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Tuesday, February 7, 2023

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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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tchayipov / weeklies: I like your idea from yesterday’s chat. NFLX should work too with higher vol, higher implied vol, and $5 strike increments. When you were saying the margin requirements were high, were you using Portfolio Margin?


The poor people I see are doing just fine for their circumstances. 
My niece is living better than she ever has with one child, 6, another on the way, a husband who feels he doesn’t have to work because he has diabetes (and applied for and gets Disability (from the Social Security fund he hasn’t paid a cent into to) for the rest of his life (he’s 31))).  She gets disability as well, depression, obesity, and other assorted self-inflicted ‘health’ issues, along with WIC, Medicaid and food stamps and heaven knows what else–I figure it’s worth about $50,000 a year gross.
These two people are typical of a percentage of those who have found a way, if they want to live modestly, on the Welfare system.
Do you have any thing to say about that?
I need not tell you that I have no sympathy, none, for them.
Does anyone? Do you?

NET $  = +.06%,  dx/y = (.27)%
hogh on the NET +.54%,  low was (.77)%

F = 1234.50
overnight:  high =1234.75, low = 1219.00
 
Just a reminder, Thursday will be contract rollover day on the eminis, I beleive the new month is March = H

 why dont they just increase our accounts 15% and close the markets for holidays now already.

Im afraid this is the death of all bearish plays for the rest of the year. I think its time to capitulate.

flip, disability for diabetes?  Never heard of that one-  Not a good thing when they predict 40% of adults will have it by 2040 or something ridiculous like that.
 
Assange in the slammer.  Boy, would I like to be a fly on the wall in that interrogation room.  Can you imagine the deals they will try to make with him?  But, I think they have their work cut out for them.  He seems like a sharp cookie who has thought through his options and planned accordingly.  At least I hope so..
 
I figured they’d take out the S&P resistance after hours.  That’s usually how the pop the big ones.  But, I’m looking for a fade.  We’ll probably play around with 1226 for a few days before going higher.  But these days.. one never knows.

Flip – It does not speak well for the family tree, especially when you as an uncle, choose to air out your feelings toward them in a public forum. Who knows, they might be subscribers to PSW and that would make for an uncomfortable holiday get -together…… 🙂

NET $  = +.34, dx/y = (.39)%
 
oil +1.16, gold = +13.50
10yr = +3.40%,  30yr = +2.19%

Oh no, all shorts are going to hell…

@1020
 
Due to the stress they have put on my sister, I no longer have anything to do with them, holidays or otherwise. As for the tree, the rest work their butts off, and have little but disdain for the sister who, by the way, is pretty damned smart, clever, and creative. She just chooses to use those faculties for scamming the system.


I learned thru them that Social Security fund have been tapped for all sorts of welfare programs.  Don’t know under which one he qualified, think it was SSI.

Flip – Welcome to America, HOME of the scam…..
 
Have a good day

Flip, I am not sure that your niece is representative of the majority of the lower middle class in this country. I guess there is also some irony in the fact that not only "rich" people can scam the system 😉 

Lets start this over…..
 
GOOD MORNING EVERYONE!  🙂

@ stjeanluc
 
Not yet 1020, still 3 minutes to open bell:
Don’t know that % are, but I can assure you in her small town she learned the roped from her friends, neighbors, and otrher assorted hangers on.
It’s a lot greater than you think.

Flip – your not alone. I have several as you descrided in my family tree as well. It’s very frustrating in that they are rewarded very well for "working" the system.

 neverwork / Lambada
NFLX doesn’t  have weeklies unfortunately

For the past 6 months or so, every discussion about the market on CNBC and others has revolved about uncertainty! Uncertainty over taxes being the overwhelming issue. This has now been resolved (at least temporarily) so I am wondering what the next excuse will be! Uncertainty over healthcare comes to mind… It’s true that in the last 10 years of running my business, there has been more certainty over healthcare. I was certain that my premium would go up 25% a year no matter what I did! Now, I don’t know – could be 5% or 25% again! But for crying out loud, I don’t run my business worrying about uncertainties. When you have a small business, many uncertainties await – losing a major customer, quality issues, liquidity, vendor problems. My goal is to try to produce the best possible product and increase revenues. Listening to CNBC now makes me feel like our corporate overlords are now behaving more like operators than entrepreneurs. Hearing them gush over China sometimes makes me wonder if they don’t wish this country was run the same way, with the state providing a customer ready to buy anything they make and keep a pliant and cheap workforce at the ready. Of course, the cost of failure in China is a bit higher, but I am sure we could keep the best of both worlds… Just my rant for today! 

Phil / Gold   They’ve voted for debasement of the $, no structural solutions, so the US is scr’d.  We will now be adding $2T a year to the deficit indefinately.  Time to buy ABX and TBT in volume today.  Or, maybe we wait until tomorrow on TBT in case Ireland blows the Euro up?

Phil,
She never saw me in the mirror, did she see you? 🙂

NET $  = +.38%,  DX/Y = (.32_%
 
C =1233.95, F =1233.25
10yr = +3.74%,  30yr = +2.09%
oil +.35,
VIX (3.83)%

I remember romper room 🙂

tchayipov / NFLX:  I have weeklies for NFLX on IB and have traded them before. They have great liquidity as well. What broker you using?  I am currently monitoring a long 195 straddle (Dec 10th) and short 190/200 strangle (Dec 17th) as a 4-leg trade and may get in shortly.

 NFLX does have weeklies.    I held a 210/185  strangle last week that tested all of my patience and ended up a breakeven trade.   Bought the 210C/185P  the week prior when NFLX traded at 190 for a few days.  Then it zoomed up to touch 210 on Wednesday, so I sold some 190P and 195P, mainly to reduce margin requirements.  Then it collapsed to close on Friday at 185.   That 3 day action kept my knuckles white, and fortunately I was able to unload the puts before losing money on Friday.  So, watch out on these high volatility weeklies, they are very unpredicable, even intra-day!

 neverwork
I use TOS, and they don’t have them yet, if you have its great, it is very good candidate, I guess should be better to start the position when 2-3 days left, keep us informed please how you are doing, see my post yesterday night

 Good Morning Phil, 
Are we taking off the AIB play before any announcement? I am up 20%…
Thanks

Phil, RomprRoom?  I remember!  Did you grow up in Jersey or vicinity.. we had it in DC but do you remember Wonderama?  That was a Sunday morning favorite.  Of course.. there wasn’t much else on.  The grand prize every week was a gleaming new, usually white, Ross bicycle.  Oh how I wanted one..  

Thanks, Phil. Now I have the DK’s in my head–better watch out, keep up this revolutionary tone and they’ll be at your door after they’re done with Assange.
Lloyd uber alles! Perhaps whoever did the DK’s video will do a video with LLoyd as the star. "Banksters Uber Alles".

NIce romper room reference, what’s next "electric company"

flip    
I know for a fact that the only thing the sister gets disability for as listed is being crazy and depressed. The husband has to be SSI or wellfare because diabeties doesn’t get SS. Knowing a person that is manic depressive and watching what happened over 30 years little things like your airing closes the door to ever getting out again. You and most likely many don’t want anything to do with her and that includes employers. The system is out of control and what you don’t understand is in the eyes of corporations these people are disposable. Hireing the disabled doesn’t exist except at checkout lines for corporate image and they are always retarted so easily controled.

NET $ +.69% , dx/y  = (.36)%
near highs of the overnight on the NET
 
C =1231.62, F =1231.00

The retail gold stocks (NG, NGD, HMY, etc) are really lagging the big boys (ABX, FCS, GG).  Gold has pulled back hard as well.  I think they are loving the retail moving in on gold, and with China starting all the gold ETFs, this weaving of gold is gonna fall apart….

tchayipov
I am seeing NFLX weeklys on TOS – "DEC2 10"

That word is retarded and a similar issue is how do you get a job after jail? Who hires criminals?

 Romper Room:  I’ve been in Charlotte for 30 years but love the nostalgic feeling that Romper Room reference brings back.  Was that just a NY metro show? How about Soupy Sales?  I grew up in Bergen then Monmouth counties back in the days before streaming Netflix.

 Phil     Thanks for the PCLN play.   That was fun.  🙂

red, before streaming Netflix?  Geeze you ARE and old timer!  We had RomprRoom in DC.
 
FAS pretty much closed it’s gap.  Had 3 quick short plays now long until it looks like a free money day to the downside.. which it very well could be-

Out of my long for now..

Romper Room, electric company — HR Puffin’ Stuff? Mr Green Jeans?

Phil Which Mar call are we talking about?
GLL Apr $26/32 bull call spread is $2.20 and you can sell GLD March $152 calls for $2.25 so a .05 credit on a bet that gold doesn’t move 10% higher (past $1,550) by March.  If gold breaks $1,500 you can slap a cover on and use that as a stop line.

 sorry guys,
I have on TOS NFLX, just bot 195 strangle and sold 8 days 200/190 straddle ( just for 1 options to check), good luck to everyone
by the way, TOS shows only $230 margin per 1 set, I guess will be more if price start move to short strikes

Phil,
 
Did you dump the DIA 110P?  Is it worth holding them or will they erode to quickly with only 2 weeks left?

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