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Tumbling Tuesday – China, Korea and Europe, Oh My!

Man was yesterday silly!  

We ran with some upside plays out of the box but they died by 10:10.  I called the top at 10:12 when I pointed out to Members that 2,530 was Friday's top-out on the Nas and 2,532 was resistance going back to the Friday before.  By 10:54, the Nasdaq was back down to 2,515 and I said to Members:

Wow, that turned fast! What a joke that the Nas can pop from 2,500 to 2,530 in 30 mins and then all the way back down 30 mins later – as I said this morning – an untradable market unless you are a real cowboy day-trader.

Of course we ARE cowboy day traders and Mega Kudows to JRW, who called a move into TZA at $20.06 and a move out at $20.84 (4%) at 1pm.  My own 1:31 note to Members was: "Volume died at 77M on the Dow at 1:27, only 50M since 10am so very slow at the moment, which means we could start heading up again." And, of course, we did!  At 1:57, I added: "Meanwhile, Nas looks like it’s going to make another run back to 2,532 – just to make sure it’s totally obvious what a farce this market is…"  

Of course, at PSW, we don't care IF the market is fixed as long as know HOW it's fixed so we can play along at home.  As the Nas headed back to our 2,532 target (where they closed exactly for the day), we added the WEEKLY QQQQ $53 puts at .45, which was a play I called at 3:01 in Member Chat, while the puts were still selling for .55 – THAT'S HOW FIXED THE MARKET IS – WE KNOW OPTION PRICES AN HOUR IN ADVANCE!  

Speaking of fixed markets, the image on the left is from Bess Levin's well-titled "Insider Trading Festivus 2010" in which she suggests sending FBI strip-o-grams to the evil hedge fund of your choice "just to f*ck with them!"  Bess cautions fund managers not to assume that all FBI agents bursting through their doors are strippers as that can lead to some very awkward moments…  

Meanwhile, it's a Festivus for the rest of us (who are short) as the markets roll back over.  Of course, yesterday's insane market moves served to reinforce our "take the money and run" sentiment as we got a drop on the Dow all the way to 11,060 at 12:48 yet the Dow recovered 120 points into the close on weak volume that gave us the que to move in short – despite our bullish expectations for HPQ earnings (we sold puts earlier in the session).  

FXI WEEKLYThe Nikkei was up 1% this morning but the rest of Asia had a rotten day with the Hang Seng falling 627 points (2.67%) and the Shanghai off 56 points (2%) and the BSE down 265 points (1.33%).  This knocked the FXI below support and down to the 22 DMA at 42.67 (see David Fry's chart) and breaking that would be – BAD.  China is experiencing runaway inflation and Wen Jiabao's price controls are doing nothing to reign in the 54% increase in the money supply over the past two years – an amount our own Fed calls "a good start."  

Bloomberg has an article today with this little anecdote:  

Standing near his 12-table noodle shop on Beijing’s Yonghegong Avenue, owner Liu Heliang says meat and vegetable prices have climbed 10 percent in a year and staff wages are up 40 percent.

I’m struggling to make ends meet with costs going up like this,” said Liu, a native of Sichuan province who pays his workers as much as 1,800 yuan ($271) a month, or 88 percent more than the Beijing minimum wage, to serve up a staple Chinese meal. “Raising prices is the only way out,” he said, predicting he won’t be able to hold out beyond two months.

I mean, really people, how is a man supposed to run a successful business when he is forced to pay his workers close to $10 a day?!?  This is why we must protect the business owners in THIS country before our own workers start getting funny ideas about being able to afford to eat the food they serve or buy the things they make…  This is a great example of why China's growth is unsustainable.  Just the way Egypt's growth was unsustainable 3,000 years ago because it was based on slavery, China's growth also reaches a breaking point if the workers are no longer willing to accept their lot in life.  

Paying a worker $271 a month (and that dollar matters when it's only $271!) for 160 hours of work (and you know it's more than that) is $1.70 per hour or about what I made as a busboy in 1976, when my plan was to buy a brand new VW Beetle for $1,999.  That's why Tata motors has cars for $2,499 – that's what the market will bear over there!  Of course, in 1976 gas was $1 per gallon and we'd put 6 kids in that VW and $1 each would get us to the shore and back and another Dollar would pay for lunch so I was happy to work one hour to pay for a day off and save the rest.  Modern workers are not so lucky as they work all 40 hours of the week just to buy necessities and spend their free time praying nothing happens that will force them to borrow money.  

They are just not addressing the fundamental problem at all,” said Patrick Chovanec, an associate professor at Beijing’s Tsinghua University. With the expansion of credit and cash in the economy stemming from China’s response to the global crisis, “you’re sitting on a volcano,” he said.  China’s plans to rein in prices include selling state food reserves, stabilizing the cost of natural gas and cracking down on speculation in and hoarding of agricultural products, the State Council said. The aim is to damp food inflation that reached 10 percent in October, more than twice the 4.4 percent headline rate.

If you think you don't have to worry about whether or not Chinese workers can afford a Big Mac, think again.  The myth of infinite Chinese demand is what's spurring the speculative rally in America.  Since the people PHYSICALLY cannot afford price increases, margins are being squeezed and sales are dropping fast.  Bloomberg points to another example of an apple seller whose prices went up 60% which led directly to a 60% drop in sales – all this is right on the money with my call on the 2010 outlook I made last year – it's "A Tale of Two Economies" and the wealthy investing class simply does not see (or does not want to see) the abject suffering of the working class – whether it's Chinese or US workers, as the situation reaches a breaking point.  

Even the mighty US consumers are nearing the breaking point with just 15.7% of holiday shopping completed by the week ending Nov 14th compared to 20.5% at this time last year and 28.3% in 2008 – the last year we had a "healthy" economy and when 10M more people had jobs and 4M more families had homes to put a Christmas tree up in.  

Food companies are still reeling from lower sales volumes that began in 2008 with what some dub "pantry deloading." Over the past two years, the number of items kept in American pantries has fallen about 20%, according to a recent SymphonyIRI survey. Consumers are also cutting back on the range of goods they stock.The average household had 369 unique items in its medicine cabinets, pantries and cosmetics bags this year, compared with 404 in 2006, the survey found.


We're going to run our annual PSW Holiday Shopping Survey this weekend so our Members can give us their observations of Black Friday's from around the nation.  Our holiday surveys have been excellent predictors in the past so I look forward to this year's results!  The Government revised GDP UP this morning, to 2.5% in Q3 from 2% originally estimated.  That's a nice 50% improvement over Q2's 1.7% although we still have 9.6% official unemployment but I guess those bums weren't shopping anyway.  A big contributor to GDP was a 28.2% boost in year over year profits in the Financial Sector, which is about 20% of the S&P these days.  Thank goodness for that as we were sure worried about our Bankster buddies in this rough economy!  

openingimageFed Minutes are out at 2pm and we can expect the Fed to LOWER their forecasts, despite the GDP.  They have to do this to justify QE2, of course, as "The Bernank" does whatever it takes to distract you from what's really happening.  

Ireland is NOT "fixed."  As I mentioned in yesterday's post, they are two weeks away from a budget vote and, if they can't agree on the loan terms that are being shoved down their throats – we could be right back to chaos over there.  Now that Ireland does appear to have a life-line, the sharks have moved on to surround Portugal, Italy and Spain with Antonio Garcia Pascual, chief southern European economist at Barclays Capital in London sayingSpain is bit too big to be bailed out, the size of a rescue required would use up all the funds available and then you have Italy with contagion as well,” prompting “a situation where the euro itself is put into question.”

So happy Tuesday to you and GOOD LUCK – we're going to need it to get through this mess!  We'll be watching our 10% lines and taking the money and running on our short plays because we don't really have the volume for a proper breakdown just yet but the trend is no longer the friend of the bulls who need to do more than last minute stick-saves to turn things around at this point.  

Things should be interesting this afternoon with the Fed Minutes and, for the morning, we'll be looking to hold the floor we established last Thurs and Friday at Dow 11,120 (already lost), S&P 1,185 (already lost), Nasdaq 2,500 (holding), NYSE 7,550 (oops again), and Russell 715 (holding).  If those break down, we've got a clean shot for another 2.5% drop below those lines and that's going to make for a very worried Thanksgiving for those who ignored my cash calls of the past month.  


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  1. NET $ (.14)%, dx/y = +.58%
    That is the highest NET I have seen today
    Futures = 1185.25, overnight:  high = 1197.75, low =1182.50
    oil = (1.20), gold = +1.40

  2. Gel- are you adding/closing any Currency plays due to North Korea’s shenanigans? They are the biggest pain in the @$$es out there. We need to take that family out. With 1000s of artillery within range of seoul and missiles that could hit Japan it is an impossible situation… We keep talkin and the keep selling weapons and their knowledge……Scary deal… Anyways, since the possibility of war is almost 0% what about going long S. Korean’s currency against the euro?

  3. Well, I think its official:  China wants the market DOWN.

  4. Moving averages for the S&P, using the simple and exponential (listed respectively)
    21day = 1198.12 – 1193.69
    50day = 1172.11 – 1172.37
    200day = 1130.99 – 1125.83
    We may ping pong in the 21-50 day range, remember to watch that 1177
    Just thinking out loud

  5. Phil,
    Why is there a photo of my wife sporting the FBI outfit I got her posted on you web site????

  6. NET $ has really fallen off last few minutes here
    NET $ (.65)%,  dx/y = +.62%

  7. exec- your wife? You sure abt that?

  8. NET $ (.68)%

  9. Damn; looks like a great morning oppty to short CMG, NFLX today … barely moving … fake, fake, fake, fake

  10. NET $ (.49)%, dx/y = +.66%
    C = 1183.53, F = 1181.75
    VIX +11.75%
    oil (.82), gold +13.0
    10yr = (2.20)%,  30yr = (.95)%

  11.  Hey all,

    We have a new Short Sale available this morning in Brown Shoe Co. (BWS). 

    Check it all out here!

    Good Investing!

  12. S&P cash low yesterday was 1184.58, we broke that briefly this morning.

  13. Phil,
    Nice call on the QQQQ weekly puts.  In for .46 near the close yesterday out at .76 at the open.  Thanks

  14. Phil, 
    I bought 5000 shares of AIB… @ 1.11 as per yesterday’s post. Now down another 14% is it a DD at this point? 

  15. NET $ (.40)%
    C =1184.56, F =1182.25

  16. North Korea saved my ass on TZA.  Held it threw the stick yesterday.  Sold into the frenzy for a 5.4% swing.

  17. Phil, 
    I hold CHS short (2 rounds 750 shares at 11.15 and 500 at 11.35) now shot up on this down day to 11.75 for no reason it appears aside from ANN upbeat expectations… Do you recommend another round here?

  18. Exec – lol – well at least YOU made some profit…. Im about 80% cash now, only have a couple buy/writes with DF and STP as well as one of Gel’s currency plays… Frigging N Korea!!! Feel sorry for all my buddies stationed over there. Anytime these shenanigans happen they work some crazy hours….

  19. CMG I can borrow; NFLX I can’t
    They are still running the squeeze in NFLX
    Completely ridiculous, gunning it on the same news over and over

  20. France (1.65)%,  GER = (1.08)%,  UK (1.11)%

  21. Phil and Gel1
    Beta 3 and SLW
    Thankyou both for the assistance in understanding

  22. Indices tracing out nice inverse cup and handle formations.  Watching that 1170 line like a hawk.

  23. Good morning!  

    Speaking of cash, the Dollar finally popped 79 and is at 79.3 as the Yen got stronger on a flight to safety there and no one is flying into the Euro or the Pound so we have the potential for a real dollar riot if this war tension heats up.  

    Gold is being jammed back to $1,375 but HMY is still $11.75 and you can buy them for that and sell the 2012 $7.50 calls for $5 and the $10 puts for $1.10 and that’s $5.65/7.83 with a nice 23.5% profit if called away at $7.50 so it’s a wimpy way to play gold but a nice way to hedge a very conservative bet that still pays a nice annual ROI. 

    Copper is well below $3.80 at $3.72 so we’ll keep an eye on them and oil is barely holding $81 despite a Rent-A-Rebel attack in Nigeria last night that was meant to push it back to $82.50 (and it did until the dollar started coming back).  

    Levels need to be taken seriously now, the Dow has been below for a week but seeing the others cross is a big danger sign: 

    • Breakout LevelsDow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725
    • Up 10% (must hold)Dow 11,220S&P 1,177, Nas 2,420, NYSE 7,500 and Russell 700
    • Up 7.5%Dow 10,965, S&P 1,146, Nas 2,365, NYSE 7,280 and Russell 672
    • Up 5%: Dow 10,710, S&P 1,123, Nas 2,310, NYSE 7,140 and Russell 666 

    That 1,177 line on the S&P is huge if it breaks and I really don’t know which way it will go at this point.  

    NFLX is still going up, testing $190 on this run.  CMG is having a little trouble at $240 and PCLN is finally calming down – we’ll keep an eye on them. 

    HPQ is holding up but CSCO is making year lows at $19.25 and that’s not helping the Nas at all (but great for our QIDs and the QQQQ short play!).  

    We’re falling too fast to chase unless the S&P breaks down – then I’ll have more short plays so stay tuned in Member chat for some more cowboy trading!  


  24. Phil/Weekend Survey,
    Out of curiosity, how many paying members on PSW?  Can non-paying members take the survey?

  25.  So, the market is crashing and everyone is rushing into NFLX.  That makes total sense!

  26. 10:00……about time for them to mobilize the Bots.

  27. NET $ (.58)%,  dx/y = +.67%
    C =1179.62, f =1177.75
    the 50 day MA is 1172.11 – 1172.37, with the 1177 right here below us

  28. VIX +16.66%

  29. FDIC report out here, sounds like most of the improvement was just reductions in loan loss reserves, same as we knew I guess
    acct gimmicks

  30. Good enough on the QQQQs – stopping out with a double at .90! (.05 trailing, .10 trailing if they hit $1.05)  

  31. NFLX flying even after a downgrade by Caris. I guess Piper’s 202 call has more weight?

  32. very weird
    NET $ (.66)%, falls the more the dx/y rallies +.73%
    being offset by the YEN, else the dollar would sky rocket,  Y/$$ = +.57%

  33. NFLX, 
    This is insane… climbing 2% on this day! Tempted to DD the Dec 190′s…

  34. phil, still holding jan 23 UUP calls.  up about 15%.  hold or sell?  thanks.

  35. Sold 210 call Dec for NFLX @ 3.50
    A good play for the weeklies would be to sell the 190 calls or 195 calls

  36. I had some good shorts this week so far.
    AMZN late yesterday; covered this morning
    CMG late yesterday, covered this morning
    some scalp trades onlg.
    and, oh, down goes NFLX … let’s end this BS party !!

  37. Cap- I was looking at Dec NFLX calls to sell as well.

  38. nicha – 200′s look good
    but also the weekly’s if you can trade them !
    if wrong, you can keep rolling … only 1.5 days after today.

  39. gotta find less nutty stuff to play with however !

  40. amatta- CHS killing me too.

  41. Cap- went with Dec $310 calls.

  42. China/Kinki – They certainly want global commodities down.  Don’t forget they subsidize them so when oil or copper shoot up – it’s the government that suffers, not the people.  If they put price controls on food, then profits suffer and the Government gets less revenues.

    Dollar 79.40!  

    Wife/Exec – I don’t know but if you send her over here I’ll be happy to clear things up! 

    Fake/Cap – Yes but look how long Joan Rivers lasted before she got freaky looking…

    S&P futures touched 1,177 for a second there….

    Qs/Button – Nice job, even though they fell some more you can just switch to playing with profits on something like the DIA Dec $107 puts at .96 for maybe $1 as the Dow fails 11,000 and you can use that as a stop line.

    CNBC now saying we are running out of chocolate.  This may be the most ridiculous thing they have ever said as cocoa is VERY easy to grow up and down 30 degrees from the equator, which is most of South America, ALL of Central America, Southern Asia, Africa…  any increase in price and planting will lead to a surplus in about a year.  I think they are just running out of things to stampede speculators into.  

    Speaking of which, our DBA puts are doing well today. 

    AIB/Amatta – I think 14% is jumping the gun.  As I said, Ireland is not solved, they may vote against bailout and tank the whole thing so 14% may be nothing.  20% off is .22, which is .89 and that would average you in at $1 and you’re down 10% after you DD.  If they don’t go down 20% or more, then you don’t really need to DD as you can always sell May $1.50 calls for .20 to make up for that.  

    By the way, this is why I like AIB, you can now buy them for .98 and sell the May $1 calls for .35 for a net .63 entry, called away at $1 with a 50% profit.  If AIB falls all the way to .10, you can Triple Down and average in at .18 so as long as you are willing to stick out a crisis – this is a very nice entry point for them.  

  43. NET $ (.27)% big movr up, high from earlier was (.14)%
    dx/y = +.76%
    C =1182.19, F =1180.50

  44. my low was  1179.61

  45. Good morning,


    IWM    70.58, 71.03, 71.66, 72.22, 72.49, 72.76, and 73.12


    And Phil, I’m really liking the FBI !!

    large image 

    In TNA at $55.60

  46. JRW / She’d look better to me if she was wearing Skechers Shape-ups! (only)

  47. CMG setting up as a good day trade short 242.5 or higher – IMO  !!

  48. Low volume; easy to jam … short it at upper Bollinger band

  49. Dollar 79.55!   Keep in mind this means gold is stronger than it looks and so is copper so don’t get too bearish on this move, it’s very much thanks to a 1% rise in the dollar since yesterday’s close.  

    CHS/Amatta – I think the problem is people think Chico’s is another Mexican fast food chain so it’s getting bid up!   Seriously, teen retail is always a crap shoot and CHS is a good grower with 1,000 stores (just like CMG!) which seems to be a sweet spot for investors these days.  You already DD’d and it’s the same as the AIB question, you haven’t taken anywhere near enough damage at $11.80 (down 5%) to merit an adjustment.  If you intend to be long-term short and want to adjust, then sell the $11 puts for .30 and that raises your basis to $11.50 without spending a dime and then you can DD at $13.50 for a $12.50 average short if you have to (and sell some .50 puts to offset that).  It may not sound exciting but it keeps you out of trouble!  

    NFLX/Cap – Totally off the wall.  They have a new service which cannibalizes their old service Caris downgraded them this morning but Piper gave them a $202 target.  Here’s a buy premise fromThe Street but it’s hard to trust a guy who seems to be broadcasting from the basement of his Dad’s house.  I think they have run out of people who have actual reputations who are willing to call them a buy here…

    79.50 seems to be all the Dollar could manage so the DIA $112 calls at $1.04 are the way to go for Dow over 11,050

  50. SKX up 2%. Nice. Retail looks good today. On what basis, I don’t know

  51. JRW… I like your Fabulous Body Images (FBI)

  52. Jromeha… my FX portfolio is fully deployed at the moment Short EUR/USD, Short EUR/GBP and Long USD/HUF…. this could be the theme for a few days or longer. Korea does not look good – you might be sent there to sort out NK financial problems in the future.

  53. Phil/Wife
    You might get turned off when you discover the "No Taxes for Top 1%" tatooed on her butt!!!

  54.  Phil – Regarding the HMY play.  I’m a little confused on what we are trying to achieve.  I’m somewhat new to options, and I haven’t seen a play that is buying the stock, and then selling ITM calls and ITM puts.  From the TOS risk graphs it seems like this play would lose if HMY continues to rise.
    I apologize if this is a beginner question, but I figured it’s the holiday’s so I’d ask :)
    Thanks for any help,

  55. Phil / no POMO  You mentioned only starts in earnest next week, so no support today/tomorrow?  So, they take it down this week and bounce next week?

  56. Nicha – black friday of course !
    NFLX – there is always the Cramer afternoon pump.

  57. Tuska,

    Comon, this is a family site 8-)

    Dollar should top out at 79.50……….. so much for Korea and the flight to safety !! As the dollar fades, we should drift up.

  58. You are welcome Maya! 

    Good lineup at the bottom:  Dow 11,020, S&P 1,180, Nas 2,500, NYSE 7,475 and RUT 717 so we’ll watch those lines for future breakdowns.  As I said, we’re not really that weak, just reacting to a strong dollar that certainly has nothing to do with anything we’re doing on this end – it’s all about the relative lack of faith in the Euro that’s driving people here and that can reverse pretty quickly.  

    Survey/Exec – We have about 500 Basic and Premium Members and we don’t let non-members take the survey as we don’t know them so how do we know if we can trust what they say?  The nice thing about this survey is you know what kind of person Gel or Cap or Craig is and you have read enough of their comments and know enough of their backgrounds to be able to read what they write in context – that’s why I find it so useful, much more so than reading the random observations of total strangers.  

    NFLX/Craig – Yes, I know my Grandfather always said: "When times are uncertain, put everything you have into the momentum stock of the moment" – or something like that… 8-)

    FDIC/Mike – Good call, nothing but book juggling.  

    NFLX/Jabo – I would give Piper more weight too but a $190 stock going to $202 in a year is not really something I want to tie up $190 in.  

    NFLX/Amatta – I haven’t changed my view as we still have a month to go but, ALSO, too early to DD or do anything on the short $190 calls, which are just $9.50 now.  

    UUP/Lunar – I think the dollar could go higher but it’s a gamble for sure.   If you DD’d into the position I’d certainly cut back – just in case.  We are making slow, steady progress but the Fed minutes may take the dollar back down and then there’s a better entry.  

    Good timing on TNA Gel – Don’t let the hot Federal chicks distract you…

    Retail/Tusca, Nicha – Hope springs eternal ahead of Black Friday.  After – maybe not so much…

  59. NET $ (.62)%,  dx/y = +1.01%

  60. TSA is also under FBI I think…..  Full Body Inspector.

  61. But this is why I still have a bunch of Jan puts !!

    Whether it’s Korea or something else, this could be the long kiss goodbye !!

  62. LOL Exec!  Now that’s committing to a cause.  

    HMY/Skdoyle – Very beginner question and most of the answer can be found under "How to Buy Stocks for a 15-20% Discount" and I very strongly recommend you read the New Members guide and take the reading suggestions seriously so you can get the most out of chat discussions and trade ideas.   If you sell a $10 put, then the stock can either be put to you if HMY is below $10 or the puts expire worthless with HMY over $10 on the expiration day.  It’s a binary event and either way you keep the money you sold the put for so there’s $1.10 in your pocket.  If you sell a $7.50 call, you collect $5 and it’s the same binary event – either HMY is under $7.50 and the calls expire worthless or HMY is over $7.50 and the caller will pay you $7.50 to purchase your stock, which will net you $13.60 back at the end of they cycle (if over $10).  So you lay out $11.75 to buy HMY and you sell the $7.50 calls for $5 and the $10 puts for $1.10 and that drops your net outlay to $5.65.  I don’t care what TOS says you have because those are the FACTS and sure, it may look like you are losing some money as the stock runs up, but the only way you can actually lose money is if you don’t understand how the trade works and you let your life be run by a poorly designed calculator.  That is why you must take the time to learn the strategies – we have years of incorrect education to undo before we can make you a better trader!  

    Woops, Nas failed 2,500 but CNBC calls in chief BS artist Leesman to try to get people to love the new GDP numbers and BUYBUYBUY – clearly we are off script with this market selling and that can lead to some real panic if things start breaking down.  

  63. Retail- I am not sure electronics will be good this year. Most ppl already picked up LCD/LED’s in Q3 when prices were low. People take advantage when they think prices are low. 3D tv’s have come down quite a bit but will that be enuff. Looking at black Friday ads laptops are the same price as last year, HD camcorders are cheaper, digital cameras are abt the same. Maybe the expectations are so low that anythng will be a beat. Hmmm, maybe I shud buy back the CHS short…

  64. Phil:
    Some suggestions on CMG. I wish I never made this trade, but I am still fighting it.  I can’t believe the strength in this stock. I hold only 2 calls sold Dec 230 (in at $8.70). Is a straight roll to 3x the Jan 250 in order? I am trying to stay as conservative as I can with this stock. Even if it goes down it doesn’t seem to stay down for long before making higher highs. Thank you.

  65. Out of TNA at $56.15; failing the channel, dollar at 79.56 !!

  66. NET $ (.37)% trying to rise, Euro getting crushed against the Yen
    E/Y = (2.01)%
    Yen still holding the dollar in check, Y/$$ = +.34%, else would be much higher
    Europe will be closing next 15-20 min

  67. Phil: Is this a time to buy VXX?

  68. From Trader Mike for matt !!!

    I hate to keep harping on the financials but I think it’s noteworthy that XLF made a lower low today and showed poor relative strength. The action in the financial sector still seems like a bad omen to me…

  69. alik – its never a good time to buy VXX. its a totally flawed instrument.

  70. Phil / Ireland   Looks like the peoples revolt you advocate here is happening in Ireland.  They are rioting as they won’t bail out the European bond holders in their banks.  And, why should they?  Would an Irish banking collapse become a disaster for the Euro, their mkts , our mkts??

  71. Breaking the S&P lows here

  72. tuska / Ireland

    It’s the big Eurobanks that hold the paper; Ireland is their AIG !!

  73. POMO/Tusca – I also mentioned that POMO cannot be your sole investing premise.  Yes, we have $45Bn scheduled next week and this week is weak already so I sure wouldn’t want to be gung-ho short on next week – just in case – but I also wouldn’t think POMO is going to heal all wounds either.  

    Oh no, Dollar popped to 79.71 – it’s out of control!!!   Pound ($1.582) and Euro ($1.338) selling off hard into the close and dollar is gaining so fast even the Yen went down but this is the end of their trading and we’re heading into 11:30 with 60M on the Dow, which is only a normal amount of trading for a Bot day so very stickable once the EU people are done panicking.  I have to say I favor killing the short directionals and going long into the Fed (2pm) once we hold a bottom (probably a reject of the dollar around 80 or even 79.75).  

    Good Fibs JRW (and we always love Marilyn!).

    3D TVs/Nicha – I can’t believe anyone is actually buying those things.  Even my kids said they have no desire to sit in the living room with glasses on after we sat in a store watching Avatar on 3D Blue Ray for a half hour.   It was very impressive but so what?  

    CMG/DClark – I say leave it along and roll it in Dec if you have to.  A 3x roll can really screw you if they head higher and CMG is at $241, not $301! 

    VXX/Alik – It’s never a good time to buy VXX, that has to be the worst ETF ever made!  It’s a casino bet.  If you want to bet volatility, bet the DIA puts because volatility doesn’t go up unless the Dow goes down. 

    And what Hannah said!  

    XLF/JRW – They have indictment fever right now – we’ll see what happens when this story moves to the back burner.

    Ireland/Tusca – They shouldn’t and we shouldn’t and no one should bail out the bondholders.  That’s what they get paid high returns for – the risk of default!   There’s even a standard 1% or so CDS fee baked in that insures them against default so you are really bailing out the idiots who didn’t buy insurance and, of course, the insurers who back bonds at 100:1 but have no actual reserves to cover their Trillions in liabilities.  Let them all crash and burn and do you know what will happen?  Within a week or two new banks will rise from the ashes and their assets will be in cash and they will make sensible loans to sensible people and society will reboot while a bunch of rich idiots hold a garage sale.  Fine with me!  And yes, an Irish banking collapse would collapse the UK and that would likely take us down with it but again, so what?  

  74. NET $ (.28)%, dx/y = +.90%
    C =1177.62, F =1176.25
    VIX +15.41%
    10yr = (2.67)%,  30yr = (1.12)%
    oil  (.79),   gold +16.70

  75.  Phil, thoughts on solar? WFR below 12, etc.

  76. alik/hanna5- I would second that it’s never a good time. A good friend of mine who is a money manager calculated that the VXX drops approximately 40% annually because of periodic resets, and that’s with the VIX staying level. I think the charts would support that.  A devil’s tool if I’ve ever seen one.

  77. Phil:
    Thanks for the encouragement. Sometimes we need it! Thanks again.

  78. NET $ (.32), dx/y = +.98%

  79. Phil,
      When you find a lull in the action (ha ha ha), I would appreciate any guidance you might care to offer on guidelines for managing successive buy/writes. Specifically, I’m focusing on the art of deciding whether to leave it alone and take the expected profit, or take action to prolong a play for additional profit. I love the idea of getting cost basis way down as you have sometimes outlined, but all good things must come to an end.
      On a specific note, I saw you comment recently regarding having moved to 2012 on UNG. I still have some JAN 2011 $7 calls and puts as part of a recovery strategy working down some long ago $12 Puts. Should I be waiting until 2 weeks or so of expiration, a la the general guidelines, or looking to roll sooner?

  80. NUAN, SKX, DECK are up today. I was out of NUAN before their earnings. Would you recommend buying them back now, or it is better to wait? Would you recommend increasing my positions in DECK, SKX?

  81. seems like everything is being held right here since the Europe close

  82. NET $ (.58)% falling off as the dx/y spikes higher +1.21%, they are playing games, see if the market bounces as the NET $ falls

  83. 50% of the whole move, previous close to intraday low,,  is 1187.38, could be an interesting point to watch maybe for a short, if we bounce up to there there
    just thinking out loud

  84. My opinion…. the banks may very well be bailed out, as this is a stabilizing necessity – HOWEVER, should the taxpayers be the ones who are on the hook for this ? – No - THEN, the taxpayers should have the equity in these institutions, and the bondholders SHOULD be stiffed, as the risk they took did not turn out well.  By keeping the bondholders healthy in this activity – it rewards failure. Do not do what our government did, and transfer assets to those that CAUSED the problem ( unions )

  85. Here is someone on Strategt Session, supposedly would not talk to the FBI yesterday during raids, but wants to on CNBC
    sounds fishy to me

  86. What is you opinion of ARW? It seems very nicely valued at the moment.

  87. CRM, CMG, NFLX , OPEN they are up and up and up almost every day. It looks like they are stocks for short sellers suckers, they short them and burn , and again and again with no end in sight. I feel a big pain in CRM they are up even today, very sad and I will give up eventually too.  I am sure they will go down the very next day after I will buy back my short calls, so I will let you know 8-)

  88. Gel – lol, I WISH! Korea would be a nice option! Alas, it does not look in the cards for me though. Im trying to kiss whoever’s  butt I need to (kinda hard b/c Im in school now and out of the loop until March so I dont know whose butt to be kissing! lol) see if I could get a deployment to Djibouti (Africa), but I’ll probably be going to Afghanistan. At least there will be mountains there, definitely better than Iraq…

  89. Hey all,

    TSL looks pretty strong at this level. They report earnings in exactly one week, and they are at lowest levels in several months…

    Definitely should take a look at it. I am in at 23.50.

    Good Investing!

  90. Phil:
    Re XLF indictement fever/Would this make it a good time to go long, short term, financials: XLF or FAS AND
    to close existing FAZ positions?
    Nice call on the QID 13S, got out @$.50

  91. NET $ (.60)%, dx/y = +1.13
    gold +16.20, oil (.01), oil had been down (1.43) at one point
    Just massive moves in the currency relationships including the Euro
    E/$ = (1.79)%
    E/Y = (2.22)%
    strange still is the Y/$ = +.54%

  92. Forgot to ask which USO Dec Calls look attractive if any?
    Thanks Phil!

  93. Phil and All
    I know this is totally off the market and today’s trading, but I am so much more active with my trading that I need accounting help and would appreciate input. I spent about 90 minutes with best friend Xcel yesterday entering trades, P/L etc. I don’t believe my local, plain vanilla accountant has the background to really provide great advice for professional trading. I have looked at Green Tax Trader, and have talked with Traders Accounting. They have recommendations for setting up an LLC, possibly a combination entitiy with a C-corp. Does anyone have experience with, or an opinion about these accounting/legal companies? Or about what type of structure to set up?
    I know a number of you probably went through this phase of business years ago… any input would be appreciated.

  94. Phil, I have this situation I wanted to get your advice on.  I originally sold 10  VXX  $15 (old prices) put contracts for around .60.   Last Friday, I rolled them into 3 June 11 $49 (new prices) contracts which I sold for $13.00 ( I think I paid $3.9 to buy out the putter, so I have realized losses of around $3,300 on this transaction so far).   I’d like to get rid off VXX as a hedge as it will mostly only continue to decay over time.   How would you recommend to go about it?  Just eat the losses and move on to something else or try to do something like turn this into a bear put spread (maybe a calendar one) by buying ITM puts?

  95. Back in TNA at $55.25 (1/2 position)

  96.  Jbur -
    Why would you want an LLC or C-Corp. LLC is bascially a pass through entity – right? No real tax advantage.
    Just elect mark to mark accounting for next year. Make sure you sell anything with LT capital gains before the end of the year.
    Buy trade log and you are done – it will generate all the forms you need.
    I guess if you have W-2 income from another job you run the real risk of the IRS disallowing you electing Trader as a profession – for some stupid reason you cannot be a part time trader - 

  97. Another 1/2 TNA at $55.64

  98. JR/FBI
    If you continue to yield 4% a day…….you can have as many FBI friends as you desire.
    Did you catch that last pop on TNA?

  99. leanf675 – I dont whatr phil will say, but i would eat the losses and move on to something else. Otherwise, consider selling 2 VXX 65 2012 calls for about $9. With the way this thing is structured, the only sure thing is that it will decay over time! If the VXX spike again (would be a massive move in VIX) you can sell another call to average in. Then wait till Dec or Jan of 2012 and see what the price is….just my 2 cents.

  100. JR
    55.25….nice call.  What did you see that made you get in? 

  101.  Samz, 
    Are you saying sell anything with LT capital gains because of some change in the tax law? I thought it was only Dividends that were going to be effected.

  102. Wow, look at CNBC trotting out all the "poor" fund managers who won’t be able to benefit from inside information.   

    WFR/JVest – They are down on lower oil as well as the government cutbacks in Europe and the US (and can China be far behind).  LONG-term, they are still great plays but not this year.  

    VXX/General note on ultras – The more volatilie the underlying index is the more often the ultra has to roll over a substantial portion of its positions and the more money you lose.  That’s why some ultras seem more stable than others.  Also, there are more fees in some than others and those fees will kill you too and, with commodity funds like USO, you also get a monthly hit on contango as the contracts roll-over and that costs you money.  All this needs to be taken into account when playing Ultra ETFs but, like I said, figure out a way to be long-term short as those factors become your advantage from the other side!  

    Buy-writes/Kevin – You shouldn’t have to "manage" buy/writes, they are supposed to be set and forget plays with 20% built-in downside protection so the only time you should have to worry about them is when the underlying stock is down more than 20% and, even then, you should have an offsetting disaster hedge.  As with any spread, you should have a trading plan from the outset.  If you expect to make, for example, $1.85 on my HMY play over the next 14 months then you expect to make .10 a month.  If, for some reason, you end up $1 ahead in 6 months or less, you may want to consider cashing out early but, otherwise, it’s a simple plan to stick with.  UNG was a blown play for us so you should be thrilled to get out even.  Any stock depends on our outlook between now and expiration but we have no major reason to expect a huge improvement on UNG between now and Jan 21 so holding $7 calls that are 100% premium is not advisable but the puts have a small chance of working out and the expectation there is the roll to the 2012 $6 puts should not change much no matter which way things go so no real harm in waiting and seeing there.   As always, you look to roll when you have a good opportunity to do so.  If you want the 2012 $7 calls, they are now .85 and would cost you .68 to roll to so if something happens that makes the roll cost .50, you should be happy to buy a year.  It’s not about the day on the calendar or when it expires – everyone wants to have a rule but the rule is to learn to understand your trade, why you are in it and what is worth keeping and what needs to be shut down – that’s the "rule." 

    Holding/Mike – Yep, especially the dollar, which is now flatlined between 79.65 and 79.72 – a pretty narrow range.  

    Unions/Gel – Oh yes, it was the tellers union that took down the banks – those bastards!  

    ARW/Alik – In Dell’s CC they said they are focused on cutting component costs (quality control alert!) and it’s companies like ARW that will suffer.  This is round 2 of corporate cutbacks in 2011 that will hit suppliers and landlords and such and ARW is not particularly cheap but would be interesting if they pull back to $22.50 again. 

    I like buying 3 OPEN July $55 puts for $5.50 ($1,650) and selling 5 Jan $60 puts for $1.80 ($900) for net $750 on the 3:5 spread.  If OPEN fails to hold $70, you need to buy 3 more puts to turn the play more bearish but, if not, it’s a cheap long-term short on puts that were $9 a week ago.  

    Oil back to $81.50 – still going for that $82.50 mark ahead of inventories.  

    XLF/Reza – Sure, see yesterday’s FAS play.  Big pay-off if the financials take off and not so bad if they don’t.   Good job on QIDs.  I would close FAZ if you don’t need them, getting arrested is usually a good way to put in a bottom…

    USO/Reza – Right now I like the Jan $36s the best but we got in at $1.15 and they’re $1.25 now so not as exciting here.  Those are pretty much 20% and done plays ($1.40) so not worth a risk here.  

    Accounting/JBur – If you are worried enough about it to set up a corp then your first step needs to be finding an accountant that can actually help you.  Each thing you do affects other things and it gets mess very fast and what’s right for one person could be a disaster for you so you need an accountant that knows your particular situation and understands stock and options P&L issues.  

    VXX/Leon – It is such a terrible ETF that I would say dump it and move on.  The VXX will probably decay but, if we do crash, they could also go to $40 very quickly so why mess around with it?  Also, think about your logic.  You sold 3 June $49 puts for $13 which obligates you to spend 300 x $49 ($14,700) if VXX fails to go over $49 by June (now $44).  You could have sold 12 $12 puts for $3.10, which would obligate you to to spend 1,200 x $12 (14,400) if VXX doesn’t drop 72% to $12 – which do you think is the smarter play?  

    Dollar still flatlining at 79.66 but the BuyBots are kicking in at 1pm with the Dow volume at 82M.

  103. NET $ (.59)%,  dx/y = +1.14%

  104. exec

    Connect the lows on 11/12 and 11/22 on the 10 day chart; we formed a base at IWM 71.55 today and the dollar is fading. Be careful at IWM 72.22 !!

  105. JR
    That 10 day chart.  How is it set up?

  106. Phil and Samz:
    Thanks. Yeah, the trick is to find someone who is knowledgeable and trustworthy. I don’t want to get some boiler plate contract that I may not need sold to me just so that they can charge a fee. In my understanding, there is a lot of tax benefits that are not questioned if you are trading within a trading specific  legal entity. The MTM stuff Samz, I guess I just have to go do my homework.

  107. Phil, I dont know why everyone is bahing VXX so hard.  I think its great!.  Last week I Sold the Jan 2011 $60 CALL’s for $12.50 when the VIX was at 20 and VXX was at 48.  This week the VIX is back to 20 and VXX is at 44.  So I am just going to short this thing in to the dust. 

  108. that would be bashing not bahing.

  109. Good Morning – FBI girl – Yeah, I saw her and other agents on kaanapali beach yesterday….. ;)

  110. Good trading and a great Thanksgiving to all!

  111. exec / chart

    10 day IWM 5 minute chart
    PS I’ll probably bail at TNA 56.60-64 !!

  112. It’s already starting with the body scanners!!!  It sure doesn’t take long for the comedians to get the ball rolling.

  113. were there treasury auctions today, besides the POMO?

  114. NET $ (.52)%,  dx/y = +1.09%
    C =1182.83, F =1181.25
    gold +18.70, oil (.05)
    10yr = (1.42)%,  30yr = (.62)%
    VIX + 12.25%
    reminder FOMC minutes out at the top of the hour

  115. Phil / Unions
    When bailing out the banks, obviously the unions would not be beneficiaries, as banks are not unionized.  My reference is to the GM situation ( albeit a less than perfect alalogy ) wherein our government ( US taxpayers ) bailed out GM while taking the equity from the stockholders and bondholders ( which should be the case ), but then turned around and gave ownership to the unions – all of which ( the equity ) SHOULD have been the property of the taxpayers, and not the unions. – just a clarification !

  116. For those of you who like nice vacations:  Villa Rentals.  These guys are cool, they usually come with a maid and often a cook, sometimes a whole staff and you can get a cook or a car and driver in most places too!  Prices not really bad and often better than rooms in luxury hotels but they are for week stays.  

    Fed minutes in 30 mins! 

    Happy Thanksgiving 1020 – done already?  

    LOL Exec.  They say the FBI keeps the scans so I bet celebrity scans do begin showing up on the web.

    Treasury/Mike – I don’t think so. 

    GM/Gel – Well that makes a little more sense and GM should have been allowed to fail too.  In fact, maybe if we had let them fail in the 80s, this country would have woken up then and not had our asses handed to us by China!  But, we didn’t "give" the unions GM, they made concessions on contracts in exchange for stock and that’s what allowed the company to reorganize and go public again.  Are you advocating that only contracts you like should be enforced?  I know you don’t like unions but these are just negotiations, like any other and some car companies were good negotiators and some were not – I think blaming the unions is a bit misplaced but that can be a lovely conversation for the long weekend…

  117. I fly out of San Francisco International airport…. Hmmm  -  Can’t wait for my Thanksgiving "goose" this year from TSA ! 

  118. NET $ (.55)%

  119. Phil, sorry for the very basic and probably dumb question.  Referring to the below, these are 25-share contracts  you are referring to, aren’t they?  I don’t see these premiums for the contracts in new prices.  
    How does it work in general with assignments whenever the underlying shares go through a reverse split, like the 4 to 1 one  in case of VXX?  Should the assignment be triggered only when the new price drop to the old price level (in this case to $12) or should the assignment be calculated as the old price by the split factor ($12 x 4 ($48) in this case) for the assignment to occur?   The former just doesn’t seem to make sense…
    Also, think about your logic.  You sold 3 June $49 puts for $13 which obligates you to spend 300 x $49 ($14,700) if VXX fails to go over $49 by June (now $44).  You could have sold 12 $12 puts for $3.10, which would obligate you to to spend 1,200 x $12 (14,400) if VXX doesn’t drop 72% to $12 – which do you think is the smarter play? 

  120. Gel 1
    The problems at the old GM was the management.

  121. Phil/Villa’s,
    I’m surprised and very disappointed that they don’t offer any Villa’s here in Cleveland Ohio.  Obviously were to classy for those low budge shacks.

  122. Hey exec,  I lived in cleaveland last year.  We moved down to Kent this year.  But I am taking the girl friend there tomorrow for dinner at Dante’s.

  123. Re: Celebrity scans: that SHOULD put to rest the debate about the gender of  LADY GAGA once and for all!

  124. CMG, I’m shorting it now.  Sold 2 CMG Mar 310 and 2 Mar 320 calls for $2.9 average.  Ordered to buy 8 CMG Mar 200/195 put vertical for $0.85 (currently $1.1).  The plan is:
    - Buy back the callers on a $20-$30 drop in CMG.  Already have a GTC order to buy back at $1.  This would make the long put vertical a free play.  Maximum payout is $10 if CMG is below 195 in March. 
    - If CMG drops and the put vertical doesn’t get filled, I’m happy with the profit on the short calls.
    - If CMG goes up, roll the callers 2X in the same month, move the put vertical up to say 220/210.  If all else fails, roll callers to outer months if needed.  I can roll the callers 3 times (8X) as I only started with 4 contracts.  Any time that CMG drops $20-30, I would buy back the short calls, eliminating the upside risk.  Basically, I’m using the margin to keep CMG callers away from the money and moving the long put verticals up with the stock if it continues to go up.  I can be wrong 3 times and any $20-$30 correction would allow me to buy back callers.

  125. I am short some CMG again at 242.83

  126. Reza,
    Never been to Dante’s.  Try Red’s sometime for a good steak.

  127. NET $ (.42)%
    C =1180.56, F =1176.50, just before FOMC minutes

  128. To give some people an idea of how lucky we are with the dining scene in cleveland,  Several weeks ago we went to Crop Bistro and got the chef’s table, which is a bar overlooking the kitchen.  Then the Chef basically hangs out with you and chats tells you about what he’s making for you for your entire dinner.  It was a 7-course meal for $72.  This included a lobster dish, scallop dish, and foie gras dish.

  129. Pre holiday shopping at MAcy’s (yesterday) in Seattle: the sales rep says it was DEAD ALL WEEK. So no pre-holiday bargain hunters out.
    Seattle will be a poor test of the Anecdotal PSW Retail Forecast — some crazy cold weather here has frozen the city into lock down. I ran this morning in 20 F (5 windchill) and thought I was back in Upstate New York! Yuck!!

  130. Red’s/exec: Thanks, Love a good steak!
    Sure looks like a nice place from the website; I’ll keep that in mind, when I’m in the neighborhood :)

  131. qcmike / Old GM
    Right you are with no doubt… as they gave the unions everything they were preparred to extort from GM, thus kiilling any chance for financial survival in a competitive world market. They also had lousy products and generally, as a management team. were innundated with nepotism, and the "peter principle" prevailed to the extreme. I know, as I was an insider at a high level for awhile.

  132.  biodiesel – i just finished i nice 6 mile run in 60 degree weather.  Nice and pleasant in scottsdale.  Finally cooling off.

  133. NET $ (.41)%

  134. Fed minutes not being taken too well at the moment.

    Dollar STILL at 79.67 so not much of anything from this.  

  135. ya gotta watch the fake CMG trade … just sits there, until sellers arrive

  136. bots keeping a bid there until sellers show up

  137. Bio – what Macy’s in Seattle? Are you talking downtown? Bellevue Square? Alderwood Mall? Northgate? Southcentery?
    Craig – hahaha where they getting that Seafood from? Is that one of the lakes that caught fire a few years back? Im in Dayton now and I dont touch the Seafood around here….

  138. craigzooka: "Last week I Sold the Jan 2011 $60 CALL’s for $12.50"  I think its impossible..

  139. here we go …

  140. sure looks and feel like the market is being held here

  141. NET $ (.46)%

  142. I thought TBT would be down a lot more considering the news.  Big players are betting on a resurgence in treasuries, but what if macroeconomic conditions have already shifted? I hate betting against guys managing $1.5B …
    Pattern traders take note: TBT ticks up in the afternoon

  143. WSJ interesting article on insurance companies’ (e.g. Chubb’s and Travelers) portfolio could be hurt if munis decline do not reverse:
    State of Alert for Insurance Firms
    Here’s a snippet:
    "Those exposures—Travelers has $41 billion in munis; Chubb, $20.2 billion—may hit insurers’ book values if the recent selloff doesn’t reverse, or gets worse."

  144. VXX/Leon – No sorry, that was my fault as I though they were the same.  Well, take that same comment and sell  3x the 2012 $25 puts at $4 on the same logic except that would put it to you at $22,500 instead of $14K but that just goes back in line to why this is not a very good ETF to play – you don’t feel safe at $25, even with the ETF at $45 now and you don’t feel safe selling $60s for the same reason which means you are simply not being adequately compensated for the risk you are taking.  

    Cleveland/Exec – I hear you can get $1M mansions in Detroit for $50K if you’re not picky about the neighborhood….

    CMG/Peter, Cap – Well they are not going to stop going up if we keep selling more and more calls every day!  

    Chef’s table/Craig – Those are cool.

    Dead/BDC – My brother is very concerned about Lexus sales this month and that’s West Palm Beach, Florida – where they should be recession-proof (half his customers pay cash). 

  145. covered CMG for another $1.
    pulled about $6/sh since yesterday shorting pops on this crap.

  146. Geeze, I leave for an hour and what happens, just may have to buy TNA again on a bounce off IWM 71.74 in spite of dollar strength !!

  147. Do not you think that what’s going on is very bullish for stocks? The opponents of QE2 worried about lower dollar, higher commodities prices, inflation – and here is the reality: dollar goes up, commodities down, no meaningful signs of inflation – so no convincing arguments why not to have a perpetual QE. Also, it seems increasingly likely that Europeans will also need their permanaent QE (what else can they do? to financially disintegrate? ) – and the example of US will proabably ease their fears.

  148. NET $ (.46)$
    C =1179.44, F =1177.25

  149. exec / steak

    I used to get a great steak at Jim’s Steak House in "the flats" but I understand they have closed; it was the best place in town, right on that river that occasionally caught fire (great entertainment) 8-)

  150. Re weather/Here in northern MA it was a nice 60 earlier today.

  151. At reza99
    I see lots of trouble for all types of insures, not just from municipals.  The low interest rate environment will also destroy their business models.
    Plus policy premiums will be going up.
    Pension plans have to be getting crushed too.
    They keep dumping all of this municipal crap on us (taxpayers) too, through the Build America Bonds.  If we do not stop them we will own all of the mortgage crap through Fannie and Freddie and be on the hook for all of the state troubles through the Treasury.

  152. PAHURIK, your right.  I made a mistake.  That was the Jan 2012 $60 Call, not the JAN 2011.  Sorry about that.  Good catch by the way.

  153. NET $ (.51)%
    C =1178.95, F =1177.50

  154. CMG $243+; time to hit it again !

  155. this is completely insane

  156. took at quick 0.51 cents on that one

  157. they may run it up some more …

  158. mike5885:
    Yes, I agree. It looks to me the fed has taken over the role of the lender of last resort and is currently lending to itself too thru QE and everyone knows about moral hazard.
    Phil/mike5885 and others:
    I would be interested in any short opportunities that may arise in insurance space even the ETFs: KIE, PIC or IAK?,

  159. Cap / insane

    I agree, dollar NOT fading, TBT NOT going up, and yet we climb ……………………….. It is indeed GOOD to be a DAY TRADER 8-)

  160. You can’t take any selloff in the market seriously w/ stocks like CMG NFLX CSTR etc running wild

  161. Sure is JRW; one of the few benefits of enduring a holiday week trading is that you can take advantage of the games they play.

  162. All I need is you to join me in this CMG endeavor JRW .. then we shall skin them !   LOL

  163. Oil is up 18 cents after close? Such a joke. On a day like today oil should be down 2$, with or without the stupid rent a rebels

  164. Cap / Skining "them"

    As long as it is NOT in Norway 8-)

  165. NET $ (.51)%,  dx/y = +1.32%
    oil (.34), gold +18.20
    should be falling if the dollar was NET up, but is not, could be some fear trade, but the NET $ has been lower all day amazingly

  166. Phil your 11am call—we are sitting there now--what is your opinion?
    Good lineup at the bottom:  Dow 11,020, S&P 1,180, Nas 2,500, NYSE 7,475 and RUT 717 so we’ll watch those lines for future breakdowns.  As I said, we’re not really that weak, just reacting to a strong dollar that certainly has nothing to do with anything we’re doing on this end – it’s all about the relative lack of faith in the Euro that’s driving people here and that can reverse pretty quickly.

  167. Those bastards ran it up to 0.01 from my standing short order.
    What a rigged joke …

  168. You in TNA now JRW?

  169. I’m planing on exiting TNA at $56.20 +/-; barring a Stick of coarse 8-)

  170. 243.62

  171. Capt. / TNA

    Yes, at $55.62 from my last post (2:29); orders keyed in to bail currently, waiting for Mr Market to give me a sign !!

  172. Out of TNA at $56.20; reloading just in case !! (Of a Stick)

  173. CNBC sure pumping and pimping today against the insider trading cases again

  174. Fed minutes with highlights:

    The 11/03/10 meeting opened with a short discussion regarding communicating with the public about monetary policy deliberations and decisions. Meeting participants supported a review of the Committee’s communication guidelines with the aim of ensuring that the public is well informed about monetary policy issues while preserving the necessary confidentiality of policy discussions until their scheduled release. Governor Yellen agreed to chair a subcommittee to conduct such a review.

    Developments in Financial Markets and the Federal Reserve’s Balance Sheet
    The Manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign financial markets since the Committee met on September 21, 2010. He also reported on System open market operations, including the continuing reinvestment into longer-term Treasury securities of principal payments received on the SOMA’s holdings of agency debt and agency-guaranteed mortgage-backed securities (MBS). The Open Market Desk at the Federal Reserve Bank of New York purchased a total of about $65 billion of Treasury securities since the Committee decided, on August 10, to begin reinvesting such principal payments. Purchases were concentrated in nominal Treasury securities with maturities of 2 to 10 years, though some shorter-term and some longer-term securities were purchased along with some Treasury inflation-protected securities (TIPS). Over the intermeeting period, the Desk also conducted a number of small-value tri-party reverse repurchase operations with the primary dealers and with money market mutual funds that have been accepted as counterparties for such operations; these transactions, which the Desk conducted to ensure continuing operational and systems readiness, used Treasury securities, agency debt, and agency-guaranteed MBS as collateral. In addition, the Federal Reserve conducted another small-value auction of term deposits to ensure the continued operational readiness of the term deposit facility and to increase the familiarity of eligible depository institutions with the auction procedures. There were no open market operations in foreign currencies for the System’s account over the intermeeting period. By unanimous vote, the Committee ratified the Desk’s transactions over the intermeeting period.

    The Manager described the tentative plans the Desk had prepared for implementing a possible Committee decision to expand further the System’s holdings of longer-term Treasury securities. Purchases would continue to be concentrated in nominal Treasury securities with remaining maturities between 2 and 10 years, with some purchases of shorter- and longer-term securities and of TIPS; with this maturity distribution, newly purchased securities would be expected to have an average duration of 5 to 6 years, essentially the same as the average duration of the System’s existing holdings of Treasury securities. The Desk planned to publish additional information about its transactions to increase the transparency of, and encourage wider participation in, future purchase operations. The Desk judged that if it continued reinvesting principal payments from the Federal Reserve System’s holdings of agency debt and agency MBS in longer-term Treasury securities, then it could purchase additional longer-term Treasury securities at a pace of about $75 billion per month while avoiding disruptions in market functioning. The Manager indicated that implementing a sizable increase in the System’s holdings of Treasury securities most effectively likely would entail a temporary relaxation of the 35 percent per-issue limit on SOMA holdings under which the Desk had been operating; whether, and to what extent, the System’s holdings of some issues would exceed 35 percent would depend on the specific securities that dealers choose to offer at future auctions. Finally, the Manager summarized the implications for the Federal Reserve’s balance sheet and income statement of alternative decisions that the Committee might make about the size and maturity distribution of the SOMA’s securities holdings. Participants discussed the Desk’s tentative operational plans; they also discussed the potential effects of an expansion of the System’s holdings of longer-term securities on financial markets and institutions and on the economy, and the channels through which those effects could occur.  

    Wow, this is quite a thing to "yadda, yadda" over!  

    Staff Review of the Economic Situation
    The information reviewed at the November 2-3 meeting indicated that the economic recovery proceeded at a modest rate in recent months, with only a gradual improvement in labor market conditions, and was accompanied by a continued low rate of inflation. Consumer spending, business investment in equipment and software, and exports posted further gains in the third quarter, and nonfarm inventory investment stepped up. But construction activity in both the residential and nonresidential sectors remained depressed, and a significant portion of the rise in domestic demand was again met by imports. U.S. industrial production slowed noticeably in August and September, hiring at private businesses remained modest, and the unemployment rate stayed elevated. Headline consumer price inflation was subdued in recent months, despite a rise in energy prices, as core consumer price inflation trended lower.

    Private businesses continued to increase their demand for labor only modestly. In September, private nonfarm payroll employment remained on a gradual uptrend, and the average workweek of all private-sector employees was unchanged for a third month. In addition, the number of individuals working part time for economic reasons moved back up for a second month, and the available measures of job openings and hiring were still low. The unemployment rate remained at 9.6 percent in September, leaving the average rate for the third quarter only slightly below its average over the first half of the year. Long-duration unemployment continued to recede somewhat but was still very high. Indicators of layoffs remained elevated, although initial claims for unemployment insurance drifted down a little during October. The labor force participation rate in September was unchanged at a level lower than earlier in the year.

    After rising rapidly from mid-2009 to mid-2010, industrial production decelerated in August and edged down in September. In the manufacturing sector, output gains across a wide range of industries were smaller in recent months, and capacity utilization leveled off at a rate still well below its longer-run average. Production of motor vehicles picked up during the third quarter as automakers replenished dealers’ stocks, but motor vehicle assemblies were scheduled to drop back in coming months. More broadly, October surveys of new orders received by manufacturers suggested that demand for factory goods had continued to increase.

    Real personal consumption expenditures (PCE) rose at a moderate rate in the third quarter. Rising equity prices likely resulted in some further improvement in net worth over the same period. However, real disposable personal income, which rose strongly in the first half of the year, increased only slightly in the third quarter. As a result, the personal saving rate dropped back somewhat in the third quarter, although it remained near the high levels that have prevailed since late 2008. Bank lending standards were still relatively tight, and household borrowing remained low. Surveys taken in September and October indicated that consumers were slightly more pessimistic about the economic outlook than earlier in the year.

    Nobody’s working and nobody’s happy about it.  

    Activity in the housing market remained exceptionally weak. Although sales of new and existing homes turned up in August and September, the still-low level of demand suggested that the payback for the earlier boost to sales from the homebuyer tax credit had not yet faded. Moreover, despite further declines in mortgage interest rates in recent months, other factors continued to restrain housing demand, including consumer pessimism about the outlook for jobs and income, the depressed rate of household formation, and tight underwriting standards for mortgages. In addition, the moratoriums recently announced by some banks on the sale of properties they had seized in foreclosures were likely to damp home sales further in the near term. Starts of new single-family houses rose somewhat in August and September, but the pace of construction was still noticeably below the already-depressed level of the preceding year. New homebuilding appeared to be weighed down by the backlog of unsold existing homes and tight lending conditions for acquisition, development, and construction loans.

    After a very strong increase in the first half of the year, business investment in equipment and software posted a smaller, but still solid, gain in the third quarter. Nominal shipments of nondefense capital goods from domestic manufacturers remained on a moderate uptrend through September. But rising demand for equipment and software during the third quarter was also satisfied in part by a further rise in imports of capital goods. Near-term indicators of business spending on equipment and software were generally positive. New orders for nondefense capital goods, excluding aircraft, continued to outpace shipments through September. Credit conditions improved further in the third quarter, particularly for larger firms with access to the capital markets. Financing flows to smaller firms, which are more dependent on banks, were more subdued.

    In short, the rich continue to get richer and the big fish are fed by the banks so they can gobble up the small and, as we know, it’s the small businesses that do all the hiring and the big businesses that do all the outsourcing so we are, day by day, encouraging exactly the kind of behavior that is destroying this country!  

    Real nonfarm inventory investment was estimated to have picked up during the third quarter. Rebuilding of dealers’ stocks of motor vehicles accounted for part of the step-up, but some of it likely reflected another large increase in imports. In August, inventory-to-sales ratios for most industries remained well below their previous peaks. Surveys of purchasing managers in September and October indicated that most did not perceive their customers’ inventories to be too high. Business investment in nonresidential structures was about flat in the third quarter as another strong increase in spending for drilling and mining structures offset further declines in outlays on commercial and industrial buildings.

    Consumer price inflation remained low in recent months. The total PCE price index increased slightly in September as consumer energy prices moved up noticeably for a third month. The core PCE price index was unchanged in September, and the 12-month increase in this index continued to trend down. At earlier stages of processing, the rise in producer prices for intermediate materials remained moderate in September, but prices of globally traded industrial and agricultural commodities accelerated considerably in October, reflecting in part the lower foreign exchange value of the dollar as well as concerns about supply for certain commodities. In September and October, survey measures of households’ short- and long-term expectations for inflation remained in the ranges that have prevailed since the spring of 2009.

    Labor compensation rose at a moderate rate in the third quarter. Private-sector wage increases, as measured by both average hourly earnings of all employees and the employment cost index (ECI), remained subdued. However, according to the ECI, employer benefit costs accelerated this year after posting a very small increase in 2009.

    The U.S. international trade deficit widened in August, after narrowing in July, as a modest increase in nominal exports was more than offset by a strong increase in imports. Following widespread declines in July, most major categories of imports rebounded in August, with imports of consumer goods and capital goods exhibiting particular strength. Imports of petroleum products also increased substantially, reflecting both higher volumes and higher prices. The increase in exports was concentrated in agricultural goods, partly boosted by rising prices, and in services; most other major categories either declined or were flat.

    Recent indicators of foreign economic activity suggested that growth abroad had slowed appreciably after midyear. Following an unsustainably high rate of expansion in the second quarter, growth of real gross domestic product (GDP) in the emerging market economies appeared to have slowed markedly, notwithstanding an apparent acceleration in economic activity in China. Real GDP growth apparently moderated in the advanced foreign economies as well. In the euro area, industrial production rose sharply in August, but purchasing managers indexes moved down in recent months. The German economy continued to perform strongly, while recent data showed weakness in the peripheral euro-area countries. A reacceleration of food and energy prices helped push up inflation abroad, albeit generally to still-moderate levels, in the third quarter.

    That EDZ hedge is looking pretty good again, isn’t it?  The one from October is already a big winner so it’s not like we didn’t see this coming way back.   

    Staff Review of the Financial Situation
    The decision by the Federal Open Market Committee (FOMC) at its September meeting to maintain the 0 to 1/4 percent target range for the federal funds rate was widely anticipated. However, yields declined as market participants reportedly interpreted the language of the accompanying statement to imply higher odds of additional asset purchases and a longer period of exceptionally low short-term interest rates. Investors took particular note of the statement’s indication that inflation was below the levels consistent with the FOMC’s dual mandate for maximum employment and price stability. In the weeks following the FOMC meeting, Federal Reserve communications, along with economic data releases that continued to point to a tepid economic outlook, appeared to reinforce market expectations that additional policy accommodation would be forthcoming in the near term.

    Yields on nominal Treasury coupon securities and those on TIPS declined, on net, over the intermeeting period, largely in response to Federal Reserve communications and somewhat weaker-than-expected economic data releases. Five-year inflation compensation increased over the intermeeting period, and forward inflation compensation 5 to 10 years ahead also rose. Anecdotal reports pointed to the increased likelihood of additional asset purchases by the Federal Reserve and to FOMC communications noting that the Committee viewed underlying inflation as somewhat below the levels judged to be most consistent with the Committee’s dual mandate as factors contributing to lower yields and to the increase in inflation compensation over the period. Yields on investment- and speculative-grade corporate bonds declined somewhat more than those on comparable-maturity Treasury securities, leaving risk spreads slightly lower. In the secondary market for syndicated leveraged loans, prices of loans continued to move up and bid-asked spreads narrowed a bit further.

    Conditions in short-term funding markets were generally stable over the intermeeting period. In dollar funding markets, spreads of term London interbank offered rates (or Libor) over those on overnight index swaps edged up but remained at levels similar to those observed prior to the emergence of euro-area concerns earlier this year. Spreads on unsecured financial commercial paper and on asset-backed commercial paper remained low. Rates on repurchase agreements (repos) involving various types of collateral were little changed on net. Bid-asked spreads in most repo transactions generally declined while changes in haircuts on different types of repo collateral were mixed.

    Broad U.S. stock price indexes rose, on balance, over the intermeeting period, reflecting investor expectations of further monetary policy accommodation and better-than-expected third-quarter earnings news; option-implied volatility on the S&P 500 index was little changed. The spread between the staff’s estimate of the expected real return on equities over the next 10 years and an estimate of the expected real return on a 10-year Treasury note--a rough measure of the equity risk premium--narrowed a bit but remained at an elevated level. Bank stocks generally underperformed the broader market amid concerns about the handling of mortgage foreclosure documents and possible lack of compliance with securitization agreements.

    Net debt financing by U.S. nonfinancial corporations was very strong in September, with sizable gross corporate bond issuance across the credit spectrum and a substantial increase in commercial paper outstanding, but data for October pointed to a moderation in these flows. Issuance of syndicated leveraged loans in the third quarter remained near the average pace recorded in the first half of the year. Measures of the credit quality of nonfinancial corporations remained solid. The pace of gross public equity issuance from seasoned and initial public offerings by nonfinancial firms remained moderate in September and appeared to slow in October.

    Commercial real estate markets remained strained. Commercial mortgage debt in the third quarter was estimated to have declined at a rate similar to the drop in the second quarter, and the delinquency rate for securitized commercial mortgages continued to climb in September. However, some signals offered modest encouragement. In particular, vacancy rates for commercial buildings stabilized in the third quarter, and the pipeline of new commercial mortgage-backed securities picked up a bit from very low levels.

    Residential mortgage refinancing activity moved up in late September and early October, from an already high level, as the average interest rate on fixed-rate mortgages fell further over the intermeeting period. In contrast, the level of applications for mortgages to purchase homes remained anemic. Total consumer credit contracted in August at a pace roughly in line with the declines posted earlier in the year. Issuance of consumer asset-backed securities was solid in September. Consumer credit quality generally continued to improve, though delinquency rates remained elevated.

    That’s actually the first green anything we’ve had on CRE all year so an actual good sign there

    Bank credit edged up in September and October, as brisk growth in banks’ holdings of securities more than offset a further decline in total loans. Commercial and industrial (C&I) loans turned down in September after having increased slightly over the two previous months. A moderate net fraction of banks reported, in their responses to the October Senior Loan Officer Opinion Survey on Bank Lending Practices, that they had eased standards on C&I loans and narrowed spreads of C&I loan rates over their cost of funds; demand for such loans reportedly declined, on net, over the preceding three months. Commercial real estate loans, home equity loans, and consumer loans contracted. However, closed-end residential mortgage loans on banks’ books increased modestly for the second month in a row.

    Over September and October, M2 expanded at an average annual rate that was noticeably above its pace earlier in the year. The growth rate of liquid deposits moved up, while small time deposits and retail money market mutual funds continued to contract. The compositional shift likely reflected the relatively attractive yields on liquid deposits. Currency growth strengthened, with indicators suggesting strong demand from abroad.

    The dollar declined about 3 percent against a broad array of other currencies during the intermeeting period (17 FRIGGIN’ DAYS!!!), depreciating even more against the euro and the yen. In addition, Chinese authorities allowed the renminbi to appreciate slightly against the dollar. Market commentary highlighted the possibility that major central banks would further ease monetary policy, and the Bank of Japan expanded its asset purchase program and reduced its policy target rate to a range of 0 to 10 basis points. Benchmark 10-year sovereign yields generally declined in the major advanced foreign economies, but the overnight rate in the euro area increased as the European Central Bank continued to allow the amount of liquidity provided to the banking system to decline. Spreads relative to German bunds on the 10-year sovereign bonds of most peripheral euro-area countries either declined or were little changed over the period, but Irish sovereign spreads moved higher on concerns over the fiscal burdens associated with losses in the Irish banking sector. Major equity indexes in the euro area and in the United Kingdom increased moderately, whereas the Nikkei index declined.

    Several emerging market central banks tightened monetary policy, including the People’s Bank of China. Against the backdrop of interest rate declines in many of the advanced economies, as well as heavy capital flows toward emerging market countries, many emerging market currencies strengthened, reportedly prompting further official intervention in foreign exchange markets.

    A little heads up from the Fed on Ireland would have been nice!  

    Staff Economic Outlook
    Because the recent data on production and spending were broadly in line with the staff’s expectations, the forecast for economic activity that was prepared for the November FOMC meeting showed little change to the staff’s near-term outlook relative to the forecast prepared for the September FOMC meeting. However, the staff revised up its forecast for economic activity in 2011 and 2012. In light of asset market developments over the intermeeting period, which in large part appeared to reflect heightened expectations among investors that the Federal Reserve would undertake additional purchases of longer-term securities, the November forecast was conditioned on lower long-term interest rates, higher stock prices, and a lower foreign exchange value of the dollar than was the staff’s previous forecast. These factors were expected to provide additional support to the recovery in economic activity. Accordingly, the unemployment rate was anticipated to recede somewhat more than in the previous forecast, although the margin of slack at the end of 2011 was still expected to be substantial.

    The staff’s forecast continued to show subdued rates of headline and core inflation during 2011 and 2012. However, the downward pressure on inflation from slack in resource utilization was expected to be slightly less than previously projected, and prices of imported goods were anticipated to rise somewhat faster. As in previous forecasts, further disinflation was expected to be checked by the ongoing stability of inflation expectations.

    Wow, they are backpedaling already as they see they’ve let the inflation genie out of the bottle.  

    Participants’ Views on Current Conditions and the Economic Outlook
    In conjunction with this FOMC meeting, all meeting participants--the six members of the Board of Governors and the heads of the 12 Federal Reserve Banks--provided projections of output growth, the unemployment rate, and inflation for each year from 2010 through 2013 and over the longer run. Longer-run projections represent each participant’s assessment of the rate to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks. Participants’ forecasts are described in the Summary of Economic Projections, which is attached as an addendum to these minutes.

    In their discussion of the economic situation and outlook, meeting participants generally agreed that the incoming data indicated that output and employment were continuing to increase, but only slowly. Progress toward the Committee’s dual objectives of maximum employment and price stability was described as disappointingly slow. Participants variously noted a number of factors that were restraining growth, including low levels of household and business confidence, concerns about the durability of the economic recovery, continuing uncertainty about the future tax and regulatory environment, still-weak financial conditions of some households and small businesses, the depressed housing market, and waning fiscal stimulus. Although participants considered it quite unlikely that the economy would slide back into recession, some noted that continued slow growth and high levels of resource slack could leave the economic expansion vulnerable to negative shocks. In the absence of such shocks, and assuming appropriate monetary policy, participants’ economic projections generally showed growth picking up to a moderate pace and the unemployment rate declining somewhat next year. Participants generally expected growth to strengthen further and unemployment to decline somewhat more rapidly in 2012 and 2013.

    As long as we don’t have any shocks – we might be OK!  How comforting

    Indicators of spending by households and businesses remained mixed. Consumer spending was expanding gradually. Participants noted that households were continuing their efforts to repair their balance sheets, a process that was restraining growth in consumer spending. Sluggish employment growth and elevated uncertainty about job prospects also continued to weigh on household spending. With respect to business spending, contacts generally reported that they were investing to reduce costs but were refraining from adding workers or expanding capacity in the United States. Energy producers were an exception. Participants observed that firms had generated rising profits, but that business contacts indicated those gains largely reflected cost-cutting rather than top-line growth in revenues. A number of businesses continued to report that they were holding back on hiring and capital spending because of uncertainty about future taxes, health-care costs, and regulations. But concerns about actual and anticipated demand also were important factors limiting investment and hiring. Firms continued to report strong foreign demand for their products, particularly from Asia.

    Participants noted that the housing sector, including residential construction and home sales, remained depressed. Foreclosures were adding to the elevated supply of available homes and putting downward pressure on home prices and housing construction. Some participants saw disputes over mortgage and foreclosure documents as likely to delay the eventual recovery in housing markets. Commercial real estate markets also were weak, and the availability of credit for commercial real estate transactions remained limited, but low interest rates were helping stabilize prices.

    Participants agreed that progress in reducing unemployment was disappointing; indeed, several noted that the recent rate of output growth, if continued, would more likely be associated with an increase than a decrease in the unemployment rate. Participants again discussed the extent to which employment was being held down, and the unemployment rate boosted, by structural factors such as mismatches between the skills of the workers who had lost their jobs and the skills needed in the sectors of the economy with vacancies, the inability of the unemployed to relocate because their homes were worth less than the principal they owed on their mortgages, and the effects of extended unemployment benefits on the duration of unemployed workers’ search for a new job. Participants agreed that such factors were contributing to continued high unemployment but differed in their assessments of the magnitude of such effects. Many participants saw evidence that the current unemployment rate was well above levels that could be explained by structural factors alone, noting, for example, reports from business contacts indicating that weak growth in demand for their firms’ products remained a key reason why they were reluctant to add employees, and job vacancy rates that were low relative to historical experience. A number of participants noted that continued high unemployment, particularly with large numbers of workers suffering very long spells of unemployment, would lead to an erosion of workers’ skills that would have adverse consequences for those workers and for the economy’s potential level of output in the longer term.

    Hey, you know what will fix this?  Cutting benefits, of course.  Not!  I can’t believe the lack of discussion of this issue in the MSM as 2M of their viewers/readers are about to drop off unemployment  - that’s 2% of US households cut off with nothing at Christmas – you would think someone would care…   Really…  Anyone???     

    Participants saw financial conditions as having become more supportive of growth over the course of the intermeeting period; most, though not all, of the change appeared to reflect investors’ increasing anticipation of a further easing of monetary policy. Most longer-term nominal interest rates declined, real interest rates fell even more, credit spreads tightened, and equity prices rose, in part reflecting better-than-expected corporate earnings reports. Inflation compensation rose noticeably, returning to a level more typical of recent years. Participants noted that credit remained readily available--in debt markets and from banks--for larger corporations, and there were some signs that credit conditions had begun to improve for smaller firms that obtain credit primarily from banks. Banking institutions reported signs of improving credit quality. Improvements in household financial conditions were contributing to better performance of consumer loans. However, banks continued to report elevated losses on commercial real estate loans, especially construction and land development loans. Participants noted the risk of losses at financial institutions stemming from investors putting mortgages back to sellers if the quality of the loans was misrepresented when the mortgages were sold into securitization vehicles.

    Measures of price inflation had generally trended lower since the start of the recession; the same was true of nominal wage growth. Most participants indicated that underlying inflation was somewhat low relative to levels that they judged to be consistent with the Committee’s statutory mandate to foster maximum employment and price stability. While underlying inflation remained subdued, meeting participants generally saw only small odds of deflation, given the stability of longer-term inflation expectations and the anticipated recovery in economic activity. They generally did not expect appreciably higher inflation, either. While prices of some commodities and imported goods had risen recently, business contacts reported that they currently had little pricing power and that they would continue to seek productivity gains to offset higher input costs. Small wage increases, coupled with productivity gains, meant that unit labor costs were lower than a year earlier. Many participants pointed to substantial slack in resource utilization, along with well-anchored inflation expectations, as likely to contribute to subdued inflation for some time. A few participants expected that continuing resource slack would lead to some further disinflation in coming years. However, a few others thought that the exceptionally accommodative stance of monetary policy, coupled with rising prices of energy and other commodities as well as rising prices of other imports, made it more likely that inflation would increase, within a year or two, to levels they judged consistent with the Committee’s dual mandate.

    WOW!  That is a sick statement.  They are HAPPY that low wages plus commodity inflation and rising import prices will allow inflation to increase.  TOTALLY the wrong kind of inflation (not demand-driven) and they even say that companies will seek more efficiencies (ie. outsourcing and layoffs) to offset the prices they can’t pass on to bankrupt consumers.  On this basis alone I call for a full impeachment and removal of the Fed – to be replaced by cartoon bears if constitutionally possible!  

    Participants generally agreed that the most likely economic outcome would be a gradual pickup in growth with slow progress toward maximum employment. They also generally expected that inflation would remain, for some time, below levels the Committee considers most consistent, over the longer run, with maximum employment and price stability. However, participants held a range of views about the risks to that outlook. Most saw the risks to growth as broadly balanced, but many saw the risks as tilted to the downside. Similarly, a majority saw the risks to inflation as balanced; some, however, saw downside risks predominating while a couple saw inflation risks as tilted to the upside. Participants also differed in their assessments of the likely benefits and costs associated with a program of purchasing additional longer-term securities in an effort to provide additional monetary stimulus, though most saw the benefits as exceeding the costs in current circumstances. Most participants judged that a program of purchasing additional longer-term securities would put downward pressure on longer-term interest rates and boost asset prices; some observed that it could also lead to a reduction in the foreign exchange value of the dollar. Most expected these changes in financial conditions to help promote a somewhat stronger recovery in output and employment while also helping return inflation, over time, to levels consistent with the Committee’s mandate. In addition, several participants argued that the stimulus provided by additional securities purchases would help protect against further disinflation and the small probability that the U.S. economy could fall into persistent deflation--an outcome that they thought would be very costly. Some participants, however, anticipated that additional purchases of longer-term securities would have only a limited effect on the pace of the recovery; they judged that the economy’s slow growth largely reflected the effects of factors that were not likely to respond to additional monetary policy stimulus and thought that additional action would be warranted only if the outlook worsened and the odds of deflation increased materially. Some participants noted concerns that additional expansion of the Federal Reserve’s balance sheet could put unwanted downward pressure on the dollar’s value in foreign exchange markets. Several participants saw a risk that a further increase in the size of the Federal Reserve’s asset portfolio, with an accompanying increase in the supply of excess reserves and in the monetary base, could cause an undesirably large increase in inflation. However, it was noted that the Committee had in place tools that would enable it to remove policy accommodation quickly if necessary to avoid an undesirable increase in inflation.

    That last bit is worrying for people who are counting on a non-stop continuation of POMO.  

    Committee Policy Action
    Though the economic recovery was continuing, members considered progress toward meeting the Committee’s dual mandate of maximum employment and price stability as having been disappointingly slow. Moreover, members generally thought that progress was likely to remain slow. Accordingly, most members judged it appropriate to take action to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with the Committee’s mandate. In their discussion of monetary policy for the period immediately ahead, nearly all Committee members agreed to keep the federal funds rate at its effective lower bound by maintaining the target range for that rate at 0 to 1/4 percent and to expand the Federal Reserve’s holdings of longer-term securities. To increase its securities holdings, the Committee decided to continue its existing policy of reinvesting principal payments from its securities holdings into longer-term Treasury securities and intended to purchase a further $600 billion of longer-term Treasury securities at a pace of about $75 billion per month through the second quarter of 2011. One member dissented from this action, judging that the risks of additional securities purchases outweighed the benefits. Members agreed that 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 its goals of maximum employment and price stability.

    With respect to the statement to be released following the meeting, members agreed that it was appropriate to adjust the statement to make it clear that the unemployment rate was elevated, and that measures of underlying inflation were somewhat low, relative to levels that the Committee judged to be consistent, over the longer run, with its dual mandate. Nearly all members agreed that the statement should reiterate the expectation that economic conditions were likely to warrant exceptionally low levels of the federal funds rate for an extended period. Members agreed that the statement should note that the Committee 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.

    At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive:

    "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to execute purchases of longer-term Treasury securities by the end of June 2011 in order to increase the total face value of domestic securities held in the System Open Market Account to approximately $2.6 trillion. The Committee also directs the Desk to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System’s balance sheet that could affect the attainment over time of the Committee’s objectives of maximum employment and price stability."

    The vote encompassed approval of the statement below to be released at 2:15 p.m.:

    "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.

    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.

    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."

    Voting for this action: Ben Bernanke, William C. Dudley, James Bullard, Elizabeth Duke, Sandra Pianalto, Sarah Bloom Raskin, Eric Rosengren, Daniel K. Tarullo, Kevin Warsh, and Janet L. Yellen.

    Voting against this action: Thomas M. Hoenig.

    Mr. Hoenig dissented because he judged that additional accommodation would do little to accelerate the economy’s continuing, gradual recovery. In his assessment, the risks of additional purchases of Treasury securities outweighed the benefits. Mr. Hoenig believed that additional purchases would risk a further misallocation of resources and future financial imbalances that could destabilize the economy. He also saw a potential for additional purchases to undermine the Federal Reserve’s independence and cause long-term inflation expectations to rise. Mr. Hoenig also believed it was not appropriate to indicate that economic and financial conditions were "likely to warrant exceptionally low levels of the federal funds rate for an extended period" or to reinvest principal payments from agency debt and mortgage-backed securities in long-term Treasury securities. In his assessment, this continued high level of monetary policy accommodation could put at risk the achievement of the Committee’s long-run policy objectives.

    It was agreed that the next meeting of the Committee would be held on Tuesday, December 14, 2010. The meeting adjourned at 1:15 p.m. on November 3, 2010.

    Notation Vote
    By notation vote completed on October 8, 2010, the Committee unanimously approved the minutes of the FOMC meeting held on September 21, 2010.

    Videoconference Meeting of October 15
    The Committee met by videoconference on October 15 to discuss issues associated with its monetary policy framework, including alternative ways to express and communicate the Committee’s objectives, possibilities for supplementing the Committee’s communication about its policy decisions, the merits of smaller and more frequent adjustments in the Federal Reserve’s intended securities holdings versus larger and less frequent adjustments, and the potential costs and benefits of targeting a term interest rate. The agenda did not contemplate any policy decisions and none were taken.

    Participants agreed that greater public understanding of the Committee’s interpretation of its statutory objectives could contribute to better macroeconomic outcomes. Participants expressed a range of views about the potential costs and benefits of quantifying the Committee’s interpretation of its statutory mandate to promote price stability by adopting a numerical inflation objective or a target path for the price level. In the end, participants noted that the longer-run projections contained in the Summary of Economic Projections, which is released once per quarter in conjunction with the minutes of four of the Committee’s meetings, convey considerable information about participants’ assessments of their statutory objectives. Participants discussed whether it might be useful for the Chairman to hold occasional press briefings to provide more detailed information to the public regarding the Committee’s assessment of the outlook and its policy decisionmaking than is included in Committee’s short post-meeting statements.

    In their discussion of the relative merits of smaller and more frequent adjustments versus larger and less frequent adjustments in the Federal Reserve’s intended securities holdings, participants generally agreed that large adjustments had been appropriate when economic activity was declining sharply in response to the financial crisis. In current circumstances, however, most saw advantages to a more incremental approach that would involve smaller changes in the Committee’s holdings of securities calibrated to incoming data.

    Finally, participants discussed the potential benefits and costs of setting a target for a term interest rate. Some noted that targeting the yield on a term security could be an effective way to reduce longer-term interest rates and thus provide additional stimulus to the economy. But participants also noted potentially large risks, including the risk that the Federal Reserve might find itself buying undesirably large amounts of the relevant security in order to keep its yield close to the target level.


  175. another 0.70

  176. Hit & Run baby !!

  177. DIE NFLX !    LOL

  178. Janus Halted and Wellington Receives Insider Trading Inquiries


  179. Phil / plays   Still cash focus.  My question yesterday was shouldn’t we be short until Friday afternoon (no POMO week) in anticipation of the huge POMO next week.  But, now the Irish / PIGS uncertainty may now be the main mkt driver?  Frankly I don’t see any fix for Ireland that the people will accept, so I don’t see MP’S voting for the bailout and going home to face constituents.  This thing could blow up anyday now.  Still thinking short might be better than cash for a spec.

  180. Thanks for that FED minute update, great notes

  181. NET $ (.53)%

  182. JRW / Raider
    Careful now…. you are letting your mind wander in a tumultous market !

  183. JR/Jims
    I used to go to Jim’s.  It was good in its day.  I’ve been to all the good steak joints in town.  Red’s is #1 in my opinion.  I think they have a sister place in Fort Lauderdale.

  184. Watch the S&P — if we break 1173.75…. could be trouble in River City !

  185. Hi Phil,
    GE – What would be a good strike to sell for Dec (front month) or longer dated calls?  I own some ITM calls and would like to be covered for the current malaise.  Do you think next week will be a better time to sell calls on a bounce?
    (Current position- Long Jan 10C (Break Even exit would be around $6 per contract), Long 2012 Jan 15C (bought at $4.9, as part of spread leg, currently down to $2.1, down about $7k overall on the spread which I hope to recover by writing well timed covered calls -hopefully- as GE stock recovers.  Hence the question)
    SYMC – This is not a PSW recommended position, but would like to know your or other members opinion anyways.  I need to hedge a long term SYMC position by selling calls and puts (selling naked puts ok).

  186. Well, either we break over IWM 72.04 or we don’t, and that’s the direction into the close.


    Thoughts on tomorrow, baring any new wars ??

  187. NET $ (.53)%,  dx/y = +1.28%
    C =1180.17, F =1178.50
    here come imbalances

  188. Bots are trying to push it over.  I’m betting it’s going to break down at the close.

  189. Bullish/Alik – If the dollar goes up, commodities and the markets go down so your premise that Europe does QE too is NOT bullish for stocks.  As long as we print MORE money than the rest of the World, we can keep fighting the downturn but if they add 10%, then we have to add 20% to maintain the 10% we have now plus offset their 10% so we’ll be printing $3Tn a year rather than The Bernank’s $1.2Tn rate and then what if that’s not enough?  If you buy a stock and it goes up 20% but the currency it is priced in goes down 20% then you were not smart to invest in the stock – you were just smartER than someone who stayed in cash.  I called for a lot of stock (65-70%) while the dollar was going down and then I flipped to a lot of cash (65-100%) while the dollar has been bouncing back up.  You have to look at the overall picture, not just one aspect.  

    On the hook/Mike – That’s the plan!

    Insurance/Reza – I don’t know how they are investing.  They are not limited (unfortunately) to simple investments and the investor class is doing fairly well this year so I don’t see the point in betting against people who have tons of liquid cash as they fit the same profile as anyone in the top 0.01%, who are having a fantastic year.  

    Bottoms/Jabob – If we hold it, that’s bullish technically so we should play the ups but very tricky into tomorrow and then the holiday so it’s should be a small bet at most. 

    Halts/Mike – Very exciting stuff!  

    POMO/Tusca – I wouldn’t short on lack of POMO but I do agree with going long on expectation of it.   It should work until it doesn’t and if we don’t pop next week on $45Bn, then it’s time to bury the parrot.  Ireland is very possibly going to spiral into pure chaos and, if that happens, it could spread throughout Europe and that will boost the dollar and tank our markets no matter what the Fed does so I like a short play over the weekend – just in case – and then, on Monday, I’ll be wanting to test long ahead of the 5 POMO rounds.  Thursday is an election day in Ireland for an MP seat and then that result and the weekend make for a very bad combination.  Also – Korea is at war (either that or S Korea proves themselves a gutless sham to the North).  Here’s the WSJ take:  

    Since the Korean War ended in a cease-fire in 1953, North Korea has provoked South Korea more than 30 times with acts of fatal or life-threatening violence. It has blown up a South Korean airplane, assassinated members of the South’s presidential cabinet, fired at naval ships and sent commandos to kill South Koreans over land and in submarines.

    South Korea’s responses have varied from trade sanctions to cutoffs of communication and economic aid, but it has never retaliated militarily. And that pattern looked set to continue despite the fact that Tuesday’s artillery attack was the first time since the war that North Korea struck at land-based targets.

    "The question for South Korea is how much more serious can these attacks get before the risk of doing nothing and showing there’s no cost is worse than the risk of prompting an overreaction by North Korea," said Andrew Gilholm, analyst in Beijing for Control Risks, a risk consultancy for financial firms. "My own view is we’re still not at that level."

  190.  JACK is a buy. Especially given the success of Qdoba. Comps up 5.6%.
    The fact CMG is up is insane. Totally insane. The $7.5B burrito. They trade like they have no competition. 

  191. JRW/nice car--
    Even if THEY may not be real THEY sure do look FABULOUS!!
    Too much caffeine and watching NFLX price action today …

  192. POMO – Seriously, $45B is nothing given the $600 Trillion value of the global derivatives market.

  193. Phil – What is your feeling about Asia tonight? Our close is looking pretty solid. I shorted oil and am down 23 cents on it. Was debating on whether to hold until tonight or cover…. Im usually pretty good with trading CL but this 23 cent move after hours has blown my mind…. I know inventories are tomorrow but that should be the reason Oil closed with a small loss rather than 2$+

  194. GE/DrM – I’d sell the June $16s for $1.15 and use .90 of that money to roll the Jan $10s to the 2012 $10s and roll the $15s down to the $12.50s.  That way, you are in at less than $6 better than the caller on the $10s and, hopefully, you can roll them up at some point and widen the spread.  If GE keeps heading down, you can sell the June $14 puts for $1 (now .75) and that DCA’s you in at $15 (a bit less) as a long-term hold you can sell more calls against and drive it down below $14 if you have to.  You get all that protection and it all starts with selling the June $16s for $1.15 – not bad!  

    SYMC/DrM – Still need to know where you are with basis etc.  I like SYMC but they are probably at the top of a run and heading back to test $15.   

    Tomorrow/JRW – We are going into a break but not the rest of the World.  Japan was actually closed this morning and will gap down sharply tomorrow and China looks like they’ll be off too and France finished down 2.5% today with the UK and Germany down 1.75%, which is where it looks like we finish too so we should test those 10% lines tomorrow and I don’t see any reason for optimistic buying into the close and then we have the war and Ireland and whatever tightening measures come up in China over the weekend so there’s not much to get long about until next week and then it’s just the Fed pumping money in.  As I said Monday – good week to stay in cash and take a nice family vacation! 

    JACK/BDC – I like those guys.  

    Asia/Jrom – See above.  Could be good for oil but better to get out evenish and wait for a more obvious day to play – especially a short, which can get blown out.   If someone hired Rent-A-Rebel last night and that didn’t work – what do you think they will do over the next few days?  

  195. Done for the day; 4%, and really had to work for it !! Should finish at IWM 72.10 to set up tomorrow’s push.

  196. RINO/Mike – Fun, fun!  

  197. Phil,
    I have a general question about adjusting positions. If you have sold a put at a strike which is now in the money and you don’t want to accept the position, you will roll it further out in time and down in the strike for at least as much money as you need to buy back the one you sold. What I’m unclear on is whether there is a more optimal time to do the roll?
    is it better to roll it when it is close to the strike price or at a lower price.
    Is it better to wait until the month of expiration?
    The situation I am looking at is SDS (currently 27.25) Jan 2011 28 strike puts. They were sold to fund a bull call spread which expired already. I’m currently down 60% on them.
    Since I had time and you thought the probability of a pullback was higher, I just let them ride until now to let them get back closer to the strike. But, now I’m not sure I shouldn’t have rolled them when SDS was lower (mkt at high).  I was thinking let them ride until closer to expiration. I’m not comfortable with a double down. I doubled the put sale because I wasn’t comfortable with higher strike you had originally selected. When I roll I will reduce size at the same time. Of course with SDS I’m also fighting the ultra etf decay so I need to find the balance on what month I roll them to.
    Any thoughts on timing the roll? sooner, later, near strike price or lower.
    Is there any way to look up or calculate the monthly decay of one of these ultra ETFs?

  198. Anyone Know of a Tool. I’ve talked with TOS, Fidelity, TDAmeritrade – none of them have one.
    Currently the only way I know how I am doing on one of these trades is to log the initial trade and subsequent adjustments into an excel spreadsheet that uses DDE into the TOS database for realtime values. This DDE works nicely. But, it is labor intensive.
    The spreadsheet calculates whether I am up or down and whether the adjustments actually helped or whether I would have been better off just taking my loss. I hope over time to have a better handle on when to adjust and when to fold.
    I do know about the tos summary profit and loss per equity, but its just year to date and there is no drill down capability. It will work fine if you only trade the equity once per year.
    Also, I want to use the tool for long term money that may be more than a year.

  199. Friggin Oil, back down where it belongs! And back where I belong, in the black! Covered for a 24 cent gain

  200. Oh this is nice – Market Oracle says our military is running full-scale simulations to prepare for total economic breakdown in the US!   

    This guy claims we are already at war with China

    I missed the news today as I was busy with other stuff but a good time to catch up

    At the open: Dow -0.44% to 11129. S&P -0.67% to 1190. Nasdaq -1.03% to 2506.
    Treasurys: 30-year +0.54%. 10-yr +0.4%. 5-yr +0.23%.
    Commodities: Crude -0.93% to $80.98. Gold +0.72% to $1367.60.
    Currencies: Euro -1.18% vs. dollar. Yen +0.28%. Pound -0.34%.

    10:00 AM On the hour: Dow -1.37%. 10-yr +0.42%. Euro -1.36% vs. dollar. Crude -1.15% to $80.80. Gold +1.41% to $1376.90. 

    11:00 AM On the hour: Dow -1.19%. 10-yr +0.4%. Euro -1.48% vs. dollar. Crude -0.87% to $81.03. Gold +1.35% to $1376.10.

    Euro drops to new intraday lows following comments from PIMCO’s El-Erian that Ireland "risks a major bank run," and that "restructuring of Irish debt needs to be discussed." Euro recently -1.6% vs. dollar to $1.3398. 

    12:00 PM On the hour: Dow -1.44%. 10-yr +0.39%. Euro -1.79% vs. dollar. Crude -0.83% to $81.06. Gold +1.27% to $1375.10.

    Lots of red as European stocks close at or near lows of the day: Spain -3.1%, Ireland -2.9%, Italy -2.5%, UK - 1.75%, Germany -1.75%

    01:00 PM On the hour: Dow -1.26%. 10-yr +0.34%. Euro -1.71% vs. dollar. Crude -0.12% to $81.64. Gold +1.49% to $1378.00.

    02:00 PM On the hour: Dow -1.41%. 10-yr +0.27%. Euro -1.73% vs. dollar. Crude -0.54% to $81.30. Gold +1.47% to $1377.80.

    03:00 PM On the hour: Dow -1.31%. 10-yr +0.26%. Euro -1.85% vs. dollar. Crude -0.42% to $81.40. Gold +1.31% to $1375.60.

    At the close: Dow -1.27% to 11037. S&P -1.43% to 1181. Nasdaq -1.46% to 2495.
    Treasurys: 30-year +0.32%. 10-yr +0.24%. 5-yr +0.16%.
    Commodities: Crude -0.31% to $81.49. Gold +1.27% to $1375.00.
    Currencies: Euro -1.89% vs. dollar. Yen +0.15%. Pound -1.08%

    Market recap: Stocks fell sharply as investors grappled with crises on two continents – fears of a sovereign debt contagion in Europe and the Korean shootout in Asia – plus a widening insider trading investigation in the U.S. that began ensnaring mutual fund firms. Gold and the dollar jumped, while oil and industrial commodities fell. NYSE decliners led advancers three to one. 


    Q3 GDP (second estimate): +2.5% vs. +2.4% expected, +2% prior. Chain-weighted price index +2.3% in-line with expected, unchanged from prior.

    Nov. Richmond Fed Mfg. Survey: +4, to 9 (above 0 = growth). Shipments +4 to 7, new orders +2 to 10, jobs +6 to 10.

    Oct. Mass Layoffs: 1,651 mass layoff events (at least 50 workers), resulting in 148K job losses – up 121 layoff events from September. Associated initial claims increased 9,389.

    Oct. Regional and State Employment/Unemployment: Rates little changed, with 19 states and DC seeing sequential decreases in unemployment, 14 increases, 17 unchanged. Non-farm employment rose in 41 states, led by Arkansas (+1.5%) and New Mexico (+0.8%) in percentage terms, and Texas (+47,900) in jobs. Largest decreases in Delaware (-3,000 jobs, -0.7%). 

    Oct. Existing Home Sales: -2.2% to 4.43M vs. 4.42M expected. Inventory of unsold homes on the market -3.4% to 3.86M; months supply 10.5. Median sales price -0.9% Y/Y to $170,500. “The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales," NAR’s Lawrence Yun says.

    ICSC Retail Store Sales: -0.6% W/W, vs. -0.1% last week. +2.8% Y/Y, vs. +3.4% last week. A pre-holiday lull ahead of Black Friday prompted the W/W decline, but the report still sees strong growth of +3-4% Y/Y.

    Redbook Chain Store Sales: +2.5% Y/Y vs. +2.7% last week. The report claims shoppers are holding off ahead of Black Friday promotions. 

    Treasury sells $35B in five-year notes at 1.411%, vs. 1.404% expected. Bid-to-cover was 2.65 (prior 2.82). Indirect bidders took 31.5% of the offering. Demand was the weakest since July 2009, and down about 6% from October ( 5-year notes +0.18% to 120-23. 

    Expect office real estate to lag any broader recovery, UC Berkeley professor and hedge-fund manager Kenneth Rosen says. Firms have large reserves of "shadow space" to fill before re-entering the market; the sweet spot will be found in apartment REITs, particularly senior housing, given demographic trends and record foreclosures.

    European contagion appears to be spreading, with Spain’s latest debt auction coming well short of the expected sale size. Also, Portugal confirms that its deficit was larger than expected, as government expenditures during the first 10 months of this year increased by 2.8% from the same period in 2009. 

    Warnings from German Chancellor Merkel and German Finance Minister Schaeuble that the Irish crisis has brought the euro into an “exceptionally serious” situation sends the euro to fresh lows. Euro -1.3% vs. dollar, -1.9% vs. yen. 

    Falling profits and tighter margins will prompt banks to close 5,000 branches nationwide in the next 18 months, says Meredith Whitney, or roughly 6% of the country’s branches. As many as 41M U.S. households won’t have access to banking services, up from 30M last year.

    FDIC Quarterly: Commercial banks earned $14.5B in Q3, up $12.5B Y/Y, but also the weakest quarter since 2009. Bank debt holdings declined just $6.8B, suggesting a two-year contraction in loan portfolios "may have run its course." Loan-loss reserves shrunk for the first time since Q4 2006, due almost entirely to big banks reducing provisions, even as smaller banks continued to build them.

    The number of banks at risk of failure climbs to 860 as of Q3 but the industry’s health continues to improve (???), according to the latest FDIC report. At the same point last year, 552 banks were on the "problem list." Industry profit was down from the $21.4B reported in Q2, but the FDIC says this was largely due to $10.4B in writedowns by Bank of America (BAC). 

    AT&T (T -0.9%) and Verizon (VZ -0.3%) may not have enough cash to fund their pension funds because they overestimated projected returns while underestimating cash expenses. AT&T paid $868M in the first 9 months of the year, and Verizon $1.8B in the same period. “The wireless business has to run very fast to outpace these enormous legacy obligations," says an analyst. 

    St. Louis Fed’s Track the GDP charts tell an interesting story: The current expansion, which began in Q2 2009, is significantly weaker than average, mostly due to massive cutbacks in consumption. The only real strength seems to be coming from exports – likely thanks to a weak dollar. 

    From today’s FOMC minutes it emerges that most members welcomed the fact that a new round of asset purchases – by depressing the value of the dollar – would help  promote a stronger recovery and higher inflation. This seems to contradict Bill Dudley’s statement that the Fed has "no goal in terms of pushing the dollar up or down." 

    Canadian inflation rose to 2.4% in October from 1.9% the previous month, suggesting economic growth continues to accelerate. After a brief surge higher, the Canadian dollar continued its fall as traders instead focused on the eurozone, China, and Korea. The loonie is currently worth $0.9771.

    Japan will be forced to take austerity measures similar to those in Europe, Japan-watcher Tobias Harris says, since PM Naoto Kan’s government has so far failed to take decisive action to get Japan’s economy back on track. “They haven’t pushed to change the retirement system," a big demographic problem for the country. 

    The spigot is being shut. China’s largest banks (BACHY.PK, IDCBF.PK, ABGEF.PK) are bumping up against their annual loan quotas, and have stopped offering new financing. Chinese stocks continued their recent slide, falling 2% last night.

    I’ve got your nose (cone):Boeing (BA) may come to regret its recent penchant for outsourcing its supply chain, as the Chinese roll out a new airliner some already call a "737-killer" and may be 20% less expensive to build than the 737. In recent years, Boeing has ramped up its outsourcing to China and elsewhere and allowed the transfer of an unprecedented level of know-how.

    A new report recommends the DOE develop a strategy for grid-level energy storage. Potentially positive news for AES (AES -3.3%) and A123 (AONE -2.6%), whose lithium-ion systems help meet fluctuating demand; Beacon Power (BCON +11.4%), which uses "flywheel storage" to keep the grid stable; and American Superconductor (AMSC -0.6%), which sells superconducting cable. 

    VIX is up another 13.6% today to just under 21 amid Korea jitters, not to mention the yet-unresolved eurozone sovereign debt turbulence. "It’s a fear day," one money manager says. "You have Europe debt worries, tension in Korea, hedge fund investigation, weak housing report. There’s a tremendous amount of bad news to absorb. That’s not going to encourage risk appetite."

  201. JRW, thanks for the chart.  I’m as perplexed as anyone about the financials and it would appear that they are going lower.  Someone was dumping hard today at the close.  Every pathetic attempt at moving up was dumped into.  I think they are selling just as fast as they can find suckers to sell to.  The biggest sucker of them all is the Fed.  But then would that make us the suckers in the end?
    I tell ya.. if you could pull 4% out of today’s market you have got some system going for you.  You should charge to have folks stand over your shoulder.

  202. Phil – we run simulations on everything. If we didnt run around doing some exercise, preparing for war, etc what would you all be paying us for!!? Isnt necessarily a thing most people want to hear, definitely a little disconcerting, but it is what it is… It’s a POSSIBILITY, and so we prepare for it…

  203. Matt,
    Haven’t heard much from you lately.  You still bearish?

  204. An interesting read on China, Japan and the dollar , yen and government control of economies:

  205. Judy- wud you mind sharing the excel sheet? I have one that is simpler than what you have and it takes me a half hour everyday just to update. I sure wud like the feature:

    “The spreadsheet calculates whether I am up or down and whether the adjustments actually helped or whether I would have been better off just taking my loss.”

  206. Pstas, interesting article. In the long run, we are all screwed!!!! 

  207.  jromeha  - northgate

  208. AIB closed down almost 20% @ .8911.

  209. Matt 1966
    The financials may be crashing but Phil’s spread is down $360 on 20 contracts each which is not too bad in my book..

  210.  Judy,
    you can download all your TOS  trades from TOS screen into spreadsheet to avoid manually entering trades.
    Then you may create a macro to reformat that .xls into another .xls with fields that you need for your main spreadsheet. The main problem I see is to format OPRA (symbol for options, i.e. .IBMyymmddC120 (expiration day is the main obstacle)). I don’t know how download OPRA from trades screen, maybe you can call TOS). 
    If you don’t know how to create Excel macro I can help you. If you are interested to explore it more-send me

  211. Uck…. Havent been in that mall in ages…. Kinda dirty, that Best Buy next to it is pretty cool though. Is it usually a busy mall? I always thought it was a mall that got less traffic as Alderwood, Bellevue Square, Westlake were much nicer…..  Got to stop talking about WA, already feeling homesick….

  212. Good morning!  

    I just lost a huge comment so sorry about that, especially to Judy, who I wrote a big answer to and now she’ll have to remind me tonight or tomorrow (but you have 2/3 premium so too early to roll is the quick answer).  

    I’ll put my general commentary in the post.  

    - Phil