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Saturday, November 26, 2022

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Jobless Thursday – America’s Infrastructure Crisis

What a disaster!

Not only are our students failing to keep up with the rest of the World but America is close to getting a failing grade in Infrastructure.  That’s right, what was once the World’s mightiest and proudest economy, this once great nation of builders has been given an overall grade of D in the American Society of Civil Engineers report on our Infrastructure.

The 2009 Grades include: Aviation (D), Bridges (C), Dams (D), Drinking Water (D-), Energy (D+), Hazardous Waste (D), Inland Waterways (D-), Levees (D-), Public Parks and Recreation (C-), Rail (C-), Roads (D-), Schools (D), Solid Waste (C+), Transit (D), and Wastewater (D-).  Awful?  Shameful?  How about DANGEROUS?  Deadly even…

For one thing, The number of high hazard dams—dams that, should they fail, pose a significant risk to human life—has increased by more than 3,000 just since 2007, when there were "just" 1,000 dams at risk and 3,000 to pro actively maintain but the administration refused to fund the project, now the costs have tripled as the situation deteriorates but that’s nothing compared to what happens if just a few of them break completely.  1,819 dams are now in the "high hazard" category and, with the current budget, for every one damn that is reparied, two more become an emergency.  

In urban areas, roadway congestion tops 40 percent.  According to the report, decades of underfunding and inattention have jeopardized the ability of our nation’s infrastructure to support our economy and facilitate our way of life.  At risk of catastrophic failure besides the dams (including levees) are things like our drinking water, sewage systems, bridges, waterways, rail lines, airports, roadways (especially elevated ones) and, of course, our entire electrical grid.  Additionally, 7 Billion gallons of clean drinking water is lost every day through leaking pipes – that’s 23 gallons per citizen per day WASTED for want of $11Bn in repairs – don’t bother worrying about it, the last Administration wouldn’t fund it in 2001 or 2006 so why bother now – 10 Trillion gallons later? 

The ASCE calculates a 5-year $2.2Tn investment is needed to address the situation, that’s $500Bn (25%) more than it was 5-years ago, when they released their last report and nothing was done by the previous administration.  So, rather than having invested in America, putting people to work and improving EVERYONE’s way of life, we spent over $1Tn fighting a war, another $600Bn a year on our regular military operations and gave over $1Tn worth of taxe breaks to just 1% of the people who are able to fly over the decaying infrastructure in their private jets.  No wonder Obama is angry

You should be angry too.  Americans are spending 4.2 BILLION hours a year stuck in traffic, 1 Million people’s ENTIRE YEAR!  That costs the economy $78.2Bn a year or an average of $710 per driver – that’s the hidden tax we pay for NOT fixing just the roads.  Lack of uniform systems and regulations have led to high concentrations of hazardous materials and heavy metals in our nation’s landfills, which poses a significan threat to public safety.  One out of 4 of our nation’s bridges are either structurally deficient or functionally obsolete and the current budget of $10.5Bn is only half of what is needed just to maintain these disastrous conditions.  Travel by freight train is three times more fuel efficient than a truck but we are going to be taking tracks out of service if $10Bn a year isn’t dedicated to a $200Bn repair fund between now and 2035. 

Why is there no money to fix our infrastructure?  Possibly because the top 1%, who used to earn $1Tn a year (inflation adjusted) and paid 60% income tax in 1979 ($600Bn), now earn $2Tn a year (20% of all US income) and paid an average of 17% in income tax for 2009 ($340Bn) and that is nothing compared to the grotesque levels of tax evasion practiced by America’s corporations, who earned $6Tn and paid JUST $138Bn in taxes last year (2.3%), leaving the rest of the government’s $3.5Tn budget to be paid by everyone else in the bottom 99% – SUCKERS!  By the way. a lot of people will claim corporations earn less but that’s because they count the losses claimed by some corporations (AIG, FRE, FNM, GM, most airlines…) against the profits of other corporations and you KNOW that’s not the right way to look at it! 

The top 1% and the multi-Billion Dollar Corporations use our roads, they drink our water, they flush their waste which needs to be cleaned.  They dump their trash in our landfills and they pollute our air much more so than the average citizen in the bottom 99% yet they are not paying their share to support the system that makes them average salaries of over $1M per year (and that’s $17M a year for the top 0.01%).  Come on America – this is ridiculous!  I wrote about this in "Who Rules America" as well as "The Crisis of Middle-Class America" and you can click on the Income Share chart above to get to Slate Magazine’s excellent "Visual Guide to Income Inequality" so we can move on to other topics now…

New jobless claims actually fell by 27,000 last week to "just" 451,000 and it is JUST because, as I began to point out two weeks ago, there are 140M people working and 451,000/143M = 0.33% or 1 in 300 so your odds of getting laid off in any given 52-week year is about 1 in 6, which means the average employee KEEPS their job for 6 years.  It is difficult to maintain an environment of economic terror when, two years into the double-secret ultra high-stress red economic terror alert level, 90% of the people still have the same job they had in 2008.  I’m not trying to trivialize unemployment – I just want to keep it in perspective.  Meanwhile, we have 3M unemployed construction workers and $3.7Tn worth of infrastructure repairs that need to be done, that’s $1.2M worth of work that needs to be done FOR THE GOOD OF OUR SOCIETY in the EXACT skill set of 1/3 of our unemployed labor force.  Hmm, I don’t know what it is but it seems like there might be some sort of solution here…

On the whole, we were pleased with yesterday’s Beige Book – not "thrilled" but pleased and we not only maintained our bullish posture but we added a dozen bullish trade ideas in Member Chat.  In addition to XLF and UNG, which I mentioned in yesteray’s morning post, we took advantage of yesterday’s weakness to pick up 11 bullish plays on AAPL, HOV, TBT (bearish TLT), INTC, HRB, BSX, IRM, AMD, MDT, EOG and NSM.  Just ahead of the BBook, we took bearish covers with USO and the Qs, both of which made small profits before stopping us out ahead of the close so, all in all – a very good day (assuming the market agrees with me and moves past this jobs data).  Some of my comments on the Beige Book for Members were:

  • Same issues as last time, residential and commercial real estate are sucking up the joint but, we did not have this much green last time either.
  • Good demand for educated, skilled professionals (top 10%) egg sucking for the masses. 
  • This (poor spending on big-ticket items in Philadelphia, Richmond and Dallas) portends a bad Durable Goods report for August so let’s keep alert for that!  Auto dealers are "optimistic"????  When’s the last time that happened?
  • "Substantial gains"???  Has the World gone mad?  What kind of language is this in relation to the economy?  This is unheard of – somebody better spin this negative quickly or people might get excited…
  • "Existing HIGH levels"???  Are these cities in Asia???  "Healthy conditions"???  Whuck?  That’s not what it says in the Journal!  Is the Fed lying or are things perhaps not as bad as they seem?

So we move into the day cautiously optimistic.  Asia was mixed with the Shanghai dropping 1.4% but the Hang Seng was up 0.4% and the Nikkei was actually green for the second day in a row, up 0.8% and the BSE was it’s usual green, up 0.7% on the day.  Europe, on the other hand, is very excited, up about 1.25% and all indexes there well above our midpoints and testing their own 2.5% levels, which we can expect to see tested today in the US.  Those levels are: Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650.  Of course the Russell is our laggard but as long as they can hold our mid-point at 635 – we’ll call that progress.

Until we get green on 3 of 5 of our levels though, we remain very cautiously bullish and, keep in mind – the best time to initiate disaster hedges is when the market is going up, not down so any failure at our resistance points today is going to lead us to up our covers.  We get both oil inventories and natural gas inventories at 10:30 and the expectations are that we will see our first net drawdown in over 2 months as the tankers finally stop dumping crude (as I mentioned on Tuesday).  We’ve been long USO since last week’s dip but we’ll have no tolerance for another dip below $75 (our target is our sweet spot at $77.50). 

 

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Phil/Cap  Phil, in honor of your well deserved rant:"Kobe, Tell Me How My Ass Tastes" by Shaquille   🙂
 

My apologies to all for my obvious lack of class…. 🙂

While I apologize for my perhaps too many posts this afternoon, I stand by my opinions; and despite your diatribe above Phil, I don’t believe that I said anything that was remotely offensive. 
Feel free to disagree with my opinions that you don’t like, but please do so respectfully, as I try to do with yours.  That was the point of the sermon.
I am too straightforward to resort to whatever was meant by  "slick tactics" and I am confident that nothing I said was "despicable" and I take issue w/ such characterization.  
Don’t get annoyed; I still luv ya (except for your politics !).  Just say (like you did) "cool it on the political posts."
 
Jrohema:  As I have said a billion times, I am an independent….but yes, I do have a sense of humor; just sometimes people can’t tell when I am displaying it !  I didn’t pick Palin, McCain did, but I support her right to have been elected governor and to run for VP.  I didn’t pick McCain either; thought he was a terrible choice to run.
 
But then again, I am anti-most politicians these days.
 
I did go to an interesting event this week where the speaker was former AG Mike Mukasey.  That was very interesting and informative.   I won’t rehash here b/c it will get Phil even more upset.

And what 1020 said !   😉

Bonds/TBF – pstas – apologies, I did see it, but forgot to comment yesterday as I was side tracked with ARNA data.  From my limited knowledge, the bond traders use the 20 yr to leverage the 30 yr notes.  The fed did not sell the 30 yr notes for a while, and have now resumed.  My bond expert thinks the 30s will hit 3.5%, which means the 10s should hit 2.2 or lower.  TBT, TBF, etc, are all 20 yr shorts….

 

Bond yields are going down in that trend, so playing for an up trend on a short term trade may be worth it (buy a few short term Ps on TLT, although TLT has hit support 1.  I may actually go long here for a 1/4 entry, and DD at 98 where the next line of support is.  bonds, Bonds, BONDS…..and BIOTECH!!!!

 Phil,
Two posts. If I get fined $25, the dog and  I  don`t eat this week.

Phil – non poli question, NSM, you like them down here?

Oops, didnt see this past post

Thanks Phil–i really appreciate the help

Phil,
I am not here to critizise your web site. You as always have my admiration for the way you analyse all questions put to you. It is just as one is looking for an answer one has to pile through a mountain of political chit chat. I as well understand as one of our members says, on a boring day one has to do something to pass the time.
But I still feel the political parts to answer will take a lot of you normal valuable time to study positions and as well avoid from making mistakes. In the end it is your site and you are the one who has the final say.
The value of this site is non replaceble and I surely appreciate it. Thank you

Some amazing runs (perhaps ridiculous runs):
 
AMZN  122.50 on Aug 31;  over 141.00 today   (and 96 after it reported what supposedly were disappointing earnings).
PCLN 287.80 on Aug 31; over 334 earlier today
NFLX 121.81 on Aug 31; almost 150 today
AAPL  237.20 on Aug 25;  $265 earlier today
 
To me, these type of moves suggest a market in trouble that could break down big at any moment.
 
Just once, I would like stocks that I own to have these type of moves !  (I do own a little AAPL – but hedged).

Cap – AMEN….although if you bought ARNA (maybe you did)…you would have went from 2.90 to 7.15!!!!  CRIS baby, CRIS.  I have a good feeling about this one….

I have a question on position management.
There was a conversation recently about early exercise of options, which does indeed happen.  But I’m curious about the other side of it.  Is there ever a benefit of "self-assignment" of short puts (i.e., buying back the put and buying the shares) if the premium is exhausted and there’s little benefit in a roll (not much extra premium in the later-expiring options)?
Case in point: I’m short October PBI 25 puts at the moment — part of a buy/write that didn’t turn out as well as I’d hoped.  Their premium is effectively exhausted, the stock is beaten-down, and they pay a very nice dividend, so would there be any value in swapping the puts for shares (effectively assigning the shares to myself)?
I could roll the Octobers out to April for .80, but the dividend in that time would be .73, and taking on the shares would also allow me to sell calls (e.g., the January 23s for .35) along the way and continue to whittle down the cost basis.  So this seems like the right move.
Wisdom appreciated, as always.

Cap – please enlighten me as to what issues you are more ‘independent’ on? Gay rights? Abortion? Gun control? legalization of drugs? PLEASE, tell me how you are independent? I dont care what you classify yourself as, I want to know what is your stance on various issues where you would have the opportunity to show your ‘independence’

Pharm – you are buying CRIS?

jrohema … I am not a Dem and not a Repub, I am an independent.  I will vote not according to party lines or litmus test issues, but I will vote for a candidate who I think is deserving of my vote and is most consistent with my views or outlook.
I don’t vote for candidates b/c they are pro marriage or anti gay marriage; or if they are pro life or pro choice.  Now it is unlikely that I will support candidates that run on a platform of wanting to legalize drugs (you should have seen all the ads in the local papers in Colorado for marijuana dispensaries) but it is possible.  I would vote for a cross dressing gun toting gay transvestite if I thought that person was best suited for the office he/she was running for.
Why do those issues you identify show "independence" ?  What makes being for or against any of those "independent" in your view.
I have some core issues that I view as important that ought to be well known to you by now (strong defense, pro freedom, cut deficits, lower taxes, rein in spending and government).  Most pols are squishy on some of these issues so I choose those who I believe have core values; and are true to them; and are not phony.  Sadly, voting for almost any politician these days is an excercise in holding your nose.  I tend not to favor big spending, big government, nanny state types; or grievance mongers.
But I don’t vote on any party line; and I would have no problem voting for a third party candidate if I thought it made sense to do so.  I also don’t give money to politicians.
Are you suitably enlightened now ?

Pharm; I do need to follow some of your picks more closely.  What is the 50-word story on CRIS ?

boobearsdad
PBI
This is one of the stranges sugestion I have seen. You must be in love with the company.
I would positively let the putter run its corse if you like the company that much. but possible roll to a lower 20 putter to get still some money out of the original putter. You do not indicate what you received. Adding stock I would set up a new buy write where you let the caller pay part of the buying of the stock Sell the Apr 20 call for 1.40 here you have already a discount of 1.40 and selling or rolling the old putter to April will give you another 2.10 minus the cost of the rolling. 
It looks like the lowest point of this stk was march 6 2009 at 18.02 now being 19.90 does not say much about improvment. They never managed more than break the 25$ ceiling. So you must love the stock good luck

Cap – 50 words? you mean you just want the entry, exit point and timeframe on CRIS? 😛

rn273; the Cliff Notes version …  I don’t need more than that to "get it".

 The political stuff is better suited for a live chat. Can this site support that in addition to the regular business? I would be happier to switch between them than to have it all mixed up here. It will come as no surprise to Phil that I disagree with his solutions at the same time I agree with most of his problem descriptions.
I do not believe you can address the problems of the regular people by punishing the top 5% (and yes, I know, the top 0.1% is always used as the whipping boy for the argument) but its the top 5% Obama is after. I’m going to be that less than 15% of the top 5% voted for him. Lots of money, lots of opponents. Good target for a dem.
 
All I really have to say, ever, is that taxes are one thing, and what the money does when the government takes it – that’
s another.
 
Flat Tax anyone?

MMYT/Hanna & Phil – It is a trifle overpriced now, but has an excellent future. I would wait for a significant claw back in the Indian markets – should happen sooner than later, and then get in around the $18-$20 range. A good way might be to wait till options come out. Many people look at it as the Priceline of India – however, a large component of Indians still use human travel agents (not just companies, even individuals); and most hotels are not on the online radar yet. It will boom as internet penetration increases, but seems too high now.

Cap – yes, it was a joke 🙂

yodi,
Thanks for the response.
I’m definitely not in love with the stock, but I am trying to see if there’s a way to salvage what turned out to be a lousy position — was looking fine until the 20% drop after their last earnings report, but now here we are still 20% down from 25 at 19.90.  My net on the shares (including commissions and fees) is now 21.38/23.26.
Since I see an essentially 100% chance of being assigned next month, I figure I’ll have to deal with it at some point.  Being fairly new to all of this, I’m trying to think of all the ways to work on the position; the idea of buying the shares (to allow me to begin selling calls against them a month earlier, if I decided that I was going to accept assignment anyway) struck me as a possibility, so I thought someone here might either be able to talk me into it or out of it (quite likely "out of it").
It’s clearly not a growth stock, but they do pay a 7% dividend, so the position seems salvageable with patience.  (Or I may want to kill the whole thing and eat the loss, but I’m looking for the ways to fix it first, then I’ll decide if I can do better by moving on to something else.)
Rolling out to April 20 puts puts me at net ~24.66/22.41, so that’s an .85 improvement over six months.  But I can do better by April by taking the shares (now or at October expiration), taking the .73 dividend, and selling April 22 calls for .60 (net 21.94 at April expiration, essentially break-even if called).
Lots to think about.  Thanks for the ideas.

 Thanks Phil on EAT.  Wish I had asked you about MCD on Tues. where I could have taken adv. of dividend.  

Drugs/ Cap – as a radical rather than an independent, maybe I can persuade you to change your thinking on illegal vices. In my public health practitioner mode, I can tell you confidently that it is much easier to care for people with health problems of any sort if the cause of the problem is legal. So my stance on ‘drugs’ is make ’em all legal! Take a look at Vancouver
http://www.usatoday.com/sports/olympics/vancouver/2010-02-15-vancouver-safe-house-drugs_N.htm
that’s workable and saves lives. Sure, you’ll have people who kill themselves with drugs, just as with alcohol. But you have a better chance of being able to help them, and keep them from getting blood-borne diseases in the meanwhile. And while we’re at it, prostitution should also be legal. No silly business with certificates or anything else that will encourage a black market, but let’s do a decent job with health reform (preferably European model single-payer – you see why I’m a radical?) and the women will be able to get their health taken care of without getting "pre-existing conditioned" to death.
Now granted, all the current operators of these businesses will be unhappy, and I don’t have a solution for that – job retraining, perhaps? Rebuilding our broken infrastructure? Anyway, there you are.
– also, full disclosure – my great-grandmother ran a bar in the Broad Ripple district of Indianapolis all the way through Prohibition. She did get jailed three times, overnight, but that was for marching for the vote.

Drugs / Snow; I’ll leave that for another day.
 
Everyone w/ cable … tune in to the History channel now; and for the next 2 1/2 hours.

boobearsdad
Coming back to your PBI.
You talk about a buy write so I do understand you hold shares right?
These shares will produce div. it looks like a regular div of .36 per quarter. At your last buy right you will be stuck with the OCT 25 putter. Now you look at april where you automatically roll the putter to a 22 Apr put gives you 3.40 minus the difference of what you received for the 25 Oct put, which I do not know. But rolling and rolling the putter keeps you out of being assigned. If the stk has not come up to 22 by April you can start rolling the putter again. You can with your first roll be otimistic or pessimistic. You can even take on the April 25 putter again. It does not cost you any extra margin but the stk could come out of the woods as it was already 24.98 in JUL 10, only 3 month ago
So this way you do not worry about assignment. At the same time you sell the April caller. You seldom get much premium on stk which pays resonable div. So you say you in the stk at 23.26 the 23 caller pays only .40. But you will not be called away below 23 and you can always receive div on the stock. Sometimes one buys a lower putter to stop the bleeding. But looking at the April lower putters even the 17 putter demands still a hefty .90 indicating that not to many people have great confidence in the stk. That is about all I can say to it possible Phil could put his magic stick over it. But not all one picks are winners. good luck  

No CAP, I’m not. Why did I pick the social issues you ask…. Hmmm …. Maybe because it’s obvious you are not an ‘independent’ when it comes to economic issues so I thought maybe you had some social issues that you were more liberal on. Call yourself what you want but you’re FAR right when it comes to your postings on here.

yodi,
Thanks for taking the time to respond.  I appreciate it.

you welcome, hope I could help

Phil,
thank you for response

Cap,  I don’t like paying for our super-sized, wasteful  "defense" budget.  Especially for the way Bush ran it : "he tried to kill my Dad",   &  Dick wants their oil  http://www.zerohedge.com/article/dick-cheneys-oily-dream  .
  So you pay my Bully the World  taxes,  & I’ll pay your Build America  taxes.   🙂

Peter/Chaps/Stranglers- I have been unloading Oct putters with the Vix drop anticipating opportunity to reload in a pull back off this recent uptick.
Anyone else looking at the same scenario?

boobersdad,

if your short put has no premiums, you are risking to be assigned stock after ex-dividend date, especially if the dividend is large. So be careful, sometimes it makes sense to buy the stock, and close the put to get the dividend, and after that you may sell call, or again sell stock,  and a put. I may be wrong, wait for Phil’s response.

ed3524,
There are no dividends left between here and expiration, so I figure that I’m in danger of assignment any day, which is why I was thinking about just self-assigning.  Thanks!

CRIS – in bed with Genetech (b’f Roche) with a hedgehog inhibitor for cancer (cancer docs are VERY high on this pathway).  20 clinical trials ongoing for many different types.  They were beaten down b’c they failed in one trail (very hard cancer to defeat) and they are waiting for others to come along.  ONE hint of working, they are at $3.  One other, they are bought.  Here is a good, concise writeup on them.

 

rn – I am already in them. I have DD once from 1.7.  I will again soon.

PHIL
Is your step dad improving? I hope so.

boobearsdad
To follow up on yesterday, I wish to comment that you should not to greatly panic about puts. Principle you only sell a put if you wish to buy a stock cheaper. I give you some examples with puts. DB dropped yesterday considerable for a German bank stock. I sold the Oct 55p for 1.60 lets see what happens.
RIMM a typical example not for every once play. It has been all over the map. I sold the Jan 11 Strangle 90/55 call for 4.16 and put for 6.54 Rimm dropped like a rock to 45.00. The put went up to 11.72. I sold the caller cashing 4.00.
The putter has still 4 month life. At 11.72 the putter has still 1.72 of premium. So wait and see is my policy. That is the most important part do not panic. As long as if there are still .20 of premium few people will buy so I keep an eye on it possible until Dec. On the other hand if you would be worrying you take that putter and roll it to say Mar 50 if you have any hope they survive. Out of my pocket I have to pay for the roll 3.00. That 3.00 comes out of my cash of 6.54 I already received. So I left with 3.54 plus the caller 4.00 and my new putter has a value of 8.75. I obvious can go to 47.5 or even 45 Mar putter without losing money. I do not have the stk. The secret here is plain calm and wait. I hope this helps you.

Pharm – follow up on the earlier bond question- re: you comment on support-
although TLT has hit support 1.  I may actually go long here for a 1/4 entry, and DD at 98 where the next line of support is.
Are these TOS chart support lines? If so, what study are you using. Looking to follow along here.
Thx.

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