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Wednesday, June 7, 2023



Meaningless Monday – Rethinking that Round Earth Idea

What if the World is flat?

It sure looks flat.  You have to go to space to see that it's round, even in an airplane it looks pretty flat, doesn't it?  Well, fiat currencies are like that too.   We talk about Quantitative Easing as if the World is flat because Americans (who are trained to be self-centered to the point of Xenophobia from birth) don't think of their connections to other counties on this planet.  To understand the American investor is to look at this map and understand that it is not a joke

So investors in the US discuss Quantitative Easing as if we can simply devalue the dollar and every other country on Earth has no choice but to bend over and accept our worthless currency because they are lucky we even bother to trade with them.  To most American's, it's still 1950 and we just won the war and Europe better kiss our ass and the rest of the World better fear us or they're NEXT.  That pretty much sums up our next 50 years of diplomacy, doesn't it?  

That is the mindset that now permeates investors attitudes towards our currency which is, in fact, the World's Reserve Currency.  What does it mean to be the World's Reserve Currency?  Well, nothing more than the fact that it is held in significant quantities by governments and institutions as part of their exchange reserves.  That is what our government and the Fed are now taking advantage of by printing Trillions of additional dollars and devaluing our currency, which is currently 62% of the World's reserve holdings, although that is down from 71% in 1999 and 64% in 2008.  

That's the problem the rest of the World faces as we race to devalue our own currency – they simply can't replace it fast enough to stop us.  The only real alternative to the dollar is the Euro, which makes up 27.3% of the World's reserves, next is the Pound at 4.3%, followed by the Yen at 3%.  Let's say, for argument's sake, there is an even $100Tn in the World.  That means $62.2Tn of it is the US Dollar and $3Tn is the Japanese Yen.  No matter how irresponsible you think the US is being with it's currency – you simply can't buy enough Yen to replace them.  There are only $27.3Tn in Euros (and they don't look like a good bet, do they?) and $4.3Tn in Pounds.  What has been happening?  Well between 2008 and 2009 $1.9Tn was moved out of the Dollar (3%) and $900Bn went into the Euro (3.4%), $300Bn into the Pound (7.5%), the Yen LOST $100Bn (3.2%) and "Other" currencies picked up $800Bn (36%)!

A 36% increase in "Other" currencies, which flew from 2.2% of global reserves to 3.1%.  Others are Rupees and Yuan/Renminbi and even Rubles as well as Aussie Dollars and Canadian Loonies but the sum total of ALL those currencies is just 3% of Global Reserves.  It is tremendously destabilizing to those countries to have their currencies go up in value as it makes them all less competitive as exporters.  That is the goal of the US at the moment – to create a monetary sink-hole of such mass and gravity that it begins to actually suck global trade dollars in – instead of spitting endless amounts of them out, as has been the norm for the past few decades.

Can creating a black currency hole really save our country, or do we risk being sucked in as well?  Clearly the "Greenspan Model" we've been running has been nothing but destructive for America as we have exported 10% of our labor demand to China, who have accumulated $2.5 TRILLION dollars of our currency reserves while we have run up $9Tn of debt since Al Gore lost his election bid in 2000, despite getting the majority of the popular vote.

Why bring up Gore?  Well it was Gore who wanted to protect both jobs and our "lock box" but that lock box was raided and our Social Security SURPLUS was used to fund a decade of runaway Government spending that has gotten so extreme that we now need to borrow over $100Bn a month just to keep the lights on in this country.  $100Bn is more than the ENTIRE GDP of all but 67 countries on this planet and that's what we need EVERY MONTH to keep up the pace of our spending.  Annually, our $1.2Tn deficit is the ENTIRE GDP of all but 14 countries on Earth (about Canada or Spain's entire GDP).  

Our monetary black hole has already sucked up all the money on Earth and that's why 72.1% of our Treasuries are now sold to ourselves – we've pushed the rest of the World past their limits and $4Tn of our debt has been dumped on the Social Security Trust since the "lock box" was raided and now we are devaluing our currency at a rate of 1.5% PER MONTH in order to keep up the illusion of solvency but we're really not fooling anyone BUT OURSELVES! 

It's US we owe the money to.  Sure China has $2.5Tn of our debt and other countries have perhaps $8Tn more but the other $30Tn in the world are held by Americans and the Government's insane scheme to devalue our currency by 10% in order to borrow 10% more money is costing us $3Tn for every $1.5Tn we borrow.  That's CRAZY!  

Of course crazy isn't just our current policy – it seems to be what the voters aspire to as well.  Unlike Europe, we do not have serious policy discussions about taxation and Government spending – instead we have two parties that totally disagree with each other on every issue other than maintaining the status quo which is destroying our nation day by day.  

The MSM is no better, with nothing but polarizing opinions as if the whole World is right or left with no room in the middle for rational thought.  On Friday, I called Newt Gingrich an idiot and my patriotism was subsequently questioned – that's the way politics are played in America these days – the way they were played under Joe McCarthy in the 50s… 

Unfortunately, the lunatics have clearly taken over this asylum and we continue to create dollars at the pace of about a dozen Bahamas per month.  That's right, the entire annual GDP of the Bahamas is $9.3Bn and we drop 12 times that in debt load on a monthly basis, going 144 Bahamas deeper into debt every year!  Our debt and deficit is now so massive, that we need to measure it in terms of the GDP of other nations because 1,500,000,000,000 is fairly inadequate to grasp the scope of our deficit spending.  Suffice to say that it's more money than exists unattached on the planet Earth so, in order to go further into debt – we have to create more money.  

As I mentioned, because other countries aren't as stupid as we imagine, we need to create 3 dollars in order to borrow 1.  That gives us $1 more debt (out of 10) and $2 less value to our remaining pile.  How long can that go on?  One reason our currency creation is so inefficient is because the people we are giving the money to, the Banks, aren't willing to invest it in America either.  They have their own debt holes to fill and most of the money we give them goes into a derivatives ($200Tn and rising) juggling scheme that makes them look solvent and masks their very, very questionable asset bases.  

The banks take the money the Fed is dumping on them and speculate in commodities and foreign currencies and THEN they buy some TBills in order to keep the treadmill running.  This forces asset bubbles in things like gold and oil but they too are a complete illusion because it's only the idiots with dollars that are buying them – the rest of the World stopped chasing shiny metals in June but the flat-Earthers in the US just didn't seem to get the message.  Here's gold priced in Euros, which is DOWN 8% in 3 months!

Our stock markets, of course, look just even worse – down 10% to the Euro in the last 3 months, but that won't stop the MSM from engaging in the Grand Dellusion that they are feeding to the voters this month – that everything is somehow going according to plan (what plan?) and happy days are just around the corner – as long as Americans can keep pretending the World is not round at all but a neat little square with our great nation on top and in the center.  

Well, there's a lot to be said for getting out while you're on top – or at least while there are still enough people fooled into believing you are on top.  As the Joker says in the "what plan?" link above – Nobody panics when things go according to plan, EVEN WHEN THE PLAN IS HORRIFYING!

That's what we have now, a horrifying plan to prop up the US Economy based on the belief that the US is the center of the universe and that the rest of the World will be fooled by our fiscal nonsense.  As you can see from the gold chart and the S&P chart – we stopped fooling them a long time ago.  What will happen when we can no longer fool ourselves?  

For my take on the markets today, see the weekend's Member Chat but, as indicated above – it's a meaningless semi-holiday in America – a day the bulls can only pray will be quiet, because all my charting indicates that real activity is very likely to come to the downside this week.  



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Phil–on the PRE PSW positions —CME and TMV
700 sh of TMV at 83
100 sh of CME at 440
they were all purchased by broker before I took over the portfolio–please do not tell anyone what an idiot I was–I have many more I am slowly trying to clear up:(

Why do you think only Americans are  "xenophobes"? 
 We don’t exactly see the French, Italians, Russians, Spanish, Peruvians, Vanuatuans, Firth of Forthians, Irish, Brazilians, Californicans, Canadians, Africans, Brits, Asians, Indonesians, Aussies, Kiwis, Danish, Swedes, Norwegians, Saudis, Yemenese, Japanese, Chinese, New Yorkers, New Jerseyites, Alaskans, Greenlandians, Penguins, Libyans, Moroccans, etc. thinking their countries aren’t extra special.
Why do you?

I think the dollar may rebound sooner than we think. Also agree that the hope of QE2 is already well embedded into current asset prices. There is no compelling reason to destroy the world reserve currency, at least not yet. One major international upset will prove that point.
If commodities and fuel continue their rise and there is no jobs and wage inflation to go along, we will enter anoter recessison.

Hey all,

I have two new positions this morning that we are looking at in Trina Solar (TSL) for a Buy and Fortune Brands (FO) for a Short Sale.
Good Investing!

Thanks for the reply on the banks….
Are there a new batch of 500%er, positions that you have in mind?

Good morning Phil — need your help agjust Goog position that I short 5 of Oct 550 call for $4 and 3 October 560 short cal for $2.60.  Forgot that this thursday is earning for goog, possiblity up side after earning, should I buy ITM nov call like 540 and after earning roll the call up and turn to a spread … not sure what to do thx

 Phil—are you still bearish on WYNN? It’s up 2.5% today. Time to DD on the puts?

Good morning,


IWM  66.56, 67.09, 67.34, 67.93, 68.14, 68.33, 68.61, 69.01, 70.18, 70.55 and 71.62

 Phil/lWYNN—-per my above comment, I meant DD on short calls.

PHIL    DXD and SDS putters to roll by friday.  Would you roll to January?  

VIX back down to Apr. levels.  Looks like everything is hunky dory.

VIX below 19.50

hmm,if i criticize anything about the Obama administration I am told I am too stupid to understand and an I am a rascist!!  Not that the stimulus was wasted on a bunch of social mumbo-jumbo,Larry Summers was a bad choice,the war goes on in Afghanistan,an promoting class warfare sure is not "Washington as usual"…PS…George Bush is long gone!!  Can you say"Jimmie Carter?"

Hi Phil– what is your recommend AAPL trade before earning or recommend to wait after earning.  thx

Phil-do you still like theTLT Dec 102 puts ?

swellesley5 – No, plenty of criticism here, you must be thinking of another board…….

With vol low what do you think of picking up leap puts on spy and iwm.

Thinking about writing weeklies against the puts or just covered calls with locked in protection.

As I have often said, we either go Up or DOWN from here !!

Swelley, GWB is not long gone. When we are no longer spending 100s of billions on Iraq or Afghanistan, or dealing with bullsh!t rulings by a conservative Supreme Court then he will be long gone….

A BIG IF, but……………..

Phil – VECO – do u like the below VECO play?
Phil’s Buy/Write strategy can be initiated by buying half of your desired VECO position and then for each 100 shares of VECO, SELL one Jan $36 2011 put and SELL one Jan $36 2011 call on Monday:
Buy 1/2 position in VECO Long at open Monday (approximately $36.50)
Sell 1 Jan. $36 Call per 100 shares of VECO (approximately $4.40)
Sell 1 Jan.$ 36 Put per 100 shares of VECO (approximately $5.20)

My morning FX play is:
Buy ( long) AUD/CHF at market
Stop (sell) at .9350
Stop (limit) at .9850

Methinks this mortgage fraud issue is going to be a catalyst for some downside …

Still short FCX

 PHIL    DXD Bull call January 27-32  October 27 putter.  Roll putter to January by friday????

JRW… I like your optomism !

Dollar showing some life.  Go Greenbacks.

SLT – A long I bought some of and plan to add to with today’s double-bottom breakout
Target is just shy of $18 in 4-8 weeks. Good commodity diversification long-term trade…

Will bee adding to my NEM ( Newmont Mining ) positions today. This is a play on gold primarily, but also copper.
Lots of talk about the anticipated quantitative easing…. why not just get to it and go one step further and talk about the inflation that will result from it. Since 1971, the American dollar has lost 90% of its purchasing power relative to the hard currencies.Greenspan liked to be referred to as a Fed chairman that fought inflation… ya sure… In his 19 year tenure the dollar dove over 50%…. And Ben… he will will set a record, and might even be presented with a Nobel prize after all the dust settles.


Phil:  I’ve been traveling and I’ve lost track of the hedges you are recommending. i have a long-term stock portfolio to protect.  I’ve sold premium against many of my long stock positions and am heavily short FCX calls but I need additional downside protection.  I am long QID Nov 13 calls, short QID Nov 15 calls, and short QID Jan 13 Puts (total cost .29).  I some have DIA Oct 109 puts (cost .88) and a small position in SPY Oct 116 puts (cost 1.48), these have lost 50% of their value and need to be rolled as they are getting too close to expiration.  I am considering moving a percentage of the stocks to cash  (say 25%) but need to hedge the rest.  I am not adept at hedging and could use guidance.  Thanks.

will keep a look out for something else and get out of CME

Good morning!  I hope all got out of ALXA last week…..they took a 60% haircut on the FDA denial. 

Alxa – got out at 3.49. I love it you get a win "by the skin of your teeth"  🙂

JRW / Currency devaluation
Your link is very descriptive of the transitional demise of the dollar. The United States is not alone in this overindulgence and the resulting problems. Many other global currencies have suffered similar debilitating devaluations, beside the dollar. In the post WW 11 period, Latin America literally saw its currencies crumble in the inflationary 1970’s and 1980’s. In the late 1990’s currency values were desecrated in Asia. Russia devalued and crashed in 1998. Other currencies that have tanked over the last 35 years are: South Africa, Turkey, Iceland, India, Pakistan, British pound, and the Italian lira – just to name a few…. oops I almost forgot Mexico. The US has joined the party and we are the RESERVE currency. Have I mentioned lately I like Gold? — reading this stuff does tweak your interest, as with so much in the way of currency problems, folks are looking for stability when it comes to a store of value that is reliably immune from these massive devaluations.

I added a 2012 bull call ratio spread to my NEM plays, and also sold some December 60 puts, to help pay for the spread.

ALXA – got out just in time, thanks Pharmboy!  Now the question is: do you think this one was unfairly pounded and we start while it’s down, like with CRIS?

"[The US political system] has two parties that totally disagree with each other on every issue other than maintaining the status quo, which is destroying our nation day by day."
That quote’s a keeper!

Phil, I have a long call F Jan 2010 12.5 which I rolled down from 17.5 due to margin req, against them I have been selling covered calls with not a great succes because F has been in uptrend lately, anyway now I have shorted March 2011 12 at 1.20 and today is at 2.46 but still 0.65 premium in them, what shall I do? wait until the premium is consumed and THEN roll or is there any other adjustment I can make to improve rhe trade? Thanx

sorry the long call is Jan 2012 12.5

hahaha that’s a great line too….

Phil, CMG continues higher.. I have short 2x Nov $180s (from a previous roll) @ $6.7 in premium and 1x Oct $170s @ $5.70.. I want to roll the remaining Oct to 2x $180 Nov to end up with 4x Nov $180s. This is now getting a bit oversize, HOWEVER margin is not (and will not) yet an issue even if CMG shots up to $200. 
I was thinking of buying 3x Mar 2011 $200s @ $9.50 and convert the whole play into a ratio backspread, but I SERIOUSLY have trouble buying calls for such an expensive price, even if the intention is to have the shorter calls expire worthless and sell whatever value remains in the long-term ones.. or buy an additional caller if CMG announces spectacular earnings and raises guidance and then roll the short ones to higher prices and convert it to a vertical call spread. However I feel that if CMG misses by one bit, the plunge will be significant and I will end up LOSING money from the ratio backspread. 
What would u suggest?

Bought the EUR/NOK… looking to take profit at 8.39…. could be a very long play… betting on continued Euro strength.

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