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Testy Tuesday – Kan Keeps His Job, Yen Makes New Highs

Japan has the same Prime Minister!

That is big news after having 5 different ones the past 4 years.  With the last PM lasting just 9 months, word was Kan was going to challenge the record for shortest term after being forced into this election just 3 months after being elected the first time.  When we talked about this yesterday, the race was considered "too close to call" but the incumbent Mr. Kan ended up winning 60% of the vote – kind of makes you wonder how far off our own pollsters are with their early election calls

Now the stage is set for the Oct 4th meeting of the BOJ, where action must be taken to get the Yen under control.  Ozawa was clearly better for the Dollar, as he favored strong intervention to bring the Yen down including a program of both QE and stimulus and they Yen blasted to 15-year highs on the result of this election, now at just 83 Yen to the Dollar, down from 120 in 2007 (30%) with a 15% move up since May.  This is TERRIBLE for Japanese exporters, who get paid relatively less for everything they sell but it’s good news for commodity pushers, who get paid in devalued Dollars.  

To what extent is Japan’s deflation simply a function of their currency appreciating an average of 10% a year?  If their deflation rate is 2% then doesn’t that mean it’s really an 8% INflation rate masked by a too-strong currency?  Perhaps that’s why the people of Japan, who get paid in Yen and shop with Yen, strongly preferred Kan, who was only really opposed, in the end, by Parliament, where he won 206 to 200 – the Japanese version of the US Senate.  This means that, like Obama, it will be very difficult for Kan to get anything done despite his popular support and, also like our own Senate: "Having witnessed the shaky ground he stands on, opposition parties are licking their chops to begin their attacks on Mr. Kan," said Koichi Nakano of Sophia University.  

Doesn’t it make you feel good to know that, despite our cultural differences, politicians around the World are all the same – just a bunch of power-hungry, vindictive bastards who put their own interests ahead of the people who they are supposed to represent?  Like Obama, Kan still faces difficulties navigating what the Japanese call a "twisted parliament," where the DPJ has a minority in the upper house, following a drubbing—under his leadership—in July elections. This gives opposition parties power to block most types of legislation, much like our own filibuster-plagued Senate..

The Nikkei only fell 22 points this morning but we’re done with last week’s EWJ play, which was a gamble ahead of the election and, since the premise of the election change is gone, it’s no longer interesting.  The rest of Asia doesn’t mind a strong Yen – it means they get to sell more stuff to the Japanese.  The Hang Seng and the Shanghai were flat but the BSE jumped another 138 points (0.72%) to 19,346, still the World’s leading index.     

Not only did the Yen hit new highs but the Yuan moved up against the dollar on rumors that the Chinese will allow their currency to appreciate to head off talk of trade sanctions from Washington.  “China doesn’t want to see the relationship with the U.S. get hurt because of the currency issue,” said Lu Ting, a Hong Kong-based economist at Bank of America-Merrill Lynch. “There will be more space for yuan appreciation also because signs show the economy will have a soft landing.” 

Europe is flat ahead of the US at 8:25 and we’re waiting for retail sales reports as our indices are all hovering around 5% gains for the last 30 days, but already well over 5% off the late August lows, where everyone was panicking and my commentary on the sell-off on the 31st was: "I still think it’s all BS.  I’m still more in favor of buying off these levels than selling but I am getting VERY lonely over here."  Fortunately, the move since then has given me that hope we were looking for:

Russell 650 was the key to happiness we were looking for, now we’ll see if they can hold it!  Our 2.5% watch levels were Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650 but one day does not a breakout make although the NYSE already popped the 5% mark with the S&P testing yesterday so happy days may finally be here again if we can get over the 5% hump at: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666.  That 666 line on the RUT has been very ominous for us al year so we will be hedging up at these levels, using the 3 of 5 rule on the 5% line to flip back to bullish. 

Retail sales are up a better-than-expected 0.4% for August.  Well, BTE than economists but not better than we expected because we pay attention to hard data, not the nonsense that’s spewed by the MSM.  The Beige Book was pretty clear on the matter last week and just yesterday, one of our Members asked me if I thought it was a good idea to short BBY and I said:

BBY – I don’t know, I think electronics are selling so I’d go for the Dec $35s at $2.30 to give yourself a little room in case they do take off.  You stand to make $1.20-$3 if all goes very well and you risk a $2 move up that costs you about the same.  I like the idea better if they have a big run up (200 dma is $38.50) and there’s excitement to sell into but not so much as it is now.

As it turns out, BBY’s earnings are up 60% on a 3% increase in sales and the stock is up 10% in pre-market trading, looking very good to hit the $38.50 target.  Not all retail sales are sparkling though.  Gasoline sales were up 1.9% (go VLO!) but, as also mentioned in the BBook, durable goods dragged us down with furniture sales off 0.5% and appliances down 1.1%.  Still, core retail sales (ex-auto) were a huge relief – up 0.6% vs. up 0.3% expected by those expert economists.  Notably, the rise in retail sales exactly mirrors the 0.3% increase in wages in the August Employment Report, once again proving that nothing is better for the economy than hiring people and paying them well enough to shop. 

Of course, this is not the plan of the GOP or the Tea Party for 2011 as the Tea Party Express called for a repeal of Health Care Legislation yesterday, saying: "Unfortunately we will not be able to pass repeal legislation until there are 60 amenable senators to avoid a filibuster and a Republican president to sign it.  By the time such a majority is secured, Obamacare will be well on its way to becoming another entrenched, immortal entitlement program.  Therefore, a more immediate and comprehensive strategy is in order to ensure this train wreck of a law doesn’t leave the station.”

This repeal tactic is similar to the one planned for Social Security.  As Conservative pundit Karl Denninger pointed out last month, the attack on Social Security payments can be based on the 1960 Supreme Court decision of  Flemming .v. Nestor, which held that Congress reserved the right to alter, amend or repeal any provision of the Act.  According to Denninger:

There is no "debt" owed to those receiving entitlement benefits through these programs.

They are legally welfare programs which Congress can modify or even eliminate at any time without triggering any sort of Consttutional or "full faith and credit" problem, or any other legal obligation to those who have allegedly "paid in" to them over their working lives.
That is, your FICA and Medicare taxes are in fact a simple tax and your Social Security and Medicare benefits are in fact a simple welfare program. 

So the eyes are clearly on the prize this fall as Republicans look to fund those tax cuts by going after the $800Bn annual Social Security obligation…. oh, excuse me, welfare program but I wonder what will happen when that $800Bn is removed from the economy and what will happen to the $2Tn of assets that were paid in… oh, excuse me, taxed by the retirees and what  will happen to the $4Tn the government borrowed… oh excuse me, stole from the fund (lock box)? 

It’s going to be an interesting election season – be very careful out there!  


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  1.  Phil, good reference if you have the time….

  2. Phil/SKX, where do you see 2012 options in SKX? I don’t see them in thinkorswim or optionshouse. Were you talking about April 2011?
    You recommended yesterday in this comment: "Another One/Hoss – How about SKX 2012 $20/25 bull call spread at $2.50, selling Jan $20 puts for $2 for net .50 on the $5 spread and, if all goes well, you can be in just a .50 bull call by Jan (10% down from here) or possibly have to roll out to the 2012 $17.50 puts (now $1.80). "

  3. stjeanluc, great article….thanks for sharing.

  4. Phil--should I roll down the SQQQ oct 55 calls bought at $3.40 to  oct 50  and sell some puts as you stated  (if so what  would you recommend)

  5. Great paper StJean, thanks!

    SKX/Jvest – Yes, the Aprils.  They were at the end of the chain and I guess I assumed they were 2012.  Better actualy as you collect sooner if all goes well. 

  6. SQQQ/Savi – If we have another good day and you want to keep the hedge, best to go back to Dec, where you can flip to the $44/49 bull call spread for about $2.  That’s all in the money on the $5 spread.  These ultras are tricky to play veritcals if you don’t take the short put side so be careful but good job being pro-active about rolling at the inflection point.  Logistically, you started out with $3.40 naked and now you fall back to $3.40 on a $5 spread and, if the Nas goes up again, you’ll look for an even roll to a $4 spread or even a $3 spread if you have to.  The thing is, the Nas had to rise 5% to force your roll, it has to rise another 5% to force another and another 5% to force another.  So, even if you have 3% of your portflio in this trade, if the other 97% is invested in the upside and moves with the Nas, then you make 15% on 97% before you finally lose the 3% – that’s a good hedge!  On the down side, keep in mind that you are capping gains so, at the point where the market does flip down, you may be undercovered with this hedge if capped.

  7. ARNA getting sold off

  8. Woh! WTF just happened to ARNA?  They just 30% in the last 4 mins.

  9. Good Morning! 
    Nothing like a ARNA wedgie to start the day……. :)

  10. ARNA: LOCASERIN "Did not satisfy the (FDA) guidance’s Mean Efficacy Criterion"

  11.  FDA said it is effective by a slim margin

  12. Phil, Pharm/ONTY,
    Pharm missed my post yesterday so I’ll repeat: now at 3.75.

    September 13th, 2010 at 12:58 pm | Permalink  
    I sold the Nov. 2.50 puts awhile back, have a nice gain and want to close but with the stock at 3.68 now wondering why they are so high? Any suggestions? Thanks

  13. I mean I wonder why the short puts are so high?

  14. Hey all,

    I have two new positions this morning. We are looking to buy Direxion’s Daily Bear Energy ETF (ERY) and Short Sale Teradyne (TER). 

    Check out my levels, analysis, and more here.

    Good Investing!

  15.  INTC could have a good couple of couple of days, looks like market wants to run into earnings slow meltup

  16. ONTY/jomp – if you are up 50%, then by all means move on. ONTY has a few things working in the hopper….but if any thing gets delayed, then they are going under $2.


    Well, ain’t that a fine howdy do for the morning….ARNA getting taken out back and beaten….but never fear, the data are here.  That is the short interest in the stock, and ‘they’ wanted to take it down.  Let’s see if the rest comes in a swoops it back up.

  17. 2.8M shrs traded so far on ARNA, and mkts aren’t even open yet

  18. Wow, pharm thx for echoing Phil’s when in doubt sell half yesterday…. Still hurts, but only half as much:)

  19. ARNA – now why didn’t I buy protective Ps yesterday?

  20. Market Makers are such a bunch of crooks.
    By offering 3 contracts of Jan. 2012 DNDN – I just dropped the spread by over $1

  21. dndn – make that $1.25 -
    If I put the first limit order in, does my trade go through first??

  22. Pharm,/ONTY – Thanks

  23. Phil / ARNA – thank you very much for your advice.  I sold the stock at 7 for +100% gain and got into April ’11 7/11 bull call spread and reduced my long exposure by 85%.   Maybe time to buy back the high caller if you think the selling is overdone and it will rebound?

  24.  ARNA – Followed Phil’s rule to only sell puts if you want to own the stock,  I just sold the Jan 2011 $2.50 Strike Puts @ $0.75 which if put to me will give me a cost basis of $1.75 per share.  Any chance ARNA will not survive until Jan/11?

  25. Pharm,
    Des ARRY or SPPI have data or decisions coming out within the next few months?

  26. i tripled down at 4.06 on arna for a daytrade… Pharm are you doubling down or buying any with an expected bounce into the decision?

  27. Bought back the Jan 11 $10 calls on ARNA. Keeping the $5 calls because I think this will bounce.

  28. Just found this paragraph that could be a reason for panic (in the briefing docs):  When gauged by the standards of the Division’s 2007 draft guidance for Developing Products for Weight Management, the mean weight loss associated with the lorcaserin 10 mg QD and BID dose was about 3% greater than the mean weight loss with placebo. Therefore lorcaserin did not satisfy the guidance’s mean efficacy criterion. However, the lorcaserin 10 mg BID dose did, by a slim margin, satisfy the categorical efficacy criterion.  This was in BOTH (2) trials.  I see Opt is on the same page as I am.

  29. jr – I am buying $4 calls in Oct and Sept.

  30. Pharm- what is QD and BID mean on ARNA? Does it make a difference that only BID works? Tha ks.

  31.  Pharm…Okay now what? I sold sept 6 puts…close for a loss or wait it out til friday to see what the stock does?

  32. MAIL still going up 6.10 now good going

  33.  Pharm the options on ARNA is really ex, you buying naked??

  34. phil
    I have T shares at 26.05 and sold the Jan 25p at 2.2 and the 25 caller at 2.(almost no premium)  Does it make sense to roll both options to the 28s, or perhaps 27 on the putter?

  35. Does the FDA briefing document tell anyone anything they did not already know? We already knew that the only questions were related to efficacy rather than safety, right? And giving rats 7 times the dose to cause malignant tumor isn’t exactly news – won’t that happen with any drug (give then x times the normal dose, and see them get cancer?)
    Pharm – if the panel now rejects ARNA, how much more do you see it falling? Will it breach 2? Or 3, perhaps? (I am getting into put spreads, and want to have a good idea of the lower bound).

  36. Pharm- got my answer on qd and bid.

  37. once a day (QD) or twice a day (BID). 


    Sundevils – risk appetite.

  38. Good morning!

    Of course the minute I dare to put up new levels, the market finally pulls back!  That’s OK, we expect a 1% pullback off the 5% lines – it’s when we get a bigger retrace than that we worry. 

      • Up 5%: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 
      • Up 2.5% (MUST hold): Dow 10,455, S&P 1,100, Nas 2,255, NYSE 7,000 and Russell 650

      Middle Range: Dow 10,200, S&P 1,070, Nas 2,200, NYSE 6,800, and Russell 635

    We had the NYSE yesterday but lost it at the open and the S&P was the only other index that got close to 5% so we’ll have to see what Business Inventories tell us at 10 (not much as they are July numbers) and tomorrow we are busy, busy with the NY Fed, Import/Export Prices, Industrial Production and Cap Utilization as well as Crude Inventories. 

    That means we have enough potential for good news to take us higer but there’s no way to tell what the NY Fed will say (SF Fed was not very good yesterday.  Thursday is the Philly Fed, another wild-card with low expectations. 

    Oil is hovering at our $77.50 spot but copper took a hit, back to $3.44 with gold up to $1,266 and TLT on the move up again so there is still plenty of worry in the world and, just like we looked to hold upside plays until we saw 3 of 5 of the 5% downside levels break (they didn’t) we need to try to not panic out of bearish covers until 3 of 5 of the upside 5% levels break.  In a range-bound market, we WILL go to the top of the range and the bottom of the range and none of that matters until the range breaks.

    I still like SQQQ until they fail $50.  The Nas is up 8% on the month’s move and that’s ripe for a pullback and, even if they hit 10%, then we still expect a pullback to 8% so the $50 mark is very significant on SQQQ, whcih is about $47.50 on the QQQQs and 2,285 on the Nas. 

    Looking at the above chart, we have a runaway Russell so, if we fail to hold 650, they are a good candidate for a pullback.  TZA is at $29.88 and the Oct $27/33 bull call spread is $2.20 and all in the money.  If TZA drops 7.5% to $27.50, that’s a 2.5% move up in the Russell to 666 and that’s another big test so, at that point, a $2 put could be sold to offset (currently the $28 puts are $2, so figure the $25 or $26 puts).  So this is a bet that the Russell won’t climb 5% by October expiration with 200% upside protection on the vertical which is upped significantly if the put is later sold.

    Oops, we’re past inventories and the NYSE is back over so let’s watch that S&P to take us to the next level. 

    Remember – these are ideas for hedges to cover long-term BULLISH positions (see Portfolios Tab).  We end up talking a lot about bearish plays as we move higher but keep in mind that we are still generally bullish in our outlook but markets don’t go straight up and there’s no reason not to try to take advantage of the dips along the way

  39. rn – range is right, and you are correct, it is all data we already knew.  Remember, the shorts will move the the stock anyway they want.  Retail started stepping in at $6, so they are wiped out.  Same with DCTH.  Unreal, unfortunate, and very sick playing.  It is all about the politics now within the agency.

  40. Phil, can you re[post your short gold play?  thanks!

  41. Phil- I read an article yesterday where the author was calling for POMO"s Wednesday and Thursday- most likely on your site or Seeking Alpha. I totally understand the logic as a move over 1130 would cause all shorts to scurry, momentum would take over, and the FED could relax for awhile with the market. Does anyone have access to this type of information other than the FED committee or is this speculation on the authors part? Thanks in advance.

  42. Big ARNA melt-down!  It does look like a BS hyena attack because the headline is "FDA Staff Raise Safety Issues" but it’s a rehash of why they are having a reveiw on Thursday in the first place, not NEW news:

    WASHINGTON, Sept 14 (Reuters) – U.S. drug reviewers cited memory problems, tumors in rats and other safety issues in an initial review of Arena Pharmaceuticals Inc’s (ARNA.O) experimental diet drug, sending the company’s shares down nearly 36 percent.

    Food and Drug Administration staff said in a review released on Tuesday that heart-valve disease, psychiatric and memory problems and rat tumors were "three noteworthy safety issues" for an advisory panel to weigh at a public meeting on the drug, lorcaserin, on Thursday.

    Agency reviewers also said one of the doses Arena tested met agency criteria for effectiveness "by a slim margin."

    The medicine is vital to Arena, a small San Diego-based company with no approved drugs on the market. Japan‘s Eisai Co (4523.T) holds U.S. marketing rights to lorcaserin.

    Shares of Arena were down 35.9 percent at $4.39 in morning Nasdaq trading. (Reporting by Lisa Richwine; Editing by Lisa Von Ahn)  

    This is the genius of stock manipulation – use a credible story with excellent timing and, if you couple that with a little panic-like selling to get the bacll rolling – you can get some amazing results!

    Also worth reading on the subject are articles in Seeking Alpha against and for the stock.  Based on the timing of the against article, the title "Arena’s Lorcaserin;  Therapeutic Value Zero?" and the fact that this is the first and only article written by this author, I’d say it’s very likely that this too, is another hyena attack.  

    That makes me kind like ARNA here ($4.12), even though it’s crazy risky, it’s certainly a lot less risky than it was yesterday and now you can sell Jan $2.50 puts for .70 for a net $1.80 entry.  That can be paired with the 2012 $1/5 bull call spread for $1, for a net .30 entry on the $4 spread that’s $3.12 in the money at the moment.  Worst case is you own ARNA for net $2.80 and if you plan on doing a DD at around $1 then it’s 2x for avg. $1.90 and hopefully there will be $2 puts to sell.  Overall, it’s a play that, even if they do get rejected, they will live to fight another day – which is not always the case with biotechs so be careful! 

  43. Currency markets still relatively quiet – no convincing plays at the moment.

  44. Dear god, Yen just broke 83!   Maybe we can have an 80′s flashback and Japanese just start buying up U.S. companies and assets en masse.    Better them than the Chinese, IMO…

  45. DNDN/Samz – that is nuts!  I don’t know if there’s any real order to the fills – very much depends on your broker’s acces to pipes.

    ARNA/Terra – As I said above, I don’t think this move is real but maybe I’m wrong about Thursday being the actual day – for that I defer to Pharm.  Also, Pharm, what happens to ARNA without Lorcaserin?

  46. Phil, Nice call on BRCM and GLW earlier

  47. ARNA   I havent’ been following the stock, but since people seem to see value, aren’t the Sep 4s for $1+ which are still OTM and expire in three days a good way to take a bullish position?

  48. Pstas
    From last evening’s "nighthawk" post – I agree. the degradation of personal responsibility is a cultural deficiency that has been built into our society by the never ending rant by our politicians in the trade-off of promises for votes. The vast majority of our population is ignorant when it comes to economics, so they believe these perks are affordable, and are "rights" that exist just because they are citizens of the USA. The politicians ( both parties ) have created this mind-set, and our balance sheet has become an unmitigated disaster.

  49. Pharm… taking your advice, I phased into CERS today, and will buy on dips.

  50. I am keeping an eye on my MAIL today – will blow out with a profit if it takes a jump.

  51. kinkistyle / Yen
    I have a feeling the strengthening Yen is somewhat coupled to the strengthening Yuan, so this could go on for a long period. They are very close trading partners.

  52. ONTY/Jomp – They are in a nice uptrend and the 50 dma is $3.50 so I wouldn’t worry unless it breaks down.  Puts are high because a sharp up move still increases the implied volatility of the stock overall, raising puts and calls.  

    T/Drum - I would hold off until they hold the highs.  If you are in them for the long run, then you can roll the $25s to any April combo you want so there’s no major hurry to switch unless you REALLY don’t think you need the protection at all.  Keep in mind that you have a free cover as they paid you $4.20 and they are now $3.70 for you to buy them back (leaving you in the stock at net $25.55 with no callers or putters).  The Apr $27 puts and calls are an even roll so just keep your eye on that and  make sure the roll doesn’t get too expensive on you but, otherwise, your net $21.85 entry is well protected for a very likely $3.15 gain so just sit back and enjoy the dividends.  

    GLL/Trad – I don’t know what it was but you can go for the GLL Jan $32/38 bull call spread at $3 and sell the $33 puts for $2 for net $1 on the $6 spread that’s $4 in the money with gold at $1,270 so figure $1,300  gold will drop GLL to $33.  We’re getting a big dollar sell-off today but testing the 200 dma at 82.  If that fails – then we have trouble!

    POMOs/Jthom – In theory, only the Fed Governors know but, since there are 20 of them and they each have a dozen clerks, the chance of "THEM" not kowing is very slim indeed.  Either way, the Fed didn’t reserve the power to do the POMOs without the full intention of usuing them and, if they were going to use them – why wouldn’t they do it when it would do the most good?   And, for that matter, why wouldn’t they let the info slip so they could "coordinate" the efforts with the fundies, who are all motivated to end Q3 with a bang. 

    Yen/Kinki – Yes, we have several bridges to sell them…

    Speaking of Japan – EWJ cambe back strong already.

    BRCM, GLW/Jomp – Thanks!  Day 2 of SOX leadership is good for USD too.

    ARNA/Eph – Are you saying buying them?  I don’t like paying 25% premium for 4 days at all!  If you want to gamble $1, how about the Oct $4/9 bull call spread for .95?  You limit your upside but you stand a pretty good chance of recovering .50 if things go against you too. 

  53. Gel/ FX
    AUD/USD going balistic, next resistance levels upwards are 95 then 96.50 then who knows …. parity?
    My AUD/YEn play is also doing fine.
    USD/Yen, I have a entered a small position (way too early)
    Equity Markets are moving up on good volume. September optimism maybe?

  54. Tx on SQQQ

  55. Phil
    with all  of our indices up why do you think XLF is lagging?
    thank you

  56. Good morning,

    IWM  63.33, 63.87, 64.41, 65.46, 65,83, 66.39 and 67.09


    655 on the Russell is the key; watch for a possible flush before the push higher

  57. ARNA/Eph – Are you saying buying them?  I don’t like paying 25% premium for 4 days at all!  If you want to gamble $1, how about the Oct $4/9 bull call spread for .95?  You limit your upside but you stand a pretty good chance of recovering .50 if things go against you too. 
    ARNA…..I’m sorry..the Sep $4 PUTs selling for $1.40, and I was surprised that selling those was not mentioned as an entering position if one was bullish on the stock.

  58. Phil, what is point buying ARNA 2012 1 call for 3,2? Buying stock 4.2 is same and 4x less margin. I mean same risk  is ordinary buy/write.

  59. sry, buying 1 call is equal margin to buy 100 stock

  60. Phil/Pharm what do you think of Orex here? I know arna is your favorite but if we go by what happened to vvus then we could expect orex to fall if arna is not recommended but recover in a month or two. If arna is recommended then we might see orex get an initial pop as well…

  61. Lflantheman,
    sorry for bothering you again. any APPL suggestions now? going into earnings?

  62. Good Morning!
    stjeanluc/reference – Good article, thanks for the link!
    samz3700/first — in theory, yes, your order would go first. However, in practice, it doesn’t always happen since there are multiple markets for the same order and yours can only appear on one at a time. This is where good broker "execution" comes in.
    gel1/nighthawk — Well said my friend. Disturbing isn’t it?
    I’m starting to get a little altitude sickness at these levels but we’re only 120 off that 10700 line. I wouldn’t doubt we bump that before seeing a pullback. The bots are slowly creeping up on 10,600, watch for the club if they don’t get over it before the 2:00pm test.

  63. Why is my comment awaiting moderation? I remember someone mentioning that a lot of links can cause this but I don’t have any.

  64. Phil / CHK – do you think we have seen the bottom in this stock?  we’ve been in a pretty tight range btw ~$20-$22 since June.  I hold Jan. ’11 22.5/27 bull call spread since late June/early July (2 trades).  Was thinking about buying back the short call which I have nice gain on and riding the long calls out from here.  

  65. Yen/Phil:  LOL.  I’ve long been thinking about starting some sort of importing business of Japanese products into the U.S. because of the demand among young people, but this Yen issue forces me to turn the tables and start thinking of exporting U.S. good out to Japan.  Unfortunately, I can’t think of anything we have that the Japanese would want.  All our stuff is made in China anyway.   You can download porn off the web now too…
    A microcosm of the U.S. manufacturers problems.

  66. stjeanluc - RE: your above cited report- despite obvious biases and some rather trite handling of market forces I recommend it as a good read for those on both sides of the political spectrum.
    Thanks for bringing it to my attention. Lots of fodder for more after hours discussion.

  67. kinkistyle/exports — I think you can export 50′s-70′s nostalgia, but that was a thought several years ago, not sure if it’s still a fad over there.

  68. ARNA has nothing else in the pipe worth mentioning.  They do have data coming out in Q4 for diabetics (BLOSSOM-DM), so that is another set that could propel them, but on pg. 29 is clearly states that

    The results of two Phase 3 studies are consistent and confirm the efficacy of lorcaserin 10 mg bid and 10 mg qd compared to placebo after 52 weeks of treatment, in the co-primary weight loss endpoints of average weight loss compared to baseline, the percentage of subjects who lost at least 5% of baseline body weight, and the percentage of subjects who lost at least 10% of baseline body weight.

  69. lionel / AUD
    Damn… I missed a good one!  I thought the election results would be a negative, but I guessed wrong.

  70.  I’ve mentioned this before but still really confused. If JNK tracks DIA to within a fraction of a percent over two years, and JNK pays 10.8% yield and DIA pays 2.45% yield, then couldn’t one have simply bought X shares of JNK and sold short X shares of DIA and made 8.35% with no risk? Does this represent the aggregate buildup of the amount that the overall market is discounting the risk of bonds??

  71. This is a triple witching as well, so should be nice and violent.

  72. Gel/AUD
    You were right. Election results were not positive for the currency. But job creation, GDP growth were higher than consensus which means higher chances to have a rate hike before the end of the year.
    But today s move is just the USD taking a 1% plunge against EVERY major currency (even Gold).
    On an FX basis, Oil, Copper and equities are down today by .5% on better than expecetd US economic news.

  73. rainman:  I was thinking of that.  Kitschy, retro stuff from antique and garage sales is one of the uniquely American things that I can demand a premium for. Also Americans are obsessed with health and exercise fads.
    On a side note, my wife is apparently eligible to receive a "stimulus" check from the Japanese government because she is having a pregnant.  Looks like my first export will be a baby!

  74. MA heading back to 200 :-)

  75. DNDN – my broker is IB – you know one of the biggest options houses :)
    Phil – seriously – what should i do here about getting out of the Jan 2012 25s calls. The spread is now bid$18.45 vs ask of $21.20 - now deep in the money so kind of hard to get out of them – but i did good – bc my basis is $12.70 -
    I sold the nov. 45 calls for $3.10 and nov 41 calls for $5 to try and burn off the premium – but I would really rather take the money and run.
    Who has priority on execution if an order does come through? Is it the first one sent to the exchange or what?

  76. biodieselchris,  revtodd
    does it make sense for IRA acct to buy JNK , and sell deep ITM (bid/ask spread is large) getting over 8% return?

  77.  "Today we have the opposite happening. Interest rates have fallen to the point where the RFP model would predict that the S&P 500 should be more than double where its current value of 1,035. Other than the possibility that the model is wrong, this leaves us with three possibilities at the extreme.

    Bonds are valued fairly and we are heading into a catastrophic double dip recession and earnings on the S&P will fall by 50%
    Bonds are in a bubble and rates should be much higher
    Equities are undervalued"

    PSW doesn’t so polls, but maybe you can vote for which one you think?

  78. Kinkistyle/ Congratulations to you and your wife. Just out of curiosity, how much is the baby check in Japan?

  79.  Above, those are supposed to be 1,2,and 3 in front of the coice but the comment generator ripped out the numbers. I’m voting for 3. The author claims/predicts a FMV of 5% for treasury rates (20% drop in bond price from here) and a higher S&P500.

  80. lionel:  Thank you!  Its actually part of the National Healthcare system — like a baby insurance benefits check.  Its around 420,000 yen per baby, which in todays exchange rate comes out to around $5000 USD.  Hmmm… how can I convince my wife to have 7 more babies…. :D

  81. CMG has touched $170.. I have short 3x $165s .. I’m not sure whether to roll now to Oct $170s or wait until Friday’s expiration to get all of the premium. $170 is insane for a food chain..

  82. kinkistyle/babies — I’ll bet you can find a group of american men that would help you export more babies!

  83. ARNA pipeline-yes, they do have ADP597. Their deal with JNJ was not very strong. JNJ jas been able to run many phase I studies without taking it phase II and triggering a milestone payment. But they have to decide before November 1 if they take it to phase II or release it back to ARNA. If they release it back, it will be a vote of no confidence. But they did run 4 or 5 phase I trials, so maybe they see some value there. 


  84. kinki/7 more — I didn’t get to that comment before I posted about american men. I Didn’t mean babies for YOUR wife, just to Japan in general. 

  85. Kinki/ Thanks for this information. I am sure you will find a way to convince her :)

  86. Coal, Peebody on CNBC at the exact moment im researching coal demand in India
    India’s spot buying has been a critical price driver in the coal market for the past three years. Any rise or fall is soon reflected in international benchmark prices.
    Last week benchmark October South African coal prices — a key supplier to India — fell by over USD 5.00 a tonne in two days to USD 80.00 because a widely expected resumption in Indian buying from the beginning of September had failed to emerge.

    "Everybody’s been waiting for new Indian buying but they are still completely out of the market so where is all this South African coal going to go?," one major European trader said.

    "There was no business done at the September Delhi coal conference, a lot of talk about 2011 demand but they don’t seem to want anything for the rest of this year," said one of South Africa’s largest coal producers.
    Producers and traders who had been counting on renewed Indian buying to prop up prices said they were feeling pressure to sell South African coal wherever they could even into the depressed European market, and brace themselves for further falls in the value of their long positions.

  87. hmm… 2013 leaps are out, didnt notice that before

  88. XLF/Z4 – New bank regs mean they just won’t be able to earn like they used to and, until they prove otherwise, it could be a long road to recovery.

    ARNA/Eph – I’d rather sell 2 Jan $2.50s than one Sept $4 but if you are super bullish then it’s not so bad. 

    ARNA/Pahur – Actually, as the stock goes down the $1 call will gain a little premium while the stock itself will just lose money.  what happens to a call with a .99 delta like those is that the delta drops and you lose less on the way down.  It’s not the kind of thing that’s usually worth taking advantage of but this stock happens to be that volatile and that cheap but you are right about the margin issue – if your account is going to give you a margin credit for the stock and none for the calls and you are tight on margin – that’s a consideration.   Of course, if you have an account that’s tight on margin – why the hell would you be taking a risky play like this one anyway? 

    OREX/Jrom – That’s interesting as they got slammed as well.  Prices not as good as ARNA so I’d wait and if ARNA gets slammed and OREX sells off too, then it’s worth considering at a lower price.   Of course keep in mind that I don’t really look at fundies on these biotech/FDA trades, I treat them all as craps rolls, looking for decent bets with the assumption that they are all binary events. 

    Moderation/Rain – I have no idea why.  Is it possible you weren’t logged in?  

    CHK/Terra – I like them down here for a long-term hold but I would be concerened about the spread as you need a pretty big breakout.  Rather than give money to the caller (not that it’s much), why not spend $2.50 to roll down to the Apr $19s ($3.80) and get back $1 by rolling the caller to the Jan $22.50s ($1.30), which puts you in the money on a $3.50 spread for net $1.50 (plus your original cost) and you have 3 months to roll the caller to widen the spread. 

    Exporting/Kinki – Well they do love those comics!  I think almost anything from would sell well in Japan.   Another thing I’d sell in Japan is fine silverware – talk about an open market!  You’d have to market it up to convince people there is a need but if you could get them to become wedding presents or something…  It’s a good point though, what can we make that they will buy? 

    JNK/BDC – That’s a very interesting idea.  I suppose it’s close enough but there are some pretty big gaps over 2 years and JNK under-preforms by 10% in the 5-year view and by about 4% in the 1 year view.  Still, an interesting idea that would take a long time to test.  How about long DIA and short JNK?  That would seem like a can’t miss for a percent or two as the dividends keep JNK from getting over DIA in the long run but, looking at the 2-year, there are still exceptions.

  89. Phil / WWE – your thoughts on this stock?  I’m thinking about a buy write on this one.  10% yield. 

  90. Phil- do you have a regular, reliable source for S&P composite earnings forecasts?

  91. Phil: Sorry for a out of topic question. Is there a better way to contact the site-admin than the form available on the "Contact Us " link on your website? My membership dues have been charged twice. I sent a message through the form in "Contact Us" link yesterday – but I didn’t get a response.  If there is a better email contact, I can send a email again.  Thx

  92. kinkistyle …. Congratulations!  Wishing you many more!
    Importing into Japan is almost an impossible task.  I have done it, but the government makes it ALMOST impossible. They really want "home grown" products. I had medical, dental and pharmaceutical products that were needed my them, but it took years to get the import license. Better to choose a different country, if this is your objective.

  93. Copper got a big reject off $3.50, oil rejected at $78, gold hit $1,276 and nat gas touched $4 and got blasted back to $3.85 today.  Dollar jammed down against the Euro is what pushed the commodity highs (Euro at $1.30 again, Pound at $1.557).  Another thing that’s going to be tough to get over is AAPL $270 and if AAPL can’t get over $270, it’s hard for the Nas to make progress.  Nas is at the 2,300 line but needs AAPL to get moving so let’s keep an eye on them.

    RDWR flying – must be a buyout rumor

  94. JR,
    You think they’ll take another shot at RUT 655?

  95. ARNA/  I like selling Sep 3 Puts @ .50  – leaving you open to a net $2.50 entry.  And you can fund Phils suggested 2012 Call spread at some 1 to 2 ratio (1 spread for every 2 puts).

  96. coal/kustomz – there is a lot of coal sold in the black market in India. Factor that into your research. See, for eg.:

  97. Just looking for excuses to be cautious at these levels,  both the YEN and Euro gaining wont help the situation

    Industrial output in the 16-nation bloc remained flat in July after a 0.2% decline in June, Eurostat said Tuesday. Economists were expecting production to edge up 0.1%. June’s decline was revised from 0.1% reported initially

    Japan’s industrial output fell 0.2
    percent in July, revised data showed on Tuesday, indicating
    production may be slowing down as Japan’s export growth

    Manufacturing is at the heart of Mexico‘s export-driven economy and while that sector expanded 0.4 percent in July from the prior month, growth in a trend reading from the statistics agency slowed for the ninth straight month.


  98. Phil, C is down 1% today to $3.95. From yesterday’s play, can you confirm whether you meant to sell $5 CALLS and not puts?
    "C, on the other hand, looks nice at $4 and I like the 2012 $2.50/5 bull call spread at $1.25, selling 1/2 the $5 calls at $1.40 for net .55 on the $2.50 spread and a break-even on the 1/2 assignment at $5 way down at $3.62 as your 2 $2.50 calls would be about $3.50 as that would return $2 on 2 calls to offset the loss of the $5s ($1.50) and pay back the .55 you put in!  To the upside, it’s got almost 400% upside with worst case owning 1/2x C at net $3.50. "

  99. Baby exports/Kinki – Not a bad plan!

    DNDN/Samz – One problem with IB is they seem to route their orders internally before hitting the open market.  That is sometimes not to your advantage.  Best way out of the 2012 $25s is to sell the $30s.  If you can get $18 for the $30s then you are pretty much left with a $5 spread at $3 and the rest is off the table, not to mention your sale of the $25s for $18 is already getting a $2.40 premium for the position and the extra $5 is just gravy if you get it.  I don’t know the exact execution rules – in theory it’s first come – first served but, of course, type of order and size of order paly into it. 

    Link/BDC – I don’t know where that was supposed to go but it went to coments.  Of the 4, I’d say bonds are in a bubble is my #1 choice, followed by Equities are undervalued but certainly not by 50%. 

    Babies/Kinki – Forget the wife and find out if you can legally marry a guppie.  They have about 40 babies a month!  8-)

    CMG/Rav – Well we are looking toppy so I’d hang on as long as they don’t crack $170 and hold it.  You have a roll tot he Oct $170s for + $1.50 or so so as long as the net roll stays over $1, not so bad. 

    ARNA/Opt – Thanks, that makes them sound way more attractive! 

    Coal/Kustomz – That’s interesting, I wonder what’s up with that?

    WWE/Terra – They are over their 2008 highs but not over 2007 earnings so not one I’d go for.  Revnues are off so it’s all cost cutting but at least they are debt free.  For me, they don’t have good options to sell as they are thinly traded with wide spreads and they are right between the $2.50 strikes so I’d say stay away unless they crash, then worth another look.  

    Earnings forecast/Pstas – No such thing that I know of.  I pretty much just sort of go through my own expectations based on reports as they come in but not for a forecast other than "better/worse."   Probably Zacks has something good along those lines. 

    Admin/Etrad – Greg only works part-time so maybe he didn’t get it yet.  admin at philstockworld dot com is the best way to reach him by Email.

    Japan/Gel, Kinki – How about export?  I’d love to get Real Gold in the US.  If they still make it, it was a vitiman soda drink with ginsing or something.  I think that’s a cool thing to market here – a soda with some % of daily vitamins…

    1:30 volume on Dow is 102M so a little slow today and, of course, stickable

    ARNA/Rexx – That works but there is the danger they drop to $1 on bad news. 

    July/Kustomz – We already know July was global slowdown month.  So far, it looks like it was a dip and not a trend. 

    OH NO – It’s El Erian!!!! 

  100. C/Jvest – Damn, sorry about that.  It was selling the $5 puts, of course ($5 calls are just .46)

  101. rn, thanks for the link  …keeping a close eye on both China and India.. inflation is the fly in the ointment for both India and China..keeping a close eye on production and prices for 2 of the fastest growing economies..

  102. question for anyone….I trade with TOS and the account is titled as an LLC…now they are saying that is considered a "professional traders" account and to get real time quotes one must pay 200/month. This is new from TD Ameritrade as of this month. Anyone else trade thru an LLC and receive this notice? Does IB or options house do this? I love TOS but I don’t trade enough to warrant that fee… thanks

  103. kustomz – inflation is worse in India than the figures suggest: the govt uses the Wholesale Price Index rather than a CPI, and the WPI doesn’t include most items the consumer actually uses.
    It is cheaper for me to buy a condo anywhere in midtown or downtown Manhatten than in Mumbai or Delhi

  104. CSCO to pay a dividend:
    (Reuters) – Cisco Systems Inc (CSCO.O) plans to begin paying a dividend for the first time from 2011, returning some of its growing cash hoard to investors.
    Shares of the company climbed 3.5 percent after CEO John Chambers said on Tuesday the time was right to start paying a dividend to shareholders in fiscal 2011, and sees a dividend yield of about 1 to 2 percent.

    Chambers, speaking at a financial analyst meeting, said he would not alter his business strategy despite near-term challenges in the economy and "a couple bumps" over the next year.

    In August, the CEO known as one of Silicon Valley’s strongest cheerleaders sent jitters through markets after he warned of "unusual uncertainty" in the economy and industry, stoking fears that a recovery in tech spending could wane.

    In a prepared presentation on Tuesday, Cisco said it was seeing "mixed signals" today. But Chambers said the company would remain focused on long-term business trends.

    Cisco shares climbed to $22 after the dividend comments.

  105. There are times I’m grateful for my basic membership. For instance, when part of a conversation with someone named Kinki about marrying a guppy appears. ;-)

  106. Phil/C – since the strike prices on the C 2012 options are both pretty far out of the money ($2.50 and $5), what do you think about the March 2011 C $3/4 call spread at $0.67 selling the $4 puts at $0.44 for net $0.23 on the $1 spread. I believe it has the same breakeven at $3.62 but matures 9 months sooner. Am I getting the breakeven math wrong?

  107. Phil we had a slump in July but food prices continued its uptrend along with commodities (cotton oil food etc)  I think a dip will become the trend, are we to believe wages are keeping up with inflation in India and China? History has shown that higher prices (inflation) cause slower growth and liquidity issues.

  108. Oil is moving more crazy than usual today! 20 cent pops in a short time both ways multiple times today…..

  109. Phil,
    Would like some objective guidance on my epec sht trm hedge Oct TZA 32/41. I also have adequate LT protection for portfolio in the form of Jan/11 hedges.
    If I accepted the 5% levels (3 out of 5 holding for 2  days  )as a realistic inflection point that mkts have  turned bullish (economically correctly so or not) what would your counsel be :
    1.Man up and close out
    2. Roll forward  to keep option open that economy will in fact often. If so, roll roll what?
    Thanks again,
    Ken (aging newbie)

  110. Phil,
    Would like some objective guidance on my epec sht trm hedge Oct TZA 32/41. I also have adequate LT protection for portfolio in the form of Jan/11 hedges.
    If I accepted the 5% levels (3 out of 5 holding for 2  days  )as a realistic inflection point that mkts have  turned bullish (economically correctly so or not) what would your counsel be :
    1.Man up and close out
    2. Roll forward  to keep option open that economy will in fact often. If so, roll roll what?
    Thanks again,
    Ken (aging newbie)

  111. Phil / QE2   Jan Hatzius (GS) comment that $1trillion Fed purchase of Treasuries coming Nov or Dec.  Is that why gold is taking off? ie goose the mkts and currency debasement the only major political tool left now we’ve gridlock on big fiscal initiatives.  If so, stocks could rise further and the dollar tank (which we need if exports are to increase).  Should I buy ABX today?  Looks like this dollar weakness may put a floor under oil stocks also.

  112. Phil
    What are you thoughts on the banks?
    Is there any trade on BAC?
    Can you recommend a spread on BAC or any other banks?

  113.  MSFT and CSCO paying out dividends may mean merger Mondays are going to be far and in between 

  114. rn273/India- inflation: tell me abt it. My parents are in Bombay now on vacation and they are just blown away by the prices of produce and groceries. Way too expensive to live there. And don’t get me started on the real estate. A 1BHK flat recently went for 2 crores (over $400,000).

  115. Export/Phil: By the way, Real Gold is manufactured by Coca-Cola.  No Kidding! Check it out:
    But therein lies the issue.  Everybody American I speak to always has something they want from Japan.  Be it electronic devices, toys, manga, clothing, snacks, etc…  When you think about it in this way, its no wonder yen is rising in value — there is huge demand for Japanese goods.  I really wonder how high the yen could go without BOJ intervention. Maybe 60?  Maybe 50??
    When I ask my friends and family in Japan what they want from the States, after a lot of hard contemplation I hear "I really like the smell of American fabric softener sheets" or "You know, American deodorant sure is strong".  IOW, Americans are smelly and have lots of good to cover it up, LOL…   What we Americans have to export is mostly intangible I think: services, ingenuity, invention, HEDONISM.  I was kidding that maybe we could mimic China and use cheap labor as a way to grow out of our mess, but maybe thats where we’re headed.

  116. Phil,
    For hedge, what do you think about TZA Jan 11, 23/30 bull call spread for 2.78, sell Jan 11, 23 put for 2.70.  Net 0.08 for $7.00 spread that 6.66 ITM?

  117.  Phil,
    RDWR rumor is HPQ and IBM possibly competing for it--$1B.
    I think HPQ qould rather buy cos. than buy its shares or issue dividends:P
    Trying to see if I can sell sept. 35 calls, buy back month 30s.  Should work well if nothing is announced by Friday.  Probably still able to roll out into a spread if it is announced by Friday.  Plus there is a chance of higher bids.
    What you think?

  118.  Phil,
    However, RDWR Sept 35 P trading a rich premium

  119. Fees/Sundevils – I’ve seen this done to people.  I imagine they are scrambling for dollars and tightening up the rules (gotta pay those merger fees!) but make sure you check the competition before you switch as it may be the same all over. 

    CSCO/Deano – Nice!  That’s why I love companies with cash – it’s bound to come out one way or another. 

    LOL Snow!  We were just talking about importing babies to Japan to get the stimulus checks….  See, nothing strange!  8-)

    C/Jvest – It’s fine but pretty bullish as you pay the average of ($4.23 + $3 / 2) = $3.62 if it’s put to you above $3.62 and below that you begin losing money and your basis jumps to $4.23 below $3 (but then you can DD and drop it back to $3.62 anyway.  As long as you don’t mind that then it’s just fine.

    Wages/Kustomz – I think wages in the 3rd world have miles to grow.  It’s not like they are paying them $20,000 a year – it’s like $2,000 a year and, since a factory could (before the madness) afford to pay workers $40,000 a year and make a profit, we can expect more FoxCon situations where workers strike and are rewarded with doubled wages.  Right now it’s a golden age for Capitalists, where they can exploit the workers of other nations without penalty but that won’t last forever and workers of the world will unite once again – just the ebb and flow of things in the long run. 

    Oil/Jrom – You are right, bucking like a bronco! 

    TZA/8800 – As long as your long gains are offsetting hedge losses at the inflection points, then you are probably correctly hedged.  Once we get over then, as you say, it’s time to man up but the Oct $32/41 bull call spread is $1.25 on the $9 spread and that can be rolled to a an Apr $25/32 spread at $2 for .75.  I’ll assume your basis is about $2.50 so that would put you in the $7 spread at $3.50 and you can sell Apr $18 puts for $2 if you are so inclined but there’s no real need unless TZA falls further and then you get a better price.  TZA has to fall about 20% more to cost you that $3.50 so the real question is – do you make more than that if the RUT goes up another 7%? 

    Dollar/Tusca – Well looking at TLT it’s game on again with the dollar dump but we got hit with a lot of stuff today with Japan, China, the Fed….  Seems to me it’s more games by the bond pimps to give them a chance to unwind.  Of course, don’t bet against El-Erian – that guy’s got POWER!  I was liking RTP on the Aug drop as they seemed more sensible than chasing pure gold plays but they are testing their own top now.  ABX is a great company but pricey at $45 and my other favorite, HMY is also getting away.  So, on the whole, my answer is CCJ (uranium, not gold), who are still very cheap and just breaking over the 200 dma for the first time in a year. 

    CCJ is at $26.56 and you can sell the 2012 $25 puts and calls for $8.70 for net $17.86/21.43.

    Banks/QC – I still don’t trust them.  I like C because they are too big to fail (we hope) and have a close floor of zero but we’ve already seen BAC fall apart over the past year, falling 30% lower than C for the year (YTD view).  I think the problem is BAC picked up MER and maybe now, with FinReg, that wasn’t such a good idea.  Remind me tonight and, if I have time, I’ll look over the banks and see if I can find a bargain. 

    Bombay/Nicha – As long as the neighbors don’t cook curry – that smell really carries!  8-)

    RealGold/Kinki – Damn, Coke bought them?  If that’s the same one I used to drink I can’t believe they don’t do that here.  You are right about the Yen, Japan is a very strong export economy and that washes away a lot of sins.  What we do export to Japan is music and film – that’s pretty much America’s biggest export and Japan is one of the only countries that doesn’t just copy it and sell it on the black market. 

    TZA/Bob – That’s exactly the kind of hedge I do like!

    Feels like a little 2:30 stick action.  Dow volume just 122M.

  120. Looks like NUE just had a flash crash.

  121. BWA question – I entered the Sept 45/47spread w/put sale but rolled when it seemed BWA wasn’t going to hold up. From that trade i have a .26 gain. Now i am in the Oct 44/47 for -1 cost. This could be closed today for abt 2.25 but i think, would be more profitable to hold to expir but also risky. What can you attempt to teach me re the pros & cons of holding or TM&R?

  122.  I can read "real gold" but that’s where my japanese stops, hiragana and katakana. No kanji yet :(

  123. Nicha – yep; cheaper to live in NY :)

  124. Buying GE $16 March calls for 1.32 with a plan to half cover with weekly (or monthly) $16 calls; out at 20% profit (whenever that happens).

  125. Amazing, ARNA went right to my stop at 4.36 (entry point) then turned the second I was out, watch it fly now!

  126. 09:30 AM At the open: Dow -0.09% to 10535. S&P -0.12% to 1121. Nasdaq -0.17% to 2282.
    Treasurys: 30-year +0.26%. 10-yr +0.19%. 5-yr +0.15%.
    Commodities: Crude -0.13% to $77.09. Gold +0.98% to $1259.30.
    Currencies: Euro -0.25% vs. dollar. Yen +0.41%. Pound -0.05%.

    10:00 AM On the hour: Dow -0.28%. 10-yr +0.29%. Euro -0.01% vs. dollar. Crude -0.03% to $77.17. Gold +1.58% to $1266.80.

    11:00 AM On the hour: Dow +0.1%. 10-yr +0.32%. Euro +0.71% vs. dollar. Crude +0.79% to $77.80. Gold +1.82% to $1269.80.

    12:00 PM On the hour: Dow +0.35%. 10-yr +0.29%. Euro +1% vs. dollar. Crude +0.87% to $77.86. Gold +2.26% to $1275.30.

    01:00 PM On the hour: Dow +0.15%. 10-yr +0.4%. Euro +0.99% vs. dollar. Crude -0.74% to $76.62. Gold +1.93% to $1271.20.

    02:00 PM On the hour: Dow +0.01%. 10-yr +0.4%. Euro +1.06% vs. dollar. Crude -0.73% to $76.63. Gold +2.13% to $1273.70.

    03:00 PM On the hour: Dow +0.15%. 10-yr +0.43%. Euro +1.06% vs. dollar. Crude -0.54% to $76.77. Gold +2.16% to $1274.00.

    You may have picked the wrong September to go short, with the month off to its best start in 70 years.

    ICSC Retail Store Sales: +0.8% W/W, vs. -0.4% last week. +2.6% Y/Y, vs. +1.8% last week. Cooler weather raised demand for fall and back-to-school apparel and the report sees the full-month pace coming in at +3% Y/Y.

    Aug. Retail Sales: +0.4% vs. +0.3% expected, +0.4% prior. Ex-auto +0.6% vs. +0.4% expected, +0.2% prior.

    Redbook Chain Store Sales: +2.9% Y/Y vs. +3.0% last week. With Y/Y growth rates flat since June, retailers are hoping the fall’s cooler weather will boost demand for seasonal merchandise.

    Jul. Business Inventories: +1.0% to $1,375.7B vs. +0.7% expected and +0.3% last month. Sales +0.7% to $1,090B. Inventory/sales ratio remains unchanged from June at 1.26, and vs. 1.35 a year ago.

    The real QE2The Fed could announce a new program of asset purchases to support the weak economy as early as November, Goldman (GS) chief economist Jan Hatzius says, adding that it likely will buy U.S. Treasurys worth about $1T to kick-start the economy. He says the impact of such a new round of easing would be "moderate."

    The effect of the MSM disconnect: The IBD/TIPP Economic Optimism Index rose 1.7 points to 45.3, vs. 43.6 in August. "Though consumers are pessimistic about the outlook for the economy, they are optimistic about their personal finances," TIPP President Raghavan Mayur says.

    Small business sentiment is up slightly, says the latest NFIB survey, but small business owners are fighting a part of the new health care law that would require them to file a 1099 tax report for every vendor transaction valued at $600 or more. NFIB says the measure would create "a tremendous paperwork compliance burden."

    More than 120 small banks and other financial institutions have missed their scheduled quarterly TARP dividend payments, more than one-sixth of the banks that received federal aid. In addition, five banks that received TARP injections have failed altogether, making it unlikely that taxpayers will recover the $3B poured into those banks.

    Obama reportedly considers appointing Elizabeth Warren to run the new Consumer Financial Protection Bureau as a recess appointment – i.e., on a temporary basis – to avoid a confirmation battle in the Senate; the idea is not supported by Senate Banking Committee Chairman Chris Dodd.

    A pox on both your houses, many investors say, seeing the stock market as rigged while placing little confidence in regulators to fix it. An AP-CNBC poll of investors shows 61% saying the market’s recent volatility has made them less confident about buying and selling stocks, and 55% say the market is fair only to some investors. (full survey)

    A look at 24/7 Wall Street’s list of companies that have lost the most value over the last decade shows Ford (F), Compaq (CPQ), Kodak (EK) and Citigroup (C) "leading" the pack.

    Low yields are crushing future payouts for pension plans, with the asset-liability gap at the 100 largest growing $108B in August to $459.8B – which could cause many plans to move into riskier investments like leveraged loans, real estate or private equity.

    BlackRock (BLK) breaks higher, +2.9%, as CEO Laurence Fink says inflows are much stronger in the third quarter, similar to the firm’s fourth quarter of 2009, when $39.7B came in. The inflows are "across the board": fixed-income and equities, passive and active products.

    What inflation?  For the sixth month running, U.K. inflation exceeded the government’s 3% limit, rising 3.1% in August. The persistently high inflation could exacerbate the Bank of England’s split on whether to increase rates to tame prices or focus on possibly providing more stimulus.

    German investors are feeling a bit shaky, sending ZEW’s economic expectations index down to a 19-month low and marking the index’s fifth monthly decline. Though Germany’s risk of a double-dip remains slim, investors are worried about slowing U.S. growth and continued eurozone debt problems.

    China is using the "Goldman Conspiracy greed machine" as a vital weapon in its global strategy against America, Paul Farrell writes, and Goldman’s (GS) greed is so blinding that it has lost the ability to see the long-term consequences of its behavior. Farrell says China will be the global super-economy by 2040, thanks to Goldman.

    Another IPhone victimAt its annual showcase today, Nokia (NOK) unveils several new Symbian smartphones and tries to drum up investor confidence in its future. But a rapid loss of marketshare and its recent management shake-ups (I, II) have surrounded the firm with an air of uncertainty that new phones may not be able to dispel. Shares -1.8%.  Nokia (NOK) Chairman Jorma Ollila plans to leave by the company’s 2012 general meeting. This is Nokia’s third major management change in the last week. (see also) 

    Microsoft’s (MSFT -0.3%) Bing climbs to second place among U.S. search services, passing Yahoo (YHOO) and trailing only Google (GOOG), a Nielsen report says. Bing sported a 13.9% share of search volume in August, compared to Yahoo’s 13.1% – both far behind Google at 65.8%.

    Speaking of BAC:  Bank of America (BAC) will identify tens of billions of dollars in assets and businesses it wants to sell or wind down, FT reports, as it attempts to ease shareholder concerns about its $2.3T balance sheet. Non-core assets to be divested could exceed $100B and include some products and loans it acquired when it purchased Countrywide in 2008.

    JPMorgan Chase’s (JPM -1.2%) Jamie Dimon says his bank "will be fine" after implementing stricter Basel III capital and liquidity requirements but lending costs for bank customers will go up because returns for banks will fall after implementing the new regulations.

    Global Payments (GPN -0.4%) strikes a deal to process credit card payments in China denominated in the local currency, a small crack in accessing China’s potentially lucrative market. Until now, foreign firms have been able to tap China’s consumers only when they use their Chinese bank cards overseas.

    Yum Brands (YUM) raises its quarterly dividend 19%, the sixth annual increase since initiating a quarterly dividend in 2004. The company continues to aim for a payout of 35-40% of annual net income. Shares +1%. (PR)

    Cisco Systems (CSCO) will initiate a dividend of 1-2% in 2011, CEO John Chambers tells analysts at a company meeting; shares up 3.2%.

    Best Buy (BBY): Q2 EPS of $0.60 beats by $0.16. Revenue of $11.34B (+2.9%) vs. $11.56B. Raises FY’11 revenue growth guidance to +5% Y/Y, EPS guidance to $3.55 – $3.70 and comparable store sales to +1% to +2% Y/Y. Shares +7.7% premarket. (PR)

    Kroger (KR): Q2 EPS of $0.41 beats by $0.05. Revenue of $18.80B (+6%) vs. $18.72B. Reaffirms FY’10 EPS guidance of $1.60 – $1.80. Shares +3.1% premarket. (PR)

    Three lunchtime reads:
    1) Why it matters what sort of crisis we’re in
    2) Tavakoli: Bullies on the block
    3) Watch the lagging indicators

  127.  Oil/ Front Month expiration + down Dollar + 90% chance of Cyclone developed it surely can went nut.


  128. Phil/C, there is some nuance in your C trade that I don’t fully understand then. At first glance selling $5 puts seems *more* bullish than selling $4 puts. Also, your trade also had a $3.62 breakeven price I thought. I guess the difference is you only have 1/x put to you instead of 1x? Also, I suppose by selling above the strike price you’re "borrowing" an extra dollar for free to finance the call spread vs the March 11 $4 put.

  129. Hey all,

    We have a new Longterm Valuation on Skechers (SKX). The stock is rated at a hold with a buy below $21 and a FV estimate at $28.50. Came across a lot of risk with this one when dug deeper. Check out all my analysis here.

  130. Phil / Industrial Production tomorrow, based on Beige book and inventories, do you think this will be a positive number vs consensus?

  131. Bingo bango bongo…so much for MA and V being dead money!!

  132. RDWR/JG – Looks like pure speculation to me.  Selling the $35 calls for $4.50 is tempting but, if it’s real, you can get pretty burned so not worth it.

    NUE/Kinki – They made negative outlook comments.  I’m surprised X isn’t hit harder. 

    BWA/Morx – Risked .01 to make $3 so 30,000% upside with a 1% risk.   Now you are risking $2.25 to make .75 (33%).  Don’t you think it’s a better idea to find somewhere else you can make $3 on .50, even if it "only" ends up being $2.25?  BWA could be the greatest stock on the planet but that won’t make it immune to a crash and you already had a good run but you want to roll the dice day after day through October?  Surely out of 9,000 stocks you can find another one that’s trading at a discount that you think is more undervalued than BWA.  If not – then stick with it.  But first look REALLY hard! 

    GE/RN – See Morx – there’s a good one right there!  I like RN’s idea as well as foregoing the 3% dividend and going for the March $13/15 bull call spread at $1.50 and selling the Jan $15 puts for .75, which is net .75 on the $2 spread (166% upside in 6 months) that’s $1.25 in the money if it holds up and, otherwise, both can be rolled down and out

  133. Phil--what (if anything) do you think of UEC? thanks

  134. Ghosts of September. Nice chart from Barry’s blog:
    A Correction for Every September
    "…nearly every September since 1917 (except 1954, 1964, 1968 and 1973) has had a correction with an average loss of 4.5%. As the market trends closer to the upper end of its trading range, near resistance, and signs of an overbought market continue to strengthen, the likelihood of a typical September correction is also increasing."

  135. Man, they’re taking ARNA down some more :( , hopefully we get a bounce tomorrow!

  136. If anyone wants to go for a bullish gamble on ARNA, the Sept 7-8 bull call spread can be had for 0.15 or less…

  137. Now that is manipulation…..round and round we go.

  138. 1/2 of the float has turned in ARNA.  THAT IS NOT NORMAL!

  139. @Phil
    AAPL/  In at $132.00.  Have been selling calls for year now against it.  Sold the Oct 2010 $270.00 calls wich are down about a third since  AAPL has rallied over the last ten days. 
    How would you play it now? Simply allow the caller to take it away in October should AAPL trade above $270.00? Or roll the Oct calls to the Dec $270.00 calls with a part of the gain have on the stock?  Other?

  140. C/Jvest – Well partially there’s the element of targeting.  I think C is good for $5 by then so why not take advantage of it.  Also, the $5 puts pay $1.40 but the $4 puts only pay .78.  If I sell 10 $4 puts at .78, I get assigned 1,000 shares of C at net $3.22 ($3,220) but if I sell 5 $5 puts for $1.40, I get assigned 500 shares of C at net $1,800 and, if C is at $2.50 or lower, I can always buy more to DCA lower (the extra $1,420 buys 568 shares at $2.50 or 500 at $2.50 which would be $3,050 for the same 1,000 shares but it’s my choice to spend the extra $1,250.  So you get all the money you would for selling the $4s with less margin committed and less cash committed if C crashed.  Oh, by the way, if C goes to $1, with 10 $4 puts you are still net $3.22 but with the 5 $5 puts, you have net $3.60 and you can buy 1,000 more for $1,000 and drop your avg net to $1.86.  Always opt for flexibility.

    Industrial Production/Tusca – Production has been on a tear since March ’09 and the BBook didn’t seem to have great numbers and we’ve been getting spotty regional Fed reports but I still think we’ll hit the 0.3% expected gain for August.  If we do, that’s pretty bullish, although the market may not think so as it will be down from 1% in July.  On the whole, we should be thrilled to just drift into Friday at these levels.   

    That stick was a failure – 5% lines hanging tough but that’s not surprising, really

  141. hm, I sell ARNA 2013 Jan10 C  2,6 and stock is 4.1

  142. Gel Hi,
    The MAIL play do I read this well the pay .45/share for the quarter or is this for the year ???

  143. yodi:
    IncrediMail Ltd. Board approves $4.3M ($0.45) interim 2010 dividend
    - Board of Directors has approved an interim cash dividend for 2010 of $0.45 a share, totaling approximately $4.3 million.
    - The record date has been set as the close of the NASDAQ Global Market on September 20, 2010. The dividend will be payable to the Company’s shareholders of record on or about October 5, 2010. The dividend will be paid to the Company’s shareholders net of taxes withheld at the source, pursuant to the applicable provisions of Israeli law.

  144. Pharm – what is a float?

  145. Float are the shares available to trade (shares outstanding but not owned by insiders or otherwise locked up).

  146.  Phil:  TBT has been tough on my account.  I have short puts in vertical credit spreads and have been rolling them downward since spring.  As I’ve done ratio rolls and widened the spreads to roll even or for a credit, the positions have grown and immobilized an increasing amount of buying power.  I currently need to roll the following positions:  short Sept 43s/long Sept 35s, net credit is $1.83; short September 42s/long September 35s, net credit is $2.06; short Sept 41s/long Sept 35s, net credit is $2.50; short Sept 41s/long Sept 34s, net credit is $1.85; short Sept 40s/long Sept 36s; net credit is $1.60.  I am having trouble figuring out rolls that make sense. The short sides are so deep in the money that I don’t gain much time premium as I try to roll forward, but since the long sides are closer to the current price of TBT the time premium increases faster.  In effect, I get proportionately less for what I have to sell and pay more for what I have to buy.  I never expected that TBT could drop as far as it has and I’ve dug quite a hole for myself.  Any ideas you have would be appreciated.

  147. Phil
    Remind Me
    Banks/QC – I still don’t trust them.  I like C because they are too big to fail (we hope) and have a close floor of zero but we’ve already seen BAC fall apart over the past year, falling 30% lower than C for the year (YTD view).  I think the problem is BAC picked up MER and maybe now, with FinReg, that wasn’t such a good idea.  Remind me tonight and, if I have time, I’ll look over the banks and see if I can find a bargain.


  148. Jordan – So 1/2 the floats turned in ARNA means that half of the available shares changed hands today?

  149. Phil, what is your outlook for crude inventories tomorrow?  Another draw?  Are we already pricing in a draw?

  150.  Phil,
    My idea was selling RDWR Sept 35, buying back month 30 calls as a hedge--assuming news is real but will not be announced by Friday.
    BUT I saw the rich premium on the Sept 35 and 30 puts…and thought it was too risky

  151. rn273- you get double prints with buyer and seller on Nasdaq stocks so more likely about 1/4th

  152. pahurik
    Thanks re MAIL just like to calculate better to sell the shares tomorrow or hold on for the div.

  153. Phil- as long as you are looking at banks- SAN- business must be off the charts in Chile. Up 40% since June ; up 10% + the last 30 days. 5.5 x book? Anyone have any idea what this is all about?

  154. I think we’ve topped for this go ’round.  Banks say game over.

  155. Pharm – 1/2 float turned?

  156. UEC/Datuu – They are too small and the industry is too complicated for me to like anyone but the leader.  In gold mining, I can get my arms around HMY and understand their issues but mining uranium has so many other variables that it just seems too risky to me to go with the minis. 

    September/Kinki – Yes, good one:

    Strong September Openings

    September Corrections

    Wow, that’s a bad month! 

    RUT finished at 649.20 – what a tease!  NYSE 7,162 – just over the line, S&P just under, Dow 5% 2% off so we need the Dow to break out and that means we should try to figure out which components are likely to move up, if it’s going to happen at all.

    ARNA – So the FDA briefing did have new information and, obviously, everyone is bailing.  Still a craps roll as the cancer issue is with very heavy doses and they do pass one effectiveness standard but "by a slim margin."  If I were the FDA, I’d say no but if I were the FDA, there’s be about 1/10th as many drugs on the market as most of them don’t work anyway.  This thing is a total gamble on Thursday’s review so don’t stay in unless you are prepared for a poor result!

    AAPL/Flips – Wow, I’d certainly want to take at least some of 100% profits off the table.  Nice job managing the trade to get here!   I’d roll out to 2012 $230 calls at $65 and take $203 off the table and then you can sell 17 months more of callers (which you seem to be good at) while freeing up the money to trade elsewhere (or buy yourself something nice – you deserve it!).  If AAPL goes down, you’ll be thrilled you got the $200 out.  If AAPL goes up, you can easily DD and roll the callers to 2x whatever.  Just do what you’ve been doing and you can work off the premium in short order and, after that, selling just $3 calls every month is giving yourself a 5% monthly dividend! 

    TBT/John – Well, generally you are short TBT at $41 with a $2 credit on average.  You are tying up a lot of margin and the current price is about $6 so you are down about $4 on each.  If you can, I think I’d sell some amount of naked 2012 $27 puts for $2.90, which TOS tells me has a net margin of $1.20 for each $2.90 collected.  This is using far less margin than your current spreads and you can always buy the $20 puts (now $1) to cover as a momentum play if TBT breaks below, say $32.50 and then get back out when they turn back up.  If you do that and pick up a dime here and a dime there, after a while you can be talking real money.  Let me know if that doesn’t help and we can look at alternatives but this is simple and frees up margin, not to mention dropping your putters $14 in strikes - so I like it.

    Reminding/QC – Too soon, I have to go now but I’ll try to remember tonight. 

    Crude/Jordan – I do think we have a small build or a small draw.  As I noted last week, a lot of the builds we were getting was from storage tankers dumping oil – that seems to be tapering off.  I don’t think oil should be over $80 though.

    RDWR/JG – It’s a good plan but the possiblity of getting burned vs. the not so exciting rewards turns me off.  Also, they don’t need an offical announcement – just need Cramer or someone to talk up the rumor and they can go up another few bucks. 

    SAN/Pstas – The area is growning and the banks were down on worries of Spain exposure (and Basel) – not because of anything they actually did wrong. 

  157. Phil/ BWLD.  Accidentally closed the sell 35 Sep P vs Buy Sep 40/45 Call Spread today. 
    I paid 52 cents.  Unwound for 4.48 (after accidentally hitting the lousy market bid on the call spread – I could have bought the 45 Put for .10 but only got 4.60 for the $5 spread)  + 850%
    (And that’s before I doubled up the puts, but you’re not a DFG).

  158. BDC/  JNK     I’m thinking about this.  Do you know of any other Junk Bond Funds with options?  There is some liquidity here but I’m just scouting for both more data and other ETFs.  I could only go back 2 years with JNK.  No rush as I must buy junior a guitar.

  159. yodi / MAIL
    Have been in meetings so no reply. Pahurik has said it well. I think I will sell my shares tomorrow, prior to them going x-div, as I expect a pullback after that date. I did not enter this trade for a long term hold – just a dividend play!

  160. Thanks gel I think I will do the same

  161. 69M shares and 310,000 options changed hands today on ARNA, 10x the average volume of options. It will be interesting to see how much the open interest changed. Tomorrow should be fun to watch.

  162. Gel – what do you think of going long USD/CAD?

  163. Phil,
    XOM Sept 57.5 Puts sold 8/31 @.62. .  I have a very heavy position in these contracts.  Instead of buying to close, I was thinking that I would like to ‘own’ the stock for a few hours/days since they will be put to me at 57.50 and then I can sell them at the current market at expiration.  I’m pretty confident that XOM will hold at least 60 this week.  So my question is would you recommend this strategy if one has the capital to make a round trip like this?  I think that it is somewhat speculative albeit a way to profit twice from the position.  Look forward to your comment.

  164. Phil, I really appreciate you taking the time to explain your rationale on the C trade. What a great learning experience.

  165. MA announced 1b share buyback, If they would have announced this a week ago MA would have traded to 215/220 range, but the dead money call and the recent market move makes me think 210 possible if markets can hold

  166. jromeha
    I am not at the moment trading the USD/CAD…. One of my chart services likes it for for  a 23 pip profit – Buy at 1.0270, stop @ 1.0223, and limit target of 1.0293. Good luck!

  167. Pharmboy:
    Your take on ARNA? What do you think happens next? Thank you.

  168. Anyone have an explanation why Chase’s on line banking site has been down for nearly 24 hours; cyber attack ? 

  169. ARNA/dc – I am holding on by my fingernails.  Like I said, I am long spreads, will be out tomorrow b’f close.  The risk is very high, and it is up to the politics that be.  I sold a bunch up at >7, but kept others, knowing that the attack one way was coming.  Phil is right, it is a craps shoot, and biotechs live and die by their blood, sweat and tears.  Look at SVNT today!  Look at DNDN, ITMN, VVUS, etc.  Do I think they get approval….well, they met 1 of 2 endpoints, and that is all they have to do.  Cancer, sure, a risk, but not seen in the monkeys at 12mo tox studies.  Is it mouse/rat specific?  Not sure, but many drugs cause cancer in rodents after high, long dosing regimens.  I am not worried about the heart problem at all.  So, again, it is a crap shoot.  Are the hedgies hitting it, absolutely….70M shares, come on…..


    Again, DCTH and now ARNA.  These are high risk trades that many need to be happy to be out of when up 10, 20, and 50%.  Yes, I was and am high on ARNA, but caution should always be heeded when FDA and data comes rolling around.

  170. Ed/ Trading AAPL:    I’m buying October 280s, but not a lot yet.  Would like a pullback, but a big pullback may not come, as the stock remains under accumulation.   Hope to be able to work the weeklies a lot in October before earnings.  Expecting a blowout report, as usual, and more upward movement.  Depends some on the overall market movement.  Best case scenario would be a retreat to 260 before earnings.  We could really load up then!  As you may know, with my AAPL portfolio I sometimes just sit in cash for days or weeks and wait for an opportunity, then come out with a huge options block purchase, looking to ride the wave.  I don’t see that right now, not this week.  Probably pin 270.  So just a few Oct 280s to keep me interested, and wait for the right moment.  
    And doesn’t ARNA have a whole lot of people torqued up !!!   I know a bit about those FDA types.  They are a strange breed, frequently illogical, often unpredictable.  Trying to figure what they will do is like trying to figure out what my wife will bring home if she gets hold of my credit card.  Pharmboy is right.  It is a total crap shoot.  My play on ARNA?  Go to cash and watch from the sidelines.  That causes the least coronary spasm of all ARNA trades.   

  171. Good Cop, Bad Cop?
    A little sparse on details, but:
    Charlie Munger on US Economy: Pain Not Over
    A day after Berkshire Hathaway’s Warren Buffett made headlines about his views on the economy, his long-time business partner Charlie Munger is weighing in.

    Munger, Berkshire’s vice chairman, said the job market is likely to stay "lousy" for an extended period, and that he doesn’t see anything that would prompt employers to hire in the immediate future.

    Munger also warned that the pain is not over in many sectors, citing timber and commercial real estate as two sectors where there is "more pain to come."

  172. lflantheman
    Hi I see you are looking already to buy APPL 280 c long. I am still holding the 280 jan 11 c short I trust you think that stk will run up to 300. Your thoughts pls. thks

  173. More fake jobs #s on the way ?
    John Crudele suggests Gov’t may try to count (for the 1st time) 1-day election workers as "new jobs" in time for the last jobs report before the elections.
    Yay Obama.

  174.  yodi/AAPL…..Well, I’m just dabbling in the Oct 280s right now.  Yes, I think AAPL sees 300 within 6 months, maybe sooner if the overall economy rebounds.  You are short Jan 11 280 calls?   Naked?  I think you would lose on that play, if that is what you have.  I’d rather sell Jan 11 280 puts.      

  175.  lflanttheman,
    thanks for APPL update. really appreciate, please keep AAPL posts coming, your gut feelings so far are very precise. Thnx

  176. FX markets are going bonkers, looks like BOJ has stepped in

  177. Banks/QC – Note from Navellier says it all:

    Don’t be fooled by the recent bounce in financial stocks, Louis Navellier warns. "High foreclosure rates and low lending rates are acting against the big banks," he says, urging investors to sell these 11 famous financials: STD, BAC, BCS, LFC, C, HBC, GS, JPM, LYG, RBS, WFC.

    I’m thinking that BK, VLY, BMO are good regionals.  STT, TD and LYG are my favorite majors but LYG has gotten away a bit and they are on the above list!   BMO is a big high so I think BK from that group and STT from the 2nd are my two bank picks (besides C).   That may seem like a short answer but I just looked over 100 different banks to give it to you!  8-)

    BWLD/Rexx – Nice one!  If you are going to have accidents, those are the kind to have…

    XOM/DD – Absolutely that’s a great thing to do with cash.  It’s especially effective for things you "wish" you could buy at some low price.  Like BK, that I just mentioned, is at $25.59 and I can sell $25 puts for .10, which doesn’t seem like a big deal but I’d like to set up a position in BK and I’m not in a hurry so rather than put in a limit order at $25 and hoping to get filled, I can just sell 10 puts for $100 and that doesn’t seem like much but it’s $1,200 a year which is like a 5% dividend on the stock I don’t even own.  The XOM deal is way better as you picked up .62 for not owning the stock.  Do that 12 times a year and you have $7.44 – how can it be a bad strategy when attempting to buy a stock for 5% off?

    No problem JVest!  You just have to catch me in the right mood and it’s much easier when everyone cans the political BS and we can concentrate on the markets so thanks everyone for much better restraint this week!  

    Holy crap, someone just inervened on the Yen!  Glad I wasn’t long on that trade…  Should have guessed when EWJ held up all day.

    Chase/Humvee – That’s messed up.

    ARNA/Iflan, Pharm - Good advice.

    Munger/Kinki – That’s interesting, usually those two are on the same page.

    The demise of the U.S. consumer is exaggerated, Morgan Stanley’s (MS) Richard Berner says, as households reduce debt and build savings faster than expected. Debt payments as a share of disposable income fell to 12.46% in Q1 from a 2008 peak of 13.96% and are on pace to drop to 11%-12%, which he says will put the economy on course for 3% growth next year.

    Comex gold settles at a record high, gaining 2% to close at $1,271.70/ounce on the New York Mercantile Exchange. WSJ‘s MarketBeat suspects the spike may have been caused by Goldman’s forecast of a new round of Fed easing by November; Zero Hedge thinks QE could come a lot sooner – next week.

    Cuts in public spending have a "human cost," IMF’s Strauss-Kahn says, exhorting governments to find ways to boost employment to prevent a generation of workers from losing skills. A welcome surprise, Paul Krugman says, to see such sanity in the midst of the "madness that has overtaken so many international institutions." (IMF report)

    As stocks get swept into various indexes by ETFs and are actively traded via algorithms and machines, there is genuine concern that it could lead to the death of stock-picking as we know it. “You can’t fall in love anymore,” says Birinyi’s Cleve Ruecker, noting that the surge in ETFs has made it “easier to get in and out faster."

    The WTO is likely to rule that Boeing (BA -2.1%) received illegal subsidies from the U.S. government, potentially leveling the debate with rival Airbus. The preliminary, confidential finding will come more than a year after ruling against Airbus in a similar case, and officials could feel pressure to prove that a new ruling against Boeing is just as severe.

  178. Buffett / Munger …. could be attributed to senility  (of either or both)    :grin:

  179. Chase:  yeah Dimond has already apologized but its website is now down for almost 30 hours; its unbelievable, but points are that there are real vulnerabilities in our systems.  Perhaps an inside job by disgruntled employee, or outside via cyberattack.  I’m surprised its flying under the radar of MSM; might turn JPM into a short term sell. 

  180. Thanks phils

  181. Phil
    Thanks  for taking the time to look at the banks.
    Sounds like one of those good ideas that just sound good.

  182.  ARNA--if you want to play the name into these binary, play the volatility crush. did this with SVNT and based on AH price action, it should work out.  I did a 20/10 Sept/Oct double calendar.  Will enter something on ARNA with similar strategy tomorrow morning.  Just look at the IV and theta on the front month options vs back month.  Plus the fact that OpEx is the next day.
    Loving this dump on the Yen.  While I didn’t make a fortune on the way down, I’m doing okay playing the bounces.  Looks like a sleepless night for me.

  183. 3-4 am trade on the Yen? What is the max currencies usually appreciate in one day? Thinking of going long Yen futures for an overnight trade

  184. jr…

    "Now, suppose Japanese officials believe that intervention is required regardless of the G-20. Presumably, they will give US Treasury Secretary Timothy Geithner a phone call to at least keep him in the loop, if not to receive his implicit consent. One wonders if Geithner will recognize what he would be consenting to: Japanese intervention, if it occurs, means that Chinese authorities managed to get Japan to acquire their Dollar reserves for them. Instead of buying Dollars, China buys Yen, which in turn induce Japan to buy Dollars. This maintains the artificial capital flows to the US while allowing China to escape accusations of being a "currency manipulator."

  185. jromeha… I just went long on the Yen @ 84950, with a tight stop. I hope there will be some shorts that are in need of cover as the Asian markets get the jolt.

  186. Oops, I meant whats the most a currency usually DEpreciates in one day?

  187. kustomz…. Do you know the size of the intervention by the BOJ ? Possibly the MOF might have also announced some fiscal changes in addition.

  188. Cool, then Im in with you gel! I went long Yen futures…..

  189. gel, If this was a coordinated move there could be more downside in the Yen and the amount would most likely be much less without help from China or our Fed.

  190. Im out, thx for letting me know that you were in Gel! It gave me the confidence to pull the trigger. Made a nice, QUICK profit. Owe you a beer whenever we have that PSW get together in Vegas!  

  191. jromeha / YEN
    I was just stopped out – had a tight stop – not sure where it will go from here.

  192. Good morning Phil,
    APPL hearing lflantheman advice I would like to have your opinion on the complete deal sold originally the APPL spread Jan 5x 280c/175p 9.48/14.49  subsquently I rolled 3 of the Jan putters up to 220 for a further credit of 3.00.
    I am thinking of rolling the 280 caller to 310c costing me the same what I received for the caller and possible rolling the putters still higher. The 280 jan putter as lflantheman  sugested looks very high to me as I expect they will get some more competition from RIMM and Nokia. Just to give this spread further protection I hold as well 2 x jan 185 putters short which I sold for 17.12 . Thanks for you opinion.

  193. Phil these are 2 x Jan 12 putters at 185

  194. Full Text Of BOJ Governor Statement
    TOKYO(Nikkei)-- Full text of the statement issued by Bank of Japan Governor Masaaki Shirakawa follows.
    "There has been growing uncertainty about the future, especially for the U.S. economy, and foreign exchange and stock markets have been unstable. In these circumstances, the downside risks to Japan’s economy warrant attention.
    The Bank of Japan strongly expects that the action taken by the Ministry of Finance in the foreign exchange market will contribute to a stable foreign exchange rate formation.
    The Bank will, while pursuing strong monetary easing, continue to provide ample liquidity to the financial markets."
    They are very open about their currency manipulation.  I guess all the pretense and charades goes out the window when you start getting desperate.

  195. yodi/AAPL…..I should have put a smiley face next to my comment about selling the Jan 11 280 putters.   What I meant to say was……..If someone backed me up against a wall and said that I MUST sell either the 280 callers or the 280 putters (naked), then I would sell the putters.  Truth is, I probably wouldn’t do either, as there are better plays.   I’m pressed for time right now but will come back on this later. 

  196.  Phil,
    What do you think about  ATHR?  Fundamentals seem very solid. I can sell the Jan 11   24 P for 2.10 and effectively get an entry at 21.90 which seems cheap.

  197. lflantheman
    Thanks for the smiley

  198. Becaful of those Chinese ADRs: yesterday was DYP, today is UTA.