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Which Way Wednesday – For Retail Sales?

[Retail sales chart]Remember this from last year?:

Price-slashing failed to rescue a bleak holiday season for beleaguered retailers, as sales plunged across most categories on shrinking consumer spending, according to new data released Thursday.  Despite a flurry of last-minute shoppers lured by the deep discounts, total retail sales, excluding automobiles, fell over the year-earlier period by 5.5% in November and 8% in December through Christmas Eve, according to MasterCard Inc.'s SpendingPulse unit.  "This will go down as the one of the worst holiday sales seasons on record," said Mary Delk, a director in the retail practice at consulting firm Deloitte LLP. "Retailers went from 'Ho-ho' to 'Uh-oh' to 'Oh-no.'"  The holiday retail-sales decline was much worse than the already-dire picture painted by industry forecasts, which had predicted sales ranging from a 1% drop to a more optimistic increase of 2.2%.

That was the December 26th headline in the WSJ (the chart is from last year too) which presaged poor Q4 earnings that sent the markets off a 27% cliff from Jan 1st through March 9th of this year.  The Dow was at 9,000 last January and managed to fall all the way to 6,500 on those retail results – the same retail results we are hoping to beat by 1% this year with the Dow at 10,500.  This will be interesting to say the least.  We remain skeptical of the rally but have put up a new, very bullish Watch List as we have identified many stocks we can buy into a technical rally if it holds up into the week after New Years as we begin to deploy some of our own sidelined cash.

We held our short-term bearish stance but our premise is wearing thin as even the 2.2% GDP (20% worse than expected) announcement yesterday was somehow taken as good news by the market.  Today the WSJ is touting strong interest in a $1.1Bn CRE auction held by the FDIC as another positive market sign – forgetting the fact that these commercial properties are being sold at 50-90% discounts and are just 3% of the over $30Bn of seized assets the FDIC is sitting on and must sell over the next 12 months (so $1.9Bn short of target this month already). 

The FDIC must raise more capital in order to seize more banks as their balance sheet hit negative $8.2Bn at the end of September.  They had been putting off the sales, hoping for a turnaround but 50 cents on the dollar is about as good as it's going to get as they prepare to flood the market with a record amount of property sales

This is not necessarily bad for REITS though.  The ones that are solvent will be able to buy properties at bargain prices and will probably be able to make a go of the properties from a cash-flow basis, even if the prices stay flat for many years.  Meanwhile, the FDIC is likely to have to maintain a stake in the properties auctioned off AND provide financing since the banks, who still have their own $5.3Tn of CRE loans marked at 100% despite market discounts of 50% and lower.  Of that $5.3Tn of Commercial Real Estate, $1.9Tn is in Retail Space and THIS is where we think the whole thing is most likely to fall apart in 2010.

We hear a lot of reports about how office buildings are holding up well despite massive unemployment but that's because office buildings are the most efficient use of commercial space, accounting for just 4Bn out of 29Bn square feet in the US so 10% unemployment there impacts perhaps 400M sq feet.  Industrial Space, on the other hand, accounts for 13Bn square feet and we are currently running 20% below capacity.  This hasn't impacted CRE yet because they tend to have long-term leases and relatively few have run out this year and the government has been bailing out the big boys (like auto companies) to keep them from going bankrupt and defaulting on loans which might, heaven forbid, impact Goldman Sach's earnings.

So we're not really worried about Industrial Space just yet and we're not too worried about 2.5Bn square feet of Hotel Space as they too have long leases and International footprints that helps avoid sudden failures.  Retail Space, on the other hand, is 9.5Bn square feet of CRE and those guys could start going bankrupt as early as Q1.  If we assume a faily even distribution of $5Tn over 29Bn square feet, we can assume that lenders have about $1.6Tn tied up in Retail Space and a minor 10% default rate and we have $160Bn at risk and, if all goes well, perhaps "only" $80Bn in additional losses if all goes well.

$80Bn can, of course, be swept under the rug but the real danger is that a major failure in CRE next year will cause a demand for a realistic accounting of bank assets.  While the government has been super about helping the banks prop up their balance sheets in 2009, it's going to be difficult to sweep a 50% write-down of $5.3Tn worth of property values under the rug in 2010 when there is unlikely to be another multi-Trillion dollar bail-out package and we've already made as much of a joke out of accounting regulations as we possibly can in what is now known as "Mark to Fantasy Accounting."

While our government may not be concerned about the long-term damage we are doing to our nation's future by refusing to make a realistic assessment of our financial system, China is seeking to avoid making the same mistake and the People’s Bank of China “will study establishing a macroprudential management system,” the bank said in a quarterly monetary statement in Beijing today. The aim would be to prevent risks and ensure the safety of the financial system, it said. “China’s aggressive injection of liquidity into the banking system leaves the country vulnerable to some of the same potential problems that hit western economies,” said David Cohen, an economist at Action Economics in Singapore. “They recognize that they’re not immune.”

While China’s banks mostly side-stepped the mortgage-linked assets that threatened the U.S. financial system, this year’s lending has brought its own risks. Chinese banks’ capital strength is probably more “strained” than it appears as lenders use off-balance sheet transactions to make room for lending growth, Fitch Ratings said Dec. 17.  Bank of China Ltd. said last month it’s studying “various options” to replenish capital.  The central bank said today that it would “manage money and loan growth, guide financial institutions to lend in a balanced manner and avoid excessive volatilities.”  Central bank adviser Fan Gang cautioned Nov. 18 that the nation needed to be on alert for bubbles in equities, real estate and commodities.

That may be why we're seeing such a manic pumping up of commodities, even against the dollar rally as market manipulators are willing to pull out all the stops to get the hell out of their ridiculous positions before people catch on that THE Party has declared the party over for speculators in China.  Take away Chinese speculation and all you are left with is Japan's deflation, Europe's teetering alliance with Greece, Spain, Ireland and Iceland still threatening any hopes of recovery and, of course, America, which will announce another 500,000 weekly lay-offs tomorrow.  Oil is hitting $75 in pre-market trading and, unless the 10:30 inventory draw is more than 2Mb – we'll be shorting them again today. 

China had a wild 250-point stick save into the close, giving them all of the 1.1% gains for the day in the last 90 minutes of trading as the Central Bank's statement was not as harsh as anticipated but really it was the mega-pump by Citic Securities, who said growth in China may surge 12% next year and that drove pre-holiday traders into a frenzy which, coincidentally, worked out well for Citic, who are China's largest broker and probably managed to make their quarter on the sudden boost in trading – what a fortunate turn of events for them, don't you think?

Citic was especially lucky that their report happened to come on the Emperor's birthday in Japan so trading in Asia was exceptionally slow and easy to boost.  The Shanghai Composite was down for most of the day but had a big finish to wind up 0.8%.  Also putting on the pom-poms for the market early this morning was BlackRock's Bob Doll, who said: "The path of least resistance will continue to be to the upside,” he said.  The economic recovery “means earnings should be somewhat better and liquidity should still be plentiful. That’s a recipe for equities moving higher.”  Bob has $3.2Tn invested in the market so you just can't get a more objective opinion than that can you?

EU stocks hit a 14-month high as the BOE voted unanimously to maintain their $320Bn bond-purchase plan as that country struggles against deflation and a still-shrinking GDP.  Growth in money supply has been “disappointing,” the minutes said. The panel said that the narrowing in the spread between gilt yields and corresponding swap rates, which they had previously seen as a positive sign of the bond plan’s success, has “partly reversed” in the past two months. The measure of M4 money supply that the bank uses to assess the effectiveness of quantitative easing fell 0.7 percent in October from the previous month and was down an annualized 5.3 percent in the three months through October 

Mining companies led the rally as copper miraculously jumped back from $3.11 in US trading yesterday all the way back to $3.17 this morning thanks to the tales of endless Chinese demand as well as a very positive outlook on US Consumer Spending for November.   Funny story there – it turns out our Personal Spending was a miss, up just 0.5% vs 0.7% expected and down from 0.7% in October.  Personal Income was also down to 0.4% from 0.5% expected while the PCE remained very low at 0.2% and 0% at the core – indicating that retailers and manufacturers are still not able to pass along price increases, which is kind of dangerous if incomes are moving up 0.4% on them. 

Another report indicates that retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect, according to Britt Beemer, chairman of consumer polling firm America’s Research Group.  Sales in November and December may fall 1.2 percent to from the same period in 2008, said Beemer in a Dec. 21 interview.  

Available credit to U.S. consumers through cards fell to $3.6 trillion this year from a peak of $4.7 trillion last year, according to a study released in July by TowerGroup, a Needham, Massachusetts-based financial research and advising firm.  “We’re scared to death of what this law is going to do,” said Edward Record, CFO at Stage Stores Inc., the Houston-based operator of 759 stores including the Bealls and Peebles chains. “It’s definitely going to hurt consumer spending.”

We shorted MA yesterday as they hit $255, switching horses from our already profitable puts on V so that's me talking our book I guess.  Our plan was to short into a rally that tests and fails to make new highs and we'll be keeping tabs on Dow 10,516, S&P 1,120, Nasdaq 2,250, NYSE 7,285 (below 7,200 is our biggest negative indicator) and Russell 625 so it's all about the NYSE breaking over 7,200 and then a confirmation by the S&P to get us to make a few bullish bets but I'm hoping we simply have an opportunity to press the bear side as 1999 Redux moves to it's very likely conclusion.

We remain mainly in cash and looking forward to a nice, relaxing holiday.  There's no point in taking these very low-volume moves seriously no matter what the outcome and we'll continue to play for a possible plunge until we see an upside surprise to retail numbers – at which point we'll wave the white flag and run with the bulls. 


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  1. Phil, I followed some advice on AAPL you gave me and it’s worked out well thus far, but I am at a decision point. I am long AAPL Jan195 calls and sold the 200 calls. The spread has only widened to 1/3 of what is should be if the AAPL stays above 200 by Jan expiration. What can one do in these situations when the spread has not widened? I hesitate to sit tight on it as a lot of bad things can happen between now and Jan. expiration.

  2. Phil — I missed my limit orders the other day on the SRS Feb 8 calls and 7 puts.  Are there any other "writes" that look good? A part of me feels that we have to see a bounce here into which we can sell some premium, but with the way they are talking up CRE lately, I’d hate to see the stock go below $7 with no protection for my long position.

  3. Good morning Phil,
    We bouht the 5 RTH 90 putter for 1.40 now down to .375 any good suggestions ?

  4.  bord…I’m not Phil, of course, but he always wants other opinions on trades, so here’s mine:   You’ve got  AAPL Jan 195′s  @ 9.15, so a premium of about 4.15, and Jan 200′s @ 6.10, or a premium of about 6.10 (these figures are at yesterday’s close).  So if you hold until Jan expiration  and if the stock stays above 200 you will make 2.00 more.   Nothing wrong with that.  But my present take on the stock is that it’s going up in the short term.  Look at the news this morning    AAPL estimated to double this years sale of iphones next year.  Also, CBS in talks with AAPL regarding streaming TV.  There’s more good news I haven’t mentioned.  No bad news has appeared recently.  Add this to the probable ‘Christmas Bounce’ and I’m looking for short-term upward movement in the stock.  Were it me, I would buy back the 200′s now, and look to sell 210′s as AAPl moves upward over the next few days.  I think the stock will pin at 210 at expiration.  Now we’ll see what Phil says.  

  5. Phil, I got called away this am. on my AGNC March 25 short calls. Still have the short puts. Any suggestions? – buy more stock to capture dividend? Thanks

  6. Good morning!

    AAPL/Bord – The Jan $200 calls still have $6 in premium.  You need to do nothing.  Your calls are $5 more in the money than those and it doesn’t matter what the interim prices are, you just need to wait for expiration to get your $5.  That’s the problem with vertial spreads, you are pretty much trapped in them until they expire if you want to realize anything like your full profits.

    SRS/Jcm – At the moment I like the Jan $6 calls which have just .10 of premium as a pure upside play but these are real dangerous.  They are not paying enough premium to make selling puts sexy.

    RTH/Yodi – I doubled down twice off that but you are better off spending $1.40 to roll up to the $95 puts, which will put you in the $1.70 puts at net $2.80.

    AGNC/Jomp – Well, hopefully you collected a little premium and sure you can re-establish if you get a good price.  If not, just let the short puts expire, right?

  7. Phil, your FCX JAN 75 put is up 33% – time to take the money and run? Thx btw.

  8. Phil,
    I’m curious about learning about the oil futures play. Can you elaborate on the instrument a bit. I use IB so if I type in USO it gives me the option to trade stock, options, or futures. Are you trading futures on the USO? …or what instrument?

  9. Phil -
    Covered calls on rimm – had to roll from Dec. 60 to Jan. 65 -
    I am down on 2.20 on the calls – don’t ask about cost of rimm – bought after the initial drop -
    Thinking of buying back calls and waiting for more premium to sell again.

  10. Phil
    RTH- Is there any specific day/date when you expect retail data for this to play out. I am just gathering details. Secondly, can we play this with the JAN 95/90 Bear Call spread? Thanks.

  11. Phil -
    Sorry – you still holding the iyr vertical put spread – or taking the loss and closing out?
    Jan 45 – 47 bear put spread

  12. We’re watching Dow 10,516, S&P 1,120, Nasdaq 2,250, NYSE 7,285 (below 7,200 is our biggest negative indicator) and Russell 625 but the volume is so low it’s hard to find any meaning in it.

    We have Michigan Consumer Sentiment at 10 and Crude Inventories at 10:30 and we’ll just have to wait and see what effect they have.

    I like shorting oil but only after the inventories.  Most likely going short in the futures at $75 with a stop at $75.05, looking for a quick .50 on a dip ($74.50).

  13. FCX/Emc – Absolutely, you can barely get a win on the bear side so anything over 20% needs to be guarded closely with tight stops..

    Futures/Aclend – I don’t know about IB but USO is NOT the futures.

    Housing starts are a catastrophe at 355,000, back to last year’s lows.

    Michgan Sentiment was a bit of a miss too!

    Down we go, now we see what sticks. 

  14. Phil
    DIA 108p mar bouhgt at 6.64 now 5.90 still hold 104janp sold 2.32 now 1.40 shall I sell all 104 and buy more 108?

  15. That’s what I thought. I’ll check it out. Thanks

  16. Nov. New Home Sales: -11.3% to 355K vs. 425K expected, 430K prior. Months’ supply 7.9 vs. 6.7 prior. New home sales are based on contracts signed, so these numbers are what the market looks like post stimulus credit.

    MBA Mortgage Applications: -10.7%. 30-year fixed mortgages were flat at 4.92%. Calculated Risk: It is hard to ignore the sharp decline in purchase applications over the last couple of months.

    Dec. Reuters/UofM Consumer Sentiment: 72.5 vs. 73.5 expected, 73.4 preliminary, 67.4 in Nov. Expectations 68.9 vs. 66.5 prior. "Consumers’ evaluations of their personal finances improved slightly in December, but the gains still left their overall assessments at quite negative levels."

    A trade group for the lenders that finance half of the capital equipment investment in the U.S. says the sharp pullback in business borrowing moderated notably in November. ELFA’s capex financing index fell 7% to $4B, the smallest year-on-year decline this year. But other metrics, particularly a jump in chargeoffs (to 2.4% from 1.7% m/m) and delinquencies (to 4.5% from 4.2% m/m), suggested businesses were still struggling to service loans.

    Nov. Personal Income and Outlays Income +0.4% vs. +0.5% expected, +0.2% prior. Spending +0.5% vs. +0.6% expected, +0.7% prior. PCE core price index: 0% vs. +0.1% expected, +0.2% prior.

    NJ Gov.-elect Chris Christie offers a clue to state spending in 2010, unveiling plans to slash spending and programs by up to 25%. "Absent strong action, revenues and expenditures will likely remain out of balance for the foreseeable future," a recent memo (.pdf) to cabinet members and agency directors says.

    As we expected, lots of bad data but oil is heading up to $76 despite the news and gold is trying to rally – quite a joke actually but they think they have a big draw in oil in the bag (over 2mb) – big opportunity to short if they are wrong at 10:30.

  17. OK, so Michigan sentiment missed expectations (I guess no guarantees on those Magic 8 Balls) but was still up. But new home sales were a train wreck, down 11.3%. So the market decides to just shrug it off?!!! This is going to be REALLY UGLY when it pops.

  18. RIMM/Samz – If the call is covered, then hopefully you are not too worried about the caller being up.  RIMM had that outage and will sell off until they resolve it.  I’d keep the good coverage over new year’s and worry about it in Jan.

    RTH/Chakra – See above.  Last year we got bad retail news on the 26th but no major selling until after Jan 1st.  It’s kind of a crap shoot at the moment but I do like the short spread.

    IYT/Samz – Actually the way to play that is to take out the $45 putter at .63 and spend .64 to roll up to the $48 puts, now $2.08 so you are spending $1.27 to buy $1 of premium and then just hope for a nice pullback.   If not, the $46 calls can be sold (now .98) to get back all but .40 of what you spent to roll up $1.

    DIA/Yodi – March is a long way away.  I wouldn’t buy more March puts but I would keep a very tight stop ($1.50, .20 trailing stop) on the $104 puts you sold since you already made .90 which pays for you to roll to the March $110 puts. 

    USO up $1 today and I like the Feb $35 puts at $1.05 as a speculative play into inventories that could be good for a quick quarter

    Dollar getting hit hard on day 2 of terrible economic data at 91.38 Yen, $1.432 for the Euro and $1.596 to the Pound (England still looks worse than us).

  19. Phil,
    Hold ELN jan 4c short sold for 1.60 now trading at 2.60 shall I roll it up to jan 6c for 1.95 cost or shall I wait for the correction ?

  20. UNG   I’ve had a spread with Jan 10 calls that are currently naked.  I was waiting and hoping for a pop up to roll or sell, but I think I should just sell it while there is a bit of premium left.  All the new shale makes me very uncertain about nat gas prices going forward.

  21. Just an observation, and everyone please correct me if I am wrong on the dates….. Three times this decade (at least) in early January 2000, 2008 and 2009 we had big smack downs after large run ups (in the case of 2009 more like a bounce off the initial crash). I don’t think anything will happen except for mildly bullish/neutral action from now until Jan. 1. But when you think about this pattern, the ugly retail numbers that "should" emerge in January, and the fact that the feds may drop bad news about how much MORE cash the wards of the state will need (AIG, FNM, etc.)  in January….. this just feels like the unknowing muzak bliss before a hard January correction.

  22. Oops, oil inventories down 4.9Mb last week – totally wrong way and should be market supportive here.  Gas down 900Kb Distillates down 3.1Mb so that’s a huge draw by any measure.

    Those USO puts will be little affected (that’s why I liked them) but  hardly worth keeping as our premise was shot.  Next week we should get a nice build due to the snow so I’d be happy to short oil into a big move up again – especially because clearly the consumers can’t afford to buy $80 oil.

    Gold is another thing people can’t afford but it’s back to $1,095 as the dollar falls.  Ags are rallying back too but the Dow still looks weak and the Nas is holding everything up above 2,250 while the NYSE is holding everything back below 7,200. 

     EIA Petroleum Inventories: Crude -4.8M vs. -1M expected. Gasoline -0.9M vs. +0.8M expected. Distillate -3M vs. -2.3M. Utilization 80% vs. 80.2% expected. Feb. crude +2.7% to $76.40.

    Dow leaders after one hour: BA +0.7%. CAT +0.6%. PFE +0.5%.
    Laggards: HD -1.6%. MRK -0.8%. JPM -0.8%. DIS -0.7%. PG -0.7%. AA -0.7%.

  23. Does the oil premise apply to EOG puts as well?

  24. FWLT – just added it to the watch list.  Gonna try for a small lot of some 25 Aug10 C for 6.5, selling the 29 or 30 Jan10s whichever holds a $1.  Chart looks like it will float in here.  Currently $29.xx.

  25. Incredible how November home sales are down 11% and IYR is positive.

  26. Phil,
    On the naked straddle writes that are meant as possible entries such as TIE and ENP, you mentioned that "stops need to be set" when they are breaking to the upside but you didn’t elaborate. I do recall you mentioning a few times that it is prudent to buy the stock to cover. At what point, would one do this, when the price crosses the strike or at BE on the straddle?

  27. …or just close out the straddle at BE?

  28. bord:
    A lot of folks here agree with your premise. The issue with these things is the timing. You’ve got to make sure you’re not counting on the wheels coming off by any particular month (January).

  29. judah & all, the RUT Feb 680 CALL goes up a little, so I’m starting to sell the Feb’s.  The 480/680 strangles took forever to fill, so I changed to 500/680 and starting to get fills today.  As VIX is low, the downside risk is significant (where VIX can shoot up).  Scaling in is a must.

  30. Hi, Peter,
    What’s your price target for RUT 500/680?

  31. Now GLL is fun again withthe Feb $10 puts sold at .60.

    ELN/Yodi – Well they have no premium so not doing you much good.  Hopefully you are not naked.  I like ELN and you can roll them along to the Apr $6 puts and calls at $1.75 rather than taking a huge hit. 

    UNG/Eph- Maybe they will get some good news tomorrow too.  It’s a wacky sector and I don’t like them long (we shorted EOG yesterday) but Jan is tight so you are playing a dangerous game if they miss tomorrow and head down. 

    Muzak/Bord – Think of it as the elavator music masking the sound of the cables snapping one by one until the sudden plunge…  8-)

    EOG/JCM – I still like those puts for sure.  They are up on the silly buy-out rumors Cramer is spreading about the entire industry since XTO got bought.  That can last for a while but the reality is we are swimming in gas and there was no agreement in Copenhagen that puts any pressure on people to switch to nat gas anytime soon (sadly).

    FWLT/Pharm – I used to short them in the $70s but they are a good buy at $29.

    IYR/Roam – They don’t care about home sales.  This is the article that’s pumping them up (mentioned in morning post):

    Sources say investors are jostling to buy a $1.1B portfolio of CRE loans held by Franklin Bank, IndyMac Bank and other failed lenders – a fraction of the FDIC’s growing collection of real-estate loans. Sensing a bottom, many banks aren’t willing to sell, making the FDIC practically the only game in town.

    Of course here’s the reality:

    Economist John Geanakoplos says we’ve yet to see the worst of the housing crisis. He notes mortgage servicers – who don’t own the mortgages they service – are dragging their feet to foreclose on homeowners. In the end, "almost all of these people are going to end up defaulting and being thrown out of their homes," he says. Homebuilder ETF XHB -0.6% after weak Nov. home sales.

    Straddle/Ac – Let’s say you wanted to sell the naked TIE March $12.50 puts and calls for $2.30 because you think TIE is going to have trouble holding $12.50 and you are hoping for a better entry.  That’s fine to go naked but you want to set a stop to buy the stock to cover at perhaps $13, which would give you a $10.70/11.60 entry with a call away at $12.50.  You plan would be to buy the stock at $11.50, which drops your net entry to $9.70/11.10 so it’s really a question of your tolerance to the upside but that’s all there is to it – just do your calculations and know how much risk you are willing to accept in each direction.

    Can the NYSE hold 7,200?  Will the S&P take 1,120 (not looking like it)?  Volume at 11 is just 36M so it’s all a joke anyway….

  32. Peter D Hi
    I am following you play on RUT but can not accept the margin from TOS on the p/c FEB 500/680 they ask 7100.00 for 620 of credit any comments?

  33. Hi cwan, I’m scaling in, so whatever the Mid price that TOS give me + $0.05.

  34. Somebody really needs to put a stage in SPG and IYR  (twins). This is beyond fantasy land at this point !
    Kill SPG
    Kill SPG

  35. Save SRS
    Save SRS

  36. Phil, Great call in the past couple of days switching from V to MA puts.  The MA puts are up over 30% already.

  37. Howdy Yodi – Are you keeping cool?
    Before you initiate these RUT and SPX plays, please read the margin discussion below as the maintenance margin can get much larger than the initial margin:

  38. Hi, Peter, Thanks.  I am going for wider strangles on RUT, 450/690.  Scared to death with these monster babies.

  39. chaps: you are oh so right…..i learned that lesson the hard way summer/fall this year, the market can be irrational much longer than you can remain solvent.

  40. Hi, Yodi,
    There have been a lot of discussions on these SPX / RUT strangle plays in the last month or so.  Go back and read the discussions before you initiate these plays, as you have to be very careful.  You can look for "Peter" in the posts.

  41. Phil
    what do you think about LOW after today’s drop? still like them long term?

  42. Sector ETF strength after one hour: Heating Oil– UHN +4.4%. Gasoline– UGA +3.6%. Oil– USO +2.8%. Gold Miners– GDX +2.6%. Commodities– GSG +2.1%. Internet– HHH +1.7%. Silver– SLV +1.3%. Commodities– DBC +1.3%.
    Weakness: Solar– KWT -1.3%. Telecom– IYZ -1.2%. Commercial Banks– KBE -1.2%. Agribusiness– MOO -1.1%. Transports– IYT -1.1%. Steel– SLX -1.1%.

    Nice commodity rally with steel (a thing that’s actually used) selling off and day two of weak Transports, which I find very disturbing.  FDX and UPS way off this morning.

    Had to cover 12/31 DIA puts in $100KP, looking to squeeze a quick quarter out of the $105 puts, failing that, I’ll be rolling $103 puts to Jan $104 puts using the $1.10 I collected

    This does not change my opinion on leaving March $108 puts naked as we’re not even at 10,500 yet.

    Margin/Yodi – Those plays will take up your whole portfolio if you don’t have a portflio margin account.

    SRS/Cap – It’s a train wreck but it’s based on this news item of the sale so I don’t mind as much. 

    MA/Juda – Don’t be greedy.   It doesn’t pay to be greedy about anything bearish.  Not being greedy on V is how we switched to MA.

    LOW/Tcha – They are down on the poor home sales data (as is HD).  Both are good pickups into the winter weather but I’d wait for the downgrade police and maybe get a better entry.

  43. XOM – Anyone suggest a bullish options play? I was considering a buyWrite with selling Feb $70 calls for around $1.50 but that requires a lot of capital. Any better suggestions?

  44. Phil/MA.  I was out shortly after my post. Thanks.

  45. Phil,
    We’ve already had two Sticks today and it’s only 11:30; thoughts on direction this afternoon ? I’m thinking up because They are thinking Bonus !

  46. Phil, what do you think of MAC?

  47. Phil
    RTH – What spread are you referring to ? I apologize as you may have chatted in prior sessions that I missed. I can only see a roll to the JAN $95 puts for $1.75. Plz clarify. 

  48. Phil,
    Didn’t Rod Serling have an episode with a Bearish guy trapped in a Bull Market purgatory ?

  49. XOM/M2 – We sold puts last week, you can sell the Apr $70 puts for $4.25 and that’s a nice entry at $65.76 if put to you.  Not much less than you’d make getting called away at these lousy premiums.  2011 $60/70 bull call spread is nice at $5.75 too and you can always sell $55 puts for $5 if the stock dips and threatens your $60s.

    MA/Judah – Nice.  Maybe an opportunity to reload if the market insists on testing highs.

    Direction/JRW – Oh there is no way we’re going down now.  If we can’t get a sell-off on 355,000 housing starts then nothing will work.  That’s not even 20 homes per day per state – imagine how FEW people can possibly be employed in the home building, realty and mortgage industries with those kind of numbers.  There is not even a hint of a comeback in those numbers and that’s where so many of our jobs were lost.  What new industry is going to come and replace them for people to work in?  Copenhagen just killed the hopes that solar would take over as a growth industry and we’ve allocated nothing really for infrastructure…

    MAC/Jimmy – It’s hard to say.  They are not as overbought as some other REITs but they are very concentrated in retail malls, which I think is the scariest sector right now.  They do not have a significant amount of cash ($120M) to Debt ($6Bn) to make me think they’re immune to problems and they fell all the way to $5 in the last panic so too risky for me but not one I’d bet against either. 

    RTH/Chakra - I was referring to the Jan $95/90 bear put spread you mentioned, which looks like net $1.35.

    Twilight Zone/JRW – That is what it feels like. 

    AMZN zooming up again. 

  50.  Housing…….Spoke to my bro in Lodi, California yesterday.  He is (was) a building inspector for the city of Lodi.  He says the average number of building permits issued  per year in 2004 -2006 was 8 hundred.    Number issued so far in 2009………..four!      That’s 4, as in one less than five.  Amazing.

  51. Phil
    Margin Yes I can believe this I looked at setting up a margin acc but the risk getting in to trouble is to great and once you get in trouble you black marked for future trading. TOS

  52. Phil
    Holding some FCX Jan puts….what is your rule of thumb on when to roll out to say the Feb exp? 

  53. Phil -
    Instead of buying put spread on IYR – why aren’t we selling premium on the calls?
    I don’t mind having a small position of naked calls and just rolling, rolling, rolling -
    Jan. 48 for .55   : it’s a 4% cushion before we owe anthing -
    Any problem you see in this to off set the premium on the put spread – if I don’t have a full position on?
    I might just sell 1/3 calls – I know its doubling down – or adding a third

  54. IYR should have read "in addition to" "not instead of"

  55.  Phil,
    Still buy the Jan 6 call for SRS? It’s down to 1.33

  56.  Phil,  Or how about the Feb 7?

  57. Phil / SRS — these FDIC loan sales always have brisk bidding; don’t see any news value there.  Everyone wants to buy defaulted loans at 50 c on the the dollar.

  58.  Phil I’m getting destroyed by MA.  Are you going to leave the Jan 250′s naked?

  59. I bid on some loans recently.
    Here’s the profile of what these dumbass banks have.
    100,000 sf office building suburbs.  90% + leased. 1.1 M NOI.  Bought in 2007 for 20 Million.  Bank lent 17 Million.
    Property today worth 10-12 million.  Loan is performing but at 3% and due next year.
    What would you pay to buy this loan.?
    At what amount could the owner refinance, assuming he can get financing ?
    Bank did not like my price so they are holding it.

  60. So, there is a lot of interest in what this bank is selling to, but there is not a lot of interest by them in selling at prices that would clear the market.

  61. Its brilliant, rally the dollar but keep the markets strong, sell the dollar then continue the rally to 11000 on the weakening dollar. Being played like a fiddle.


  62. What about these QID puts I bought?  My cost is about $0.90, trading now at $0.80.  It doesn’t look like anythings going to take the market down, and in fact, it looks more like a run to 10,500 is in the cards.  I;d appreciate your thoughts.  Sell some Jan puts as a day trade?

  63.  Hello Officer … yes, I would like to report a missing bear …

  64. oh man look at FCX go…

  65. Housing/Iflan – That is bad!

    FCX/Alsos – Rule is to do it when it makes more sense to do it than not to.  You don’t want to let your premium drain away so if you are sitting on Jan $75 puts, for example at .88, the Delta is just .21 so if you are down 50% you need a $2 move in FCX just to make .40 back.  You can DD and then you need a $1 move to get even or you can roll up to the $80 puts, which have a .46 delta and again a $1 move down would get you even or you can go to the Feb $75 puts at $2.75 and sell Jan $75 puts to some other sucker for a decent spread while you wait.  The Feb $75 puts have a .30 delta to the Jan $75s .21 delta so you’re not going to get in any downside trouble and the extra time is the bonus that makes it the best choice at the moment.  So if you don’t think FCX will come down far enough to get you even, then the roll should be done now.  If you do think you can get out even on a pullback, you can wait, perhaps setting a stop at $80.50 to make your roll.  Keep in mind that copper prices have no basis in reality other than this strike:

    Copper futures +1.3% to $3.1605/lb amid talk of a looming strike in Chile at the world’s top producer – and despite the fact that stockpiles have risen to their largest point since April, as Chinese demand has cooled. Copper prices have more than doubled this year.

    IYR/Samz – Because the calls are too dangerous to sell.  There’s no logic to it but you have to respect the fact that IYR goes up and up and up and up.  Any call sale is fine if you can afford to roll yourself out of trouble but not everyone can so I prefer the limited risk hedges here. 

    SRS/OldG – Well they are a disaster but I will continue to like them until the CRE earnings knock my socks off. 

    WSJ’s "Dimming of a Beacon" article – a recap of the U.S. economic model (and its flaws) in the 2000s – draws a response on the Atlanta Fed blog pointing out (via chart) that China, with its 141% growth, looks different on a per-capita basis.

    Matching last month’s amount, the Treasury says it will sell $118B in notes in the post-Christmas week:
    - $44B in two-year notes Monday
    - $42B in five-year notes Tuesday
    - $32B in seven-year notes Wednesday

    Great article: If governments continue to pile on more and more debt, when will they reach the tipping point? The Greeks appear to be close to the tipping point, and it is only a matter of time before other European countries, and eventually even the United States, begin their fiscal death spiral. The Greek government’s unwillingness to make the hard choices necessary to put its fiscal house in order in the past few weeks has caused investors to demand a 2.5 percent premium on its government-issued Eurobonds over those issued by the German government.

    The steep yield curve in the present environment is NOT a harbinger of recovery — it’s a brake on recovery because it encourages banks to own Treasuries rather than risky assets (see below). Here are David Goldman’s top ten reasons to expect the yield curve to flatten.

    FDIC/Cap – I know, I was saying so this morning but that doesn’t stop them from spinning happy headlines off it.

    MA/BGB – Well if you didn’t get out ealier on the $250 puts, now is a great time to add another round if you were scaling i or to get back in at $3 if you want to come in fresh.

    Banks/Cap – They are holding everything and praying for a comeback.  If it doesn’t happen early in 2010, there could be a bloodbath as they all race to lighten up.  For REITs though, they are doubling down to DCA their cashflow with properties at a lower net so it does make sense for them to snap up choice properties but the $1.1Bn being sold is the MOST saleable stuff the FDIC has – wait until they try to sell the crap that’s cash negative even at half price.  And, don’t forget, the states and towns haven’t even put forth the tax increases yet.

    Just hittin 55M Dow volume at 1pm – what a sad little rally this is.

    Bought back my ABX short puts off that huge move – that was sure fun!

    QID/Jcm – I don’t think we go much higher than here unless S&P breaks 1,120 but, if they do, then sure cover them but you say selling QID puts, which makes no sense as QID is going down, not up.

    FCX/Bord – Yep, copper at $3.20 on that strike news.  Nice shorting opportunity

  66. Cap, Jeez what suburb is that property located in, 20m for 100k SF!! …..what would i pay…as little as possible, if your not making 10%+ dont bother unless you can flip it for a quick profit

    Im working on another hard money loan, 12% and 4 points up front on a 3 year..hammering out the details on default.

  67.  Hey Phil…whats the play betting on Israel attacking Iran?

  68. Not QID puts.  Sorry.  Meant to say DIA puts as aday trade since the pump monkeys seem intent on delivering a Xmas rallyt to new highs, no?

  69. Phil, you started today’s post with a quote about last year’s retail #’s….Do you think this year’s retail #’s will be the thing that finally knocks the wheels of this joke of a rally?

  70. The recent drop of the VIX to a 16-month low foretells better days for four sectors in particular, says analyst Nicholas Colas: energy, financials, industrials and technology – where implied volatility has dropped sharply in the past month.

    Woops, there goes the S&P over 1,120 and Dow is green!  Off to the races and a good time to cover for an upside move.

  71. Phil, i have 2 unrelated questions if you don’t mind.
    1.  I sold SRS Jan 10 $8 puts for $.8 per your recommendation.   It’s now in the red.  Do you recommend rolling it down or DD at this point?
    2.   Wanted to get your opinion on doing a buy/write on WH.   They seemed to be an inexpensive divident payer, but perhaps I am missing something.
    Thanks in advance.

  72. Iran/Big – You can bet oil up on that one.   The ERX Feb $38 puts can be sold for $3 and are easy to roll.  You can also buy the Feb $39/43 bull call spread for $2 and plan on selling whatever puts for $2 on a pullback below $40 (maybe the $35 puts) to make the trade free with a nice buffer.

    DIA/JCM – As I said above I sold the 12/31 $105s for $1.10 as a cover.  Looking good so far as they are under $1 and have .50 of premium. 

    Retail/Jrom – Yes, I think that we are really no better off than we were last year other than all the lay-offs and cost cutting but that’s not enough to justify this March winding up 65% higher than last March and that’s what has to be decided come earnings time.

    SRS/Leon – I would wait at the moment.   At $7.22 they are only worth .78, the rest is premium that you don’t need to pay.  They can be rolled even to the Apr $7 puts so hardly worth worrying about now.  WH seems like a solid play but they have no options so all you can do is buy the stock and wait.

    Sector ETF strength: Gold Miners– GDX +3.9%. Heating Oil– UHN +3.7%. Oil– USO +3.2%. Gasoline– UGA +3.1%. Internet– HHH +3%. Coal– KOL +2.5%.
    Sector ETF weakness: Commercial Banks– KBE -1.3%. Regional Banks– RKH -1%. Solar– KWT -0.7%. Financials– XLF -0.3%. Biotech– BBH -0.3%.

    Dow leaders: MCD +0.7%. KFT +0.5%. TRV +0.4%. AA +0.4%. VZ +0.4%.
    Dow laggards: MRK -1.5%. HD -1.4%. JPM -0.9%. BAC -0.9%.

  73. Hey guys remember "Da Bear" ???  I’m not currently signed up but hope you get this – "Happy Christmas to Phil and all". I’m still a bear , and so it seems is Phil. And still the markets go up. Hopefully I’ll return next year. Good Luck.

  74. FWLT – damn, off to the races with them…..

  75. Broadpoint Amtech analyst Mark McKechnie this morning writes that Motorola’s (MOT) sales of handsets based on Google’s (GOOG) Android operating system could get a lift from sales into China

    China mentioned and it isnt helping MOT at all

  76.  Phil…I’m holding AAPL stock, several hundred shares.  What’s the best covered call sale, and how do you determine this?  Oh, and it’s an IRA holding, so I can only sell calls, not puts.   Thanks.

  77. Even BIDU is coming back today. 

    Amazning how many hundreds of billions of market cap can be added to the market on such little trading.  Now the Dow is really lagging and oil is selling off into NYMEX close so we still could go either way.  

    RUT is broken out, Nas is broken out but S&P and Dow and, of course, NYSE are way behind their highs…

    Hi DB!  Happy holidays!

    AAPL/Iflan – I’d go conservative into earnings and cover with the Feb $200s at $12, that protects you back to $188 and still has a nice $10 of sold premium and you can probabably roll tyhem up to Apr $220s once you feel safe. 

  78. Trucking companies dropping like flies yet NAV climbs higher…truly baffling

    Great holiday DB

  79. I was wondering if anyone out their wanted to share an inspirational story about how they got where they are today. I feel kind of like the new guy on the block. I only have 50k in a 401k and 16k in a TOS account. When you guys talking about buying loans from banks and things like that it is exciting. I look forward to one day being able to participate In stuff like that.

    I am 29 now so I have a lifetime of investing ahead of me. I just thought it would be cool to hear some investing stories from some pros like cap and gel or Phil.

    P.s. The 16k started out as 9k in march, that’s when I found PSW and had my eyes opened!

  80. Hey DB – Happy Holidays….Where’s our other Perma Bear Matt????

  81. I don’t know how stupid people are to buy market at this level after today’s housing report
    make me sick

  82. Tell me about BIDU coming back! Talk about a lack of patience and getting bitten in the but because of it! I do have a question about the strategy you gave me yesterday Phil. I went with your second option i.e. selling the 400 JAN Calls to make a vertical with the 420 calls that I had bought previously. I didn’t understand the following: "if BIDU begins to recover, you will need to spend $20 to roll to the March $410 calls and play out the spread". I couldn’t figure out what was going to cost me $20 but that maybe because I don’t get what my end position is meant to be. Could you shed a little more light please?

  83. I am also bearish like – but I have to start wondering if I am missing upside plays that I should have traded – held my nose and bought with tight stops and money management -
    Phil recommends Trading for a Living by Elder -
    Primary rule is to trade with the trend – seems like a marktet where could have gotten more bullish based on dominate trend  -  kind of kicking myself for that one – making too many trades against trend is starting to hurt returns.

  84. Hey Phil.
    I have a short position in IOC that is becoming painful.  What is your outlook on this one?

  85. $16K/Craig – That is excellent!  Sounds like you are sensibly investing.  I made my big money running companies, this is my retirement job and my big mistake was keeping most of my money in CRE as I thought that was safer than stocks – big mistake.  At least with stocks you can get out when you don’t like the market!  The most important thing I learned about investing is the need to play both sides, even if you totally don’t believe in the other side because the market doesn’t care what you believe from day to day.  Slow and steady definitely wins the race in long-term investing.

    Speaking of big investors:  As expected earlier this month, Pimco’s Total Return fund has become history’s largest mutual fund, with assets of $202.5B. The sum surpasses Growth Fund of America’s $202.3B from 2007; that fund has now declined to about $153B. Total Return got $47B to lead mutual fund inflows this year.

    AMZN making yet another leg higher, that could put the Nas over 2,279.  Transports went green now so Dow is a major laggard at this point and trading just below this week’s intra-day highs but still 40 points below the futures while Nas and RUT are over the Futures and S&P is about 3 points short of futures high. 

    Here comes Cramer – can he punch us through?

  86.  Phil… bot SPY feb 112. where do you stand on GLD and Dollar now? Do I dump my GLD 106 puts now, or is the rise in gold a headfake?

  87.  ATVI looks good…how about Feb 12 calls @ .35?

  88. Phil,
    What’s your opinion on APA.

  89. does anybody know what procentage of employment in construction business in US?

  90. Phil
    do you plan to be covered on mattress overnight?

  91. This chart from Tyler highlights my entire problem with the last 3 months:

    BIDU/Emc – Well you sold the $400 calls for about $12 and now they are $22.  Your Jan $420s are now $11 and it will cost you $23 to roll to the March $410s (because you left it a bit long) and, if BIDU stays high, you can roll the Jan $400 caller about even to the Feb $430 calls, which puts you in for a nice spread to roll to an eventual March vertical spread if BIDU keeps going up.

    Holding nose/Samz – It’s all about balance, not trading with or against anything but keep in mind that this rally, which seems to be bumming you out, is coming on a 3-day volume that can be completely reversed in a single morning of brisk trading – it’s totally meaningless.   Sadly, we could have another 3 and 2 1/2 trading days ahead of us between now and the end of the year and you just have to decide how you really want to be positioned for the first week of Jan.  So far, I burned a 7% gain in the $100KP positioning very bearish, taking a big hit as I load up on puts and today was the first day I really put the brakes on (selling the $105 puts) to lock my posiiton here, at $99K.  I’m fine with it because I have a long-term plan and I think this may be a great short opportunity but if you don’t have conviction and are just going to play whatever trend you see, then you can get whipped very badly in this market. 

    IOC/Jbark – That’s a very expensive price for a company that doesn’t make any money.  They are a growth play and will do well on high oil prices but not something I would chase up 10x from last Nov.  If you are already short – maybe sell some puts while you wait?   You can sell the Feb $75 puts for $7.70, depending on your entry, that should be fun and they can roll down about $5 per month.

    GLD/BigP – Yesterday I said I expected gold to move up and the dollar to move down.  We got a little move today but it was enough for me to want to go back to GLL so I do think it’s a headfake but that Iran thing can burn you so take money and run is a good plan if you are ahead. 

    ATVI/BigP – They are on the Watch List with plays there.  The Feb $12s are fine for a gamble on earnings/holiday sales.

    APA/Josec – They are a good company but there are so many that HAVEN’T made it to withing 20% of their nominal highs that I can’t see chasing one like APA, who are up over 100% since March.

  92. Phil, That is one helluva chart.  Of course, we’ve experienced it trading these past few months, but it really hits home to see it graphically displayed like that.

  93. AXP with a big turn down.   V falling again, MA with a pullback. 

    Stopped out my DIA $105 puts sold at $1.04 (up .06).  That sucks as I wanted to be not so bearish into the close.  The right move it to cover with the $104 puts at .57 but I may go with my gut and stay naked (not that my gut has been right all week).  We have jobs tomorrow and they only expect to lose 465K so that might disappoint and expectations for Durable Goods (up 1.2%) seem kind of unlikely given the GDP result but no bad news has thrown this market yet.  I am going to flip the 12/31 $103 puts to Jan $103 puts as it’s crazy to put all eggs in 12/31s.

    Constrtuction was about 7% of labor force (10M jobs) at one point, must be much less now. 

  94. hi Phil : Rode your coattails on ABX.Paid for my subscription for  the next 6 months. thank u for the trade.
    I like F and am thinking of a buy/write for $1.60 premium at the $10 March strike, with the stock  currently at  $10.06. Only negative  is I have to put up 100% cash for the put since I want to do this in an IRA .any suggestions?

  95. Phil,
    Just got back after being gone for a few hours. I noticed you recommended sell to cover (105puts) based on a break above 1120 S&P. I’m slightly bearish without it waiting for "the sell-off." Still valid now that it looks we’re breaking down or just sit tight?

  96. Phil
    do you expect that unemployment number will be worth than expected because of today housing number?

  97. Phil,
    XOM – Thanks for your suggestion. Wrote April $70 Puts. Wish had written them last week when it was higher!

  98. ABX/Dflam – Nice!  You can buy the 2011 $7.50 put for .83 as the June $7 put is .50 so figure you lose less than .10 per month to save $7 in margin (not to mention the downside protection).

    Covers/Ac – It’s good for a quick in and out trade but I can’t execute them that way on WSS as they keep making me pay the Ask and giving me the bid so it’s a disaster but if you are confident you are getting a good price, you can day trade around the lines.  At the moment, I’m very bearish into the close but it’s the Jan $103 puts now so not so subject to quick moves.   I think if you can get .60 for the 12/31 $104 puts, that’s the best cover for the moment.

    Unemployment/Tcha – I think retailers didn’t staff up as much as expected and certainly no one is working in construction.  Last month was a lot of temp hiriing but much of that may have been warehouse duty and that cycle is done as stores are either stocked or they are not at this point and I don’t think the census hiring has kicked in. 

    Rail traffic finally posted its first year-on-year increase of 2009, not a moment too soon. Total volume was 0.3% higher and intermodal traffic 9.4% higher; but again the numbers suffer in comparison with 2007: total down 11.6% and intermodal down 8.7%

  99. dflam / F
    Ford likely to pull back a bit overnight accordind to David Ristau, so entry at maybe9.60 / 9.75.

  100. Phil/MA.  Followed your suggestion and went in again and just got out again buying/selling MA puts.  As MA went negative for the second time today, I recalled from my youth Howard Cosell’s voice shouting, "Down goes Frazier, Down goes Frazier…"  Seemed like a good sign.  Thanks for the trades. 

  101. JRW 111 : thanks!

  102. UNH having a bad week after flushing shorts on Monday. 

    EOG STILL going up on their flush. 

    TOL holding up well. 

    UPS finsihing near lows. 

    XLF looking sickly.

    POT is a tempting short at $111.33. 

    X hitting $55 – Amazing!  We shut down 12 different Auto lines, stopped making SUVs and no one is building anything but X is up 50% since 11/1.

    MA/Juda – It’s the gift that keeps on giving – nice job!

  103. Phil – what gives with X flying up while NUE flatlines?  Based on the analyst estimates for 2010, the forward P/E for X is now 50ish while NUE is 17ish.

  104.  Phil…Do you recommend X puts here?

  105. X has to get back to 80 to make the move back to where it sold off drastically….. NUE is already there.

    X was once 190$$$

  106. Phil, feel free to ship that Canadian Co’s "stuff" whenever…….also, sorry to post Cramer’s stuff here, but thought you might enjoy!  I think they are all BK…
    From 2000. For the full text, go here:
    Editor’s Note: James J. Cramer is the keynote speaker at the 6th Annual Internet and Electronic Commerce Conference and Exposition, held today at the Jacob Javits Center in New York City. We’re running the full text of that speech here.
    You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.
    OK. Here goes. Write them down — no handouts here!: 724 Solutions (SVNX Quote), Ariba (ARBA Quote), Digital Island (ISLD Quote), Exodus (EXDS Quote), (INSP Quote), Inktomi (INKT Quote), Mercury Interactive (MERQ Quote), Sonera (SNRA Quote), VeriSign (VRSN Quote) and Veritas Software (VRTS Quote).

    We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over — and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don’t even have earnings per share, so we won’t have to be constrained by that methodology for quarters to come.

  107. Well that was a fun finish, came about 20 points off the bottom into the close but still finished about 20 points below where we opened.   Nas finished up at the high (up .75%) and S&P held 1,120 with NYSE finally holding 7,200  and RUT way up at 631 so technically everything we wanted except total Dow volume of just 112M, about 1/2 of what passes for normal this quarter. 

    I guess I’m bearish here because the Friday after Thanksgiving we gapped down over 200 points and this just feels kind of the same as we not only had the same sort of relentless, silly rally on bad data but we also were right about 10,450 at the time.

    X/Chuck – Makes no sense to me.  I don’t see any possible way you can paint a bullish demand picture for steel in 2010.  Maybe compared to this year but compared to normal?  No way…

    X/BigP – Too scary to short.  Seems logical but logic can get you killed in this market.

  108. Phil, feel free to ship that Canadian Co.’s "stuff" whenever…also, sorry to post Cramer’s stuff here, but thought you might enjoy all the BK recs….
    From 2000. For the full text, go here:
    Editor’s Note: James J. Cramer is the keynote speaker at the 6th Annual Internet and Electronic Commerce Conference and Exposition, held today at the Jacob Javits Center in New York City. We’re running the full text of that speech here.

    You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.

    OK. Here goes. Write them down — no handouts here!: 724 Solutions (SVNX Quote), Ariba (ARBA Quote), Digital Island (ISLD Quote), Exodus (EXDS Quote), (INSP Quote), Inktomi (INKT Quote), Mercury Interactive (MERQ Quote), Sonera (SNRA Quote), VeriSign (VRSN Quote) and Veritas Software (VRTS Quote).

    We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over — and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don’t even have earnings per share, so we won’t have to be constrained by that methodology for quarters to come.

  109. ….sorry about the repost.

  110. There will be another pump tomorrow, but it might be a good short opportunity since I imagine many people won’t want to be too long into the holiday and weekend, and thus sell off the end of the session.
    I hate this type of market--just like last summer, low volume running up crap and speculation plays, while the solid value names don’t budge.  However, the steel, eg, industrial continuance does not surprise me. My consulting involves some federal work and I know federal procurement. I guarantee you that the bulk of the bricks and mortar stimulus money has yet to hit the ground… speaking of ground, it’s winter now and a lot of this construction can’t be started for a few months anyway.  So its impact is still being anticipated in my opinion, which might explain partially why the stock price of X and others like it appear to defy gravity.

  111. kustomz; can’t disclose location due to confy but NY metro area distant suburb.
    Hard money loan … 12% and 4 sounds cheap for 3 years.  How big & what type of deal ?

  112. I was wondering how they were getting more productivity from less workers

  113. oncmed … Cramer 2000 … that is priceless !
    I’m sure Cramer will deny he ever said any of that …

  114. Hey Cap 66k balloon… working out the details on interest and principal i recently did a deal for 267k 11% no points im not too greedy …on first year interest only 2nd and 3rd interest and principal…i will be doing the same on this deal

    Its a secondary which is a big plus, if she cant pay i get a condo in DT Palm Beach for 66k


  115. Cap i was just wondering if it was in Nassau county, i was looking at 27k sf building for $30sf i didnt buy it due to the high taxes 105k in property taxes, they didnt want to hear any talk of tax abatement so i walked

  116. No; not Nassau …..
    66k … isn’t that a lot of work for small $$ ?  

  117. PHil
    LYG- buy/write – July p/c @ $1.30  +/-; $1.91/2.21 ; they just paid another dividend ($1.42/share). They paid $.84 back in May.  +/- 30% on call away.
    I have 500 shares of LYG purchased back in May. My basis is not $.85 after the dividends and selling puts and calls. I am considering selling the July puts and calls on the 500 shares I own plus doing another buy/write. What is your insight on just how secure LYG may be?

  118. DD’ed my QID position in AH. New basis is $19.36, wish me luck.

  119. Hard work? You don’t collect 7k a year with 500k in a savings account, I think it’s a great return with the possibilty of owning the property for half the original purchase price. I havnt worked hard since 2004 ;-)

  120. Must Read at Zero Hedge:
    You will want to sell everything you own !

  121. Kustomz:  good for you … my question was simply that small deals take lots of time and expense, even in foreclosing.
    I run into that problem all the time on deals.
    If it makes sense for you, that’s terrific … we should talk deals sometime off line.

  122. Man, for the bold, the short opportunities seem to be piling up !
    Look at stuff like SNDK, POT, and all the stuff we talk about daily.

  123.  Merry Christmas ever one (spell checked this time ;) )