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Toppy Tuesday – Can the Dollar Fall Faster than our Indexes?

It's a race to the bottom!

While we may have thought we were flatlining yesterday near our breakout, Europe and Asia had a different view of our markets as we pulled back -0.5% to -1.73% when priced in other currencies.  While you may not care what happens in other countries, there are 6.5Bn people who would disagree with you there and the US is not the World leader anymore (despite what the citizens of the US may think) – we can no longer afford to ignore things like how exchange rates affect us.  Here's the chart for the Dow, S&P and Nasdaq priced in Dollars, Euros and Yen for the past two months:

Fortunately for the bulls (especially the commodity ones), the dollar has resumed it's pathetic decline as Obama and The Bernank have combined to dilute our currency by another $2Tn over the next 48 months, from about $14Tn to $16Tn (+14%) plus, possibly, the $110Bn of new $100Bills the Treasury is trying to run off.  This has sent the dollar back down from it's Thanksgiving high and now it's going to be all about whether or not we can hold that 78.5 line as our Congress finalizes their vote on the Obama Tax Cuts and another $1,000Bn of US debt taken by our citizens in order to hand another $650Bn to the top 1%.

When $100Bills are being printed faster than rolls of Charmin are being made, your currency is probably on it's way to a crisis.  You reach a certain point at which it's cheaper to just wipe your butt with dollar bills than to go to the store and buy toilet paper and, of course, we've all seen pictures of Germans in the 1920's, fueling their fireplaces by burning bills, which were cheaper than wood.  Of course stocks and commodities are going up when priced in dollars – they are making more dollars every day, even Disney now has cartoons trying to explain to kids why this is a bad idea.

On top of the relentless devaluation of our dollar-denominated assets, we also have wild rumors driving up demand for commodities by speculators, who are generally those same top 1% who are being handed money by our Government at a rate of $2Bn per day.  If you had to put away $2Bn a day, where would you put it?  Well they've made Treasuries very unattractive with historically low yields and low deposit rates and a declining dollar have made saving the money look like suicide.  Bonds are getting crazy too so that leaves stocks and commodities and, since the top 1% are every bit as stupid as the bottom 99% – the best game in town is to start rumors to drive their money in and out of "the next big thing" like dot coms, oil, natural gas, housing, mortgage-backed securities and now oil (again), gold (again), copper (again) and silver.  

At least sliver hasn't been used since the Hunt Brothers crashed the market back in 1979 but that was long enough ago that we have an entirely new generation of suckers who are willing to believe that JPM has been foolish enough to be short 3.3Bn ounces worth of silver ($99Bn) to the point where if everyone in America bought an ounce (300M ounces for $10Bn) it would bankrupt them.  Aside from the fact that the math doesn't work in the first place (10% isn't going to blow out JPM), what are the odds you could get more than 2% of the people in this country to do something so stupid as to buy silver for about 100% above it's 5-year average based on some idiotic rumor.  

Surely American's can't be that stupid again, can they?  LOL, just kidding – of course they can!  These are the same Americans that think oil can go back to $100/barrel without destroying the economy and plunging it back to $45, these are the same Americans that are buying NFLX for $200 (we shorted last week), PCLN for $412 (we will be shorting), CMG for $262 (we shorted already) along with $89 oil (our short entry) and $1,406 gold (our hedged long at the moment).  Kid Dynamite did an excellent job of deconstructing silver and I really don't have time or space here for the rest but I would urge you to seriously consider all of your runaway investments in light of Kid's logic as there are people pushing all of these stocks and commodities at you every day – no different than silver except in scale.  

Rather than listen to the blather of the MSM to tell us how great the economy is, we tend to rely on actual reports – like the very depressing December "Rail Time Indicators" report, which shows a very steep drop-off in the actual delivery of commodities (pg 2), indicating demand has NOTHING to do with prices right now.  Average Weekly Carloads excluding coal and grain (pg 11) are closer to 2008 lows (+20K) than 2007,8 highs (-30K) with petroleum shipments (pg 12) similarly depressed while auto shipments (also on 12) have actually crossed below the lowest trends.  

Another report we pay attention to is the PSW Holiday Shopping Survey where our Members, many of whom are or have been successful captains of industry themselves, head out to the Malls and report their ground level observations.  Last year's survey led us to go short on the markets into January earnings and this year, we're already seeing a fairly sharp pullback since Black Friday's early excitement.  

That has led us to stick to our guns on the above short plays as well as our repeated success on oil shorts.  Just yesterday, in the morning post, I mentioned we'd be shorting oil at $89 (we did in the futures for a very nice .75 gain) as well as picking a USO put.  It took only as long as 9:32 for my Morning Alert to go out to Members with a trade idea for the USO Dec $38 puts at .41.  We took .60 and ran at 1:23 (up 46%) as well as a too early exit on those NFLX Jan $155 puts at $2.25 (up 40%) that I had mentioned we'd be getting back into in Friday morning's post, when they opened at $1.50.  

Well, as my Dad always said: "You can lead a horse to water but you can't make him think."  We choose every day to listen to one media source or another and I simply try to introduce a healthy level of skepticism that, on occasion, enables us to find nice investing opportunities – often as we play on the opposite side of "The Beautiful Sheeple."  What's scary is I can tell 250,000 people that a trade's going to work in the morning and it still does – that is one MoFo of a rigged market when we can pile in the opposite side of a trade and it fails to affect the outcome!  

Speaking of data – BBY missed by .07 with just .54 of Q3 EPS and that is in-line with our observations as we were simply not seeing a lot of big-ticket items going out the doors at the stores (watch out WHR!).  ICSC Retail Sales were up 0.8% this week so that's trending up and November Retail Sales were also up a strong 0.8% but this one has a breakdown and, as you can see from the tables, it's pretty much all Gasoline sales, which are up 16.6% due to inflation and on-line sales, which are up 13.3%.

Meanwhile, we have a PPI report that, coincidentally, also shows a 0.8% increase, which is DOUBLE the last reading of 0.4% and, ex-autos (which are being heavily discounted to move inventory), the November PPI is up 1.2% vs 0.4% in October.  We'll have to wait for tomorrow's CPI report but raise you hand if you think that the Producers will have trouble passing that 1.2% increase along to the unemployed masses (Best Buy sure did!).  

You should be rooting for runaway inflation if you are a bull as we need that Dollar to die so we can keep pretending how great things are in the economy.  UK inflation shot up to 3.3% in November, 65% over the BOE's 2% target rate and the EU, not wanting to be out-inflated by their island neighbor, is looking to increase their own bailout fund beyond it's current $1Tn level even while trying to tell bond investors that they will have no need of the first Trillion.  As I said over the weekend, when you are peddling a fiat currency, trust is about the only thing you have going for you.  

Small businesses trust our government with a 1.5% increase in the NFIB Optimism Index since October but that's slowed considerably into the holiday's from October's 2.7-point increase and, let's not kid ourselves, we're still deeply into recessionary numbers.  This is like when we get excited about home building going from 400,000 to 410,000 when the high was 2M.    

As usual, you don't want to look too deeply into the data or you'll notice that Earning Trends had a -24% impact on the survey and Current Inventories also knocked 24% off the gains.  So how could the index be going up?  Well EXPECTATIONS are up 47% on the overall economy and up 29% on sales expectations with 24% of small business owners planning to increase inventories.  That means the summary is, inventories are building out of control and the margins on things that are selling are contracting but The Bernank says things are getting better so I'm going to put on my 3D glasses and watch the cool charts on Fox news while I wait for customers to come through the door.  

OK America – good luck with that plan.  Meanwhile, we will wait to see if they can finally break 11,500 on the Dow and force us to get more bullish but, until then, it's a different kind of BS I'm worried about.  

 


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  1. $TBT – Another reason to like TBT – Moody’s warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Obama’s tax and unemployment benefit package becomes law….. increase the likelihood of a negative outlook on the US government’s Aaa rating during the next two years.
    http://thehill.com/blogs/on-the-money/budget/133441-moodys-says-tax-cut-deal-risks-us-credit-rating


  2. NET $  = +.16%, dx/y = (.24)% at 7:45
    Futures overnight:  high = 1239.75, low =1233.75, current = 1237.50


  3. Seoul warns Barclays and JPM on currencies


  4. Phil / TBT  How much per week would Ben have to buy to keep 10 year yields below 3.25%   I’m asking since he has ‘threatened’ to create whatever it takes to avoid a Depression.  So, do we ‘fight the Fed’ and buy TBT?


  5. FDIC is supposed to be deciding on new capital rules for the banks today, but I can find no info.  It will most likely get kicked down the road.
    Do we will probably never hear, or will just ignore with the FED meeting.


  6. NET $ flat here, zero
    dx/y = (.14)%
    Futures = 1238.00


  7. yshenhar / Hussman — thanks for posting the link to Hussman last night.


  8. Phil,
     
    Have you been consuming Matt pills?  You sound awfully gloomy in your editorials lately.



  9. exec:  thats the Phil I know.  He was giddy on Aug.30th when everyone was Hinderburging.


  10.  NET $ falling off, NET $  = (.06)%,  dx/y = (.13)%
    C = 1242.01, F =1237.00
    10yr = +2.10%,  30yr = +1.98%
    VIX +.51%
    oil (.72),  gold (3.0)


  11. Great article as usual. There is no fear by anyone out there. Even David Rosenberg seems to be ready to throw in the towel. But NFLX is under 180!


  12. Good morning,
    I had various requests for the B/W calculator. Just some short comment. If you just sell calls you need to ignore the putter and the same for onlu writing puts ignore the caller.
    Further I found a good website on call writing www,callwriter.com. You need to be a member to use the calculator only for calls no puts,but it works great. The page gives good research tools on call writing. Once a month they give a one hour B/w workshop excellent. Just on one small play I covered the membership for one year.
    Remember Phil’s words only sell puts if you in love with the stock!!!


  13. INVITATION TO THE CHILI RESTAURANT. Please buy my tacos I am loosing stock value down to 222.55!!!!


  14. i belong to a yahoo group named "justcoveredcalls" that seems to me to have lots of good sharing by members of how-tos, spreadsheets, trade ideas, etc. Go to yahoo groups and search if you are interested.


  15. wow
    NET $ (1.03)%, dx/y = +.11%
    just a gignatic fall off

    see if anything happens here

    C =1242.37, F =1237.50


  16. Moody’s/Terra – Yep, it’s an amazing thing how something like this can be ignored.  This is the kind of thing that happens to 3rd World countries, not the USA – supposedly…

    TBT/Tusca – Well it looks like about $35Bn a week (POMO) is required at the moment but the more he puts in the more he needs because just 3 months ago, $10Bn a week was doing the trick.  This all ends badly but, since most countries are in this boat, very possibly including China (see yesterday’s discussion) then it can go on for a lot longer than you think.  I think with TBT, it’s a case of "just buying the F’ing" dips more than anything else.

    FDIC/Mike – Here”s the latest

    Spain is still out of control.  Thanks for reminding us StJ!  

    Matt pills/Exec – No, I’m just reading a lot of really messed up stuff and it’s my job to give you the real news, whether you like it or not.  I’d love to put on rose-colored glasses and do nothing but pick stocks that are going to go up every day but it’s not what I’m seeing as being a sound strategy right now and, unlike the rest of America, I seem to remember a very terrible global meltdown that occurred just about 2 years ago and I know a lot of people who lost their asses listening to the idiots in the MSM telling them how great everything was while I would make jokes about fiddling while Rome burned and calling it a Meatball Marketplace (where bad news "just doesn’t matter") but it turns out that was too subtle for some people they got caught up way too bullish so now I’m going to scream "the sky is falling" and risk the ridicule, rather than allow anyone here to misinterpret my thoughts about this "rally."  

    Good chart StJ, thanks

    And here are the Irish government’s real GDP projections for the purposes of the make-or-break 2011 budget for consolidating Irish finances:

    Spot the difference. Again.

    Still watching Dow 11,500 (not looking good for bulls), S&P 1,220, Nas 2,600, NYSE 7,750 and Rut 725 all looking comfortable at the moment but we have the Fed at 2:15 and I can’t imagine what more they can say to push the markets higher but you never know with The Bernank so we’ll have to wait and see.  

    Business Inventories at 10 not a huge deal but oil inventories will be tomorrow plus Mortgage Applications, CPI, Empire Manufacturing, TIC Flows, Industrial Production & Cap Utilization and the NAHB Housing Market Index so bid day tomorrow!

    No new plays at the moment, still watching and waiting.  Keep an eye on WYNN, if they fail $100 the MoMo crowd may become concerned about their various holdings…  


  17. Did anyone see any news on JPM and solver last night or this morning?  thought I saw something about them reducing their futures exposure to silver


  18. exec / MattPills:  psssst… want one?


  19. In the interest of attempting to look at both sides of an issue, check this out an article that takes to task some of the observations made in the NYT Derivatives article from the other day.  Some very interesting observations about how those markets work.
     
    Just a little perspective.


  20. And his followup article from yesterday about the derivatives market, again a counterpoint to the NYT piece…..here.


  21. great

    CNBC is going to start having a revenue model to sell shit, selling quotes and data

    not good

    there goes any hope of being an unbiased news station, yesi still had hope (some)

    does Pisani realize that he is no longer a reporter but a pitchman


  22. basically a commercial for quotes/data disguised as a news story, unreal


  23. I think PCLN CMG NFLX are telling us something about the market.  


  24. And finally, an article on peak oil and how it’s already changing us, only in ways that are unpredictable.  Behaviors are changing, and that cannot be legislated.  Interesting concept of how oil demand shifting from OECD to non-OECD may not be as horrible "sky is falling" as many are claiming. 
     
    Again, not picking sides, just pointing out another argument.


  25.  Good morning.  No particular edge this morning; but I am noticing AIG up about $2 at 50.40
     
    Dec calls at 55 strike can be sold for 26-30 cents right now.


  26.  Aug 30th/Kinki – And let’s not forget that was S&P 1,040 – down 203 points from here (19.5%).  Pullback off 20% run should be 40 points, back to about 1,165.

    October business inventories up 0.7%, which was less than 1% expected so a bit of a hit to GDP, which works under the mistaken assumption that all inventory is sold.

    Dollar topping out at 79.75, Spanish bond auction went poorly but talk of bigger bailout fund is counteracting it.  Yen rise from 83.5 (3am) to 82.8 (6am) and now back to 83.5 so that’s pushing the dollar down and the Euro is bouncing off $1.34 and the Pound is holding $1.575 so we’re primed for a pop if the dollar fails 79.50.  

    TNA Dec $68 puts can be sold for $1.05 and that’s nice upside protection if you have the margin for it as they can be rolled way lower and expire on Friday.  IWM Dec Quarterly $77s are $1.55 and those are a good buy and the Dec $78s can be sold against them (now .46) for .55 or more for a nice spread so those are two upside plays we can take to cover shorts.    

    Wow, PCLN fell off a cliff.  I have to be careful what I say in the mornings!  8-)

    JPM/Mike – See link in above post.  It’s all nonsense.  

    Perspective/Hoss – That guy is an energy apologist that pimps for ICE, how’s that for perspective?  That’s kind of my point – they have people on payroll everywhere to spread disinformation  - makes it very hard for the truth to gain any traction.  

    CNBC/Mike – Now you are catching on! 


  27. mike5885
    Don’t forget CNBC is a contra indicator like Cramer, same thing warnings reversed!


  28. Phil, regarding the EU situation, the scary part I think is that some government there are facing big deficits even though in the most part they didn’t really take big stimulative measures in the last 2 years. Deficits should be partly blamed on reduced revenues (same as here where revenues are 15% of GDP, the lowest in decades, but we also added $800 Bn of stimulus). Instead, the EU is now pushing austerity measures which should have a further negative impact on revenues and growth. This sounds like the beginning of a death spiral! To add to the problem, as opposed to the US, they have very little room to spare with taxation – when you have tax brackets higher than here, a 20% VAT and high salary deductions for social programs (not necessarily bad), it’s tough to raise more money on the back of the middle class. We have more wiggle room here if we had the political will (although that will might be imposed on us soon).


  29. Mattress Play – The roll to the March $116 puts is now .50 so that’s our spot if you aren’t there already.  Naked puts at the moment.  

    Also, I’m liking the DIA $114 puts at .40 with a stop at 11,505, which will probably cost a dime.  


  30. Silver / suckers – Here is a bullish case for silver from Sprott Asset Management, who has had a good run over the last decade with gold.  They make the argument for demand significantly exceeding supply, primarily with the increasing demand continuing from ETF type vehicles.  Sounds like pure momo speculation to me but like Nflx and other momentum plays, this could have legs for a while, especially when pumped by these guys and others than can profit from a nice run.  http://www.sprott.com/Docs/MarketsataGlance/11_10%20The%20Double-Barreled%20Silver%20Issue_FINAL.pdf


  31. any news anywhere,  or just typical BS


  32. cash high from yesterday was 1246.73 as a reference point
     


  33. With regard to commodity prices…the law of supply and demand is still in effect….that is….the supply and demand of SPECULATORS!
    Shorting oil at $90 has been a $ maker!


  34. TSLA on a downtrend since the Volts started going out the door.  Maybe it occurred to investors that it’s one thing to build a car but quite another thing to build up thousands of dealerships and repair centers all over the country.  I like TSLA at $20 but not at $30 and certainly not at $36, where they were a couple of weeks ago.  

    Gregor/Hoss – He’s beein signing that song for years.  

    156,000 contracts left in Jan on the NYMEX by the way.  They need to get rid of 130,000 by next Tues – very doable so we’ll have to give up on 1050P oil puts after inventories tomorrow.  

    AIG/Cap – Playing with fire! 

    11,492 – this is so exciting…

    EU/StJ – You are right and, when the middle class has no more to give, you tell them to cut back.  The LAST thing that will be done in any Western society is for the Rich to kick in!  


  35. Good morning,

     

    IWM 78.68, 78.22, 77.98, 77.62, 76.81, 76.45 and NO POMO !!


  36. Phil:
    What is the risk /reward for holding the USO’s until after inventories? Do you expect the report to be bad?


    • yshenhar (basic)

       
      Today Hussman writes a warning to stock investors: 

      “In recent weeks, the U.S. stock market has been characterized by an overvalued, overbought, overbullish, rising-yields syndrome that has historically been hostile to stocks. Last week, the situation became much more pointed. Past instances have been associated with such uniformly negative outcomes that the current situation has to be accompanied by the word "warning." 
      The following set of conditions is one way to capture the basic "overvalued, overbought, overbullish, rising-yields" syndrome: 

      The following set of conditions is one way to capture the basic "overvalued, overbought, overbullish, rising-yields" syndrome:
      1) S&P 500 more than 8% above its 52 week (exponential) average 
      2) S&P 500 more than 50% above its 4-year low 
      3) Shiller P/E greater than 18 
      4) 10-year Treasury yield higher than 6 months earlier 
      5) Advisory bullishness > 47%, with bearishness < 27%
       The historical instances corresponding to these conditions are as follows:
      December 1972 – January 1973 (followed by a 48% collapse over the next 21 months)
      August – September 1987 (followed by a 34% plunge over the following 3 months) 
      July 1998 (followed abruptly by an 18% loss over the following 3 months)
      July 1999 (followed by a 12% market loss over the next 3 months)
      January 2000 (followed by a spike 10% loss over the next 6 weeks) 
      March 2000 (followed by a spike loss of 12% over 3 weeks, and a 49% loss into 2002)
      July 2007 (followed by a 57% market plunge over the following 21 months)
      January 2010 (followed by a 7% "air pocket" loss over the next 4 weeks)
      April 2010 (followed by a 17% market loss over the following 3 months)
      December 2010
      …cyclicals are nearly as overextended relative to staples as they were at the 2007 peak… 
      From our standpoint, the return/risk profile of the equity market is the most negative that we ever observe historically, so we are willing to speculate neither on the hope for government wisdom, nor on the hope of government recklessness.”

      See the whole article for more detail: Warning- An updated Who’s who of awful times to invest. 


  37. Hey, in all the chatter and news reports about the "tax deal", I have not once heard any mention of the threatened increase in cap gains rate from 15% to 20%, and then adding on that Medicare tax at 3.6%.
    This would have been a 57% increase in that tax, and since all my income comes from that source, it is a biggie.
    Does anyone know where that stands?
    All that fuss over whether the top marginal rate should go from 35% to 39.6% (of course, actually, with incomes under $720k, you have to add the takeback of deductions that functions very much like an actual dollar for dollar tax, making the current rate about 40%, and the proposed new rate about 44%.) This is, relatively speaking, an increase of quite small impact and if I could get something else in exchange, I would toss this on the table pretty quickly.


  38. IWM is looking interesting. It hasn’t quite made target though RSI is looking somewhat bearish. XLF looks similar as it has also not quite made the obvious target:


  39.  TLT – at or below 92.50 has been a good sell for TBT – seem to get a bounce off of support at 92.50 or so – where David Fry has support 


  40. DECK/Phil – 80 calls were briefly out of the money this morning. Are you for taking the money or is this one you’d try to hold through expiration with a trailing stop (sold for 4.07 on the 3rd)… I was at a family Christmas gathering on Sunday (we’re all travelling to different parts of the globe for the holiday) and two of my nieces were talking about a new pair of UGGS. I just wanted to smile and say, "Hey, you know I’m short the Dec 80 calls," but held back.


  41. Weird chart action so far in FAS/FAZ.  Not sure what to make of it yet-


  42. SPX price target 1252


  43. Demand/Stu – Forgive me for being an old fuddy duddy but I don’t consider hoarding by speculators to be "demand."  Whether it’s hoarding silver in ETF’s or hoarding shares of NFLX ahead of inclusion into an index – it means that the people holding the commodity are not really long-term users of it and that means you are simply creating a larger flood of sales down the road when the sentiment changes.  Yes, these things can go up longer than you expect but that is no reason to check into the roach motel and trap yourself with the other suckers (see "Roach Motel Theory" and realize, however, it took me 2 years to be proven right on that one!).

    Just the typical BS, Mike.  

    $90/Retired – That’s still our spot but, on the futures, make sure to confirm a move under the $90 line and use $90 as a tight stop.  Better to lose 5 nickels and then catch a $1 move down…

    They are releasing Assange – your secrets are no longer safe! 

    USO/DClark – Well they are Jan puts and we can roll/DD if wrong so that, to me, is low risk and the reward, if we get a drop back to $82.50 this week – is pretty darned good.  

    Cap gains/Barf – I think they are staying the same.   That’s where most of the benefits to the Wealthy accrue but the talking heads cleverly discuss ordinary income to try to show how the tax isn’t unfair to the poor.  That is the great thing about being in the top 5% – from the perspective of tax laws and such, you have a lot of powerful people pulling strings on your behalf. 

    Atlantic/StJ – I would be happier if he had come up with more than 5 paragraphs on the subject!  

    Dollar 79.72 – I think this is goign to come down to the wire on the EU close.  The FTSE has been going up and up and is now up 0.45% for the day while the DAX is flat (Germany is paying for new bailout) and the CAC has just turned green with 40 minutes left.  Berlusconi survived his no-confidence vote and that’s giving people a more stable feeling for the moment.  


  44. Well, it could be worse. He could be short silver, too.
     


  45. Phil:
    It’s a small bet for me so I will follow your lead on USO. I am pretty much on the sidelines and waiting for direction. Too hard to pick a direction with all of the goofy stuff going on. Cash is good………right? Thank you.


  46. Tactical for today:

    spyst $SPY Analysis 12/14


  47.  Phil, do you recommend any BBY plays after today’s plunge? 


  48. Phil (or others) — looking for constructive criticism here.  I manage a large muni bond portfolio for my step mom.  It’s CA muni bonds, with an average tax free yield of about 5%.  All are AA rated or better, General Obligation bonds.  They are held in a trust account. 
    I’m looking to hedge against interest rate fluctuations (as opposed to defaults).
    So, I’m considering a TBT spread:
    Buy TBT at todays price.
    Sell the JAN 2012 40 call for $5
    Sell the JAN 2012 40 put for $6.5  (or the JAN 2012 45 put for $10ish)
    Breakeven is about $27 or $34, by my calcs
    Thoughts?


  49. ravalos – i was just looking at those plays.  You can do a 25/35 2013 Call spread for 5.4 and sell 30 2013 puts for 4.1 for a debit of 1.3.  Phil, will say "wait for the downgrade police" 


  50. ravalos – i havn’t made that play, but i’m looking.


  51. At the open: Dow +0.08% to 11438. S&P +0.12% to 1242. Nasdaq +0.22% to 2631.
    Treasurys: 30-year -0.97%. 10-yr -0.43%. 5-yr -0.19%.
    Commodities: Crude -0.62% to $88.06. Gold -0.14% to $1396.00.

    Currencies: Euro +0.14% vs. dollar. Yen -0.12%. Pound -0.49%. 

    10:00 AM On the hour: Dow +0.41%. 10-yr -0.52%. Euro -0.11% vs. dollar. Crude -0.61% to $88.07. Gold -0.25% to $1394.50. 

    11:00 AM On the hour: Dow +0.46%. 10-yr -0.63%. Euro -0.04% vs. dollar. Crude -0.23% to $88.41. Gold +0.04% to $1398.50.

    NFIB Small Business Optimism Index: +1.5 points in November, following +2.7 prior, but the index remains in recession territory. There were ‘grudging’ improvements in consumer optimism, but no surge as seen in 1983 after three years of deep recession.

    ICSC Retail Store Sales: +0.8% W/W, vs. -2.1% last week. +3.1% Y/Y, vs. +2.6% last week. The strong Y/Y growth came as last-minute holiday shopping is beginning to build. 

    Nov. Producer Price Index: +0.8% vs. +0.6% expected and +0.4% prior. Core PPI +0.3% in-line with expected and -0.6% prior. 

    Nov. Retail Sales: +0.8% vs. +0.5% expected, +1.2% prior. Ex-auto +1.2% vs. +0.7% expected, +0.4% prior. 

    Redbook Chain Store Sales: +2.5% Y/Y vs. +3.8% last week. The report stresses that sales are back loaded towards end of the month. 

    Oct. Business Inventories: +0.7% to $1,417.7B vs. +1% expected and +0.9% last month. Sales +1.4% to $1,118.8B. Inventory/sales ratio falls to 1.27 from 1.30 a year ago.

    The sharp rise in yields will be unsustainable, say a pair of economists who depart from Wall Street’s consensus. The bond market’s battering reflects a "growth scare" that will prove unjustified, they say, since the economy has little prospect of picking up enough steam to reverse disinflation, significantly cut unemployment, or budge the Fed from its zero-rate policy. 

    A case of agreement has broken out amongst European policy officials as ECB President Trichet says the EU must broaden its bailout fund. "We’re calling for maximum flexibility and maximum capacity," he says, sounding like ECB VP Constancio last week.

    The ECB receives German support for its plan to raise capital as a buffer against losses from bond purchases. The ECB has just €5.8B of capital against €138B in assets, not in Fannie Mae’s league, but still a high leverage ratio. A 5% loss would leave it technically insolvent.

    Spanish bond yields rise for a 7th straight day to 2010 highs as a government bond auction produces plenty of buyers, but only at a low price. Spreads to other European debt also pop as ECB sovereign debt purchases focus on Irish, Portuguese, and Greek paper. 

    Describing the government’s forecasts as "overly optimistic," Ernst & Young sees Ireland remaining in recession in 2011 and unemployment at 14% into 2014. The government, needing to make the budget numbers work, sees 1.75% growth in 2011 and unemployment at 9.5% in 2014.

    Standard & Poor’s revises its outlook on Belgium to negative from stable, warning that a downgrade could occur within six months. Belgium’s domestic political uncertainty "poses risks to its government’s credit standing, especially given the difficult market conditions many euro-zone governments are facing," S&P says.

    Inflation in the U.K. rises to 3.3% in November, well above the BoE’s target of 2%. Sterling and gilt prices were unaffected as the BoE is forecasting inflation to fall back towards its target in 2011, and few expect a change in monetary policy. Sterling buys $1.5877.

    China’s decision not to raise rates reflects a lack of consensus among several government agencies. The PBOC is not the final arbiter of monetary policy, and rate moves "represent different interests in the economy, not just the inflation control objective," explains economist Ma Jun.

    The good news for airlines: IATA ups its industry profit outlook to $15.1B this year and $9.1B next, up from prior estimates of $8.9B and $5.3B. Now the bad news: The still-fragile industry is ‘balancing on a knife edge,’ ‘margins remain pathetic,’ and ‘any shock could stunt the recovery.’ 

    Best Buy (BBY): Q3 EPS of $0.54 misses by $0.07. Revenue of $11.89B (-1.1%) vs. $12.45B. Shares -9.6% premarket. (PR) More on Best Buy’s (BBY) disappointing quarterly results: Q3 sales inched down to $11.9B, below last year’s $12.02B and analysts’ estimates of $12.5B. The company sees full year EPS of $3.20-3.40, vs. consensus of $3.58. Shares -9.6%. (PR

    Morgan Stanley strikes Apple’s (AAPL -0.1%) name from its "Best Ideas" list, explaining the stock is up 28% over the past 6 month, double the gain for the S&P 500 during the same period. On the bright side, Morgan Stanley says Apple still has great opportunities for the iPhone and iPad, particularly in the enterprise and Chinese markets.

    On Dec.16, 100K Facebook shares will go on sale at website SharesPost with a minimum bid of $23/share, says a source. The auction is open only to accredited investors worth more than $1M. Some expect Facebook to hold an IPO in 2012.

    Research in Motion’s (RIMM +0.9%) PlayBook tablet will move a relatively low 2.1M units in 2011, says Citigroup. Worse, RIM’s worldwide smartphone market share is 15%, down from 21% in 2009. Citigroup projects $1.62/share for Q3, versus the consensus $1.64/share, and reiterates a Sell rating. 


  52. its Pisansi Mays on CNBC
     
    sorry, just rubds me wrong


  53. now I cannot even spell, time for my meds :)


  54. JRW, tactical for today?  According to your chart, SPX is below the blue line.  What support is that?


  55. yeah, its a new level of douchiness!


  56. matt

    SPY is at the top of the gap-fill (green zone); the red line above should be a problem. A break above the upper blue line and all my puts are toast !! IWM is on its lower blue though, so………….


  57. Dollar refusing to lose so far at 79.70. 

    TBT taking off. 

    DECK/Pack – It depends on whether you want to stick with it on a roll or not.  In the very least, you should have a stop at a 50% profit as there’s no point in being greedy to the point of blowing your gains.  Very likely, they’ll pin $80 into Friday but that means 3 more days of stress lie ahead.  

    FAS, FAZ/Matt – XLF with dramatic up and down spike this morning.  

    LOL JRW – great Pic!  

    USO/DClark – Until we see the barrel count under 90M in for Jan delivery, we can still reasonably expect a pretty strong sell-off ahead. 

    BBY/Rav – At $30 they are worth a toss on a long-term recovery but, for now, we need to wait for the downgrade police.

    And what Jo said!  

    TBT/Hasc – If you want to make $9 on a move up you can just go for 2x the 2012 $35/45 bull call spread for $4.10 and sell 1x the 2013 $30 puts for $4 and that’s net $2.05 on the $10 spreads that pays you on anything other than a fall in TBT.  Assuming your bonds are long-term, owning TBT at net $32 won’t be bad insurance and TOS says the net margin is $10 on the put side plus $4 more in cash on the call side is $14 cash + margin to pay for $16 of upside protection.   Keep in mind the idea is to buy 1/2 as much as you are considering on the buy/write – not to leverage yourself into more risk!  


  58. NET $  = (1.07)%,  dx/y = +.13%
    C = 1244.42, F =129.50
    10yr = +3.11%,  30yr = +2.64%
    (bonds really getting sold, probably the FED, need to build a profit in for the banks so they will buy after the announcement later)

    VIX (.11)%
    oil (.08)


  59.  Phil / TBT
     
    I think this stock will be fun to play going forward…. We will see, I believe, opportunity to channel trade this one as it gyrates in an upwardly biased trend. Back in September it was trading in the $31-$32 range, and now, well, it is flirting in the $39 range. In Elliot wave theory, it is in its 5th wave upward. If the fundamental forces do not overwhelm the technical forces, then we should be expecting a "pull-back" right about now. I am thinking about taking profit today on my positions, and wait for a correction. I will later buy, as the cartoon suggests, on "the f***ing dips"…… Not losing the faith, Phil – just booking some profits !


  60. There goes the buck below 79.70 at the EU close.  It does look like they were holding it up and now the local branch of the Gang of 12 takes control of the markets for the remainder of the day so we’re very close to our execution point for the short TNA $68 puts (now .90) and the IWM $77 Quarterlies are still $1.56 while the Dec $78s are already .50 so moving nicely.  To be clear, these are a cover for the DIA $114 puts, now .33 as we test 11,500 (as expected) and we’ll just have to see which way things fly on the Fed minutes later but I’m still expecting not to pass 11,500 without rejection and that should give us .50+ back on the DIA puts.  

    CNBC says Senate is passing Tax Cuts.  

    Volume at 11:45 is a lame 50M on the Dow. 


  61. Mike, 
    I’ve been meaning to ask for a while what is what you post (NET C F).
    Thanks


  62.  JRW…. Never a boring day here at PSW – your charts and graphics are awesome, and definitely make the day interesting !


  63.  Somebody needs to remind Pelosi that the election is over, and the voters want the HR to go in a different direction. I guess losing that free GS550 is pissing her off.


  64.  Phil / Roach Motel – I love the analogy and enjoyed your linked article.  I have avoided these hotels/traps myself. Of course, the roach motel/greater fool theory seems to be one of the driving forces of the market these days.     


  65. CAAS — anyone have thoughts about this one as it drops to within 5% or so of its 52wk low?


  66. Even for the manipulated market we’ve come to know.. this pause by the other indices to allow the prestigeous DJI to cross its momentous threshold is quite cheesy.  Let me guess.. it will flirt with 11500 up until the Fed makes an announcement today telling us how great everything is and it blows through 11.5k as though it’s melted butter.



  67. Mourning the muni market, Heidi Moore notes the double whammy that the tax bill delivers to a bond class that was rapidly losing investors’ faith already: Competing tax incentives will reduce demand for tax-advantaged bonds, and the death of Build America Bonds will remove a tool that’s helped paper over market flaws for a couple of years.

    TBT/Gel – Just waiting for EU problems to spill over here but I think we’ll see France break first as an early warning.  Keep in mind those spreads they show for Spain and Ireland are against German notes but the German notes are also climbing, which makes the absolute rate demanded higher than what they are talking about all around.  As a rule of thumb, the US can’t uderbid Germany on a note auction without a whole lot of help – that amount of effort is not likely to be sustainable.  

    GS550/Gel – I’d be pissed too!

    Fools/Stu – It is indeed a ship of fools that we have not set sail on yet but, as 11,500 approaches, it looks like we’ll have to at least get a cabin near the life boats.  

    Damn, there goes the Dollar, flipped right down to the 79.50 line! 


  68. Phil, 
    I am traveling so I haven’t been able to follow the posts thoroughly. I have open in the 1050P:
    20 DIA 111 P’s (closed the 113′s as per your post yesterday), 10 USO 36 P’s, 10 QID Puts, 5 XRT Puts. Anythng to do with these at this point?
    Thanks


  69. 10yr = +3.29%,  30yr = +2.52%




  70. amatta

    C =  is the S&P cash
    F =  Futures for the S&P emini


  71. matt / dji — Funny I was thinking the same thing and almost commented to that effect. You can see them testing it making sure it stays a practical strategy but then I started to take the contrarian side since it looks too be too good of a setup. IWM at 77.7 seems awfully lucky though!


  72.  Phil/DIA $114 puts — do you recommend holding them through the Fed announcement or shed them beforehand?


  73.  NET $ (1.08)%,  dx/y = +.08%, both heading lower


  74. This is interesting:
     
    Our Chinese buddies.


  75. interesting read on ADP


  76. 1050P Update:

    We killed the 5 NFLX Jan $155 puts at $2.25 so $325 more to cash is $29,957 plus these plays in progress:

    • 10 QID Jan $10 calls at avg. $2.05 (net of rolls and DD), now $1.70 – were doubled down at $1.90 and still holding out hope. 
    • 20 DIA Jan $111 puts at net $1.30 (added .28 buy-back of Dec $113 puts), now $1.41.  We have flipped back to bearish here and it’s a lot of money so these are going to come off the table about even at 11,505.    
    • 10 XRT Jan $46 puts at net $1,  now .87 – even more crowded at 57,000, we need someone to capitulate! 
    • 10 USO Jan $36 puts at $1.10 average, now .63 – This is our DD point so 10 more at .63!
    • 20 XLF Jan $15/16 bull call spreads at .58, now .66 – fine as an upside hedge, stop is now .50 (raised from .45). 

    We’re looking at losing over $1,000 on our short plays if things keep going up and gaining $840 on XLF so not a terrible balance but we’re not playing to stay even – this is a very aggressive portfolio so be careful tracking it! 


  77. It is interesting how ADBE has not recovered much since the really bad reaction to their 3Q earnings call.


  78. By the way, notice how this works – We cash out our winners and try to work on our losers.  When we think we are too bearish, we look for a bullish play and vs. vs.  That’s how we work a small portfolio like this, try to stay liquid and flexible and always try to be realistic about your prospects (ie. you could be totally wrong at any given time).  To some extent, the artificial deadline of Jan 21st is limiting our ability to roll and cover and I will stop if it gets too restrictive.  As it is, it’s been slow going trying to eek out another $24,000 in this crappy market!  


  79. exec / contrail — there should be question that was a missle. When is the last time you’ve seen a contrail that looked like that?


  80. Currently reading Graham’s ‘The Intelligent Investor‘. A passage from today’s reading worth sharing: "A substantial rise in the market is at once a legitimate reason for satisfaction and a cause for prudent concern, but it may also bring a strong temptation for imprudent action." Graham goes on to say, "Or – worst of all – should you now give way to the bull-market atmosphere and become infected with the enthusiasm, the overconfidence and the greed of the great public (of which, after all, you are a part), and make larger and dangerous commitments?"
    What was the ‘greed of the great public’ in Graham’s time is now the Gang of 12.


  81. 1050P/Amatta – Good timing, I was just working on it!

     Dollar took very tiny, very short dip below 79.50 but holding it so far and that Dow cannot close the deal at 11,500 so far.  Not bad for a target we’ve been watching for 6 months…

    DIA/Jvest – We are going for it but if it’s money you care about – CASH is your best friend.  

    ADP/Mike – I’ll like them too when people start working again, they are a great company.  

    ADBE/Jordan – They need to work out their thing with AAPL.  I’m already not posting flash stuff on the site because it misses the IPhone/IPad crowd.  

    LULU is the next thing that being pushed like heroine.  This was happening back in 2007 too when they topped out at $60 and fell to $5 a year later.  I like LULU but not this much!  


  82. Pricless
    Colbert finds Goldman Sachs partners credit card


  83.  Guys
    The f***ing HRH has required us to pay additional for the conference room – $500/day, provide a $1M insurance liability policy, pay $500/day for our conference room internet access, and pay a surcharge of 21% to allow us to bring our own A/V equipment! Mandalay was even worse. Bottom line – this is bogus and has become a time suck for me – sorry, I do not have time to keep negotiating with these chumps.
    If someone wants to pick it up, let me know – else Vegas is off.
    Phil, my apologies for not getting this done earlier.


  84. C = 1246.14, F =1240.25 at 12:40 area

    10yr = +3.35%,  30yr = +2.75% selling

    NET $  = (1.16)%,  dx/y = (.11)%, both falling

    large moves, the $$$/Swiss Franc  (1.15)%,  $$$/Yuan = (.12)% had been flat


  85. Phil, As I was posting you put the 1050 update. The DIA 111′s bought at 1.30 are now .91, not sure how you figure the breakeven at 11,505? The 113P’s made a profit of .28 x 10 ($280) and we are down .39 x 20 ($780) on the 111′s…
    Thanks


  86. Suspicious lack of volume as we cross 11,500 and suspicious lack of CNBC cheerleading. We hadn’t hit 11,505 though and that extra nickel is sometimes the key.


  87. Colbert/Mike – "The economy is like The Producers, you can make a lot more on a flop than a hit!" – That’s a great line!  

    Vegas/Deano – That’s why I said at least 30 – not fair for 10 guys to have to kick in for all that.  We can shoot for something in the fall with a lot of time to get ready, maybe Labor Day.  

    1050P DIA/Amatta – Oops, my mistake, I was looking at the $113 puts I guess.  That would be a crappy loss so let’s hope the Dow behaves itself and doesn’t break 7 points higher!  

    .  


  88. And we’re at the flat line CNBC says!!! Whuck? Since when is the S&P more important than the dow crossing a 11,500?


  89. There goes 79.50 on the dollar so those TNA covers are now necessary.  


  90. C on the Bank of England
    one of the good quotes
    The bank of England admits to underestimating quite seriously the effect of sterling’s devaluation on inflation. It also concedes that it has probably overestimated the degree to which overcapacity in the UK economy would push down on prices."


  91. C = 1246.67, F =1240.75 at 12:25
    VIX (1.08)%

    0yr = +2.71%, 30yr = +2.15%, remember the 10yr has been as high as 3.20% area twice so someone is making nice .50% rolls
    oil +.19, gold +6.40

     


  92. We are right on that 11,505 line but, since we can’t get out even on the DIA puts, I’m inclined to hold on a bit longer.  Now I’m leaning towards selling the 12/31 $113 put (now .67) and rolling up to the Jan $113 puts ($1.40) rather than getting out so that’s the plan if we don’t get our sell-off.  


    12:00 PM On the hour: Dow +0.58%. 10-yr -0.7%. Euro +0.2% vs. dollar. Crude +0.15% to $88.74. Gold +0.24% to $1401.30.

    01:00 PM On the hour: Dow +0.61%. 10-yr -0.69%. Euro +0.2% vs. dollar. Crude +0.11% to $88.71. Gold +0.42% to $1403.90. 

    Borthers can you spare a dime? President Obama called a short-notice meeting with Warren Buffett (BRK.A) and Bill Gates this morning to talk about ways to boost the economy – including raising competitiveness with investments in education – as well as the two men’s philanthropy. It comes a day before a summit with business leaders to discuss similar growth measures.

    Here’s something I’ve been saying for ages:   Why has a chunk of the hedge-fund industry succumbed to illegal behavior? At HBR, Lynn Stout goes for a different explanation: It’s not that incentives are misaligned but that funds are " ‘criminogenic’ environments that can turn even ethical people into conscienceless sociopaths." Structural signals are sent to traders: Don’t bother with ethics.

    The FDIC is proposing that all banks comply with the same minimum-capital standards – particularly big banks that argued they should hold less because of superior diversification, and "produced models that were overly optimistic and ultimately required massive federal assistance," Chairman Sheila Bair says. 

    Japan’s Chief Cabinet Secretary indicates that the BOJ will not be pressed for another round of QE. Yoshito Sengoku says Japan’s proximity to low-cost economies in Asia is the reason for deflation. He does not believe "printing money" will be effective, but instead would bring dangerous "side effects."  Weak news for the Dollar.

    Fresh off the success of its foray into the U.S. ETF industry, Pimco plans to enter the European ETF market in January, according to Barron’s Murray Coleman. It is unclear at this juncture which segment of the market Pimco will first focus on in Europe. 

    A slowdown (stoppage?) in commercial real estate construction in the next 1-3 years will cut supply and raise values, Sam Zell says, forecasting little prospect for new building other than apartments: "When the buildings fill, then pretend and extend is over."

    Three lunchtime reads:
    1) Five experts: Where to invest in 2011
    2) Fed contrarian Hoenig keeps wary eye on history

    3) Solid rule for ETF investors: There are no solid rules 


  93.  WFR -- seems like a good time to buy on a near-term dip (down 1% today). Slightly better entry price than when Phil recommended it last Thursday. Also, solar is in on the tax cuts party:
    "The pet legislative project of the solar and wind industries — the Treasury cash grant program that was set to expire at year-end — made it into the massive tax cut legislation. Senate Majority Leader Harry Reid unveiled the package late on Thursday, and one of the sweeteners included is the extension of the Section 1603 cash grant program that originated in the financial crisis stimulus legislation."


  94.  Hi Phil,
     
    Thanks for TBT / TLT trade ideas.  I see a large (25k options contracts) transaction on TLT at 94 strike.  Could this be a near term top on TBT and short term bottom on TLT?
     
    Looking at near term trade ideas related to this - Buy March 38P / Sell 35P for net debit  $1.12 put spread.
     
    This is based on expectation that TBT will consolidate in 35-40 range in next 3 months, as Fed succeeds in its objective of keeping the yields reasonably low, hopefully keeping TLT yield around 4%.  Any alternative trade ideas around this theme?
     
    Considering your 2012 35/45 spread as an alternative as well.   


  95. deano – thanks for your efforts.
     
    I wanted to go to Vegas to meet all of you and shake some hands and have a nice meal. Thats about it.
     
    After 24 years living there, my biggest smile after leaving the family, is seeing Vegas in my rear-view mirror.  :)
     
    Thanks again for all your time.


  96. Deano, appreciate all your hard work buddy…. I guess it will have to be labor day or something…. It’s amazing how dumb these casinos are…. I have plenty of friends in Vegas and business is still turrible… Yes, it’s even worse than terrible, it’s turrible! You’d think they’d want the business!?


  97.  Friend just came back from Vegas – Thanksgiving weekend.  Says it was pretty dead.
     
    I might be able to get us a deal at the Palazzo.


  98. C = 1246.70, F =1240.75 at 12:45

    10yr = +2.92%,  30yr = +2.20% see if they get another roll on the 10yr

    oil +.07, gold +6.00

     NET $ (1.12)%,  dx/y = (.09)% at 12:46


  99. Did the bears get it wrong about what JPM is manipulating?
    http://www.cnbc.com/id/40659891


  100.  But I don’t have time to deal with it.
     
    I think what you do, if you do it, is forget the conference room.  Just book rooms.  
    Then, if the hotel won’t play ball, book a lunch or a dinner at a restaurant, get a private room, and bring in a modest amount of AV equipment or skip it.


  101. Not even as much as a hiccup with the dji going over 11500.  Is it clear yet that technicals don’t mean a damn thing unless ‘they’ want them to mean something?  And fundamentals…. ROFL!!
     
    This is their game and we are just trying to steal a nut from them.


  102. Hi Phil : On 11/22, I bought COP in IRA account ( no naked puts allowed) at $60.58 and sold May $62.50 puts at $3.12 for net $57.46 COP now at $65.70 with calls at $5.65 for net $60.05 Original goal was 8.6 % / 17.6 % annualized,plus 3.5%.dividend. With quick run up by COP, should I roll to Jan. 2012 $62.50 calls for $7.65 ? thank you


  103. Phil
    You looking for "sell the news" on the fed?
    dow outperforming is not a good sign for the bulls


  104.  tlt dec 92 puts are .50 – if you think tlt holds 92 by end of week – ok cover for those playing tbt – was better at .70 earlier


  105. Something is up. Yesterday, CNBC was vocalizing about 11,444 left and right and there hasn’t even been a mention of it today (nor 11,500 — not even by the guests!). I think that means the initial assement of it moving with the fed is correct but I don’t think they know which way it’ll be pushed yet. I think we might see a large spike with the Fed release and then CNBC will pile on with the trade to draw in the retail side.


  106.  VECO taking a 13% hit today because of some idiot analyst says China will be ordering less next year – moving it to a "Hold" recommendation.  BS – it is all manipulation. China is growing at 9% and will do the same next year. I took profit on my short calls and DD on short puts. At least WE know the markets are rigged.


  107. Out of TBT for the moment… will wait for a drop, and then go long. 


  108. Last FOMC statement was Nov 3rd:

     

    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 the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.
     
    Voting against the policy was Thomas M. Hoenig. Mr. Hoenig believed the risks of additional securities purchases outweighed the benefits. Mr. Hoenig also was concerned that this continued high level of monetary accommodation increased the risks of future financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.

     

    New one in 15 mins.  While I can’t see what they can say that will be more positive.  I don’t think they’ll say anything negative either so it’s really just a matter of seeing what the market decides to do once that catalyst goes away.  


  109.  C = 1245.20, F =1240.25
    10yr = +2.92%,  30yr = +2.02%

    Net getting crushed here
    NET $ (1.32)%, dx/y = .06%

    just before the announcement

    $$$/Yuan = (.14)%
    $$$/Franc = (1.19)%
     


  110.  deano
     
    I gotta hand it to you…. you have taken on a difficult task. MLK weekend is out for me, but if I may make a suggestion – one participant  must be the sponsor or banker of the affair, with the financial arrangements not an issue. Trying to get a consensus is like herding cats ( very difficult ). Send out the inviitations with a RSVP and request at the same time for a non-refundable check. That way you can negotiate one on one with your best choice for a location and comply with the deposit details. When I hosted receptions in the past, at the Mandalay or in other locations, this is typicialy the procedure that is required.Maybe TOS or Pimco want to sponsor the event, and we will let them speak to some of the best option traders out there…. 


  111. Wind/Jvest –  Good article in the Times today detailing how China stole the wind business from a Spanish company.  This is pretty much what they do with everything but we let them get away with it so don’t look for it to change.  

    TLT/DrMtv – I think it’s going to be natural resistance.  We shorted TLT way up at $105 and gave up at $95 and it’s bounced around since.  The thing with TBT is that one day it is likely to explode and never look back – the question is when but that’s why we just aim to stay involved – keeping our selves in the right place and waiting patiently for the right time.  

    Copper/Yshen – LOL, it’s always something!  Same silly thing.  JPM is so dumb they hold 90% of all copper positions?  Well, if they do – then betting against them is probably not a good idea, right?  

    COP/DFlam – It seems a little early to me to blow off protection.  They are only at $65.79.  I guess rolling across is fine if you plan to be in it long-term but you are giving up .14 of downside delta protection and selling just $2 more in premium for 8 more months.

    Sell the news/RWV – That’s what I expect, especially when they pump it up ahead of the news.  

    ONXX going nuts.  

    BBY may be going down but BBBY is at year highs.   Both are retailers who’s main competitor went BK last year…


  112.  C = 1245.46, F =1240.00
    10yr =+3.17%, 30yr = +2.68%


  113. ONXX – SLAM da da da da, let the boyz be boyz! Oh wait, that’s Onyx…..Ummm this is awkward….Sorry, it’s a slow day for me….


  114.  Guys
     
    Thanks for the thanks but not real proud of not getting us together. The arrogance of empty hotels is amazing to me though - 


  115.  New Fed Statement – NO CHANGE IN POLICY!!!!  

     

    Information received since the Federal Open Market Committee met in November confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment. Household spending is increasing at a moderate pace, 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. The housing sector continues to be depressed. Longer-term inflation expectations have remained stable, but measures of underlying inflation have continued to trend downward.

    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 continue expanding its holdings of securities as announced in November. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase $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 the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

    Voting against the policy was Thomas M. Hoenig. In light of the improving economy, Mr. Hoenig was concerned that a continued high level of monetary accommodation would increase the risks of future economic and financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.

    Hardly a word out of place!  So if they liked the statement in November, they should be liking it now as the Fed seems to pay no attention at all to inflation and is determined to move ahead as if what they do has no effect on reality.   

    I’d say kill the TNA side of the trade and let’s hang onto the naked DIA short plays as I see nothing here that should take us higher.


  116. NET $ (1.14)%,  dx/y = (.06)%
    10yr = +3.23%,  30yr = +1.93%

    C =1246.03, F =1240.00


  117.  Deano – Did we end up with at least 20 confirmed rooms?   If so,  I don’t mind going down to the Las Vegas Visitors Authority and getting bids in real-time through them and helping to get it done.   I think they will want a minimum of 20 rooms x 2 nts with lunch and maybe a confirmed dinner reservation onsite.  I’m willing to put some cycles into it, but only if we have at least 20 people.  


  118.  Empty hotels/Deano – Well The Bernank says the economy will be great and they have fixed everything with free money so why make rational decisions now when things are going to pick up.  This is the same idiotic crap we saw in the small business survey and the same crap that led BBY to WAY overestimate their outlook for this Q and for the year and this is what I’ve been saying about EVERYTHING – WAY too optimistic all around and the market is pricing in a best-case scenario as if it’s reality.  


  119. Bull Parade on CNBS……


  120. Deano --  Thanks very much for doing all of this.  I can’t believe with business being "dead," as everyone says about Vegas, they just can’t say "yes" to deal.  I’m still ready to do whatever.


  121.  


  122. Las Vegas,
    You guys make me smile. Spending 200 250$ per night in a hotel, on top you pay for breakfast lunch and dinner!!!
    Cancun in the off season you can pick up Hotels for 50 to 60$ per night all inclusive even the booze. Casinos I think we have two here, if you want to loose some money. I trust just a different climate. Warm sunshine with Carribean ocean.


  123. Phil, do you turn on the bull blinders if we close above 11,500 or does it need to hold that level for a few days?


  124. Financials Lagging


  125.  Cramer telling us how foolish it would be for us not to follow the crowd into more stocks.  

    Meanwhile, dollar came back from 79.35 to 79.57 so far.  

    Oil closed at $88.40, contracts down to 148K with 262K in Feb and 167K in March and 57K in April so that’s 577Mb shoved into three front months and if they roll them all they’ll be over 600M and that’s a point at which they are choking on oil with 550M being very uncomfortable.  They need a blow-off day to relieve pressure.  

    Volume on Dow still lame at 79M at 2:45 and this is our last decent volume week of the year.  Any selling pressure on a low-volume day means the bulls are having trouble keeping control.  


  126. Yodi – Big business ruined Vegas……


  127. deano- thanks for the initiative. I was looking forward to meet you all.

    gel – I like your idea of a bankroller and I nominate you to take care of all financial arrangements next time 8)


  128. Yodi, in march I visite Barbados, but I think next time Cancun is interesting . This week ltur sell condor flights to Cancun for 119 eur from Germany.


  129. 10yr = +5.13%,  30yr = +2.93% huge selling of US debt


  130. Here we go with the market casino, going down, I trust we lucky if we see still green by 4PM


  131. Yes Yodi, but the flights are cheaper to Las Vegas and don’t have the local policeman’s head on a stake…..


  132.  lvmoda
    We had 20 + months ago – when they told me I’d need to guarantee 90% & sign a contract, I reduced the number to ten & asked for & got 10 confirms. Its getting late but more competition is always good. I personally like Yodi’s solution better, but if I’m going to Cancun, you can bet I’ll be doubling the airfare by bringing the wife!


  133.  Adding to one of my momentum stocks ( ENDP ) with the execution of a short strangle – April 35  short puts, and July 40 short calls. Got to watch those short calls, as this one might take off.  Pharm…. are you trading this one ?


  134. Vegas — I think too many of you believe the person at HRH has the authority and/or ability to make a business decision. If you flat out ask them if they have the ability to negotiate rates and they say "no", you ask to talk to someone who has that ability. It is like that everywhere (unless you are speaking to the owner of course).


  135. jabobeast

    Neither a Bull or a Bear be you, if smart you are !!


  136.  nicha…. ha ha ! Wait first to see my fees…. banking does not come cheap!


  137.  Cancun/Yodi – Yeah but then you have to spend $200 on bottled water.   8-)

    11,500/Jabob – As it’s the top of the range and as the other indexes are getting weaker, not stronger as the Dow catches up, I still need at least 2 consecutive closes above before I’m willing to "stick with Cramer."   In fact, just saying that makes my skin crawl but I will follow the technicals if I have to.  

    Yen is up to 83.67 on comments they are done with QE, despite that heavy downward pressure on the buck, we are back to 79.7 which is why I flipped back to bearish after that ever-so-brief flirtation with a bullish position.  We still may go down in flames being bearish but, as with last week – there is just a relentless amount of spin going into the bull side of the market.  All stops are being pulled out and all they have been able to do is push us very slightly over the April highs, when the dollar was 10% stronger than it is now.  How is this "bullish" for equities?  It’s nothing but bearish for the dollar – is that a premise to buy a stock?  


  138. JRW,
    Is that Yoda giving me the finger ;-)


  139.  Let’s go to Cancun then !


  140.  I adding to my EUO play… Europe is facing some headwinds, and the prognosis looks ominous at the moment.  Italy just gave a "no confidence" vote and the PM is in trouble. The entire Eurozone financial plans are "shakey" to say the least, and a drop in the Euro could be precipitous at any time. Watch your longs, for sure. I think the only plan that could save this financial mess is for the Eurozone to issue their own bonds, and play with the interest rates to unload them.


  141.  OMG … was that one of you guys who knocked off the Bellagio today ?
    LOL


  142.  Here’s another option on the Vegas trip — I didn’t mention it before because I didn’t think it was appropriate.   But I own a small restaurant/lounge that’s a couple of miles west of the Strip from Wynn’s/Palasso.    It’s a down-to-earth locals place but ideal for banquets up to 150 people and I have full bar and kitchen.   Just hired the executive chef from Stack (MGM Mirage) to redo my menu so he could put together some nice food offerings.   Then everybody can book their own arrangements and $10 cab ride to my place.  It would be exclusive for us all day up to 4pm when we normally open to the public.   I have all the AV stuff to hookup a laptop to a big screen tv so no worries.    All I ask is that Phil show up!  :>)


  143. Hi Phil is it too late to but put on CRM today


  144. Cap / Cancun
     
    Good idea… "margarita mania" at its best !


  145. C = 1243.96, F =1239.00
    10yr =+5.24%,  30yr = +3.52%

    hour of power

    10yera spiking, but no one cares


  146.  I like that idea lvmoda (fwiw)


  147.  Right philosophy JRW has – heed it well should you all!

    Cool, casinos being robbed as we speak!

    02:00 PM On the hour: Dow +0.63%. 10-yr -0.78%. Euro +0.19% vs. dollar. Crude -0.15% to $88.48. Gold +0.46% to $1404.50.

    The No. 1 reason to be scared right now: "the fact that no one else is." Pragmatic Capitalist observes that the VIX is fast approaching levels that are consistent with very high complacency. "Right now looks like a good time to be hedged – not necessarily because you’re bearish, but because it’s the contrarian play."

    The latest results for the Business Roundtable survey show business leaders more optimistic about the economy. Fully 80% of CEOs expect their company’s sales to increase over the next six months, compared with 66% in Q3; 59% expect to increase capital spending, up from 49%, and 45% expect to boost domestic hiring, up from 31%.  This is what you call "fruit of a poisoned tree" – the assumptions on hiring and spending are all coming from the expectations of increasing sales.  If that thread fails to materialize, the whole thing unravels.  We won’t know what’s really going on until earnings and we said that last year and they were a disaster vs. expectations.  

    Fed Open Market Committee: Sticks to the bond-buying course, affirming its intent to keep expanding securities buys in its $600B QE2 program. As expected, no change to near-zero rates and none foreseen for "extended period." Contrarian Thomas Hoenig issues only dissenting vote.

    More from FOMC: Recovery continues, but not fast enough to cut unemployment. Household and business spending is rising, moderately. Employers reluctant to hire, housing still depressed, and underlying inflation measures still trending down. The panel stays the course today, but the next meeting (end of January) may be different, possibly with more signs of an improved economy and some new hawkish faces on the board.

    Copper’s continued ascent tells Ed Yardeni that the global boom remains on track, and he provides an interesting data point for the metal: theft. Apparently, a lot of copper is getting thieved and resold for scrap; usually copper is cheap enough that it doesn’t entice thieves.

    Nomura Securities launches telecom coverage with a Buy for AT&T (T +1.4%). AT&T faces "meaningful attrition" when it loses iPhone (AAPL) exclusivity in 2011, and a possible subscriber drop to 65.8M from 68M. But with fewer iPhone promotions, the better AT&T’s margins, and the board will soon probably approve a 2-year, $10B share repurchase plan. 


  148. Bellagio — I wonder if those cheques are RFID enabled…


  149. Missing from the current Fed statement: Bernanke "this is our moment to shine"

    Ron Paul will be on CNBC shortly :-)

    TSLA service, I have a feeling TM will service the cars


  150.  Especially if we’re only 10 -15 people.   That offer is open pretty much any weekend with enough advance notice so if another weekend is better for people.   Also,  I think there are great package deals for individuals at the properties and nobody has any financial risk or admin headaches…


  151. jromeha , Phil,
     
    Phil I think you still on the moon looking for GOLD, I pay 2$ for 20 liters of bottled water. If you can not drink water a beer cost 1.50 to 2$ per bottle not for 20 liters!  Police heads on the stick. You fail to see the GEO convention of last week, all big shots of the world where right there in the convention hall opposite my property,
    I could not get out of the gate without running over Fed, police but did not see any with his head on a stick. I think your views are 30 years behind. The worse thing what can happen to you, you will get a sun burned.


  152.  Rainman – they chip are rfid, but to detect counterfeit.  I would be surprised if they are numbered somehow.   Anyway, just another insurance claim for MGM…lol!   The guy will never be caught because he was wearing a motorcyle helmet and none of the cameras will recognize him.    My opinion:   inside job.


  153. P.S. flights to Las Vegas for me easy 450 to 550. $ but not the first class!!! Servants class.


  154.  Restaurant/LV – Wow, you should have said that before – that’s nice!  I will go with the group flow.  

    CRM/Gucci – They should probably test $125 at least but a little chasey after a fall from $151.  

    RFID/Rain – That’s what I’d heard, will be interesting to see if that’s true now.  The Bellagio is the last place I’d hit as it’s full of drug dealers laundering money at 3am, certainly not the kind of guys I’d want to be robbing!  I’m pretty shocked though as it’s a huge hotel and the casino is buried inside – it’s not like you can run out the door so easily, I’ll be very interested to read details of this heist.  

    Missing/Kustomz – Here, try this.  

    TSLA/Kustomz – That’s an interesting thought.  

    Mexico/Yodi – Wow sensitive!  We’re just kidding man…

    RFID/LV – I thought they tracked the actual chips so they knew who was winning what, etc.  Inside job sounds right to me because I play craps at Bellagio all the time and it would take me 3 mins to RUN from there to an exit – how the hell could a guy pull that off and leave with thousands of chips and get away?  


  155. Ah, the good old days with SRS !!

    Chesapeake Lodging Trust is buying Le Meridien San Francisco for $143 million — nearly $400,000 a room for the 360-room hotel.

    The deal is expected to close by year end.

    The sale of Le Meridien is the latest example of a national REIT swooping in and buying a San Francisco hotel for top dollar. And the price per room keeps climbing.

    In late August, LaSalle Hotel Properties bought the Hotel Monaco for $68.5 million, about $341,000 per room. In May, Pebblebrook Hotel trust bought the Sir Francis Drake Hotel for $90 million, over $216,000 per key.

    Read more: Le Meridien Hotel sells for $143M | San Francisco Business Times


  156. Milken on CNBC, from wikipedia
    "Milken was indicted on 98 counts of racketeering and securities fraud in 1989 as the result of an insider trading investigation. After a plea bargain, he pled guilty to six securities and reporting violations but was never convicted of racketeering or insider trading. Milken was sentenced to ten years in prison and permanently barred from the securities industry by the Securities and Exchange Commission. After the presiding judge reduced his sentence for cooperating with testimony against his former colleagues and good behavior, he was released after less than two years."


  157. Phil,
    Sensitive no I do have a thick skin not to worry, just putting loco ideas straight.


  158. Ivmoda- I like your idea.


  159.  So Deano – if you want to keep the list up to date, I just need to confirm today that some wedding or something isn’t already booked that weekend and we just do it.   We can just shift this down to a free form get-together.   Sound good?


  160. VECO — bought @ 42.10 sold Dec 40 calls and puts for $6.10 for 10% in 5 wks or an entry of $37 (12% discount).


  161.  PSW Conference…. I still believe there is a way for SOMEONE to sponsor this event and pay for everything except the airfare and hotel. The attendance would be double, and the sponsor would be well rewarded, IMO.


  162. mike, they parade Milken out on TV like he is a respected, honored member of the financial community.


  163. gel, maybe we can have ARNA pay for it – lord knows everyone has bought or sold a share or two (or the derivative of a share)


  164.  Milken is respected by the WS crowd


  165. Second day in a row IWM unraveling.


  166.  PCLN getting a butt kicking


  167. Sorry, that was the Jan call/puts on VECO.


  168.  Mike
     
    Milken was the genius that created a successful "Leveraged Buyout" marketplace, that created financing for our economy at the time. Drexel gave him a free hand to expand their business model  - he was convicted by the "nothings" that were jealous, and lived their life in envy. This guy is my neighbor ( part time) and I am proud of that, as I respect his accomplishments and his focus on helping others less fortunate. The press has screwed this guy…. all about envy and class warfare.


  169. Dollar back to 79.75 and markets back to day’s lows – not a complex script to follow. 

    Milken was a piker compared to the kind of stuff GS et al do these days.  Also, as Cap says, a very smart guy regardless.  Makes a great point about our lack of investment in education but I’ve been banging that drum for years and now there aren’t enough people out there to even understand my point anymore….

    03:00 PM On the hour: Dow +0.37%. 10-yr -1.26%. Euro -0.07% vs. dollar. Crude -0.55% to $88.12. Gold -0.45% to $1398.00.

    Speaking of Mexico:  Forewarned is forearmed. Mexico requests an increase from $48B to $72B in its line of credit with the IMF. Combined with its dollar reserves, this would give Mexico a $200B "insurance policy that will fully protect the economy from any external turbulence," says President Calderon.

    More madness:  China’s currency, pent up inside the country’s borders for decades, is emerging as a hot property in global foreign exchange markets, just months after China allowed the yuan to be bought and sold outside the mainland for the first time. The value of the yuan remains tightly controlled by China, yet forex traders see demand rising sharply. 

    Computer prices are rising even as the prices of other consumer electronics such as high-def TVs and digital cameras plunge this holiday season. Higher-end models are "flying off the shelves" as customers recognize that "if they want a level of performance and graphics, they probably aren’t going to get that for $299." 

    Apple’s (AAPL) iOS and Google’s (GOOG) Android platforms both received 38% of smartphone ad impressions in Nov. in Millennial Media’s mobile ad network. Research in Motion (RIMM) was 3rd with 19%. Apple was 1st in the devices category, garnering 25% of the top 15 manufacturers’ impression share, followed by Samsung (SSNLF.PK). 


  170. jomama
    Sponcers ARNA yes that will do Still holding shares at 5$ in my Portf. Any takers???


  171. The wealth effect of the markets was what 1.7T, I read somewhere that insider selling was right around 1T last 12 months. Who’s holding the bag?


  172. JO… I’m sure TOS or possibly Fidelity would pick up the tab… just to get 50 new traders that are prolific. We need to take advantage of our franchise…. are there not 50,000 folks that tune into PSW… give the sponsor a plug. ( maybe pay for the rooms as well, even breakfast in bed. 


  173. Gel/VECO- thanks for the tip. Sold Apr $40 puts for $4.80. Margin of $1200/put.


  174. lvmoda – Are you on Spring Mtn?  Whats the name?


  175. C = 1240.21, F =1235.00
    10yr = +5.245,  30yr = +3.52%

    have to run
     



  176. U.S. Credit Swaps Decline for a 10th Day, Longest Drop Since October 2006. The cost of protecting bonds from default in the U.S. fell for a 10th straight trading day, the longest streak since October 2006. “People are bulled up on credit,” said Stephen Antczak, head of U.S. credit strategy at Societe Generale SA in New York. “There’s no fear of defaults. There just isn’t in the near term.” The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, fell 1.2 basis points to a mid- price of 84.8 as of 12:14 p.m. in New York, the lowest since April, according to index administrator Markit Group Ltd.

    Airline Profits to Drop 40% on Taxes, Oil, Group SaysAirlines may post a 40 percent decline in combined profits next year on slower economic growth, higher fuel costs and austerity measures in Europe, a leading industry group said today. Net income will drop to $9.1 billion in 2011 from $15.1 billion this year, International Air Transport Association Chief Executive Officer Giovanni Bisignani told reporters in Geneva.

    Canadians With More Debt Than U.S. Spark Policy Makers’ WarningCanada’s top economic officials yesterday urged households to be wary of taking on too much debt after data showed the indebtedness of Canadians surpassed U.S. levels for the first time in 12 years. Bank of Canada Governor Mark Carney, Finance Minister Jim Flaherty and Prime Minister Stephen Harper said in separate public appearances that they are concerned about rising debt. The ratio of household debt to disposable income in Canada was 1.48 in the third quarter according to Statistics Canada, exceeding the U.S. level of 1.47. “Our parents were more inclined to pay off that mortgage as soon as possible, and some Canadians are not as inclined to do that now,” Flaherty told reporters yesterday. “I encourage them to do it.”

    Capitalizing on the Euro Crisis. China Expanding Its Influence in EuropeChina is seizing on Europe’s debt problems to expand its influence on the continent with large-scale investments and purchases of government bonds issued by highly-indebted states. The strategy could push Europe into the same financial dependency on China that is posing a dilemma for the US.

    Europe’s Bondholders Shouldn’t Share Bailout Cost, Danish Government SaysEuro-area senior bondholders shouldn’t have to share the cost of bailing out the region’s most indebted members as the onus is on governments to rein in budgets and reassure investors, Danish Finance Minister Claus Hjort Frederiksen said. “It’s important that the countries consolidate in a convincing way to tell the markets that they are on the right track,” Frederiksen said in an interview in Copenhagen yesterday. Asked whether Europe should force debt investors to foot part of the bill on subsequent bailouts, he said: “I don’t think so, frankly.”

    U.S.: More Teens Smoke Marijuana Than CigarettesMore high school seniors this year used marijuana than smoked cigarettes in the past 30 days, according to government data released Tuesday. In addition, daily marijuana use increased significantly among eighth-, 10th- and 12th-graders, with about one in 16 high school seniors using marijuana daily or near-daily, the annual "Monitoring the Future Survey" found. Teens in all three grades exhibited more favorable attitudes toward the drug, according to the national survey of more than 46,000 teens. The survey’s lead investigator, the director of the National Institute on Drug Abuse (NIDA), and the White House "drug czar" blamed the rising use among teens in the past three years on publicity surrounding medical marijuana. "Young people are increasingly seeing marijuana as not dangerous," said lead investigator Lloyd Johnston of the University of Michigan’s Institute for Social Research.


  177. Phil / Rates   Looks like supply is beginning to exceed demand globally.  Higher bond rates not good for the economy nor stocks.  Not convinced the Fed can halt this?  Is this the ‘tipping point’ where we short the Russell?  I don’t expect the vote out of Ireland tomorrow to be positive – austerity is increasingly seen as a lousy alternative to default.


  178.  rainman / VECO
     
    This drop is overdone by a long-shot. I just sold more April puts – doubling my position. 


  179.  Spring Mountain at Jones….Cafe Moda.   


  180.  Bag-holding/Kustomz – Retail shareholders, people who invest in ETFs and anyone who follows Cramer, as usual…

    Tipping point/Tusca – Well, at some point they were bound to exceed the supply of investable capital, especially with stocks and commodities competing with bonds and TBills for investor attention.  The Fed can buy all that stuff if they want to but will they want to with Ron Paul breathing down their necks in January?  I don’t think it matters what Ireland says they are going to do – it’s all based on unrealistic performance assumptions just like the entire solvency of America is predicated on our ability to borrow short-term funds at 2.5% – if that goes to 5% – we are way beyond screwed….

    Volume just 120M coming into the close and a very easy stick.  Just another crazy day in the markets.  We’ll see how CPI looks tomorrow but I don’t see a win in that at high CPI = inflation and low CPI means margins are being squeezed so choose your poison tomorrow morning.  


  181. lvmoda – Been there!  :)


  182. lvmoda – Do you know what happened to Ciao Ciao?  Some family members went there last week and they were closed…


  183. gel1 / VECO — I was plaging them back in Aug in the 32′s and they got away from me. This was the first trigger I’ve seen that got me intersted in it again. Big spike in volume when it crossed 42. 1M+ (10%+) shares traded there today (+/- 0.10). I think it will hold tomorrow but if it breaks $40, I’ll be selling more puts, likely farther out.


  184. @jomama
    Milken was singly responsible along with his henchman, Ivan Boesky, for putting more people out of work than any single man on this planet and creating at the time a monstrous debt burden.
    His use of borrowed money to accomplish this task for those deals,  loading up the balance sheets (and his payoff)  of good, solid companies with onerous debt partly to pay him off, is no different than what the FED is doing today.  While his numbers were no match for the FED,  in his day  it was unconscionable. He got everything that was coming to him and a lot less.
    Wall Street may revere his ‘accomplishments’ just as they respect Lord Blankfein being able to get Hank Paulson to pay them their losses and bonuses in spite of abysmal failure.
    WADR to Gel1, and others who think MIlken is shrewd guy who did nothing illegal, I beg to differ.


  185. Yodi – I think we’ve already been through this, are you going to force me to pull up clips highlighting the heads on sticks in the Cancun region? "Views from 30 years ago", nah man, more like 30 weeks….


  186.  Lot of earnings on deck this week, FDX is a big one on Thurs AM along with DFS, GIS and RAD that morning with ORCL and RIMM at night!  Got to get our heads in the earnings game…

    Tuesday, December 14

     


        Before The Open   Actual   Consensus Yr Ago   Yr/Yr Rev  
    Conference Call (Telephone) Best Buy BBY 0.54   0.61 0.53   -1.1% Guidance Downside
    Conference Call (Telephone) FactSet FDS 0.88   0.84 0.74   11.6% Guidance In-line
    Conference Call (Telephone) Pantry PTRY 0.38 c 0.67 0.60   7.7%  
    Conference Call (Telephone) Sanderson Farms SAFM 2.08   1.72 0.96   12.8%  
        After The Close   Actual   Consensus Yr Ago   Yr/Yr Rev  
    Conference Call (Telephone) Rick’s Cabaret RICK     0.14        
        The9 Ltd NCTY     -0.37 -0.43      

    (a) Excluding non-recurring items.
    (b) Calculated using current exchange rate.
    (c) May not be comparable to consensus.

    Wednesday, December 15

     


        Before The Open   Actual   Consensus Yr Ago   Yr/Yr Rev  
    Conference Call (Telephone) Joy Global JOYG     1.16 1.20      
        After The Close   Actual   Consensus Yr Ago   Yr/Yr Rev  
    Conference Call (Webcast and Telephone) AAR Corp AIR     0.35 0.34      
    Conference Call (Telephone) ABM Industries ABM     0.43 0.39      
    Conference Call (Telephone) Apogee Enterpr APOG     -0.10 0.39      
        CPI International CPII     0.23 0.34      
        Dynamex DDMX     0.29 0.31      
    Conference Call (Webcast and Telephone) HEICO HEI     0.40 0.43      
    Conference Call (Telephone) Herman Miller MLHR     0.28 0.20      
    Conference Call (Telephone)


  187.  1020 – Small world, isn’t it!   So you know we’re definitely downscale and local, but kinda cool and fun in the late night…lol!   No, don’t know about Ciao Ciao but Las Vegas is going the way of Detroit, where the main industry is dying and not coming back.  Unfortunately, many local places are locked into leases signed years ago and they just can’t make it.   


  188.  Let’s try Thursday again:

    Thursday, December 16

     




        Before The Open   Actual   Consensus Yr Ago   Yr/Yr Rev  
    Conference Call (Telephone) Actuant ATU     0.34 0.20      
    Conference Call (Telephone) Bio-Reference Labs BRLI     0.30 0.51      
    Conference Call (Telephone) Discover Financial Services DFS     0.42 0.63      
      FedEx FDX     1.31 1.10      
    Conference Call (Telephone) General Mills GIS     0.78 1.54      
        GigaMedia GIGM     0.01 -0.04      
    Conference Call (Telephone) Marcus Corp MCS     0.07 0.07      
    Conference Call (Telephone) Pier 1 Imports PIR     0.14 0.37      
    Conference Call (Telephone) Rite Aid RAD     -0.13 -0.10      
    Conference Call (Telephone) Scholastic Corp SCHL     2.19 2.29      
    Conference Call (Telephone) Stewart Enterpr STEI     0.07 0.06      
    Conference Call (Telephone) Winnebago Inds WGO     0.02 -0.05      
        After The Close   Actual   Consensus Yr Ago   Yr/Yr Rev  
    Conference Call (Telephone) Accenture ACN     0.75 0.71      
    Conference Call (Telephone) Applied Signal APSG     0.22 0.27      
    Conference Call (Telephone) Oracle ORCL     0.46 0.39      
    Conference Call (Telephone) Quiksilver ZQK     0.07 0.02      
    Conference Call (Telephone) Research In Motion RIMM     1.64 1.10


  189.  Tuscadog:  Rates
    I share your interest in getting in position for big time bond trouble.  I know we could have a rush to the dollar for a variety of reasons short term but overall the short bond trade looks like the best medium/long term play.
    Did I read one day you’re in Charlotte?  If so did you work for one of the banks?


  190.  Phil,  are you scoping a short on RIMM based on the Apple / Android market share trends?


  191.  Hmm, randomly cut off SMOD, SCS and TTWO.  Friday is just CCL and WNI in the morning.  

    Next Monday ADBE gets another try at earnings, DRI will give us some insight into the restaurant game, JBL and MU will steer the semis and PAYX will probably indicate no employment growth.  

    Tues is KMX, CAG, IPSU //  HOV, NIKE, RHT and TBX (of the ones I care about) and Wed is WAG, BBBY (flying today) and FSII.  

    RIMM/LV – They are tricky to short.  If they were up more I’d like it but down at $60 is a hard call.  


  192. Phil / earnings — what web site are you pulling those from?


  193. lvmoda/Detroit – My family and I lived in the Willows village of Summerlin for our last 10 years in Vegas.  Without construction or any industry other than gaming, I’m afraid you may be right.  Ciao Ciao was on Durango, south of Flamingo @ Peace Way. They had one of the best prosciutto pizza pies we’ve ever had and that’s including NYC or the "old country".
     
    I hope you’re doing O.K.  I read the R.J. online everyday.  Depressing man……


  194.  

    WHO’S LYING?

    by James Quinn / The Burning Platform

    Excerpt:

    The GDP of the US peaked at $14.5 trillion in the 3rd quarter of 2008. Today it stands at $14.8 trillion, two years later. GDP has gone up for one reason and one reason only – the Federal Government has borrowed trillions from future generations in order to artificially prop up a system already crumbling from the weight of too much debt. Highlights from the GDP calculation are:

      • Private investment is $216 billion lower today than it was in the 3rd quarter of 2008.
      • Exports are $80 billion lower today than they were in the 3rd quarter of 2008.

    A little more digging on the BEA website reveals some interesting data:

      • Personal income has risen by $300 billion since the 1st quarter of 2008.
      • Strangely, private industry wages have DECLINED by $213 billion since the 1st quarter of 2008.

    It seems that personal income has risen due to two major items. You will be glad to know that government wages have risen by $58 billion and drum roll please: government entitlement transfers have increased by $523 billion since the 1st quarter of 2008. The Federal government has borrowed hundreds of billions from future generations and paid it out in the form of unemployment benefits and other social programs so that consumers would spend it today. This is how you generate a positive GDP, without generating a real recovery. And, of course, if the government used an honest CPI rate, GDP would still be negative, just as it has been for most of the past decade.

    I hate to be a wet blanket during this festive holiday season, but the truth is that there is no self sustaining recovery happening. The powers that be, with the help of their lackeys in the mainstream media are desperately trying to convince you that everything is alright. It is not alright. It is getting worse by the day. The only people spending are Lloyd Blankfein and his ilk, while middle class Americans sink further into despair and debt.

    Who’s lying? You know.

    http://www.theburningplatform.com/?p=8360


  195.  Earnings/Rainman – Briefing.com


  196. jromeha
    Heads on a stick. Let me inlighting you about a few things. Just above Phil placed an article on drug use in the US.
    The drug market is just like the stock market for every seller you find a buyer. For the dealers of durgs the US is one of the biggest buyer’s market. If they would not have any buyers there, they would be out of business. Here they can not sell them as most of the children aswell as adults have not got the money to buy them.
    So what would you think will happen to you, if you would pester these dealers for more and more protection money every time to do their business? let me tell you, you possible also lend with your head on a stick, did you ever check out how many heads land on a stick in the US, possible they run out of sticks, thats why guys like Murdock (sorry about the spelling of his name) land in gail, I guess many would like to put his head on a stick.


  197. Redlog / Rates   Yes, in Charlotte NC, but not a banker.  My feel, reading Phil, is that accelerating global dependence on debt financing will force competition and rising rates globally.  This will crash real estate further and bankrupt millions of consumers.  You’re right that the Euro could collapse first, giving a temporary lift to dollar and TLT, but the US must also pay the piper for our selfishness.  The consumer austerity will crush our stock markets.  Hopefully Phil will tell us when to enter the short play.  I’m chaffing at the bit!


  198. Parmboy?? you hiding under the covers at Disney? Did you see MTXX today?


  199. Phil / Who’s Lying — And there you have it. The jobless recovery!


  200. Lying / Phil – Is there a connection between private industry wages going down by $213  billions and businesses posting the biggest earning growth in 22 years?



  201. Milken/Flipspice – I won’t defend the man, but how do you make the comparison with the Fed when he ran a business with customers who were free to buy or not buy his products? He didn’t load anyone’s balance sheet with anything. Companies and LBO funds that financed themselves through Drexel’s underwriting, and banks, insurance companies and bond houses that bought the paper were responsible for their own decisions. Turns out that a lot of those decisions were very costly – to shareholders, employees, and, eventually, taxpayers., – but don’t put that all on Milken. He got busted for genuine crimes, but being a great salesman wasn’t one of them.


  202. I believe that many corporations got fat and sluggish from the top down over the last few decades. Payrolls got over-bloated and people underachieved and accepted ever-increasing wages as their birthright.
     
    We are now in the process of correcting this. It is not going to be pretty.


  203.  The security video of the $1.5M casino chip heist:
    http://www.youtube.com/watch?v=NktlrixHG78&feature=player_embedded
    Must have been a lot of $25K chips since he doesn’t seem bogged down.  Notice how security was tracking him on the camera, but did not confront him.   Company policy and a good one I think.   



  204. @pakdog
     
    I don’t exonerate the CFOs, CEOs, and boards of the companies who ‘bought’ his spiel to use borrowed money to take over companies, not by a long shot. 
     
    But it takes two to tango and Milken was surely the lead in that dance. To me the ‘first cause’ is always the creator and Milken, if you believe it, being  found not guilty of insider trading, is not the same as him not actually doing it. In spades.
    I’m in the process of reviewing all his deals and will post what happened to those companies as soon as the results are in. If you’re interested.  And I’m envious of no one with Prostate cancer, or serving even one month in prison. He ruined many lives and his penalty was a slap on the wrist.


  205. @pakdog
    ..forgot to add this at the end of above…for openers
     
    Drexel Burnham Lambert was a major Wall Street investment banking firm, which first rose to prominence and then was forced into bankruptcy in February 1990 by its involvement in illegal activities in the junk bond market, driven by Drexel employee Michael Milken. At its height, it was the fifth-largest investment bank in the United States


  206. jromeha:
    Yes, I definitely remember you guys going thru this about 5-6 months ago. Can’t get the gruesome pictures out of my head. I had no idea, before then, that this stuff actually went on there. I probably will never use my time share there again, but  will be safer so.  By the way, Cancun felt much, much different when we first starting going there almost 25 years ago. Perhaps too many hardened individuals moved out from Mexico City looking for a quick buck.


  207.  411/Flipspice – definitely interested in Milken’s deals, it’ll be interested to note which ones worked and which didn’t and why.


  208.  Our Elected Reps at work:   The Pigs continue to feed at the trough.
     
     
    The Senate Omnibus Is Out
     
     

    It’s nearly 2,000 pages, and even the tables summarizing its thousands of earmarks are a sight to behold.
    The AP is rightly portraying the bill as the porkers’ last hurrah, a kind of monster’s ball for old-guard appropriators — Republican and Democratic alike — “seeking one last victory before tea party-backed GOP insurgents storm Congress intent on ending the good old days of pork-barrel politics.”

    “That omnibus bill will be loaded down with earmarks and pork barrel spending, which is a direct — a direct — betrayal of the majority of voters on Nov. 2 who said ‘Stop the earmarking, stop the spending, stop the pork barrel projects,’” protested Sen. John McCain, R-Ariz.

    And Sen. John Barrasso (R., Wyo.) tells National Review Online that while he hasn’t had a chance to review the package, it “sounds like a last gasp effort of a congress that spends too much.”
    Indeed, the Senate bill has more pork fat than the House counterpart passed last week, and far worse, it contains funding for Obamacare implementation.


  209. @pakdog
    Two huge cmpanies that immediatley come to mind are Global Crossing and MCI —both kaput…


  210. "Gubmint Knows Best"
    http://slopeofhope.com/2010/12/gubmint-knows-best.html

    No comment needed.


  211. Just a note on unemployment payments.

    Last time I checked I was paying into the fund on my W2.

    It’s not really accurate to say that paying out unemployment compensation is borrowing from future generations.

    Yes, it’s an entitlement, but sometimes people are actually entitled to their entitlements, i.e. they have been paying into the fund their entire lives and now they need the help. Maybe the gov. does a bad job of saving funds from unemployment insurance a la social security but it seems like unemployment insurance might be one of the few things that we have paid for.


  212.  Interview from today w/ CMG co-CEO.   
     
    http://www.fool.com/investing/high-growth/2010/12/14/live-chat-chipotle-co-ceo-monty-moran.aspx
     
    I recommend simply reading the transcript; you can do what was a 1-hour Q&A in 5 minutes.
     
    Nothing very illuminating here IMO.  Here is my takeaway:
     
    -  "Asian concept".  Whatever it is, they plan to test in 2011 with 1 store  (no big near term growth oppty).
    -  No discussion of #’s, margins, costs, anything financial
    -  CMG does not franchise.  All stores company owned.
    -  CEO seems to think that going to Chipotle is "exciting".  I don’t agree.  Its just a quick, modestly inexpensive, decent lunch.  There is nothing exciting about it.   If anyone wants to share the excitement of their lunch at a CMG, please do share.
     
    An interesting read, but not terribly informative from an investment perspective.


  213.  Man, GX brings back some memories – a friend of mine had a boatload of restricted Global Crossing stock – used to work at CIBC, which was one of their bankers that also invested in the company cheaply and had all sorts of cheap warrants.  Lots of CIBC folk had potentially lucrative stakes.  My buddy’s was worth 10′s of millions at one point … but it was restricted and they could not sell; by the time they could, it was worthless.


  214.  Samz3700 — companies pay into unemployed insurance funds – at state level.   As a W-2 employee, you do not.
     
    Plus, to the extent that governments are paying out more funds than they are taking in (and they are) that is borrowing money to pay out "entitlements" or handouts or whatever you want to call it.


  215. Samz: you  are probably thinking about State Disability Insurance,  Unemployment insurance is an employer expense (at least here in California)


  216.  Flip
     
    Milken was a "deal maker", much like a pimp… He is entitled to his service fee at a fair market value… but remember, he was not the "whore" or the "john" to put it all on "street" terms. The parties benefited from his services and were happy. His efforts resulted in LBO’s that represented fair market values for the assets transferred.. A lot of efficiency was achieved, through these acquisitions, as the assets were better utilized. You say  Milken caused job loss… that makes no sense, as he was nothing more than a marriage counselor and introductory agent that gave advice about the financial consequences of a marriage. If, after the leveraged purchase was consumated, there were employees that were no longer needed, then, I’m sure Milken had no responsibility to provide them with unemployment insurance, as I believe you think might be appropriate. When you are introduced to a potential mate for marital purposes, is it appropriate to blame the one who introduced you, for ever, if the marriage turns out less than desirable? No. Milken was accused by many that were envious of his success, and as always the false accusations and resulting legal problems fall on the ears of those that would "like to believe he was guilty". This man was innocent, and FORCED to plea bargain… just to salvage any life in the future. He, in my opinion, gave new life to dying businesses. Unfortunately, many that sought his services were cockroaches, and "if you lay down with the dogs, many think you might have fleas"….. All of this was guilt by association, and this guy was the target of those that could not stand the thought of his success.This book has been written before and I’m sure you will see a new version some day in the future, as envy is far more pervasive than success.


  217. " Gubmint" knows best when most have given up thinking, as they assume that is being done for them…. before long the brain and the body reaches a state of atrophy, and we all have become "mind dead robots" That is OK, as we all have the "Gubmint" looking out for us, and all is well..


  218. Flipspice – MCI and Global Crossing were involved in large bankuptcies, neither had anything to do with Milken, though. Looking at the settlement with the SEC I don’t believe he got off easy. Not a lot of prison time, but $200 million fine, $400 million returned to investors, and a lifetime ban from involvement in the securities industry. The list of crimes he pled to makes me think it was quite a negotiation – love this one "Sending confirmation slips through the mail that failed to disclose that a commission was included in the price." Ok, ya got me, don’t shoot G-man, don’t shoot.


  219. humvee,
    It varies from state to state. In PA, unemployment insurance comes out of every check.


  220. It seems that we get a little more as well. My hubby’s unemployment was more than someone I know in OH that makes more than him.


  221. interesting information on  unemployment insurance: 
    http://usgovinfo.about.com/od/federalbenefitprograms/a/ucprogram.htm


  222. Great call at 2:24 Phil!


  223. Good morning!

    Well, we’re off to a hellish-looking start this morning and the Dollar is only at 80.14 – that does not bode well for the market.  Gold flopped down to $1,387 already (5:30), copper $4.14, silver $28.96 (you should see the hate mail I’ve been getting!), oil $87.40 and nat gas $4.23.

    Our indexes look down about half a point so far but the Hang Seng dropped 2% with the rest of Asia down about half a point and Europe is looking down about half a point too and still weak.  

    Moody’s says they will probably cut Spain’s rating so that’s the spook of the day, CPI is likely to be another one at 8:30.  UK Unemployment is heading higher and, of course, they are rioting in Europe again (that’s a police van burning in the video!).  I love the total lack of mention of this in the MSM – I guess this is the pretend part of extend and pretend.  

    Very Important Read/Watch from ZHedge about Stockman on Dylan’s show:  

    After recently debunking the economic "recovery’s" flagrantly misrepresented employment data, the OMB’s David Stockman makes a third appearance in as many months (previously here and here), this time on Dylan Ratigan. And as always, it is a must see: key soundbite: "We have had a Fed engineered serial bubble, that has created the appearance of wealth, that has caused people to consume beyond their means through borrowing, and that has flushed the income and wealth of our society up to the top, as a result of the Fed turning the financial markets into a casino. These are pure casinos, they are not capital markets, they are not adding to the productive capacity of our economy, they simply are a bunch of robots trading with each other by the millisecond as a result of the Fed giving them zero cost overnight money, and giving them all kinds of hand signals on what to front-run." It is almost as if Stockman reads Zero Hedge… And he continues: "The Fed is destroying prosperity by funding demand that we can’t support with earnings and productions, causing massive current accounts deficits and the flow of funds overseas and the build up in China, OPEC and Korea of massive dollar reserves which is a totally unsustainable, unsupportable system, and we are coming near the edge of where that can continue to remain stable." Ironically, Stockman is spot one when he notes that America incurred enough debt to have effectively LBOed itself. The net result, as every PE principal knows all too well, is a husk of an entity, whose most valuable assets have been bled dry. At this point, the last straw for America will be the inevitable rise in interest rates (at some point over the next five years, the Fed and Treasury will have to sell a combined $5 trillion in debt – that alone will destroy the supply/demand equilibrium and send rates surging) which will result in either debt repudiation or outright bankruptcy. The only good outcome is that the great experiment of LBOing America by the kleptocratic elite is coming to its sad conclusion.

    Some other facts:

    • In 2000, there were 72 million middle-class jobs: manufacturing, construction, FIRE, transportation, etc; today, there are 65 million jobs, we have lost 10% of our middle class supporting jobs. We have replaced these with part-time jobs.
    • In 1981 the national debt was $1 trillion. Today, it is $14 trillion. The economy in the same period is 3.5-4 times bigger, the national debt is 14 times bigger.
    • Booby-trapping the 2012 election with a the latest set of tax-cuts that expire just days ahead, will panic the White House into doing the wrong decision for the economy once again in another political trade off that delays the inevitable collapse.

    Full clip:

     

    Visit msnbc.com for breaking newsworld news, and news about the economy

     

    If you want to never complain about US housing prices again, check out the 5,000 sq ft Hong Kong Townhouse for $35M ($7,000 per sq. ft!).   


  224.  Mexico – Not to belabor the point but the LA Times just did a whole section on the drug wars this weekend.   Here’s the one that really has me running to the travel agent, Yodi:

    Mystery of missing 20 may be solved
    Eighteen bodies found in a mass grave south of Acapulco may belong to members of a vacationing group of men who vanished Sept. 30. Relatives will attempt to identify the corpses while authorities continue to search for more bodies.

    Cancun mayor’s arrest adds to Mexico worries
    The charges against Gregorio Sanchez, on leave to run for governor, add new force to worries organized crime has infiltrated politics at all levels and is undermining moves toward a real democracy.

    Mexico ranks #6 in murders per capita with .13 vs US (#24) at 0.42 so about 1/3 but the UK is .014 so 1/3 of US and Japan is .005 so 1/3 of them!  Hong Kong is just above Japan at .0055, which is interesting but maybe only because I’ve watched too many James Bond films and it seems more violent than that.  Greeks are also very nice to each other with just .007 murders per 1,000 people – I wonder what the US rate will be when our unemployment is 25%??? 

    Paying the piper/Tusca – Well keep in mind that, even if we cut back, we’re still on a path to borrow $6Tn over the next 5 years.  That’s a lot of money and that’s just the US!  There are few countries in the World not running deficits and the baby boomers are retiring all over the World so the $70Tn of unfunded US liabilities and hundreds of Trillions of unfunded Global liabilities begin to need funding as well.  So a few Trillion here and a few Trillion there and, before you know it, you’re talking some real money…

    Connections/StJ – Of course.  It’s what Rob Reich points to on the main page article, what’s basically going on in the US is that employers are driving down wages/benefits while wringing max productivity out of the workers (who will work unpaid overtime as they fear for their jobs) – effectively driving US wages down to Chinese levels as fast as they can.  That is one very profitable model, especially as their business plan is no longer to sell to US citiizens but to expand overseas – creating more jobs over there and ordering more equipment over there and buying real estate over there and creating construction jobs over there and demanding services over there….  


  225. Phil, Please to see you running to fly to Mexico,
    Most of these cases have links to drug dealing. If you mix with these gangs you might be hang with them. It only stops if the US stops buying drugs.


  226. @gel1
    Let’s agree to disagree on Milken. Ivan Boesky got off practically scot free for testifying against Milken, telling Giuliani where some of the bodies were buried. Milken got off pretty well considering the number of companies that he had leverage their balance sheets to unsustainable levels, laying off employees,  pay the high interest rates his junk bonds commanded.
    Given the nature of the men and women involved in the latest Mortgage backed securities credit fraud/ fiasco of global proportions, their essential criminal minds, I will never be convinced that only envy was the cause of--at that time the greatest credit fraud in history which was committed at least 2000 times.
    Saying that Milken was not a filthy crook is like saying Paulson, Blankfein, Fuld, Greenspan, TheBenbernank, Geithner, o’neal, Lewis, Mack, Fink, and all the others  are just really good businessmen.    He may not fall to the level of a Madoff, but two years in jail, giving up some money he obtained thru the borrowings of the companies he got financing for at usurious rates, and a ban from securities trading only looks draconian compared to the fact that all those listed above aren’t serving life sentences for their past and continued crimes.
    If anything, the prosecution of Milken only looks bad in contrast to the fickle nature of  the characters responsible for balancing the scales of justice. 
    I lived thru Miken’s shenanigans and watched closely as the companies that he initially wooed, spread the word that Milken could get financing for good but undervalued companies—his best moments—,  and then watched as he got paid hundreds of millions for obtaining financing for   so-so companies, then companies that should have been and eventually did bo bankrupt allowing owners and managers to walk away with borrowed money that they would never have to pay back, AND saw as he ‘trained’ other thieves like Gary Winnick at Global Crossing.  I saw it happening in real time. And I remember the employees of Drexel standing on the street with their lives now in shambles.


  227. @pakdog
    Seeing as how bankruptcy is essentially a credit problem,(Owing more than you own)  I don’t know how you can say that Milken arranging 1 billion in financing—doesn’t sound like much now, does it? but it was serious money back then, BIG serious— for MCI, and Global didn’t have anything to do with Milken.


  228. Woops, there goes the dollar, slapped back down to 80 starting 6am on the dot! 

    Fat Corps/Barf – It’s a systemic problem.  Once you allow Corporate profits to reach a certain level (through lack of taxation), they are forced to do whatever it takes to keep those profits coming in and that leads to the mess we have now.  I don’t know if this can be fixed anymore as it’s a global problem with corporations just moving to the next nation that’s willing to exploit its people and resources in exchange for campaign donations.

    Athens rioting too. 

    Casino/LV – That’s just what I thought, it’s quite a hike out of there and they just let him go?  No Tasers, nothing?

    Pork/Cap – Well, that’s what they mean by "gaining consensus" right?

    Unemployment/Samz – Good point.  The government is like some shady insurance company that is happy to collect premiums but, when it comes time to pay, you have to go through some nightmare approval process (Congress) where they deny, deny, deny…  Yet another mandatory insurance program where workers or (employers on behalf of the workers, depending on state) pay tens of billions into it and, when it comes time to pay them back the Government suddenly calls it an "entitlement program" as if it’s not an obligation back to the insured.    Also, if the risk of becoming unemployed has doubled, shouldn’t the withholding double as well?  That will never happen because it’s a flat tax on wages with no upward limit so the wealthy would pay more than the poor and we know that will never fly.

    CMG/Cap – Beware of any company who says "China" as their main growth plan.  

    Thanks Praiz! 

    Drugs/Yodi – You are right about that, no customers would equal no drug trade but I think it’s more realistic to legalize it because getting people to quit would take decades (if ever) while legalizing drugs would put the cartels out of business overnight.  


  229. Still on vacation….but saw a few questions on the biotech/pharma sector
     
    ARRY/tacha – I have liked them for a while and we have played them a few times.  Their MEK inhibitor is critical, and any hints at working and they will be a takeover candidate.
     
    ENDP/gel – I have been watching them but not seen anything this week obviously.
     
    BSDM – now lookie there at that one…..unreal and if you have ANY profits….um….take ‘em.  If still on the down side from our original play, then hold on tight.  I expect them to pull back soem as well, but could be fun for a nice few days of trading. 
     
    Phil  or original FCX play for Feb11 $90 P are down….DD or should we roll up to 95s for 70c?


  230. Milken/Flipspice – 2 things, Global Crossing was founded in 1997 long after Milken pled guilty and was officially out of the securities business in 1990, so either he had nothing to do with their failure or his evil powers are greater than any of us dares to imagine; MCI was merged into WorldCom in 1997 and went down in the accounting fiasco that led to Bernie Ebbers joining the Club Fed for a 25 year term. Finally, anyone who bankrupts their company by overleveraging bears the responsibility for their bad decisions. Blaming the investment bank doesn’t work.


  231. @Phil
    Since boldly jumping into selling the   2012 $4 TZA puts, I’ve learned the hard way about decaying value of triple ETFs.
    Since learning about ‘rebalancing’ that these triples and all ETFs do, would it be advisable to double down at this time or just eat the small loss and forget about EVER going more than a few months out on these things again?


  232. @pakdog
    Sorry to get back so late….
    Your reference to Milken’s evil powers is right on though you think it is a myth.  His evil powers spilled over for decades and indeed still pervade the credit markets.  He is essentially responsible for the creation of the tools used for balance sheet destruction no less than Einstein, Oppenheimer are for the Atom and hydrogen bombs.
    Winnick was the primary culprit behind the Global Crossing fiasco. You must know that he learned at the feet of Milken all about leverage with junk bonds as did Bernie of Worldcom infamy and Kozlowski at Tyco.
    As the primary mover, Milken encouraged outrageous leveraging and anyone who picked that up from him can hardly be credited with inventing the single most destructive tool for  wiping out companies that--to that time--was ever concocted.
    We will differ on this forever so let’s just let it go.  I lived thru what he did and remember clearly how he bankrupted his own company. That, to me, is evidence enough that, while he used his original idea for a lot of great investment— the LBO with junk bonds—-leveraging great companies which were undervalued, like all other megalomaniacs, he let it take over his ego, and wound up letting it get out of control, becoming disastrously avaricious. 
    It’s at least some justice that as he flew to close to the sun, he crashed and burned.  
    He is far from the neutral innocent that some claim him to be.