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Whig Party Wednesday – Reps take the House and QE Too!

Now, like many Americans, the Democrats know what it's like to lose their House.

Back in the mid-1800's, the nation had another kind of Tea Party as the Whigs became a successful 3rd party, even going so far as to put  two men in the White House – William Henry Harrison and Zachary Taylor plus Millard Fillmore, who succeeded "Old Rough and Ready" who died just after a year in office but that was a long term compared to Harrison, who caught pneumonia making a long inauguration speech in the freezing rain and died of it a month later despite attempts to cure him with opium, castor oil and leeches – treatments we are likely to see again as the Republicans vow to repeal Health Care legislation.  

I don't have to talk about what happened last night, Barry Ritholtz did a great job of it in "The Tragedy of the Obama Administration" so let's just focus on the repercussions of the changeover and, of course, today's upcoming Fed decision.  The Board of Governors were meeting all day yesterday and will meet again this morning to discuss their policy decision and one would think they can't be so deaf as to see that our citizens are not interested in additional deficit spending, which is exactly what QE2 is when the Fed writes checks to paper over the Treasury's profligate spending.  

Look for new and improved ways of not taxing corporations. Like GM, which will not have to pay taxes on its next $45.4Bn of earnings despite the fact that the Government paid for their losses already and allowed the company to bust union contracts and trash benefits for the millions of retired and fired workers as they shut down and sold brands – permanently shipping US manufacturing jobs overseas.

Of course, this tax break isn't about GM.  GM just sets a good precedent for similar treatment of Banksters and others who received relief under TARP and, of course, whatever they decide to call the next emergency bailout of Big Business.  If the market breaks our tops, we are going to be loving the XLF which already owns most of the people who got elected last night.   With FAS at $22.44, we can sell the April $19 puts for $2.75 and buy the Jan $17/21.67 bull call spread for $3.10 and that's net .35 on the $4.67 spread that's starting out 100% in the money and makes 1,334% if FAS simply holds $21.67

See, that's why we don't fear the upside.  If the market is going to have a mindless rally, we can find dozens of trade ideas that can keep us ahead of inflation like that.  This is why we can PATIENTLY wait for the market to PROVE it can move forward – our job is to preserve cash so we can participate in these mindless opportunities to make ridiculous returns while the life savings and futures of the bottom 95% is ground into dust.  

Do I feel bad about that?  Not anymore, they are going to get the economy they just voted for and that's survival of the financially fittest and we'd better get serious about it because no prisoners will be taken in the next round of "Survivor, America."  Already the commodities are flying in celebration of the return of control of the House to Republicans.  There will be no legislation, there will be no investigation, there will be no restrictions at all and oil already jammed up to $85 in pre-market trading along with gold back over $1,360 and copper back at $3.85.  Isn't that great?  $5 more per barrel costs US consumers $100M a day and there's NOTHING they can do about it. They must spend it and that's more credit card transactions and more retail spending on gas, which we'll use as data to pretend the economy is improving – BRILLIANT!

We have the MBA Mortgage Report this morning along with ADP Employment (+43,000 jobs – all service), Inventories and ISM manufacturing but nothing really matters other than the Fed, which has to ignore all the improvements in the underlying data and risk hyperinflation by jamming another Trillion dollars into the dead pool of the US Money Supply.  We like XLF, UYG (see Member chat for our plays on them) as well as FAS to play the QE2 game because, eventually, all this money will flow through them at some point. Globally, the banking sector is just a shadow if it's former self, as illustrated in this chart (click to enlarge):

It's also interesting to note that just 4 of the World's top 50 banks are US banks – this probably does not fit into the average voters delusion of US economic superiority but we love our delusional voters because they are also delusional investors who pay us premiums, aren't they?  Barry points out that the election means "Less Limits and Oversight of Banks."  If we can't beat them, we may as well join them as we gear up for round 2 of "Grand Theft America." 

It's all about the Fed today and then it will be all about Jobs on Friday.  Despite intervention on the Yen this morning that took the dollar back to 81 this morning, the overall dollars has stayed below the 77 line since yesterday morning.  My comment to Members near yesterday's close was that the market move was very unimpressive on the heels of a 0.7% drop in the dollar as they market should AT LEAST gain enough to offset the currency it's priced in and then you have the magnification as the commodity pushers move up on the weak dollar as well.  

Not seeing good action makes us wonder, how low does the dollar have to go to get us back to April's highs, when the dollar was 7% stronger?  All else being equal, we should be 7% ABOVE April's highs, not 7% below it and, if we can make 1,300% on a flatline – imagine what we can do with a 14% pop!

Here's looking forward to a very exciting final two months…

Chart via The Banker, Thomson Reuters, H/tip Barry Ritholtz 

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  1. Charts today:
    TBT…the death of a thousand cuts
    ARUN…Gel and another breakout…
    HOV…if builders get a pop, why not this one?
    SONC…looks like a reversal
    Why me?

  2. Hi Phil,
    Is there a way to send you a private message?

  3. NET $ =+.30% at 8:25, futures =1194.00, oil +.81

  4. The DX is only off a penny.  I’d say the PHILhysteria here is unwarranted and what the buck remaining stable means is that it sees NO major changes coming regardless of the election, it is acting as if the ‘election’ (which is a joke since lobbyists write our laws, not CONgress) is a non-event.
    I agree. The only good thing to come out of it,  is Nancey Pelosi no longer speaks.

  5.  The question is if this pumping of the market is the democrats way of giving the people incentive to vote their way. Will Ben pull the rug under to create a selloff to welcome the new republicans, just a thought

  6. Just for the record many of the silent majority LOVE it when Nancy speaks. We also love Robert Reich’s new book "After Shock" which explains what has happened to the working people in this country over the last 30 years in language anyone can understand.
    But understanding is not power. Money is power. Money is King. Thats why we all want it.

  7. Phil, I hold 9x CMG Nov $200s short and the losses keep piling up, the roll to Dec $210s got away from me and I can’t increase the number of calls anymore since this is already an oversized position.. With the election results and the Fed announcement today I now fear a massacre on this position.. I still want to short it but what are my options? I had sold 2x Jan $180 puts short but I don’t want to end up with also 9x Jan $180 short puts. My plan is that AFTER TODAY I can roll again to 9x Dec $200s for some credit to get me some time and sell 2 or 3 more Jan $180 puts. All I need is a bit of a pullback to reduce the size on the calls but it’s not coming. Do I have a choice? Any other ideas? Thx

  8. @redfern1
    Apparently your reading of the definition of majority needs to be revisited.  It just voted our something like 60 democrats and here in PA a repulican governor which is something remarkable.
    And don’t mistake a joy at losing Nancy as endorsing republicans.  Can’t stand the incumbents in either party since they are the ones chiefly responsible for the mess this country is in, because of the utter corruption of the seniors like Pelosi, Reid, Schumer, Dudd, Frank, Kennedy, McConnell, Boehner, and the rest of them need to vanish from face of the earth. (or the voters who put them in need their heads examined).

  9.  Whats with WYNN and their gigantic one time dividend. This is not the first time. I remember there was one around 60s

  10. NET $  =+.08%, F =1193.25

  11. Phil:
    Sounds like you are leaning toward a strong QE effort by the Fed? If true, is there any reason to hold USO puts from yesterday?  I am kicking myself because I was unable to jump out yesterday because of a prior commitment. Lost 50% which would have been great instead I am stuck .05 below where I bought them. Not a big deal, but do you think I will get another chance or should I just bail for a better opp. in something else. Where is member chat? Thank you.

  12. Good Morning.
    No gloating from me; and I know some of you don’t believe me but I am an independent (who just happens to dislike most democrats in leadership positions).
    The biggest surprise / disappointment to me from last night is Harry Reid’s political survival.
    The man simply disgusts me.
    Big night for Republicans and the country, those that want to roll back the havoc wrought by Obama Pelosi and Reid.
    Could have been bigger in the Senate, but weak Tea Party candidates Angle and ODonnell and possibly Miller hurt them.
    A couple of races still too close to call (CO and WA).
    Hopefully, today marks the end of the rampant manipulation / Fed put in the market.  I don’t care for Ron Paul either, but I hope he gets after the Fed, and that this will rein in all this QE BS…..
    I want to see an end to the endless pumping of crapola and a more normal market, even if it means the market drops.
    Good luck today all.   I am going to be looking for a short opportunity on OPEN today (short Nov 75′s or 80′s if the premiums are good enough).

  13. Well……I feel better now. 
    Boehner gave a speech and it sounds like he and the rest of the Republicans are going to fix everything.  Yaaaaaawwwwwwwnnnnnnn

  14.  yeah it can start with a market crash!!

  15. NET $ +.10% at the bell

  16. dclark41 / chat — this is members chat.

  17. Anyone recall what the current plays in XLF and UYG Phil referenced in today’s opening salvo are? Couldn’t locate in Tue member chat.
    Thanks in advance,

  18. Good Morning Phil:
    Re RIMM Ratio spreads. From your yesterday’s response, I gather to take some money off the table, you’d rather sell 1/2 a spread position than, roll up the long calls.
    Would you explain your reasoning and when, if ever, would rolling up the long calls would be a favorable move?
    Trust you’re enjoying the nice FL winter weather; Cheers!

  19. I don’t know if there is something more current, but I have July 11 and Aug 22 with mentions of UYG.

  20. Good morning!

    Sorry but I just lost my comment so the quick deal is same old levels as we’ve been using but we need a big move up over 12.5% before we take this seriously and it’s very bad the Dow can’t hold the 10% line.

    Keep in mind that the FAS play discussed in the morning post is to protect too bearish positions but I’m still leaning towards a sell-off on the Fed disappointing this afternoon.  

    Above the 11,200 mark, we can play DIA Nov $113 calls as momentum trades at $1.20 as the Dow has the most to catch up if we are breaking up.  

    It’s all about the Fed later so stay on your toes!

  21. Good morning David,
    It looks like we could have bought the overnight AET much lower today.

  22. David I take this back it jumped just about 1.00 in 3 minutes AET

  23. NET $  = 0, futures =1191.00

  24. rainman
    That’s what I thought. The better question would have been where are the XLF and UGY plays located. Thank you anyway.

  25. Phil,
    may you suggest a trade to capture huge $8 dividend (ex-div 11/19/10) announced by WYNN.
    Chaps, and other veterans of the board: any ideas?

  26. Watching Reid operate in Nevada to manipulate and win the election shows how broken our system has become.  Reid financed subversives to promote Sharron Angle in the primary allowing her to win against Sue Lowden, former Nevada GOP Chairwoman.  The top GOP leader in Nevada, Bill Raggio, endorses Reid in the general election, due to sour grapes from a primary battle he had with Angle in 2008.    The popular republican ex-sheriff Bill Young (who now works for Station Casinos) endorses Reid.  The CEO’s of Harrah’s and MGM (who control 80% of strip casinos) endorse Reid, then force bus their employees under close supervision to early voting booth’s.   Yes, I think the Daily Beast got it right:  Las Vegas is America’s dumbest city.  The establishment republicans in Nevada wanted Reid to win, knowing that they wouldn’t be able to control Angle.  This election was engineered by big money corporate interests, who don’t care about the local unemployment rate and foreclosure rate.   That’s why Reid has been so ineffective in Nevada…."they" want him to be that way.  Now we have look at that face for another six years and get more of the same useless banter he has come to represent for Nevada.   At least we keep a Republican governor who won’t likely rank as America’s worst, like the outgoing governor Gibbons.   Sorry for the rant….I’m done!

  27. David – I got in the AET trade late yesterday before the close and sold @ 31.12 this morning for a quick 3.7%. Thanks for the hit and run profit.

  28. lvmoda:  Come on… don’t seriously believe elections are manipulated.  I suppose you think the market is manipulated too!  What’s next…..slot machines, corporate earnings, Inflation numbers, …….don’t be so cynical!!!

  29.  exec, market is manipulated, just a politician’s tool

  30. Ivmoda/Nevada
    And I was under the misguided impression that the Repubs. were the ones for big business and the Dems. wanted more regulation of them. Guess I’ll have to get accurate info from Fox in the future.

  31. Phil,
    In your opinion.  What can the Fed say to stimulate the market vs. causes a sell off.  They may want a sell off.

  32. FEAR gives me a Boehner!

  33.  MYGN up $1 to $20+ after reporting earnings – might be a good long term growth story in the medical diagnostic / genomic filed – they have the patent – so far – on breast cancer gene (BRAC…) test – plus rolling out more

  34.  How can this be lackluster, prices paid shot up!! MSM is crazy

  35.  Exec – Yeah, you’re right.   I just hate having to see Reid’s mug for another six years as senate majority leader!

  36. lvmoda – you’re right about Lowden, it was the "chicken for health care quip" that doomed her. Las Vegas avoided the dumbest city title by voting for SpongeBob and not the moron, Patrick…..

  37. Message/Judy – Send it to Greg (admin at philstockworld dot com).

    DX/Flips – The danger to the markets is that international traders actually believe the Reps will bring some kind of fiscal responsibility into the mix and that will boost the dollar and tank commodities and the markets so fast your head will spin.  

    Ben/Chyer – He is technically independent (and a Bush appointee that Obama should have ditched when he had the chance) and works for the bankers and the bankers are going to celebrate this victory as it’s a green light to "do it to us one more time."

    Money/Red – It is now our duty, as American citizens, to make as much money as possible while we can so we can abandon ship the next time it all hits the fan – hopefully we have about 18 months…

    CMG/Rav  - The 2012 $250 calls are $22.50 and the $190 puts can be sold for $23.50 and that will give you a cushion as high as $275.  If you are very worried now, just sell the puts to balance out and eventually you will roll or, if you think protection to $275 is not enough, you should be glad to get out while they are at $217.

    WYNN/Chyer – Steve owns 11M shares.  Maybe he has some Xmas shopping to do.   Also, don’t forget dividend tax goes from 15 back to 20% next year.

    USO/DClark – Well I wouldn’t hold them into the Fed but we could still get bad news (for oil) at the 10:30 inventory report but not worth taking a big risk on.

    Member chat/DClark – That would be this.

    Congats Cap, now let’s see what your boys do with the opportunity.  OPEN had good numbers and they were weak internally but I’d stay small until we get an upgrade or two and then take advantage of that.  Whitney is getting hammered on this one!

    XLF/8800 – Those we did plenty of.  Jan $13/15  bull call spreads at $1.30 make 50% at $15 so a good deal with no margin required or you can cut them to .10 by selling 2012 $13 puts for $1.20.  UYG is fun because you can sell 2012 $40 puts for $5.80 with UYG at $56.84 and you can spend $3 on the Jan $54/60 bull call spread so 2 of the bull calls for 1 of the short puts gives you a massive upside on a very small gain.    Again, I am not really bullish but these are my favorite bullish index plays.  

    RIMM/Reza – Absolutely take gains off the table on the Nas but keep your leverage as long as it keeps heading higher.  You don’t want to roll into premium at the moment as doing that at the top could be a huge mistake.  

    Have to go to breakfast, will be back about 11:30

  38. ed/WYNN: Not sure I’d play a stock just to capture a one-time dividend. In theory, it will just reduce the price of the stock by the dividend. In reality, who knows?
    The ex-date is Nov options expiration date.  That means you have to own the stock the day before expiration to get the dividend. So you could buy the stock and cover it with with the Nov 110 calls. If you’re called away before Nov 19th, you’ll have made around $4 in premium. If not called away you’ll get $12 in premium plus the dividend, but have to deal with owning the stock.

  39.  Got a short strangle on PCLN which reports next Monday:   Nov340P/Nov450C.  At current price of 380, I’m biased toward a strong report, but not strong enough to take it over 450.

    Interesting tax ruling about government owned corporations not having to pay taxes. I guess this also means the union won’t have to pay taxes on their sahre either.

  41. Phil,  In TBT with a jan 35 call.  Would you let this ride or move it out a couple of months?  Is this too short a timeframe for the inevitable inflation?

  42. I’m not sure what happened with oil inventories, but cnbc was posting oil inventory info last night after the close. That is when oil popped and hasn’t pulled back at all even with $ move up.  I don’t know if they leaked and so they released early or this was different inventory info or what. NOT SURE

  43. That was for DCLARK

  44. CNBC/Former Fed Gov - Interesting hearing a former Fed Gov state that QE2 will do very little to help the economy (eg drop unemployment by only 0.25% by 2012)…but it is "the best card in the deck, and they have to play it".  The risks outweigh the benefits IMO… 

  45. DCLARK/USO -  I wonder if the fed can allow oil to keep going up? Basically that will negate the effects of QE. The worst thing they can do is tank the $ at this point sending oil way above $85.

  46. PHIL
    your thoughts please on employment at the end of the week? or will it even matter if the Fed disappoints today?
    thank you

  47.  I think the bankers will have more to make if they tank the markets. Public will not blame him for disappointing, in fact cheer him for not being another greenspan. There are enough bad news across the pond to crash this market and they will be begging Ben to do a even bigger QE. I think if ben does anything to crazy any failure they will hang him out to dry. Wall Street has a vested interest to keep him  around

  48.  Goldman, I hear alot of people say it is a bad idea. Bill Gross named him a Charles Ponzi!! But when asked should he, they all say yes

  49. JUDY
    Thank you. What did CNBC say? Otherwise, I will wait until 10:30 and see if the report is confirmed.

  50. I didn’t hear discussion, it was just on their breaking news line.
    And, I watched my uso get devalued

  51. It was api last night.

  52. Interesting…anyone see anything about TGB?  Taseko Mines….couple of weeks ago, they were a flash crash victim falling 30% in less than a minute, only to recover.  They went from 6.30(ish) down to 4.40 during that crash.  Since, they have been trading 6.10-6.50.  Today, they open back at the flash crash low, $4.45, and haven’t done anything. 
    Just wondering if anyone’s seen something I’ve missed.

  53. Hi Phil,
    Looking at your recommendation below, I am in a similar position. Do you mean buy the Jan 250 call.
    looking at the stock at 217.40 the 200 Jan 11 caller at 24.00 has still 6.40 in premium and I sold the Jan 200 for 21.55.
    I am somewhat more concerned that the stock is heavily overpriced and one could get burned with a 190 Jan12 put.
    Thanks for your input.
    CMG/Rav  - The 2012 $250 calls are $22.50 and the $190 puts can be sold for $23.50 and that will give you a cushion as high as $275.  If you are very worried now, just sell the puts to balance out and eventually you will roll or, if you think protection to $275 is not enough, you should be glad to get out while they are at $217

  54. NM…found it.

  55. lvmoda — good points, thanks.  I hate that guy (Reid).  What an arrogant, inept, corrupt d-bag.
    OPEN / Phil — well, I took advantage of the early excitement and got sales of a few Nov 80′s for 65 cents.  Missed on getting the 75′s for $2.
    CMG / that’s been a beast.  I feel your guys pain !
    EOG – getting hit w/ the ugly stick !

  56. Good morning,


    IWM 70.40, 70.96, 71.28, 71.65 and 72.13

  57. Flip/majority
    Only the "interested voter" has spoken…. the silent majority is apathetic and knows NOTHING will change… As for replacing your lineup of incumbents, this will take time to clear the "room" but it will not make a difference because the system is corrupt from the bottom to the top.  The American public and voter is stupid… why stupid??? Because, they do not have the ability to learn or educate themselves to the real issues affecting the destruction of the country and most every voter is ONLY self-interested… not what is good for the country.
    YEPPP, your right, you sure fooled me ?!?!?!?! If your an independent, (I assume by registration only not by voting record)… after reading you for six months, what does a conservative Republican sound like….??? Smile… You will not get your wish regarding the Fed or the market.  The Fed will continue to run this experiment until the country is 3rd world status and a new currency replaces the dollar.  All the people who were voted in yesterday will only continue supporting the people who "ramp and manipultate" the markets.  An error in thinking is they are more educated about our problems than the people they replaced.  Sooner than later, that "job" will look pretty cushy with salary, benefits and lifestyle.  the machine of the corrupt system will devour them too.  Have a Good trading day….
    Welcome to the club.  the voters do get what they deserve….. after all W winning a 2nd term already has proven that….. We now have impulse and reactionary voting and politics… the in fighting will continue.  Last night, I had to run and get a 2nd box of Kleenex while I listened to John Boehner give his little talk…..Boehner’s history of a large family and small business owner (as myself) does not equal to his voting record…. the word I am searching for…. HYPOCRISY…..The Republicans are true to their word…. the first 2 years was to say "No" (as stated by one of their own insiders) and the next 2 years will be to make Obama a one term President…. "No" will now be ‘stalemate" and the country "be damned"….. it will be the same music but a different tune…. The CNMC crew of "Strategy Session" was interesting to watch yesterday in reacting to David Stockman’s description of the economy and the markets and it’s dire future in continuing this Fed policy….. the "Crew" as always, was in disbelief that his summary of bad news could indeed happen….. what Cheer leaders for this market….. HIgher and Higher and Up, Up and Away….        

  58. Phil, further to the CMG above looking at the market at 10.30 there is not really any enthusiasm S&P just minus and dow +- 20 not showing any buying frenzy after the election, I would say we will go down from here at least short turn.

  59. Judy
    Guess I should have watched CNBC! Not a good day for USO puts. Did you own calls or the stock? If so, congrats! Not sure what the large inventory drop was from?

  60. NET $ = (.68)%, while the dx/y shows +.19%
    F = 1192.25, oil +1.08

  61. What ever happened to JR and his lines? I sure miss his tutelage and insight.  Has he moved abroad?  On another vacation?  Or is he  just swimming in his pool of cash?

  62. dclark,
    I had the same puts – phil called yesterday, except I went with Nov. instead of weekly

  63. Wealthwarrior – Look above…

  64. dclark Not down too much, but been trying to get enough $ to stay. I have a nack of picking the losers.

  65. acobra65 – Yep, the American Idiot is alive and well, and they exist on the left and the right. Our best days are behind us…..

  66. Mike
    why do u think the $ just boundced

  67. As Phil pointed out, it’s not what you or I think about the election or political system.
    How are traders, hedge funds, and international investors going to interpret all of this – not to mention Dick and Jane (but they seem largely absent from US equities)

  68.  Traders are probably all on the sidelines waiting for the Fed -
    election seems like a sell the news / non-event – it should have already been priced into the market – bc no big surprises.

  69. Judy:
    Here’s for picking losers! Cheers! Another member! :)     I have been on a bit of a roll losing too with these short term trades after doing very well with them. Thank god they are small trades. Still have QID, DXD, FAZ, and UUP short. 4% of portfolio. Good Luck.

  70. Gov. Moonbeam II – this is a serious question for our CA residents- what is the outlook given Mr. Brown’s victory? What’s his plan for salvation?

  71. You know there are 1000s of people commenting on a potential selloff but an interesting one that Ive read said the news itself wont cause a big selloff but we could have a minor selloff before the news because everyone is reading that there will be a sell off after the news…. Ive been going back and forth with the whole reverse-reverse-reverse psychology so much that my head is spinning… My gut tells me Phil is right (like usual) and I should stay in cash, but that’s pretty hard to do on a day like today…lol.

  72.  Gold lost it!!   18 bucks down

  73. Pstas -- 
    Jerry Brown was an excellent governor and had a reputation as a fiscal conservative.  Not only did we have a balanced budget in those years, we had a surplus.  It’s great to have him back.

  74.  22 bucks and counting

  75.  Someone is liquidating huge

  76. EOG dropped by more than 10$$$$$

  77. Went short CMG a couple of minutes ago.  Got filled on the DEC 195 PUT at $3.40.  The way I figure it, If we crash, this guy will go back to its pre earnings level of around 170.   

  78. excohen- Brown- I get that, but the state was flush then- what is his plan now that CA is broke?

  79. Gold is melting……oh, and good morning from the Brown State. 

  80. Hey hey! Nobody believes in inflation anymore?

  81. Jro – totally with you on that…
    TGB had their Prospect mine project rejected by Canadian Federal authorities.  Hrmmmm…ouch.

  82. So, is gold selloff saying that QE2 is gonna be less than expected?

  83. GE Healthcare has entered into an agreement to acquire the assets of Orbotech Medical Solutions, a subsidiary of Orbotech Ltd. that manufactures cadmium zinc telluride detectors. These detectors are used in GE’s Alcyone nuclear medicine technology. GE will pay $9 million in cash at closing for the assets of OMS and up to an additional $5 million in cash, subject to the achievement of certain agreed performance-based milestones.


    Although, they are still as insolvent as our banks, but hey….don’t matter.

  84. Short IWM

  85. Hey all,
    We have a new Midterm position in Solarfun (SOLF) for a hold into Monday. We are looking for at least 3-5%, but this could be much, much more.
    Good Investing!

  86. Good Morning from the land of "loony tunes". For the past 38 years I have watched my State of California spiral its way into the financial toilet. The election yesterday was the last hope for survival. Sadly, the inmates in the asylem are still fully ensconsed in the position of control, and the final chapter will soon be written. I was living in San Francisco at the time Jerry Brown was Governor of the state, and he was the principle reason the State was placed on a trajectory of fiscal hari-kari, and " Governor Moonbeam" has been re-cycled to finish the job, in finality. I have a prognostication….. California will default fiscally…… the taxpayers of the US will pay the debts, and the State will become a continuing "laughing stock" as a place for business development.  Thank goodness for the tech industry, but that will not last forever.  Lastly, the proposition to legalize pot went down in flames… too bad, as that could have saved the "crazies" from the pain that is headed their way. Sorry for the rant, but disappointment sometimes overwhelmes constraint.

  87. ivmoda, Every 2 years 1/3 of the Senate is up for reelection.  Reid could get bounced as majority leader in 2012 and probably will.  The Republicans are great at campaigning, bad at governing.  The Dems are bad at both.

  88. NET $ (.37)% with the dx/y at +.11%
    reminder Europe  closes an hour late this week, till we have our time change in the states

  89. btw, really suprised to see the relative size of US banks to others.  How did England, France and Germany manage to hold onto so much $?  I guess history is on their side.  Kind of takes the steam out of any US clout for Basel III.  And seeing how our Fed / Gov caused this global downturn we should just sit there, shutup and do what they say.

  90.  Dollar did  not even spike that high, something is going on

  91.  Craig,
    Can you help me with you trade strategy, If you think CMG could go back to 170 and would be put to you at 195-3.40 net 191.60 won’t that be a bit painful and spoil your Christmas?

  92. right on the dx/y
    the net $ rallied from (.68)% to (,02)% in 10 minutes from 10:35 – 10:45, while dxyy did not even budge hardly
    but, that is when the market sold off

  93.  Phil -
    What do you see for gold – just getting back to even on GLL and would really like to continue to hold – looking for a 10% pull back

  94. I’m back!  Looks like I didn’t miss much.

    Oil traders back to old tricks as very disappointing 2Mb build in crude not stopping them from heading higher.  Refiners have shut down with -2.7Mb gasoline and -3.6M distillates.

    Gold got hammered very violently on tiny move by dollar over that 77 line – be careful Gel!!!

  95. The only thing the right can say about Brown is to keep repeating the "Moonbeam" thing, as if it were some magic elixir to change what actually happened in the 70s into something else.  The fact is, Brown was a fiscal conservative.  Look it up.
    As to your question, Pstas, we need to get the budget balanced and control spending, and, my point it, Brown has done it in the past and he can do it again.  If he says to the Democrats "we need to cut this or that," or "we need to renegotiate these union contracts," it carries much more weight than having an empty suit like Whitman say it.  We tried that, it didn’t work.
    The election was not close….Brown won 54-41, and Whitman spent $150 million.

  96. Uh Gel ?,
    I agree with you that California is going to default, but that balloon set sail a long time ago.  You can’t blame Jerry Brown, who I happen to think is the only honest politician in government.  And seriously guys, I didn’t much like Pelosi, but Boehner???

  97. Thats a quick drop, fat fingers?

  98. Huge swing lower  here
    the NET $ is (.81)% lowest I have seen today, even while the dx/y rises +.23%
    F = 1188.00, oil +.44, Gold (23.60)

  99. Having Jerry back is like having the Stones perform at the Super Bowl a couple of years ago.  Very Ground Hog Day like!!

  100. Gel/CA – from an outsiders perspective, it was nice to see that $140M of personal wealth thrown at an election failed, not considering the consequences of who won, etc.  Someone with that sort of money has no "real world" connection to the majority of the population, IMHO.  Plus did it really matter who won…CA is going to default, Uncle Sam will pay the bill…if anything, the outcome will speed up the inevitable bailout…

  101. Wednesday’s economic calendar:
    Auto sales
    FOMC Meeting, Day 2
    7:00 MBA Mortgage Applications
    7:30 Challenger Job-Cut Report
    8:15 ADP Jobs Report
    9:00 Treasury Quarterly Refunding
    10:00 Factory Orders
    10:00 ISM Non-Manufacturing Index
    10:30 EIA Petroleum Inventories
    2:15 PM FOMC Announcement (QE2?) 

    At the open: Dow +0.09% to 11199. S&P +0.06% to 1194. Nasdaq -0.03% to 2533.
    Treasurys: 30-year +0.52%. 10-yr +0.23%. 5-yr +0.05%.
    Commodities: Crude +0.29% to $84.14. Gold -0.18% to $1354.50.
    Currencies: Euro -0.1% vs. dollar. Yen -0.69%. Pound +0.37%.

    10:00 AM On the hour: Dow +0.1%. 10-yr +0.15%. Euro -0.07% vs. dollar. Crude +0.58% to $84.39. Gold -0.27% to $1353.20.

    11:00 AM On the hour: Dow -0.02%. 10-yr +0.28%. Euro -0.05% vs. dollar. Crude +0.79% to $84.56. Gold -0.79% to $1346.20.

      MBA Mortgage Applications: -5% vs. +3.2% last week. Thirty-year fixed mortgage rate increased to 4.28% from 4.25%. – Very pathetic at these interest rates!

    Oct. Challenger Job-Cut Report: 37,986, a slight increase from September’s 37,151 planned layoffs. "Job cuts are the lowest they have been in a decade, due in part to a slowly improving economy; if not the fact that many employers have basically cut their workforces to the bare minimum. Unfortunately, the lack of spending by consumers and businesses is stunting demand for new workers." 

     Oct. ISM Non-Manufacturing Index: 54.3 vs. 53.4 expected and 53.2 prior (>50 denotes expansion). Prices index 68.3 vs. 60.1.Employment 50.9 vs. 50.2. New orders 56.7 vs. 54.9.

     Sept. Factory Orders: +2.1% ($420B) vs. +1.7% expected, -0.5% in August. Ex-transport, +0.4%.

    EIA Petroleum Inventories: Crude +2.0M barrels in-line with consensus. Gasoline -2.7M. Distillates -3.6M. Futures +1.24% to $84.95.

    As projected, Republicans retake control of the House while Democrats hold onto their Senate majority despite GOP gains. Winners from the power shift include companies like IBM (IBM), Microsoft (MSFT) and Blackstone (BX), which now have new Republican allies in their fight against proposals to increase taxes on overseas profits. 

    After racking up billions in debt, getting a gov’t bailout and filing for bankruptcy, GM may now be eligible for tax breaks worth up to $45.4B, thanks to a little-noticed federal ruling last year allowing recipients of TARP bailout money to use tax-loss carry-forwards.

    GM Oct. U.S. sales: +3.5% to 183,759 vehicles (vs. Edmunds expectations of -4.2%), with core brands up 13%. Chevrolet continues to lead sales, up 6.7% to 124,294; GMC up 30.3% to 33,136; Cadillac up 15.4% to 13,393; Buick up 38.8% to 12,569. (Detroit Free Press)

     R&D spending dropped at major firms last year for the first time in over a decade, with cuts concentrated in big-spending sectors like auto, computing, electronics and industrial. The top three R&D spenders were Roche (RHHBY.PK with $9.12B), Microsoft (MSFT, $9.01B) and Nokia (NOK, $8.24B).

    Oct. ADP Jobs Report: +43K vs. +23K expected and -2K prior (revised from -39K). "Since employment began rising in February, the monthly gain has averaged 34,000 with a range of -2,000 to +65,000 during the period… [but] employment gains of this magnitude are not sufficient to lower the unemployment rate."

    The CFTC is investigating a range of nat-gas trading activity from 2008-2009, and has sent subpoenas to hedge funds and other major traders. Subpoenas aren’t uncommon, but it has been years since the CFTC sent out this many and industry experts say they’re not sure what exactly the CFTC is looking for.

    Ireland’s five-year CDS spread widens to another new record as political pressures continue to sour sentiment on the country’s debt. The resignation of a member of the government’s party from parliament reduces its majority to just three, raising more doubt whether a budget will be passed by the December deadline.

    Apple (AAPL +0.5%) could sell 100M iPhones and 48M iPads in 2011, Wedge Partners analyst Brian Blair raves, and if that’s not enough, the new 11-inch MacBook Air is "spectacular… different than any existing Apple product." Blair sees the Air providing a boost to Mac units this quarter plus "meaningful incremental revenues" next year.

  102. escohen… To correct the record…. Jerry Brown was a "disaster" – Just a quick revelation… Brown was the one that brought public service unions into the stae… public service unions have "strangled" the state financially through their extortionary methods, and the result is what you see today. Brown’s entire campaign finances were paid by those unions… so why would we expect a change for the better by re-clcling the guy. Sorry, but I do not see the State revising the misdirection that has destroyed the state’s balance sheet.

  103. Phil:
    Well, it looks like the Repubs. are going strongly towards austerity and, on the other hand, if Obama holds firm or claims that a loss was "not as bad" as a "real" loss then we are headed for gridlock. Don’t you think that will lead to more uncertainty and essentially more of the same for the markets? In other words, range-bound markets. I don’t see any clarity from what I’ve heard so far.

  104. Chyer/fat finger drop – in the past 20 minutes, IWM moved up off the 71.12 level and stopped at the upper bollinger band, then up to the 50sma, then up tp the 200sma, then bounced off the 71.28 level and dropped to the 8ema, then dropped to the 50sma, then dropped to the 71.12 level, then bounced back to the 8ema/50sma.  Nothing new…the programs are trading technicals with each other…

  105. Phil
    will those tax loss carry forwards count for the banks too?  so they might actually want to create losses on those bad assets?

  106.  QQQQs under trendline 52.65 unable to get above. 

  107. NET $ is (.99)%, with the dx/y at +.26% for the day (,owest I have seen on the NET today)
    oil +.33, gold (21.50)
    F = 1187.50

  108. While the Fed could put a hurtin on it.. today is all about the dollar.  Now that Republicans and going to bring down spending (not necessarily the deficit) that should help the dollar and hurt equities.  I know Phil likes FAS.. but I’m shorting it going into the meeting.  8-)

  109. Phil/Spain
    The "assumed creator" of the Tea Party movement, Rick Santelli can look to Spain for solving the problem of the homeowner with the extra bathroom who cannot pay the mortgage….. it’s called "debtor’s prison".  It is estimated that 20% of the populace could become "slaves to the banksters" for the rest of their lives…. this includes guarantors on family member loans.  We (USA) might feel that our brand of capitalism which rewards the ultra rich at the expense of the middle class and the poor is the best system on earth….. but in Spain, the bankster’s are the equivilent of the "Financial Mafia" because it is "Heads you Win and Tales you lose" (No Bankruptcy Solution)…. The Financial Mafia will get their money no matter what…..even if it takes FOREVER….. Think of it, in a creditor.debtor relationship….. All the RISK for the DEBTOR and NO RISK and plenty of UPSIDE for the CREDITOR.  Maybe, our Congress will now pass a law which retroactively will prevent these "American losers" from gaining relief from the banksters….. AND you thought our system was RIGGED…. SMILE… 

  110.  Phil: DBA help Yesterday
    I found your suggestion to adjust a DBA position really interesting and expect I’ll learn something as I watch it.  I wouldn’t have been paying any attention to the net delta’s of positions and see that’s one of the keys you focused on.  I feel that I’ve learned something else that should help me “catch my own fish instead of relying on you to give me one”.  J

  111. NET $ (.80) now
    10yr = (2.04)%, 30yr = (1.37))% so some buying of treasures
    European close coming in 30 min

  112. Newbie trader, sorry I was not more clear.  After a while on this board you begin to leave out details explaining your trades because you just assume everyone speaks fluent options lingo.
    I bought the CMG DEC 190 PUT for $3.40.  This means I hold a contract which says I can sell 100 shares of CMG for $190.  If CMG were to retrace all the way to $170, the 190 PUT would be worth over $20.  At which point I will happily sell it back collecting my 600% return.

  113. Pharmboy
    What do you think of
    UTHR – United Therapeutics Corporation (NASDAQ)

  114. have the FED 2:15
    then ECB, UK and Bank of Japan overnight with rate decisions

  115. @acobra65
    I don’t vote anymore, not after what the republicans did after ’94, the ultimate model of hypocrisy.  That crowd lost me as soon as the revelations of homosensuals in the ranks, the outsized corruption, and two-faced turn about they did on term limits.
    So don’t peg me as a conservative.  If you’ve read me for 6 months you can put together a picture of a much chastened ‘independent’ who will never cast another vote as long as the Lobby system continues to hijack the vote.  If that wasn’t made clear to you by the trillions in bonuses paid to failed financial types by Paulson and lately tacitly agreed to by the Bamster and Bush, then nothing will.
    Elections are just another form of Reality TV without the pretty, sweaty girls in short shorts and skimpy tops.

  116. Woopsy, that was the 195 PUT, not the 190 PUT.

  117. Fed/Exec – Boy, I have to skip a lot of comments to get to one about the market!  It’s all about the amount of QE2 that they approve.  Market expectations have now run wild and the Fed has said nothing at all to dissuade them so anything less than a medium-term commitment of 3-6 months of at least $100Bn a month will be a huge disappointment.   I can’t imagine what they can possibly do to surprise to the upside.  

     Wages/DK  - Notice that this number adjustment shows that national average wages fell much more than reported, by $598 to $39,055.  The timing of this is very interesting.  It’s amazing how much just two high earners can skew the entire national average – makes you realize how little the bottom 99.99% really earns. 

    WYNN/Ed – What Chaps said, it’s not worth the hassle – the numbers are baked in and you won’t be fooling anyone.  Best play is, if you want to go long – is to take advantage of put premium when they drop and sell short puts but I think WYNN is a bit toppy here anyway.  

    TBT/Trad – We moved back to 2012 as it was too scary playing for Jan but, if the Fed doesn’t make their $100Bn a month pledge, things could move fast.    Guy on CNBC just said the right thing:  Don’t fight the Fed but don’t play along with them either.  Let them buy all your notes and take your money and play something else.  

  118. Phil – I took the SPY puts you suggested yesterday afternoon at $0.65.  Because of unexpected events, I was out before I could close the position.  This AM, I doubled down at $0.55 giving me a net entry $0.60.  Sold 1/2 at $0.74.
    See, you are rubbing off.

  119. Sorry for confusion, I meant away from my computer and didn’t close position.  2 yr old fell down.  She’s ok, but had to leave computer.

  120. BAC going to sell its Blackrock stake
    selling a good asset to hold on to toxic carp, jmho

  121. Boehner Dead Cat bounce!
    Small run up, same old says nothing, market goes down. QE2 will most likely be a sell off, get ready.

  122. Phil and other site veterans:
    Is there a high-reward direction neutral play that makes sense now?
    How about a long DDM(double Dow) strangle Nov51C/50P ($2.55)?

  123. Trucks  – have you guys checked vehicle sales reports (Honda, Toyota, and Ford) over at Seeking Alpha? People are still buying pickups and suvs more than sedans, or at least those vehicles’ sales increased more. Would’ve thought that audience had pretty well dwindled by now.

  124. StreetTracks Gold Trust Hearing weakness in gold partially attributed chatter of a large seller in the gold ETF ahead of the FOMC meeting
    - speculation is likley big name hedge fund 
    - COMEX gold volumes have surged to roughly 4x normal volumes over last hour or so 

  125. NET $ (.88), Europe will be closing

  126. Oil/Judy – Those were the API numbers.  Like ADP on jobs, they are a private measurement that has little to do with the final numbers.

    QE2/Goldman – The risks are out of control hyperinflation that destroys all savings in this country so I’d have to agree with that.  The only good thing about it is it wipes out debt so we can all start fresh except this time we’ll end up bailing out the banks for $100Tn and that will be out new national debt after we pay off this old one.  

    Oil/Judy – The Fed doesn’t care about oil or the people that use it.  The Fed is not our government, the Fed is the arm of the banks that is tasked to work with the government to "maintain financial stability" which has been interpreted as making sure banks make as much money as possible.  The Fed has a "dual mandate" to control inflation (because banks don’t like inflation) and promote full employment —  we can already see how they interpret full employment!

    Employment/Z4 – Until we are creating at least 150,000 jobs a month, the employment numbers are meaningless.  That doesn’t mean they won’t move the markets but they shouldn’t.  The key will be what the Fed says because if they are going to base QE2 on forward data, then good jobs mean less QE2 (bad news continues to be good news).  

    TGB/Hoss – It’s not nothing. Canada blocked a mining project of theirs and Cannaccord downgraded them.   Very dangerous stuff.  

    CMG/Yodi – No, I’m saying that’s the roll target (into the spread) so there’s no need to do anything unless you are worried and then you can just sell the put to mitigate further upside damage (but, of course, it means you have a long wait to get even most likely).  That’s my point, though – If selling the put really worries you, then why worry about the upside?  Sometimes you have to take a proper stand on these plays, as long as you are realistically prepared to deal with the downside if it goes against you, of course. 

    Speaking of sell-offs – someone is a little nervous about the Fed not coming through.  Even JRW is up early! 8-)

  127. UTHR/qc – they need that oral form of Remodulin to move forward.  Revenues went up considerably, and would consider them a takeover for a mid tier pharma (GILD since their PAH is not so hot).  A flag is forming on them, so a move either way is coming….ease in or wait for things to settle and a direction to be set.

  128. Phil, on the DIA 113 calls, I could use some guidance on how to time these (and other calls).  Was 11,200 meant to be a hard stop, or were we supposed to see where we were after the FED before dipping in?

  129. CADX – gets FDA approval….stock drops15%.  Nice.  IV Tylenol.  Woop teee doo.  Companies with no originality really annoy me.

  130. Matt/Banks
    "Sit there, shut up and do what they say"….
    Obviously, you have not heard of "OUR" USA Theme song by Toby Keith…. Smile !!!  WE, don’t sit there, shut up and do what they say to NO ONE…. Or…….. We WILL PUT A BOOT IN THEIR ASS…..  It’s the American Way….

  131. Boy oh Boy…..I’m actually enjoying reading some of the posts today.  Are the people at PSW the only ones that get this stuff????
    acobra65:  I couldn’t have said it better myself.  
    As far as California goes…….they are a disaster and it appears that it will get work since they’ve kept the same disaster creating politicians in power.  It don’t doubt for one second that they will default and some vote seeking political party will offer to bail them out at the tax payers expense.  Hmmmmmm perhaps that fault line will take minimize the size of the bailout before it occurs.

  132. CA- well, best of luck w/Moonbeam II. Here in IL, we had a the supposed reformer Lt. Gov. Quinn take over for the defrocked Blago . He quickly encountered the shear power of the combined behemoth of the unions/contract cronies all held together by a bipartisan political combine which is corrupt to the core. In a tight re-election fight, Quinn bought off union support with an layoff protection agreement to recover from strong challenge from Republican challenger Brady. The final results are not in and Quinn hangs on to a slim lead. There are the usual shenanigans with absentee ballots, etc. but rest assured there are sufficient ballot boxes tucked away to be miraculously discovered should the need arise. So, despite some positive Congressional gains, the state structure remains essentially unchanged. The state is flat out busted; bleeding jobs; being crushed by pension / benefit obligations plus Chicago/Cook County is a financial basket case having already raided the multi-billion dollar "rainy day fund".
    It will be interesting the monitor both CA and IL as canaries- right now, the prospects for both seem dim.

  133. Phil, Chaps/WYNN thanks a lot

  134. Acobra – ugh PuhLEASE dont mention Toby Keith!!!

  135. Phil – never said it was nothing. Prospect mine is a large development. Not permitting it is a very big deal. Sorry if you took it that I thought it was nothing. That’s not what I meant.

  136. Phil, I hold 2x NFLX $170s short, they are all premium at this point but I’m not sure whether I should close them now (and get out even) before the FOMC announcement and then re-think the idea of shorting them again once we know the outcome of this week’s events.. The reason why is because I already have enough of a fight with CMG to then compound the problem with CMG if NFLX shoots up like crazy. Not that I’m unsure about their ridiculous value but I just don’t want to deal with two big losses. CMG is giving me some bad opportunity costs because I’m limited to do other plays while I fight them.. Would u suggest I close them before the announcement?

  137. Hi Phil,  hope you are enjoying the trip.   I have a question about our good old friend TBT.  I think I am a little overexposed here.  My initial thinking was it would protect my cash sitting on the sidelines.  However, it doesn’t seem to be doing this job as Fed’s Ponzi scheme has manage to  keep the rates low while killing the dollar.  Getting to the question part… I have 1000 TBT shares with an ave price of $42.00 which I have been selling calls against.  Which action would you recommend at this point: 
    a) sell the shares, buy 1x calls  2012/2013 ITM calls (like $20 strike) and keep selling calls against  them every month (calendar spread) and use the remainder for something else to protect sideline cash.   Please recommend what else can be used to protect sideline cash.
    b) sell the shares, buy 1x calls /sell calls monthly + sell some OTM puts (would want to increase my position by much though)
    c) sell the shares/ buy 1.5x or 2x calls/sell calls monthly.  
    d) keep the shares/keep doing what i’ve been doing with selling covered calls.
    e)  something else – please recommend.

  138. Flip/Conservative
    RE-READ my post….. Maybe, your too sensitive……My comments you are referring to are to "Cap" not you…… !?!?!?
    I agree with your assessment of the system and both parties. Stick around…. MAYBE, Newtie will have another shot at bringing back 1994……….. In my opinion, he is responsible for initiating in 1994 the acrimony and polarization we see today.   Of course, the Me, Me generation hasn’t helped that situation for the past 16 years.  Have a good day… 

  139. Pstas – yup, we’re going down like Fraiser! Not to fear though, the Federal government will bail us out. Wohoo! Isn’t being a FIB’er great? F****ng Illinois Bastard.

    If we could move, I’d a been home to Tx years ago, this is bullshit.

  140. Question for everyone.   Doug Kass’ favorite long is ASPS.  Anyone playing this stock?  If so, how?

  141. Good 10:37 call Yodi!

    LOL Matt, great political summary!

    Dollar/Mike – Seems like the pressure is still coming from Japan.

    Gold/Samz – Like everything else, they are pre-supposing a lot if loose currency and anything less than massive QE will find virtually no fundamental support for gold at these prices.

    Moonbeam/Esco – Anyone who dares to equate a balanced budget with asking the rich and corporations to contribute their fair share is guaranteed to have well-paid PR firms assassinate their character and the public much prefer simplified labeled insults to any actual analysis of their actual platform and political achievements so Governor Moonbeam it is!   Brown’s election and Carley’s defeat give me hope that all is not lost but I don’t get how pot was defeated…

    Range-bound/DClark – I suppose it will be.  That’s what I expect, it’s just a question of what range we’ll settle into.

    Taxes/Mike – Once you have one decision like GM’s, it opens the flood gates for every one of them to run to tax court.  And why not, if they get out of the tax, it’s well worth the money they spend in court and, if they don’t, then the court costs are tax-deductible so, either way you and I pay to insure that Big Business pays as little tax as possible.

    FAS/Matt – I only like them as an upside hedge.  Overall, I remain bearish on the assumption this is the top of the range.  

  142. Who are these crackheads buying oil here? Im shorting, its got to come down to at least 84.50 before the announcement.

  143. UUP: looks like a 5-year low at 22.  This has to hold.
    Bad news if Fed/QE2 allows to sink under that. Lot’s of good discussion around QE2 risk versus reward. Seems to come down to "well, what else can they do?" 10y rates at 3.2% possible in the short term. That’s +46% on TBT, putting them at 47.50 from here. It’s been a thorn in my side since July, but the truth is, when it goes, it goes.
    Gold sell-off is good news — blow-offs from some of the recent high-fliers (I’m talking to you, CMG), would be very nice indeed. AAPL, PCLN, NFLX.
    WYNN: does that 8-dollar div effect Nov expiration? Makes 100 puts seem underpriced at 1.05; could be an interesting gamble?

  144. NET $ (1.09)%  lowest I have seen today, dx/y +.20%
    C = 1190.08, F =1187.00
    oil = +.84, gold (17.80)

  145. WYNN/biodieselchris: WYNN is going ex-div on the $8 special dividend on Friday, November 19 (options expiration day).  Should cause the strike price of all the active options to move down correspondingly on that day, so a 100 put will turn into a 92 put overnight.

  146. Phil do you still favor UUP? There must be a bottom somewhere?

  147.  Phil, I’m with you on the CMG comment to Yodi’s.. I can’t sell the puts precisely for that reason you mention to him.. so it’s not that I’m worried about the upside, it’s just that I want to be able to handle this one correctly. Don’t want to make a mistake.. so sticking to my conviction, I had rolled my short 9x Nov $200s to 9x Dec $200s.. I did this so that the calls still have premium on them and I don’t run the risk of an early exercise (since the Nov $200 were 95% intrinsic value and the rest premium).. with the Dec ones at least I get more time. So now that CMG has crossed the HIGHEST target price of ALL the analysts ($215) I would expect a downgrade very soon based on valuation.. even though they might not take them down so much, my plan is to wait for this pullback to come THEN I can roll from 9x to maybe 6 or 5x Jan $210s and simultaneously sell some Jan $180 puts (I already sold 2x). I would expect CMG not to have THAT BIG of a pullback ($180 is the price prior to Q3 earnings announcement) until at least the next earnings announcement, so in January 2011 I would expect them to be around the $200s level just in preparation for the next Q release. From experience, I kind of feel that significant reversions/sentiment changes/more proper valuations come during earnings announcement, so before that I don’t expect that big of a fall (and I sincerely doubt that the markets will fall into a double-dip recession or something drastic). Would you agree? 
    CMG/Yodi – No, I’m saying that’s the roll target (into the spread) so there’s no need to do anything unless you are worried and then you can just sell the put to mitigate further upside damage (but, of course, it means you have a long wait to get even most likely).  That’s my point, though – If selling the put really worries you, then why worry about the upside?  Sometimes you have to take a proper stand on these plays, as long as you are realistically prepared to deal with the downside if it goes against you, of course. 

  148. Phil
    Here is Governor Moonbeam’s balance sheet – On the left – nothing is right….. On the right – nothing is left. ( the money is gone, and so are the businesses that generate income ). One must remember…. 35% of all the welfare paid out in the US, is right here in California….. Jerry-boy loves welfare, and has no plan to change THAT…. it is his voting base.
    We do not have to worry about corruption here in CA…. we depend on stupidity to guide us.

  149. jromeha/Toby Keith
    SMILE !!! Aren’t you  glad, I didn’t post the You Tube Video of the song !!!

  150. And I am still waiting for my tax refund from the state (CA). 

  151. The Tea Party is responsible for the re-election of Harry Reid. The Tea Party promoted Sharron Angle to prevail over Sue Lowden… who would have defeated ‘Harry the Corrupt"

  152. Once again it must be written:
    Corporations, with any ability to raise prices, PAY NO INCOME TAXES or ANY TAXES OF ANY KIND.
    When will you get it???

  153. Long the AUD/USD pairing… looking for a target of 1.0050

  154. Gel, awesome! Maybe a 2-BR condo in SF will fall back under $925k so I can live in Pacific Heights again.
    Maybe I can work for Google, oh wait, they’re in Nebraska, not California right? Because CA is bankrupt and has no business. 

  155. Gel/Lowden  You’re "right"  :)

  156. And covered the oil….Like the AUD/USD call gel.

  157. Phil / Pot Defeated
    It would have passed, but for the reason all of the "pot-heads" were so stoned, they could not make it to the polling centers….. furthermore – why legalize it ? – there is no problem finding the stuff, and many grow their own.

  158. I remember when indoor smoking laws were considered "progressive." All those health care costs and lives saved since then. Thank God for progressives. Without them their would be nothing for ‘conservatives’ to conserve.
    Also, somebody better tell Boehner (pronounced ‘BONER’), to pack it in on the smoking. 2-3 packs a day? What a total f—--loser. This is the spokesman for health care now?

  159. Gel – you legalize pot  and decriminalize all nonviolent drug crimes so we can tax it and reduce the burden on our prisons. Something that a libertarian should agree with…. Heck, maybe even an independent like Cap could see the fiscal benefits to these policy changes

  160. Phil
    From my understanding the reason Pot was defeated was the beer industry spent a ton of money in the last 2 weeks so they would not loose Joe 6 pack a day sales. Pot doesn’t have an industry to support itself. Seems really bad that California looses all those taxes that they need and pot users drink beer, maybe more responcibly. Brewers want binge drinkers and don’t care about the costs or deaths!

  161. PCYC – fell back to 5d MA, and volume appears fine.  I did not get filled yesterday, so I am buying the 6 Dec10 Cs for 80c or better.  1K of Nov $6 Ps went through.  P/C ratio is 16.7.

  162. NET $ (.20)%
    F = 1186.25, oil +.82

  163. Shadowfax/Alcohol – Per
    November 3, 2010 — Alcohol is more harmful both to the individual and to others than heroin and crack, according to a new study published online November 1 in The Lancet.

  164. Obama Dead Cat Bounce!
    Same as Boehner only a double when gays in uniform came up. What does that say?

  165. IBWA
    Just spent $10.00, $10.00!!!  for three 1/2 ",  simple copper fittings, that cost half that much last year. 
    A solid brass fitting, much more machining, cost  LESS.
    Can’t’ figure whether to go long a pure copper mining or futures play or way downstream, at retail.
    China sure ain’t passing their savings on anymore or Home Despot has figgered a way to ‘pay’ for lower  sales.

  166.  Phil, what do you think about weekly USO $36 puts for .20 ?

  167. Gel; sadly, CA is a lost cause …

  168. NET $ (.47)%

  169. Ahh Cap, but it is 85 on the coast today in So Cal, and there ain’t a cloud in the sky.  Just a damn shame that I can’t get that nickle bag without a whisper….I wanted to shout it out in down town San Diego!

  170. Pharm – ain’t it swell?  8 ft. breakers today……

  171.  I just bought a CMG 220 call. You never know in this crazy market. Why fight it?

  172. goldman
    I have known that since the hippy 60s. I have lost friends to drinking but only freedom and money to pot. Pot smokers don’t get violent either! I would love to try pot for pain relief but where I live it isn’t worth it any more than prescription medications that I tried and decided only with an implant that I was unable to control, actually I wanted a snake venom implant.

  173. Pharm- 85 is awesome. Lucky man. It’s in the 40′s here in upstate NY.

  174. 1020 – yes, that is a reason to live here….oh, and my day job….

  175. Shadow – come out here. You can "glow a bowl" sip a Corona and watch the sunset. Just what the doctor ordered!  :)

  176. Obama’s too long press conference reminds me of this scene:

    particularly from about the 5:10 mark …
    not a lot of awareness about what voters don’t like (not just the economy, but obamacare, taxes, cap n tax, and so on);
    Oh well, on to Ben and his band of merry helicopter pilots….

  177. POT!!! Why legalize it? To get the Pot smokers away from dealers that also sell heroin, crack, cocaine and all the other bad $hit. Its a gateway drug because the government forces you to buy it from dirty drug dealers, exactly what the Government wants to keep the DEA boys well funded…grew up in a shady part of NY…someone buys a 20 of weed toss them a few lines so they get a taste of the yayo..higher margin drug then get them hooked on the heron so they’ll sell their mothers for a fix.. some may not agree but I’ve seen it with my own eyes

    Cant wait for 2:15 to come and go, devil finds work for idle hands

  178. Debtor’s prison/Acobra – It’ coming, don’t worry about that.  Whenever you have leaders who really believe you can "spend your way out" of a crisis, that’s going to be the end game.

    Deltas/Red – Delta and Theta (time decay) are worth studying if you like spreads as it will stop you from being surprised  by relative changes in your positions and make the adjustment decisions a little more obvious.

    SPY/Hoss – Nice job working the trade!  I know what you mean about raising kids being expensive…

    Boehner/Shadow – I am certain that guy is just Bob Dole with a face-lift!

    DDM/Reza – Hmm, your idea of a neutral play is to bet the DDM moves at least 5% one way or the other?  Or do you mean selling them, which is also dangerous but from the other direction.  I think it’s cheaper to take a stand, get out if we’re wrong and then see what happens later.  Don’t forget strong possibility of big head fake.

    Trucks/Snow – Yeah, we had that last report too.  People are still buying trucks as if gas were still $2 – it’s crazy.

    Gold/Chyer – Thanks.

    DIA/RDN – That was absolutely a hard stop.  As I mentioned, I have no faith at all in the upside and those positions are just there to avoid capitulating on short positions. 

    American way/Acobra – Our country right or wrong.

    Good QE2 post, David.

    NFLX/Rav – You should close any position that worries you.  If you always do that, you will have no worries most of the time!

    TBT/Leon – I am enjoying it but I’d be enjoying it more if there were an actual recession and it was not so crowded here.  They have been very poor short-term dollar protection but if you started at $42 back in March and sold $1 per month of calls for 6 months, then not off too far at $33.  At this point, rather than sticking it out, you can cash out and agree to re-enter at net $29 buy selling the 2012 $29 puts for $3 and buying the 2012 $29/36 bull call spread for $3 so you keep a $7 upside with a 10% downside cushion for maybe $6 of cash and margin.

    ASPS/Leon – What is his logic?  Don’t forget Kass works for Cramer so beware of small caps that he pumps.

    Dollar getting smacked back to day’s lows into the Fed – this is going to be fun!

  179. NET $ (.73)%

  180. Damn, 8 minutes left…. I feel like it’s Xmas morning and Im a kid again!

  181.  TBT, go in before 11:15 AM?  
    (I took 5 Nov-33c even though they are 90 cents, just in case the Fed shows some restraint destroying the United States of America forever. Probably a bad bet)

  182. kustomz
    Gateway drug? WOW!

  183. Thanks BDC, now, what is MrM doing?

  184. I’m afraid it will just be another Charlie Brown Christmas – Rocks in my stocking……. :)

  185. UUP/Morx – One would think there’s a bottom but that’s up to the Fed.  I do still like UUP at the moment, that may change in 5 mins. 

    Last Fed meeting was:

    Release Date: September 21, 2010

    For immediate release

    Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term.

    Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to remain subdued for some time before rising to levels the Committee considers consistent with its mandate.

    The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings.

    The Committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh.

    Voting against the policy was Thomas M. Hoenig, who judged that the economy continues to recover at a moderate pace. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and will lead to future imbalances that undermine stable long-run growth. In addition, given economic and financial conditions, Mr. Hoenig did not believe that continuing to reinvest principal payments from its securities holdings was required to support the Committee’s policy objectives.

  186. We are going to start logging longterm ratings performance. This will be updated on a weekly basis on Mondays.

    Here it is:

    Date of Initial Rating Stock Entry Rating Exit Rating Current Rating FV Estimate Initial Coverage Price Current Price Percentage Change
    09/10/10 FSLR Below 144 Above 216 Hold 174 138.41 136.22 -1.58%
    09/14/10 SKX Below 22 Above 32 Hold 28.5 22.92 19.42 -15.27%
    09/17/10 ALGN Below 15 Above 24.50 Hold 22 19.29 17.28 -10.42%
    09/21/10 CREE Below 44 Above 61 Hold 56 50.38 51.31 1.85%
    09/23/10 RYL Below 15.25 Above 22 Hold 20 16.82 15.35 -8.74%
    09/27/10 FTR Below 13.50 Above 15 Buy 16 8.24 8.93 8.37%
    09/28/10 TSL Below 27 Above 45 Hold 38.5 27.5 26.67 -3.02%
    09/29/10 GMCR Below 17 Above 25 Sell 22 31.06 34.22 10.17%
    10/01/10 JWN Below 33 Above 52 Hold 45 37.11 38.76 4.45%
    10/05/10 JCI Below 27 Above 43 Hold 35 31.76 35.47 11.68%
    10/07/10 PAYX Below 27 Above 36 Hold 34 27.58 28.12 1.96%
    10/13/10 SPWRA Below 15 Above 24 Buy 21.5 14.24 13.27 -6.81%
    10/20/10 F Below 11.50 Above 20 Hold 17 13.64 14.68 7.62%
    10/22/10 JACK


    Oh my…..

  188. Hahahah SWEEEEEEEEEET drop in oil :)

  189. Phil, thanks for the TBT recommendation.   Regarding Kass’ logic on ASPS, here is a quote from his post the other day (I know it’s not very clear what the runway of opportunity actual is for this mortgage servicing company).  Since Kass seems to be the only more or less reasonable guy amongst the gang of Cramer clowns I thought I’d ask if anyone here knows about this company.
    "I am adding to my Altisource Portfolio Solutions (ASPS) long, after listening to the company’s conference call late last week and subsequent to a call I had this morning with the CEO and CFO (who are based in Luxembourg).
    In the fullness of the time, I expect this stock to double again, as it is quite unusual to find a company that faces such a large runway of opportunity (likely to grow its cash flows by over 35% a year over the next few years).
    ASPS remains my favorite stock for 2010 ... and, again, for 2011!"

  190. NET (.79)% at announcement

  191. Bye Bye Buck!

  192.  tbt at 33+

  193. Today’s statement, $600Bn by end of Q2 ’11!!! – This BETTER boost the market, that’s a big commitment!:

  194. LOL!  Watch the manipulators fight each other for the upper hand.  Must… maintain… stability…………

  195. NET (1.19)%
    huge selling of Yen my best guess

  196. The Bid/Ask on an SQQQ Nov10 42 Call right now is .05/.95!  With all the computer precision running this market that’s the best the MM can do?

  197. Phil, that’s <100B a month.  You said that would be a dissapointment-

  198. Market will finish flat…….

  199. NET $ (.80)% at 2:22
    all of the movement has been in the E/$ gapping higher, then the Y/$ Yen gapping lower

  200.  What is the stop on the 113 DIA??? bought for 1.20, its already in the mid .95…s!!

  201. 10yr = (.27)%, 30yr =+1.6%
    big chnage

  202. Man you can drive a truck through the bid/ask spread on options now…. huge gaps.

  203.  TLT selling off hard….

  204. Interesting The DOW is like a herd of sheep running in all directions. Watch out for the cliff

  205. Sorry Pharm, what am I doing with respect to which ticker Chris mentioned?  WYNN? CMG?  TBT?  On the former two, no position.  On the latter, I’m sitting on the TBT JAN 2012 38/42 bull call spread from many months back, hasn’t moved much.

  206.  There`s a real battle on TBT

  207.  Dollar flying!!!!

  208. NET (.71)%

    currencies here flat, all over the place internationally swinging wildly

  209.  market is moving too fast

  210. Will someone give the market lithium please!

  211.  Go Bucky go!!!

  212.  out of the TBT Nov-33c daytrade at 1.67 (+78%)
    Lloyd screwed up and let me make money on this thing for a change. The world must be ending!  :)

  213. Full statement

    Release Date: November 3, 2010

    For immediate release

    Information received since the Federal Open Market Committee met in September confirms that the pace of recovery in output and employment continues to be slow. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts continue to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have trended lower in recent quarters.

    After housing starts, it had said:  "Bank lending has continued to contract, but at a reduced rate in recent months. The Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be modest in the near term." – So there is already more bank lending and they are mum on resource utilization and going ahead with QE anyway.  VERY dangerous!

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.

    To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to expand its holdings of securities. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

    That last bit is disappointing as the market doesn’t want the Fed to have any reason to back of over 6 months.  Also, $75Bn a month is disappointing but it is IN ADDITION to rolling other securities so probably adds up to $100Bn or more.  Still, as we expected, it’s not enough to support the insane expectations the market has built into this statement and down we go.

    The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

    The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

    OH NO!!!!  Look what they removed: "and is prepared to provide additional accommodation if needed" – Ththththis is all folks!  

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

    Voting against the policy was Thomas M. Hoenig. Mr. Hoenig believed the risks of additional securities purchases outweighed the benefits. Mr. Hoenig also was concerned that this continued high level of monetary accommodation increased the risks of future financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.

    Hoenig remains the sole voice of reason but he doesn’t even get to vote next year!  There’s one more meeting on Dec 14th and then Jan 26th, March 15th…

    So, I think this was not enough and forget the local reaction – how is the World going to feel about a possible bottom to the dollar, which is zooming back over 77 and look at TBT fly.  Why is TBT flying?  Because the Fed will only buy $75Bn of Tim’s trash each month and we need to sell A LOT more than that.  

    Notice how this report was a disappointment and Bill Gross bolted from CNBC – when the statement goes his way he sits around pontificating for hours.  

    Tonight would be a great night for the BOJ to intervene on the dollar but we’ll have to wait and see.  

  214. So I guess the question becomes: Is $75B per month enough to keep rates from naturally inflating?

  215. Phil/Immigration
    Report: 55M people have inquired about Canadian citizenship since Tuesday (yesterday)…. mostly Americans…..WOW!!! Must be because of John "The Enforcer" Boehner as speaker of the House…. Couldn’t resist.  Man, Cramer on CNBC is really on a trip…. "Bernacke for President…. of the WORLD….

  216. JR,
    How are you holding up?  You sitting long or short?

  217.  Market too crazy, will sit a while and see. I think all the countries in the world will ram in supporting the dollar, time to put an end to this nonsense

  218. Go TBT go!

  219. So much for the AUD/USD trade ….. Pfffffft

  220.  wow, another leg up on TBT.
    Bonds just took a big shit. Was this the catalyst needed to end there frustratingly long dominion of pain?

  221. Don’t forget POMO tomorrow!

  222. NET (.46)% and the F just stuck at 1187.00

  223. exec
    Because I play JRW’s game, I made 2% on the early fall and in cash since. JRW is in NY doing something.

  224. Thank you TBT for saving my ass today… don’t understand it, but, but take what you can get!

  225.  Everyone watching GLD, still no move yet

  226. what’s up with VXX dropping like a rock… what a piece of crap !

  227. shadowfax…. JRW is in NY showing GS how to play the market!

  228.  CMG – unphased and continuing to climb

  229. NET (.39)%
    still have seen the biggest swings on the E/Y and E/$, especially the E/Y

  230.  Phil, 
    I bought 20 113 Nov DIA’s into the Fed for 1.21. Stopped out on 1/2 at .99. What should I do with the rest? 

  231. If I would have to guess, it looks like there is huge buyers of Euro and Swiss Franc trying to hold the dollar in check and lower

  232. ViX down almost 10% from peak today!  Full speed ahead Bernanke…

  233. Options sellers win again!  Look at your profit with the buy/write and short strangle positions. VIX dropped like a rock after 2 major events, Election and the Fed meeting.

  234. CMG/Rav – It’s a sensible way to go but maybe jumping the gun on the roll as you want to catch them when they do dip on a downgrade or whatever and you are giving time away to your caller.

    The question now for fund managers having meetings is do they have enough reason to stay loaded in equities between now and Thanksgiving, where they have to risk the break.  Do we have enough "good" news here to buy us a Santa Clause rally or is this the end?

     Brown/Gel – Wow, how did people put up with him for 8 years?  Now he has the interesting distinction of having been the youngest governor of California in his first term and now it’s oldest too.   People in the future will probably get confused and think he was governor for 40 straight years.  Interestingly, the American Conservative totally disagrees with you and says: 

    he was "much more of a fiscal conservative than Governor Reagan."[9] His fiscal restraint resulted in one of the biggest budget surpluses in state history, roughly $5 billion.[9][10][11] For his personal life, Brown refused many of the privileges and perks of the office, forgoing the newly constructed governor’s residence and instead renting a modest apartment at the corner of 14th and N Streets, adjacent to Capitol Park in downtown Sacramento.[12] Instead of riding as a passenger in a chauffeured limousine as previous governors had done, Brown drove to work in aPlymouth Satellite sedan.[13][14]

    Gosh Gel, sounds like exactly the kind of guy most people WANT in politics but I guess he fell on the wrong side of the fence for you and that automatically made him the object of your derision.  This is why you can’t get good people into politics – who needs your crap?


    During his two-term, eight-year governorship, Brown had a strong interest in environmental issues. Brown appointed J. Baldwin to work in the newly created California Office of Appropriate Technology, Sim Van der Ryn as State Architect, and Stewart Brand as Special Advisor. He appointed John Bryson, later the CEO of Southern California Edison Electric Company and a founding member of the Natural Resources Defense Council, chairman of the California State Water Board in 1976. Brown also reorganized the California Arts Council, boosting its funding by 1300 percent and appointing artists to the council [6] and appointed more women and minorities to office than any other previous California governor.[6] In 1977 he sponsored the "first-ever tax incentive for rooftop solar" among many environmental intiatives.[15]
    In 1975, Brown obtained the repeal of the "depletion allowance", a tax break for the state’s oil industry, despite the efforts of the lobbyist Joe Shell, a former intraparty rival toRichard M. Nixon.
    He was both in favor of a Balanced Budget Amendment and opposed to Proposition 13, the latter of which would decrease property taxes and greatly reduce revenue to cities and counties.[9][20] When Proposition 13 passed in June of 1978, he heavily cut state spending and, along with the Legislature, spent much of the $5 billion surplus to meet the proposition’s requirements and help offset the revenue losses which made cities, counties and schools more dependent on the state.[9][10][20] His actions in response to the proposition earned him praise from Proposition 13 author Howard Jarvis who went as far to make a television commercial for Brown just before his successful reelection bid in 1978.[20][21]
    Come on everyone, let’s all jump on the bandwagon and tear down Jerry Brown.  This is how conservatives are, it doesn’t matter if you balance budgets or cut deficits or fight corruption – they don’t really give a crap about any of that.  If you are not one of them they will tear you apart and attack every aspect of your life until they find something they can hang on you that makes a good sound bite.  
    This country truly gets the government it deserves by allowing the BS spewed by the right to pass as political discourse… 


  235. Long DDM strangles/Phil -The idea was long DDM strangles for a 2% (2.5%) bursty move in the DOW (4% on the DDM) due to the FOMC news release. For now, locally at least, a yawning response. I opted for weekiles of some other leveraged ETF instead.
    What would be a low-risk (low-cost?) non-directional bet under similar circumstances?

  236. BDC – Nice Catch – Great reading for all, including Independents!  :)

  237. Phil:
    So your opinion on the markets and where we go from here now that we know the Feds direction. Thank you.

  238. Perhaps Ben’s ultimate plan is to make cash so worthless, taxpayers won’t be able to afford to leave the country.  Mission accomplished!

  239. Goddamn MM’s rigged game, bought the DIA’s for 1.21 when the Dow was right around 11,200 and now its gotten over it but the damn things cant get past .95

  240. Phil/Brown  Nice job. I think too many people remember what they want with no time spent looking up the FACTS.  Thank you.

  241. Brown / Phil et al – he also did a decent job as mayor of Oakland – the city was in considerably better shape after his tenure.

  242. Leon – (in my best Rocky 3 Apollo voice shouting to Rocky when he’s getting pounded on by Clubber Lang) Get out of there man!!!!!!!!!! I went against Phil’s advice on VXX and lost quite a bit. THat stupid ETN loses money when the VIX is up OR down!!! It is GARBAGE. I honestly dont know how it is even allowed to exist…. Think or swim allows you to play options on the VIX which are MUCH better…. Maybe buy a dip now and then sell before employment #s come out on Friday….

  243.  for the uber-contrarian, TLT 100 calls are running at a big discount to an hour ago

  244. BTW shorting oil at the 85 line has proven to be VERY profitable today. YOu can short the /qm or /cl contracts and buy back when it falls to 84.9 – seems to be like a yo-yo in that range right now….

  245. Phil
    I liver in Sacramento in the mid 70s, My company car while working for RCA was a Plymouth Sattelite, gas hog V8, until Raytheon bought me out.

  246. NET (1.19)% at 2:08

  247.  Pot/Gel – You legalize it so you stop spending money fighting it’s import, so you don’t have to waste law enforcement effort capturing and jailing people for stuff there is no problem finding and you generate tax revenues while gaining control and making it safer to consume and purchase instead of forcing citizens into crime.  Essentially, all the logic of repealing prohibition, which led to the rise of the largest criminal empires in the US, apply to pot, which sends hundreds of Billions of dollars out of the country every year illegally and untaxed supporting a massive criminal industry that could be replaced by legitimate  US farmers overnight. 

    Beer/Shadow – Thanks, that makes sense in that evil, sick way that corporate actions that screw people often do…

    Dollar smacked down hard back to 76.50 and a 100-point recovery in the Dow, we’re back on track!

    Copper/Flips – Just stay flexible on them because Chinas hoarding can change to dumping at the drop of a hat. 

    USO/Aug – I’d stay out for now.  They may try to push for $87.50 if they can spin an easy fed to Asia in overnight trading – then it will make a great short.  

    Note TBT still climbing despite dollar dive – interesting.  

  248. snow / Oakland
    The only thing Brown did for the City is to flush the toilet a few times… nothing has changed overall… still a mess, and I refuse to drive anywhere near the place.

  249. This run back up to the highs doesn’t seem to have conviction to break them. I’m not buying this. I think we’ll get a clubbing into the close.

  250. Closing out TBT and buying more GDX with the funds.

  251. Phil/Brown
    The FACTS….AMEN !! AMEN !!  AMEN !! Nothing like a more complete picture of Brown’s tenure….. And critique by other Conservatives…. Thank’s  

  252. Amatta / 1.21 — take a look at the waterfall on the vix.

  253.  Phil — Thanks for posting that on Brown.  I was going to post those same quotes about his fiscal restraint.  Conservatives in this state want to remember him (and the 70s) in a certain way, and they don’t let the facts slow them down.

  254.  What is going to stop now these markets?? Gee..

  255. Phil… I am for legalizing pot… My hope is that after we legalize it, we then can enroll all the pot-heads into bungie-jumping classes, in order to keep them busy.

  256. 30yr +3.18% now

  257. Phil:
    If this is a real call to the exit for bonds do you still like your TBT trade from earlier? What adjustments would you make in lieu of run up? Thank you.

  258. I think QE2 is working!   I’m INFLATING~~~~~~~~~~~~~~~~~~~~~~  ppphhhhhhhhhht.  Nope, just gas.

  259. gel1 / pot — if we legalize pot, we could probably get the stoners to pick fruit at alien wages. I’d much rather have a stoner coming at me in a two ton vehical than a drunk. You don’t have to worry about speed limits with stoners either, if anything you need to push them along 8-)

  260.  Dollar goes down, TBT goes up is strange?? That’s what is SUPPOSED to happen! The cheaper dollar is killing your fixed asset, so you demand a higher rate.
    Maybe it’s been so long since things have been normal that when normal exposes itself, no one recognizes it anymore.
    Or am I way off here?

  261. If you own GLD you lose money and got devalued

  262. The problem with legalizing pot is that it’s a weed. You won’t get tax revenue from it because everyone will grow it. The only the savings will be that of not having to fight it.  Salty snack makers would have a jump in profit though.

  263. gel1
    Remember that other great idea was put the pot heads to work in the vegtable fields instead of imigrants with a benifit, free weed!

  264. escohen…. I must agree with you… this guy was so cheap. his state limosine was a used broken down Plymouth, and he resided in a walkup one bedroom apartment and did not go near the Gov’s mansion….. so what?  He brought in the unions, and THEY have blown all the budgets since that time. Brown’s image of austerity was only an image. We must look beyond the window dressing,  and analyze his policies, and what effect they had on the budgetary holacaust that ensued since his departure.

  265. BDC: TBT is finally doing what its supposed to do.  Hedging against inflation.  Everything Phil said would happen in April of this year, is happening.

  266. Shadowfox, I could use some pointers on how to get Raytheon to buy me out (fuel cell company…)

  267. shadowfax… great idea… but remember  most of the weeds are in their "roof garden"

  268. big jump here last few min
    NET $ +.32%

  269. gel1
    You need to leave California but don’t move to Boston either, you will hate New England more, although they did decriminalize pot there, You can get high and Bungy Jump off your sailboat mask when the wind and waves tilt the boat enough.

  270. The "he brought in the unions" thing is just an empty Republican talking point.
    No one discussed the unions in the 70s; it was not a major issue.  The issue of excessive contracts and/or inflexible future benefits is a RECENT issue.  I see no evidence that he "brought in the unions" way back when.
    If your point is that the unions supported him now, so what?  It is common for unions to support the Democrats, and not just in CA.
    My point is:  Tough choices need to be made, including union issues.  Spending needs to be cut.  Brown is in a better position to do that than Whitman would have been. 

  271. Hi, Peter D,
    How have you been!
    I am looking forward to closing some of the SPX short strangles, too.
    But what do you suggest for new positions?  Chaps the other day said that he’d wait for higher VIX before selling new strangles.

  272. back neg NET $ (.09)% so all over
    probably PEG it NET = 0 for the ECB, BofJ and UK

  273. Phil,  I am short ABV.  I got in midway in this fed iduced run up and am down 20%.  They posted pretty good earnings.  Do you have an opinion on this stock?

  274. Gel – After analyzing Brown, aren’t we left with only our "opinion" on how his decisions then, has left us now, 30 years later?

  275. Biodiesel – I read an article by Madhedgefundtrader (sometimes his stuff is posted on here) stating  since QE2 is mainly focusing on supporting  the shorter term bonds the longer term bonds are falling (hence TBT going up) and if it wasn’t for the Gov’t support most bond markets would be in a freefall by now.

  276.  Obama/Cap – Wow, you didn’t like his press conference.  I am just shocked.  I guess he must have blown it to have lost you on this one.  You have certainly made me rethink things, thanks…

    Great TBT call BDC!

    ASPS/Leon – If it hasn’t already doubled by next week, remind me to look when I’m back home. 

    DIA/Amatta – Stop was the 11,200 line on the Dow yesterday, now it’s like an earnings play, all the volatility is washing out and if they don’t move up fast the value will crash as the events are both past.  

    Cramer/Acobra – The way he is spinning things, this HAS to be a top!

    VXX/Leon – The events are past so less expectation of volatility now.  I don’t know why you people bother with that thing, it’s like the worst game at the casino.

    Wow, you can sell TBT $35 calls for .88 – any takers?

    DIA/Amatta – Those are over, they were protection, not a bet and it sure doesn’t seem like the short plays are in any danger.

    DDM/Reza – Never be the sucker buying premium.  If you can’t figure out your play selling premium – just move on.  I didn’t like that one because the risk of a 5% move selling would be too large to make the collected amount worthwhile.  Some trades you just don’t make.

    Direction/DClark – I don’t know, have a lot of reading to do but I do not see any reason we should break higher over this news and earnings is winding down so what’s the next catalyst?   

  277. Howdy Cwan,
    Just take the profit first, then see what opportunities would present themselves later.

  278. jromeha / VXX
    I am playing VXX…. it is a crazy play for craxy guys like me… I go waaaaay out in time and sell puts. Someday this one will pay off, because some day the maket will again get very nervous… The VIX today has not yet met its total complacency level of 14, and anything over 50 is centainly possible. We we at 60 ( vey nervous ) just two years ago. Play the VXX with binoculars, and get in when it is cheap ( like now)

  279. NET +.27% at imbalances for what that is worth

  280. GO Ron Paul
    Ron Paul to Chair Monetary Policy Subcommittee
    Posted Wednesday, November 03, 2010 12:03 PM | By David Weigel
    Sometimes all you need is the headline. Ron Paul is slated to run this subcommittee, giving him some actual power and a megaphone on the issue dearest to his heart.
    Filed under: Ron Paul

  281. Plan/Goldman – That actually makes sense!

    Brown/1020 – I just get so sick of the cult of personality that has replaced politics.  People can’t even be bothered to justify a position as long as they have a "zinger" to throw out they think their point is made.  The campaigns that were run in this cycle were some of the most despicable yet but that works for some as they need low voter turnout and all the negativity does keep people away from the polls.  Also, with two parties – what’s the alternative?  

    Oil/Jrom – Nice job.

    Same as yesterday guys – the markets got EVERYTHING they wanted, the earnings, the elections, the easing and THIS is all we get?   NOT GOOD! 

  282. Phil/Next Catalyst – Friday magic 100k jobs gain?  CNBC has been pumping that idea today.  Perhaps a small selloff on Thursday and a large gap up Friday morning on such news…

  283. PHIL
    thank you for taking time out of your vacation to answer questions and make comments.

  284. Phil,
    What do you expect in terms of retracement?

  285. Gel – why dont you just play options on the VIX via TOS. The VXX is garbage…. Selling puts *might* be ok but if you look at long term charts the thing is a CONSTANT money loser. Why not just sell VIX puts instead of VXX puts?

  286. 1020 / Opinion
    I try not to be a "biased" pundit that is idealogicially driven in my opinions, however I am basing my statements on what I consider to be "fact". Much anlalysis has been dedicated to determine what has destroyed the financial status of our state. I do believe, that the preponderance of evidence shows the State and local governments are overspending on pensions, feather-bedding policies, and related union contractural actinities. As income levels drop, these "out of control" union contracts are indexed to move in the opposite direction – thus creating deficits. Mr. Broun and his associates are the ones that put this practice in motion, and for this reason, I believe, is primarily responsible for the financial mess we live with every damn day.

  287. GEL re earlier comment
    I don’t think washington will be able to bail out California now. It is suddenly a non starter because of last night. what democratic senator from the 23 up for reelection in 2012 will want to have that albatross around his neck?

  288. amazing…DOW going to be pegged at the magic 11,205 number EOD…

  289. Phil / POMO   You said Thurs and next Monday, so bullish for tomorrow?

  290.  it’s hard to find any premium to sell here – except puts on inverse etfs

  291. NET +.03% on the $

  292. wow…make that 11,215!

  293. jromeha / VXX
    The VXX etf is a tracking vehicle for the underlying VIX, although it foes not "mirror" the VIX exacttly.. The etf invests in futures on the index that expire, causing a constant rollover of positions, making money on some and losing on others.. The VXX moves only about 50% to 60% in correlation to the VIX… so when the VIX moves up $1.00, the VXX only moves up $.55. At the moment I am selling 2011 naked puts on this beast. I am playing this one the same way I play TBT. Look at historical charts, and pick a strike you would be happy to own the stuff, and if you miss the target, you still pocket the change.

  294. Gel – If only we all had a little clairvoyance….. :)

  295. /TF – THe day’s high after hours – what a CROCK!!!!
    Gel – That’s exactly why I think that the VXX is garbage. THe contango or whatever hurts their value b/c they are constantly trading in lower priced futures for more expensive contracts. Anyways, if you want to own that ETF more power to ya! Oh and if you need responsible caretaker family to look after your future casa in Boston let me know :) lol.

  296. drum / California Debt
    I believe the US will absorb the debt. Most all of the debt ( and it is massive) is held by outsiders in the form of bonds, debentures and funds held by retirees throughout the country. Allowing a default would impact the entire country, and could well create a "domino" effect as banks, funds and other entities crash as a result. ( Not to mention the insurers that would be taken down, as well )

  297. Well, that was fun today. A little politics; a lot of interesting market action. Learned a lot from the discussions also. Especially a useful lesson for the future- i.e., one does not want to be around lefties after having lost an election- they get very grouchy. :)

  298. Notice the guy from AET still has his people studying health care reform and they are trying to get a handle on the impact of the legislation but Conservatives already knew it was a total disaster 8 months ago.  Maybe AET should fire all their expert consultants who spend their whole lives studying the industry and replacing them with one Conservative blow-hard who knows it all.   Cap, are you busy?  8-)

    Plymouth/Shadow – I know, the B52s wrote a song about you.  

    TBT/DClark – I like TBT long-term or a short of TLT, which we’ve had nor reason to change since $105.  Unless someone waves the magic wand and stops us from falling $1.5Tn a year further in debt – there simply isn’t enough money in the world to keep refinancing it at 2.5% for 10 years – it’s just physics at a certain point.  All Ponzi schemes unravel – this one has just found a very deep-pocketed sucker in the Fed but even the Fed can’t service exponential increases in borrowing that is required to pay off each successive round of original lenders until what?  Until the Fed holds all $20Tn of US debt?  Do we really think that, at no point between $2.5Tn and $20Tn people will begin to lose faith in what’s going on here?

    LOL Matt!

    Stoners/Rain – Like this?  I must say I got nervous in Amsterdam when I drove into town on a Friday night and realized that pretty much every other driver was high, including some of the police that were directing traffic.  

    TBT/BDC – That is what used to happen.  Would be an odd time for logic to come back to the markets…

    Weed/Rain – So is tobacco but you don’t see people growing that.  As long as the price is right people will buy it.  Heck do you realize how much cheaper it is to grow your own tomatoes and no one does that. 

    ABV/Trad – Shorting Brazil beer – why?   Huge growing market, cheap liquor..  They are probably overdone but you’ll have to be patient now that they’ve had nice earnings.  Also, you’d better hope Cramer doesn’t get excited about them.  

    Brown/1020 – No, it was something Brown did 30 years ago not what Republican Deukmejian did in the next 8 years or what Republican Pete Wilson did for the next 8 years and, of course, the one Democrat that came in to clean up that 16-year disaster, Gray Davis, was forced from office in his first term by Conservative attack dogs who began going after him the moment he was sworn in and that led to 8 years of Arnold and a total collapse of the state but it was all Jerry’s fault.  This is why I don’t even bother anymore – it’s ridiculous to even engage in conversation with people who can hold such delusional opinions.

    Ron Paul/Kustomz – That’s a pleasant surprise.  This should be very entertaining.  Oh and I apologize to Conservatives who cannot understand why I would like Ron Paul as I have this strange thing where I support qualified people no matter what party they label themselves as….

    Jobs/Goldman – That would work.  Now the Fed has committed to easing regardless of data, good news can be good news again.

    You’re welcome Z4 but I wouldn’t miss this stuff for the World!  History is being made here – it doesn’t feel like it but the whole World is on a major pivot point and so much of our future hangs in the balance of what happens in the next 12 months.  

    Retrace/AC – There is no reason for a sell-off.  Only a failure to break up will bring it on now and that will all come down to how the emerging markets interpret the Fed.  My bearishness is not about the market but about the dollar, which finished today below 76.50.  If they dollar fails to fail, then the markets will correct and figure the dollar gets back to 80 so the market falls about 7% so that’s what I’ll be looking for if the dollar holds up.  If the dollar fails 76, then 72 is the target and the market goes up 10%.  CASH!  Cash is good!!

  299. RE: VXX, I sell VXX puts to help finance my disaster hedges because the margin requirement is significantly lower than BGZ, TZA, SDS, etc. puts. In addition to those puts, I will sell way OTM calls, on days that VXX is actually going up, against them to help offset the decay caused by Contango.   For example, I am now in a short VXX strangle, having sold the VXX Jan 12 puts and the Jan 16 calls.  
    As of Nov. 9, VXX does a reverse split so it will make existing option positions do funky things (like when TZA did a reverse split), so be aware of that.

  300. Renting vs home owning – This
    is very interesting – he doesn’t seem to have read your article, Phil, but I wonder if this is a trend.

  301. jromeha / VXX
    I agree… it is a piece of shit…. but that is exactly why I SELL options at a ridiculous strike… I pocket the money if the thing does not move, and if it does drops to my target… I’m still happy.
    Boston… it may take some time, as my plan iis to sell my Nevada property, and buy the MA property… I’ll keep you posted.

  302. POMO/Tusca – It’s being front-run now thanks to GS so it’s better to sell into the morning excitement.  If you wanted to go long – this afternoon’s dip was the time for that but now we got a 125-point move up into the close – not what you want to chase.  

    Grouchy/Pstas – I’m not grouchy, just resigned to watching us run back down the rabbit hole we fell in in the last decade.  I’m disappointed as I thought voters were smarter but that’s about it.  Now we can just profit off the carnage like good little Capitalists and get ready to cut and run when it all hits the fan.  

    Rentership/Snow – Home ownership is a very tricky deal.  Real estate taxes and utilities have made it much less desirable than it used to be.  I see so many people down here in Florida who thought they were OK because they owned their home outright but now they are being either forced out or forced to reverse-mortgage as taxes and utilities exceed their planned budget for retirement.  That’s the sickness of they system, we confiscate people’s land despite their diligent saving for retirement.  Effectively, if you are not constantly making money, you will ultimately lose everything – that’s they system people are voting for in this country. 

  303.  pstas 
    Not the Lib`s fault today..sorry. They were behaving very well. Cap went ballistic because he did`nt get Harry Ried`s scalp and called him every name in the book. Then for some reason Gel decided to trash Jerry Brown with some questionable facts that have been argued before. 
    The Lib`s just re-acted to the attacks. Not a very humble group of victors, more like pirahna`s tasting blood.
    Only lesson I learned was that there`s no reasonable debate when it comes to politics.

  304. Ben – AMEN!!! I really didnt see too much liberal b!tching b/c most of us knew it was inevitable (I held out hope that more Dems would get out and vote). It is sad to see Obama backtracking on letting some of the Bush tax cuts expire and Cap and Trade. He really hasn’t made progress on any of the issues that I voted him in for. 

  305. NY FED’s FAQ on the new QE2 policies

  306. Phil / You should close any position that worries you.  If you always do that, you will have no worries most of the time!
    Very YODA-like …
    Fun elections factoid:
     Alvin Greene received 358k votes — 184k more than Chris Coons; 77k more than Joe Manchin. And just 3k fewer than Harry Reid.

  307. Gel,
    sorry, but i don’t think the California-or new york-or illinois related bonds and other debt instruments can be salvaged by any national effort to save them.  the2008  2009 stimulus was a unique political event, ordained by disparate forces,  and regardless of the fiscal destruction you outline, political developments and popular outrage will demand that these states finally figure this problem as their own. read Dickens and  his wrath against those damned pennsylvanians after they defaulted on their 1843 bonds..

  308. Phil / Brown
    Facts are not "delusional" opinions…. Opinions are everywhere and do not have much relevance to a resolution, however historicially proven "facts" do have substance, and are the benchmark for any substantive change that is meaniful. Facts and opinions are mutually independant, and are not interchangeable, as you have implied.

  309. POT:   
    What would Mayor Bloomberg do if Pot were legalized.  Mayor McNanny already has banned cigarette smoking everywhere in NYC.  Pot may be even worse for your health than cigs are.  Funny how all the legalization folks never talk about that.
    While we are at it, let’s legalize all crimial behavior and simply tax it, then we can do away with law enforcement completely.
    And by the way, I have nothing really against people partaking in a little toke now and then in the privacy of their own homes.
    I do have a problem w/ the idea of legalizing drugs and the message it sends to kids.  Not to mention the second hand pot smoke that just might be a problem for most everyone else.
    Do it at home and at rock concerts.  But lets not go crazy here.

  310.  Cap 
    Figure populations of the states have anything to do with that?
     SC is 4X bigger than Del.
    Undecided in California got more votes than Mike Enzi…is that somehow a scoop?

  311. Phil:
    Re Dollar, what happens if the dollar is range bound from here 76-80? Do you see this as a lower probability than the other two possibilities: $ > 80 and $ < 76  ??
     Not knowing anything about forex, what if the dollar’s move is measured and gradual?

  312. Phil:
    Does the dollar go on a free fall from here? Or is there some mitigating force to offset the fed. I am still holding the UUP trade (Jan $22 Calls buy/ Jan $23 Puts sold). Thank you.

  313.  Political discussion here is a microcosm of the country as a whole – we bicker over whose party is better but still support/play with a two party system that’s really a facade for entrenchment of the powers that be. Voting for minor tax changes when the whole system needs massive overhaul. Voting for gridlock while the country digs itself deeper in debt by the second. Debate over don’t ask/don’t tell while the supreme court allows corporations to spend whatever they want on elections in the name of freedom of speech. We need to find common ground on how to fix our government – prior to its demise. Sad,

  314. drum… Yes, I agree that a bailout would be cause for a revolution, as those folks in conservatively oriented States, that have exercised prudent financial practices would be outraged with the idea their taxes would be spent to bail out the asylems that were governed by the irresponsible. My theory is based upon the recent problem in the Eurozone – the strong bailed out the weak ( loans) in hopes the weak would change their liberal ways, and someday pay back the debts.They assumed this solution would not be as disruptive as a contagen colapse of the entire banking system. There is a prevailing mind set that is reluctant to discipline the weal sisters, and otherwise just hope the whole thing will someday go away. The Fed has signalled its solution… it is devaluing the Dollar, and allowing the debts to decay and be paid off with worthless currency. This solution is not fair to those that are responsible, and try to balance their budgets. I predict we will follow the pattern of the past, and prop up the weak and irresponsible in the form of loans that  ( A’hem ) will never be paid back in equal dollars. For those hard-working, tax-paying farmers in Kansas, who properly manage their finances, they will be very angry to learn their taxes are going to bail out farmers in California who are growing pot, and supporting a state government that can’t understand money management..

  315. Cap – if alcohol and nicotine are legal (and they are ‘drugs‘), then why not THC (mojo).   If kids want to find some, they will.  Why not regulate it (oh we did do a good job on cigs, though!)  The addictive properties of THC are no different than nicotine, and both give a feeling of relaxation, but nicotine is a stimulant and THC is a depressant. 


    Oh, and THC is much safer than alcohol (10:1), heroin (6:1), and cocaine (15:1) (and nicotine for that matter) with a therapeutic index of 1000:1.  In other words, the others will kill you easier at a much smaller dose!!!!!

  316. Phil,
     The 10% upside scenario has me worried as I am still net short. I sold 10 Fas puts but didn’t buy the call spread. Any other recos?

  317. Gel,
    I think that the act of redemption itself would be the actual catastropic ecomonic event. Such a pitiful demonstration of the national condition`will destroy the entire political order, and even Washington cannot abide . a shades of 1861 moment. As for the eurozone example, the farmer in Baden can always get his deutschmark back; certainly the farmer in County Leitrim wants his more flexible pound back. I don’t think, in the final ananysis,  that our inland empire will benignly accept such a blatant solution  

  318. drum… you may certainly be right… I could never accept it, and that is my problem today…. accepting the cost of others mistakes.

  319. TI / Pharmboy – " and THC is much safer than alcohol (10:1), heroin (6:1), and cocaine (15:1) (and nicotine for that matter) with a therapeutic index of 1000:1.  In other words, the others will kill you easier at a much smaller dose!!!!!"
    Just for fun, share with us the TI for tylenol – especially when used to treat that nasty hangover headache.
    And for the record, as a public health officer, please make my life easier and legalize all the drugs and prostitution as well.

  320. pstas 4:17.   ROFL !
    my thoughts exactly …

  321. Ben1be:
    This is going "ballistic" according to you ?  puh-leeze ….
    "The biggest surprise / disappointment to me from last night is Harry Reid’s political survival.
    The man simply disgusts me."

  322. Pharm … you raise good points.   I don’t know… the issues are complex; I guess historically those vices are culturally accepted throughout history.  But others are not.  Where do you draw the line ?
    Meth Amphetamines
    And that’s just drugs … then you can get into other areas … bigamy, rape, incest, …..

  323. Jerry Brown:   The two things I remember his first two terms for, one good and one bad:     1.  Legalizing Micro Breweries and Brew Pubs!       2. Diamond Lanes

  324. Cap:  Don’t fret too much about Reid:   every party needs a pinata  :)

  325. California elections:  I don’t hear too much talk about the real sleeper proposition that passed last night which will have much more impact on us than appreciated.  We passed a proposition which allows a simple majority of the legislature (previously need 2/3 majority) to institute new taxes.   It was buried in and advertised as a proposition to prevent to politicians from getting paid if they don’t have a budget delivered on time.  We’re really gonna see the spiral accelerate.

  326. Phil/Ron Paul  You support qualified candidates, no matter the party?  Thats no fun!  ;)

  327. Commodity Inflation:

    Nothing to see here folks, move along …

  328. Cap – could you please explain what issues you are in the CENTER on!? I know it bothers you to be have the republicant label but I have NEVER read anything posted by you relating to politics that wasn’t from the CONSERVATIVE perspective….ANd saying "all politicians are crooks, etc" doesn’t mean youre an independent. Just give me a couple issues where you would side with the left and/or middle. THey could be social, economic, or environmental – YOUR CHOICE!!! Don’t respond with, "I dont have to prove anything to anyone" HUMOR ME…PLEASE…

  329. Cap – Alvin Greene  Idiot America – What pstas does not get. These people are all around, on the LEFT and the RIGHT.
    Alvin Greene receiving 358k votes is not funny. Yes it’s a joke, and it’s on us…..

  330. gel/brown  Yes, but where are the facts? You have only stated opinions……

  331. TI of Tylenol snow….well, let’s just say that acetaminophen, aspirin, etc would NOT be approved today as drugs….hell, we don’t even know how acetaminophen works.  Now, are you referring to a chronic alcoholic, casual drinker, or non drinker…TI is very close to its therapeutic dose of 4g/day (or a bit more for non drinkers)!  Acetaminophen, as you well know, causes more hospitalizations and problems than all the others combined!!!!  Has THC ever killed anyone directly?  Nope.  Very hard to OD on THC.


    Cap – I think rape is very different than THC, cocaine etc.  Legalize all drugs, tax them, and distribute.  Works in Amsterdam, and if someone ODs, then we call it in scientific terms – survival of the fittest or natural selection!  We could also invest in something called … education.

  332. jrohema -
    Why don’t you list a bunch of issues, hopefully important ones, and detail what your position is on them, and whether you think you are left, right, or center on them (or is it left vs. further left ?).  Then I can try to HUMOR YOU as I weigh in on those same issues.

  333. Pharm – Ted Nugent Double Live Gonzo is one of my fave’s from my college days !

  334. Cap -  Drugs, the gateway to:  bigamy(?) rape and incest…. Cap, is there something you would like to share with us?

  335. Pharmboy:  Actually the Netherlands has been modifying their stance on drugs and prostitution (too many foreigners, especially the Brits, coming over and going over the top); there is serious talk of legal marijuana only for residents and modifying the red light districts because of violence.  Seems there is no nirvana.

  336. Cap,   you may be a republicant but thumbs up on Cap’s Market Place

  337. How bout this jrohema:  Where do you stand ?
    This sucks, is overkill, intrusive, potentially hazardous and tramples on individual rights and privacy rights:

  338. davew … thanks …
    (but I’m not a Republican, not that theres anything wrong w/ that !).

  339. Cap  I’m not a Republician either!  Touche! 

  340. Cap – Now, about when do you think this whole hazerdous, intrusive, suckass trampling of an individual’s rights and privacy begin?………..Ah, forget it……

  341. Good nite all!  :)

  342. Cap- not sure what I’m supposed to be for or against…. Increased security? Scanners? As long as it is safe I’m not against it. Now to the issues….
    Social- gay rights/marriage/in the military – support their rights to all
    abortion- not a huge fan of it but definitely prochoice.
    Immigration- I support a path to citizenship for people here now but don’t think that a child born here to people who are not citizens should be given citizenship.
    I’m for less US military intervention in the world and decreasing the DOD budget. Our ‘intervention’ should consist of supporting agencies/programs like the Defense Threat Reduction Agency that try to prevent Russia and co from selling their nuclear weapons to terrorists.
    I’m against most gun control but the issue isn’t that important to me
    I’m for cap and trade. I’m for increased spending on R&D for almost all science (stem cells and alt energy two of my favorites). I’m for increasing gas taxes significantly, I’m for mandating higher fuel efficiency. I’m for letting the tax cuts for people who make over 250k expire.

  343. So I’m pretty much left on all issues listed besides gun control and certain aspects of immigration. Your turn.

  344. Pharmboy/THC ETC
    love your analysis of the industry and Imfead and enjoy all of it.
    Howevere, regarding THC, it’s not just the drug itself but how it’s taken… Smokiing will give you same risks as tobacco, with different variations and flavors.
    Have you seen the psychiatric sided effects of chronic use?
    Purely from a medical standpoint, given the harmful effects of tobacco, and if our politicians ever had the guts, it should have been made illegal decades ago….but try doing that…A politician is certainly ‘dead meat’ to even suggest it.
    The government is paying for our health, dictly or indirectly already… But they do not have the courage to ban tobacco…nicotine is only a small part of tobacco….hundreds of diseases caused, and even your smartest doctor could not list all the bad effects.
    The best analogy I can use…the govt. Insuring my house, paying me to burn it every month, to keep the home builders happy and in business…never mind I am on the streets every month for a few weeks at a time…
    Tobacco has ABSOLUTELY no beneficial effects at ANY DOSE! Cannot even compare to alcohol, which if used in moderation or less, at least has been shown NOT to harm!?
    THC? Sure you could eat it and bypass some of the side effects of smoking it…but where is the data?

  345.  Good morning!

    Oil is hitting $86, copper $3.86, gold $1,364 – QE2 is working already!

    The dollar is down at 76 and testing that line.  I was just on a CC with investors last night and I said this is the magic spot where the dollar could go 4 either way – we could drop to 72 or we could bounce to 80 and hopefully we do both because we can expect a 2x market move of about 10% each way and that would give us a hell of a range to play.

    This morning we have a 0.5 drop in the dollar and a 0.5% rise in the futures but that’s nothing compared to oil up 1.5% and gold up 2.15% and copper up 2%.  Bernanke made some speech justifying his actions but how many days of 2% up moves in commodities will it take for him to admit there is inflation and then how many days before the Fed does something about it?  That’s the problem with hyperinflation – it moves faster than policy can keep up.

  346. Thursday’s economic calendar:
    Chain Store Sales
    6:00 Monster Employment Index
    7:00 BoE Announcement
    7:45 ECB Announcement
    8:30 Initial Jobless Claims
    8:30 Productivity and Costs
    10:30 EIA Natural Gas Inventory
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet 

     Fed Open Market Committee: Announces quantitative easing via $600B in purchases of longer-term Treasurys by the end of June – at the rate of about $75B/month. Maintains near-zero rates and expects to do so for "extended period." Vote was 10 to 1, with KC Fed’s Thomas Hoenig saying the risks of the purchases outweigh the benefits.

    More from FOMC: Progress toward dual mandate of maximum employment and price stability "disappointingly slow." Along with $600B asset buy, Fed will continue POMO rollovers of maturing securities. Household spending rising gradually; business spending is growing more slowly than before. Housing starts still depressed. Fed will keep watching and "employ its policy tools as necessary" to support recovery. 

     The New York Fed’s statement provides some details on theFed’s easing plan: The $600B in new purchases isn’t all; continued POMO reinvestments could total $250B-300B during the same period – $850B-900B total, about $110B per month. NY Fed expects average duration of securities bought to be between five and six years.

    What does QE2 mean to you? Since all the hype was overblown, probably not much – except destroy the dollarjack up inflation, or startthe U.S. swirling down a never-ending cycle of government intervention.

    Oil futures hit a six-month high, pushing toward $85. Oil markets are already assuming Bernanke will succeed in his goal of stoking inflation, but some worry that the inflation will get out of control. Commodity prices may not fully reflect fundamental demand in emerging markets or global investor appetite for commodities – and disdain for paper – as a portfolio holding.

    Shoppers will pay more for clothing next year as skyrocketing cotton prices force companies to take their chances in passing along price increases to consumers even as demand remains sluggish. Hanesbrands (HBI -1.4%), Jones Group and VF Corp. (VFC -0.4%) say they will raise prices for clothing set to hit stores early next year by as much as 10%.

    Goldman Sachs’ (GS) Jan Hatzius sees QE2 boosting U.S. GDP by 0.5% and doubts it will create a long-term inflation problem – instead, inflation will remain below the Fed’s 2% target for some time. Until housing improves, GDP growth will be stuck at 1.5%-2%, he says, and won’t hit 3% until employment picks up, perhaps in 2012.

    Ken Fisher likes the prospect of D.C. gridlock and sees a continuing rally in stocks as a result. "Markets don’t like big sweeping actions,” he says. “It’s been in the interest of the Republicans running for office to talk down the economy. That goes away immediately after the election." Fisher looks forward to a period of "very little legislation and a lot of baby kissing.”

    And now the sunnier side of real estate: ING IM’s Patrick Moonen says investors could do worse than look to European REITs for yield (they could be invested in sovereigns). Many real estate companies have refinanced and underlying commercial property may be turning around vacancies and rents.

    Chesapeake Energy (CHK): Q3 EPS of $0.70 beats by $0.06. Revenue of $2.6B (+42.5%) vs. $2.3B. Shares -0.3% AH. (PR)

     MetroPCS Communications (PCS): Q3 EPS of $0.22 beats by $0.01. Revenue of $1B (+14%) in-line. (PR)

    Qualcomm (QCOM): FQ4 EPS of $0.68 beats by $0.09. Revenue of $3B (+9.7%) vs. $2.8B. Shares +7.2% AH. (PR)

    Transocean (RIG): Q3 EPS of $1.15 may not be comparable with consensus of $1.36. Revenue of $2.3B (-18.2%) vs. $2.5B. Shares -0.4% AH. (PR

    Suncor Energy (SU): Q3 EPS of $0.42 beats by $0.01. (PR)

    Time Warner Cable (TWC): Q3 EPS of $1.00 beats by $0.11. Revenue of $4.7B (+5.2%) in-line. (PR)

    Whole Foods Market (WFMI): FQ4 EPS of $0.33 beats by $0.05. Revenue of $2.1B (+14.7%) in-line. Shares +7.3% AH. (PR)


    Notable earnings after Thursday’s close: 

  347. Legalization- underlying this is the premise that individuals are responsible enough to limit the downside. Fair enough- free to choose,etc.
    However, there is this:
    So, these same adults/parents are assumed to NOT be sufficiently responsible to control the what, why and how their children eat?
    After a few tokes, I am sure the logic is resolved.

  348. Mornin. Phil, looked at Omega5 lately? We’re getting close. If we could get a serious pop in the next couple of days, maybe by Tuesday next, it seriously sets us up for a blow off top. What’s the catalyst? Jobs! The numbers will come in more fake baked than the chicks on Dancing with the Stars, and voilà! Everything is hunky dory, go back to your life.

    How do we go down? In the face of $27.5Billion/week coming from Fed, it would have to be fast, as any down move is a buying opportunity.

  349.  Phil
    I hold the following short positions:
    TZA Jan 22/32 + short Jan 21 put
    FAZ Jan 11/16 + short Jan 11 put
    QID Jan 12/16 + short Jan 13 put
    Should I use today’s excitement to roll down the long legs and down and out (Apr) the short puts on TZA and QID? Or some other action?

  350. Of course we are having a POMO morning and, as expected, we’re up in the futures,  but this looks to be more dollar-based than POMO based at the moment.

    " I am basing my statements on what I consider to be "fact"."/Gel – Not to get into it all over again but that’s exactly the problem with all sorts of communications in this country – we don’t get to "consider" things to be facts.  Facts are FACTS, they are irrefutable things that are true, no matter how much you wish they aren’t.  If something is a fact, then it would be provable and irrefutable.  The biggest problem both sides (all 3 sides now) have in America is they all believe they have facts on their side because our schools no longer teach logic or philosophy and our media drums idiotic things into the populace like "we report, you decide" – which is completely ridiculous to those of us who expect FACTS from our media.

    You are not supposed to report opinions and present them as facts.  You are supposed to report FACTS that have been vetted and any proper new organization would be embarrassed that ANYTHING that was said on their air would turn out not to be accurate.  Oh sorry, I was having a 70s flashback to Walter Cronkite and Joe Friday ("Just the facts, m’am").  We may now live in the land of delusion but that doesn’t mean we all have to act delusional, does it?  Let’s all try to step our discourse up a notch, shall we….

    Very good political summary Ben!  I do sometimes wonder how we get into this BS and it is the usual suspects.

    Dickens/Drum – Do you have a link to that?

    Dollar/Reza – I think the Dollar may fall to 72, which is uber-support and should also hit big upside resistance at 80 but a panic back to the buck can blow through any resistance.  With 62% of all the money in the world in dollar assets (about $62Tn) a 5% drop in the dollar costs somebody $3Tn so that’s a big deal right there and unless everyone is like PIMCO with a 2:1 foreign asset ratio (not possible obviously with 2:1 of the total assets in dollars) a lot of people are getting very badly hurt by these currency shifts.  Mostly it’s Americans, who have about $40Tn in dollar-denominated wealth but it’s enough global citizens, sovereign wealth funds, CBanks, IBanks, etc. that they are not likely to take a big move in the dollar lying down.  Bernanke declared a currency war yesterday – let’s give the World a few days to respond. 

    UUP/Deano – If things don’t improve this weekend, I’d ditch the calls, at least. 

    Well said Deano.

    Upside/AC – Sure, see UYG and XLF earlier today.  If we break over, there are tons of nice upside plays but the financials are "safest" at the moment because they are still so far down and, as I said in the morning post, who is the Fed funneling all this money through?  

    Excellent currency article Terra, thanks!  That’s why we love the boyz at ZHedge!

    Accepting the cost of others mistakes/Gel – Tell that to my great-great grandchildren while they are sill paying off Bush’s mess!

    Drawing the line/Cap – The Netherlands did a fantastic job of deregulation, including prostitution for decades.  What went wrong is the EU allowing free boarder passage into the country and that began attracting pretty much the worst elements from the rest of the EU as it’s too easy to get to by train so Amsterdam is like Vegas on steroids now and they are just not prepared to handle the rest of the EU’s idiot bachelor parties.  There used to be a thing about going to Amsterdam where you went through customs etc any time you entered the small country from any other and that gave more of a feel of oversight to the thing and, of course, customs going out meant no taking souveniers home.   Now the stakes have gone up as people have begun to use Netherlands to move drugs through Europe as there are no boarder checks between there and the end user anymore.

    Taxes/Humvee – It’s inevitable.

     Thanks Cap, I think I’ll lead with that chart today.

    "I think rape is very different than THC"/Pharm – See, now THAT should be a FACT!  Note the workings of the Conservative mind here, things get labels and things get categorized and those categories and labels grow to include all sorts of things that they just don’t like.  Amazingly, once something gets labeled, it’s like one of those super-sticky ones that won’t come off no matter how ridiculously miscategorized something is…  8-)

    Overkill/Cap – What?  Are you getting soft on terrorism in your old age?  And what if they were more lax and a plane blew up?  Would you blame individual rights and privacy rights or Obama?

    Omega 5/Hoss – I think it was Beta 5.  Omega III was our old pattern. Remind me on Sunday and I’ll see if I can update that one.  At this point, we need to clear our minds and accept the possibility that an inflationary cycle may be taking hold that will send the market up 10-20%.  The question is, will the rise in the markets keep us up with inflation?  We don’t care, because we can use leverage and inflation blows up all normal option parameters – in other words, you can buy an IBM 2013 $155/165 bull call spread for $3 because the underlying assumption is it will be difficult for IBM to rise 20% so you can make 233% which implies the odds are 10:1 against that happening.  If we have inflation, the odds shift drastically in our favor on upside bets to the point where they become almost no-brainers and we will be able to layer these up over and over again and, as in our FAS example yesterday, we can make as much as 100% per month playing this game.  Will it be enough to keep us ahead of hyper-inflation?  Probably because I’m not expecting more than 20% a year, which is plenty over 5 years to fix our debt issues and give all homeowners a nice nest-egg to retire on.

  351.  A sector to keep an eye on is water transport. I hold DRYS, but even if the Baltic index is down, the other transports are flying and money needs to go somewhere. Also, HOV in the builders….some money in a buy/write is a pretty good long term bet.

  352.  Shorts/Yshen – Europe is up almost 2% so I’d slap a long cover on at the open and then I’d roll the calls you are long on down and just hope you have a good reason to take the cover off ahead of tomorrow’s numbers but, if we are up all day, maybe keep the cover – just in case.  

  353.  And BYD…its starting to participate in the casino madness, but it has a long way to run if it starts showing up on traders scans.

  354. jrohema
    Increased security – I am for keeping us safe, but some things are ridiculous like these scanners and frisking grandma while not frisking those who are statistically thousands of times more likely to be a security issue.
    Immigration – am not aware of many people who are against immigration and I am not.  As long as it is in accordance with the law.  I also do not think that a child born here to people who are not citizens should be given citizenship.  Thats just stupid.
    Illegal immigration – I am generally against giving amnesty to people here illegally.  They broke the law.  Maybe employers broke the law too, and should be punished.  Politicians who ignore the law do so largely for craven political reasons (they think it creates voters for themselves).  There’s no good answer for many who are here illegally, but we need to start w/ protecting our borders and enforcing the laws.  Paths to citizenship must set a high bar and put these folks behind those trying to come here legally.
    US military posture.  I don’t agree w/ your view that a strong militray means  "intervention".  Like it or not its a dangerous world and we need to have a strong defense and presence worldwide.  I am not a real politick guy, but intervention and deterrence are important politically and economically and morally.  There are a lot of bad actors.  Where would Europe be today w/out the US or Nato ?  Budgets are another matter, and in the world and decreasing the DOD budget. 
    Guns.  Not a huge issue for me.  I don’t have a gun. I think guns should be properly licensed w/ legit background checks done. There are too many guns in the hands of criminals. People can own guns responsibly within the law.
    Cap and trade. Not in favor.
    Taxes.   To paraphrase Jimmy McMillan, the Taxes are too damn high !.  Not in favor of tax increases.  Would prefer a flat tax at a lower rate w/ no or limited deductions.  The people should keep their money and decide how it gets spent.  Government is not a good steward of our money.   Agains class warfare.  Defining >250k incomes as "rich" is absurd.
    Social- gay rights/marriage/in the military – not an important issue for me; not a voting issue for me. Support the rights of people to be happy and not discriminated against.  Have no opinion on don’t ask don’t tell.
    abortion- not a voting issue for me; not a litmus test issue; not a huge fan of it; against late term abortions; see both sides of the pro life / pro abortion issues; think the left is too militant / extreme about the issue; a product of the ’70s; some elements of the right are too extreme as well.  Think abortions should be discouraged where possible, not marketed like a product or considered an absolute right.  Its a medical procedure.
    Good government.  We need good government and reduced spending.  The people aren’t a piggy bank.  Everything needs to be on the table.  I’m still waiting for Obama to go line by line thru the budget to find cuts (Ha Ha Ha).
    American Exceptionalism.  The US, despite its flaws and increasingly idiotic and corrupt government, is a beacon of liberty to the world and should play a leading role morally, politically, economically and militarily.

  355. dear phil
    re dickens. not anymore. course taken about 50 years ago.