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Thursday Morning

Well yesterday was disappointing.

A 0.5% global rate cut with something like $60Tn worth of global debt outstanding was effectively dropping just $300Bn into a $50Tn global economy, not much at all, and the markets dropped almost a percentage point on the news.  Now, we could say that at least they didn't drop 5% again but we did manage to test new lows and the Dow is still down 15% in 5 days and that is, as they say in the business, bad.  Following our 5% rule, there is no recovery in the weekly chart until we get a better than 3% gain (and hold it, of course).  That would take us back over the 9,500 mark, the level we were watching with great interest yesterday

Sadly, it's our downside levels we are watching now as last night's Big Chart Review shows the S&P (946), the NYSE (6,232) and the Nasdaq (1,717) all dangerously close to the 40% off line for the year.  The SOX need to get back over 329 before they are back to 40% down and the Transports have more of a prayer of getting back over 1,868 but it's a long way from 1,689, where they closed yesterday.  In Europe, we are keeping our eye on the CAC, who need to get back over the line at 3,701 and the DAX, who will fail the test at 4,891.  If we lose those levels, we'll be looking down at the 50% and 60% declines that Asia is now experiencing and it's not entirely clear that they have bottomed there.

With lower rates and lower oil and other government bailouts, the Dow should be the ones to lead us higher, especially if the Dow Financials (AXP, BAC, C, GE and JPM) can pull themselves together.  Unfortunately, XOM and CVX have a long way to fall if oil breaks down below $80 and they could weigh down the index as the two Energy components outweigh the 5 Finanicals by 20% in the index.  On the bright side, other than JPM, the Finanical group is alredy down 50% for the year and are undeperforming the broader index by 20% so we can at least hope for a nice bounce off the 50% line.  John Mason has a good article outlining the sentiment in the financials that is holding them back, despite all the cash they are being infused with.

Hyenas continue to attack the financials with baseless rumors flying around that Mitsubishi would be backing out of the MS deal, that sent the stock down from $24 to $15 on Tuesday and they are drifting along at $17 and probably will until the cash is in hand – although the way things have been going, there's not guarantee that the stock still won't get "sold on the news" when the deal is finalized.  We really can't afford another bank failure, confidence is already shot so we need to watch very carefully what happens now that the short sellers are back in business today.

Iceland had their final bank failure today as the had to take over the largest and 3rd of its 3 largest banks, Kaupthing.  This is just the last straw for Iceland as there was a run on the bank and the $683M emergency injection we talked about on Tuesday was nowhere near enough to stave off the calamity.  Iceland has shut the markets until Monday but the 3 banks now under state control have over $120Bn in assets that may need to be liquidated (Iceland's entire GDP is $14Bn) and that is making the EU financial sector very nervous.  We've been looking at gold as a hedge against this issue spreading and The Gold Report has a good interview with Roger Wiegand so I won't repeat myself here.

[Chart]The WSJ continues to headlining both gloom and doom with a page one article titled: "First Into Recession, California Shows Possible Future for U.S."  The chart on tax receipts is especially telling as surly this will be mirrored in New York and, as I said in our political post this week, it is ridiculous for both candidates to be talking about more tax cuts when clearly the government is going to have a massive shortfall in revenues in 2009, perhaps over $500Bn less than projected under the current structure. 

The London Times is leading off with the headline "Savers Vault from the Banks to a Safe Place at Home" discussing how people in the UK are pulling money out of banks and buying safes to keep cash in the home.  This is pure global panic and it's usually the kind of thing you want to buy into but the situation really is that shaky and the panickers may be right this time.  All we can do is continue to play the ultra-shorts on the upswings and hope that one day it turns out to be a bad bet.  Sadly, it hasn't been since 9/22.

We also have our trusty list of long plays and those are playable now above 9,500 on the Dow but it's worth taking a chance if we retest and hold 9,200 again as well as we did yesterday during member chat.  It looks like C and WFC are going to split the WB baby and the two are currently carving up the assets in an attempt to stay out of court.  The WB deal took C from $15 to $22 on the 19th and they are back at $14.40 as of yesterday's close so it will be interesting to see if there's any enthusiasm for the new structure.  IBM provided some much needed good news, with a small beat but that small beat is 20% better than last year's Q3 and they reiterated guidance at 22% earnings growth for the year.

Everyone is trying really hard to turn the markets.  Both China and Korea announced rate cuts this morning and the HSI responded with a 3.3% (511-point) rally but 16,000 held firm to the upside and that is the 50% line that we really need them to retake.  Japan simply has no room left to cut their 0.5% rate, a fate the US is just 1.25% away from and the Nikkei quickly shed a brief rally to finish the day down half a point, just a hair above the 9,150 line which marks a 50% decline in that market.  Europe is drifting along up about 1.5% ahead of the US open, which is looking up at the moment (8:30).

The good news for today is that Jobless Claims did not go up and we didn't break 500,000 as feared.  New claims actually fell 20,000 to 478,000 but continuing claims went up 56,000 to 3,659,000, indicating that jobs are getting harder to come by.  Let's not forget that the bulge that was caused by the hurricanes has likely snapped back the other way as people return to work and other people are hired to help clean up so more weight should be given to the poor continuing number although that's not what's happening in the pre-markets, who jumped 50 points after the announcement.

In the continuing sage of the US's $200Bn a day parade of bailouts and stimulus, the government is now considering taking equity stakes in banks like the UK did yesterday.  The FTSE is actually trading LOWER than yesterday's open but I can't disagree with the idea of the US picking up the financials on the cheap.  The XLFs are still very low and, at $15.28, yesterday's close is 60% off last year's highs of $38.   With the 2010 $15s going for $4.05, it's not a bad way to partner with the US government on a bank recovery.  The UYGs are an ultra-long ETF to the XLF and they are down from $75 to $10.75 in the past 18 months.  While I guess they can go to zero, the March $13s at $3 were $10.50 on Sept 19th and can only lose $3 if we go to zero in the financials and, frankly, the loss of an option contract will be the least of your worries if that happens!

We have our critical levels for the day:  Dow 9,400, S&P 1,000, NYSE 6,400 – If we can't hold those, there's no reason at all to be bullish but, as I said, if we dip back to 9,200 and hold that, then picking up a few of these bullish plays on the cheap could work out well if we bounce back up but setting realistic stops is key because if we do break below 9,000, then Cramer's 8,000 prediction looms large and, ahead of the weekend, I can't imagine investors getting all brave on Friday if we fail our levels today.


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  1. Now the Fed wants to buy equity in banks?  Just once I’d like to wake up with no attempts at manipulation by our government!
    Just what is it about propping up bank share prices that will help the credit market?  Do bankers need to feel fat and happy with their stock options in order to lend?  Geeze!

    I guess they needed a weapon against the shorts.  Now you short at your own peril when you are going up against the gov with 700B to use pretty much at their discretion.  I thought that money was to be used for CDO’s anyway?   But who can believe anything when they make up the rules as they go along.  But a quote here from CNBC will work against them.  Just how much is anyone’s guess.  The only thing they will accomplish is taking more money from mainstreet when they get lured in and handed the bag.  This market moves so quick you have to be glued to your platform with hard stops to protect yourself.  And God forbid you hold overnight!  This is daytrader land.  And these games they play will only further that feeling.

    I think it’s time to take a hiatus.  Just smack me if we rally and I want to go long with banks.  Until we get past earnings the days are wrought with peril.

    “The core problem is that the smart people are realizing that the banking system is broken,” said Carl B. Weinberg, chief economist at High Frequency Economics. “Nobody knows who is holding the tainted assets, how much they have and how it affects their balance sheets. So nobody is willing to believe that anybody else isn’t insolvent, until it’s proven otherwise.”


  2. Good idea by Dave I’ll reprint here:
    One idea that comes to mind from reading Vitaliy Katsenelson’s thesis about secular range-bound/bear markets: instead of considering a stock a value because it trades at a discount to market-average P/E multiples, look at what the market average P/E multiples were at the end of previous range-bound/bear markets. For example, after the range bound market ended in about 1950, the one year trailing P/E ratio on the S&P was 7x. So, theoretically, if you could find a stock trading at 7x today, and you thought that company’s earnings were sustainable (a key point), that might be a value.

  3. Interesting discussion on CNBC about the long-term effects of all the government’s intervention and it ties into the idea of sustained earnings.   Lots of new regulations on the financials are likely to result in slower earnings growth for them therefore they deserve lower PEs.   Also, to the extent that the whole economy grows slower than it normally would because of the debt overhang, most companies’ earning will be similarly hurt and they deserve lower PEs as well.

  4. Phil:

    Higher open:
    I have the DIA dec 100 puts and we are going up.
    I have the SKF shorts Oct 130 and we are going up.

    What do you think of rolling my calls in C over to JPM ?

  5. Here’s video of the National Debt clock over $10Tn – they had to remove the dollar sign to make room for the new number!

    GOOG got another downgrade today.  BAC goat an upgrade from Robert Baird along with GWW, who are not bad down here at $72ish.  We have wholesale inventories at 10, hopefully that’s not a shocker as lack of credit may have caused a stockpile. 

    RIMM is breaking $60!

    RPM missed this morning but not by much and they kept guidance in-line.  Earnings are recessionary but not depressionary so far.  SLM reports during the day, that’s a big one and INFY is tonight but it’s all about GE and PGR tomorrow morning.  RT had awaful earnings last night but they are being sold off like they are KKD and they are pretty damned interesting at $4 as a long-term hold.

  6. RMM – I think having those two shorts gives you the green light to play the UYGs up and that’s where you can put the C money too.  If C does well, UYG will do well while I can’t imagine going naked long is going to be a good idea, even if we do fly up.  On SKF, do you have the $130 calls?  Those are very dangerous if we are heading higher as you have no room to recover but, if you sold them, then that hedge is fine as you can roll them to Nov $155s even so why worry?

  7. Phil:
    when a stock is down a lot, say 30 %, can you ever recover the loss, I have heard the word "unrecoverable", can you shed light on when things are unrecoverable ??

  8. V continues where it left off yesterday.

    Airlines perking up, AAPL looking good, RIMM is just funny now – it was $53 yesterday morning! 

    CAL at $12.65 is a great buy, you can cover it later.

  9. This is strange, XLF up 4% and SKF is heading up – that’s not good!  VIX is still nasty at 54.  If you don’t have those downside ultra-shorts, it’s not a bad idea to accumulate them…

  10. Phil:
    there is a person called Gartman, he seems to be talking sense,
    he has everything hedged, mostly with SDS,
    he also says: watch copper stocks and baltic shipping because they are good indicators when things recover.

  11. CAL – Actually, selling the Nov $10s for $4.10 lowers the cost to $8.20 called away at $10 for a 22% gain in 5 weeks and otherwise you own CAL for $8.20 – that’s not bad!  Of course the same owning CAL cheap logic could apply to just selling the Nov $10 puts for $1.70, also a crazy premium and you can backstop it with the Dec $5 puts at .55.

  12. Phil:
    on SKF: I have no calls long, only the oct 130 shorts, when would you roll these to nov 150 ?

  13. Interesting quote from the Soliel Analyst that downgraded GOOG today …. "A Wall Street analyst downgraded Internet search engine Google Inc. on Thursday, saying the company’s practice of giving 10 percent of profits to charity and giving employees one day a week to work on pet projects should end amid the current economic climate."

  14. Unrecoverable/RMM – Plenty of examples of how that’s BS, including the depression when the Dow fell from 377 to 41 – now at 9,400 so there is no such thing as unrecoverable if the world doesn’t end – the question is when?   As to Gartman, he’s totally right, it’s the same logic I have with the ultra-shorts, you want to be able to use less money on the short side by using the 2x shorts to prevent a total disaster.  Ironically, it is a more bullish play to use the ultra shorts as you are not really looking for downside, it’s a "just in case things go to hell" play.

    SKF/RMM – certainly not while the guy has 30% premium!   If you want to roll him to an higher position with more premium, just keep your eye on the Nov $155s, now $23.65 and make sure you don’t lose the opportunity to do an even roll with your $21.30 caller.  As long as that relationship remains at better than even for you.  It doesn’t matter what the number is as you will be rolling the caller $25 higher for next month.   Selliing those calls naked is, of course, a bullish play so do be careful that you have enough cover if things do fall apart. 

    Even in this little rally, PRU is making new lows.  UNH is a train wreck. MS is down to $16.22, GM is below $6.50, WLP is at $38.65 so this is nothing like a broad rally.  That may be a good thing though, as it may indicate some actual stock pickers are finding value rather than knee-jerk trading programs yanking the market up and down. 

    Soliel/DB – Really, are there no prisons, no workhouses?   Better they should die quickly and decrease the surplus poplulation….

  15. Phil, Scrooge?

  16. Speaking of bah, humbug – MAT is hitting new lows as is GRMN (still), VZ. GSK, YHOO, MMM, MOT and SLM ahead of earnings.

    The good news is the VIX doesn’t seem happy about the move down but that SKF is freaking me out as it shouldn’t be going up so much with the XLF still green so someone is betting very big on a finaincial meltdown.

  17. Wholesale inventories up 0.8%, that’s not really so bad but we’re selling off anyway.

  18. SKF now over 151.  Wow.  I must say I’m suprised.  But that will only ratchet up the immediacy for Paulson to take a stake in preferred banks.  I wonder who, if anyone, must greenlight this nationalization?  In the meantime, it looks like the bloodletting to position for earnings continues.

  19. Phil – SKF – Could people think that allowing shorting again will cause a drop in finacials ? so a trading thing rather than fundamentals. (even though that sounds silly !!)

  20. Wow, probably +60% of trades in SKF are IntrMrkSwaps.  But I can’t really tell if they’re getting in or out.  Since it’s up so big from the open I would have to assume they’re getting in.  What’s your take on it Phil?

  21. On the contrary, the vast majority of trades in VLX are Norm.  Interesting!

  22. Holy Sht!  Unless L2 is out of whack, look at the depth in the 150 range for XLF!!  It goes on and on!  Can someone please verify their L2 data on this?  Thanks-

  23. Nevermind, it’s now on the Ask side.  Crazy stuff.  Glad I’m out for now.

  24. SKF/DB – It’s very possible that there is a fear of short sellers causing this.  Pasani is talking about how crazy it is that IBM is being sold on today’s news and it does indicate that this is simply a massive liquidation event that has nothing to do with fundamentals.   IBM’s forward p/e is under 10 with 20% earnings growth on target.  That measn they currently get a 10% rate of return on your invested dollar and that is growing at 20% per year.  They generated $7bn in free cash flow last year and bought back $4.5Bn worth of stock (3.5%) in the past two quarters, unfortunately, probably around $120 but this is just STUPID to have this stock trading at $93 AFTER the earnings.  I can understand the concern ahead of earnings but this is now ridiculous….

    SKF/Matt – Looks like huge bet placed on financial meltdown and, unfortunately, it won’t take much of a rumor to make it happpen so make sure you do have covers to that effect. 

    ANF getting crushed – Dads are just saying no to new clothes at the mall.

    ZION had been holding up better than most banks but is diving today.  Don’t tell me that short sellers don’t have an effect as there is no news at all that should be doing this to them.

  25. Iceland PM warns of national bankruptcy!!!

  26. Phil:
    roll of SKF shorts oct 130 to nov 155 criterium: if price of oct130 is equal or less than nov155, go ???

    If SKF keeps climbing, how do I cover ?

  27. AMTD having a bad week, that would be nasty if a brokerage goes under….

    And the ugliness resumes!

    SKF/RMM – Yes, you need to roll it up before it starts costing you money to do so.

  28. SKF is crazy!  Look at the orders on the books!  Huge volume.

  29. Phil:
    I cannot believe what I see: SKF climbing hard so far,
    what is the intent here ?  This banking sh.. disaster, some of these guys should be tied to poles in Manhattan.

  30. FTSE down from +2.0% down to even since US opened.

  31. Phil:
    ok they ran it up but I believ now SKF will drop sharply, IMO.

  32. How about buying SKF PUTS now ?

  33. There are probably quite a few large players who are re-establishing their hedges via shorting financials. Question in my mind is what happens after this. I’m betting this trade gets pretty frickin’ crowded, pretty frickin’ quick. It’s too obvious to short financials on the morning they lift the ban.

  34. Phil,
    Iceland going bankrupt.  What fallout do you see?  I feel that their might be a global contagion out of this mess.  Already saw an article in one of the UK newspapers that mentions that UK savers in IceSave bank not able to withdraw money from the bank.

  35. SKF – don’t get too excited, they topped out at $161.50 in pre-market yesterday and then fell back below $140 right after the open, this is probably a good place to short them.  You guys need to realize that with the XLF at 15, the bet for it to go to 10 (SKF $200) is pretty much a bet that there will be major bank failures in the US.  Obviously, the government will do anything it takes to stop that from happening and that is why I like the gold hedge, because most of those things that they will do will likely spark off massive inflation.  So the logic is long on financials (as they don’t have far to fall) and long on gold since, if the financials fail, then gold will probably go up and, if the financials go up, then it may be because the US pumps Trillions into them and gold goes up anyway…

    Who’s holding up:  AAPL, BIDU, CY, EDU, FDX, FSLR, GOOG , INTC, ISRG, LVS, MRVL, MSFT, OIH, PCX, the Nasdaq and the SOX, RIMM, SNDK, SNE, TM, V, WFR, DISH (from the value congress), STX…

  36. There are some real wierd currency moves going on as well, like the move in the Mexican Peso. FXM is the ETF.

  37. Phil, do you have a gold ETF or whatever… what’s your your pick on that?

  38. I am afraid to say this, but we could go below 9000 on the DOW

  39. Phil:

    Optrader uses MA 5MA for stops: where can you get a nnumerical value for MA for stocks ?

  40. This market is awful. Why doesnt the Fed cut interest rates, or take a cut in the banks , or lend commercial paper, or buy my stocks ?

  41. SKF puts/RMM – The UYG longs are much cheaper and safer (as they can only cost you $3).

    NYSE broke 40% at 6,232!!!

    Iceland – huge global issue.  They could bust another bank for one thing.  Also, now EU investors will start panicking out of other countries they think are  "weak" and there’s plenty of those out there.   If Iceland goes under and starts defaulting then how are the Russian satellites going to get investment money?  The Czechs, Romania, Moldova, Belarus, Hungary, Bosnia, Serbia even Spain looks very iffy and Italy could have strikes any minute while France is always on the edge of a riot…  If you were sitting in Germany or England and had investments out there, wouldn’t you be on the phone right now asking for a wire?

    Consumer Goods and Healthcare are getting killed today and Big Oil too.  OIH is holding up.  Utilities are generally very bad, I missed the nat gas number but CHK is diving so it couldn’t have been good.  Overlal, Tech looks best today and the rails are catching bids.  On the whole, it’s the same crap as every day with selling into any rally killing the markets.

    GLD is the gold ETF and ABX is my favorite miner but they are way up from where I picked them.  To me the play on Gold is to look for $1,500 to $2,000, which is $150 to $200 on GLD so the 2010 $105s for $10.40 just to put away for safe-keeping or the 2010 $80s for $19.40, where you can sell the Nov $100s for $2.20 without worrying about the caller hurting you.  10 sales like that and you’ve got free calls…

    Damn, I have to go to a meeting at 11:45, back about 1-1:30.  Gotta watch these 40% levels:  S&P (946), the NYSE (6,232) and the Nasdaq (1,717) - You can’t possibly be bullish if ANY of these are below 40%.  If the SOX turn red, that would be very bad too (not that this isn’t already very bad).  Right now, it’s all about the NYSE getting it back together.  I think the S&P WANTS to hold up here at yesterday’s low of 970 but look out below if they can’t hold it.

  42. No reason not to short the Dow here, they are on the way to 8,400 if they are going to catch up to the NYSE and S&P.  Simple play is to take the DXD Jan $86s for $13.30 and look to sell the Oct $95s for $7+ (now $5) if we head higher or the $85s, now $7.25 if the S&P and NYSE break back over 40%

    Well, so much for my meeting.   It was with a hedge fund guy and he can’t leave his office!

  43. Phil:
    my UYG mar16 are way down, would you roll them ????

  44. UK completely lost it , with 15 mins to go FTSE – 1.1%. Banks getting hit. Metals and Miners have lost this mornings shine :-)

  45. MRK at new lows.  PEP too, LLY, CL, AFL…  There is no such thing as a safety stock!!!

    S&P back over, need NYSE 6,232 to confirm.  I’m liking the SSO (ultra long S&P) at $34.25.  March $45s are $3.28 and you can sell March $51s for $2.20 so it’s in for $1.10 with a $6 upside and SSO was above $45 until Friday.

  46. UYG/RMM – to go to the $11s for $1.10, yes but I’d be looking to sell something in Nov to pay for it on the next bounce.  Right now the Nov $15s are $1 but the Nov $18s were $1.10 yesterday and $2.25 on Friday so better to wait for a bounce and sell those or something higher.

  47. looks like ibm and aapl now tracking each other with almost identical stock prices and support levels!!!!
    iceland sure is leveraged to the hilt. their population is slightly smaller than that of toledo ohio!

  48. Phil:
    my roll SKF oct to nov went thru even.

  49. This is, by the way, the 9,200 level we wanted to test to make those bullish plays.  Since we are down here seemingly for a reason (Iceland) I’m not gung-ho enthusiastic but if you are way up on the short plays, then covering with some ultra-longs from down here is not a bad idea.  If the Dow breaks 9,000, then it’s catastrophic but as long as 2 of 3 are over the 40% line (along with the Dow, of course) then they is hope.

    MDT making new lows, fundamentals are just meaningless here.  ERIC $6.36!  Berkshire down almost 20% ($22,000) for the week – now that’s scary!

    TM down to $66!  RDS.A at $49, DT at $13.89 – can you imagine Deutsche Telecom being a bad long-term investment?  BCS at $16.60 they fell off a huge cliff.

    Speaking of countries you want to pull money out of, Bush is sitting with Slovakias President.  Wouldn’t you think he’s got more important things to do than assure Slovakia that our financial system is strong?

    There goes KEY, another "good bank" gone bad.  Remember last week when I said to watch the KRE and RKH (regional bank indexes) for signs of a big collapse – check out those charts!

    COP at new lows – I don’t know what’s keeping XOM and CVX up…

  50. COST is also STUPID LOW at $57.66, the $57.50 calls are a nice mo play at $2.17 with a stop at $2 as they can hit $3+ really fast.

  51. MCD at $55.22 and the 2010 $50s are $11.15 and Nov $60s can be sold for $2 (not that I would cover down here unless we fall below 40%, then I would cover lower).

  52. Phil:
    just when I wanted to pull the trigger to buy SKF PUTs your comment that UYG would be better, so I did nothing, now SKF has dropped *$ so my put would have worked nicely. Cannot blame you as I did not act.

  53. Phil:
    in rolling DOWN to lower strikes (LIKE uyg FROM MAR16 TO 11): is the roll best when it is at the low or when it is  rising ?

  54. RMM – Good question.  Also, Phil, please specify when to roll long term longs vs. short term shorts, when near a short term hi or low?  Or when $VIX is at hi/low?

  55. SKF/RMM – Yes but the UYGs are already up 10%, the point was not to say shorting SKF was bad but that longing UYG was better as it cost far less premium and had less risk of heading way down on you.  On the bright side, you got max premium out of that new caller.  You may have to wait an extra month but it’s a lot more breathing room.

    Bargain hunting:

    NKE 2010 $50s at $13.50, Nov $65s should be $3 to sell at some point (now $1.30). 

    EBAY 2011 $15s for $6.  Nov $20s are still .75 but, again, why sell at this price?

    EK Jan $7.50s are $6.14 and the $12.50s can be sold for $2.50 so that’s break even at $11.14 with a 50% gain at $12.50, which is 10% down from here. 

    TRAD joins AMTD on new low list.

  56. Phil – I know some of us long timers should know, but I have been so shaken lately, I don’t trust myself now?  Gotten off the saddel for this ride.

  57. Phil:
    with 1 week to OPEX and CALLS very low, covering at these levels even if there is good  premium makes little sense, unless one is totally bearish and full of panic.
    Altough it looks they might run the market way down toward OPEX, I have seen this before.

  58. Roll/RMM – you get a better price as it heads lower because the higher strike of the same month will retain price a touch more than something closer to the money. 

    Rolls/Grant – Better with specific examples as it all depends on so many things, including individual targets and, of course, goals.  Generally, you roll a leap when it’s a good deal to do so and you are bullish enough to want to invest more.  You shouldn’t just chase everything down and sometimes it pays to just wait out a dip – although a dip like this is unprecedented so it’s all out the window really.  For rolling the calls and puts you sold, your goal is to get the premium so when you’ve gotten 2/3 of it, that’s about the time to start shopping for your next roll but, of course, it all depends on if you believe in the move or not.  As to getting on the sides, I agree,  it’s just a day trading market right now with these insane swings in either direction.  You can make money long and short but it means taking both sides and swalling big losses while cashing out the big gains – scary stuff.

    OpEx – Could go either way but we are so so oversold right now.  It’s all perfectly justifiable if we start getting bank failures but, if the Fed and Treasury actually fix this thing, then the rest of the market has a long way to go up over the next year or so.  The real bet is "Are the world governments so incompetent that they will allow this (or be unable to stop things) to fail?   I can’t imagine who would want it to fail, it would be a total catastrophe, doubtful it would be any party for the rich either but we are so close to the edge it’s just terrifying.

    All it takes is for GM to go bust.  They directly employ 350,000 people and then there are at least another 1M suppliers and salespeople around the country.  Just the defaults alone will wipe out another 100 banks and businesses and then the unemployment will bankrupt several states.  Then you have another 1M foreclosures which will cascade the bank failures and the destruction of the pension program would put a massive cash drain on the system as a million GM retirees scramble for cash. 

    So if something isn’t done, they HAVE to do something else and something else and something else because this whole thing (America, the global economy) can unravel really, really fast so we’ll get crazy hyperinflation before they allow things to actually start shutting down as the government prints up as much money as it takes and the rest of the world will have to pretend it’s all fine with them as they would get sucked right down with us.  If we went by ourselves, China would probably survive but if we take Europe down with us, China would collapse and that could get really, really ugly.

  59. Phil:
    I see your MCD comment:
    I have MCD jan 55 calls, base 6.11$, still have a 2.4 % gain,
    now going out to 2010 and to strike 50 ?????????????????????????????

  60. BTU way too low at $33.75.  Both candidates are pro-coal (clean coal sponsored the Dem convention) and you can just buy the stock for $33.75 and sell the Nov $30s for $7.65 which is a break even at $26.10 (20% down) and out at $30 with a 15% gain in 5 weeks.

  61. phil,
    It looks like the market is pricing in a global depression of some sort, even though it might not be the case.  What is your take on global market conditions?  Also the market isn’t satisfied by the global coordinated rate cut effort.  What does this portend to the investors?

  62. MCD/RMM  – Well., you’re spending $6 to buy $5 of intrinsic value and 12 more months, not a bad deal since you only have to sell .10 a month to cover the additonal premium whereas you need to sell $2.50 of premium in Nov and Dec to cover your Jans and that would put you into a very tight spread with the $57.50s.  With the 2010 $50s, you can cover with 1/2 Nov $60s at $2 and if you do that 12 times you pay for your leap entirely.

    Depression/Malai – See my 12:17 comment.  It could happen.  It could happpen next week, that’s why it’s essential to have good downside protection and covers are not enough, you need to protect with puts or ultra-shorts that will pay you off in a wipeout but it’s very hard to imagine that the worst-case scenario will play out and, if it doesn’t, there will be a whole lot of covering going on in what should, in the very least, be a false rally.

  63. GM goes broke….No such thing with the Fed playing Satan oops i mean Santa, the US will go broke trying to keep the economy from going negative…g*d forbid. This is so nutty, how can 5 million people that cant pay their mortgage bankrupt the whole world there’s something amiss here.

  64. Ah, that’s the beauty of leverage!

  65. We are all one step, no make that 10 steps closer to a NWO. Next their going to start putting chips in us. And i don’t mean Doritos.

  66. Phil:
    we and many others predicted for many years that GM, Ford and Chrysler would go under,
    why: by making lousy cars, too big, too heavy, Toyota, Honda and others making much more attractive cars,
    this lousy product strategy for the last 40 years combined with endless discounting and incentives,
    the inabilty to deal with the excessive healthcare/pension costs for their workforce.
    Now we are close to bail them out too.

    Don’t you see the pattern:
    every sector, icluding the government institutions, have done a lousy job for a long time,
    we are running out of options to bail out ourselves.

  67. kustomz, good point.  Unfortunately it’s easily explained by over leveraging and the bogus credit default swaps that have been sold to buyers who didn’t do their due dilligence.

  68. Phil
    A while back we discussed some income stratagies,  I have been following some of the ones mentioned.  I was wondering what your thoughts are now.  I’m looking at ACAS mostly.  ABR looks like the earnings are falling apart.

  69. Man, check out this close on the DAX,they blew the 40% line at 5,013 and jumped down 140 more points!

    The CAC fell to 44% off and the FTSE is the loan hold-out at 36% down but they fell almost 5% off the morning high today.

    Now XOM collapsing along with CVX.

    AAPL seems to be getting a loyal following again and GOOG not doing so bad on a downgrade.  Maybe time to pick up the QQQQ 2010 $30s at $6.92 – not a bad price with the Nov $37s going for .95.

  70. AAPL Need help as Oct options expiry just round the corner and need to get out of the Oct Puts I sold! I have:
    Long Jan 110 Puts (cost $4) now $26.50
    Short Oct 120 Puts (cost $5) now $28
    Getting nervous, and considering rolling Oct 120 Puts to Nov 110 Puts for $3.50…

  71. Did we just get bad news or is it the 1.30 sellers ?

  72. Phil, my hunch is that’s how today’s close will be.  Which is to say, alot like yesterday’s.  In the mean time its a sausage factory.

  73. GM/RMM – I totally agree and if this were last year at this time I’d say let them fail but we just can’t afford it right now.  They are a terrible company and should be given to China or Japan in exchange for backing the existing pension and then they can lay off half the people and turn it into a productive company.  There is virtually no hope of GM ever fixing itself, it’s just a money sink and has been for 20 years.

    ACAS/TC – What was the play on them?  At the current share price the dividend (if they ever pay it) would be 27%, that’s kind of nutty!  They got a JPM downgrade that killed them on 10/1 as the assassin/analyst there said they may not be able to maintain dividends.    You can buy the stock for $14.59 and sell May $10s for $5.55, that gives you a basis of $9.04.   With a $1 quarterly premium, that’s pretty nice!  You can cover with Feb $7.50 puts at $1.50, which limits losses to about $3 and maybe you kill the puts if they go below .75, as that would probably mean things are going better anyway.

    ABR is also funny at this price because their dividend would be 36% if it keeps up.  They have given no indication whatsoever that they will cut it and they haven’t even been downgraded but they are down over 40% this week.   They don’t have options so there’s no way to protect yourself with them.  This is ANTOTHE STUPIDLY CHEAP STOCK.  The company pays $55M in dividends on $85M in income out of $274M in total revenues.  That means their revenue stream (which does come from lending that does include mortgage-backed securities) could drop by 1/3 and the company could manage their business through a downturn.  At $5.69, they have a Market cap of $140.75 – again, this is a company that made $85M last year and has not even lowered guidance

    AAPL/M2 – It’s always bad to give your putter or caller position advantage.  Since he paid you + $1 you can move yourself to Apr $105 puts at $26.35 and move him to Jan $120 puts at $30.38 so now you collected another $2 from him so you have $3 in your pocket at least with the same spread (but more time).  If AAPL still doesn’t come back by Thanksgiving, then we can roll again until you get $10 off this guy.

    Iceland bank called a loan against a guy in England and he lost $1Bn having to liquidate – how’s that for collateral damage?

    JNJ making new lows!  OXPS joins the new low list, bad trend in the brokers!

    News/DB – I don’t think this market needs bad news any more, sellers are on auto-pilot…

  74. Phil; please give an example of what you call position advantage for callers and putters.

  75. Somalia Pirates:
    a good lesson would be to send a few warships there and just blow them out of the water. Is that too tough a stance ???

  76. JOSB is down so you know it’s a bad day.

    Position Advantage/RMM – It just means not having a caller or putter that is more in the money than you as they can easily outgain you by a wide margin.  The only reason you would ever do it is to make a contrarian play (like selling the SKF Nov $150s at $38.25 and rolling yourself up to Jan $180s at $33.55 because you think $150 is way too high so you take your own cash off the talbe from the Jan $120s at $57, pocket the $23 and hope to collect the $38.25 and still have some value in the Jan $180s on Nov 21st. 

    Pirates – Am I crazy or can’t this whole problem be solved with a satellite and an attack helicopter?  A helicopter can go 200mph and a boat can go about 30 so once someone SOS’s a position you may not be able to stop the attack but you can make damn sure it’s the last attack those guys ever stage..  Of course that’s also my solution for protecting Billion dollar oil platforms from Nigerian rebels in power boats but that doesn’t seem to be worth it the oil companies does it?

    I think I said yesterday that the 5% rule means you can lose 5% on day one and 2.5% on day 2 and 1.25% on day 3 and that is actually a good pattern.  That’s what we have to root for today and maybe a flatline tomorrow but the NYSE MUST get back over 6,232 for that to happen (50 points).

  77. A rally into a close would really indicate a change of heart :-)

  78. Phil:
    position advantage: said simply: the caller is ITM.

    my AAPL nov 105 is OTM, I have position advantage, and premium/Timevalue is 7.65$.

  79. Buying F stock is like buying a leap.

  80. What happens to the crew that was taken hostage if you blow the boat out of the water?  Can you still hire captains etc to man the ship?  Is the ship still in international water so that you don’t invade another country?

  81. Dow goes lower everyday, i think at this rate its safe to say we break 9k to the downside. I think its safe to say GM and AIG have to be removed from the Dow or they’ll remove themselves soon enough. Who replaces them? TAP and PM o lord. GM going out will affect the markets, just more bad news. Do we all just invest in IBM?

  82. Buying F stock is a leap of faith.

  83. BBY new lows, LVS at $15.50!!! 

    DRYS – I don’t know if they own their ships outright but they have 46 of them, probably $50-$100M each and the market cap of the company at $21.22 is now $925M.   The balance sheet only lists $1Bn in debt against $1.7Bn in equipment and they made $475M last year. 

    GS $107!

    Hostages/Mike – Ah, that would be bad,  I was thinking they rob you and leave….

    Kustomz – We are below 40% on 2 of 3 and the Nas is not far behind, the only thing to do is short everything at the moment.  Until we get back over 40%, there’s little hope.

  84. Phil:

    my DIA puts are not protecting well enough against the loss in my SKF shorts

  85. XOM at $72.50!!

    Actually, with XOM and CVX both down more than 5%, that’s most of the Dow’s losses today.   Overall, the components don’t look that bad (ignore GM of course) with the big non-financial losers KFT, KO, MRK, PG and WMT making no sense anyway. 

    Nasdaq is down but the Qs are still up, GRMN went up finally!  WFMI is going to be cheaper than discount groceries but thier business model is too scary in a recession. 

    Oil closing a lows of the day but still higer than yesterday’s low.  ICE falling off a cliff, down more than 10% for the day.

    SKF/RMM – then you need more puts…  Isn’t that the Nov $155 caller who has $30 in premium that you are worried about?  You do realize he can be rolled even to the Jan $170s right.  Not that you should since he has $30 in premium to burn off but really, you can’t react to every tick of the market like that…  You can always cover with Apr $200s at $43 or buy 1/2 X the Nov $90s at $78 since they will gain $30 in value before the $155s go in the money and you have to give them their $40 back but then you’ll be screwed if the market goes the other way…  If you’ll remember, when we originally did the SKFs they were around $90 and I said they should hit $140, maybe $200 so none of this is unexpected.

  86. MA is really trying to stay green. Any buying and I think it could break up.

  87. I knew that nat gas report was bad, CHK making new lows! 

    AAPL, SNE and RIMM still stubbornly positive.  SHLD at $70, good call by someone yesterday!

    XOM – I hate them but I’m not sure I’d mind owning them at $67.73 next week selling the $70 puts for $2.27 and you can margin stop that by buying the $55 puts for .15.  ps – you can roll those puts down to the Nov $60s near even (but not the lower puts so only for people with margin power).

    SOX are still positive.

    Oh nice, RBC says 300 banks will fail over next 3 years.  Weiss research says 1,479 banks at risk, 1 in 9 banks!  There’s today’s market killer…

  88. Phil:

    where are we going to close???????????????????
    what is your hunch ??????
    have justed taken gains in DIA puts, now have only SKF Puts and SKF shorts.

    SKF at 165, very very high.

  89. Phil:
    am getting annoyed when these young, good-looking women at CNBC always seem to have fun to report their bad interpretation: of course, they are only doing their job.

  90. MA – of course if we have sellers :-(

  91. SKF/RMM – those are double bets on the SKF going down, I hope they are offset by something.  We are now looking very bad for the close with the S&P at the 2.5% line and the NYSE already down 3% and looking weak but this is a wonderful commodity sell-off along with the usual financail nonsense and the SOX and the Qs are acting like they are getting some rotational love and that’s a very good thing if they can keep it up for more than a day. 

    BIDU has begun a dive, they’ve been a good buy at $200.  GOOG can fly down but the premiums are just sick on that stock.  I like having the $370 puts for $45.90 and selling 2x the $340 puts for $27.25 which looks like this:

    Buy 1 GOOG OCT 2008 370 Put (.GGDVN) $45.40 $4,540.00
    Sell -2 GOOG OCT 2008 340 Put (.GGDVE) $26.50 ($5,300.00)

    $302.40 $0
    $310.00 $760
    $325.00 $2,260
    $340.00 $3,760
    $355.00 $2,260
    $370.00 $760
    $385.00 $760
    $400.00 $760

  92. If the BIDU $210s come down to $10, they make a reasonable bounce play for tomorrow but not over the weekend as the premium will die.

  93. That GM story is bad news (same price now as it was during the depression).  It’s going to drive the point home to people and cause more confidence to be lost.   Major disaster! 

    New lows are flying now, we are heading down!  Even our holdouts are turning red and it looks like we’ll go down 5% again.

  94. They got the Dow under 9K

  95. Phil:

    I find myself getting out of positions too early, the DIA PUTs for instance,

    there are certain times when things often change, and maybe I should pay attention to things like 1 hour before close , is ther something to watch ?

  96. SKF at 172

  97. VNO and BXP in a power dive, that’s our commercial real estate in this country falling apart!

    Those QID puts are looking like fun again.  Apr $60 puts are $7.65 and you can sell Oct $60 puts for .77 and the Nov $50 puts are $1.18 so nice income stream while you wait for normality.

    MER $14.87!

    RMM – it’s a casino.  There’s not much to watch as it’s just a totally insane market but you MUST be covered for a 1,000 point drop (assuming you are generally bullish) as it could happen overnight. 

    FDX $69!  XOM breaking $70, C $13.50, CAT $45.    Meanwhile money just came out of bonds again, big jump in rates but maybe it’s running to Treasuries today as nothing at all seems safe….

  98. Phil,
    strange day! appl, ibm & dow are all bottoming at 89! leading digits that is!

  99. I bet that was a computer program – too coordinated and quick

  100. Phil:
    for that 1000 drop, what do you recommend to buy ????

  101. Look at those FXPs fly!   Another 1,000-point dip in the Hang Seng is expected.  March $100 puts at $20.50 are a fun way to predict the Hang Seng won’t go down 75%.

    DXDs are rocking and rolling!

  102. aig, gm and xon are the dow killers today!

  103. If we dont go down 500 points i would be shocked. CNBC just putting out one bad scenario after another. One positive is the lower we go the closer we get to the bottom and the higher return we’ll make when we head back up. Hard to think in that respect at the moment but that’s the way the markets work.

  104. good old s&p gm ratings. are they on the ball or not?? talk about kicking a dead dog!!

  105. Buy for a drop/RMM – Holy cow, I’ve been printing lists all week!  At this point it’s too dangerous to take the ultras, because we could snap back so the good old DIA Dec $87 puts at $6.30 and you can offset those by selling 1/2 the Oct $84 puts for $1.85 just in case we snap back tomorrow (and, if not, they can be rolled to 2x Oct or Nov at lower strikes).

    GM on negative credit watch now, this could be it!!!!

  106. as cnbc points out the good old s&p guys kept it a poor secret until their buds got out of gm!!

  107. Phil, who would pull money out of bonds and buy equities at this point of the game?  Would they just be sensing ‘oversold’ and that their money could make a difference?  Seems like a risky move to me if on a large scale but not large enough to move the market mentality.

  108. How on earth could GMs credit have not been negative before this?!?  That’s what’s wrong with the system, the fact that there was anyone left in America who thought their credit was worth even FFF levels….

    GE broke $20 – THE HORROR!!!

    RIMM about to give up and join the pity party along with AAPL…

  109. Bonds/Matt – You pull money out of bonds because you think the bond market will collapse and you give you money to the government (Treasuries) to hold if for free, hoping they will at least pay you back.  Obviously, the money isn’t being used to buy at the moment, I haven’t seen a buyer in the last 30 mins.  If you have a large fund, you have to buy some things down here, things like the XLF at $14 can be DCA’s down to $8 in a few traunches and you can hedge that with SKF calls, there’s lots of plays like that if you have capital to work with.

  110. GS heading to 100.

  111. I think the shorts have a long way to go before they cover, unless Bush gets on TV and gives one of his awe inspring speeches i cant see whats going to save this market!!

  112. holy cow !

  113. VIX over 60,  nope make that 61.

  114. I would cal this a crash.

  115. Phil, I’ve got capital but no balls.  I’ve been like a deer in the headlights all day since I got shaken out of my SKF position by Paulson’s sabre rattling premarket.  I can’t believe I sold for a loss premarket when I could have been up thousands.  I’m shell shocked!

  116. anyone going long tonight just for luck, like MER or MS?

  117. Of course, I am always impressed how they get the number: 500 down. that was the goal.

    are you guys that good to get this doen ????????????

  118. My brother (the technician) says that we likely have three more minor waves down as part of the major wave C.  His estimation for the SPX down for each of these minor waves are (respectively) 115 to 173 SPX points (I think we are experienceing this one now), 85 to 128 SPX points, and 180 to 270 points :( .

  119. Got the GOOG put spread for $1050 – what do you call this thing??

  120. sorry, they go for 600.

  121. Hi Phil,
    I have the capital, but don’t understand the play that you are suggesting.  Can you lay out an example play?

  122. LMAO Maria asking guest if he thinks this is a crash!!!!

    Phil your 8200 Dow is closer to reality

    PFE under 16!!

  123. ok, they go for 1000.

  124. Bush – LOL Kustomz!

    Shell-shocked/Matt – this is a massive disaster, there’s no other way to put it.

    GOOG/Edro -Ratio backspread, watch that your callers don’t get away from you, be happy with a small quick profit as the putters lose premium and you are in the money.

    Capital/Patrick – has to wait for AH, plenty of things to buy.

  125. Bought some PFE, havnt seen this price since the late 90′s

  126. A good time for puts on the VIX?   It’s at 65.

  127. Maybe this is the finally puke before we go up.

  128. Amazing how much your calls are protected when they are DOTM.  Delta so small a drop does not matter. hahahaha

  129. The ignorance which existed as it was clear for years that GM/automakers will cause big problems, now this comes on top of the bank morass.
    This is worse than 1929.
    We will survive but live not very well, please do not speak all the time of the American Dream, it has run us and the world into the ground. The American dream causes living beyond what you can afford and it makes you to want too much.

    Sorry, these are facts.

  130. Sing Steve, doubt it!  It’s an end of day selloff.  Not good for a bottom. 

    Phil, I would love to do a little shopping AH.  Long or short.  I’m thinking to just stick with what works and pick SKF up again at a discount from today’s high.  Any thoughts when you get a chance would be appreciated.

  131. Bought more PFE

  132. VIX puts/Steve – I would have thought 50 was a good spot, this is insane! 

    Delta/Steve – keep in mind that’s a function of VIX 60, when the VIX drops so will the callers, very fast!

    BIDU with a good bounce!!!!

  133. Good time to take a chance on the upside plays I hate to say.

  134. matt
    But I feel like I hit level 3 basement on that ride.

  135. aapl, rimm, grmn  all closed green today!

  136. Dow has lost 5400 points on anniversary of alltime high of 14160.

  137. Sing S.  I know, my neck is stiff as a log right now and I didn’t even have any skin in the game.

  138. Phil:
    upside plays: what about my SKF shorts ? hate to mention  this.

  139. well aapl still going down.  a long time to settle today must have been massive volume at the close.

  140. Did anything actually cause that sell off ?

  141. Hate to say it but Cramer actually saved his sheep some $.

    Phil, after you’ve had a chance to screen a hundred or so stocks.. let us know what you like for a bounce tomorrow! ;)

  142. phil,
    how strange, aapl closed exactly at where it closed yesterday. does this work to decrease value of aapl options in some kind of reduced volitility measurement that the market watches??

  143. RE: Capital, I’d like to second that after-hours discussion. Significant amount of cash over here… since early-mid 2006. :P (Too bad even more significant amount in longs…)

    Not sure I’ll be around after hours so just want to add… if looking to deploy a lot capital for longer time periods, wouldn’t it be prudent to wait until after the election, after the first $100 billion of bailout is actually spent (so people see it working[?]), after a dip in the LIBOR, other short-term events, etc etc? I dipped a toe in XLF (~$18 cost basis) and GE (~$20 cost basis) earlier this month (decent cost basis thanks to selling puts and covered calls). I wanted to sell some AAPL puts (I really should do the long way OTM Jan put & short the ATM Jan put play you mentioned), but I’m now wondering how low we can go and am holding off. (Also, I know the point here is options, but in this environment I’ll feeling a lot more comfortable with dinky covered call plays… or stuff like that AAPL put play.) Thanks.

  144. DB
    Where have you been for the l;ast week?

  145. Singapore – "In cloud cuckoo land" expecting a bounce.

  146. DB LOL

    Looks like WB is buying more WFC

  147. after all that bs, my aapl jan 130′s actually increased in value from prev close!!

  148. Any see any after hours trades – did everyone collapse of heart attack ?

  149. INTC $15!!!   TASR $5!  WFMI now $15!  C under $13!   BA $45!  HOV $4.75! 

    At least that was good volume today but what a terrible finish. 

    We’re almost certainly headed to 8,000 now unless there is some major intervention. 

    Pasini makes a good point.  The MER stock swap for BAC works out to $17 and the stock is at $13, it’s a good cheap way to gamble on BAC.

    SKF/RMM – Well you do need to hope the world doesn’t end now….  They can be rolled to the Jan $180s for $4 so not so tragic yet and they can be rolled to the Apr $220s for $5.  After that, you have some trouble! 

    I’m actually looking at the fact that you can sell the SKF Jan $180 puts and calls for $108.  That means SKF would have to hit either $288 or $72 before you are out of pocket.  You can cover with $75 puts at $4.35 but the upside cover doesn’t work so it would be a gamble against a total meltdown.

    Oh good, they are showing clips of Bush sitting with the President of Slovakia – I feel safer already!

    Cause the sell-off/DB – Yes, my worst-case depression scenario of GM going bust just came true…

    AAPL/Highlander – In a minor way it reduces AAPL’s V but it’s overridden by the greater VIX sentiment.

    Cash and capital.  I sent out qualification letters to everyone who was on the Hedge Fund interest list.  If you didn’t get one, send to but yes, this is an intensely good time to have money to put to work!

  150. Phil
    Is CROX a buy here at 1.90?   It is cheaper than the options.   A P/E of 2

  151. Check out the move on GLD into the close!  That’s pretty intense…

  152. Financials, no one calling a bottom there

    Tech, a few held up in that huge selloff

  153. If all was normal one could expect a big bounce tomorrow but all things are bazzaro now.

  154. CROX – LOL!  You have to go right to the balance sheet now and assume any company that doesn’t have a year’s worth of operating cost in the bank may fail.  That doesn’t mean you can’t gamble on something as crazy low as CROX – they have a market cap of $157M and they have $55M in cash, $147M in recievables and $221M in inventory against about $160M in liabilities but any company that can’t get a loan could be in big trouble if banks start failing.

  155. All is not normal Steve.  How spooky was my 12:17 comment about GM?  That’s what’s on the table right now, massive collapse of the USA by Xmas…

  156. Should we expect margin calls and forced liquidation in the midst of a dearth of buying interest…Given that, its hard to see why a bounce is the first reaction to today.

  157. With this big drop if you have sold any puts you might start to get assigned so be careful out there. 

    If GM goes down what about F?   a double wammy!

  158. Oh good, they are showing clips of Bush sitting with the President of Slovakia – I feel safer already!

    President of Slovakia…..He’s he for the free buffet

    Friends that could care less about the market are sending emails ad text’s wondering what the hells going on. When you get stock advice from bag boys you know its time to get out and when people that haven’t a clue make inquires about the markets i think its time to buy, or at least its close. 

    What can save GM and Ford, these are important questions that need to be addressed.

  159. If George Bush had any balls he’d get up tomorrow and whip out a checkbook and write $1Tn worth of checks tomorrow morning and just say "Go ahead and impeach me if you want but I’m saving the damn markets."  The government needs to step in and guarantee all home loans and then start an audit process on bank books and homeowners along a 10-year plan to move people to the right mortgage who can afford them and move people out of homes who can’t. 

    Step 2 would be to buy bank stock from any bank that wants capital, at this point shareholders should be thrilled to be dilluted for cash.  I’d be sitting down with Ford and GM and nationalizing them and busting the union and appointing someone like Kerkorian to rework all the contracts in a fair manner that will keep people employed and then I’d spend what it takes to retool them into high-mileage vehicle producers. 

    I’d also get on TV and tell OPEC if they cut production I’ll release the SPR at double the rate of their cut and put $200Bn of taxpayer dollars on oil puts and after I’m done trashing the market and get a double I’ll go long and start buying back oil for the SPR until my calls are worth $800Bn and then I’d go the other way again.  Nothing illegal about it apparently as all the funds have been doing it for years….

    Margin calls – I think they were already happening this afternoon.  Breaking 40% down was way outside the margin range of even the bearish investors. 

    F/Steve – I don’t think they have the same amount of unsustainable debts that GM has but it’s a confidence issue too.  GM only has about $20Bn in cash and few recievables due to the way they do accounting while Ford has $116Bn in receivables and $30Bn in cash so they can factor better than GM.  On the whole, they both suck…

  160. I’m impressed that there was no apparent technical glitches in the market.  Orders are very slow, but still working.  This is a true shell shock!  I had to go back to 10 years to find where the charts are.  Most of the mutual funds and 401k that are 100% in stock are down 40-45%.  My monthly 401k contribution are now getting a huge discount (well, I hope it’s a discount), but I need to make sure that they are rolled over to cash before the next bubbles would crash in 2020.
    So any of us trader hasn’t lost 50% are doing well.  It is going to be a long road back from this level. Hang in there folks.

  161. Phil looks like your fighting spirit is back!!!! I LOVE IT!

  162. Phil for Sect. of Treasury!

  163. Phil, I like your idea.  The Treasury should start buying shares in all the beaten down good companies.  We can then sell in 3-5 years and hopefully pay off all of the countries debts.  For those who need rescues, it should be preferred shares and warrants a la Buffet.  Nationalization is the last option.

  164. Anyone has predictions for the next few days?

    A lot of people, including myself, are sitting and watching the market slides.  Although there isn’t much buyers, there are many "forced sellers" because of liquidation and/or fear, leading to further drop in the market.  I think Phil has the right thoughts that some big funds need to start to draw a line to start putting money to work, and also determine a price that they can defend, i.e. keep buying down to that price.  We were hoping that good earnings would stop the slide, but it’s not happening yet.  Besides this, there has to be a catalist to drive the market higher, such as the G7 people comes out and announce something good tomorrow.

    If all else fails, we may be saved by the closing bell tomorrow, TGIF!

  165. That’s very Marxist of you, Welcome to the Social Republic of the United States…has a nice ring to it.

    How we come out of this mess and the means we use to fix it is very important, the Fed sticking its nose and our Government trying to save our economy at any cost is causing this whole mess, our future as a free capitalist society is at stake.

  166. Laissez faire anglo saxon capitalism just died like the Marxism/Communism extreme on the other end.  No, no more of what we’ve had since Reagan.  Only regulated capitalism (read regulated greed) works.  That’s why the Asian economies are still standing strong and won’t go into a recession unlike the N. Atlantic economies.  The only reason share prices have dropped is all the NATO money being pulled out to save a$$es in NATO.

  167. Hi Phil, I like your idea re: re-doing mortgages at least in theory. In practice, the gov’t is not capable of doing anything that large scale and prevent a large amount of fraud and other shenanigans. Look what happened in Iraq where they tried to spend a few measly billions to build some schools etc. The sad fact is the gov’t is pretty much incapable of doing anything worthwhile at grass roots… I mean, they can’t even count barrels every week without someone spending govt money on hookers and blow, jeez…

  168. I was looking to compare Bush and Hoover (who was the Republican president during 1929 depression), Hoover atleast was defeated by his own hubris, we have no such luck for voter revenge : throw the bums out ! :-)

  169. Breaking News (WSJ) : Citi said it has ended negotiations with Wells Fargo on Wachovia transaction.

  170. That C deal sucks. Down to about 12.60 in AH.  10 point drop in just over a week.  Maybe they can be stronger without the deal.

  171. Citi Ends Wachovia Talks
    A deal between Citigroup Inc. and Wells Fargo & Co. to give both banks part of Wachovia Corp. fell apart Thursday, but Citi said it wouldn’t try to block merger between the other two.
    Wachovia shares jumped 15% to $4.13 in late trading, as Citi climbed 1.2% to $13.09 and Wells Fargo fell 2.8% to $26.50.
    Citi, which said it remains willing to complete the transaction, said it plans to pursue its legal claims against Wachovia and Wells Fargo for breach of contract and for tortious interference with the contract. (Citi’s statement)
    Citi said the "dramatic differences in the parties’ transaction structures and their views of the risks involved made it impossible to reach a mutually acceptable agreement."
    Wells Fargo and Wachovia had no immediate comment on the status of the merger talks.
    The deal would have resolved a feud over the eighth-largest U.S. bank in stock-market value, which had become caught between two takeover bids while facing pressure from the FDIC to sell itself. Last Monday, Wachovia agreed to sell its banking business to Citigroup in a federally backed deal for $2.1 billion. But Wachovia then tried to scrap that deal Friday as it agreed to sell all of its operations to Wells Fargo for $15.1 billion with no government assistance.
    Lawyers for Wachovia and Citigroup have been sparring over the validity of an "exclusivity agreement" Wachovia had signed when it agreed to sell its banking business to Citigroup for $2.1 billion. The exclusivity agreement restricted Wachovia from entering into merger discussions with any other bank.
    However, a provision in the federal financial-system bailout passed Friday added a wrinkle to the situation, rendering unenforceable certain agreements that restrict merger talks between banks.
    A New York state appeals court Sunday night reversed a lower-court ruling from the day before that had extended the expiration of that agreement to Friday from Monday. Citigroup, which contends Wachovia reneged on the binding deal, said it would appeal the decision that reversed the lower court’s ruling.

  172. Peter – Hang in there is right!  There are some pretty intense deals out there to be sure but I think I’ll be concentrating on finding plays with good hedges for the most part as I think we’ll have a very hard time avoiding a test of 8,000.

    Fighting Spirit/Kustomz – What else can you do.  We (the people) should be furious about all this, it’s total BS!  Bush is scheduling a talk on TV at 10am.  What is his problem?  All he ever does is tank the markets, if he is going to say something it should be pre-market or, better yet, this evening.  What’s he going to say – "Pauly you’re doing a hell of a job"?

    Oh damn, that’s right, Monday is a holiday!!!  Holy cow they should close the market tomorrow.  Give us 4 days to think it over.

    Thanks Cris – You can’t assume government is the problem.  Our government used to accomplish great things but it’s been overrun by a culture of corruption that is every bit as bad as what went on in the mortgage industry.  The real problem is there is no independent oversight of government so they let each other get away with murder.

  173. BonVivant:
    agree, in fact always was of this opinion, the practised capitalism with its excesses in the USA have always given me a bad feelings, it is not only greedy rich people, the excessive consumption  and the required borrowing of all Americans have created this mess and distater for the USA and the world.

  174. Phil: I did not understand the second part of your SKF comment; selling jan 180 puts and calls ??
    I hope tomorrow SKF drops some because I will get out possibly,
    rolling the nov 155 shorts to jan 180 could be done, you really believe it could get that bad to 180 and even 220, obviously you think there is a chance,
    I am shattered. I always said:: let the bigshots make lots of money, I am not jealous, I expect them to make good decisions for all of us, now we know they did not at all, they were lousy, when I hear that bthe financial world created stuff which they do not understand themselves, I like to throw up.

  175. SKF/RMM – that wasn’t you specifically, just noticing that, as a new play, you can sell the combo and have an extremely wide win range ($100+) which, in a normal market would seem ridiculous but, in this market, could be hit in either direction in a week.  I do not think it’s likely they get to $220 but $200 was my target for a bank failure.  Since it’s only 20% away, that’s just a 10% fall on the XLF so it is within reason but still unlikely as the government will pull out all the stops to keep the financials from going below 40% of past value.

    As to the big shots – I’ve been ranting and raving about this psychotic, corrupt administration and all the BS they are allowing for years but I get treated like the conspiracy nut.  Now it turns out they did rob the treasury and wall street was a giant con game and they did bleed the homeowners dry and ran up the debt while giving tax breaks to the same crooks who started the whole thing…   Oh yeah, and then they put the head crook in charge of the Treasury – It’s like a friggin fairy tale where the villains are pure evil and no one can stand up to them.

  176. This is a crash.  20% in one week vs 22% in one day in 1987.

    Nikkei down 11% so far after hours.

    Be careful what you wish for; Bush on tV again tomorrow am with nothing to say.  "All is well….".

    ABR … stay away.  Lot of bad loans made over there.  Better plays in the mortgage reit pool than ABR; but not gonna recommend them now; look at the preferreds on some of them.

    What a disaster.

  177. C last week when it was 23 I said we could see 15 again.  Damn, its at 12 ?

  178. Great move by SEC to end short selling ban, dontcha think ?

    Really helping things here….

  179. Phil, yes or no question.

    Do the Dems bear any responsibility for FNM / FRE ?

    Be honest now…

  180. Monday is not a stock market holiday.

    Only bond market; and banks are closed.

  181. From WSJ
    Nikkei Average          8359.81    -797.68    -8.71%
    Seoul Composite     1192.48    -102.41    -7.91%

  182. Hello Cap :-)

  183. Dems/Cap – Of course they do but so does everyone in Congress as well as that incompetent nitwit Jackson that Bush put in charge of HUD, who followed the equally incompetent Mel Martinez.  That’s a cabinet-level position that oversees FRE and FNM but these idiots were so busy with their own corruption and cronyism that they didn’t have time to do their actual jobs and oversee the agencies. 

    Nikkei very scary already!

  184. Phil
    I have sold FCX  Nov. 40 put. The stock is @ 38.90 and the price of the put option is 8.30. Supposed I am assigned the stock tomorrow, what will happen to the price of put option ( 8.30 ). Does that disappear from my short account or will I be have to pay that too? Thanks.

  185. Futures down over 175 so far.  Maybe a black friday.

  186. Ash
    I think you will be ok.  There is still over 6 bucks of premium in the option.  You start to get assigned when the premium gets down to under 25 cents or whatever the spread might be as a rule of thumb.  Usually when it is DITM too.  ATM is still safe from assignment as a rule.

  187. Sing Steve
    I just posted a question for Phil, but I am not sure if he is still here. Can you please help me. Thanks.

  188. ash
    Plus that was Nov.   If you had sold Oct 80′s you might be assigned.  Dont worry lah.

  189. Sing,
    Thanks so much. I was concerned that I might be assigned and also pay the $8.30.

  190. ash
    Just look at how much extrinsic value you have.  if over a quater you are safe.  plus you sold Nov.  Only worry about the front month, October.   But it would be great to be assigned your Nov 40 because you could sell it right away and pocket all of the premium that you sold to.  and then resell it again.  For Nov no need to worry until about 2 weeks to go and you begin to get DITM.

  191. ramana, glad you are smiling; i’m not in a happy mood these days due to this mess.

  192. Futures -220 and counting

  193. -220; dang that’s nothing these days !

  194. Where the hell is Peter Shiff, have not seen him on CNBC once through this whole meltdown. He’s one of the guys who could say i told you so.

  195. Sing
    Thanks again. I can also roll it over to another month and lower strike. I think Phil’s rolling strategy works very good when it comes to selling puts.

  196. Asia getting hammered. 

    ash,   I think the strategy works best in putters if it is bearish and callers if it is bullish.  Neutral too is a good spot.

  197. oops; meant for ppow

  198. I guess "told you so" is in order here?
    I even made you look up "prestidigitation" if I recall. You won’t forget the meaning of that word now…

  199. This is simply incredible to me, the amount that and velocity with which we’ve fallen. From a fundamental and technical standpoint we’re not supposed to be here at all -and I don’t mean that we "should have held" or that "valuations are attractive" -I mean that we’ve knifed through all conceivable support levels without a break and that valuations are preposterously low. From a technical standpoint I don’t think the absurdity of not having bounced needs any explanation. From a fundamental standpoint the market is basically saying that we are worth nothing more than we were ten years ago -despite those ten years of productivity being exponentially more productive then the ten years before them, which themselves were exponentially more productive then the ten years before them. In the final accounting you ask where value is created and it’s created by technology and by labor -both of which grow exponentially.
    Anyhow, I suppose it is entirely possible that we’re dealing with a broken market mechanism -having gotten away entirely from the original purpose of capital markets; which is to say that our capital markets are no longer guided by investors and speculators, but driven by factors beyond the control of the participants. This is nuclear derivative argument -once you lose regulation, transparency, and most of all the simple ability to calculate the possibilties inherent in the positions one holds -the market is no longer fathomable. Sort of like introducing machine guns, where what had been standard understandable practice (trench warfare) suddenly became something far beyond what anyone thought the logical conclusion could have been.
    My guess is that this time isn’t any different, just more extreme -we will bounce, and I think we’ll bounce right now. It isn’t that the markets have fundamentally changed, it’s just that like sex, music, travel, you name it -everything is more "extreme" now than it used to be. This drop included -it has to be done twenty first century style.
    My real worry is that we’re killing confidence and rally or no we’ll be looking at a couple bad years at least before we get any of the real movement that we’ve seen these last few years. Trick is to cash in in the next six months by playing the swings and then sell volatility and go on vacation after that.

  200. FCXAsh - If the $8.20 put is assigned to you (doubtful as it’s almost all premium) the $8.20 contract will disappear, cancelling that debt and you will have X x 100 shares deposited in your account in exchange for X x $4,000 that will show up as a draw on cash, whether you have that much cash or not.  Usually (and you must check with your broker) you have 3 days to sell the shares and settle the account but it’s not the sort of thing you want to mess around with and it’s best to just get the hell out as good as you can.  FCX is actually crazy low already but copper is still plunging and no one thinks of them as a gold miner…  Oops, Steve already answered!

    Good plan Rock!  Most of the fund guys I’m talking to are expecting a big snap back but the question is, what then?  If GM goes, all bets are off and we could be erasing 20 years of gains (yes, Dow 4,000 – I said it!) so it’s important to resign yourself to losing 10% of your portfolio on the ultra-short side when and if we bounce and just keep something there in case we do plunge 90% so that 10% can give you your money back.  Our government has an infinite amount of money and they can save the market, albeit at the expense of our montetary stability but, given the choice, they will save the market as it’s not just the stocks but companies like GM and GE that employ millions of people and once those jobs start failing, they will be able to save nothing.  The quesiton is, does our government have the balls to do what they have to do. 

    Like I said before, Bush has to put his 9/11 game-face on and whip out a $1Tn checkbook and just start shopping and, if that doesn’t do it, he needs to grab another Trillion and do that.  He  needs to give GE a $50Bn order for the world’s largest wind-farm or something, and he needs to order $10Bn worth of steel from US steel for the world’s biggest bridge to nowhere and he needs to  buy 100,000 homes a month for $100,000 each ($10Bn) in some kind of home ownership/government housing program – anything that gives him an excuse to suck up the excess inventory quickly.

    Notice $1Tn is a LOT of money and you can do a LOT of things with it.  $13Bn buys MS, why let them fail for $30Bn when you can just buy them for $13Bn?  If you own all the stock and don’t sell it, then the price doesn’t drop and you bail out all the investors and bondholders and 401K people who would have lost Billions on the failure.  As the government, you can then drop another $20Bn in the company to shore up the balance sheet (it’s as easy as writing a check) and PRESTO, you’ve improved your asset considerably…  Our Treasuey secretary certainly knows how to oversee an investment banks so it’s actually something the administration has expertise in.

    Let’s see, what other fun could we have?  How about $50Bn to improve rail lines between major cities?   That’s jobs, steel and land development all in one and long-range energy savings.  While we’re at it we can add more rail lines to and from major coal producing areas and run them straight out to the middle of South Dakota where we’ll build 50 clean coal plants to power the Western grid, which we can also spend $10Bn upgrading to make it more energy efficient.  At this point we will have created about 2M new jobs so we have to be careful not to overdo it unless we want to start hiring some Mexicans to get stuff done again…

  201. Oh wait, I had a point to all this….

    That’s why I do believe in the upside, there’s nothing stopping the President from doing that stuff and Bush can sit on his ass for 3 months but you can be damn sure that Obama will whip out the checkbook and begin a new, New Deal for America.  If you don’t think it can work that easily, here’s the Dow at the time.  Roosevelt was elected in Nov of 1932 and the New Deal was rolled out in March of 1933.

  202. Oops, remember I was talking about not trusting your money in Spain? (11:02 comment)   Spanish banks say they need $140Bn!!!

  203. UK opened dow a staggering 10%. Barclays bank down 25%, Miners between 10 and 20% down. Inverse oil fund the only green I have. US premarket down a further 250 points.

    Good morning , welcome to hell.

  204. FTSE only -6% after 30 mins trading. Happy me :-(

  205. Oh well DB, thank goodness for small things!  I think the lack of any EU action ahead of the open was a huge disappointment.  Hopefully we’ll find a bottom at 8,000 on the Dow but it’s not 50% off so maybe not.  If the other indexes hit 50% down, there’s no reason to think we escape it but a good bottom day is one with a terrible open and a good recovery and I’m just crazy enough to hope that that is the intention of Bush pushing his speech back to 10:25 – to give the market a chance to panic sell at the open but then come up with something to send us back up 700 points into the close.  I know that counting on Bush to save the markets is crazy but he’s the guy they voted for so it’s all up to him this morning…

  206. FTSE seems to have stabilized at -6.5%. Been bottom fishing again, mainly doubling up on those holdings which I think might recover.

    Was thinking about the GM/Ford thing last night, whilst I dont think they’ll be allowed to go bankrupt I do think it wont be until they start making smaller, maybe electric/hybrid, cars that they’ll pick up. Meanwhile I’m going to be looking at companies like COPART that help keep cars on the road with spares and secondhand motors. People will need their transport to stay running.

  207. Good Morning Phil, DB and all.

  208. Asia Markets :    Friday, October 10, 2008
    (The following is from WSJ; please cross check with other sources to confirm.)   

    Nikkei Average*                       8276.43      -881.06    -9.62%
    Hang Seng*                           14796.87    -1146.37    -7.19%
    China: DJ Shanghai*               204.20            -9.95    -4.65%
    Seoul Composite*                  1241.47         -53.42    -4.13%
    Bombay Sensex*                  10536.69       -791.67    -6.99%
    Baltic Dry Index                        2503.00       -261.00    -11.64%

    *at Close

  209. Bloodbath in Asia as Markets Freefall

    It feels like 1997 all over again in Asia. Japan down 10 percent, Hong Kong down 8 percent and Australia down 8 percent as markets around the world are gripped by recession fears. And the selling continued this grim Friday session.

    The bloodbath in Asia follows Wall Street’s 7 percent plunge Thursday, finishing below the key 9,000 level for its seventh straight day of losses, as coordinated interest rate cuts by the world’s leading central banks did little to thaw the credit freeze and lift confidence in the financial sector. Investors also have doubts that a meeting of the Group of Seven rich nations later Friday can achieve much, with fears growing that the global economy is shifting towards recession.

    Government bond futures soared as the rapid decline in Asia stocks forced investors to buy the nearest safe haven despite fears of a supply glut that have recently weighed on U.S. Treasuries. The 10-year Japanese government bond future was up 0.4 point to 138.89, and the 10-year U.S. Treasury note futures were up more than a full point.

    Japan’s Nikkei dived 9.6 percent — 881 points — its biggest one-day loss since the 1987 stock market crash, on growing fear the financial crisis will spark a global recession. The benchmark’s drop of 24 percent for the week was more than double the weekly drop right after the 1987 market crash. Year-to-date, the Nikkei is down 45.9 percent. The market mood, which was bleak after a fall in New York shares and news that a Japanese real estate investment trust had failed, turned even darker after a bankruptcy filing by unlisted Yamato Life Insurance. At one point, the Nikkei lost more than 1,000 points. The broader Topix lost 7.1 percent to 840.86 after earlier falling more than 8 percent.

    Seoul shares closed 4.13 percent down but more than halved an earlier 9 percent fall, after heads of South Korean brokerages met to propose market stabilization funds, and as the won currency rebounded. However the KOSPI still posted a 12.6 percent losses on the week, the biggest weekly loss since September, 2001 when markets tumbled after attacks on the United States. Year-to-date, the KOSPI is down 34.6 percent.  At Friday’s low the KOSPI was down 38 percent on the year, and down 16 percent on the week.

    Australian shares tumbled 8 percent, the biggest one-day slide since the 1987 stock market crash, as fears of global recession sparked panic selling. Shares slid across the board, with heavyweight lenders and mining stocks all coming under heavy attack. The S&P/ASX 200 fell 360.2 points to close at 3,960.7, the first close below 4,000 since May 2005. Year-to-date, the index is down 37.5 percent. 

    Hong Kong shares sank 7.2 percent to a nearly three-year low, after a steep drop on Wall Street set off a new wave of selling by investors worried about the risks of a global recession. The Hang Seng Index chalked up its worst week since the market meltdown of 1997, having relinquished more than 17.5 percent at the day’s low.

    Singapore’s Straits Times Index plummeted over 7 percent with banks taking the brunt of the beating. This after Singapore’s central bank eased monetary policy for the first time since 20Amongst sectoral indices, BSE Realty Index plunged 12.13 per cent and BSE Metals Index declined 10.33 per cent03, in a widely expected move that will slow the rise of the currency to support the export-driven economy, which fell into its first recession since 2002. The economy shrank at an annualized, seasonally adjusted rate of 6.3 percent in the third quarter, after shrinking an annual 5.7 percent in the previous quarter.

    The Chinese stock market fell sharply because of the crash of global share prices, but China outperformed the rest of Asia as banking stocks came well off early lows on hopes for government intervention. The Shanghai Composite Index was off by just 3.6 percent.

    Bombay Stock Exchange’s Sensex closed at 10,536.69, down 791.67 points or 6.99 per cent. The index touched an intra-day low of 10239.76. Amongst sectoral indices, BSE Realty Index plunged 12.13 per cent and BSE Metals Index declined 10.33 per cent

  210. Euro Shares Down Over 7% in Global Selloff

    European stocks tumbled nearly 8 percent early on Friday, swept into a global panic sell-off as investors feared world governments’ efforts to thaw credit markets would fail to ward off a global recession.

    Fragile banks led the decline, with Barclays off 9.6 percent and Santander down 7.1 percent.

    HBOS, a standout faller in Europe, dropped 13.7 percent.

    Oil shares also tumbled, with BP and Royal Dutch Shell down 5 and 5.9 percent respectively as crude fell 4.3 percent.

    The pan-European FTSEurofirst 300 index was down 6.8 percent at 858.86 points, after falling more than 9 percent in early trade and hitting its lowest level since July 2003.

    The index has fallen more than 21 percent so far this week, on track for its worst week on record, in a credit crisis that has frozen interbank lending, hammered banks and slowed the global economy.

    European shares have dropped about 43 percent in the year to date.

    World stocks slumped to their lowest levels in five years on Friday.

    Britain’s FTSE 100 lost 5.5 percent, France’s CAC lost 6.5 percent and Germany’s DAX shed 8.2 percent.

    The major national indexes earlier fell as much as 10 percent. Investors blamed the slide in U.S. stocks on Thursday on the expiry of a ban on short-selling of financial stocks, there was intense speculation on whether U.S. authorities would extend the restrictions.

    Equity trading in Russia, Austria, Iceland, Romania, Ukraine and Indonesia was halted while nearly half of Milan stocks were suspended for excessive losses.

    "It’s just a panic … investors are deciding: ‘This is the time at which were going to throw in the towel’," said Peter Dixon, an economist at Commerzbank in London. "As one of my colleagues said: ‘Game over please insert coins’."

  211. Reuters : Equity trading in Russia, Iceland, Romania, Ukraine, Indonesia and Austria was halted, while nearly half of Milan stocks are suspended for excessive losses.

  212. Oil Slips Below $82 on Fears of Demand Slump

    Oil fell more than $4 a barrel to a one-year low on Friday, depressed by expectations global demand growth will shrink if the credit crisis pushes the world economy into recession. Economic weakness spurred the International Energy Agency to cut its forecasts for world oil demand growth for 2008 to its lowest rate since 1993.

    U.S. light, sweet crude [US@CL.1  81.87    -4.72  (-5.45%)] for November delivery was sharply lower. It touched a session low of $82, its lowest since October 2007. Prices have dropped more than 40 percent from a peak of $147.27 in July.

    London Brent crude [GB@IB.1  80.21    -3.75  (-4.47%)] was also lower, falling below $80 for the first time in a year.

    The IEA, which advises 28 industrialized nations, cut its world demand growth forecast for 2008 to 0.5 percent — the lowest in percentage terms since 1993. But the IEA’s latest monthly Oil Market Report warned against too much focus on demand and said the credit crisis was also impacting supply, which at some stage could support oil prices.

    "OPEC appears to be scrambling to put in another, firmer floor at $80," said Jonathan Kornafel, Asia director of U.S. based options trader Hudson Capital Energy. "The market may still overshoot on the downside regardless of what OPEC does, as financial flows continue to pour out of commodities," he added

    Yen Cuts Fear-Induced Gains in Volatile Trade

    The Japanese yen retreated from three-year highs against the euro but remained elevated in highly volatile trade on Friday, as unnerved investors unloaded risk on deep worries about the global financial system.

    Stock markets in Europe were down sharply — but off earlier lows — keeping the Japanese unit as the currency of choice.

    Leaders from Group of Seven powers are meeting in Washington to mull other joint measures to try and stop the panic in markets.

    The dollar [ 98.89    -0.90  (-0.9%)   ] hit a 6-1/2 month low of 97.92 yen before clawing back slightly, but remained lower against the yen.

    The Australian dollar [ 65.36    -2.89  (-4.23%)    ] , the most battered of major currencies due to its once favored status in the carry trade, was down almost 4 percent against the yen.

    As investors continued scrambling for cash, the dollar hit a 14-month peak against a basket of major currencies before retreating to trade flat on the day.

    The euro [ 1.3533    -0.0068  (-0.5%)   ] was down slightly versus the dollar.

    British Prime Minister Gordon Brown called for a global solution to the crisis and urged other countries to adopt Britain’s actions to save the banking system. Other governments should follow Britain in putting money into struggling banks and offering guarantees worth hundreds of billions to persuade banks to start lending to each other, Brown wrote in an article in The Times newspaper.

    Gold up as falling stocks spur flight to safety

    Gold climbed 2 percent to a 2-1/2 month high in Europe on Friday as tumbling stock markets prompted investors to seek safer assets such as bullion.

    Gold was quoted at $918.15/921.65 an ounce at 0929 GMT against $911.50 an ounce late in New York on Thursday. Earlier it touched a session high of $931 an ounce, its strongest level since July 29.

    However, higher prices are causing some selling in India ahead of this month’s Hindu festivals.

    "There are a lot of sellers today, mainly holders of small quantities of jewellery and bars," Jitendra Kantilal, a partner at bullion dealer Jugraj Kantilal & Co, told Reuters.

    Among other precious metals, silver was quoted at $11.68/11.76 against $12.01 late in New York on Thursday.

    The platinum group metals inched lower. Platinum was trading at $1,002.50/1,026.50 an ounce against $1,018.50, while its sister metal palladium edged down to $193/203 from $198.

  213. Well thats something ….

    Reuters) – General Electric Co (NYSE:GENews) on Friday reported third quarter earnings of $0.45 a share, in line with analyst expectations.
    GE reports third quarter 2008 earnings of $4.5 billion; revenues of
    $47.2 billion, up 11%; infrastructure orders of $23 billion, up 9%; on track
    to earn about $20 billion in 2008
    * Q3 earnings per share $0.45 from continuing operations
    * Says board-approved plan to maintain dividend at $1.24 per share through 2009
    * Says industrial organic revenue growth of 10%; total organic revenue growth
    of 3%
    * Says global revenue growth of 14%; global industrial revenue growth of 20%
    * Says total orders backlog of $170 billion
    * Reuters Estimates Q3 earnings per share view $0.45, revenue view $47,237.61
    * Says higher loss provisions of $0.5 billion
    * Says on track to meet revised guidance for the full year
    * Says board approved plan to sustain the GE dividend through 2009
    * Says financial services business generated $2 billion of earnings
    * Says GE Capital is on track to earn over $9 billion for the year