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Sunday, December 4, 2022

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Trillion Dollar Tuesday – More Free Money!!!

Thank you Republicans!  

The party of fiscal responsibility has strong-armed the President and what little is left on the Democrats in Congress to extend the Bush Tax cuts for another two years at a cost of "just" $830Bn to the little people who still have to pay taxes.  They accomplished this by allowing the Democrats to extend $56Bn of additional unemployment relief to the 2M families who were cut off on Friday and were about to go their first week without checks with just 17 shopping days left until Christmas.  Of course, the Democrats don't just bend, they BREAK and the Republicans also got a 30% reduction in the estate taxes that are projected to cost an additional $66Bn to the people who don't have $5M estates.  Merry Christmas, rich folks – Lloyd bless us, everyone!  

"But Phil," you may ask "who actually does pay taxes?"  When your deficit is about as high as your net collections – the answer is: No one really – or no anyone who matters, anyway.  As I've often told you, our Corporate Overlords actually pay just 2.4% of our GDP in taxes, just $138Bn last year which was less than the $6Tn in bailouts they collected by a factor of 43 – no wonder they are doing so well!  As you can see from the chart, Estate and Excise taxes are barely a point on the graph and Individual income taxes are barely 6% while Employment Taxes have jumped from 1.5% of GDP in 1950 to 7.5% today – that's a 400% increase but don't worry, it only affects your first $106,800 in income – after that, ZERO!  That way, if you earn $1M, the jump in payroll taxes from $1,250 to $6,250 is just 0.5% of your income vs the 5% increase borne by a person earning $100,000 or less.  

Imagine if all 140M US workers were given an even $6,000 break ($840Bn divided by 140M) on their take-home pay by just eliminating those SS deductions (it's not like they'll ever get that money back anyway)?  Why everyone would immediately be taking home $500 more per month.  Of course we know that the poor people would only "waste" it on food, shelter and clothing so our wise government has guided the bailout to the places it will do the most good, with $670Bn going to the top 5% and $160Bn trickling down to the rest of the tired, poor, huddled masses yearning to be able to pay their bills.  

Sorry poor people, sorry middle class, sorry anyone who doesn't make over $106,800 a year.  As Dr. Seuss said:  "They're finding out now that no Christmas is coming! They're just waking up, I know just what they'll do. Their mouths will hang open a minute or two, then the Whos down in Whoville will all cry, "Boo Hoo." 

And for the top 5%?  Well, to quote the film: "The avarice never ends! "I want golf clubs. I want diamonds. I want a pony so I can ride it twice, get bored and sell it to make glue."  Welcome to America, 2010 – land of the free ride for the wealthy and home of the downtrodden masses who will be paying $3 a gallon for gas to drive to the mall this weekend where they can look at $1,430 an ounce gold jewelry that they can't afford so they will pay $30 an ounce for the silver that was only $19 in September before Uncle Ben set sail on the QE2.  

Well, there's nothing we can do to save the poor – they are just screwed so let's just get ours while we can!  Obviously we can expect Friday's FAS and DBC plays to do very well as they were plays assuming there would be MORE FREE MONEY and we sure have that today!  All we need if for FAS to hit $25 to put us 100% in the money on a 3,233% play and DBC was "just" a 1,200% net upside with a $27 target but nothing gets those commodities going like free money, does it?  Those are perfect insurance against our bearish bets and our $10K to $25K Virtual Portfolio was up a very nice $1,825 in our first week back but we'll likely be giving up half of our gains as we gambled bearish into today on the expectations that either the EU, Congress or Ireland's Government would finally put their foot down and say no to debasing their currencies and plunging the working class people into a lifetime of debt.  Silly me – what the hell was I thinking?  

We'll be looking for upside trade ideas on lagging financials if we're going finally to break through the top of our range (Dow 11,500 is the big one) and C ($4.56) is one we're already in but would like more of.  BAC is still cheap at $11.79 and should be thrilled that the British have arrested WikiLeaks founder Julian Assange.  Secrets are once again safe and bloggers like me have been served notice that it's OK to mess around with the US Government (well Democratic ones) as Big Business likes them to look weak and ineffective but mess around with the Financial sector and you'll find yourself bound and shackled toot suite!  

While I still think this will all end in tears, we've been patiently waiting for our range tops to be broken at Dow 11,500, S&P 1,220, Nasdaq 2,600, NYSE 7,750 and Russell 725.  We should open this morning with all but the Dow over the line and, as we did in early November, we will sit PATIENTLY waiting for the Dow to confirm the move up, at which point we can safely go with the flow, using those numbers as our new breakdown watch levels.  

That's not too much to ask for is it?  Certainly not after the government drops another $1Tn on us just a month after The Bernank announce his $1Tn gift basked for bankers – that's $2Tn in two months – as much money as our Government collects in taxes in an entire year…  What could possibly go wrong?  So we're very excited to see what $2Tn buys us these days as it helps us plan our own holiday shopping.    The Fed spent $2.5Tn in 2009 and bought us a run from about 850 on the S&P to 1,150 so just about $100Bn per point is the going rate.  When the stimulus ran down, we dropped from 1,220 back to 1,110 in 90 days so we know what it costs NOT to pump up the markets, don't we?  Now we're basing off 1,050 and the Fed and Congress have decided to buy 200 more S&P points for $2,000,000,000,000 but we already anticipated all this and we're already up 175 points so we'd better watch that 1,250 line closely as I'm not sure we paid the price of admission to 1,300 yet (QE3 anyone?).  

Chris Kimble over at our Chart School points to our key Fibonacci levels on the major indexes and we'll be watching those very closely as we wait for Dow 11,500 (was kind of like waiting for Godot last time – he never came!).  Once we break 11,500 on the Dow, fundamentals are out the window (not that they've mattered much in the past month) and it's all about the technicals once we move above these lines:

 

CLICK ON CHART TO ENLARGE

 

Nobody wants to miss out on the big rally as all the rubes are being herded under the big top to pay for the freak show that is the Global Marketplace.  Ironically, Germany's refusal to fund additional bailouts in the EU led to a strengthening of the Euro against the Dollar last night and the Euro tapped $1.34 this morning, up 5% from last week's lows while the Dollar fell back to 79.65, a 0.5% drop from the open, which is usually good for a 1% boost to the markets.  What we're going to want to see as a proper show of strength in the markets is for the markets to begin ignoring the dollar and moving up on their own – something that hasn't happened in over a month.  

This whole house of cards could still come tumbling down if Ireland votes no today.  According to Rupert’s Journal, Ireland is expected to pass and the markets are reacting accordingly. The Irish are not raising corporate taxes off their EU-low 12.5% level and are instead taxing people who make up to $25,000 20%, where before they were exempt. It’s a brave, new World…  Ireland’s unemployment is (officially) 13.5% and the government is cutting back services severely too. We’ll see if this thing blows up down the road regardless: 

Ireland’s main political parties agree on the urgent need to fix the country’s fiscal and banking problems. Yet even after Tuesday’s budget vote, it is unclear whether some of Mr. Cowen’s austerity measures will reach fruition given his feeble hold on power.

Facing calls to resign and a revolt from his own political allies, Mr. Cowen recently agreed to hold new elections next year after the government’s budget effort finishes. His ruling center-right Fianna Fail party is widely expected to suffer in next year’s elections, thanks to popularity ratings that are lower even than those of Sinn Fein, a party with only four seats in Ireland’s 166-seat Parliament.

If Ireland’s two main opposition parties, Fine Gael and Labour, take the reins as expected, they could push for changes in the country’s austerity drive. Fine Gael has vowed to overturn the government’s move to lower the minimum wage, while Labour politicians have sought higher taxes for the wealthy.

One last stab at making some bearish profits for us (see Morning Alert) but, Overall, it looks like we’re going to have another up move in the markets unless Ireland surprises people with a rejection so let’s crank up the tunes and PARTY like it’s 1999!

 

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Hum – I’d rather them say it in town hall meetings than act as though the constitution is fundamentally flawed and do whatever they want (Bush). I agree that we have too large of a military but the military industrial complex ranks right up there with big oil corporations in terms of influence. Cutting the military is hard and no president wants to be seen as weak when it comes to defense.
Working in DoD Acquisition I’m painfully aware of all the Gov’t waste, it’s a broken system… THe worst part is our contracts. In the past we used Cost-plus contracts, which encouraged contractors to run up their supposed "costs" and rape the Gov’t that way….Now we have moved to an emphasis on Firm Fixed price contracts. Although that sounds good, it actually is much worse. Inevitably, on these billion $ contracts the DoD needs something changed after the contracts have been agreed upon and the contractor has started working… By changing one item in the contract it opens all items in the contract up for rebidding. Naturally, EVERY ITEM/PROCESS in the contract now suddenly costs more/takes longer to complete and they jack their rates up bigtime. And with the consolidation of the defense industry to a handful of companies (from dozens in the 80s) the Gov’t doesnt have many options….
PS I know the Byzantine Empire’s history…Heck, even got mugged not far from Hagia Sophia in Constantinople!  

A cage match (with PPV for the rest of the members) might get a Vegas discount!

To anybody interested in copper:
It seems like I missed one of the best chat room day here at Phil’s in a long time.   340+ posts.  well I had lunch with an "official" at Encore Wire….WIRE is the symbol.  Copper is 75% of their raw material and they are scared to death that copper could be headed to $6.00/lb and are making contingency plans for it as they firmly believe it could happen. I think that it will follow gold up.    Encore’s competition for copper is China, but the Chinese are slowing their purchases at todays price of $4.00 , not because of lack of demand , but because of the upcoming Chinese new year,since they don’t want a lot of material to arrive right before or during the new year holiday.  It takes about 6-8 weeks for ship to get there ,unload ,and transfer by truck to the manufacturer.  Look for Chinese demand to go up right after Jan 1, combined with the JP Morgan inventory accumulation , production problems in South America, inflation and the weakening dollar . and you have copper continuing to  make new highs first quarter of next year.  The "official" sees copper easily heading to $5 bucks maybe $6 by late 2012

hahaha doro – Im sorry, I think I might have to forfeit…. Black latex scares me….All I can picture in my mind is ‘the gimp’ from Pulp Fiction! lol

 ,
You say ‘not because of lack of demand’ for copper. Where do you see this demand? New construction has slowed to a crawl here. China is trying to slow down its real estate. Besides construction and infrastructure, where else is copper used? How much growth does Encore see in its business in the coming year? Appreciate your insight. Thanks.

Stock – Im interested – thanks for the post…

Chinese importers that  I know (ie US exporters of scrap) have told me shipments  to China  have indeed slowed as the price of copper went from $3.00 toward $4.00 and that there has been a draw down of copper stocks of raw material, and they will eventually have to go back in the market to replace the depleted inventory. Yes ,praizada, real estate construction is slow , but the government is still investing in infrastructure and copper is used in the growing domestic Chinese  consumer market  for  automobiles , machinery, aircraft and a multitude of other things that use copper.  Encore wouldn’t disclose growth estimates, but they do actually make more money with higher copper because of expanded margins but they are worried that higher finished goods prices would would eventually kill demand or encourage movement to some other type competing material.  Dont get me wrong , its also  about growing wouldwide demand coupled with a slower growing production controlled by even fewer big coroprations, plus the JP Morgan. thing.   Also any prudent corporation has to make plans for the unknown.  Phil talkes about commodity inflation a lot and had a very good essay about it a few weeks ago.

VVUS/ARNA/OREX – well, we were in all of them in some shape and form.  We made bunches, we lost bunches.  I am fuming (does the FDA care? No!).  ARNA’s drug causes cancer in rats, VVUS causes increased heart rate, and Orex’s efficacy is the same as ARNA and has an increased heart rate JUST LIKE VVUS.  OMG, this is unreal….here is the FDA briefing documents:

Contrave raises the heart rate by a statistically significant amount at week 56. The FDA notes on page 74/258 that the heart rate at week 56 was “statistically significant difference from placebo was +1.4 bpm.”

I really don’t get it.  OREX does not have 2 yrs safety data, although both drugs (naltrexone and buspirone have been around for years.  I think ARNA has a huge way forward now, and may have to get back in the stock.  VVUS does as well now, as they can argue against this panel.  I am going to short OREX when it stops going up for the FDA date of Jan 31, so that is my plan.  I would hold ARNA and sell calls and puts against.  There is no other data coming out from ARNA, as their DM study is done and it was no better than previous.


Any docs out there work in the pulmonary/allergy/GI?  Looking at Allergic Bronchopulmonary Aspergillosis and wanted to get some numbers, etc. 

I am also interested in Eosinophilic gastroenteritis as well form any allergists/GI specialists.

email me at pharmboy123 at gmail and I can explain.

 

Thanks.

Flip/pandemic – Have you been taking your meds?
 
Cap/life’s lessons #127 – Taunting is never cool, don’t be a d*ck……
 
Good Night.

Obama is not a leftist according to Colbert!

redlog/ lambada
yes you got it

"Beware Gushing Crude Forecasts" – WSJ/Heard on the Street
http://online.wsj.com/article/SB10001424052748703296604576005511718693224.html?mod=WSJ_Heard_LEFTTopNews
 
"For one thing, there is more of the black stuff lying around. U.S. commercial crude-oil inventories covered 25.4 days of demand as of Nov. 26, compared with 19.5 days in December 2007. Stocks for the industrialized world as a whole are higher, too.
There is also more spare capacity available. U.S. refinery utilization is running at about 84%, compared with almost 89% three years ago.
Meanwhile, the Organization of Petroleum Exporting Countries’ spare crude-output capacity is 6.1 million barrels a day, or 7% of global demand, according to the latest International Energy Agency report. The buffer was just 2.8 million barrels, or 3.2%, in December 2007. And U.S. energy officials aren’t adding further pressure by putting sought-after light, sweet crude into the Strategic Petroleum Reserve, as they were in the first half of 2008."

Cramer told his viewers last night to sell half of their NFLX stock.  That should be good for a nice dump.

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