Archive for 2007

The Dooh Nibor Economy (that’s “Robin Hood” backwards!)

 

As I'm doing some research, I come across some interesting things.

There's a great WSJ blog called  "The Wealth Report" by Robert Frank, who wrote an excellent book called "Richistan" in which he makes a case that the world's wealthy have essentially formed a shadow (let's call it virtual as it sounds nicer) nation "where the top 1% control $17T in wealth, have their own health care system (concierge doctors), travel system (private jets, destination clubs) and language. (”Who’s your household manager?”)."

As this chart shows, the US is cranking out multimillionaires at a record pace with super-rich (more than $10M) households doubling in the past decade.  What's scary is that doubling the amount of people who have more than $10M per household (from 300K to 600K) means there's $3,000,000,000,000 less available for the other 98% of the of the households as MONEY IS A COMMODITY and can only be possessed by one person OR another.

Another 5M households gathered up $1M of wealth for another $5T and our nation's 1,000 Billionaires added another Trillion desperately needed dollars to their household budgets to pay for, according to travel and liesure; Yacht Rentals, Villa Rentals, "Experimental Excursions", Luxury Cruises, Vacation Home Rentals, Spa Services.. (and have you seen the price of Cristal these days?).  The cost of the AVERAGE high net worth individual's summer spending on these luxury items was $1.2M.

 

Summer Activity Average Planned Spending
Yacht rentals $384,000
Redecorating $129,000
Villa rentals $106,000
Experiential excursions $103,000
Jewelry/watches $94,000
Luxury cruises $92,000
Charitable giving $82,000
Vacation-home rentals $82,000
Out-of-home spa services $61,000
Summer entertaining $56,000

 

While you hear a lot of talk of wealth creation for all, our M1 money supply (before the Fed stopped measuring it's out-of-control growth) was adding "just" $1Trillion a year to the global economy.  If the wealthy households gained $9T in value over the past 10 years,
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Another Wild Weekly Wrap-Up

It's Father's Day this weekend and, being one myself, I have a full agenda so I'll be keeping this week's note brief:

It's been a crazy week but I LOVE expiration day as it seemed to come just in time to save us from a bunch of runaway callers we had sold.  As I said in the morning: "Rising 200 points, dropping 500 points and then rising 300 points hardly feels like consolidation when you are experiencing it, but that’s all it really is in the grand scheme of things."

We added another 85 points to the Dow for good measure as the predicted onslaught of money came flowing into the markets as the BOJ and the Fed gave us the word to "Party On" in the morning.  No one was at all suspicious that the CPI report  (which is rounded to the nearest tenth of a percentage point) came in at .149%, allowing it to be reported, without fail as being just .1% so we decided to drink the Kool Aide, spiked though it may be.  After all, what's the difference between .1% and .15% anyway?  Well, since you asked, it's a monthly increase so over 12 months the difference is .6% of a $13 Trillion economy or $78Bn of additional costs borne by US consumers that are being swept under the rug.

Of course that's being VERY kind since we are pretending the "core" CPI is based in some reality as costs for non-core items like gasoline (for example) were up 10.5%.  If we lived in some fictional planet where people used gas and oil or ate food the CPI would be a whopping .7% or 8.4% a year or $1,092,000,000,000 of costs in order for American consumers to buy the same goods they bought last year for "just" $13 Trillion.  Thank goodness we got that $300 tax cut or we'd probably be falling behind!

Throwing money at the problem has been the Fed policy since 9/11 when money was spent everywhere on everything (except NY where the actual attack took place and promised relief never fully  materialized).   As Barry Rhitholz points out in his article "There's No Inflation — Except for Necessities" it's the height of irony that the WSJ would print and discuss the .1% "core" CPI number without comment when they've just announced that next month the…
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Friday Virtual Portfolio Moves

Posted June 15, 2007 at 9:28 am | Permalink (Edit)

TIE – I have the naked July $35s, which I think I’ll be very pleased with, will probably roll them to a leap if we get a good run.

Market trick- bid a buck for the DIA $135s at the open, you may get lucky from open sell orders! XXX

Posted June 15, 2007 at 9:41 am | Permalink (Edit)

TRMP exploding on Penn Gaming deal.

Gas Airlines – short the airlines, fuel is 1/3 of their cost and they aren’t raising prices – bad mix.

GOOG – selling $500 calls for $7.10 buying 3X $510 calls for .30 so I’m in pretty good shape if it pops through XXX

Posted June 15, 2007 at 9:45 am | Permalink (Edit)

AMZN $72.50s for .12 as a craps roll XXX

Posted June 15, 2007 at 9:56 am | Permalink (Edit)

CCJ – nice break for me as I didn’t take out my June caller yet! That may have been the biggest pin I’ve ever seen…

Posted June 15, 2007 at 10:02 am | Permalink (Edit)

TSO – now’s a good time! (To DD)

Posted June 15, 2007 at 10:03 am | Permalink (Edit)

DIA $136 puts for .12 are a very cheap cover! XXX

Posted June 15, 2007 at 10:06 am | Permalink (Edit)

If you did the GOOG trade you should buy back 1/2 of your puts so you have your calls for free, or, in the very least, put a tight stop on them because it’s very doubtful you’ll get your $510 money back. XXX

Posted June 15, 2007 at 10:08 am | Permalink (Edit)

CCJ will not be denied, looks ready to pop so I’m grabbing some $55s for .25 just for fun. XX

Posted June 15, 2007 at 10:13 am | Permalink (Edit)

UNP – first of all, very…
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Federally Funded Friday

What a crazy week!

It's "Quadruple Witching Day" today, when the contracts for stock index futures, stock index options, stock options and single stock futures all expire on the same day.  This hapens at the options expiration day near the end of each quarter (that's right Q2 ends in just 15 days.

With so many options finishing in the money this week it's possible that the markets are simply being pinned around 13,500 for this expiration and they will reveal their true nature next week.  Of course by next week we are into the "window dressing" period for fund managers so this could continue through July 1st! 

Our virtual portfolios held up great this week and made a little progress because we played for this starting way back on May 25th, when the Dow was around 13,500 and I said at the time: "If we do get a couple of week’s of consolidation around 13,500 then we will have played this perfectly as that’s about where we hedged out our positions, especially the calls we sold against our longer-term positions but let’s keep alert and be ready to go with the flow as we are still in danger of a big break in either direction." Now I know that rising 200 points, dropping 500 points and then rising 300 points hardly feels like consolidation when you are experiencing it, but that's all it really is in the grand scheme of things.

Just like any roller coaster, you go up and down and spin and turn but then you get right off at the same place you got on!  Last options expiration day (5/18) we closed at 13,556, yesterday we closed at 13,553 and yesterday was the day we took out our remaining June callers (other than those expiring OTM) as their premium was about done.

The BOJ should get us off to a good start by leaving rates unchanged, giving us a whole summer of carry trading to look forward to.  As long as you (well not you per se, but rich and powerful people) can go to Japan and borrow at 0.5% and put it into – well, pretty much ANYTHING – then the global economy can continue to expand.

Unfortunately, in Japan, printing up all that money…
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Thursday Wrap-Up

Another great day!

Well, not so much for me as my neutral stance is now annoying but lots of people seemed to be happy and I had dinner on Wall Street and those guys seemed pleased with themselves (apparently I'm the only one who was ever worried as we dropped 500 points last week).

What scared me about my conversation with some fund managers was the reason they weren't worried – "Bernanke is speaking tomorrow (Atlanta Fed Conference – 8:30) and Yellen is speaking at lunch (Brandeis – 12:30)."  This strikes me very much as a "fix is in" sort of mentality which certainly can't be healthy in the long run.  Is it the job of the Fed to "spin" the economic data to prop up the markets?  Actually, it just might be!

Under the Federal Reserve Act of 1913 and amendments over the years, the Federal Reserve System:

  • Conducts America’s monetary policy.
  • Supervises and regulates banks and protects consumers’ credit rights.
  • Maintains the stability of America’s financial system
  • Provides financial services to the U.S. Government, the public, financial institutions, and foreign financial institutions.

The Federal Reserve makes loans to commercial banks and is authorized to issue the Federal Reserve notes that make up America’s entire supply of paper money so one could say that IT IS the Fed's job to prop up our phoney-baloney monetary system AT ALL COSTS!  So whatever the CPI is tomorrow, Uncle Ben will be there to tell us every little thing's gonna be all right.

  "It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." — Henry Ford

I've been looking for some good news to latch on to – something that would make me feel good about getting back on the buy side and tonight I see that Chinese Factory Output rose 18.1% in May, even faster than April's 17.4% gain.  That's not a bad thing, that's our factory over there making stuff we use, often enough making them for American companies.  In the grand global economy a productive China is almost as good for us as a productive Detroit used to be.  This production growth
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Thursday Virtual Portfolio Moves

Posted June 14, 2007 at 9:54 am | Permalink (Edit)

LOL – if MO goes to $70.50 that pain will be a very nice gain! Make absolutely sure you speak to your broker, most likely they will need you to clear the trade today which means you should NOT be greedy and be happy to make .20.

Posted June 14, 2007 at 10:46 am | Permalink (Edit)

MO – turning back down on market strength. Be very careful if you are holding the longs and do not forget you have the right to put the stock at $75 by executing your July puts (but it will cost you the value of those puts).

Posted June 14, 2007 at 10:57 am | Permalink (Edit)

MO – you need to check with your broker to make sure you don’t have margin issues. I also just have the July puts now so I’m hoping to get about $5 and be done with this annoying trade. XXX

Whatever program kicked off that buying frenzy has stopped but it looks like people are just afraid to sell anything!

Posted June 14, 2007 at 12:41 pm | Permalink (Edit)

XOM, that’s totally different. Well this is the idiotic run in energy stocks I was hoping for but $67.50 oil is very scary to short against. I have the XOM July $80 puts too and since I have a $1.27 basis, if I spend $1.40 to roll to the $85 puts I will be in for $2.67 on a $1.92 contract that’s in the money by a few. Seems worth playing that way. XXX

MRO July $115 puts – I rolled those up to the $120s puts, which are down considerably too so I will spend another $1.50 to roll to the $125 puts at $3(ish), giving me a $4.15 basis and not too badly off. XXX

Posted June 14, 2007 at 12:50 pm | Permalink (Edit)

TXN, WFR – until there is a hard reversal, I’m willing to play them out a bit but $2 bucks for the WFR $60s is good money and we can always…
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Thrill a Minute Thursday

Markets Markets Rah Rah Rah – Gooooooo Markets!

OK, that's all the cheerleading you'll get out of me, you can go to every major media network or read 400,000 other financial writers if you need to feel good about buying but I am still VERY concerned!

I detailed some of my skepticism in yesterday's wrap-up so we'll just go with the fresh stuff this morning:

Other than China, Asia is had a good morning.  Even the Hang Seng put up a 288-point gain, pretty much ignoring the action on the mainland exchanges.  Exporters are having a field day on…
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Expiration Day Game Plan

This is my current thinking.

I’m assuming no great up or down move (ha!) between now and Friday but more prepared for a sell-off than retaking 13,700.   Of course I did say we’d flatline around 13,500, but this is a pretty strange way to go about it – but it’s been great for the STP and LTP as we crushed the positions we sold:

$10KP

  • DIS (8/1) Jul $37.50s - .26, now .05

I have no plan, very bad!  There was an elaborate save in the STP for the same position and if they $10KP is not all your money it’s a good save but otherwise, I have no choice but to ride this out.  Everyone is wrong about this stock and I will buy them again into earnings!

  • TWX (8/1) Jul $22.50s - .23, now .05

OK, entertainment may not have been thr right space…

  • DNDN (?) Jul $10s - $1.07, now .20
    • Sold Jun $10s for .87, now 0

Spread held so we are just hoping for a pop, will roll to Aug at some point.  Just hoping to get lucky

  • FIZZ (?) Oct $12.50s – $1.45, now $1.40
    • Sold Jun $12.50s for $1.45, now .50
      • If it doesn’t expire worthless will just roll, every sale is profit now.

Happy with these, even though the stock crashed it’s at my target price (which is why we sold the Junes).

  • FWLT (?) Jan $95 puts $8.20, now $7.50
    • Sold Jul $95 puts $4.20, now $1.90
      • Will roll to $100 puts, now $9.70.  Then roll $95 caller to July $100 puts at $3.25
      • Costs $1 to gain $5 in position, very good trade.

Shocked at how well the stock keeps doing.

  • GSK (7/25) Nov $52.50 – $2.75, now $3.20
    • Sold Jul $50s for $2.65, now $3.30

Just have to wait this one out and hope they don’t discover something.

  • JOSB (?) Oct $45s - $4, now $4.90
    • Sold Jul $40s for $4.80, now $6

Not worth worrying about, long time to go, Aug and Sept to roll to.

  • MO (7/18) Jul $75 puts – $4.40, now $4.80
    • Sold Jun $75 puts $4.30, now $4.80

Hopefully this will correct…
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Wild Wednesday Wrap-Up

Woo-Eee, what a day!

I got back around 1pm and the markets looked normal enough and we were skeptical of the markets movement but at 2pm the Beige Book came out and I said: "Beige Book – good growth, low inflation. Very bullish! Manufacturing up, corporate spending going up – if this is true we should be up 100…

Well, it turned out to be true enough for the markets to run with it but I remain skeptical – what really changed since yesterday?  Trader Mike said it best:  "As I said this morning to a friend over IM after the Dow had been up over 100 points and then gave back 50 points: “This market is insane!” Today was almost the mirror image of yesterday only the morning reversal didn’t carry the market back to the flatline. While *everything* was down yesterday, *everything* was up today. It was the release of the Beige Book at 2 PM that really got things cooking. Here’s an intraday shot of the S&P over the last week showing a lot of back & forth (aka confusion) between 1495 to 1515:"

 

Not to quote Mike's whole column but he also pulled an excellent article from Worden that said:"What is the market guessing right now?  That is the right question. The market has stopped guessing and instead is letting itself get yanked around by a superabundance of self-contradictory news releasesIs that supposed to be something new?  No, it isn’t. This is an extreme case. But there is no doubt that the market has lost its feel for where the economy is heading. Yesterday was an extremely weak day. Today was an extremely strong day. Was the market right yesterday? Or was it right today?"

Stuck in a neutral stance as we were there was really nothing to do other than pick up some Google $510s again, roll up our DIA puts and wait to see how high they're willing to take this thing

 

 

 

Day’s


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Wary Wednesday Morning

 

I'm going to miss the fun until the afternoon and it's 6am so here's my quickest take.

It's all about rates, if the 30-year breaks for 5.5% there's not much you can do to stop a sell-off.  Hopefully you have mattress plays in place and are not too worried about a nice, healthy correction.

I've been saying all year that rates and inflation would bit us in the ass and now you know exactly what that feels like and the real correction going on here is that the Treasury Market is finally recognizing some of the risk involved in holding US currency, which is not the best backed paper in the World.

If we accept that fact and move on, we can make much better investment decision and there are a lot of good companies we will be lining up as buys when this thing calms down but for now, let's focus on protecting ourselves.

First of all, this is a good time to be half in cash.  For one thing, they are now paying you almost 10% more for cash than they were last month when rates were under 5%.  The US dollar is on a tear and reflects that fact but there is a certain fallacy there if the dollar isn't keeping up with inflation so we have to watch the Beige Book numbers today very closely as well as Import Prices.  We also get Retail Sales, Business Inventories and the always exciting Crude Inventory Report and if they don't have the decency to let oil drop a couple of bucks at this point I think the energy roaches may be surprised at how fast this economy will shut down and trap them in some very expensive commodity producers at the front end of a recession.

It's important not to panic but to be ready to panicPreparing to panic means looking over your positions, thinking about your risk tolerance levels and what you are going to do when they are exceeded.  It would be great to tell you not to panic at all but, since most of us aren't professional firefighters or secret agents, we don't often face panic-inducing situations and when the Dow is falling over 100 points we have other things to worry about than whether our vodka martini is…
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Zero Hedge

Americans' Economic Hope Has Collapsed

Courtesy of ZeroHedge. View original post here.

Which came first, the confidence or the stock market rally?

One thing is for sure, the crash in stocks in December has crushed the hope of Americans that their economic future is going to be better under President Trump.

Overall confidence dipped to 58.1 - a 4-month low, but, U.S. consumers this month were the most downbeat on the economy since November 2016, a third straight drop after expectations reached a 16-year high just three months earlier, as the partial government shutdown wears on toward a fourth week.

...



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Kimble Charting Solutions

Triple Breakout Test In Play For S&P 500!

Courtesy of Chris Kimble.

Is the rally of late about to run out of steam or is a major breakout about to take place in the S&P 500? What happens at current prices should go a long way in determining this question.

This chart looks at the equal weight S&P 500 ETF (RSP) on a daily basis over the past 15-months.

The rally from the lows on Christmas Eve has RSP testing the top of a newly formed falling channel while testing the underneath side of the 2018 trading range and its falling 50-day moving average at (1).

At this time RPS is facing a triple resistance test. Wil...



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Phil's Favorites

Brexit deal flops, Theresa May survives -- so what happens now?

 

Brexit deal flops, Theresa May survives -- so what happens now?

Courtesy of Victoria Honeyman, University of Leeds

As the clock ticks down to March 29 2019, all of the political manoeuvring, negotiating, arguing and fighting is coming to a peak. In the two and a half years since the 2016 EU referendum, views on both sides have hardened and agreement still seems as far away as it was the day after the referendum.

With Theresa May’s withdrawal agreement disliked by all sides, and voted down by an unprecedented majority in the House of Commons, everyone is wondering what can and should be done next?

...



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Digital Currencies

Crypto-Bubble: Will Bitcoin Bottom In February Or Has It Already?

Courtesy of Michelle Jones via ValueWalk.com

The new year has been relatively good for the price of bitcoin after a spectacular collapse of the cryptocurrency bubble in 2018. It’s up notably since the middle of December and traded around the psychological level of $4,000... so is this a sign that the crypto market is about to recover?

Of course, it depends on who you ask, but one analyst discovered a pattern which might point to a bottom next month.

A year after the cryptocurrency bubble popped

CCN...



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ValueWalk

D.E. Shaw Investment Calls For Leadership Change At EQT

By ActivistInsight. Originally published at ValueWalk.

Elliott Management has offered to acquire QEP Resources for approximately $2.1 billion, contending the oil and gas explorer’s turnaround efforts have done little to lift the company’s share price. The company responded and said that a thorough review of the proposition is imperative in order to properly act in the best interests of shareholders, “taking into account the company’s other alternatives and current market conditions.” The news came only a month after Travelport Worldwide agreed to sell itself to Siris Capital Group and Elliott’s private equity arm Evergreen Coast Capital for $4.4 billion in cash and two months after Athenahealth was bought by Veritas and Evergreen for $5.7 bi...



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Insider Scoop

UBS Says Disney's Streaming Ambition Gives It A 'New Hope'

Courtesy of Benzinga.

Related DIS Despite Some Risks, Analysts Still Expecting Double Digit Growth From Communications Services In Q4 ...

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Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

Reminder: We are available to chat with Members, comments are found below each post.

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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