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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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Dollar with a huge move today on very little volume.  Wiped out two days of hard fought losses for the buckie.  This on a day that we agree to drive this country even deeper in debt to maintain the status quo and throw in some convoluted payroll tax breaks.  It boggles my mind.   They are saying this is stimulative.  A 2% social security payroll tax break?  I don’t even know how that works-    As long as you’re willing to accept that down is up and up is down in this market you’ll do just fine~

hanna5
 
Thank you I appreciate your respose to the drop of the DOW thanks

Jromeha:  we’ll lets start with the illegal war in Afghanistan; continue with a health care bill weakly relying on the commerce clause, obama’s own words stating that the constitution is flawed preventing social justice and redistribution of wealth
http://www.youtube.com/watch?v=H4duJUDdSd8
and continuing with arbitrary immigration opinions
http://www.humanevents.com/article.php?id=37913

Phil, 
Interesting, and ominous interview… but who are these guys?

 Interesting and ominous –
Does hyper-inflation mean we should be buying stocks? It’s not necessarily bad for stocks, but coupled with no demand.
I cannot figure out what to do except buy gold which I also think is a giant ponzi scheme – so it seems like pick your ponzi of choice.

Pulled the trigger too soon on those NFLX puts for a 20% profit… (I had only the 5 initial bought at 1.75) they will surely be in the $4-5 range tommorrow! Oh well…

I’m holding on to 9 Dec NFLX 165 puts like my life depends on it. This could be 125 by expiration.

 Las Vegas – from the HRH – IMHO not the best rates:

Day of week

Friday

saturday

sunday

Date

1/14

1/15

1/16

Guestrooms

25

25

25

paradise tower rate

$129.00

$129.00

$129.00

HRH tower rate

$169.00

$169.00

$169.00


 
 
 

Rates do not include 12% room tax and a daily resort fee of $15.00 per room. (resort fee includes Shuttle Bus ride to Fashion Show Mall. Leaves daily from the main Casino doors every hour on the hour from 10am till 6pm, local and long distance calls in the 48 contiguous states, daily use of the Rock Spa GYM ( registered guests only) ** Reliquary is not included**).

MEETING ROOM RENTAL OF $800.00 PER DAY WILL BE WAIVED WITH A $2,500.00++ F&B MINIMUM
 
 
 
2011 Catering Minimums starting @:                  Per Person
Continental Breakfast:                                              $19.00++
Full Buffet Breakfast:                                                $32.00++
Plated Lunch:                                                             $30.00++
Buffet Lunch:                                                             $36.00++
Plated Dinner:                                                            $48.00++
Buffet Dinner:                                                             $60.00++
Reception (2hr Food Only)                                      $65.00++ (approx)
Reception (2hr Food w/ Bar)                                    $85.00++ (approx)
 

 

 Sorry – so ugly on that post

 was the CEO leaving NFLX expected?

I believe it was unexpected – decided within last few weeks is what msm says. Also, he sold 100000 shares between $200 and $201. Nice timing!

I added to my JAN NFLX puts when the stock popped on the upgrade by JP Morgan.  I’m guessing they were to sell most of their position in NFLX prior to this announcement.


 
"….We are creating a permanent welfare state, by extending unemployment benefits indefinitely…"
As much as I deplore, particularly the spoiled young, not working for a living, I have maintained for years that Kurt Vonnegut nailed it in, "Player Piano". 
There are not enough jobs in the World being created to occupy the time of the 6 billion growing to 7 billion people on the planet and among those, the 75% that are able to.
The ruling elite have likely donoe their homework, have known this for many years, and have been creating jobs that aren’t really required–Tax accountants, lawyers, construction of all types that is repetitive, never-ending like paving highways with inferior tarmac,  union featherbeds– you name it.   The day has arrived that unemployment compensation is merely another word for charity and if the riots of the ’60s, where real people died in the streets , is not to be repeated, a new paradigm is being invented as we sit here and moan about this or that welfare program. But the government really has no other choice but to create more "make-work" jobs.
So, without a major pandemic that wipes out a billion or more people, or a Mao who recognized the fact that too many people were his biggest problem, getting money into the hands of the billion people who are no longer required in the work force is going to be the dynamic moving forward. Look for it. No point in getting upset about it. There is really is other way.
But the governors just can’t come right out and say it: "Too many people, folks".  They would be hounded to death.

 Going long gold against the euro –
I once heard Dennis Gartman say that he wanted to be long gold against the Euro –
Gel or other currency traders – how would you put this trade on?

Samz /Gartman —
He says that a lot.  Long gold against this or that currency.  He is vague about the details.
After reading a lot of what he’s written, I believe he simply goes long a gold contract (say, 100 oz) and used the Forex market on the other side (short EUR/USD the approximate amount of the futures contract), and that’s about it.  I don’t think he’s using the currency futures contract , because of the inflexible size (100K).

jromeha:  feel your pain
As someone who thought Obama had the courage to talk to U.S like grownups I am disappointed, to put it mildly.  What I don’t get is when people who didn’t vote for him hate him even when he caves and gives them what they want.  I’m mad because he is not standing up for what he thinks is right.  Many treat politics like football or baseball, they root for their team and against the other regardless of which team is the more skilled.  Unfortunately the consequences in politics affect even those of us who don’t want to pick a team, we just want decent government.  cheers

flip – too bad birth control gets such a bad rap. Too bad conservatives are such (expletive deleted) about sex and birth control in general.
 
Too bad.

escohen5/all

Did you get any rates from hotels? You can see what I got from the HRH – and awaiting info from mandalay. Are the HRH rates in everyone’s budget?

China is gonna tighten, be careful on gold.

Hartman/gold short euro –
Esochen –
Thanks. I just realized that if you have a large hedge fund you probably just get the current spot price of gold / or futures contract vs whatever currency you want –
You could either do it through your broker or on the European exchanges

I guess the question the is really can you replicate this by shorting euro vs dollar and going long gold. I guess so.

 tchayipov: Am I understanding that the strategy is buying the near term weekly strangle or a straddle and selling the following weeks strangle one strike further out?  TIA

jel1
Once again I agree with you, too many people sums it up. That is why I said to corps people are disposable. I still get a disconnect with your choices. You are in favor of a party that wants to populate, the religious right, ban abortion, birth control, and what then do we do with all the unneeded people. Neither my 2 sisters or I had any children, we did our part. I will build you a soapboax to spread the word out of your choice of exotic wood.

 deano – LVS/HRH rates are good with me. The only question I have is regarding the catering. Is the food going to be part of the package or are we free to eat where we like. I don’t want to be difficult but I am particular about my food (vegan). I am ok with however it works out. I will just manage the food part on my own.
 
Thank you and escohen5 for doing this.

Great discussion on Charlie Rose tonight

 C (Citicorp) traded  3.267 BILLION shares today.  1/2 of all volume today.
 
My, those robots were busy.  Good thing they are there to provide liquidity.

 Jroomeehahaha ….  thanks for pointing that out; completely unintentional.
 
Capp

 rainman
 
Away most of the day… day job requirement.  Your comment re TBT (ha) – "naked girlfriends are good"… maybe, but this one has broken many hearts, so I am approaching with care. This one cost me a lot of money in the past… now I am more careful, and plan to beat the bitch! ( many of think the same way ).

 Phil
 
Nice plan for FXY…. this one needs plenty of rope to hang itself – 2012 is a good date, and in the meantime selling calls is a nifty plan, that as you say, will pay for the rope!

 Cap
 
After reading your posts, I have to say " You are surely grounded in common sense" and thank goodness I have a mentor I respect.

Hum – let’s start with the person who got us involved in Afghanistan BUSH!!!!!!!!!!!!!!!!!!!!!!!!!!! Im not AS mad about that one b/c our country got kicked in the face and we needed to kick some butt after 9/11.  However, facts are facts and it was still Bush who got us involved so what exactly are you mad about Afghanistan? That we are still involved? Unless Im mistaken I do recall you saying that you are a Dr so Im not going to debate you on the Health Care issue, Im sure you know more than me. As far as the youtube clip, lots of politicians say lots of things, cant take everything at face value…. You’re article from "human events’ is crap. Besides the fact that it isnt a legit source, there is a problem with Arizona’s law. Being able to stop someone and demanding to see documents b/c they’re hispanic is not something I would agree with…. Also, in general every president for the past 30+ years has been bad on immigration so that point is weak.
Phil – hahahaha I DO have studying but what can I say, Im addicted to this site! As for the cage match, I think it should be more like a "king of the ring" throw Cap into the mix as well :)….
Pharm – I know you said you’re through with ARNA but I bought a position when it was at 1.40 with the intention of selling calls against it….Would you sell tomorrow or would you hold further? I think they have some important information from another study coming at the end of Jan (?) Either way, at 1.58 now just buying the stock and selling monthly calls against it seems like it can make 6%+ a month…
Red – good point, I dont understand that either.

 NFLX – JP Morgan …. its a good thing that Spitzer cleaned up Wall Street, isn’t it ?
 
FWIW, I don’t think NFLX will be taken out and shot over this … I see 170 as an extended near term downside; not even sure it will break 180 tomorrow (sad to say).
 
But Phil is correct, CFO leaving is usually not a good sign.   In NFLX case, the guy just stepped in like $20 M or so and maybe wasn’t even up to the job; so its see ya later boyz !

Gel/Cap – how old are you guys? From your posts I and vast work experience I was picturing someone in their 40s-50s. From Cap’s immature antics I was picturing an angry 30-something…. So shouldnt Cap be YOUR protege Gel ?

Nicha

Rates do not include food, however we get the meeting room for free with a commitment to spend 2500 on f&b. I have asked them to waive the AV charge of $750. the economy out there can’t be too bad if they won’t negotiate!

 J-ROME-HA … I am going to let you and Humvee duke it out in a steel cage match.  What fun !
 
As for me, Phil and I are going to engage in cartoon debates w/ those bears (just buy the f-in dip !)

 Pharm … based on your comments re: OREX / VVUS, let us know if we should be shorting either one into the excitement tomorrow.

 J-ROME-HA …  I just play angry on TV.

I’m not going into the steel cage unless I get to wear my black latex suit ….lol

Cap

Not a scientist but did more reading on VVUS & ARNA than I should have – enough to convince me that the Process is far too influenced by who has the coin. ARNA only had the backing of a Japanese Pharma, I think (but don’t know – Pharm if you can help?) that VVUS likely has some bigger backers with more influence.

Just a blast from the past lurking in.  You guys are nuts to expose some of these debates to alcohol in Vegas.  However, it would be funny to see some youtube videos of the cage matches.  Some things/people just don’t mix.    Good luck with that and I hope you can keep it civil.

SSdirk, where have you been?  You and Judahbenhur were the #2 and # 3 top TZA/TNA   JRW students from this spring

ssdirk      What have you been up to?  Miss reading your posts. 

Jromeha- I don’t recall any president ever stating that the constitution is fundamentally flawed–that would normally be a non starter for a run at the presidency, and now he has sworn to defend it–ironic
Foreign Policy:  I think we spend way too much money/blood on projecting our power; we probably only need 1/3 of our current expenditures for defense, the rest is for offense.   We can’t afford it and it ultimately will fail.  My role model for foreign policy mastery is the Byzantine Empire, the longest lasting empire in world history.  They were the eastern part of the Roman empire and survived until over run by the Ottoman Republic.   They had a strong military but it was used as a last resort; their main strategy was to create unrest and turmoil for their competitors and enemies through clandestine maneuvering, diplomacy and subterfuge. 

 Deano/Vegas —
The HRH is fine with me.  I didn’t get any rates, other than from the Wynn, which appears to be out of the running. Caesar’s said they have no meeting space, so that’s out (yeah, I asked them if that meant no meeting space ever, or just no meeting space available for that weekend, but no response at all).
I’ve never stayed at the HRH, but I’ve been there for shows.  Seems like a fun place.

Judah and I broke away from the daily PSW board when the JRW daytrading got way out of hand.  We formed a great team together and have written our own IWM indicators and TOS scripts to trade TZA/TNA.  We have been at it now for about 6 or 7 months.  In fact, we purchased 10 years worth of IWM data and wrote code to backtest our system.  The results are insanely good.  I only have 7 days left on my subscription and I am considering giving it up.  I really appreciate all of the fine folks who I have learned from.  Thanks Phil for providing a great service and unbelievable options insight.  And thanks JRW for turning Judah and I on to IWM.

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