Archive for 2009

Will Anyone Investigate Insider Trading In The Insurance Stocks?

By Joe Weisenthal at ClusterStock

Will Anyone Investigate Insider Trading In The Insurance Stocks? (PRU, HIG)

Excerpt:  Yesterday evening we mentioned the rally big insurers like Hartford (HIG) and Prudential (PRU).

Then just a few hours later, news reports confirmed that the insurance companies would be eligible for TARP. It was basically known that the Treasury would accept them, but the timing of the announcement was a mystery.

Given that our government’s been leaking like sieve lately (see: the stress-test runup), it’s impossible to believe that the news hadn’t been leaking during the day…

David Goldman offers the following insight:

First the Obama administration pulls the rug out from under the insurance industry by playing politics with credit seniority in the Chrysler bankruptcy, adding to the uncertainty of valuing trillions of dollars of corporate and commercial real estate debt. It then offers a bailout to the investors.

Full article here.


Jamie Dimon Is Government’s Golden Boy (JPM)

Courtesy of Dan Colarusso at ClusterStock

Jamie DimonJamie Dimon Is Government’s Golden Boy (JPM)

Jamie Dimon has some new best friends, and they live in Washington, D.C.

Sure his J.P. Morgan got a raw deal from the Feds on the Chrysler bailout and had to swallow big losses along with other debt holders.

But now, according to the New York Post, Washington is awarding J.P. Morgan the mandate to do the merger between the financing arms of Chrysler and GM. It has also been tapped as a major player in the restructuring of the car giants.

The fees on those deals aren’t huge, maybe a bit more than $50 million, but it could be the  beginning of something wonderful.

Sources told The Post “JPMorgan may be called upon to gobble up smaller regional and super regional banks teetering on the brink of failure — a move that plays right into Dimon’s push to expand JPMorgan into an even bigger national franchise.”

The whole story>

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The Perfect Antidote

Courtesy of Michael Panzner at Financial Armageddon

The Perfect Antidote

For all those policymakers, "economists," and TV pundits whose thinking has been clouded by the "green shoots" they’ve been smoking lately, I’ve got the perfect antidote: Howard Davidowitz.

In fact, if the reality described by this retail industry consultant in the following Yahoo! Finance Tech Ticker column (and accompanying video). "’The Worst Is Yet to Come’: If You’re Not Petrified, You’re Not Paying Attention," doesn’t sober these delusiabulls up quickly, I’m afraid nothing will.

The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.

"We’re in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn’t petrified, he or she is a damn fool."

Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."

This outlook is based on the following main points:

  • With the unemployment rate rising into double digits – and that’s not counting the millions of "underemployed" Americans – consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity.
  • Rising unemployment and the $8 trillion negative wealth effect of housing mean more Americans will default on not just mortgages but student loans and auto loans and credit card debt.
  • More consumer loan defaults will hit banks, which are also threatened by what Davidowitz calls a "depression" in commercial real estate, noting the recent bankruptcy of General Growth Properties and distressed sales by Developers Diversified and other REITs.

As for all the hullabaloo about the stress tests, he says they were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can’t get more money from Congress. It’s the ‘greater fool’ theory."

"We’re now in Barack Obama’s world where money goes into

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The Exuberance Glut Or The Dollar-Euro Short Squeeze Race

Courtesy of Tyler at Zero Hedge

The Exuberance Glut Or The Dollar-Euro Short Squeeze Race

Much speculation lately focuses not so much on what the stock market will do (the answer to that should be self-evident, especially once shorting stocks again becomes a practical reality), but what the impact of recent economic policies will have not just on inflation (isolated or global), as well as on that most sacrosanct piece of paper, the U.S. dollar.

In order to approach this question from a different angle than the conventional theoretical wisdom of Quantitative Easing being the end all be all explanation for the mid- and long-term fate of the U.S. currency, an approach that has much more practical credence is that presented by David Roche of Independent Strategy, which demonstrates overall liquidity, defined as claims on goods, services and assets, as an inverted pyramid.

At the bottom of this pyramid is the power money of reserve cash – liquidity created on the balance sheet of central banks. As noted, it accounts for a mere 1% of global liquidity, and thus the impact that the Fed and other world central banks will have with existing policies that address merely this aspect of liquidity will be, at best, massively muted. Above this is the liquidity bank loans liquidity, created through the conventional credit multiplier mechanism of commercial banks. Above that still is the liquidity created by securitization of debt. This experiment, gone horribly wrong, allowed claims on illiquid assets to grow further relative to the reserve money in the system. This is precisely the layer that the Fed and Treasury are trying to revive with the various TALF iterations, so far unsuccessfully. And at the very top of the pyramid is the layer of interest rate and credit derivatives: a means whereby institutions were able to maximize claims on physical and financial assets, by insuring against losses, without increasing precautionary reserves either of capital or reserve money.

In order to fully understand currency and price movements, one has to realize that the securitization of debt, and creation of derivatives amounted to a huge virtual printing press, primarily fueled by a massive increase in risk appetite which allowed for a huge expansion in the value of claims on financial assets and goods and

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Death By A Thousand Redemptions

Courtesy of Tyler Durden

Death By A Thousand Redemptions

Troubled RenTec, which not only made WSJ last night, but also CNBC today, may not have to suffer much longer. Based on information Zero Hedge has received, the assets at Jim Simons’ investor-open, RIEF fund, have plummetted over the past 3 years. The fund which was started as one with up to $100 billion in potential capital, is a mere shadow of its once fabled self.

Below are the AUM for RIEF at various points in time. Continuing the trendline implies some very troubling lack of capital in the not too distant future.



Dave’s Daily

Best wishes to Dave Fry and family from all of us at Phil’s Stock World!


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Bilderberg Group Plans Economic Depression

This article by Paul Joseph Watson was published both at Global Research and at Prison Planet

Leaked Agenda: Bilderberg Group Plans Economic Depression

Elitists divided on whether to quickly sink economy and replace it with new world order, or set in motion long, agonizing depression

On the eve of the 2009 Bilderberg Group conference, which is due to be held May 14-17 at the 5 star Nafsika Astir Palace Hotel in Vouliagmeni, Greece, investigative reporter Daniel Estulin has uncovered shocking details of what the elitists plan to do with the economy over the course of the next year.

The Bilderberg Group meeting is an annual confab of around 150 of the world’s most influential powerbrokers in government, industry, banking, media, academia and the military-industrial complex. The secretive group operates under “Chatham House rules,” meaning that no details of what is discussed can ever be leaked to the media, despite editors of the world’s biggest newspapers, the Washington Post, the New York Times and the Financial Times, being present at the meeting.

According to Estulin’s sources, which have been proven highly accurate in the past, Bilderberg is divided on whether to put into motion, “Either a prolonged, agonizing depression that dooms the world to decades of stagnation, decline and poverty … or an intense-but-shorter depression that paves the way for a new sustainable economic world order, with less sovereignty but more efficiency.”

The information takes on added weight when one considers the fact that Estulin’s previous economic forecasts, which were based on leaks from the same sources, have proven deadly accurate. Estulin correctly predicted the housing crash and the 2008 financial meltdown as a result of what his sources inside Bilderberg told him the elite were planning based on what was said at their 2006 meeting in Canada and the 2007 conference in Turkey.

Details of the economic agenda were contained in a pre-meeting booklet being handed out to Bilderberg members. On a more specific note, Estulin warns that Bilderberg are fostering a false picture of economic recovery, suckering investors into ploughing their money back into the stock market again…
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Trade Rewind: Anatomy of Our Winning Ag Plays

A lot of mail we get from people interested in our service had the question: "Are option trades as easy to follow as stock trades?"

I think the quick answer to that is yes for straight options and no for spreads but like many things that are worth doing, they are worth learning.  I'm going to start a new teaching series here so we can analyze some trades after the fact as practice may make perfect but it also pays to go over our winners as well as our mistakes as finding out where we went right is as important as finding out where we went wrong.  Trading has, of late, become much less about the merits of the particular stock and more about the timing of your entries as good stocks and bad stocks can move up and down 5% on any given day.

One of the things we like to do is watch for overbought sectors to short.  We had been taking pot-shots at POT all week as it was really running away with itself and on Thursday I discussed with members how the whole sector was getting overbought and, in Friday morning's post I said: "I advocate more shorts into the open if they insist on this ridiculous pre-market pump (down just .25% at 9 am), especially in the over-hyped Agriculture industry, which could not be up for stupider reasons," which neatly summarized my outlook on the sector. 


We got exactly the pump action we wanted in the morning and I sent out a 10:34 Alert to Members, sensing that we were topping out on the run in the indexes and I recommended the following plays:

Big disconnect with DBA and AGU, MOS and POT now.  It’s a little crazy to do a day trade but the POT $115 puts have .20 in premium at $6.10 and you can sell the $110 puts for $2 if it turns against you.  I like the June $90 puts on them for $1.95, looking for $1 and rolling up if it goes the other way at .85 per $5.

AGU July $40 puts are $1.05.  MOS $50 puts are a fun day trade for .10 but you need to get 3/4 out at .15 and leave the 1/4 or 1/2 out at .20 and

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Bank of America Bet to $16 by August

Today’s tickers: BAC, FXI, JWN, WFC, XHB, CNQ, ANF & PEP

BAC– And finally today, one investor apparently sees a 60% improvement in the prospects for shares over at BAC having placed a 60,000-lot trade on the PHLX to lock-in to the bank’s shares at $16.00 apiece come August. The trader bought 60,000 call options at the strike while selling the same amount of 20 strike calls for a net premium of 46 cents. Ordinarily the speculation would have cost the investor 72 cents, but the use of the premium at the 20 strike eroded the cost significantly. Currently the premium associated with securing rights to buy BoA shares at twice the current cost is a staggering 28 cents! With shares trading around $10.73 and down more than 5% at the end of trading today, this investor is taking a very bullish perspective on the company and allowing only a pretty tight schedule. The same tried in November might have cost around 60 cents instead but would have provided three more months to come good. – Bank of America Corp.

FXI – Shares of the China ETF are down 1% to $33.44, but one covered put strategist sees further bearish movement in the stock through expiration in June. It appears that this individual sees Chinese stocks giving back some of the gains made in the rally that followed the release of the stimulus package by the Chinese government. He established the covered put by selling short the stock in conjunction with the simultaneous short sale of 33,955 put options at the June 32 strike price for a premium of 1.13 apiece. This strategy was transacted when shares were at $34.09, just three cents off of the high for the day. The investor is likely looking to have shares put to him at $32.00 when the underlying price falls low enough for the puts to wind up in-the-money. The premium received for writing the puts today effectively lowers the price he must pay, should shares be put to him by expiration, to $30.87. Should this scenario come to fruition, he will have gained 9% on the stock. – iShares FTSE/Xinhua China 25 Index Fund

JWN – The fashion specialty retailer attracted bearish option plays despite a significant bullish move in the price of the underlying stock which is currently up more than 7.5% to $22.56. The department store-chain reported
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The Thirst For Risk

Courtesy of Zero Hedge

The Thirst For Risk

The charts below demonstrate unmistakably just how phenomenally bipolar the market has become, and just how aggressively asset managers are chasing after risky assets in order to make up for 2008 losses. Alas, nobody has learned any lessons from the credit bubble where fast, slow, dumb and smart money was all chasing the riskiest assets, all of which ended in tears for far too many people. The result so far for 2009: exactly the same pattern is repeating itself.

The highest activity, both in number of transactions and in notional, is in the riskiest space: equities. This makes intuitive sense: as Obama himself said on March 7th "the market has bottomed", with everyone rushed to jump into risk, and the subsequent explosion in new equity issuance is the result.

Not surprisingly, following the biggest short squeeze in decades, Real Estate equity issuance for the first 5 months of 2009 has already surpassed all of 2008, both in proceeds and in deal #. Only one thing can be said here. Once the downgrades begin of all recently upgraded companies being, all that new money will be very, very unhappy.

The most active sector just below equities are bonds, where activity has picked up over the last couple of months in the HY space, after a ramp up early in the year in the IG and the TLGP space.

What is interesting, is that loan deals continue to suffer – a space traditionally delegated for the least risky 1st lien deals, and hedge-fund focused 2nd lien deals, has seen a massive drought in demand for both, as asset managers prefer to jump straight into the riskiest assets hoping for a continuing game of greater fool with the administration’s daily blessings.

Notable is also the collapse in M&A deal volume. The facts that companies are unwilling to spend either cash or stock currency in order to grow, should be very indicative to primary equity investors who, despite this graph demonstrating that no companies are even considering expanding in this environment, keep on purchasing follow on offerings in the crappiest of sectors for totally unfathomable reasons.

And lastly, more for comic value, than anything, I present the structured finance deals in the last year. Maybe the administration should have looked at this chart

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Zero Hedge

Mass Chemical Attack On School In China Leaves 54 Injured, Mostly Children

Courtesy of ZeroHedge View original post here.

What's being reported as a mass chemical attack on children happened Monday afternoon at a school in southwest China. The horrific incident injured fifty-one children and three teachers at a kindergarten in Kaiyuan city, Yunnan province, state media reported Tuesday

A 23-year old man, now in custody, reportedly scaled a wall to get into the school and then sprayed a corrosive chemical on the students and teachers...

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Insider Scoop

10 Stocks To Watch For November 12, 2019

Courtesy of Benzinga

Some of the stocks that may grab investor focus today are:

  • Wall Street expects D. R. Horton Inc (NYSE: DHI) to report quarterly earnings at $1.25 per share on revenue of $4.86 billion before the opening bell. D.R. Horton shares rose 1.3% to $53.31 in after-hours trading.
  • Analysts expect Skyworks Solutions, Inc. (NASDAQ: SWKS... more from Insider

Phil's Favorites

How To Spend $45,000 On A $27,000 Car

Courtesy of Mike Shedlock, MishTalk

As cars become more expensive, and trade-ins worth less and less, buyers go deeper in debt on new cars.

Please consider taking a $45,000 Loan for a $27,000 Ride.

Consumers, salespeople and lenders are treating cars a lot like houses during the last financial crisis: by piling on debt to such a degree that it often exceeds the car’s value. This phenomenon—referred t...

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The Technical Traders

Welcome to the Zombie-land Of Investing - Part I

Courtesy of Technical Traders

This current market environment is very reminiscent of the 2006-08 market environment where price rotated into weakness on technicals and continued to establish new all-time price highs in the process – creating what we are calling a “zombie-land melt-up”.  This very dangerous price action is indicative of money chasing a falling trend.  Where technicals and fundamentals are suggesting that price is actually weakening quite substantial, yet the process of price exploration is continually biased towards the upside as investors continue to pile onto the back of the beast expecting a further melt-up.

Let’s take a look at what happened to the ES and Gold in 2006 an...

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Kimble Charting Solutions

Gold Indicator Sending Fresh Bearish Message, Says Joe Friday!

Courtesy of Chris Kimble

Could the Gold/US Dollar ratio be sending a fresh concerning message to Gold bulls this week? Joe Friday says Yes!

This chart looks at the Gold/Dollar ratio over the past 8-years.

The intersection of two long-term channel met at (1) a few months ago. The ratio was testing the bottom of one as resistance and the top of another as resistance at the same time.

As the ratio was testing both channels as resistance, a sizeable bearish reversal pattern took place at (1).

Since the reversal pattern took place, the ratio has been heading lower.

Joe Friday Just The Facts Ma’am; The ratio is breaking below...

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Digital Currencies

3 Reasons Why One Trader Didn't "Manipulate" Bitcoin Price To $20K

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via,

Bitcoin price highs in 2017 were not the result of a single trader on an exchange, the CEO of payment company Circle claims. In a series of tweets on Nov. 4, Jeremy Allaire disputed ...

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Chart School

Gold Gann and Cycle Review

Courtesy of Read the Ticker

Gold has performed well, golden skies are here again. In fact it has been a straight line move, and this is typically unusual and a pause can be expected.

It seems the markets are happy again, new highs in the SP500, US 10 year interest rates look to re bound, negative interest may soften. The US FED has reversed their QT and now doing $250BN (not QE) repo. The main point is the FED has stopped QT, and will do QE forever. The evidence now is the FED put is under market risk and the possibility of excessive losses do not exist. 

Point: If in future if there is market risk, the FED will print it's way out of it.
Subject To: In this blog view. The above is so until the amount required rocks confidence in the US dollar as a reserve currency.&n...

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Lee's Free Thinking

Today's Fed POMO TOMO FOMC Alphabet Soup Unspin

Courtesy of Lee Adler

But make no mistake, if the Fed wants money rates to stay down by another quarter, it will need to imagineer even more money.

That’s on top of the $281 billion it has already imagineered into existence since addressing its “one-off” repo market emergency on September 17. This came via  “Temporary” Repo Man Operations money, and $70.6 billion in Permanent Open Market Operations (POMO) money.

By my calculations that averages out to $7.4 billion per business day. That works out to a monthly pace of $155 billion or so.

If they keep this up, it will be more than enough to absorb every penny of new Treasury supply. That supply had caused the system to run out of money in mid September.  This flood of paper had been inundati...

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The Big Pharma Takeover of Medical Cannabis

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


The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:


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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...

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Free eBook - "My Top Strategies for 2017"



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

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

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

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

Some other great content in this free eBook includes:


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


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About Phil:

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

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

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