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Friday, December 9, 2022


Thank G20 It’s Friday!

"Do as I say, not as I do – or say…"

That’s the word from US Treasury Secretary Tim Geithner as he seems to forget that people follow him around with notepads and microphones as he begins the game of "Survivor – Global Currencies" although Tim seems to be following the very interesting strategy of trying to be voted out first so maybe there’s a method to his madness after all.  

Like any good player, Timmy tries to form alliances and keep the other players off balance.  On Wednesday, he told Brazil’s Finance Minister, Guido Mantega, that the U.S. won’t allow the Dollar to weaken.   After telling Guido he had a hidden immunity idol that would protect the Dollar, Tim walked down the beach looking for others to form an alliance with and the cameras followed Mantega to one of those "private chat" areas, where he explained why he had formed an alliance with Timmy:

He said he doesn’t intend to allow a devaluation of the dollar.  He assured me that the policy is not to weaken the dollar, but on the contrary, to strengthen it.

Brazil’s finance minister said he told Geithner that a firm stance by the U.S. against further weakening in the dollar would “create conditions to open a negotiation” with other countries seeking to reduce volatility in their currencies, and may help reduce pressure on China to strengthen the yuan.  “Otherwise it’s hard, to weaken the dollar and to want a revaluation of the yuan,” Mantega said.  “I then asked him about the Fed’s policy and he said that this policy’s impact is being overestimated,” Mantega said.  

Apparently, Tim was able to swing enough cast members to pull a G7 Meeting this morning, apart from the G20.  Who was conspicuously left out of the G7 (US, Japan, the UK, Germany, France, Italy and Canada)?  Why China, of course.  Poor China was sent off to get some water while Tim and the other ministers talked behind their backs.  The United States and European Union accuse China of keeping its Yuan grossly undervalued to benefit exporters.  Beijing counters that Washington’s loose monetary policy is swamping emerging markets with destabilising capital inflows, as investors chase higher yields than they can secure from the dollar.

In addition to trying to build an alliance before heading off to G20 tribal council, Tim further stirred the pot by sandbagging the G20 meeting with a letter to the Finance Ministers, telling them to (from the pot to the kettle):  "Stop manipulating their currencies to prevent "excessive volatility" and a global currency war."  In a letter to the G20 finance ministers, he also urged them to cap current account surpluses or deficits to rebalance the world economy and said the International Monetary Fund should monitor countries’ progress.

He called on countries to refrain from manipulating currencies to achieve competitive advantage by either weakening their currency or preventing the appreciation of an undervalued currency – a clear dig at China. Other countries, including Brazil, Japan, South Korea, Switzerland and Taiwan have also moved to weaken their currencies so forming a back-door alliance with Japan is critical if the US wants to take down China.

There was a rumor that Chinese Finance Minister, Xie Xuren, was furious when he got back and wanted to know who, when and how – but it turns out those were just the names of three guys who called for him while he was out.  We’ll have to wait until tomorrow to see how this little drama plays out.

Meanwhile, the dollar held the 77 line yesterday in relatively quiet trading but every tiny move in the dollar becomes a violent move in the US markets and it has been a wild week.  We’ve fallen from 88.71 in June to 76.14 this week, which is 14% in 4 months or 3.5% of your dollar-denominated assets being stripped away each month so we really could use at least a small break on the way to losing 20% of our wealth in 6 months.  The 5% rule tells us to ignore the move over 88 and 85% of 88 is 75ish with 10% being 70ish so around 77.5 we would expect to see some critical resistance and we finished yesterday at – 77.42.  One of our Members suggested yesterday doing some 5% charts that adjust for the dollar moves and that’s a great idea so we’ll do that over the weekend

With the G20 gathering in Gyeongju, Global markets were mixed today with everyone in Asia giving up about half a point into the close except Japan, who gained half a point to finish the week down just 1%, as they were encouraged by Geithner’s comments to Mantega.  Europe was down very slightly but have now gone up very slightly (9am) as the dollar has dropped from $1.386 to the Euro at 4am to $1.397 at 9 am (0.7%) led by the Yen bouncing off the critical 81 mark so a little Yentervention by Japan, even as they are meeting with Tim to talk about how wrong that would be.  

[france1022]Things are heating up in France as a coalition of unions called for two more days of Nationwide demonstrations, now heading into the school holidays which is likely to but more youths on the street.  France’s problem is their retirement age is so young that the people the government is screwing over still have the energy to protest.  This is not likely to happen in America, where we work pretty much until we’re dead…. 

On Thursday, Sarkozy’s Government asked senators to speed up their examination of the pension bill, which was approved by the lower house last month. In an attempted filibuster to upset the bill’s passage, opposition parties have submitted hundreds of amendments.  Relying on a little-known procedure, the government asked senators to pass or reject all the remaining amendments in a single vote, instead of voting on each one separately.  "This is a coup," said Martine Aubry, head of the opposition Socialist Party.  The government said opposition senators had had ample time to voice their hostility to the pension bill.

So once again the markets will give us an opening based on a debased dollar that is likely to fade once the reality of volume hits the indexes.  Nothing is certain until after the elections but that’s just a bit more than a week now so we are good and cashy and waiting for a little market certainty at this point.  I’ll give the final word of the week  to Matt Taibbi, who sums it up nicely in his new book, Griftopia:

America is quite literally for sale, at rock-bottom prices, and the buyers increasingly are the very people who scored big in the oil bubble. Thanks to Goldman Sachs and Morgan Stanley and the other investment banks that artificially jacked up the price of gasoline over the course of the last decade, Americans delivered a lot of their excess cash into the coffers of sovereign wealth funds like the Qatar Investment Authority, the Libyan Investment Authority, Saudi Arabia’s SAMA Foreign Holdings, and the UAE’s Abu Dhabi Investment Authority.

Here’s yet another diabolic cycle for ordinary Americans, engineered by the grifter class. A Pennsylvanian like Robert Lukens sees his business decline thanks to soaring oil prices that have been jacked up by a handful of banks that paid off a few politicians to hand them the right to manipulate the market. Lukens has no say in this; he pays what he has to pay. Some of that money of his goes into the pockets of the banks that disenfranchise him politically, and the rest of it goes increasingly into the pockets of Middle Eastern oil companies. And since he’s making less money now, Lukens is paying less in taxes to the state of Pennsylvania, leaving the state in a budget shortfall. Next thing you know, Governor Ed Rendell is traveling to the Middle East, trying to sell the Pennsylvania Turnpike to the same oil states who’ve been pocketing Bob Lukens’s gas dollars. It’s an almost frictionless machine for stripping wealth out of the heart of the country, one that perfectly encapsulates where we are as a nation.

Have a great weekend, 

– Phil



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goldman / Goldi-Locks
Hmmm…. nice hair…. but Im not confidant  I am strong enough for THAT one…after a few drinks ( maybe quite a few ), I’ll let you know

Vegas / deano – I’m still in, unless it happens MLK day weekend – have an annual commitment that weekend.

Phil / inflation-adjusted levels – Phil, yesterday you wanted to get a reminder to look into inflation-adjusted levels over the weekend.  I think you have it on your to-do list, but here is the reminder, just in case. 
Your levels worked wonders until this last up-and-up move that may simply be taking into account the devaluation of the US dollar (and your levels expressed in US dollars) in anticipation of QE2.


 Anyone know when the results on ARNA are coming out?

Hanna – was about to type the same question…An approval would be a nice way to end the week.

Hanna, anytime….FDA is under no pressure! 🙂  Oh, and I can tell U, it aint gonna be good.

What the heck happened to /DX and UUP at 5:00?  /DX cratered from 77.6 to 74.6 in one five-minute candle before bouncing back.  Flash crash?  The shape of things to come?

You wrote yesterday:
Buy/writes/DClark – Assume a 10-20% sell-off at least.  We enter the buy/writes expecting 20% so that’s not the worry.  What I said was if you are 40% in the money, as we are from many of our early buy/writes that still have until Jan or 2012 to play out – then there’s not much worry as we’re just waiting for expiration and a dip would be nice because we can actually roll.  If you are in a newer buy/write with little profit – you just need to consider whether or not you REALLY, REALLY want to own 2x the stock at the put-to price and, if not – CASH IS ALWAYS NICE!
Not sure I follow. If we are thinking there will be a drop that will wipe our profits, we will be just where we started (plus the premium decay we make) what good would rolling accomplish if we don’t take the profits off the table? 

 Pharm – I dont expect an approval. I would just like a ‘maybe’ with a recommendation to do some little animal studies. i’m staying positive!

 Phil / Reid – I don’t know (context).
Phil / Chamber of commerce.  Just another interest group / lobbying group.  I could give a rat’s a$$ about them.
What’s interesting is how they are Obama’s latest bogeyman (after Bush, Rush, Hannity, Boehner, the Tea Party and who knows what else other than himself).
The Chamber was noticeably in bed w/ Obama and the Dems over Illegal Immigration / Amnesty, which I find rather disturbing.  He loved them then.    Now, they are supposedly the Repubs best friend ?   I don’t think so.  
Not a conservative group issues group at all.
Face it, Obama is just flailing around, throwing mud, looking for something that will stick to someone other than himself and the Democratic Congress.
It isn’t working.

Per finance.yahoo.com/news/Whos-Buying-and-Selling-This-minyanville-1852174734.html
Strategists ask the following question, however: just who has been doing the buying?
We know it’s not you and your neighbors. The general investing public has continued to largely side-step stocks in their own background. Burned by two bear markets, and a stock market that has gone nowhere in 10 years, retail investors have been tough to lure back into the US equity market. (Also read Equities Edge Toward a Top.)
Sine the beginning of September, they have dedicated just $1.91 billion to US equity funds, according to EPFR. Year-to-date, they have yanked out $54.1 billion.
The principal buyers, say strategists, have included a couple of well-heeled groups of money-makers. First, there are the hedge funds. In September, hedgies reportedly turned in their best performance in 16 months with a 3.5% gain. However, that still undershot a 9% advance for the overall market.
There are therefore reasons to believe that the so-called "smart money" in fact missed the big September move in the market, which might have been dominated instead by the sovereign wealth funds like the kinds operated by the governments of Singapore and Kuwait. However, hedge fund managers are paid for performance and they cannot allow a headline-making advance to happen without them. So they’re now buying in order to play catch up and meet their performance bogeys, says Jon Markman of Markman Capital Insight.
A second big buyer in the stock market, says Gluskin Sheff’s David Rosenberg, would be the proprietary trading desks at the big commercials banks. These are traders that invest their firms’ capital. As Rosenberg recently noted, using weekly Fed data, bank-wide trading assets have soared $50 billion alone in the past month.

"bank-wide trading assets have soared $50 billion alone in the past month."
So Lloyd and his other bank buddies meet every month to determine the direction of the stock markets…and the hedge funds are left with the scraps.  Question remains if the MSM can get enough retail bagholders into the equation before the reversal…if not, I’m betting GS and JPM will be first to the exits, with pension, mutual, and retail investors "dead" last…

 Per http://www.minyanville.com/businessmarkets/articles/second-depression-unemployment-job-creation-unemployment/10/20/2010/id/30681?camp=syndication&from=yahoo

iDepression 2.0: Dissecting Today’s Job Deficit

Using the method of measuring unemployment used during the Great Depression and reproduced by shadowstats.com, the real unemployment rate is a depression-like 22.5%. The peak unemployment rate during the Great Depression was 25%. There’s no doubt that we’re in the midst of a second Great Depression, but where are the bread lines and the lines of unemployed winding around the corner? No need. This is the electronic Great Depression — iDepression 2.0.

Your 99 weeks of unemployment and food stamps are direct deposited into your bank account so that you don’t have to leave the comfort of your McMansion that you haven’t made a mortgage payment on in the last 14 months. There were no credit cards in 1933. Without a job or a house, you needed to move to where there might be a job. Hence, the mass migration from the Midwest to California — a la The Grapes of Wrath. Today, a neighbor in a matching McMansion down the street, with the perfectly manicured lawn, could be unemployed for three years and no one would ever know. They could sustain themselves on unemployment payments, food stamps, and credit cards. Welcome to the iDepression 2.0.

I did’t see a date on the aspen article, when was it written? Would you happen to know what time currency trades start on sun night/ mon morning in asia?  thank you

What is going on with the FDA!? Just announce the damn results already!

Ok, now that I had some calm time to analyze my move today with CMG, I made a few mistakes and put myself in an unnecessary position. I would still have an open short position in CMG, but my roll could’ve been much better. I had short naked Nov $180s before earnings, and I covered them by buying Mar $210s. Today I sold the long calls a bit too early. Then I did a roll from 3x Nov $180 to 9x Nov $200s. This oversized my position significantly even though margin was not a problem at all, but I didn’t want to end up with an oversized position.

I shouldn’t waited until almost the end of the day (1st lesson), then I should’ve used the profits from the long calls and use that money to finance a less aggressive roll. If I would’ve done that, I’d have been able to roll still to Nov $200s but only 4x or even 5x depending on the timing.. This is much better than closing my longs earlier only to see the stock increased $12 more and ending up with a roll to 9x. I looked at the profit from the longs as a separate play instead of focusing on the fact that I started the shorts in CMG to keep a premium from the Nov $180s…

I hope the stock has a pull-back so I can reduce the size.. Not that margin is a problem but now it’s oversized and I could’ve played it much better..

Oh well..

Ops, my iPod changed a word, this is what meant:

October 22nd, 2010 at 9:19 pm | Permalink  
Ok, now that I had some calm time to analyze my move today with CMG, I made a few mistakes and put myself in an unnecessary position. I would still have an open short position in CMG, but my roll could’ve been much better. I had short naked Nov $180s before earnings, and I covered them by buying Mar $210s. Today I sold the long calls a bit too early. Then I did a roll from 3x Nov $180 to 9x Nov $200s. This oversized my position significantly even though margin was not a problem at all, but I didn’t want to end up with an oversized position.

I should HAVE waited until almost the end of the day (1st lesson), then I should’ve used the profits from the long calls and use that money to finance a less aggressive roll. If I would’ve done that, I’d have been able to roll still to Nov $200s but only 4x or even 5x depending on the timing.. This is much better than closing my longs earlier only to see the stock increased $12 more and ending up with a roll to 9x. I looked at the profit from the longs as a separate play instead of focusing on the fact that I started the shorts in CMG to keep a premium from the Nov $180s… so the roll was done without using the money from the longs ( I got to keep that money but that wasn’t the initial strategy since I shorted CMG )

I hope the stock has a pull-back so I can reduce the size.. Not that margin is a problem but now it’s oversized and I could’ve played it much better..

Oh well..

Well said. It ties together a few observations I have made lately. I know a few middle income people that are eating BETTER now that they have food stamps. I wondered about an investing premise on this, since the debit accounts, at least here in FL,  are actually managed by JPM and we see food price inflation a la GIS about to raise prices because they can probably get away with it.

I need some behavioral finance therapy and direction here. Remember my GOOG positions that I had rolled down then "lost faith at the point of greatest financial opportunity" and prematurely covered? I missed out on the initial run then rolled up the previous calls to NOV 540s and also missed the pop on earnings. I could have made at least 20K on that trade. I’m pretty rattled and angry about the whole mess. I closed that out today…didn’t see any profit to be had and couldn’t stand to look at it anymore. Anyway, I am still 150K in stock, all covered but rolled up my SPY shorts from last month to 28 Nov 118s and my TZA puts to 18 Nov 21s. I also have 5 DXD Jan short puts and 4 DIA 105 disaster hedges. Basically 1% up in the market equals about 1K down in portfolio value. I have faith in a sell-off eventually and want to stick with the short side but if we moved up 5-10% from here, it would hurt. So, I sold 10 TNA Nov 49 puts as a partial cover to my bearish bets. However, I feel it is not enough as my account still goes negative as the market moves up and I will be extremely upset if we go up 5-10% and I just watch it happen without making SOME profit. So, I am very tempted to add about 20-30 more TNA puts but I don’t want to go neutral and negate the sell-off I’ve been waiting for and make the same mistake, capitulating when I am so close to realizing my trade goal. Yet, there is the very real possiblity that we run up on QE or elections. I know you are in more of a wait and see mode but my portfolio is not balanced that way right now. Please advise.

Just got on line before night night and checked to see if I could get a free copy of, "As I lay Dying", by Faulkner on Amazon, not available on kindle, so I got the paperback,  and then I thought I’d just see where things closed today and now I have to take a sleeping pill to get some rest.
I read with great interest  your statement the other day that the DX is unlikely to break 76 or there will be great hell to pay, torrential amounts of tears shed, and gnashing of dentures all over the world.  Well. 
I have had several short DX contracts in the $78ish range during the last month and upon your two statements 1) don’t be greedy, and 2) 76 could be a bottom, I yesterday put a buy GTC order to close my positions at 76 and for some inexplicable reason the DX spiked down after the close and now I can safely say that once again you have confirmed for me that you have been one of the best investment service advisors I have yet to come across.  Almost to the point that I’m beginning to think that maybe I’m completely wrong about my political stance as well. Almost.
In any event,  I wanted you to know that this has been my third execution based on your comments and recommendations that I have followed and this one has also worked to my advantage.   The priceline earlier in the last week was also a good one but I didn’t have much riding on it. 
My subscription fee has been more than justified for the next year and there’s some left over to pay  for my stay in Toronto this week, dinner at Joso’s in the Yorkville section of town. If I smoked I’d have a Montecristo to salute you. 
Be well, stay well.  

The Aspen article was a few days ago. As far as when the FX markets open – New Zealand is the first to open followed by Australia and the trade times are 7:00 PM -3 AM EST, after Australia.then Asia, the Middle East, Europe and America in that order. Since New Zealand / Australia are a day ahead of us that opening is on Sunday here in the US. For me, since I am on the West Coast, I start trading at 3:00 PM.  From there the opening in Tokyo is one hour later, and then London 6 hours later which is 2:00 AM until 12:00 Noon EST. The New York trade times are 8:00 AM – 4 PM EST.
The major markets are New York, London and Tokyo…. with NY and Tokyo over 55% of the transactions… 24 hours a day. Nearly 2/3 of NY activity occurs in the morning while European markets are still open.

and another thing!  🙂  I’m not good at the trades where you say put on such and such a momo play and kill it if we cross this line. I’m not watching the markets all day, everyday as I have kids to get from school and part-time jobs and such goings-on around town on a regular basis. So, I am much more comfortable just selling premium that can be rolled and doesn’t have to be watched so closely. (Hence, the TNA puts I chose). I know this violates your rule about not selling puts you don’t want to own but with the "rollability"  of those and all the shorts I have going (so no additional margin requirement…actually takes it down I think) and that I am only at .85 leverage, I think it is a reasonably safe strategy. I don’t know where I’ve been going wrong but I need to make some real money here. If I said here is 250K, make 5K per month without taking too much risk, that doesn’t seem unreasonable, so why am I not doing that? I have a lot of good stock positions (XOM, ZMH, VZ, etc.) but don’t now feel comfortable turning them into round-two buy/writes because I am afraid to commit my remaining cash in case good opportunities come up. I almost want to close everything out and start over. It seems like I might be better off not owning anything and using all my margin and buying power just selling premium that is farther OTM but safer.

Forex/aclend: While apparently NOBODY was noticing yesterday afternoon, the USD, EUR and GBP currencies flash-crashed in the AH market:
DXZ Flash Crash Detonates Entire Currency Complex
I was watching it while it happened, and there was absolutely no news about it.  Looking at the charts, it looks like the EUR created the spike, which triggered the crashes in the other currencies.   Someone I was following reported to see unusual activity like someone was pressuring the currency with increasing orders to see how far they could push it.   Possibly to see if they could cause a crash.
Apparently, it is VERY easy to push a currency over the edge of a cliff.

Oh and just to add, it was a spike in the Yen on May 6th that triggered the Flash Crash. Food for thought.

Good Morning.
I’m not sure how much credence you can put in the technicals anymore. It seems the Bots have figured out that a lot of people pay attention to the technicals and thus use that knowledge to torture traders even more severily than normal when a technical level is reached. 
Never the less, I still like to pay attention to technicals and todays post on the "Chart Pattern Trader" has some interesting information that I haven’t seen before,so  I thought I’d post the link.

Sorry the above message was directed to flipspice.

That’s interesting and perhaps is a precurser to what is to come.

Hmm according to the Finviz charts it looks like it was only the USD:
But in any event, we all know what will happen it that EVER occurred during normal trading hours.

Pharm- is it normal for those idiots at the FDA to wait until 2 AM to release the response letter or was it arena that released it once they recieved it? Either way, pretty annoying.

ARNA is the one, jro, not the FDA.  ARNA most likely received it during the day yesterday.

Phil .. A big "Huh ?" and "Whatever"
"I could never get the hang of ideology …"

Bumper sticker with Ontario, Canada  plates spotted on Toyota Prius yesterday near the northern border:

Copper of 7 cents!? Im so sick of this crap….

of = up…. Not sure what the iphone was thinking!


They are back after the dollar again

 Whatever happened at the G20 and the special Geitner-China meeting is not good for the dollar.  Looks like the American people are being sold out again.
4:15 EST
dx/y = (.62)%,  E/$ = +.65%,  E/Y = +.26%,  Y/$ = +1.07%,  Dollar-Swiss(.82)%

So the dollar and E/$ cancel each other out leaving about +.03%, then ad the E/Y and Dollar Swiss = .26% + .82 = 1.08 ties out to the Y/$
Just looking at those shows almost exact lock step by the developed market currencies, they are walking together, that cannot happen by accident
So what is moving the dollar lower?  Has to be the Chinese Yuan going higher, that is the only currency that could affect everything
there it is Dollar-Yuan (.11)%, that means the Yuan is higher, forcing the dollar lower, and .11% seems small, but is actually huge on a pegged relationship
All of the major currencies moving in lockstep. then China agrees to float their currency higher, when this happens the dollar weakens, all of the indebted countries get a weakening affect overall too, China does not really care because it is pegged to the dollar and weakens also
The other emerging countries are hurt and so are US citizens

As bribery for all of this Europe gave up some of its IMF seats and voting power to China and India, so that area  is happy, that is the payment .  Plus China signed that ASEAN currency deal Thursday to keep that part of emerging markets happy.  Then congress agrees to make no manipulation decision on the Chinese currency this year.
Biggest losers, the dollar and the purchasing power of the US Citizen


Another thing I noticed:  starting last week WED, the relationships between the Euro-Yen-Dollar started moving in lock stop, then the Geithner comments
on Thursday, the developed market currencies had moved in lock stop all morning long then at the European close, 11:3-0-1140EST there was a big change on the Yuan
on Friday, again at the Europe close, there was a huge change on the Swiss Franc, the $-Franc shot up to +1.20%.  What was weird is there was no corresponding movement anywhere on the E/$, E/Y. Y/$ and the $-Chinese.  They just held the same percent change relationships.
So it almost like big clean up trades are done to keep things in line at the Europe close.
We need to watch the Dollar, Swiss, Chinese at the close of europe, if there was going to be accting moves it would happen on a basket currency most likely.

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