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Monday, August 15, 2022

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Flip, Flop and Friday – Options Expiration Spectacular!

Flip, flop & fly

I don't care if I die

Don't ever leave me

don't ever say goodbye

Things were going according to plan (even though the plan was horrifying) and everyone was happy but then Uncle Ben had to screw it up this morning when "The Bernank," speaking in Germany, indicated that the Fed would pull the plug on QE2 if they thought inflation would rise higher than "2 percent or a bit less.

WHA-WHA-WHAT?  Keep in mind that WE are the only country on the planet Earth that is still pretending inflation is under 2% and he's making this speech in China, where inflation is 4.4% so what do you think happened?  

Of course, if you can answer that, you are smarter than the Wall Street Journal (but then again, who isn't when it's being run by people like Roger Ailes, who just said of National Public Radio: "They are, of course, Nazis.  They have a kind of Nazi attitude. They are the left wing of Nazism.") who went with the headline: "Dollar Sinks Despite Chines Rate Rise" because they clearly do not understand the workings of International Monetary Policy, which I would find disturbing if the Wall Street Journal were a trusted source of financial information and not just a right-wing mouthpiece.  As our friend Jon Stewart so aptly pointed out last night, there's a pretty large disconnect between Conservatives and reality these days and it should be no surprise to any of us that this carries over to their trading positions.  

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
George Soros Plans to Overthrow America
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

Fortunately, PSW readers are well aware that any indication by The Bernank that the money spigot may one day run dry handily trumps a 0.50 increase in the reserve requirement of Chinese Banks.  Bloomberg get's it (liberal morons!) with the very succinct headline "Bernanke Steps Up Stimulus Defense, Turns Tables on China."  While Bernanke didn’t identify China in his speech, he took aim at “large, systemically important countries with persistent current-account surpluses.” Bernanke’s comments come a week after leaders of the Group of 20 developed and emerging nations meeting in South Korea failed to agree on a remedy for trade and investment distortions. At the summit, President Obama attacked China’s policy of undervaluing its currency. 

China has tied the yuan to the dollar to promote exports that helped produce the fastest gains in gross domestic product of any major economy. China, which surpassed Japan’s GDP to become world No. 2 in the second quarter, recorded 9.6 percent annual growth in the three months through September. It holds about $2.6 trillion in foreign reserves, the most in the world.

German Finance Minister Wolfgang Schaeuble said Nov. 5 he was “dumbfounded” at the Fed’s actions, which won’t aid growth and will instead contribute to imbalances by driving down the currency. U.S. monetary policy is creating “grave distortions” and causing “collateral effects” on faster-growing economies such as Brazil, Meirelles said in October.  China’s vice foreign minister, Cui Tiankai, said Nov. 5 “many countries are worried about the impact of the policy,” echoing concern across Asia over the risk of a flood of capital that causes asset bubbles. Economies from Taiwan to Indonesia and Brazil have taken steps to counter inflows of speculative money, and South Korea yesterday said it will back legislation restoring a tax on foreign investment in the nation’s bonds.  

None of this is particularly bullish for commodities, which is why we got right on top of this in Member Chat at 5:43, when my note to Members was: "Interesting, Dollar is being taken down while the Bernank speaks. It jumped to 78.55 but now smacked back down to 78.25 and that sent oil from $83 to $82 and back to $83, which makes them a good short play below the 83 line in the futures."  Oil just (8:30) bounced off the $81.50 line and we are not greedy at PSW, especially at $5 per penny, per contract on the oil futures!

Like the Army commercials, we can make more money before the markets open than most people make all day… 

So happy Friday to everyone!  We're off to an excellent start and Members should make sure they read the morning comments to get their bearings on what is already an exciting day.  We killed our long DIA calls and, of course. flipped a little short into yesterday's rally but just a couple of gamble to keep us from getting bored with our cash positions.  Yesterday's trade ideas were (and this is the last day of inside trading discussions, from now on, you'll need to buy the newsletter):  

  • IWM – I’d say that 72.17 should signal a breakdown and I’ll be surprised if they break 72.78 so maybe worth a speculative short there. The $73 puts have very little premium at .80 so figure .40 would be a good DD on those with a stop on a cross over 72.78.
  • CMG – Nice pin action at $230. You can sell the Nov $230 puts and calls for $4.70 if you are feeling brave (rolling the losing side to next month, if any).
  • PCLN – Another chance to go short on them. If you take 1/2 of a small position on the Dec $430 calls at $9.20 (selling them short) then the plan would be to roll those to 2x the $450s (now $4) if they break over $425.
  • DIA Dec $113 puts are $2.57 and you can sell the Nov $112 puts for .52 which protects you (delta 56) from a 100-point move up in the Dow while a move down won’t hurt because the Dec $108 puts are .85 so, at worst, you are in a $5 vertical that’s working for net $2.05. It’s a good way to set the (hopefully) naked Dec $113 puts up for weekend protection.
  • TTM – Well you can’t sell puts but you could buy 2x the Apr $28/33 bull call spread for $2.60 and that pays $5 at $33 (+92%) and the delta differential is .22 so a $5 drop in the stock will cost you 2x $1.10 or $2.20 which is as well protected as you would be with the short calls.
  • NABI – Good call, they are in that $5 sweet spot too. At $5.22, the June $5 puts and calls fetch $1.75 for a net $3.25/4.13, which is a nice 46% profit if they hold $5 so a nice way to initiate a position. 

That's how we do things intra-day, we shorted IWM, played CMG to peg $230 (and as long as they open there we can kill the trade with a nice profit without waiting all day), shorted PCLN again, did a spread but short on the DIA as we didn't think they'd drop too much today and played TTM and NABI long but hedged.  People have been asking if we do stock trades and the easy answer for that is if we are shorting PCLN or CMG with short calls or going long on TTM or NABI – THAT is a short and long call on the stocks.  Stocks are simply less fun to trade in this kind of market, options help us mitigate our risks as well as provide good leverage we can use while keeping ourselves mainly in nice, flexible cash while this crazy market tries to sort itself out.  

Of course we plan on being mainly cash and a little short into the weekend and (spoiler alert!) next week as well as we only have 3 real trading days and then Thanksgiving so probably low volume and no way do we go into a 4-day weekend with a lot of risk exposure.  We have not yet violated the Beta 3 pattern (see Stock World Weekly) and Ireland is still up in the air (but our long on AIB has already paid off nicely!) with Portugal already shaping up as the next target for the "bond vigilantes."  Ireland seems to have already lost their battle with Pimpco with this great quote from the opposition party's Michael Noonan

Cowen has squandered independence for a German bailout with a few shillings of sympathy from the British chancellor.  The government should be ashamed that Fianna Fail should be the ones to surrender sovereignty.

As I said in yesterday's post, unlike Americans, at least the Irish know when their government is screwing them.  Medicare cuts are already starting to take place and the deficit commission has Social Security on the operating table for a benefit-ectomy and the Republicans already voted down and 2M Americans will be cut off from benefits in just 40 days with the other 6M now on a ticking clock to possible bankruptcy – Merry Christmas Mr. Boehner, God bless us, everyone!  

The Department of What Little Labor is Left reported yesterday that fewer new businesses are getting off the ground in the US as start-ups of job-creating companies have failed to keep pace with closings, and even those concerns that do get launched are hiring less than in the past. The number of companies with at least one employee fell by 100,000, or 2%.  That was the second worst performance in 18 years, the worst being the 3.4% drop in the previous year.

 Research shows that new businesses are the most important source of jobs and a key driver of the innovation and productivity gains that raise long-term living standards. Without them there would be no net job growth at all, say economists John Haltiwanger of the University of Maryland and Ron Jarmin and Javier Miranda of the Census Bureau.  "Historically, it's the young, small businesses that take off that add lots of jobs," says Mr. Haltiwanger. "That process isn't working very well now."

[STARTUPS]

Until we begin putting in job-promoting programs, we remain in a "Dead Parrot" economy and all the Fed's stimulus and Mervyn King's men will not put our economy together again.  

Oh well – try to have a nice weekend, 

– Phil

Top pic credit: Elaine Supkis at Culture of Life News 

249 COMMENTS

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Phil : In July,I bought BMY at $27.35 and sold Mar. $27 calls for $1.56 for net $25.79 (now $25.94) in my IRA account. Since the call is down more than 50 % should I roll out to June $ 27 calls?  thank you

flip
Have you ever been in an accident caused by the other party? When the very profitable insurance spends $9,000 to cut your payment to $10,000 on a car that cost $20,000 to replace are you going to say the lawyers and big business needs more money or I got screwed? How about injuries that cause you to code blue and refuse to pay? Is that thinking like a socialist or lefty? The richest people are the most unhappy and like whores want more money. Think all others are pond scum and deserve nothing. What happened to equal oppertunity for all? 1.8 trillion deficit, 1 T military, cut SS, unemployment insur., food stamps everything else, still 1 T deficit, no taxes collected, no economy, starvation, civil war. The pentagon is planing on turning the military on civilians to portect the rich, that is socialistic dictatorship and why we spent all the money to control Iraq, Be careful what you wish for, you may get it and not like it!

Just crushing the dolar; we’ll be at 75 by Christmas !!

Phil,
 
Sorry about your Dad.  I’m dealing with a similar situation.  Watching your parents grow old really sucks.

Pharm,
Anything coming up for SPPI?

Out of TNA with a quarter, another1% day. Have a good weekend all !!

 @flip – Yes, socialized medicine is bad bad bad.
Oh, wait a second…isn’t Medicare socialized medicine? Isn’t it already accounting for the vast majority of healthcare payments in the US as a percentage of total healthcare spending? Interesting. I have an idea, let’s get rid of it and rely on the private insurers for all coverage! I’m sure the insurance companies will give me great rates for a private policy once I’m retired and past 60. 

allan292
At 49 private insurance refused coverage because of per existing conditions, no rates at any price. Cut medicare and the doctors have to trade stocks to make ends meet, have you noticed how many doctors are members? Flip’s system is a winner.

@Shadow  I love the Jon Stewart clip when Spitzer asked the ex-MD Senator on how much he made a year even after all of the Medicare spending cuts made in the past 2 decades. The Senator’s reaction was priceless…he came pretty close to bringing up the whole hooker thing with my man Elliot. 

allan292
Did you know my senator Brasso WY  was a doctor, now he is one of the worst senators in the nation making a lot more money. Wonder if he was agreat super caring doctor ready to help all including those with no insurance or money? I missed that clip.

Shadow, I have noticed there are a lot of Drs on this board! However, I thnk they are trading b/c they like it, not b/c they need money.
On another note Phil, the Gov’t is thinking of freezing military pay for 3 years which would save around 9 billion (if I am remembering correctly). I think it is a good idea fiscally. Although we sacrifice much, we also have job security and the military is having NO recruitment problems in today’s economy. Not sure I would recommend O do it and give the conservatives a chance to campaign next election on "Obama cutting support for military".  Anyways, ya’ll have a good weekend.

exec, how do you resist micro managing?!  That’s a pretty nifty set up you’ve got.  So has it helped stop the pilfering?  Hope so- enjoy that pasta this weekend!  Out.

Matt,
 
I hate micro managing, in fact, my style of managing is to let people make decisions.  I learned a long time ago that if you’re going to direct each and every move a person is allowed to make, then they will be content to stand around doing nothing productive and wait for you to tell them then next place to stick their shovel in the ground.  I’ve also learned that if you tell someone how to perform a task, when things don’t go as planned, they will blame it on your idea.  On the other hand, if you let them know that it is their responsibility to figure out the best way to get a task done, they will kill themselves to make sure it gets down on time and correctly.
 
As far as the servailance system……the salesman told me that the theaft would drop off by 90% the instant the word spread that we were monitoring the site.  He was right. 

You know what’s amazing ?  It’s 1 week until "Black Friday" and we have heard virtually nothing about it … usually the media is hyping the hell out of Black Friday (& cyber monday) by now.
 
Maybe they know its not gonna be good, so the less said the better ?

Good Evening…. have been away most of the day, and as usual, the board has contributions of diverse advice and experiences… end of life issues and the following consequences of death… just my $.02, as I believe most who experience this ( don’t we all ) are looking at the "dark side" as most all who attend funerals are dressed in black, and wearing dark  sunglasses.and projecting a "morbid" attitude.  The feelings of sadness notwithstanding, I believe a funeral should be a celebration, and not an environment for encouraging the weaping and remourse.  I have been to many funerals, out of respect for the family of the deceased , and they frankly "suck" as an experience. The last funeral I attended a couple of months ago was the perfect example of how a funeral should be planned.  It was my father-in-law who passed away, and the funeral was held in a Catholic Church. My father-in law was a renowned musician, and the service was really a concert performed by his musician buddies— unbelievable!!!. The priest was also was an Irish buddy of the deceased who entertained us all ( jokes and humerous anectotal stories ). The church was a background, but the service was entertainment, as the deceased was an "entertainer" his whole life through his music. After the funeral, the family and his entourage of many friends went to his home and had a party that he would have been proud of – We even opened up his massive wine cellar, catered food, and let it be the best function he ever hosted from afar. He, I’m sure would have approved…. just a thought, as we all will go through this at some time in our life. Just a thought – It should be "the quality of life, and not the quantity of life"

I’ll leave it to you to answer whether Socialized medicine is bad, bad, bad because the Bamster just tried to re-design it and has made it more socialist.  How’s that working so far?
Even our local liberal newspaper has told him not to reduce his reimbursements for doctors under the new program.
Socialism is failing. Here as well as everywhwere else.
—Capitalism….Anyone know of a capitalist country?  I sure as hell don’t.  This country has been an oligopooly run by Oligarchs in banking for 40 years or more.  Capitalism may be failing too if only we could find somewhere to test that theory. 

Ah come on Phil, speaking of out of touch, did you just see the election results …the Dems just got their friggin ass handed to them. Look, I am a liberterian , how can you still be blaming everything on Republicans, the Dems have had control of congress for 4 years. Also, you need to be an equal opportunity critic, there is plenty of jucy stuff going around to have a field day on both sides. Finally, you seem like a really smart guy, next you will tell me that you trust the business page of the USA today more than the Wall Street Journa and Jon Stewart, a comedian, is your news and opinion source???..he seems a little too serious and needs to get laid more!!!.l…Oh, and how is extending unemployment benefits going to help the nation start job growth???…finally, I just got laid off from a sales position at BIIB, they just cut their entire Oncology division . Over 650 people got the Ax. think they are going to put them selves up for sale…Finally love your rants and writings . i appreciate all that you do….

My brother is a researcher in pediatric oncology. He faces some real challenges but tries to work with families and the system. There will be a PBS documentary out on his work soon. I will try to let you all know when it airs.
In retrospect,Turns out that selling the Nov DIA puts would have been the 90% earner today to the peg. Like Phil the master constantly states. Thanks for the learning opportunities.

Gel:  You and I agree on most topics, but I have to disagree somewhat with your views on funerals.  I believe that funerals are put on solely for the closest of the departed; they are not meant to be entertaining or be uplifting to the attendees unless that’s what the family wants (which they obviously did in the last funeral you attended and so eloquently described). 
The desires of the family will usually be dictated by their cultural ideals; being half hispanic I can assure you that if no tears or waling occurs at a funeral then attendees would wonder what was wrong with the remaining ones.   I know its very PC  to have funerals be a "celebration of life"; personally I attend to support the family nothing more or less. 
It certainly should be more about quality and not quantity of life that matters!

We need to expose more of these fraudulent, junk China companies for what they are.  Just like during the Dot.com bubble, the exposing of these companies as being valued on hot air and "hope", came part and parcel with the bursting of the Bubble.  Its about time this one popped too:
 
After RINO, Is Muddy Waters About To Sacrifice Orient Paper (NYSE: ONP) On The Altar Of Chinese Stock Fraud?

humvee… Yes, the occasion is really intended to give the immediate family a chance to bring some closure to their loss, and to pay their last respects to the deceased. The family, primarily, is the intended beneficiary, but also those outside the family that were very close. This funeral I described was in very good taste, and lasted about 1-1/2hours. The music, both  instrumental and vocal, was some of the most moving beautiful sounds I have ever heard. The eulogies were equally as beautiful, as so many ( unexpected) got up and spoke about the many memorable events they shared with the deceased. The ceremony was "upbeat"and everybody who attended really enjoyed the experience. It was the first funeral I have been to where "Ava Maria " was not part of the musical presentation.

datuu / EUO
 
I do not understand your question – "de-correlating with the Euro because of the leverage" Do you mean the etf and Euro rise or fall at a ratio that is not 2:1, as one would expect. I know Phil played this one as well, and he might have an insight to your question. I entered my first position today, selling the naked May puts. Since this etf is priced in US Dollars, I believe the move up in the value is directly related to the weakness of the Euro vs the Dollar, and not a basket of currencies. If I am correct that the Euro could fall 15%, then I believe that would be a move of 30% in the EUO upward.

coffee at starbucks up to $4.29 today (from 4.18, +2.6%).
 
Because it’s food, this doesn’t count as inflation of course.

SPPI – don;t see any new news on them.  Conference is coming up in December but don’t know what it may contain.
 
BMY – like them a lot.  I would just leave the hedge on or roll them down per Phil’s advice.  They are approaching the 200d MA, so if they touch, maybe selling the $25 Mar10 P would be a good one as well (if you can in the IRA). 

 I’m still plotting my next moves while sitting mostly in cash.  I have been reading a lot to make up for some knowledge deficits about options trading and currencies.  I’m staying focused on long-term trading that fits my lifestyle, doing discount writes in my margin account and moving more to married puts in my IRA account.  I posted some thoughts today on my website.  (click on the user id).  As I noted earlier I’m pulling back for awhile at the end of the month and I appreciate the well-wishes many of you sent last week.  I still plan to write my weekly thoughts about IRA trading and hope many of you will keep in touch through the website.  Be careful out there!  And remember I’m still the only free newsletter writer who will give you a free bed if your trading sucks because of my bad advice. 

Gel
Well said re funerals.  Funerals have certainly been cultural and societal defined beliefs which of course changed radically over the ages.  Given your contemporary view of the funeral as a ‘celebration of life’ mirrors the most recent shift at least in the Roman Catholic church but was for many years was and I think remains the main theme of the Irish culture’s ‘passing on’ ceremony.  (Think they have it right).  Having been born and educated in Boston, many of my friends are of Irish Catholic descent.  I really could not tell much of difference from a wedding, funeral or any other event in Southie.  Fact is no one view is completely correct nor will one view of the experience be held by all.  Like your father-in-law and yourself, I say let’s make it a good one.
DD

 Gel, Doubled and Funerals,
I’ve done a ton of funerals and I think I do them well, since no one I have buried has complained yet. 🙂  I have always treated funerals as a celebration of a life lived, but sometimes I have to look hard.  I have unfortunately had to do funerals where life was cut too short, or even worse, many people were glad to see them go.  Sometimes a funeral is a time to make some peace.  If I sense the family had a broken relationship with the deceased, I tend to say something about unresolved emotions and give space for people to let go of things as needed.  Sometimes a true celebration of life acknowledges the rough spots, the struggles and the importance of loving people anyway.  My rule of thumb is that if people did not laugh at least twice and cry at least once, then I did not do a good job.  My two cents from the other side of the pulpit.

DD… Yes, Irish funerals are definitely not morbid affairs…. how about some of the wakes, where the deceased is in attendance, and receives so many wonderful toasts and the recitation of memories of past experiences. All of this is good for the soul, and helps to heal the wounds of sorrow. I’ll bet the "Southies" still salute the deceased in the true traditional Irish fashion, and send them off with sincere blessings of affection. One must remember, the "departed" is probably watching the whole event from above…. so be careful what you say !

Revtodd… I like your attitude for funeral events….they should be respectful. and supportive of the family, however not morbid.  If the deceased is deserving of kind words, then the immediate family should be reminded of this, as they are the ones who are grieving the most. ( maybe the creditors feel even worse ). In my recent experience, I was the son in law, and happened to be one who was a friend – shared a mutual respect for each other, as we both loved investments, and also had similar political interests ( you betcha, Phil – he was a liberterian ) and enjpoyed good wine together. ( I inherited a part of his wine collection ). He was an extraordinary musician, and his funeral was dominated by music -executedby some of his close musician buddies… an experience that will live with me forever. He  ( the deceased ), by had two funerals – one in California, which I attended, and the other in Chicago which was for other family members and friends ( and  burial in the family plot ) In his will he insisted certain family members attend the last ceremony, as he wanted to make sure the body which was flown to Chicago was in the coffin, and that the coffin be opened for the occasion to make damn sure the funeral home in California was not playing games…. now that is what I call a hedge.

Phil,
That was a good notification yesterday regarding the 20 minute moving average.  Good video’s.
Thanks

I meant to say 20 DMA.

Good article!

 biodiesel – SBUX is increasing their prices – the interesting part of the last conference call was that they priced in a increase for coffee prices but not enough in my opinion based on the following comment by the CEO – "higher coffee prices are unsustainable"   Part of the starbux model is predicated on what i saw the other day, "two young ladies, who seemed like servers at a local restaurant (ahead of me in line) spend 13$ on two drinks and then drove away in a broken down car. At what point, does this become "unaffordable luxury"  Clearly, half of their customers are making unwise decisions and spending 6 to 7$ on crappachinnos.

Jomama:  amazing marketing SBUX has performed, to encourage lower income workers sample their only taste of the American dream and then drive away in their reality based vehicle.  Its sad to see people squander their few dollars so that they can feel part of the main stream. 

Jomama, but its probably better than going to the local mini mart to buy cigarettes, 4loco, and lottery tickets  🙂

 Does anyone here have an opinion on H&R block?  They are currently $12.50 with a dividend yield of 4.7%  I can sell the JAN 2012 PUT/CALL for $5.50 which makes the yield over 8%.


RE: SBUX customers
I received a ‘free’  SBUX card good for $5.00.  Maybe the people in the broken down car did too.  Unless you saw actual cash being exchanged, might not that have been a possibility?
Just sayin’…

gel1 and all
Being of Irish and other desent as a catholic I believe the church has adapted to modern deaths. If all would accept this view of celibration in whatever view we would be a big step towards acceptense of the facts of life and death. I will ad that all organized religion is in suspect as they are run by imperfect humanso I rarely go to church to avoid the human interpretation.

BEWARE!
When dealing with a religious SOB get it in writing as he has no problem blanking you over with god on his side!

So now the Irish bailout for what, $130B or so….from the IMF, ECU, etc.   But really, isn’t this the next step in the cascade of failing european sovereigns with much more carnage to come?   I can’t escape the conclusion that the Euro is dying a slow death which in the final capitulation phase to come when Spain or Italy fail, will drive the dollar up as the global reserve currency!  
I think I’m the only voice right now who thinks that Bernanke is actually doing the right thing in getting ahead of the deflation curve, which is the only way to effectively deal with it (Japan learned from being behind the curve in QE, and at least the Fed seems to have learned too).   I don’t know whether to call it ‘musical chairs’ or ‘pin the tail on the donkey’, but clearly there is a contest and where there will be real losers in the sovereign solvency game.   But I think Bernanke pre-calculated the demise of the Euro and where the tide of currency will flow to:  Chimerica, as it is called.  As Europe is forced first to deal with their debt collapse, the weakening of the Euro is their version of QE monetary debasement and may well lead to dissolution of the Euro in the end.  Currency players are not unaware of this. 
With China forced to cool its economy and speculative excesses by the Fed jamming their currrency, I think it was a stroke of genius and finally an offensive move against what has been an intransigent, self-interested China who in the end appears not willing to play by WTO and other global trade rules.  If they want to keep the peg, then this is what they can expect:  imported inflation, asset bubbles, unstable economy and civic unrest due to rising food prices and other basics needs.  
I think the fears of the collapse of the dollar are way overblown, especially when considering purchase-parity-power trends down the road (euro down/yuan up), and the geoeconomic instability that is present.   Yes, gold will continue to be strong, but I strongly suggest that the dollar will continue to be in demand as the global reserve currency, as the world continues to deflate the debt/asset bubble via monetization.  If Bernanke did not get ahead of the deflation curve with QE, then we would, in my opinion, face a strengthening dollar as a safe haven, even while our economy struggles and China manipulates its currency…not a good thing for America or the world.
My prediction is that the dollar remains relatively stable at 75-80 over the next year (QE notwithstanding), while the euro loses value and the yuan is forced by the market to appreciate — all good things for America and, more importantly, the responsible path for the custodian of the global reserve currency.

lvmoda
 
I happen to agree with your thesis. I do believe the Euro will face some serious headwinds going forward. Ireland is the second domino to fall, right behind Greece ( their problems are very serious, however Ireland happens to be a domino with more mass.  Spain, Portugal and Italy are lined up to follow as well, given the debt levels and cultural/financial imperfections they share.
 
Much of my reasong comes from the belief the "cultural" parameters in The Eurozone embrace the "entitlement" concept of governmental functions – expansion of pension benefits, and union domination in the workplace. The diminshment of the work ethic and creative desire will keep the economies of the members at a non competitive level, compared to other advancing nations. Simply put…. they can’t work their way out of their mess.
 
Recognizing the need for a better GDP/debt ratio, in order to keep their bonds attractive so they can finance the massive debt, many of the more indebted nations are implimenting "austerity" programs, which are not working. These programs are slowing growth, and reducing GDP…. thus making  the bonds they issue less attractive to buyers and forcing the rates up in order to make them marketable. This additional interest expense is a "double wammy" that makes things even worse financially… and increases the chance for the domino to tip over.
 
Exacerbating this whole ugly scenario – most of the debt is swirling around in the Eurozone, so all members are at risk of the potential default. The German government is the only hope for this nasty scenario – however Angela Merkel is making sure the German taxpayers will no longer be on the hook for the debts of other nations and their mistakes. Merkel has suggested the bondholders "eat" the risk… the ECB is against the idea as the rates will skyrocket and the debt will increase.The German elections are in March, so this will get interesting.
 
Bottom line is…. the Euro is approaching the bathroom, and the toilet bowl is calling. This will pump up the Dollar, and I am looking at some investments to take advantage of this scenario. On Friday I took a long position in EUO ( ultra short Euro ), and I will play the Forex market, targeting the Exotic currencies that trade in concert with the Euro. Some of these move "faster" directionally than the Euro – The Hungarian forint is one of my favorites, as they have a nice "mess" of their own, and should enter the tank at a faster rate than the Euro. The others that follow the Euro directionally are Polish Zioty, Turkish Lira and Czech Koruna. I have my eye on a few others, and will watch the charts.Many of these currencies move much faster as they are smaller and less liquid. Stops need to be observed for this reason, among others.These opportunities will develop over a period of time, as the news evolves.

Flipspice – she paid with her purchase with a $20 bill – i had plenty of time to observe since the two girls had a very elegant long order. but your point is well taken.

Dollar:  It’s become too confusing for this simpleton.  Earlier this year, if a european country showed any weakness the euro would tank, gold, us bonds and the dollar would rise.   The Irish problem came forward this weekend and the dollar and us bond are both down, and gold is up; i really don’t get it.  It seems very unpredictable and subject to manipulation.

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