you filled in the order yet?


  170. JBL-can you say sweep Yanks up 2-0


  171. Sorry entered a bid for cvx put & started all major oils up – canceled bid so you should be good again. O the power!


  172. the sox let the yanks win to make it more fun… being that many games ahead just takes all the fun out of it


  173. Will 13,200 hold? Remember we had a crappy open aand I was going to be happy to hold much lower levels so don’t get cocky on the short side! I have now switched my trigger finger order to the $133s, now $2.40 and I will buy a block (100) $2.10 as my basis on the existing ones is just $2.18 or, if we turn back up, I will buy the $134s before they hit $2.

    AAPL 10s – yeah but so will the box below you when you roll to it! Also, I think the extra 12 sales you’re buying should make up for it… That vega will put those calls out of your price range on the way up and you are bullish right?

    XOM – not even close yet. Dont want them badly enough to overpay.


  174. I wonder when the housing bubble is gonna burst here in Europe.Don’t think we have to wait very long for that.


  175. Hey Phil – when you bought those XOM puts, what chart were you looking at that gave you the idea? Or was this just more of a “fun” feeling for the stock’s movement…? Thanks in advance… trying to learn. :)


  176. Power to move the markets, wouldn’t that be nice?… Reminds me Soros back in the 90s.


  177. picked up some QQQQ calls


  178. Okay honestly that spike in the S&P is not fun.


  179. No trdsfr – we need you to get oil up so we can get our price!

    Wow, pretty good batting average today on this DIA ping pong game. Ordinarily I don’t bother but when it’s up and down 75 points per bounce it keeps it interesting, meanwhile Google is dull as toast to trade, which means it’s time to whip out the old Google plays!

    Holy cow – it’s an actual rally based on nothing – I love it!


  180. BBD – that is cruel!! But I can still say UP 5!! And the game isn’t over yet.


  181. it doesn’t make it fun for the Mariners who can’t even win 1 in 5 ….


  182. Interesting break through the channel on the spider…. Should’ve gotten out, but the break is too strong for my tastes… It might retrace all the way back.


  183. O – alright here’s a 1.1 bid on cvx put that should put oil up there for ya.


  184. Seattle,

    I am in LA and renting as well, they are still putting up condos around here and re-modeling, asking 400-500 a square foot. Meanwhile existing SFR’s and condos are for sale in the same neighborhoods. Its simply amazing, with all the funding drying up realtors still think they can get top dollar.

    Prices are coming down however, I am looking forward to the after September and next year sales, possibly 2 more years before buying or making any sort of low ball offer.

    Apple, bought back Sep 135 at 5.90 and 6.20, sold those with Phil. Thank you.


  185. being from washington the mariners have been a surprise…(still not a fan) but they have beat my expectations. but the downfall of the good season is of course all the bandwagons come out of hiding


  186. XOM – 10 min chart looked out of gas and I remembered I meant to short oil. Since XOMs are entirely liquid, I feel safest making an entry with them (don’t forget I buy a lot) as I can change my mind and just be out a nickel or a dime. What really triggered it was I glanced at the intra-day NYMEX chart and saw a blatant last-dich pump that still closed negative coupled with my two theories that holiday driving will be a bust and that the barrel count for November will screw up the rolling process this month.

    Meanwhile I didn’t get the XOM’s but the CVX $85s are no problem so I’m taking those at $1.20 XXX


  187. Bought 3 MDC Mar-08 35 puts for 2.60


  188. Maybe you can summarize the rally with symbols instead of words? “#$%@#$#!?!?!?!?!!”


  189. Thanks Phil!!!!


  190. as an option newbie who just uses calls and puts these index funds rock. i love trading the Qs with these penny increments. i can put tight stops on my trades and can get out quickly without a huge loss if i needed.


  191. O.K. but fair warning I filled cvx 85 puts @ 1.15, I’m a contrary indicator on oil shorts.


  192. DELL. Jan 27.50 puts look interesting at 1.55. any recommendations Phil?


  193. XOM – damn, I can’t get filled, someone just bought 3,000 at $1.90!


  194. mariners fans are a pretty hardy and loyal bunch.

    we’ve seen several years now where the M’s go into Sept with a really good chance and blow it. I hope this time it is ‘their year,’ and they surprise us with some mojo.


  195. Will the S&P Reverse?


  196. LOL THAT JERK…


  197. Are you putting a trailing stop on the CVXUQ we just bought?


  198. Dammit SPY just reverse already, I’m hungry.


  199. Penny trading – I keep planning to test some strategies there but I’m waiting for my fund now and I’m going to train someone to do it for me. I’m pretty sure I can make 2.5 cents on the average and execute perhaps 20,000 contracts a day so that’s $50K a day using about $4M, a pretty worthwhile effort if the fees don’t wipe it out so I’ll probably be running a test system through OptionHouse since even OXPS won’t give me what I want there… I don’t actually know how optionhouse does it but this will be a real stress test for them!

    XOM – I’m close to capitulating at $1.85 but I’ll hold out until the bitter end if I can!


  200. Train someone??? *Eyes Sparkle*


  201. What time does Bernake speak tomorrow? Thanks.

    j


  202. lol seriously, why do you want to scalp?


  203. Grease the skids under oil going into close!


  204. 9


  205. DELL puts – I’m not bearish on that sector. Watch HPQ to turn down as Dell is weaker (HPQ is on my short list for the LTP next time they pull back). If they fail a retest of the highs, then you have a trade. Or if they fail $30 but here, at $28.50, it seems more like a coin flip.

    CVX – no, that’s a DD/Roll weekend play for me. I’m playing disappionting travel numbers and nothing blowing up over the weekend.

    Bernanke 10 I thought? 9 seems unrealistic with a 2 hr time difference and what a prick if he does rally the markets when regular people can’t trade!


  206. 9 mountain or eastern?


  207. Here’s my source, I’ll check on my terminal in a sec.
    http://forexfactory.com/calendar.php


  208. 9 central


  209. the economic calendar pages on both The Street.com and the Nasdaq site say Ben’s @ 10 Eastern.


  210. you’re right, 10am…. That’s weird for the discrepancy.


  211. EST


  212. And I quoted central cause I’m a douche.


  213. I didn’t have Daylight Savings time turned on or something.


  214. 10 sounds fair but I thought Wyoming was 2 hrs…

    XOM – couldn’t even get $1.85, Mr. 3000 blew it for me and now blocks are going for $2 – I’m fed up on this one…

    Well, pretty mellow day on the whole despite the swings. Calm before the storm maybe?


  215. Wyoming is 2 hours, thats the lovely state south of me.


  216. Good test for AAPL here if they can get back to $137 that’s a really strong close for them.

    GOOG is killing my mood though.


  217. yes – calm before the storm ????
    it’s bound to be interesting or a whole big nothing !!!
    ha – we’ll see!


  218. DELL looks like a beat to me but not being taken well AH…


  219. so whats uncle ben bernanke gonna speak about tommarow? i dont even know, as i just look at charts.


  220. BSC held up very well today against the group.

    Larry Kudlow is just out of control with his “Fed must ease” logic. It’s so funny that the same conservatives who look down on social welfare consider corporate welfare to be an entitlement. Well, it would be funny if they didn’t have control of the government anyway…


  221. Dell beats by a penny. Revs beat also. Good for AAPL


  222. Phil:

    You seemed quite sure that the Fed could not possibly lower the rates in previous morning essays, and you layed out very good arguements as to why not. Have you been persuaded otherwise recently? Or are you just less confident due to the Schumer/Dodd & Paulson thinly veiled coded message that “the cut is in the bag”? This is one of the reasons I have been staying short.

    Thanks


  223. Jackson Hole is a beautiful place. I vacationed there once, and would love to go back.


  224. Phil funnier still when Liberals like Schumer & Dodd shill for their rich friends in the NYC financial industry. Makes their class warfare crap ring rather hollow.

    Greg


  225. PS if I recall, the DEM’s control both houses of Congress, all the conservatives control is the Whitehouse and some of us think the liberals have control of domestic policy there too.

    Greg


  226. If the Fed wants to retain any kind of credibility, they wont cut rates. If they do, they will set a very bad international precedent, and open the door for all “international Feds” to do the same when their country’s stock market tanks. I just dont think they can afford that kind of reaction..


  227. Over my vacation I flew into Boise and picked up my son, and we then drove to WY and picked up my daughter who worked for the summer at a place called togwottee lodge in the Tetons. Stayed there a couple days and canoe’d and rode horseback to the top of the mountain right behind the lodge – the tetons are /spectacular/. Also toured the Tetons by car and drove right up into Yellowstone to see the sights there. Absolutely gorgeous weather and scenery and hiking all around. After dropping my daughter off at her new schoole (UofWY in Laramie), drove back to Boise via 80 to 84. 84 took us through some pretty spectacular mountain passes and over the north side of the Salt Lake, and back up into Idaho. WOW. I forgot how much I missed real mountains. As has always been the case in the rockies (or the alps or the sierras), pictures just dont capture the grandeur of the scene.

    Im gonna start looking into property prices in salt lake or ogden, UT area I think.


  228. I dont think the fed thinks of the rate cut as a stock market bail out. It might be needed to save the overall economy. There is a lot of wealth in the stock market, and a lot of wealth created by it, if that wealth dissappears, it is going to have knock on effect across the economy.


  229. So, how’s this work:

    Bernanke said in a letter Wednesday to Sen. Charles Schumer, D-N.Y., that Fed policymakers are “prepared to act as needed” if the market’s turmoil damages the economy.

    So, if he doesn’t indicate a rate cut thus CAUSING the market’s turmoil to damage the economy, what then .. a rate cut? In my mind, he’s already said he’s going to do it.


  230. Dell – this is why I want to play AH – Those guys cannot read an earnings report to save their lives! Some of these initial reactions are just mind blowing…

    Fed – here’s why I lost confidence in no cut (still 50% confident) ECB backing down in their language. Meeting with Dodd, letter to Schumer, Senator Conrad letter, the chip Karl Rove put into his head when he was the White House Economic Advisor… In short too much political pressure to cut to be ignored.

    Liberals – you guys wouldn’t know a liberal if he camped out in your backyard! This country has gone so far to the right that the center looks left, that’s why even NY Democrats have to schill for Wall Street and that’s why Europe feels it’s necessary to put their .02 in before things get out of control. Those two statements this week were damned insulting and would never have happened if we still had an ounce of respect in the international community. That’s the kind of stuff you say to Brazil or Zimbabwe, not the friggin United States of America!

    If we weren’t broke and didn’t have all of our troops committed to a pointless quagmire already, those would be fighting words!

    Precident – that’s the point though, other countries WON’T do that because it’s asinine and they have no choice but to punish us for doing it. Only Europe really, Japan has been run by corporations since the 80s and they’ve been as guilty/more guilty of this nonsense than we are with their 0% rate (ie. the CB prints money and hands it to the banks who hand it to people so they can purchase their way out of a slump but the plan is coopted by the 1,000 who funnel the money out of the country and use it to swipe money from other governments).

    Think about it, I print nearly worthless money and give $1Bn to Trump at 0.5% and he puts it in Citibank at 5%. At the end of the year he takes $1Bn and $50M out of the bank (demanding Yen from his local bank, forcing them to have it in stock), pays the BOJ $1Bn + $5M and keeps $45M for his trouble (less exchanges). Effectively the BOJ pays you to be an agent to import money into their country. They get the 1,000 on their side by paying them a commission and the 1,000 insist that their local banks accept the Yen as a major currency (this is insidiously simple as the Donald says, you won’t take Yen? Well I’ll take my business to a bank that will).

    Once a few trillion in yen gets forced into the international system, it actually does become a stronger currency and the demand allows Japan to run the presses all day long. Meanwhile the plentiful supply of Yen keeps prices down, and keeps their exports cheap and since Japan is one of the purest export economies on Earth (other than oil, about 4:1), this works fine for them.


  231. Wow ! Eric ‘buy high, sell higher’ Bolling is on the Cavuto show on Fox !


  232. Box trade/terrorist silliness – can this go away now?

    http://adamsoptions.blogspot.com/2007/08/and-another-explanation-actual-one.html


  233. “Liberals – you guys wouldn’t know a liberal if he camped out in your backyard! This country has gone so far to the right that the center looks left, that’s why even NY Democrats have to schill for Wall Street”

    -Now that’s just kooky talk, that statement was lost as soon you gave credibility to the NY Democrats. They belong on the Dr. Demento Show (remember that one?).


  234. Utah – I skied there a few years back, Snowbird and Alta – it was very beautiful but not exactly a party town…

    Market wealth – I don’t agree. We are in the top end of a massive commodity bubble (fueled by easy Yen and dollar policies) and it WILL pop because there simply isn’t enough money on Earth to make the 1,000, who control 38% of the world’s wealth, 10% richer. We’re (the 5.999999Bn) tapped out. Don’t forget we (the PSW crowd) are still mostly in the top 10% of the (5.9Bn) but the only way we can afford to make XOM 10% richer next year is to pay them an extra $37Bn, let’s call that $370Bn for the energy sector (not including refiners, who screw us seperately).

    In order to keep up the other raw material producers have to screw us out of $200Bn or so and, obviously the service sector won’t take that lying down so they’ll want $150Bn, Defense needs $200Bn to grow 10% and let’s just say other consumer goods (including utilities, airlines, food) add up to just $300Bn more and that’s $1.2T or so and you can be damn sure the Banks aren’t going to lend it to us so we need to ask our bosses for a 10% raise, which will force them to raise prices and set a cycle that will spiral inflation out of control.

    Who were the smartest guys in the room? The Builders! They took the most expensive asset they could find, created a system that make every realtor, broker, banker and lawyer in America their partners and then conned people into believing that a house, and a poorly made house at that, was worth double what it cost them to build it and then they managed to keep that fallacy going for 6 straight years, raising the bar almost 15% more per year.

    Why can I buy a 2,500 square ft home in Houston for $240K when the same home in NJ costs $500K? Because it’s a farce, that’s why. The land is “only” $100K more at most, the rest is just pure profit that your finance your life for. Do they charge $3,000 for a closing in Houston? No. Does a plumber charge $75 an hour there? No. It’s a viscious cycle that feeds on itself but now we’ve gotten to the point where there physically is not enough money in the world to pay for the next 10% increase.

    The only responsible thing for Bernanke to say tomorrow is that the economy is strong however certain sectors which were overheated, housing in particular, are cooling down and that the sub-prime issue is unique but controllable BUT NOT through a Fed rate cut. While the Fed stands ready to provide liquidity as neccessary, we do not see it as necessary at this time and we believe that it is the responsibility of Federal regulators to step in and help resolve issues for Americans who find themselves faced with mortgages that will be difficult to maintain.

    That’s it. I have a big stick and I’m not afraid to use it will be a lot smarter than using the stick and having everone realize it’s not big enough.


  235. khan
    Boy I was thinking the samething about Jackson Hole right before I read your post.
    djczing
    Thanks for sharing. I have always wanted to take the convertible and do a drive like that but can’t get any of my friends to do the trip. I have driven thru Colombia and Peru mountains and all I can say is WOW.


  236. A Davis/Paul ticket has a nice ring to it. You’ve got my vote.


  237. djczing

    It’s beautiful out west, I’m glad you had a good time. That is part of the reason I left bustling So. Cal. and moved to Montana in the first place. If any of you ever get a chance drive the Going To The Sun Rd through Glacier Nat’l Park. One of the best drives I’ve ever done. Make sure you give yourself a couple of days because there are plenty of places to park on the road so you can take long hikes through the mts and valleys. All in all, the most beautifull of our nations parks IMO. Plus I took my wife and kids and there are some great places to stay there.

    This Thurs. I’m leaving my wife & kids home and driving through Wyoming to just south of Steamboat Springs, CO. I’ve rented a horse and am backpacking into the White River Nat’l Forest and Routt Nat’l Forest (no motorized vehicles) and Muzzleloading for Elk for 10 days. Trips like these seperate us from the “real world” and re-energize the mind and soul.


  238. Of course, then in November I’m going to Vegas to re-energize my adrenaline rush at the craps table. :)


  239. I’m reading that the Cheney administration is making an MSM coordinated assault on the American public for war with Iran after labor day weekend, probably using 9/11 as a kick off.

    I have no real corroborating evidence (just blogs). Whether this is an action you applaud or despise, it’s just a heads up – Cheney wants war with Iran by Fall.


  240. Phil I’ve read that we have 6.6 billion peeps running around now so “the rest of us” number is probably more like 6.599999 billion. Word.


  241. 1. If Bernanke doesn’t cut, and talks about a strong economy… The market does what?
    2. If no cut, and says he’s monitoring the market closely….The market?
    3.If cuts, and says economy is stable… ?
    4. If cuts, and unstable economy… ?


  242. BBD, Djczing

    Don’t discount the desert mountains. I used to live in Tucson, Arizona, and the Sanoran Desert is truly one of our country’s greatest vistas. I did my undergrad there and my friends and I would often rent a car for a week and drive up to Vegas via the Grand Canyon. Although I am still young, I am very well traveled and the greatest and most jaw dropping thing I have ever seen is the Grand Canyon (Beter than the Canals of Venice, pyramids in egypt, taj mahal, I can go on forever) But I have never been so blown away as the Grand Canyon. However, the car trips are still a blur (I did say I was in college at the time) ;)


  243. Phil,
    You make some excellent, compelling arguments for a strong downturn in the US economy yet I believe your market bias remains slightly bullish. Is this not a contradiction?
    J.


  244. Phil – yeah come to think about it UT wouldnt be much for partying – those states are pretty conservative (at least on the surface, right Sen Craig ?) — or maybe in Utah the problem is that every guy has so many wives that there aint no women left to party with ! Gotta love those mormons !

    dday – wow sounds like you have it /nailed/. Enjoy the heck outa ur trip. I used to backpack into the back country in southern CO and not come out for a week or 2. I guess part of the reason I did it is the same reason I climbed mountains – you get a good perspective on things when life is a binary choice of survival or non-survival. It makes your other trials seem small and insignificant.

    khaaaannnn !! (I always wanted to do that, and wonder if anyone other than bbd ‘gets it’ – gotta be more than 2 trekkies here). As far as the desert mountains, driving back west in WY I drove through the high desert – red mountains and just fantastic desolation all around. It kind of reminded me of New Mexico. I have actually never been to AZ, but would like to go there one day – my only problem is I thrive in cold and wilt in hot.


  245. Interesting on the war plan for Iran.

    Even more interesting is the fact that IRan is shelling across the Iraq border in N. Iraq. Interestingly they are shelling the same kurdish military ‘splinter’ (I dont believe they are spliner at all – I believe they are the kurds defending terriorty) that the turks are shelling.

    Hmmmm what could /that/ be all about ?

    Heres an idea – Turkey and Iran have a common enemy and may be in cahoutz (cahouts ??). The Kurds are Turkeys enemy for well documented and historical reasons – but what of Iran ?? How bout this – Iran, seeing the US withdrawing from Iraq soon is softenning up the northern defenses as a prelude to make a play on Iraqs oil ?
    If Iran takes the Kurds down then all they really have to worry bout is the Sunnis, who are a small minority — and Iraq is theres (Irans). Irony of ironies if Iran finally wins the Iran/Iraq war by way of US occupation softenning up Iraq.

    The problem is, we wouldnt let that happen.


  246. Thanks Lars for the trader status link.

    Phil; sold the FXI Sep $161′s yesterday for $3.30 ! just a few for kicks and giggles.

    Aquarium was fun for the kids; just got back. Doesn’t look like I missed to much this afternoon.

    Back to the beach tomorrow for a last 1 1/2 day of summer fun. Maybe a little hobnobbing w/ the hoi polloi as well (kidding). Beats the heck out of listening to Bernanke talk about Risk Management (or was that Costanza ?) anyway.

    Phil …. will try to call you over the weekend ….


  247. Earth is beautiful…

    But, I think space is far more exciting. It is the essence of perfection and all that is beautiful, and I’m well aware of beautiful…. As you say, well traveled… hah, I’m terrible.

    But seriously.
    http://www.virgingalactic.com/ gets you a ticket for it. Used to be 10k to book to see space, I think they upped their prices to a couple 100k, since then.

    Or you could get a billion points with your amex card, and I think you get a trip to space too with it. It’s neat.


  248. My 2 cents for tomorrow … up …

    Why ? Relief rally. Almost won’t matter what Bernanke says. Plus end of month and slow day in general. Holiday weekends tend to be up days.

    All bets are off if surprise rate cut (chances of that = 0.00001%).


  249. 6.6Bn? Well, who wrote that book saying “Even if your life sucks, don’t steal from me or kill me and replenish and multiply because if there’s one thing I can’t stand it’s a labor shortage.” “Oh, and while you’re at it, give me 10% of what little you have so I can build more places where I can repeat the first message to as many people as possible – don’t worry, you’ll be glad you did it after you die!”

    Europe housing – yeah that’s pretty much the scoop I got when I was over there, they went like lemmings into the same nonsense we did… Seriously, anyone who can, ask your parents how much their first and second homes cost as a percentage of their houshold income and get dates if you can. We can do a quick global study to see how much worse off we are than our parents.

    Bernanke no cut – certain sectors freak out, most damage done to financials (builders can’t really be more dead) and consumer spending but don’t forget tomorrow is nothing official, he can get on TV and talk about the weather… Saying anything about the stock market other than in passing would be a bad message. You’re right about stable/unstable, it’s a no-win as a cut signals panic, especially a pre-announcement, that’s why I can’t see it happening tomorrow.

    Slightly bullish comes from strength in the global economy but if Europe begins to unwind it is sooooo over. Brazil (Latin America in general), Russia, India and China are still the greatest growth story in the history of the planet but they are not ready to carry the US AND Europe through a downturn. At this point, I think we can lose one OR the other but not both. In the near term, I don’t see anything so terrible in Europe and I think the BRIC countries will survive a slight shock from a US recession so my bullish premise includes a short-term dip to perhaps 11,500, where we will take leaps in the multinationals and take our place as an also-ran economy which, like BRIC, can then grow at an astounding rate on the backs of an expanding globe.

    Think about it – 6.6Bn people, that’s 600M more than we had in 1999 so we’re adding 100M consumers a year and the GDP of pretty much every country on the planet is on the rise (2.5% avg). The global GDP is $50T so that’s about $7,500 per person. So every year we add $750Bn worth of people power through population growth and another $1.25Tn through GDP growth so thats a nice $2Tn per year in new money that’s up for grabs.

    In the past 4 years, a lot of that $2Tn/yr has mainly gone to the oil companies but what if their little control cult falls apart (but we are taught by the media not to upset that applecart) and they go back to sucking up just $600Bn. The financial sector has gobbled up another $2Tn per year of increased revenues (that’s why they are doing whatever they can to unlock the additional $2Tn that chinese farmers have under their mattresses), the health sector is way over $2T if you count hospitals AND Pharma and commoddities, including homes have sucked up the rest.

    What if all that nonsense stops and the $10Tn of global economic growth found it’s way to the bottom 99% of the people who only have 38% of the world’s $50Tn annual wealth? It would be almost a 50% boost in the standard of living for every man, woman and child on the planet and if they could take that money and not have to give it to XOM, GS, HOV and ADM and insteady were able to buy things they really want like furniture, TVs, appliances, electric cars (gas ones are a problem), clothing, entertainment, crafts (remember those)… Gee it would be just like America was in the post-depression, post-war 50s and 60s, a massive empowerment of the middle class.

    Would the transfer of wealth from XOM, GS, HOV, ADM et al to, well, pretty much everyone else, cause more or less jobs? Seems to me like there would be a huge demand for manufacturing at the expense of a few brokers…

    We could get rich in the markets playing companies that made good stuff that people want to buy – imagine that!


  250. One more trip to Europe and I think I’ll have enough Amex points Demetrius!


  251. Rate Cut … the market (interest rates, not stocks) is making the decision for the Fed IMO.

    The point of Fed action is not to save the stock market; but to break the logjam in the credit markets and to provide some relief for the ARM rollovers due to come. I don’t have a porblem w/ that.

    The stock market gyrations are just noise. At the end of the day, the market will do what it do.


  252. In what alternate universe does one “read about” a “Cheney administration” in cahoots with the “MSM” that actually hates Cheney with a passion and has painted him as Darth Vader ?

    Never mind … it would probably make my head explode.


  253. Khaaaaannnn !

    I get it.

    Resistance is Futile.


  254. phil –

    wow…
    your AH commentary is just brilliant !
    thanks…
    mar


  255. Am I just paraniod or has Cramer taken this whole week of shows from my rulebook? Today he’s saying the best way to protect your portfolio from is dip is with the index funds…

    Thanks mar – it’s good to catch me when I’m pissed about something!


  256. Wow that was very inspirational and informative. It sounds like tightening the globalization gap between the rich and poor, though I’m not too sure many of the rich would like that… Even if it is utilitarian.

    I always thought the gap means power. The larger the gap, the more powerful the top people are. I don’t know many people that are alive today, that have the power to seriously shorten the gap anymore.

    There will always be a dependency on few companies that provides for the world…. If not the oil companies today, I’m sure money will localize into nuclear tomorrow.

    Cars have problems?… I remember reading a single cow’s dung pollutes more than the average car for a year. Though I wouldn’t mind voting that we all drive Porsches, the new ones are like a dyson vacuum to the environment. (Did you see the Tesla electric car?)

    // Do you have a Centurion?… I always wondered what it takes to be a man with a card that no one really knows about.


  257. “Liberals – you guys wouldn’t know a liberal if he camped out in your backyard! This country has gone so far to the right that the center looks left, that’s why even NY Democrats have to schill for Wall Street”

    Try living near Seattle. This where the liberals steal elections… LOL!


  258. Should boost SNDK and MU

    Samsung predicts PC NAND flash quantity to exceed DRAM in 2010
    http://www.digitimes.com/bits_chips/a20070830PD219.html


  259. Cap – even if one “hates” cheney, and the MSM rolls out a war plan with Iran this Sept, am I right forever? Just place your bets now because these games count.

    BDC


  260. Asia Markets : Friday, August 31, 2007

    (The following is posted from WSJ; please cross check with other sources to confirm.)

    Japan*

    16569.09
    415.27
    2.57%

    Hong Kong*

    23984.14
    499.60
    2.13%

    DJ Shanghai*

    535.56
    5.30
    1.0%

    S.Korea*

    1873.24
    31.54
    1.71%

    India

    15287.45
    165.71
    1.1%

    * at close
    Sources: Dow Jones, Reuters


  261. Asia and Euro Markets

    European Stocks Cautiously Higher Ahead of Bernanke Speechhttp://www.cnbc.com/id/20524968
    European stocks opened tentatively higher Friday, but whether the week ends on positive or negative note depends largely on a key speech from Federal Reserve Chairman Ben Bernanke.

    Investors harbor expectations of rate-cut hints from Bernanke’s speech on monetary policy and housing in Jackson Hole, Wyo. and indications of a September rate ease could see a spike in buying of shares. His remarks are expected at 3 pm London time.

    Asian stock market summary http://www.cnbc.com/id/20525122/for/cnbc
    Japan shares closed higher Friday, as investors cheered a report that the US administration plans to unveil policies later today in a bid to reduce the wave of mortgage defaults in the US.

    The Nikkei 225 Stock Average finished at its high for the day, up 415.27 points or 2.6 pct at 16,569.09. The index rose 1.97 pct for the week.
    The KOSPI index closed up 31.54 points or 1.7 pct at 1,873.24. The index gained 82 points over the week.
    The S&P/ASX 200 (Australia) closed up 112.2 points or 1.8 pct at 6,247.2. Over the week, the benchmark index gained 2.6 pct.
    The Shanghai A-share Index ended up 53.72 points at 5,480.11 and the Shenzhen A-share Index was up 19.15 points at 1,531.17.
    The Philippines composite index closed up 44.95 points or 1.4 pct at 3,365.29.

    India’s economy grows 9.3 percent in fiscal first quarter despite tight money measureshttp://www.cnbc.com/id/19723182/for/cnbc
    India’s economy grew 9.3 percent in the most recent quarter compared to the same period a year ago, boosted by robust manufacturing and services growth, the government said Friday, suggesting the momentum seen in the past year was continuing.

    Forex – Yen lower as Bush subprime plan boosts risk appetitehttp://www.cnbc.com/id/20525351/for/cnbc
    The yen was lower, pushed down as risk appetite was boosted by a report that US President George Bush will today outline plans to help ease the crisis in the subprime mortgage market.

    US media said Bush is expected to announce help for homeowners who have fallen behind on their mortgages, in what would be the administration’s first official response to troubles in the US housing sector which has caused turbulence in global markets in recent weeks.


  262. Centurion – The funny thing about the Centurian card for a guy who leads a fairly normal life like I do, is how many people freak out about it. I’m embarrassed to use it sometimes, especailly since the started making them out of titanium which just screams for attention. On the other hand, it’s also like a universal club card when you travel in higher circles as the fact that you have one pretty much indicates to whoever you’re with that you’re not joking, so I find it somewhat useful in my consulting life.

    No one hates Cheney? Did I miss a memo or have they come up with a worse word?

    There’s little caution about European stocks this morning!