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Fake-Out Thursday – Oil Scam Continues Unabated

What a joke the oil market is!

First of all, the NYMEX contracts for January delivery close on Tuesday and there are still 132,168 open contracts or 1,000 barrels each (132M) scheduled for delivery to Cushing, OK, a facility that can handle at most, 45Mb of crude and is, at the moment, full.  The price of those barrels surged from $86.82 all the way back to our shorting target of $89 yesterday, where we once again had a nice ride down.  Now, in pre markets, it is back over $89 again and we’ll short it again so I’m not complaining about the action but I am upset that this blatant rip-off of the American consumer can go on right under our "leadership’s" noses.  

Logic alone dictates that if 132M barrels are on order for delivery to a storage facility that can only handle 45M barrels that the orders are mostly bogus.  You can track the open interest every day right here so don’t take my word for it, watch what happens over the next few days as the people who are currently pretending to demand oil in January, roll their contracts to pretend demand for February (already at a ridiculous 268M barrels), March (172Mb) and April (60Mb).  Like the great Carnac, I will put the envelope to my head and predict that, by Tuesday, the January barrel count will fall to under 30,000 contracts, while the new front three months will rise by close to 100,000 contacts.  

This is scam #1 in the energy market and it goes on every month since the "Commodity Futures Modernization Act" of 2000 made it possible for thieves to run the energy markets with virtually no regulations.  I’ve been speaking out on this for years and just this weekend, the NYTimes picked up the ball I tossed up over a year ago (better late than never!), when I pointed out that the Global oil scam was costing us 50 times more than the Madoff scandal EVERY YEAR!  We’re not going to go into all that again as I want to highlight scam #2 in the energy markets and that is the weekly manipulation of the oil inventory reports.  

Florida GOP Lawmakers Live For Big Oil ImageYesterday, Criminal Narrators Boosting Crude were very excited to report that we had a 9.9Mb draw in oil inventories.  WOW!  That sounds like a lot of oil demand doesn’t it?  Of course, any real news people would mention that the report clearly indicated that "U.S. crude oil imports averaged 7.7 million barrels per day last week, down by 1.4 million barrels per day from the previous week" but CNBC is not news, is it?  As I pointed out two weeks ago today, they are nothing more than PROPAGANDA as a station owned by a company that makes a good portion of it’s income selling energy-related products and makes much more money when oil prices are high than when they are low.  1.4M barrels a day times 7 days is 9.8 Million barrels that the US was shorted in order to keep the price of oil high – WHY IS NO ONE BEING ARRESTED?!? 

It’s not just American Citizens who are paying the extra $60M per day that the $3 pop in oil costs us, the rest of the World consumes another 70M barrels a day and they are stuck with a $210M per day bill as well for each $3 gain in price.  And that, of course, is before the refining mark-ups.  Just the $270M a day they screwed us out of this week is a very nice $98.5Bn annual rip-off of the global population or, what I pointed out last year is a Double Madoff!  

Now consider that the real price of oil, when measured as global output vs. global demand on a historic basis should be closer to $60 a barrel than $90 and you have a TRILLION DOLLAR annual scam going on and our joke of a government does NOTHING to prevent it.  Oh wait, I’m sorry, they do something, they accept massive campaign contributions from the Energy industry to block any legislation meant to put a stop to this on-going crime.  Perhaps if it were "just" a Trillion Dollars that was being stolen we could just laugh it off and accept it but the artificially inflated price of oil impacts food and many other products plus, as I mentioned, the refining mark-up alone almost doubles the net cost to consumers so, Globally, we’re paying close to $5Tn in inflated prices just so the Energy Cartel can screw us out of $1Tn.  It would be much cheaper to just hand them the cash in exchange for charging a fair price for the oil, wouldn’t it?  

 By the way, I apologize to my Republican friends for the above cartoon – the Democrats have had two years to do something about this and have proven themselves to be just as big a bunch of sleazeballs as the Republican’s ever were.  How’s that for fair and balanced.  This is a GLOBAL problem and it’s obviously not going to be fixed by the voters or the people in power so I’m going to reach out to the business community.  

The Global Corporations who do not sell energy products who are also suffering as $5Tn of consumer money is being diverted away from their companies in order for consumers to overpay for food, energy and other related products.  That’s 10% of global GDP that could be spent on assets, rather than going up in smoke every year!  The non-energy companies need to get their own lobby together – one that calls for oversight and regulation of this industry and they’d better do it soon as our friends at Goldman Sachs are already pimping for the next $5Tn rise in energy-related spending as they raise their forecasts over the $100 per barrel mark – something that will, once again, collapse the global economy while Lloyd and Co line their pockets with record bonuses and Government bail-outs.  

Meanwhile, has anyone noticed that the Hang Seng has dropped 800 points in 2 days?  I know that doesn’t fit into the Global growth narrative the MSM is shoving down our throats but surely someone is paying attention to China’s rapidly declining market?  Things were looking so bad this morning that Goldman Sachs tried to manipulate the market by announcing a new China-based hedge fund (2:30 am) and then the S&P jumped in at 3am and hiked China’s credit rating which halted the decline for about a half hour but then they dropped another 100 points into the close.  

I like to play a game in the morning called "Let’s see how long I can listen to CNBC and not hear a word about this" – it’s lots of fun as you watch them tap-dance around mentioning any news that goes against their narrative and China falling is a big one for them to ignore but, so far today, they are batting 1,000!  

Copper is also in it’s 3rd consecutive day of decline as expanding Global inventories can no longer be swept under the rug.  7,050 tons of copper made their way onto LME inventory yesterday and now there are 357,950 tons in storage as it appears that Shanghai is once again reaching their storage limit of 200,000 tons.  We shorted FCX in Monday’s Member Chat, so a little disclosure here but it’s nice to see we seem to have caught that wave.  

Nonetheless, commodity assets have expanded to a record $345Bn as of the end of November, led by index-led investments.  In other words, the relentless targeted manipulation of the markets in this low-volume rally has gotten index funds to push heavily into commodities.  This allows the Goldman’s of the World to turn ordinary 401K investors into commodity bag-holders right at the top of the market while retail investors are also drawn in, plopping another $6.1Bn into ETFs, a 10% increase in a single month!

We have all heard that China is having inflation issues and we’ve all heard that the PBOC will be hiking rates next year to combat it and we all know that the average Chinese worker makes $2,000 a year yet people continue to "invest" in the China/Commodity story as if we’re at the beginning and not the end.  

While you are BUYBUYBUYing, keep in mind that Corporate Insiders are SELLSELLSELLing, at a pace not seen since 2007!  This, of course, comes as not surprise to Phil’s Stock World readers, as we have a section called the "Insider Zone" that keeps us on top of what’s going on inside Corporate America and you can click on that link and see lots of fun charts so I won’t try to paint a picture here other than to say – Be careful out there!  


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  1. NET $  = +1.05%,  dx/y = (.23)%
    F = 1233.25
    oil(.40),  gold (8.70)
    10yr = (.46)%,  30yr = (.25)%

    overnight futures:  High = 1235.00, low = 1229.50

  2.  Good news for Schwab traders … weekly options are now tradeable, looks like as of today.

  3.  Just in time for options expiration, GS is pumping CMG today, resuming coverage w/ a $285 price target.
    Wed, Thurs of options expiration weeks are notorious for these games.

  4. Cap,
    I don’t see the weekly’s.  Where?

  5. Does anyone have the symbol for the NYMEX oil Phil is trading?

  6.  CMG – Citi weighs in w/ a "Hold" and $260.  Go figure that out.

  7.  Exec, I use Street Smart Pro and its there when you click on options the quote box, for stocks that have weeklys – not all do. 
    I don’t know what is on the website.

  8.  Phil, what do you think of the RIG Lawsuit?  They say they are indemnified by BP.  They are down by 2-3% and BP is flat.  That doesn’t make sense to me.

  9. alleyinsider SAI 

     by mrtopstep

    Apple gearing up to sell 6 million iPad 2s a month, vs 4 million iPad 1s

    clusterstock clusterstock 


    BP Stock Tanking In London Trading As Lawsuit Fears Spike $BP by @WhiteGM

    and,  ROFLMAO !    

    ByronYork Byron York 


    Barbra Streisand left country for Nov 2 elections: ‘I couldn’t face…didn’t want to be here for this bloodbath.’


  10. Phil or Board:
    Does anyone know the best way to roll a loss on an option trade while avoiding the "wash rule’? For example, 2012 leap calls that have lost value and are now too far OTM. If I want to keep the options, but roll them to a strike that is more ITM or ATM, how would I do the transaction without losing the tax benefit of the loss on the original purchase?
    If I purchase the new ATM/ITM option today and then wait 30 days before I sell the original (now OTM) option does that avoid the wash rule so the losses on the original can still be applied against short term gains. Thank you.

  11. NET $ = +.83%,  dx/y = (.16)%
    C =1236.61, F =1231.75
    10yr = (.28)%,  30yr = (.22)%
    oil (.15)

  12. Gel1 – you might want to consider this before putting too much in your CCJ play

  13. Cap, 
    Thanks for the update, I use Schwab. What do you recommend with CMG. I had some 250′s that will expire worthless…

  14. Good morning!

    The only level we care about these days is Dow 11,500 – they either make it or they don’t.  The other indexes are all way above but we can call NYSE 7,800 a bullish cross and S&P 1,240 is the trouble spot over there.  

    I hope I don’t have to tell you I like shorting the oil futures below the $89 line (/QM is the contract on TOS).  The USO $39 puts are $1.06 and expire tomorrow but it’s just .05 in premium so a good way to play momentum below the same line ($38 on USO).  

    Expiration day is tomorrow and I sent out an update on the 1050P early this morning saying we are likely to flatline into tomorrow’s close DESPITE a poor report from FDX and despite a miss in Building Permits (530K vs 550K expected) and despite another 420,000 pink slips being handed out last week.  We have the Philly Fed at 10 and 10 is the expected number, down from 22.5 last month so tragic if they can’t at least hold that level.  

    Aside from FDX missing ($1.16 vs. $1.31 expected), GIS also missed by .02 (.76) but DFS (Discover) had a big beat at .64 vs. .43 expected.  It is still great to be a banker, isn’t it?   WGO (Winnebago) also had a good .13 vs. .02 expected as more and more people are trading in their old homes for mobile ones.  PIR also did well on the demand for cheap furniture.

    So that should hold up XLF but it’s not helping BIDU, which is STILL falling.  This is good for our EDZ hedge and if China falls again tonight, something is really, really wrong over there.  

    More boring watching and waiting this morning.  I’m still bearish into the weekend but with expiration day tomorrow – anything can happen.  

  15. Cap,
    I checked a bunch and haven’t found any that weekly’s.  Do you have a stock that sells weekly’s?

  16.  dclark/Wash Rule, you can’t count on the loss if you continue to be invested in the position.. no matter what you do. Only until you completely close it (ie no open positions of any kind) and then wait 30 days before opening a new one, you won’t be able to include it in your tax records as a loss. 

  17. Exec, /cl or/qm…. The contracts were over 89 again this morning bc TOS started listing the Jan contract price this morning….

  18. Anybody, 
    I cant get commodity prices on Schwab. what is a good site alternative? symbols for Gold/Oil/Copper.

  19. Phil – FCX – we have the Feb 90s, should we roll them up or DD now.  We are in for 2.70.  Looks like they adjusted us down to the $89s after the dividend.


    Also, from PragCap – this is in a downward slope, and from the PPI/CPI and disinflation….we are in a world of hurt.

  20. Cap,
    Do you have weekly’s for Colgate?  CL?  I don’t.  Also, can you get QM?  Nothing for me on Schwab.

  21. Amatta,
    Try this site

  22.  Phil, 
    I didn’t have or saw that we should have had a stop on the XLF… Do I close it now I am down $270..

  23. amatt
    i like the TOS paper account for futures.  /dx is dollar, /hg is copper, /gh is gold, /qm is oil
    or FINVIZ.COM  very cool site.

  24. amatta / commodities — Open a TOS account. You don’t have to fund it.

  25. Phil,
    Oil below $89. Bought some futures. Where do you think it will head? Looking for a good target but do not want to be greedy.

  26. amatt
    sorry /gc is gold

  27. Insurance/Phil
    Phil….great Article about the continued "Con" in the oil markets, especially after reading Paul Farrel’s article on Obama as hostage to the greater conspiracy of Banksters not the Republican’s (Frank Rich Stockholm Syndrone suggesting the take for this article).  Yes, I know, a liberal Democratic mouth piece of the New York Times calling out a Democratic president…… (Rich must have been confused LOL)…..  It is like pealing back a rotten onion….. even the Great Reagan and Bush as well as Clinton have been duped by the greater forces beyond the Republican / Democratic machinery…..
    My question…. living in Joisey…. how much life insurance do you own and is it possible for a derivatives contract to be written, so we can bet on Phil’s popularity with the "mob" and the "cartel’s which you speak….. LOL…  

  28. I don’t want to start a political debate, but someone sent me this article and I think it is worth reading.  In my view, when the government workers start making more on average than the private sector, then there are big problems ahead.

  29.  Phil   Kudos for the oil short   :)

  30. Philly fed 24.3 I am showing?
    Better than expected but market turned red?
    What am I missing?

  31. C = 1234.56, F =1230.25 at 9:00

    10yr = +.34%,  30yr = (.24)%
    VIX +1.23% jumping

    NET +1.17%,  dx/y = (.23)%

    Oil (.69), gold (23.10)

  32. Thank you Rav.

  33. Thanks guys for the response…

  34. For what is worth, the SLV reversed on its ParSar chart
    so as long as it holds below 30, it is in in a negative trend now

  35. so did the IYR and XLY, just spot checked a few

  36. I should have known I’d get sick after going to the school recital.  Getting the flu, I think…

    CMG/Cap – Nice, we could use another whack at them.  Also, someone upgraded AAPL to goose the Nas this morning, maybe GS too.  

     Oil/Exec – /QM on TOS.  

    Dollar is flatlining at 80.50.  Been on hold since we noted it yesterday afternoon.  That is some SERIOUS manipulation when you can sqush the FOREX market like that! 

    RIG/Trad – I will like them if they have a big sell-off.  The difference between RIG and BP is BP already has money put aside and RIG does not so there’s some worst-case discounting.  

    Wash/DClark – You should talk to your accountant about electing Trader Status, that eliminates a lot of that nonsense.  

    FCX/Pharm – I was thinking of the Jan $105 puts at $2.45, and the 2012 $115/95 bear put combo from the beginning of the month.  Those Feb puts went bad fast if I remember correctly and blew past 20% ($2.20) like a day later.  I guess if you are still in them ($1.70) it’s not so bad, I’d roll up to the Feb $109 puts at $7.45 and sell the Jan $104 puts at $3.35 so net $2.40 on the $5 diagonal spread and you can then cover in Feb and if you sell another $2.40 below your strike you are in a free trade.  

    XLF/Amatta – Yes, it was initiated with a stop at .50.  We just got a good Philly Fed so hopefully you get a friendly pop but things are weaker than we thought so not worth keeping. 

    Oil/Kallen – It does not pay to think!  We are thrilled to see $88.50 but if we get past $88.75 then that becomes the stop (and it’s a .05 max loss above $89).  As we cross below each .25, that becomes the stop for 1/2 with the other half the trailing .25 and THAT’S the aggressive (and greedy) way to play.  

    Insurance/Acobra – Gee, thanks!  I think we use AET so you can take puts on them in case I get bumped off.  Tina just had me sign something on a new policy, probably relating to my recent posts…   8-)

    Government workers/Exec – Don’t blame the government, blame the private sector for pressing wages down as they outsource $6Tn worth of jobs, selling our IP overseas to the lowest bidder.  

    Philly Fed headlines were through the roof at 24.3, blowing away expectations but, as usual, only if you stick to the headlines.  Keep in mind it’s a survey, not facts, with 65% of those surveyed seeing Energy and Materials cost going up in 2011 and just 44% seeing wages rising and only 27.4% seeing any benefits increasing for workers.  So it’s more and more profits on the backs of the workers losses.   The employment index fell 8 points while the workweek moved up 8 points so it’s more free overtime increasing productivity and allowing them to lay off more workers.  How long can this keep going?   Since sweat shops are illegal I guess the plan is to turn the whole country into one so there will be nowhere special to raid…

    Prices paid went up 17 points and prices received went up 13 points so more margin squeezing there yet they continue to be optimistic that they will pass these prices on to the workers they are laying off next year.  Oddly enough, prices paid are a net positive on the index and they were up 51.2 and accounted for most of the overall gain in the index.  

  37. rates heading up
    10yr = +.67%,  30yr = +.11%

  38. on the SLV, using P&F charts, a break below 27 would give a sell signal, so maybe waiting for that, along with the negative trend to get short
    just talking out loud, I do not usually follow SLV

  39. CTFC psoition limits on CNBC
    see if they kick the can again

  40.  This could be a lot of stock buying power:


    PIMCO’s Total Return fund may buy up to 10% in equity securities -Bloomberg

  41. mike 5885/Silver – are u looking at ZSL (utlra short silver)?  perhaps a good time to sell puts on it if liquid and/or buy bull call spread. 

  42. Phil/Workers,
    I think you missed the point of the article.  The unions have targeted the public workers similar to how they targeted industry….such as Auto, Steel, and Manufacturing in the past.  We know that these sectors have either gone broke or were forced to move overseas to stay competitive.  Thus, the unions took on a much easy target going after the public sector to organize.
    It is a really scam they have going on.  This is how it works.  Organize a public sector……take your pick……schools……local police….RTA…..Regional Sewer Districts… name it.  Once they are unionized, they demand higher pay, and better benefits.  The beauty of the scam is that 1.  The taxpayers are oblivious to almost everything except who there favorite American Idol contestant is, so it’s simple to get these things past them.  2.  It’s taxpayer money so it isn’t like it’s coming out of anybody’s pocket.  3.  They people that are approving the raises and beni’s….like the school board for instance….pretend like they’re against it…..but in reality are all for it because their salaries and benefits are contingent on the agreements…..the higher the salaries and better the benefits the easier it is to justify their own.   4.  And most importantly….you really don’t have to make a profit or deliver a quality service to continue on with the scam.
    Even better is the fact that you can use all that union money to buy campaigns and perpetuation the system.
    So the real question is……will the unions bankrupt the public sector like they did the private sector.  I think we already have the answer to that question.

  43. Phil – sorry you’re not feeling well – I usually pack hand sanitizer and would love to wear a mask when attending winter school functions….. ;)

  44.  Amatta … maybe sell the Jan 260 call at 2.50 or better and the Jan 190 put at 1.60 or better.

  45.  Exec … NFLX,  USO   weekly’s

  46.  Index ETFs like SPY.
    You should see options w/ a Dec 18 expiration (this week – monthly),  and Dec 23 (next week – weekly) and Jan 22 ’11 (next monthly)

  47.  CL .. I do not see a weekly option.
    QM ?  what’s that … no quote

  48.  Mocha … getting bullish on HK for 2011

  49. Exec – Im not a really big pro-union guy but Im curious how they "bankrupted the private sector"?

  50. Cap – those are the futures symbols, not options

  51. Cap,
    I don’t have them.  Are yours coming up under options in the time window where you would find Near, Dec 18 ’10, Jan 22 ’11, etc?
    What version of SS do you have?  I’m using 4.28.9

  52. Good morning Phil, 
    Great call on Oil!
    I am trying to reconcile my 1050P positions, and I have a net loss of over $1500, and I believe I have entered into all positions as posted for the last 2 weeks. I entered and exited on some at a disadvantageous position vs the one posted but don’t know what else I am missing to be at a loss vs the $3900 the portfolio is up. Sorry to bother but is there any chance you could post the trades to see what is the great disparity…
    Thanks much

  53.  SLV/Mike – Silver tested $28.50, which should provide some support.   Watch copper at $4.10 and gold at $1,360 for breakdowns and then i’t going to be all about the $4 and $1,350 lines that will mean we have a serious correction going.  

    Meanwhile, the dollar is at 80.70 again so the markets are holding up pretty well considering.  The Euro is failing the $1.32 line so we need to watch that closely as well as 80.70 on the buck as they can give us an early look at a market turn. 

    Also very bearish is VNO failing $80!  BXP is at $81.27 and if they fail $80 too – kiss those bullish bets goodbye.  Meanwhile, something is up that’s not being reported if CRE leaders are drifting down like this.  

    Pimco/Cap – Another Gang of 12 member.  That’s what’s been scaring me the past 2 weeks – look at the massive, coordinated effort to goose equites yet they aren’t really going anywhere – that can’t be a good sign.  

    Workers/Exec – It doesn’t get past me, I just look at the story differently.  The Government is the last surviving place for unions in America so those workers have gotten wage increase that have kept them up with inflation over the past 20 years while private wages have actually declined and, vs. inflation, have declined considerably.  No the powers that be are villainizing the government workers as if they are doing something wrong, rather than Big Business, who have crushed all forms of labor protection and transfered fair wages for the middle class to excess profits for the top 1%.  No one would be "bankrupt" by unions if the $6Tn worth of jobs that were shipped offshore had stayed in this country as that would be a 50% increase in GDP and would, conservatively, have led to demand for 70M additional US workers at healthy salaries.  The same goods and services would have been sold, albeit at lower profit margins for the Corporations but the $6Tn in wages would have added $2Tn a year to the government coiffers and paid off our debt and improved the standard of living for all Americans, even the top 1%.  Rather than pursue a beneficial partnership with labor, this country’s ownership class has instead stuck a knife in the back of American workers and sold our nation’s once great and unmatched manufacturing capabilities to whoever would hand them fast and easy profits and now they seek to vilify the Government for not being as cruel, ruthless and destructive to our nation as Big Business has been.  

    CL, QM/Cap – Those are the futures symbols on TOS, you have to be under the "Futures Trader" tab to use them.  

    1050P/Amatta – I’ve been posting changes in comments under the portfolio tab, you can see them in order there.  

  54. Phil:
    So where do the oil markets go with all the corruption?  I assume this corrupt system has been in place for quite some time.  It is interesting to read and learn about, but if nothing changes how is it relevant to those of us that trade in the oil markets? It’s frustrating realizing that everything is just a "game".

  55. Phil / Jobs   $2T annual deficit plus QE and we are still losing jobs.  We keep electing the same corrupt pols, so this has to end badly.  The only way to maintain this massive ponzi scheme is massive money printing globally and the pols will choose this ‘least worst’ option.  Other than gold/silver, I’m confused on how this process will affect short term / medium term stock prices?  ie does manipulation and inflation overwhelm demand/no growth fundamentals?
    Only $2.5 pomo tomorrow.  Could be good set up for a down day?  Then big pomo days Monday and Tuesday $8 and $11,  but Wed only $2.5

  56.  Cap/CMG, I saw your post from last night.. I’m a bit more relaxed now in regards to CMG, as I rolled my 9x contracts to Jun $220s.. but also, I have short Jan $230 puts.. the idea is to have time work for me as opposed to against me. I figured that as long as CMG doesn’t show fundamental weakness/slowdown, the stock is not going to fall significantly. The idea of the front-month short puts is to make some money so I can roll the short calls higher and further out, until CMG pegs a more decent valuation (which is certainly below $220, unless they keep growing at this "perceived" staggering rate forever and ever which I seriously doubt). In reviewing my initial rationale for shorting these guys back in August, I ended up in this situation because I did not set a stop loss from the beginning. All I wanted to do was to sell some premium thinking that CMG was not going to exceed $165 by Aug’s expiration.. I never really wanted to bet against the business/fundamentals, and specially never wanted to fall within an earnings’ month with short calls! (although I did cover before the earnings, but then I made the 2nd mistake of REMOVING the covers and letting the naked short calls again while the stock gained momentum)… but I had no choice than to roll, roll, roll because I didn’t want to lose money at that time and so here am I, now trying to work my way out (and get some money in the process!)

  57. Jromeha,
    Just my opinion……but…..there salaries and benefits no longer became competitive and therefore the products that they manufactured could not be sold.
    Everyone likes to talk about how we should all make fair wages…..up until the point when they have to pay for something.  So if you got a guy earning 80 K a year to push a button that makes a piece on a car….and every single person that makes every single piece of that car is making those kinds of wages….and on top of it they start doing it poorly because they know they can’t get fired, then pretty soon the average Joe that earns 42k a year can’t afford that car. 
    I remember when we made the best cars on the planet.  Then as the wages went up…..the cars got cheaper and cheaper………pretty soon…..people looked elsewhere.  It’s not hard to sell a better product for less money in our market.
    Look at it this way.  Why shouldn’t the guy flipping burgers make 50k a year?  Or the Guy woman that Sears or Home Depot or Gander Mountain.  I’ll tell you why……because nobody could by a damn hamburger if they did.  The bottom line in my opinion is that you should be paid based on merit.  Unions take that logic out of the equation. So you end up with less production for more money.

  58. Any trigger for the stick?

  59. Cap – you should be able to put /QM or /CL in your watch list on the left if you want it to be more accessible

  60.  Phil, Thanks on RIG that makes sense!

  61. Phil/Workers,
    I hear what you’re saying but I’ve been a union company and worked with the government too long to totally agree with you.
    The main issue I have with unions is that it takes the motivation out of the employee.  I’ll give you an example.  If you have two union laborers and one guy is constantly using the jack hammer while the other guy leans on the broom all day long, at the end of the week, they both receive the same paycheck……thus…….it doesn’t take very long before the hard worker realizes that he is the idiot, or gives in to the pressure he is getting from his piers for working so hard…..and he finds a broom to lean on.
    If you are not rewarded for hard work then there is no motivation to work hard.
    Enough said on this topic.

  62. Phil--I’m trying to construct option B-W. Seem to recall preferred method is long call OTM with delta around .5, and short call ATM. This versus, a long ITM call with delta of .8. Correct?

  63. Exec – See, I like to think that it was the car companies’ visions. Perfect example of GM and Ford. GM didnt respond to consumers tastes – they kept making gas guzzlers when clearly the shift was toward more fuel economy in cars. THeir sales suffered while FORD responded to consumer demands and made more fuel efficient vehicles focus, edge, etc… I believe that was the biggest reason why GM went bankrupt and Ford didnt…

  64. exec  – I agree with your points and examples.
    Unfortunately the folks on the left have some fatal flaws in their in their arguments and continue to be in a state of denial by living in their twisted logic. They continue to demonize companies for their increased margins by outsourcing jobs but yet they are the first in line to buy the latest Apple product which continues to support the very practice they protest so loudly. Their words of protest mean nothing when they are contradicted by their own behaviors.  

  65. DK,
    The liberal agenda would work perfect if we all had monopolies.  Unfortunately, unlike the government, and schools and the other government entities that the unions are focusing on, we need to be competitive or you go out of business.
    The day will come when you can no longer print money to pay for these things and when it comes we will see what Phil posted on Italy yesterday here in America.

  66. Phil – was thinking of buying the Dec $39 USO puts and selling the Dec $38s for 75 cents…Was thinking it seems like a pretty low risk play to make 25 cents. Unless oil really blows up seems like the worst I’ll do is break even….

  67.  Where/DClark – Well we already know they can pump oil up to $140 but we also know that leads to global bankruptcy so they are trying to find a comfort zone now that they have pumped (through their pet governments) trillions of additional dollars into the global economy.  Keep in mind they are producing (and trading) as much oil as possible and consumption has plateaued so the only variable the energy producers and traders have is price.  That means Trillions of dollars are riding on their ability to raise prices higher and higher and that money has to trickle up from what is, from a global perspective, middle-class consumers.  They don’t care if you only live to 65 due to inadequate health care or poor nutrition (dental already went by the wayside as it doesn’t affect your consumption of commodities to have nice teeth), they don’t care if you have no clothes or other personal items, they don’t care how dumb consumers are as long as they are smart enough to get drivers licenses and not ask any questions.  That’s the global economy – the only difference between the Matrix and our reality is there is no escape from "THEM" in our World…  

    Sorry, that was a bit gloomy.  I don’t feel well and this oil BS is really pissing me off. 

    Inflation/Tusca – Well inflation increases profits, even if it doesn’t increase profit margins.  In the short run, bottom-line profits are what we’re betting on and they can push more and more money through the system until we choke on it.  Oddly enough, the more they put into POMO or whatever to inflate the economy, the less effective it will be and the more they need and the more they inflate… etc.  

    I was sorry we missed the SQQQ entry yesterday so I’m liking the Dec $30s at $1.25 today with a DD at .75 and a stop at Nas 2,655 (not sure where that ends up on the option).  

  68.  TZA $16 calls are .36, low was .33 yesterday so this is a good entry if you want to play for a quick pullback.  

  69. Phil: That’s right, bait them all in then release the trap.  Really good read from ZeroHedge on what smart money and dumb money is doing. Worth a few minutes

  70. C = 1241.16, F =1236.00
    10yr = +.80%,  30yr = +.17%
    VIX (1.84)%
    Net feel a long ways during the move up, NET $  = +.16%,  dx/y = +.04%

  71. The USD/JPY is basing under 84.5 and is coiling for what looks like a big move.  I hope its up.

  72.  I guess we are being POMO’d again today !

  73. Phil:
    Your response is what I expected. And I am glad you are as upset and annoyed as me with all the BS. But we are traders/investors and we have to deal with what we know. Just trying to find a catalyst for improvement on the USO puts. Or are we looking to just break even on this point?

  74. FWIW, Treasury Sec. Geithner is currently testifying before the Congressional Oversight Panel here:

  75. exec – I agree and your example of the car companies speaks for itself. The unions, in all their wisdom of pushing for "fair wages" had a flaw in their logic, they left out your point of (foreign) competition. Ooops. That is why they needed that "perfect world" you describe in order for their ideas to work.
    The same was true with Russia (which is why it failed) and it is why China over the past several years has begun to yield to capitalistic ideas. The Chinese realize they cannot create that "perfect world" which is why they had to modify their strategy rather than live in a world of denial that their system was perfect. They woke up and took a wiff of reality. If only the left in this country could wake up to their flaws as well.

  76. Good morning, and here we are again !!


    IWM 78.68, 78.22, 77.96, 77.78, 77.40, 77.18, 76.78, 76.45 and $7.5 Bil of POMO !!


    In TNA at $ 68.33

  77. For one or the other reason the chili factory is heating up again up 8.60 to 235.36 (CMG)

  78. NET $  = +.04%, dx/y = +.03%
    C =1241.39, F =1236.75

  79.  Exec … yes , that is where I see them.
    maybe you need to upgrade your version.

  80.  /CL /QM …. I don’t think the Schwab platform will give you futures quotes.
    I don’t have TOS
    I was just responding to exec i think …

  81.  Exec   4.28.9   … same as you

  82. Nat gas back down to $4.05 despite pretty nice 164Bcf draw.  UNG has fallen from $6.38 back to $5.55 in just over a week and I like them down here.  2012 $5 puts can be sold for .63 and that pays for 1/2 of the $3/5 bull call spread at $1.30 so net .57 on the $2 spread that’s 100% in the money and worst case is you own UNG for $5.57, which is today’s price but your b/e is way down at $4.29 and a very nice 250% profit if UNG holds $5 for the year.  Good inflation protection and I’m showing just $1.10 margin on the put side.  

    Wages/Exec – It’s a complicated topic but it all boils down to profit sharing.  The money is there to pay the workers – the $2Tn worth of corporate profits last year is $14,285 for each of the 140M US workers or enough to employ 40M additional $50,000 people.  Economists could argue that it would be great for US corporations to put that money back in the labor force and it would expand their client base at home and the money would pump up the US GDP and maybe they would make another Trillion but the problem with that is that they don’t know for sure that THEY will get the money back.  If AAPL pays a woman in Minnesota to assemble an IPod for $2 instead of .20 for a Chinese worker, they don’t know for sure that that woman will turn around and buy an IPod, she may buy a washing machine or, even worse, a Kindle!  Of course AAPL has a model for this and they know they won’t get enough benefit from keeping manufacturing local to be a net benefit so they don’t. 

    What we have now is the result of thousands of companies acting in their own self interest, rather than in the interest of this country and the net effect is this country, just like any colony, is stripped of its resources, stripped of it’s wealth and then enters a period of either slavery or wage slavery (same thing) until it has nothing more to give the trading companies at which point the move on to greener pastures.  We’re in that end game now and if you want to maintain the charade that "free market capitalism" is good for America  - then there is no turning back, we will just keep giving until there is nothing left to give.  This is our future, it’s not a joke and we are voting for it and people are wrapping it up in a flag (the commercial blames government waste as the problem) as if that’s the problem – anything to distract you from reality. 

    You want the government to cut back?  Add another 10% to unemployment?  Sure, that will be "great" for America, won’t it?  

    Meanwhile, this is an old chart but it is actually better than an updated version would be.  Corporate profits go up 4x, wages decline or stay flat and national income declines – that has been the pattern of the past decade and the last place citizens can hold jobs that aren’t going down in salary is the Government.  If they can break the back of government wages and disable the last Union stronghold in America, then there will be nowhere for US workers to turn and they will be rapidly forced to accept lower and lower wages year after year until we reach equilibrium with China and Africa.

    As a Member of the top 1% and an investor in Global Corporations, I can just say "FANTASTIC" and move on but I still believe this is a short-term solution and that, in the long run, we will all be worse off and my children will certainly be worse off unless they marry for money and remove themselves from the working classes – who are surely doomed.  


  83.  Exec …. here is a screenshot of a trading window with the weekly call options for USO

  84.  Ravalos — just a suggestion … take advantage of the run up to roll the CMG Jan 230 short puts to a lower future strike.
    I can see CMG falling further over the next month … I am in the short 210 puts for January.  Maybe go out to the April 200′s or something like that.  Or lower.

  85. Jbur

    thank you for the zero hedge link

  86.  June 190′s or June 185s Puts ravalos  or March 210s

  87. Phil, can you provide a correlation between oil futures and USO? Also the link for futures above does not give real time info, what would be used for that on someting like StreetSmart?

  88. Cap
    Unless I’m missing something I don’t see weekly’s.  Are they listed as Weekly?

  89. Out of TNA at $70.10; I was hoping for IWM 77.95, but…………………

  90. Cap,
    Thanks for the screen.  I don’t have them yet.

  91.  No, but there is only one weekly option at a time.
    You should see options for Dec 18, Dec 23, Jan 22, etc.   
    Dec 23 is the weekly

  92.  Exec … the only thing I can think of, is that maybe you need the highest level of Options permissions … Level 3.
    Call your guys at Schwab and ask them why you don’t see the weekly options in your platform.


    thanks for the zero hedge link

  94. phil, i really appreciate your take on the oil scam--thought you might find this interesting:
    It certainly doesn’t help to read of a shortage in crude oil spiking prices on the barrelhead. According to the latest word out of Washington, inventories have just dropped 2.77% — the biggest such falloff since 2002 — leaving refineries scrambling to brew up as much gasoline as they can manage. Crude futures for January delivery — already up more than 16% since September — added a quick two bucks and change on the news.
    Price Controls?
    I’m not the only one feeling a tad squeezed here, either. I’m told that Delta Airlines’ General Counsel, Richard Hirst, has fired off a rather stiff letter to Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission, complaining that “the speculative bubble in oil prices has concrete detrimental consequences for the real economy.”
    Hirst is asking the CFTC to move “aggressively” to limit the number of contracts a single firm can hold. Needless to say, Wall Street sock puppets like the “Securities Industry and Financial Markets Association” and the “Futures Industry Association” think quite differently about such price controls, suggesting as politely as they could manage that the CFTC “lacks sufficient data to gauge the appropriateness of such rules.”

  95.  Unions/Exec – I’m not saying unions are great.  They are bloated and corrupt just like everything else.  The idea of unions makes a lot of sense but the execution of that idea has been lacking.  Lack of collective bargaining puts multi-billion dollar corporations at negotiating tables with kids coming out of college who need jobs to pay off loans.  That’s unfair and that’s the only thing that matters.  If the situation is unfair then the agreements are unfair and will end up being advantageous to the corporations.  Since the corporation is effectively immortal but the lengths of employment are about 6 years, then even a marginal 2% improvement in contracts for each cycle lead to a 10% decline in real wages every 25 years for the workers.  It would be fantastic if you could get rewarded for hard work but Corporate America does its best to make sure you are treated like a fully replaceable cog in their machine and, like any part, they contract out to the lowest bidder – hence $6Tn of jobs outsourced by US Coporations, who are close to spending more money overseas in salaries than they do at "home".   20 years from now, when 50M Chinese workers have gotten their masters in business and years of management training – what will be the point in your job?  If you don’t own a business or perform a unique service that can’t be replicated overseas – don’t expect your "negotiating position" to be too good in the coming decades.  


    First they came for the farmers, and I did not speak out--
        because I was not a farmer;
    Then they came for the craftsmen, and I did not speak out--
        because I was not a craftsman;
    Then they came for the trade unionists, and I did not speak out--
        because I was not a trade unionist;
    Then they came for the middle management, and I did not speak out--
        because I was not middle management;
    Then they came for my job--
        and there was no one left to speak out for me.


    Buy-write/LP – That’s an OK rule of thumb but you have to give primary consideration to your target and at what net price you REALLY are willing to own 2x of whatever you are buying. 

    USO/Jrom – I’m still worried oil will fall hard but you are right, it’s a very reasonable risk and you can always roll.  

    Great chart Jbur

    USO/DClark – We’re not getting the sell-off we expected and the NYMEX paired 30M barrels today (all rolled into other months) leaving just 100M to get rid of and figure 25M can be delivered so this spike in oil worked and they now have things under control so it looks like we will end up taking a loss after the weekend and getting out even would be a lucky break.  

    Geithner/Kinki – Thanks. 

    JPM raises AAPL to $420, up 30% from last upgrade.  Gotta goose that Nasdaq!  

    Big inflection point JRW….

    CMG/Yodi – Upgrades.  

    Correlation/B1 – I don’t know what you mean by "provide" but they are pretty close in movement.  If you set up a paper trading account at TOS you can get real-time futures, which is really nice – I don’t know of anyone else who does that with free accounts.  

    Meanwhile, speaking of oil.  Taking the stop out at $88.75 puts us back in cash and now they are back over $89 so we can go short again on the next cross.  That’s why it’s good to take that futures money off the table quickly.   Had they blown lower, we simply could have set up a lower line to play off for the next entry but this way, we can catch multiple moves even on days they just hang around resistance.  

    Dollar heading for test of 80.50 that will be crucial – bearish directional bets are off if they can’t hold the line.  

  96. Hop on the BUY program !!

  97. mike:
    You’re welcome. I thought the piece was timely. Market moving up on light volume, everything is rah! rah!…. until it’s not.

  98.  Cap, why do you see CMG falling a lot in the coming weeks? I am under the assumption that shares will be bid up or kept here in expectations to a great Q4.. only to disappoint. I base this assumption in a lot of others examples where there are huge expectations prior to earnings and then they fall hard.. since Jan’s expiration will be certainly before CMG announces numbers, I am fairly confident they will be kept around this level.. For example, when ISRG reversed its trend, shares were so crazily bid up from $320 all the way to $395 before they announced numbers.. then they fell hard.. and have been falling ever since. The idea is to get this money before they announce the earnings, and just leave the naked short calls. IF CMG beats significantly, then I would sell again short puts very close to the price to keep making some money in order to roll the short calls.. what do you think?

  99. Cap,
    I have level 3.  Have you ever used Schwab’s Live help.  It’s slick and they are informed.
    Check out this string.

  100.  Hey, this chart really says it all!  What nonsense a commodity rally is:  

  101.  Lost the Dollar!  Best upside bet is gold at the moment on that basis (dollar below 80.50).  GLD $133 calls are $1.28 and a stop at $1.10 is a good way to play looking for a quick 20%+.

  102. Phil/Unions:
    I’m not going to dwell on Unions because I know where your head is.  In the past unions were necessary for the reasons you point out.  Having unions for agencies that have monopolies will only serve to give them the power to blackmail the populous.  It’s happening in Europe and in some regards it is happening here.  For example, have you ever wondered why they immediately threaten to cut off your garbage collection or sporting activities whenever a levy or budget isn’t passed.  They always seem to ignore all the other waste that could easily be cut.

  103. Phil/Unions
    BTW……our new governor in Ohio is threatening to abolish the prevailing wage law.  When that happens our company is F’d because we will not be able to complete without cutting our workers pay.
    The fact of the matter is we can only compete in Government work because the unions have all of the politicians scared and the don’t let non-union companies bid on the work…. or the punish them so bad when they do get a job that they never come back.  The bottom line is the Gov pay’s more for the work than the private sector……which is ok……it’s only the taxpayers money. :)

  104. The dollar should bounce here (80.10 on the futures); if it does it’s TZA time !!

  105.  Exec … that’s interesting.
    I still see the chains, but I am not sure the quotes are updating (weeklies)
    I just tried to put in a test order and it got rejected "can’t send the order"; so maybe they are not quite ready.

  106.  Phil / Unions
    Your analysis and conclusion is totally "off base". The unions have destroyed the manufacturing sector in the United States, and only exist in their present form as a result of 40 years of Democrat dominance in our political system. through the outdated labor laws, which were put in place as a payoff for votes received. You are oblivious to the concept of "free market" economics, and do not understand that employment is the same as anything else…. everything is negotiable and the market determines price in a successful economy.  Extortion never should determine price, unless you believe that criminal activity is the best method to strike a fair deal.  You have to be kidding… you mean to say a college graduate has to take whatever is offered… no I do not think so – it is based upon negotiations where one party provides a service, and the other pays for it, if the individual parties agree to the terms. The labor force is a huge market, and is free to negotiate, in a free country……. that is it for me…..

  107. Cap,
    It sounds to me like they may not add them.  Try logging off and see if they are still there when you log back on.

  108. Cap,
    I’m wondering if this was a test they are sending out to see how many people inquire when they don’t work.

  109. In TZA at $16.10; support at IWM 77.70, 77.58 and 77.40

  110. Phil,
    Can’t get a fill at $1.30 on the 2012 UNG spread. What do you think of the 2013 $2.5/5 spread at $0.97 and still selling the 2012 puts for $0.63?

  111. Nice call JR
    How did you know the dollar would bounce at that level?

  112.  Exec … I just messaged them as well and told them to get it up and running already (I did it nicely).
    They are telling me it is "still under development" .  "Projected date is sometime in Q1 2011".
    oh well, I was all pumped up … at least I can trade them thru Fidelity.

  113. CMG $285 price target?? —  LOL — what a pathetic pump job. This’ll shake out the put holders through Dec expiration. Jan will be the month (and, more likely, most of that will come Monday morning)

  114. At the open: Dow +0.14% to 11474. S&P +0.11% to 1237. Nasdaq +0.14% to 2621.
    Treasurys: 30-year +0.08%. 10-yr +0.13%. 5-yr +0.04%.
    Commodities: Crude -0.25% to $89.02. Gold -0.88% to $1374.00.
    Currencies: Euro +0.2% vs. dollar. Yen +0.29%. Pound +0.44%.

    10:00 AM On the hour: Dow -0.16%. 10-yr +0.05%. Euro +0.15% vs. dollar. Crude -0.49% to $88.80. Gold -1.59% to $1364.10.

    11:00 AM On the hour: Dow -0.04%. 10-yr -0.11%. Euro -0.13% vs. dollar. Crude -0.54% to $88.76. Gold -1.41% to $1366.60. 

    11:25 AM Markets get a boost from the Fed POMO – the central bank buys $6.78B in Treasurys, of $22.084B submitted by dealers – and the Dow (+0.3% to 11,489) joins other major indexes in the positive. S&P 500 +0.4% to 1,240; Nasdaq +0.6% to 2,633. Bonds slip again: the 10-year Tsy yield +0.04 to 3.56%; 5-year +0.05 to 2.15%. 

    12:00 PM On the hour: Dow +0.3%. 10-yr +0.01%. Euro -0.07% vs. dollar. Crude -0.22% to $89.04. Gold -1.07% to $1371.40. 


    01:00 PM On the hour: Dow +0.49%. 10-yr +0.12%. Euro +0.14% vs. dollar. Crude -0.32% to $88.95. Gold -1.02% to $1372.00.

    Initial Jobless Claims: -3K to 420K vs. 425K consensus. Continuing claims +22K to 4,135,000

    Q3 Current Account: -$127.2B vs. -$127B expected and -$123.3B in Q2.

    EIA Natural Gas Inventory: -164 bcf in-line with consensus. Futures -3.5% to $4.07. 

    Nov. Housing Starts: +3.9% to 555K vs. 550K expected and 519K last month. Permits -4% to 530K vs. 560K expected and 522K last month. 

    Dec. Philly Fed Business Outlook: 24.3 vs. 13.0 expected and 22.5 prior. New orders index added 4 points; shipments index dropped 10 points. "All of the broad indicators remained positive and suggest an expansion of activity. Increases in input prices were more widespread this month, and more firms reported increases in prices for their manufactured goods." 

    General Mills’ (GIS -0.36%) earnings miss and the details of the Phila Fed Index confirm what David Rosenberg calls the "mother" of a margin squeeze as input costs rise far faster than finished goods prices. The ratio of finished goods prices/crude goods prices falls to an all-time low.

    Fueling the commodity rally:  The CFTC admits it will miss its mid-January deadline to finalize position limits for traders in agricultural, energy and metals markets, and plans to propose a phase-in rather than a universal start. Details of the plan will be released today. 

    Great for XLF, bad for America!  QE or not QE, mortgage rates jump again, Freddie Mac reports – to a seven-month high of 4.83% from 4.61%, on 30-year fixed-rate loans, and to 4.17% from 3.96% on 15-year loans. Chief economist: "Market concerns over stronger economic growth that, in the near term, could lead to an increase in inflation have sparked a rise in bond yields and mortgage rates have followed."

    The bond market carnage now has its own name: Bondpocalypse. Amid calls that the bond bull is over and advice on where to invest with yields headed higher, one longtime bond fan says the market is just pausing for breath. Soc Gen’s Albert Edwards puts the recent move in context

    The view of incoming House Financial Services Committee chairman Spencer Bachus – "in Washington, the view is that the banks are to be regulated; my view is that Washington and the regulators are there to serve the banks" – is symbolic of the market fundamentalist crusaders who will set the tone for how banking reform is implemented for the next two years, Andrew Leonard writes.

    The U.S. faces a "lost decade" of weak growth similar to Japan in the 1990s, Andrew Ross Sorkin tells Japan Times, worrying that the U.S. may be "losing ground" as an "environment for innovation." He sees an unshaken Wall Street mentality: "I don’t think there was remorse… A lot of them now call themselves survivors, like cancer survivors or something. But it’s such a misplaced idea." 

    Whitney Tilson’s lost a fair amount of money shorting Netflix (NFLX +1.7%), he admits, but he still thinks their pivot into streaming video is the "beginning of the end": "In particular, we think margins will be severely compressed and growth will slow over the next year." The company is moving into a new, bigger pond full of the "most powerful, aggressive and deep-pocketed companies in the world," he says.

    In an unusual step, U.S. and EU regulators may decide this week that Roche’s (RHHBY.PK) blockbuster Avastin should no longer be approved for breast cancer. The move could shave $1B from Roche’s annual sales as insurers refuse coverage of the pricey drug. 

    In a report released late yesterday, the FDA says it found multiple quality control problems during a recent inspection at a J&J (JNJ) manufacturing plant that was the source of a major recall earlier this year. The FDA says the findings are under review.

    Three lunchtime reads:
    1) Is America the sick man of the globe?
    2) Kass: Color me more bearish
    3) Commodities and the 130-plus-year bear market

  115.  Phil, what ticker are you using to track the dollar in TOS?  I thought it was $DXY, but I’m not seeing it test the $80.50 line.

  116. palotay:   its  /dx

  117. Whuck   VECO  dropped like a rock

  118. NET $ = +.45%,  dx/y = (.19)%
    10yr = flat,  30yr = +.09%
    VIX (3,62)%
     C = 1243.00, F =1238.25
    oil (.45),  gold (15.10)

    see if market throws a fit about delay and makes sure the house gives them their tax cut


  119.  Thanks Humvee.

  120. The dollar should make it back to 80.20 on the futures, so 77.58 anyway on IWM !!

  121. intra-day highs of the last week
    1246.73, 1246.59, 1244.25
    now today 1243.65, see if ti holds

  122. Hi Phil : Need your advice. I bought CVX last June at $71.53 and sold 2012 $75 C for $7.60 and $72.50 P for $7.00 for net $56.93 CVX now at $88.77 with C at $15.90 and P at $3.60 for net $69.27. Thinking of selling stock & calls and keeping puts since I’m not making much upside on calls. What do u recommend? Thank you

  123. Phil- AAPL collar question….I own 3k shares of AAPL at 165. I’m happy to hold on to AAPL for another year, but want to protect my investment at this level here and leave some upside, so i have been looking at the buying the Jan 12 $320 put for $43 and selling the $400 (25% up from here) Jan 12 call for $19, so net cost of $24 (7.5% of notional) leaving me with $56 net potential upside…thoughts? too expensive? any better ideas?

  124. exec / 80.10

    I chart that as well  8-)

  125. JRW    Do you have one of those fancy charts that you do that correlates IWM and the dollar? 

  126. Out of TZA at $16.36 for another 1 1/2%; dollar forming head & shoulders on the 5 day chart !!

  127. Rolling IMGN Ps sold up to the $9s Jan11.  This should increase our profit on our original play on the shares, selling the $9/7.5 C/P strangle.  Have a good weekend all.  Be back next week!  Disney is still not busy, but the weather is much improved.

  128. pharm- Do you have a current view on VRX?

  129. Stockbern - ouch for me on VECO as well, I’m wondering whether to DD or just see what tomorrow brings.  Per Phil’s 5% rule, however, I just bought some 39 calls for the day in case it does little bounce here.

  130. CTFC/Datuu – See above, they are delaying their crackdown and that’s why oil had the greenlight to go nuts, now they can roll all to Jan without worry.  As to lacking data – so how about just TRY something and see how it works rather than doing nothing for another decade.  I doubt they can cause a bigger problems by experimenting than the  25% jump in oil over the past 3 months while they do nothing…

    CMG/Rav, Cap – This close to the upgrade, I’d stay away.  

    Pay/Exec – Still, the point is, why does the Government have to come down to ever-declining private sector rates? Why can’t private sector rise to meet union rates and yes, why not protect those jobs with bidding requirements and import restrictions – just like every other country has?  Why should America be the World’s sucker, buying everything and selling nothing?  We send $2Tn of our money, money we work hard to produce, out of the country every year – if that money stayed in America and had the normal 3x effect on GDP, presto – 60M $50K jobs.  Maybe your IPod would be $149 instead of $119 so you could only buy 2 instead of 3 and maybe we wouldn’t have 30 pairs of jeans in our closets but our neighbors would have jobs instead of overseas jobs sucking money out of the country.  

    Another break on oil!

    Very nice call JRW – Dollar back over $80.50 already.  That kills the gold play of course.  

    Off base/Gel – There is a difference between protecting "free markets" and protecting the interests of your fellow countrymen.  Clearly you don’t give a crap about the latter so what’s the point in talking to you about it?  You are right as an economist and wrong as an American (and "American Capitalist" is not the same as being part of America, where 300M citizens theoretically have a Democratically elected government that is supposed to do what’s best for the majority of the people).  

    UNG/RJ – That’s good too.  You could try buying the $3s first and then waiting on the sell on the 2012s.  Riskier but should work.  

    CVX/Dflam – I’d take $88.96 for the stock and buy the 2013 $80s for $14 and spend $7 to roll the callers up to the $85s and you can roll the puts out to 2013 $75 puts for another $3.70 so you have net $71.66 off the table and you are left with the $5 calendar spread and worst case is you own CVX at $75 but you are pulling $15 profit off the table so more like a net buy at $60 and you stand a good chance to net at least $10 more (assuming a roll to a 2013 vertical), even if you have to roll into a vertical.  Compare that to cashing out at net $73, up $16 and you’re really just leaving $1 on the table to make another $10.  

    AAPL/SNS – You have $963,000 tied up in AAPL?  I hesitate to suggest anything as it would move the market!  Are they paying you a dividend?  No?  Then why let them hold $963,000 of your Dollars?  I assume you would buy them again at $250 so why not just sell 30 2013 $250 puts for $28 and use that to buy 30 2013 $300/380 bull call spreads for $30 so you are in that for net $2 with another $234,000 of upside between $300 (you are already $60,000 in the money) and $380 and your worst case is you own AAPL again at net $252.   Margin on that play is about $55 so that’s $165K and you have the other $800,000 to play with.  If AAPL breaks over $350 – just let me know and we can find another bull call to layer up with!

  131. if I had to guess, I would say we are at 1230 at the close or on the open tomorrow

    maybe 1225
    that is where the most calls would expire worthless tomorrow morning at the bell

    but we are not in normal times, but the math shows potential for 1225-1230 at the bell in the morning tomorrow

    just my rough guess (make no decisions of me please)
    CBOE quotes

  132. VRX – going to have to look into the pipeline.  I know they have a gout drug going through clinical trials, but there is a ton of competition in that space.  Notice how SVNT has not been bought yet, even though they have approval.  I will look into them next week.

  133. Txs Phil.

  134. Txs Pharm…I think the play is more about the cost cutting, non-patent opps and potential acquisitions.

  135. Thanks for the Sick Man of the globe article Phil
    "The whole country is now seeing the story that Michigan has been living with for a long time," said Diane Swonk, chief economist at Mesirow Financial. "We have kicked the can so far down the road that now all we have is a cliff to fall off."
    a little different then she talks on CNBC

  136. stockbern / charts

    I have not found a way to export my best charts w/out security drawbacks; I’m sorry !!

  137.  Futures stops – I’ve been trying to go through a general outline of conservative stops and I’d say the best way to put it is this:  Below the $89 line we have a .05 trailing stop but, at .15, it goes to .10.  Once we break below $88.75, the stop goes back to .05 and back to .10 at $88.60.  Below $88.50, we continue with a tight stop on 1/2 and a set a trailing stop to the next strike on the other half so, at $88.40, 1/2 would stop out at $88.50 and 1/2 at $88.25.  This is, of course, assuming you FEEL like you want to ride out the move back up.  .25 on the futures is A LOT of money but the lower we get, the more of a bounce we expect off each resistance so you want to expand your tight stop by about .05 per .25 of progress and always think hard about riding our crosses over resistance levels.  

  138. SNS – Cost cutting is never a good sign to me in Pharma.  Means that future growth is limited.  aka – PFE.

  139.  FWIW, I shorted AA a little while ago …

  140.  Phil / Off Base
    I am not going to say anything more than – That is one of the "dumbest " statements I have heard from you in over two years.

  141. Back in TZA at $16.28; dollar going for 80.26 on the futures; IWM support now 77.45 and 77.34

  142. I am liking the CLDX May11 $4 straddle (selling) for 1.7, buying the stock here.  Similar one in the newsletter a few weeks ago, but much better price and return.  ASCO (Cancer Conference) in February, so this will give us time and more bang for the buck to let them percolate up and get out…..

  143. Dollar/JRW:  Yep.  Check out the dollar futures action from 11/26/09 thru the 2010 New Year.  Very similar pattern.  Basically the dollar rallied for 25 days then flagged and broke out hard on 1/15, a month after.  We just got our 25 some-odd day rally starting, ironically, 2 days after the official announcement of QE 2.0 on 11/5/10.  We are now 12 days into our current flag.
    We might have an interesting New Years in 2011.

  144. MA taking a big dump

  145. C = 1241.93, F =1237.50 at 2:30
    10yr = (1.28) so buying here
    NET $  = +.39%, dx/y = (.14)%

  146.  I’m going to have a TRUE nightmare in going over the taxes for this year’s investment transactions.. specifically with the wash-sale rule where I cannot deduct my loses but I will have to pay LOTS of taxes for all the gains I incurred.. it’s ridiculous but I am not eligible for trader status. :(  

  147. ravalos, to add insult to injury, if you don’t manage to turn a profit down the road you will only be able to claim a max of $3000 in losses per year.  So, you will be paying taxes on your profits in one fell swoop but they will only let you claim your losses 3k at a time.  Totally unfair.

  148. ravalos- I am in the same boat as you. I have a primary job which will not let me use the trader status.

  149. Unreal on pensions in VA
    Gov. Bob McDonnell is asking Virginia government workers to pay into the state’s underfunded pension system for the first time in 27 years.


  150.  matt, totally agree!! I was thinking precisely about that injustice.. but honestly we just can’t take the loses now so we can reduce the tax bill if we have a good chance of turning these loses to a profit.. but indeed, if you can’t do that down the road, we are screwed for many years! The question then becomes whether we should take a huge loss now so we can work it off year after year from now on.. ridiculous.

  151. If you want to watch the Fed live meeting, Janet Yellen bobs while Ben Bernanke kneels HEY!! he just light a cohiba with what was once rare..a 5k bill..truly becoming a superstar in his own right..

  152.  Pharm/ ARNA
    do you recommend to do Buy/ write here now?

  153.  Taxes/Rav, Nicha – You should talk to someone about setting up a trading enterprise.  Almost like a fund but you are the only client.  Also, I am by no means expert in accounting stuff but it is my understanding that the disallowed loss from the wash sale is still added to the basis of the replacement position so it’s not like (in my understanding) you can NEVER claim the loss, just that you can’t claim the interim loss during the longer holding period.  So (and again, I’m no accountant!) if you buy a stock at $50 and it falls to $30 and you get out but then you go back in at $35 within 30 days, you can’t deduct the $20 you lose but your net basis on the current holding is $55 and if you ultimately walk away for good at $45, you have a net ordinary loss of $10.  Really not a big deal as far as I understand it.  


    Oil shorts are down to $88.50 again, nice work if you can get it!

    Dollar just below 80.50 and copper right on the $4.10 line so very indecisive indicators at the moment. The Dow is over 11,500 – is today the day we finally hold it?  Probably not but it is exciting every day, isn’t it?  




  154. To those with TOS: Have you used Gainskeeper? Does it successfully manage trading activity (e.g., Wash Sales) and easily turn it into something the IRS is happy with?

  155. Phil,
    The site was down for about 15 minutes

  156. Good interview with David Siminoff of Thompson Peak Capital about media and the internet and the companies active in those. Conducted by Henry Blodgett (yes, that Henry Blodgett) who did a good job even though he failed to ask about the pig-in-the-python issue for Netflix and other video providers over the Net.  A little long and you have to keep clicking forward so someone gets paid but worthwhile.

  157. ARNA – not very interested, but paying for the stock in some way shape or form will only make us :)

  158. Thank gawd, thought you got taken out Phil…we all know those oil guys dont take kindly to such talk ;-)

  159. HHFIV/TOS/Gainskeeper:
    I used it for filing taxes on TOS trades last year and, so far, I’m not in prison.

  160. Phil- I am sure some people cringe when you write. I thoght you got taken out too.

  161. chaps: Thank you. Did you simply run the end-of-year report?

  162. ravalos
    You are followed by problems, not only you got burned on CMG now I see you have  problems with paying for losses!
    What you need is a strawman account. What is this?? Look at my good friend Carlos Slim, so called the richest man in the world. He is not rich he is a strawman, a strawman for on of the most honest PM of Mexico, Salina Gortares. he stole from every Mexican here and build up his riches all over the world. Under cover he is the richest man in the world, can help Bill Gates to put MSFT on track.
    You worry about 3k Look on TV today these poor guys make millions by selling info. tax free.

  163. Phil :
    On CVX, as u suggested, I sold the stock at $89.19 and bought 2013 $80 C @ $14.20,sold @2012 $85 C @$9.14,and sold 2013 $75 P @ $7.20 for net credit of $2.14 on $5 spread that’s $4.05 ITM. Thanks again

  164. Phil/Wages,
    I knew I shouldn’t have brought this up.
    The reason the private sector wages don’t rise to the level of the union is because the union wages are artificially inflated and manipulated due to the power of the voting block rather than market forces.  With that power comes the ability to extort in order to get what they demand.  For example…..when the teachers or the police or the garbage collectors or the airline pilots demand higher wages even though they may be already receiving higher wages and better benefits than the private sector or than what the market would bare, they will simply strike and paralyze the industry if their demands are not met.  And unless you’re willing to live with garbage in your streets or in an unsafe environment or have the flow of traffic disrupted, then you are forced to compromise and give them what they want.  This is exactly what happened to the auto and steel industries during the hay days when they couldn’t afford to be shut down for months over labor disputes.  Eventually, all of the wages and benefits that they agreed to came home to roost and decimated the industry.  I predict this is exactly what will happen to our public sector.
    The private sector wages on the other hand are driven by market forces.  So when Phil from Phil’s Stock World decides to upgrade his plush….50,000 square foot…..Manhattan…. penthouse….state of the art….stock picking studio…..with even more state of the art equipment that he purchased from his 1% stock picking buddy JRW, he has the luxury to go out and hire the best contractor for the best price.  On the other hand, if the local union organized all the contractors employees by promising them higher wages and better benefits for less work, then Phil would pay double or triple what he could otherwise get the work completed for……then he would have to raise his price to his members……Exec would have to charge more for his sewers to pay for his membership……the government would have to pay more for their sewers so they’d have to raise taxes…..the cost of living would spike up……so the unions would get their automatic cost of living pay hike…..and inflation would shoot through the roof.  It’s a vicious circle that does not work.

  165. JRW/security,
    Don’t sweat it.  Just hang a few online video camera’s looking over your shoulder and we’ll log in and follow your trades.

  166. Short strangles- another decent month. Taking out the last callers/putters today. Almost 2.5 % staying withing the "$20K/strangle" guideline. Will not be easy in the coming month given the low VIX. Looking back, I waited and caught spike in the VIX in very late Nov for all my sales. A VIX of 20+ seems to be the magic number for good returns on this strategy without having to take on more risk.

  167. exec
    Wages union and nonunion are all down in real terms, the only wages that have kept up are government and they are being frozen as we debate this BS. The problem is we need wage inflation which will promote consumer spending, some are moving to greener pastures but this is a zero sum game also!

  168. HHFIV
    Gainkeeper on TOS. The last time I tried it did not work with TOS but only with Ameritrade any up date thanks

  169. Yes someone was bugging our site !!!

  170. AAPL   traders       If you hold any calls and are not covered, cover 1/2 NOW with the weeklie 320s.  Huge one day premium on them.

  171. Shadow,
    The government wage freeze is a farce and a political stunt.  Read the fine print.

  172. Politics   I just signed on and need to sign off, but I thought the article in yesterday’s NYTimes about the historic and on-going conflict between laizze-faire and progressive economics was excellent.

  173. strikes / exec – you didn’t mention the air traffic controllers. Or southeastern Kentucky in the early 1900s, where the miners thought they could shut down an industry.

  174. Site was down, I got out of TZA, even, in TNA now at $69.50 looking for IWM 77.90 !!

  175. pstas – what is the $20k/strangle guideline?

  176. RIMM  Any predictions for earnings and stock reactions…it’s after today’s close, correct?

  177. pstas – and, what was your best stort strangle this month? i played a few, had to modify most. CSCO was best.

  178. exec- your right again. The unions practice extortion which is exactly what you described above in your comment.

  179. Lflantheman- those are Dec 4 weeklies that you are looking at. They expire next Friday.

  180. Pharm
    Do you now why EXEL popped over the last 3 days

  181. exec
    The government wages don’t count in the grand scheme, do the math!

  182.  Lost the site for a few minutes there.  If we go down for any length of time, backup chat is over at Seeking Alpha (most recent post there) so please take a moment (while the site is up!) to follow me over there:

    MA/Kustomz – Those new fee regulations do not sound good for CC companies or banks.   XLF took a dive too.  

    Taken out/Nich, Kustomz – Well I’m counting on you guys to at least demand an investigation if I suddenly disappear.  That would be nice.   8-)

    CVX/Dflam – Nice, I like that trade and you can roll down to improve if they go on sale.  

    Wages/Exec – Bad example because the fact is I don’t deserve a 50,000 sq foot apartment when I can get by fine on 10,000 feet and that means the 30 guys working for me can all afford another 1,000 sq feet.  Again, the issue is distribution of wealth.  You see only the side of the coin that says you should pay the lowest wages possible.  Well the lowest wages possible are $2,000 a year being paid to Chinese workers and that’s the way we’re drifting.  In an "efficient" market with fluid borders, no one should have to pay more than the going rate of Chinese labor until they run out of unemployed and then we can move on to Pakistan and Africa until they are at full employment and ONLY THEN, once we have fully employed 3Bn workers at $2,000 a year, should we even consider paying a US worker more than that.    Don’t worry, your World view is winning out and Big Business dictates what will be paid in absence of Government intervention.  With this population of cowed sheep and the type of economic BS postulated against protecting the local population – it’s just a matter of time before all the money is sucked out of this country and transferred to multi-nationals and the top 1% who own them.  That’s a vicious circle that works perfectly – it has worked perfectly for thousands of years as nations have been exploited and enslaved.  This is why empires rise and fall – this one is falling hard and fast as we dismantle the thing that made this nation truly special – a thriving middle class that gave the people true upward mobility.  

    Strangles/Pstas – Better to stay within the limits.  Some months are simply not that good to trade.  If the VIX is too low, consider a vacation! 

    Times/Eph – Thanks for mentioning that.  I decided not to as that’s "too political" as anything that mentions Reagan and/or Health Care seems to incite people around here and this is BOTH!  

    RIMM/Eph – No clue.  So much conflicting data – it will be interesting to see it resolved.  

  183. HHFIV: Yes. The IRS lets you enter the aggregated numbers (across all trades) electronically – assuming you’re filing electronically. You can then print off and mail to them the line-by-line trade details. Perfectly good waste of paper and US Postal resources.

  184. Out of TNA at $70.41; $ making LOD !!

  185. Phil,
    Any thgts re protecting long positions in China? Sell FXP puts, buy calls (light vol) vs buy FXI puts/ sell calls in some combo.  Thanks

  186. POWER TO THE PEOPLE! no power = you are only a want to be!

  187.  what happened to site ?
    must be a Republican dirty trick …

  188. Cap

  189. Scottmi- strangles – the $20K guideline is from Peter D’s outline of the short strangle strategy – selling one strangle set for each $20,000 of available margin. This assumes Portfolio Margin.
    I sold almost all strangles in SPX.  I only had to roll up my callers once. I will dabble in some individual stock strangles but only when the VIX is up and the premiums warrant the additional risk.

  190.  Consider this a warning Phil … from someone … Sarah Palin, Uncle Ben, Big Oil, CNBC, Julian Assange Hacker Patrol  -- somebody is watching …

  191. IWM only made it back to my 77.78 line; 6% on the day for the portfolio if you’re counting, see you tomorrow !!

    Since it’s not raining yet, I think I’ll go burn some of that petrol I’ve been storing  8-)

  192. Oh no!  We blew 11,500 at the last minute?  How annoying is that?  

    Oh well, up 0.5ish for the day means it’s China’s ball to carry this evening.  

    ORCL earnings look good.

    Extortion/DK – What other tactics are open to them?  Workers are oppressed people, that’s the nature of Capitalism – they are a resource to be exploited just like anything else.  Why should a Capitalist give them anything more than the bare minimum they need to survive?  Of course, that’s a problem if the workers have a lot of opportunity  - but a few decades of M&A activity the lowers their alternatives and barriers that prevent small business from competing and creating climates in which workers have no access to capital to start their own enterprises while enticing them to enter into long-term debts and driving up the cost of necessities that forces them to desperately require wages just to make it through the week combined with maintaining an uncomfortable climate of steady unemployment – makes them nice and pliable and ready to accept relatively meager wages.  England accomplished this back in the 1800′s, when they ground their own working population into dust as the upper class exported labor costs to their colonies – ah, good times! 

    China/8800 – FXP deteriorates pretty quickly, they had to rebalance it not to long ago.  You don’t want to be long-term short on them so they are not ideal for protecting large positions.  I prefer EDZ as you benefit from a drop in China or anywhere else in the emerging markets.  EDZ certainly has the same issues as FXP long-term but you can do some pretty nice leverage like selling July $14 puts for $1.20 and buying 2012 $30/45 bull call spread for $2 so you are in at net .80 with $15 of upside protection.  Of course, it would take a DISASTER in emerging markets for you to win but that’s what you’re guarding against, not a small pullback.   So a 10% pullback in emerging markets will raise EDZ 30% to $30 – you don’t make money but you are out just .80.  After that, you are protected.  

    Going the other way, $14 is about 30% lower so a 10% gain in emerging markets (not likely to happen without China) will begin to put the ETF to you but those July $14s can be rolled to maybe 1/2 or even 1/3 the 2012 $15s and, if EDZ goes lower, they will print lower strikes and other options will present themselves.  If you have, for example $90,000 of positive bets on China and you protect it with the sale of 20 July $14 puts ($2,400 cash credit and, at worst, $14,000 margin cost) then a 20% rise in China risks putting 2,000 shares to you at $14 when EDZ is down 60% at $9 for a $10,000 loss against $18,000 gained.  If China fails by 10%, you lose 10% plus $1,600 cash for the call spread and if China drops 20%, then EDZ is up 60% at $36.80 and you gain $13,600 against your $18,000 loss and if China drops 30%, EDZ is $44 and you collect $28,000 and completely offset the $27,000 loss in China.  

    Obviously, you will hopefully have a chance to adjust in between but, to the extent that you don’t need that much coverage – why over-insure?  The trick is to set up a hedge and work out the parameters in either direction and find a spot you feel comfortable with.  

    Watching/Cap – I wonder.  Fortunately, our backup server just passed it’s first live test but maybe someone is sick of us picking up short positions into BS stick-save closes?   

  193. Pharma,
    Can we still expect any upturn in BCRX or shall I let the stock go as a loss thks

  194. Tale of the tape today:


  195. Is there any evidence that ANYONE, besides e embers on this site gives a damn what Phil writes?
    Seems to me people are being paranoid here.

  196.  Oh, now you hurt my feelings!  8-)

    Well, in case anyone does care, RIMM was all over the place but finally decided to go higher.   That should give us a pop tomorrow and we’re up about 350 Dow points from last expiration day (11/19) with the S&P up 40 (from 1,200 even), Nas 100, NYSE 200 and RUT 50.  

    Dollar down to 80.20 after the close, that’s kind of interesting and strangely not helping oil or gold or copper.  Oh well, too early to worry about it…

  197. Phil,
    Thanks for the excellent explication of the China option hedge. If in addition to hedging I wanted to participate in a short term drop in China would you consider, in this low vix environment, a bull call spread in FXP or bear spread in FXI 1-3 months out? Thanks again.

  198. Phil – come on man, you can do better than the tired old arugments of the left on how disadvantaged workers are. It is non sense.
    I ran businesses for 34 years before retireing and never thought for one minute that I wanted to pay my employees a level just above subsistance. That argument is an insult to any good capitalist. I took pride in my workforce and would match them against any of my competitors. That is "the incentive" any well run company has to pay their people well, provide healthcare, pensions and benefits to their people and make sure they can compete both productivley and intellectually with their rivals. You must already know that.
    Sure there are bad capitalists out there but they fail in the end unless of course the government comes to their rescue and bails them out of their own incompetitience. The auto companies come to mind in EXEC’s example. Failed competitors that were not allowed to fail because it meant votes to the govenment. That is corruption of the capitalistic model by the rule makers.
    And your expalnation above that thank Gawd the government employess were up 10% because that would mean overall unemployment would be up 10% higher is laughable. First of all you don’t know that and second those 10% government employees are about the most expensive in the country for which we will "all" have to pay. So if the govenrment really wanted to help the "little guy" they say they are working so hard to protect they would have hired private companies to do the work and not line their own pockets with additional voters. But no, the government class is running the show and Gawd help us all when it all its the fan.  

  199. Blast from the past:
    at theNational Archives, where Nixon and Ehrlichman are discussing whether or not to support this HMO concept. And Ehrlichman says to Nixon, “You’re going to love this, because this is private enterprise. This isn’t like some freebie thing.” Nixon goes, “Oh, I like that. Tell me about it.” And then Ehrlichman says, “Well, this is how it’s going to work, these HMOs. They’re going to make more money by providing less care. The less care they give them, the patients, the more money the company makes.” Nixon goes, “Ooh, not bad!”

  200. DK – what exactly constitutes a ‘bad capitalist’? You use YOURSELF as an example as a good one, but how many employees did you have?. WHy dont you look at these CEOs and top management of larger companies to what their AVERAGE worker makes!!! Is that wage discrepancy fair? Are they 262x better than the average worker? THat’s bullsh!t is what it is…Actually, that figure was the LOWEST one I found, many other websites said the past 5 years the average pay rate for CEOs has been 363x+ more than the average worker. Sooner or later the average american will wake up from their TV watching, fast food eating comatose state they are in and when they do it won’t be pretty for republicants or ‘good capitalists’ like the bankster CEOs…….
    ‘In 2005, the average CEO in the United States earned 262 times the pay of the average worker, the second-highest level of this ratio in the 40 years for which there are data. In 2005, a CEO earned more in one workday (there are 260 in a year) than an average worker earned in 52 weeks.
    The 1980s, 1990s, and 2000s have been prosperous times for top U.S. executives, especially relative to other wage earners. This can be seen by examining the increased divergence between CEO pay and an average worker’s pay over time, as shown in Figure A. In 1965, U.S. CEOs in major companies earned 24 times more than an average worker; this ratio grew to 35 in 1978 and to 71 in 1989. The ratio  surged in the 1990s  and hit 300 at the end of the recovery in 2000. The fall in the stock market reduced CEO stock-related pay (e.g., options) causing CEO pay to moderate to 143 times that of an average worker in 2002. Since then, however, CEO pay has exploded and by 2005 the average CEO was paid $10,982,000 a year, or 262 times that of an average worker ($41,861). ‘

  201. Phil,
    One last comment and I’m letting it go.  In my opinion, one of the main reasons this country is falling fast and hard as you put it, is due to the mindset of the population.  This country was built on the risk takers.  The people that couldn’t stand the opression in Europe and had the balls to get on a ship and travel to a foreign land and work hard to build a future.  That mindset has evolved into a class of people that think they deserve everything for little effort and that the government should be the provider of everything.  I don’t see how that system can last forever. 
    As the politicians like to say now adays…’s unsustainable.
    Think about it.  They objected to the taxes and way of life so they left.  In my view we are turning in to them.  The government is more and more entwined in our affairs and the end result is they are creating the same opression that the pioneer ran from.
    I don’t buy for one minute that the unions or governments encouragement of unions has anything to do with them trying to help the little guy or bolster the middle class.  Plain and simple it is to create a voting block so they can keep their jobs. 

  202.  China/8800 – For a short-term drop, you’ll get great bang for the buck from FXP.  The March $34/40 bull call spread is $1.10 and you can sell FXI Feb $38 puts for .50 that are 10% down so, if China goes up, the bull spread costs you .60 and if China goes down 10%, the FXPs go up 20% to $37.50 and you are $3.50 in the money on the spread before you owe the short putter his money back and another 10% drop would cost you net $3.50 (and you can roll) while you collect the full $6 on the FXP spread.   

    Tired/DK – I ran a business and I took great care of my employees, effectively carving out 25% of the profits as profit sharing after full health care and matching 401K etc.  I had a great staff with virtually no turnover (no one treated people better) and a rapidly growing company but rising health care costs and competition from larger companies that outsourced and offered their local workforce no benefits and 30% lower wages began to impact my business despite the fact that their overall service was of significantly poorer quality.  Since my employees were all shareholders in the company, I decided to sell rather than go through the aggravation of turning my company into another stripped down data provider competing on price.  That gave all the employees 2-5 year’s salary rather than having do decide which half I would outsource.  So I guess it depends on your timing and what kind of business you are in etc. but you can see what "good" capitalism is doing to this country.  Do you think it’s going to stop?  Do you think it’s just a matter of cutting back the salaries of some lazy Government workers and scaling back on services and suddenly we can compete with China?  That’s a joke!  

    People shop at Wal-Mart and the Dollar store (distributor of Chinese goods) and they will do so more often as their wages get lower.  New businesses aren’t starting in this country – that’s what real capitalism is based on yet every year there are less and less companies for employees to work for.   Blaming this on Government salaries is just the BS that is spouted by the right-wing media and it saddens me to hear it repeated so often here.  I’ve had this argument before and put up charts and graphs and links that show the government is not out of control and is pretty much right in line with all post WWII governments in size and percent of GDP.


    Nixon and Clinton cut the size of Government, everyone else expanded it but that’s your demon – feel free to go crazy and attack the out-of-control Government because, as long as you are distracted by this non-issue, the rest of this country can quietly go to Hell…

    Also, I love the way everyone says "Government Spending" and acts as if it’s all about how much money a few teachers make when the entire budget for educating 80M children is 12% of government spending including the cost of shools, books, utilities, buses etc plus pensions and health care for millions of teachers that have already retired.  On the other hand, the Military is costing us 55% of our Government’s budget yet it’s a "sacred cow":  Isn’t our lack of good education one of the reasons we’re in this mess in the first place?  What is the motivation to cut that back even further than it has been?  Who benefits from an uneducated population suited mainly for manual labor?  

  203. ….er ….uhh…Clinton cut the size of government by allowing historic privatization of ‘government’ services.  The TOTAL cost of government has never gone down.

  204.  To one and all….. I have chosen to follow a different direction, that is in keeping with my "core value beliefs", and I have witnessed first hand the destructive results of "backward liberal thinking" and for the sponsor of the site to suggest I am  "an American Capitalist, and I don’t give a crap about my fellow Americans", then it is time to say "Good Bye". I will take this opportunity to say "thanks" to those that have contributed to my success, and to those that remain onward – " Good Luck"

  205. Short straddles – pstas, thaks for the reminder of peter D’s strategy. i had it printed out and in my folder right beside me.
    ill phil – your condition certainly did come out in your writing today - I mean really, the fevered incoherence of 5000 vs 1000 sq ft apartments and some kind of delusion of what "free market capitalism" has wrought was just not up to your usual standard.;-) I hope you are feeling better soon!

  206. jromeha
    From a workers point of view you are right, however from a competetive point of view if your wages are to high you can not compete with the outside world. See GM 75$ per hour possible the same in China for 2$ per hour. Do you think the GM worker works 37x that fast than the China man. The out put performance is important not what the CEO sceems of the top.
    Look at it in a greater view, the Greeks, the Romans, Europeans, the US, they all came and have gone, the new time will be China and India.

  207. Final phase of the
    Bought all of the crap from the banks here and abroad at 100%, now being told to write down the losses and dump on all tax payers

  208.  Nixon/Otto – He was THE MAN!  Here it is on audio (of course he taped everything!)

    And what Jrom said!  

    Buying it/Exec – Seriously?  Are you truly unaware of what labor conditions were like in this country in the early 1900s?  That was free, unbridled capitalism at its finest.  As I said earlier, Dickensian Europe was about the same and they eventually had violent revolutions that led to two World Wars and we would have had one here as well except for the distraction of fighting the war and the ensuing propaganda campaigns waged against our population on behalf of the ruling class in this country to keep the proles complacent.  It has worked so well that Capitalism has become a religion and any criticism of it is met with knee-jerk, visceral resistance.  For example, are you capable of watching a Michael Moore film or does he "sicken" you?  If you have never seen the film, then how do you know what he’s saying?   We all like to believe we are free thinkers who can’t be manipulated yet the advertising industry, which is based entirely on altering our thinking, is so large that it drives our entertainment industry, which is America’s number one export and it’s all aimed at promoting "free-market Capitalism" to the World.  Exploitation has gone global and the "spoiled" American workers, who won their rights in hard-fought battles in the 40s and 50s – are now being disenfranchised as quickly as possible in order to maximize profits for the ruling class.  There’s nothing wrong with that – it’s just good Capitalism…

    Privatization/Flips – I’m confused, do you want the government to employ people or private industry or are you just saying no one should work at all?  

    Meanwhile, here is a chart of  US Government Employees:


    Cut away! 

  209. @Phil
    All politics is local.
    Re: the teachers
    While it seems miniscule to you that a few  teachers get what they do, it is hardly meaningless to those who live in the school districts and own a house there.  The increase in pensions, salaries, health care insurance and the other amenities for teachers is becoming a major issue all over this country, district by district. Teachers are the new millionaires.
    That the teachers in Pennsylvania are getting increases while the parents who pay their salaries are getting laid off or have seen no progress themselves for several years, is creating a class warfare problem of unsustainable proportions. Asked to contribute $600.00 annually for  yheir health insurnace, while those that pay the teachers are paying $20,000 a year for it sets the teachers on strike.  
    It’s all well and good to talk about it in the abstract and that EVERYONE should just be paid more, but  the Power that some unions have particularly in the public sector is being abused. The middle class is being exploited not just by the one per cent but by their own members.
    While you tout the injustice on a macro level, at the street level there are people losing out to Power that is out of control from the public sector unions.

  210. @Phil
    What I’m saying is it is wrong to write that clinton lowered the cost of government. He did not. It is disingenuous to say that he did because he let some defense and other government contracts go to his buds (who contributed to his campaigns in private industry), that were performed by govenment paid workers when he took office.
    And that chart is likewise a False positive. Count ALL the private contractors that now perform government serivces not just those whose paycheck is signed by Tim Geithner.

  211. Gel,
    What a shame.
    The deteriorating level of discourse- particularly resorting to ridicule and denigration of opposing points of view is a sad state of affairs indeed. I have chosen , for the most part to ignore the political diatribes.  I am a member for the market oriented information and insight of ALL the participants and thus, make an effort to limit my reading and commentary to same.
    Perhaps others share this point of view and may wish to encourage reconsideration on your part.
    I, for one , will miss your daily input and sound investment advice.

  212. flipspiceland:  good stuff, one correction:  they’re not teachers, they’re EDUCATORS…….

  213. Sorry to see you go Gel.  I guess it’s fine for you to call me "off base"and "oblivious" when I support workers but if I conclude you don’t give a crap about them and that strikes a nerve, I’m sorry but that’s the risk we take when we engage in free and open debate.  

    Illness/Scott – Yes, flu medicine does have quite a kick!  Obviously this a hot-button issue as most of us here have employed people, of course and we all negotiate what we feel is fair.  I didn’t give away all of my profits to employees, just 25% and meanwhile, because of that, I was able to negotiate wages that allowed me to build my business faster than I could have if I didn’t have the incentives in place so, like everything else, it’s a negotiation.  Labor and management negotiations cut both ways but where in the equation is someone looking out for what’s best for America?  What kind of future are we building for this country when so many people here will argue that employees should be paid whatever the global market will bear?  Surely you see where that will end?  Is that what we want for this country?  

    If so, then go right ahead and outsource everything you can and kick out the unions and cut the benefits – if workers starve and die, there will be more of them to take their place next week.  That’s not an extremist example, that’s what factory life was like right in this country for many, many years.  It’s very easy to go back to that model, survival of the fittest is the natural order of things (and please let’s not now go off on a religious tangent!) – it’s BREAKING that model that takes work and sacrifice and, of course, the bulk of the sacrifice has to be made by the fittest, who would "win" the game if the effort weren’t made.  

    How much is enough?  How much is too much?  Who should decide?  Those are very hard questions and it’s very easy to abrogate your responsibility (if any) and let the "free market" sort it out.  Again, there are very few who would be on this board, worried about trading stocks, if we weren’t already at or near the top of the game so it’s very natural for most of us to not want the rules of the game to change.  I’m not trying to make people feel guilty for being successful – I am simply advocating for rule changes that I feel serve the greater good but, unfortunately, they would take some short-term sacrifices on our (top 1%) part to build a better road ahead.  

    Whether voluntarily or not, the "sacrifices" made by last centrury’s elite (70% taxes, minimum wage, 40-hour workweeks, abolition..) led to the growth of the middle class and the birth of the greatest economic powerhouse the World has ever known.  The majority of the people in this country became wealthy by global standards and, unfortunately, that made them ripe for squeezing and a good portion of their wealth has already been transferred up the ladder.  Now we are at a tipping point where we can say perhaps we have gone to far and attempt to rebuild our once great middle class or we can squeeze the last few drops of wealth out of them and give them that final kick, that drops them off the ladder – no longer a threat to our position or anyone else’s for that matter.  

    That’s where I see things right now and, sadly, only time will prove me right or wrong and by then it will be far too late to do anything about it.  

    Good point on the local aspects Flips.  The real problem there began when the Federal government defunded education on a national level and made it a local problem.  

  214. Gel:  I am echoing pstas’s post; I know exactly what you are saying and sympathize with what you must be feeling.  Personally, I have largely just dropped the political stuff myself, its not worth the time or aggravation; best to just follow JRW’s lead and leave the politics to others.  Its pretty ironic to be criticized for being a capitalist on a stock picking sight; its somehow alright to make money by trading stocks/options but not by running the companies that we trade.   People criticize what the CEO’s make, but never what a hollywood actor/producer or a sports star make  (that somehow is good capitalism); the hypocrisy stinks to high heaven. 

  215. Jromeha – I ran a division of a very large company. I was responsible for slightly more than 10,000 employees and their families. Do you need more info on my background ? If so I can send you any details you need just provide your email address.
    Phil – Not only do I shop at Walmart but I also shop at Sam’s club. So what’s wrong with that ?? For some reason you are going to look down upon me because I try to be frugal and shop at the lowest cost vendor ? Why do you look at that as something that is a disadvantage.
    Oh and Hello it’s not 1900 any more so give up the reasons unions originally were formed. There are laws today that prevent the type of abuse that occurred back then.
    Your chart the that government employs 1% is to prove what ? That it could be worse ???? I guess it could but I am sure the goal in the government class is to grow that 1% much larger over time.
    Yes I think they should outsource to private industry and they should start with the TSA. That group is the latest example of a government grab of votes.
    Come on Phil, I know your under the weather but what you did to Gel by questioning his patriotism is just plain wrong. I think your a good guy and treated your folks well but you can’t allow your frustrations with what is going on today to allow things to get out of control. I know the left strategy all too well in that when you can ’t win an arguement you attack the opponent personally but your better than that. Don’t use the behaviors of your fellow lefties to mistreat those who respect you.   

  216. more insanity from CTFC
    why even bother

    "The proposal would allow SEFs to have electronic trading
    systems similar to stock market order books, where bids and
    offers are continuously updated. But it would not require them
    to do so"


    " Allowing market participants to post "indicative" quotes is
    designed to ensure that less liquid derivatives are not forced
    into a fully transparent environment that traders say would
    deter participants from posting true bids and offers."

  217. Phil:  what federal defunding of education are you referring to?

  218. 16% of the total US workforce works for the government

    Total number of US workers:

    20,900,000 workers (16% of the total workforce)


  219. That 1% numbers is an example of a liberal spin:  doesn’t include any state/local worker and doesn’t compare it to the work force.   As a matter of fact, the number of government workers has recently surpassed the number of employees working in manufacturing……very sad. 

  220. It seems naive or some kind of fanaticism to think that unions have no place and only cause harm. Corruption, politics, and waste are everywhere, there’s no sanctuary from human nature. So we deal with trade offs. Whenever I hear arguments against unions I think of what the situation would be like without them (I mean unions not the people who express that view), and it’s just ignorance or inhumanity that disregards the terrible condtions which unions have addressed in the past. Employees have every right to try to get paid as much as possible and to demand safe and equitable working conditions by any means at their disposal. Lord know the the owners do it for themselves.
    A fair comparison is pollution regulations which are a cost to business and reduce profits but have very important social benefits. (Folks in China are learning this one the hard way like Americans and Europeans before them) It would be naive to assume that companies would regulate themselves out of humane concern for the communities they affect because that has not been the case in the past. We all know that’s true. Without counterbalancing forces to restrain capitalism terrible abuses follow. It’s just a fact. Do we really need any more proof of that? All the examples of businesses doing the right thing without government intervention or unions doesn’t eliminate the terrible things that have been done by others. 

  221. Actors/Humvee – I don’t differentiate there.  It’s ridiculous what athletes make too and movie stars but the reason it doesn’t seem strange to Spielberg to pay Will Smith $20M to make a movie is because he’s making $200M.  If Spielberg made $20M and Will Smith made $2M they’d both still be very comfortable and the 50M people who went to the movie could all pay $2 for a ticket and $1 for popcorn.  That’s my issue, when you funnel EXTREME wealth up to the top, then you are taking it from the bottom – that should be obvious.  Now, you may care about the bottom 90% or you may not – that’s fine.  I choose to care but not just for me – I don’t think that this country will prosper without them.  We can exploit them for many years and then we can move on somewhere else when this country starts to look like that riot in Rome but I don’t see the alternative ending where that doesn’t happen.  

    Walmart/DK – I have no problem with you shopping there?  Did I say that?  That’s human nature, you are going to go where you get the best deals.  I am curious what company it is you ran that you don’t think anything is wrong with Wal-Mart taking over retail.  If there are no more local retailers and Wal-Mart buys almost exclusively from China then every dollar earned in America and spent at Wal-Mart unbalances our trade and costs more Americans jobs.  Most people who run US companies would be a little concerned about that.  Again, it’s survival of the fittest so what are you going to do?  As to what I "did to" Gel – that’s pretty unfair isn’t it?  I think we all assumed Gel was a big boy and I didn’t question his patriotism at all so please don’t misrepresent what I said.  It’s very easy to go up and see what I said but you choose not to, I suppose.  I simply said (1:56) Gel was right in his point (that labor is negotiated fairly in free-market) from an Economic perspective  but wrong from an American perspective under my previous point (12:41) that what’s good for Big Corporations is not necessarily what’s good for this country.  

  222. Gel1
    I sincerely hope you departing is just a joke. I know I am outsider here throwing in sometimes my views, but I have enjoyed very much your input to our group. In a way I think I am very much like you, sharing you views. But remember this group is made up of different people with different opinions, and if I do not like their opinion, I just flip over.
    I am with the group to learn and advance in trading technics, and besides Phil’s stubborness, he gives excellent advice when asked. I think we all should restrain somewhat from our political opinion during trading hours, though I must say some witty comments keeps us some days from passing through low trading times.
    Possible we should keep our political opinions to ourself and do not fire Phil up on this matter, but keep him ocupied giving intelligent advice related to our option trading.
    I do hope you cool down by tomorrow and see you at this site.

  223. gel1   Don’t leave !    Phil won’t say, it but I will.  You have been one of the major contributors  to member chat, and I look forward to your many stock recommendations as well to your political opinions.  When I recommend PSW to a friend I always have to give a word of caution as to the politics, that sometimes one has to skip over some of it to get to the meat of the "money trades."  Also, Phil is coming down with the flu and was feeling terrible.   I have to go now but will finish this later.

  224.  Now now everyone, let’s try to play nice, even when we disagree.
    Gel, I sincerely hope you don’t check out.   You are a valuable asset for all of us.
    But if you do, please contact me off line.
    Don’t take Phil’s political blinders and zeal personally.  Many of us sometimes cross the line of civility, usually not intending to.  Hopefully you guys can kiss and make up.
    DK Guy, exec, pstas, gel … I was about to give you all kudos for the points you made today.  How anyone can defend bloated, inefficient government and the insane spending associated with it is beyond me.  Unfortunately, we have a whole kleptocracy built up around this (Congress, state and local governments) and us ATM machines are getting pretty fed up w/ this nonsense.
    Some people, Phil included, haven’t quite gotten the message, or they don’t accept it. 

  225.  Defunding/Humvee:

    Percentages/Humvee – Well I didn’t make the chart so call them.  Obviously, the other 19M workers are state and local and it’s pretty easy to get involved locally (I am) and get things done your way so just spread a little cash around at the next election and sit at the big boys table and legislate to your heart’s content.  I don’t care if Texas cuts all of their teachers nor do I care what nonsense Christie pulls at the state level as long as I get my way in my little town and county.  I don’t have greater aspirations than that.  While I’d love to save the World, the World doesn’t seem to want to be saved so I just do what I can to keep my own back yard in order. 

    And what Pakdog said!  

  226. gel – Many a times I have seen your posts to Phil where you call him many things so I say let bygones be bygones.  
    This site is great because it is not only Phil but the input of intelligent people like you that makes this site what it is. I will really miss you :( and your investment advice if you go. Besides, you are the sponsor of the next get-together of PSW members. 8) Hope you will reconsider!

  227.  Phil … do you really understand all the charts you post about government spending ?
    The govenment’s Dept of Education has very little to do with education, which is largely funded at the state and local level through property taxes and state and local budgets.
    Surely you know this, because the nonsense about how little is spent on education is just that nonsense.
    And then if you consider the impact of teacher’s unions run amok, with bloated benefit packages and ineffiicient and insane work rules, all to benefit the teachers, and not the kids, then you will understand why kids aren’t getting the education that they should.
    In NY State, which has roughly the same population as the State of Florida, the annual budget is TWICE that of the State of Florida.   Now, how can that be ?   Do we NY’ers live a life of luxury, getting twice the services that Floridians do ?
    So where does the money go ?
    a) Medicare, Medicaid.
    b) Public Sector benefits … government employees, teachers unions, politicians.   An explosion of escalating costs.  Firemen retiring on $100,000 + annual pensions.  Padding there pensions through ridiculous union contracts allowing overtime abuse in the last couple of years of employment.  Politicians "retiring" but not retiring … exploiting a loophole to collect their pensions but still keep their jobs.   All sorts of double dipping, waste, fraud and abuse.
    They cut subway and bus service b/c the MTA can’t manage a budget or control costs.  Plus they can’t reduce bloated inefficient payroll b/c of the unions.  So instead of cutting people, they cut service.  Meanwhile, the workers keep getting caught sleeping in their cars when they are supposed to be working.  And the managers and the boards get free Metrocards, they get free parking placards that they shouldn’t have, and so on.
    Its in the news every day …  
    This is why gov’t doesn’t work.   And the liberal solution of throwing more $$ at problems does not work, it has never worked, all it does is make the problems worse.
    Thus, the Feds and the States are broke.  And that is why.

  228. Phil,
    Thanks for continuing to voice your opinions on the situations faced by most Americans in this country today. There are few people who have been fortunate enough to move up the wealth ladder in this country and still care about the plight of those on the bottom rungs. I for one, appreciate your passion for your fellow man.  

  229.  And let’s talk about production … government workers produce what, exactly ?

  230.  States spending more on education means the Feds are defunding ?   Whuck ?
    Also, states spending more debunks the argument that not enough is being spent to begin with.  Of course this assumes that the state spending is effective.  It probably isn’t and most likely is spent mostly on more teacher compensation at benefits, giving no bang for the buck to student education.

  231. 02:00 PM On the hour: Dow +0.42%. 10-yr +0.12%. Euro +0.03% vs. dollar. Crude -0.49% to $88.80. Gold -1.23% to $1369.10.

    03:00 PM On the hour: Dow +0.32%. 10-yr +0.37%. Euro +0.08% vs. dollar. Crude -0.85% to $88.48. Gold -1.26% to $1368.70.

    At the close: Dow +0.36% to 11499. S&P +0.62% to 1243. Nasdaq +0.77% to 2637.
    Treasurys: 30-year +0.71%. 10-yr +0.49%. 5-yr +0.23%.
    Commodities: Crude -0.82% to $88.51. Gold -0.01% to $1370.80.
    Currencies: Euro +0.17% vs. dollar. Yen +0.51%. Pound +0.58%

    Market recap: Stocks moved higher as a series of upbeat economic reports (I, II, III) and a positive outlook from bellwether Federal Express gave investors cause for optimism. Visa and MasterCard were hit late by the Fed’s proposed new rules that will hit earnings associated with swipe fees. Demand for Treasurys rose, pushing the 10-year yield down to 3.48%. NYSE advancers led decliners more than two to one.

    A possible government shutdown is looming at midnight Saturday as Senate Republicans and Democrats ratchet up a standoff over a $1.1T spending bill. Republicans propose a bill to fund the government through mid-February – when they’ll have more members; Democrats say they’ll have none of it. 

    National home prices, including distressed sales, declined 3.93% Y/Y in October, according to CoreLogic’s Home Price Index; excluding distressed sales, Y/Y decline was 1.5%. "The prospect for a housing recovery in early 2011 is fading," CoreLogic says, in the headwinds of stubborn unemployment, seasonality, and high shadow and visible inventories.

    Democrats pull the tax-cut vote from the House floor, delaying debate and a potential vote on the bill until at least tonight. Clean passage of the bill remains expected, but a few more votes may still be needed from angry liberal Democrats.

    Ron Paul says he plans to use his new position atop a House subcommittee that oversees monetary policy to gain more support for his movement to audit the Fed’s operations. "The popularity of the Fed has changed. They’re being challenged from all angles right now… It isn’t so much what I will do. It’s going to be that these policies are doomed to fail." 

    The IMF approves a €22.5B loan for Ireland and says it is open to re-negotiating parts of the bailout package with a new government. "The fact that the IMF board approved this program, knowing that there is going to be an election in a few months, is a clear sign that the board believes that across the political spectrum there is a clear endorsement of the objectives," an IMF director says.

    European leaders agree to amend the EU treaty to allow a permanent bailout fund. The new facility, known as the ESM, will take over in 2013 from the existing €440B EFSF. Details, such as the size of the fund, whether bondholders will take haircuts, or more stringent rules for profligate nations, are not yet agreed on. 

    Rules on capital requirements would have cost financial institutions €602B ($797B) had they been in place at the end of last year, the Bank of International Settlements says. Lenders also would have had a €2.89T euro shortfall in funds needed to guard against a run on deposits had the Basel rules been in place.

    U.S. banks and other debit card issuers would be allowed to charge retailers only up to $0.12 per transaction under a Federal Reserve staff proposal; fees currently average about 1%. The Fed is crafting the caps on “swipe” fees to comply with financial curbs Congress passed in July. V -11.5%, MC -9.7%

    Like I was saying:  When Goldman Sachs invented the BRIC acronym in 2003, it predicted China would overtake the US economy in 2041. Now Goldman says its 2027. If current growth rates are extrapolated, it will be 2022. The Economist has an interactive chart to plug in your own assumptions. 

    Regional surveys released by two different Federal Reserve banks this week suggest the seeds of future inflation are being planted. Reports from the New York and Philadelphia Feds found factory operators expecting solid price gains over the next 12 months, and that firms are already facing a broadening of price pressures.

    It’s a great time to be rich: If the tax-cut extension becomes law, the next two years will be the best in living memory for many wealthy Americans to shield their income and fortunes. Reagan would be proud, Robert Reich writes.

    Why are natural gas prices slipping despite a consensus draw reported earlier today? "The market remains very temperature-focused," says Barclays’ James Crandell. Above-normal temps expected in the Northeast are combining with still-huge inventory to help depress prices. Futures -4.1% now, to $4.051; it’s the third straight day of declines.

    For the first time in seven years, Pimco’s giant Total Return Fund files a new policy to allow investing in equity-linked securities. The fund won’t invest in common stock, but could put up to 10% of assets into convertible bonds and preferreds as soon as Q2 2011.

    Blackstone’s (BX) Steve Schwarzman is bullish on the U.S. economy and thinks the tax deal will add 0.5%-1% to 2011 growth. That means less need for QE: "You’re going to have more people with more money without taxes going up… I think economy will respond positively to that." He sees signs of a pickup in commercial real estate.

    A UBS report shows its hedge fund clients piling into European stocks at the fastest pace in years. Energy and construction are the popular industry groups, but chemical stocks fall out of favor. Use caution riding coattails – by the time the news hits, the hedge funds may have moved on. 

    Societe Generale’s Albert Edwards says that while everyone might now be bullish on equities, investors should stick with bonds in an environment where individuals are deleveraging. "In a post-bubble, Ice Age world, lower bond yields go hand in hand with higher equity yields," he says. So "we are locked in a secular bear market for equity valuations." 

    "After all this money has flooded in … it’s hard to find fundamental value," says top-ranked international fund manager David Herro, speaking about emerging market equities. Herro has reduced emerging market stocks to 4% of his portfolio following their biggest rally in 16 years. 

  232. Cap – do you mean the military, FBI, congress and associated staff, immigration, coast guard, national parks air traffic control, the army corp of engineers, district courts, prisons, state department (Thomas Jefferson’s first post I believe, f*ng slacker), etc. etc. ?

  233. 2008: Department of Education spending of $68 billion is more than double the level in 2000 of $33 billion.17

    17 Budget of the U.S. Government, Fiscal Year 2009, Historical Tables, p. 79.

  234. Pakdog:  I’m not sure you want to include Congress on your list of "money well spent"

  235. Any really serious about cutting costs tell me why we spend 571% more  on military than the next highest spending nation (China) and more than all of the next 16 nations below us combined? Are we preparing to go to war against all of them?

  236.  everything.   Especially CONGRESS & staffs, immigration (they don’t seem to do much about enforcing our laws), TSA, agriculture, education, STATE DEPT, IRS, Amtrak, Post office, for sure !   Everything needs to be right sized.
    pakdog … tell us what should not be reduced and why ? 
    If you have a point, make it.

  237. humvee/Congress – Sure they’re screwups but as long as we’re going to have a democracy they’re better than the alternative so they should get paid.

  238. Cap – you suggested that government workers don’t produce anything. My response was meant to show that there is plenty of good productive work the government does. Crossed any bridges lately?

  239. Its a dangerous world pakdog.  If I follow your logic, why do we even need a military ?
    Does History mean nothing to you ?
    Why was Nato formed ?
    Why are we in Korea ?
    What would this country be like, and what would the world be like if we did not have a qualitative military edge ?
    Is there a difference between our military posture and Russia’s ?  Iran’s ?  China’s ?
    Are they all the same ?
    Are you anti-military ?
    Are you a pacifist ?
    You are entitled to ask questions.
    So am I.

  240.  What "good productive work" did your post show ?
    Is that what the government does ?  Are they making bridges ?  
    Is that why we have a $1.5 Trillion deficiit ?
    What new bridges are being built, and how much do they cost ?

  241.  pakdog …. yes Congress should get paid ?  But how much ?  Should they set their own pay ?  Vote their own raises ?  Should there benefits be better than everyone else’s ?
    How large should there staff’s be ?  What’s the budget ?  Do they even need a staff ?  Should there be term limits to prevent hacks like Rangel and Dodd and Frank sucking us dry for a career ?
    And so on.

  242.  Pakdog & anyone else
    Downsizing Government:
    Now this is a serious, detailed plan to cut spending ! $$

  243.  Good news:  1,924 page Omnibus spending bill just died in the Senate, along with 6,000 earmarks.

  244. Cap – Per me post above I would start with the military. We have enough nuclear weapons to avoid major conflicts with any highly populated nation or coalition of nations. Terrorism is more of a politcal problem than military since terrorists shun open conflict with a superior enemy. Still a military response to terrorism is part of the program. But the amount we spend is totally disproportionate to the need. You can whittle away at the edges of the rest but give me a chance to whack the military down and we’ll see some real progress.

  245.  pakdog, you are entitled to your opinion, but I am not buying it.
    Its a typical liberal anti-military pro big government response "but what about the military ?"
    I have no sacred cows, but I can’t take anyone seriously that can’t acknowledge the mere fact that government spending is out of whack and out of control across the board.  There is no "let’s start with the military" first solution.   That would be your answer with a balanced budget.
    It is not serious, in my opinion.

  246.  Gel/Nicha – Actually, Greg just pointed out to me that today was Gel’s renewal day and he had already opted out of renewing long before I said anything this afternoon.  Why he chose to characterize my comment as the cause for his exit when clearly it had nothing to do with it is only for him to know but it’s a shame he chooses to leave in that fashion.   As I noted, I had trouble reading into anything I said there to be particularly offensive and it does turn out to have just been an excuse to justify a decision he already made – unfortunately at my expense.  

    Understanding/Cap – It always amazes me how you have many, many, many broad statements to make that completely negate all the linked charts and statistics I put up but with no actual research of your own to cite.  You are talking about NY Teachers vs. Florida teachers and, again, that’s a local issue – go vote.  Federally, we don’t spend enough on education and that shifts the burden down to the state and local governments – that’s clear from the charts.   Also, it’s very, very scary that you can’t understand why a teacher who is expected to live in NY State and teach children there where the median home price is $350,000 and the average home price is $693,000 should cost more than one living in Florida, where the median home price is $236,000 and the average home price is $361,000.  Perhaps the lack of education thing is worse than I thought!  8-)

    Thanks RJ!

    Produce what/Cap – Again, am I meant to respond to that?  Government workers produce nothing.  No wonder you feel compelled to spout your nonsense here as they would string you up if you went to an actual boro meeting in NY and tried to get away with that.  Fortunately, there are no government workers on this board (that I know of) – because not to many of them ever make enough money to invest in the markets.  When you choose to do government work, you are choosing a career path that trades away the chance for great wealth in exchange for job security, benefits and a pension.  That is the deal those people signed up for.  I could have done it, you could have done it – but we were more aggressive and "went for it" – the kind of people you attract with government reward packages are less likely to be aggressive go-getters but I know tons of Government employees who work their asses off.  Of course the system could be better and of course there are cheats but, on the whole, with 20M workers to choose from, your fireman example is kind of lame…

    Cato Institute/Humvee – Well that is just an amazing statistic.  Especially amazing as it points out the ridiculous waste of Bush’s moronic "No Child Left Behind" program which shot spending up from $37Bn under Clinton’s 2000 budget (in 1992 it was $32Bn) to $60Bn in 2003 and, as you note $68Bn in 2008.  Obama’s 2009 budget has begun paring the Bush crisis down to $64Bn.  The problem is that money was entirely misallocated and tremendous costs were shifted down on the schools so the percentage of Federal money (see above chart) SHRANK despite the increase in dollars.  $37Bn spent on NCLB (item in the same link you posted) did nothing but cause the state and local governments to spend money on testing, re-qualifying teachers and tutoring programs that had little or no benefit.  Meanwhile, $37Bn could have added 1.2M teachers aids and dropped the student-teacher ratio nationally by 30%, which is what the DOE studies indicated would have the most impact before the testing companies became major Bush campaign supporters and, of course, let’s not forget the Bush family’s direct profits from Ignite Learning!  .  

    Military/Pak – I believe the US accounts for 52% of the entire World’s military spending (maybe 45% if you don’t count the wars) and NATO accounts for another 25% so that leaves our "enemies" with I/3 or less than our budget as a group.  China’s entire military budget is $125Bn and Russia is down around $70Bn while we are close to $1,000Bn.  That’s a lot of money…

    ROFL CAP!  We don’t need to have our boarders patrolled or our food, planes or trains inspected, our children educated, our mail delivered – we don’t need public transportation or tax collection but we damned well need an army that spends 10 times what the second largest army spends.  Are you trying to be funny or is that just the way stuff comes out of you?  

    CATO/Cap – Really is there not another place for you conservatives to get your data?   

  247. Guys – please, are we going to continue this all night? There will never be an end to all our arguments. 
    Have a peaceful night all! Tomorrow is a new day. Let’s begin it on a new note.

  248. Cap – At least the Cato Institute has the guts to put it out there, and I respect that they have a coherent philosophy they stick to which is more than can be said for anyone who faces re-election right now. We could argue about the details of their plan but we all know that the big three – military, social security and medicare - are politcal poison. Anyone proposing serious military cuts faces accusations of whimpiness and insufficient patriotism, and the wrath of local voters about to be cut off from the military spending spigot. Propose serious changes to social security and medicare payments and the AARP will sic armies of angry (voting) seniors on you. This is one reason why the toxic politcal environment is so counterproductive. Real change will take real compromise – that’s politcs for crying out loud. But no, we have blowhards bloviating like mad and demonizing and vilifying and declaring over my dead body and can’t even go out for a hot dog with a member of the other party so we’re all going to hell together. But at least we stood on our "principles." I’m sick of fantics and zealots and most of all the bloviating media charlatans making $10s of millions a year whipping good people into a frenzy and distorting the whole process.
    In the end I ask myself, Who’s winning? And every time it’s the big monied interests. Do they ever lose? Really. Supposedly, if it’s good for business it’s good for America. But the facts aren’t there. Show me the improving living standards, show me the jobs, show me the improving national infrastructure rather than the reverse. Show me everyone esle having a better life along with the top 10%. You might say it’s not the government’s job to guarantee anyone a good life. True, but is it the government’s job to serve big money? Do you think that’s not happening? Even whales come up for air once in while.
    One republican hero running for re-election famously ran on the phrase, "Are you better off than you were 4 years ago?" Are we really better off with all three branches of the federal government dominated by the financial powers of the world? Hell, we even had a supreme court justice go on a hunting trip with the vice president shortly before the court ruled on an important case affecting the man’s work with his oil company cronies. Where was the outrage? It’d be like some guy flirting with your wife right in front off you.  It just shows how distorted things have gotten. We’re becoming numb to the level of corruption and manipulation going on.
    I’m not a liberal – you might not believe that but it’s true. I vote for republicans probably as often as I vote for democrats. I didn’t used to believe it but I’ve come to see that we no longer have government of, by, and for the people but government of the corporations, by the corporations, and for the corporations. Nothing else matters right now. All the other arguments are a distraction from the main problem.

  249. Cap – So you want to do a line by line analysis of the budget to run the congress? That seems a bit silly. If you want to have a reasonable discussion maybe throw a few republicans into your "hack" catagory, and just because someone serves there for a long time and disagrees with your politcal views, it doesn’t make them a hack.  You should check out Orrin Hatch’s tribute to his good friend Ted Kennedy – there were polar opposites politcally as you probably know.
    Here’s part one:

  250. Gel, i don’t want to see you go, either. I appreciate all that you have contributed here. Let us know how we might keep in contact if you really move on.

  251.  Phil,
    Great work today both on the oil fraud, & defending the center.
    Ironic isn’t it, the way the GOP’s founder abolished slavery & preserved the union, while todays party champions Jefferson Davis’ world ?  They reject Thomas Jefferson’s system of checks & balances as "socialism", even as were still undoing the carnage of Bush’s de-regulating wrecking crew.
    They always justify their multiples of average salary with comparisons to the unique talents of entertainers & sports stars,
    (ROFL), complain about teachers,police, trash collectors, etc, but seem to be OK with billionaire, bailout needing, multi million  dollar bonus recieving, bood sucking banksters.  It’s the gubmint & labor they call extortionist. & ROFL again 
    re: patriotic sacrifice.  From this self centered bunch ?
    What do doctors, lawyers, bankers, & politicans make in China anyway ?

  252. Gel – best of luck. You will be missed.


    There are many here that have come and gone.  Will be many more as well.  Singapore is one that comes to mind, and I know there are others.  Matt, Cap are the oldies….but goodies. 


    On a lighter note, Disney – FL has not been busy at all.  Now, that is part of the reason for coming this time of year, as it is one of the less busy times… but, still, not really a problem with lines. 


    On another note, where are we with Vegas.  Need to book my hotel….if it is still a go.

  253.  Pakdog, good responses, much better than Phil’s who responds with the usual If you can’t argue with the message, attack the messenger silliness.  I could have predicted his response to the Downsizing Government analysis … that Cato Institute did it, is bad enough for him.  If it were done by Brookings or some loony lefty group, he would be all for it; Cato ?  won’t even read it … "is there not another place for you conservatives to get your data".
    I don’t go looking for Cato, Brookings or anyone else, or see who sponsored it … I just saw a well reasoned proposal / analysis.  If Phil wrote it, I would have posted it just the same.  
    Instead, Phil’s looking for the label of who wrote it.
    Let’s see; Republican hacks …. surely there are plenty of them as well.  Lisa Murkowski is one.  The Maine Senators.  That doofus from Oklahoma I think who is defending earmarks / pork to the death; I forget his name.   Listen, I have said many times, a pox on them all; it just so happens that many of the Dems tick me off more than the Repubs, because their policies are so anathema to me.   I can’t get riled by Boehner like I do by Pelosi.  Or Reid vs. McConnell.  Or whack-a-doo’s like Alan Grayson.  But I see far more corruption and hypocrisy on the Left … doesn’t mean the Right is clean.     Ron Paul is a nut job IMO.
    Now if you ask me for politicians that I admire, well, very few, possibly none.   I like Paul Ryan.  I like Eric Cantor.  Marco Rubio just elected from Florida has potential.  Same for Bobby Jindal.  They are more sensible Congressman.  I like some things about others.  The Senate used to have some good folk.  Conrad is a Dem who is ok on some things; DeMint is an interesting guy.  McCain is a mixed bag.  Got a bunch of nameless nobody lawyers.  Can’t stand Kerry or think of a more useless Senator w/ a big name.  Rockefeller, same thing.  I don’t see anybody exciting or compelling among the Dems.  Do you ?
    Its a crappy profession, unfortunately its become a profession … as in professional politicians, not citizen politicians.  They live off the system and the taxpayer and become "entitled" – which is how you wind up with corruption from the likes of Rangel, Dodd, Jefferson, Barney Frank, Maxine Waters, others (for example).

  254.  and I know Jindal is a governor.

  255. For a politician, Paul Ryan rocks.
    Hopefully he will prove that he can walk the walk, not just talk the talk.
    He is a rising star.

  256. Cap – Your response to my saying that we should pare down the military makes one of my points, viz, that it’s political poison. Did you notice, btw, that you friends at Cato recommend serious reductions themselves? You start out suggesting that I’m not sufficiently fearful thereful my judgement can’t be trusted on this ("It’s a dangerous world out there") Then you question my understand of history, which presumably must jibe with yours to be respected. Next to ramp up the fear factor you through out a few boogie men, Russia, and China, and Iran, Oh My! (gosh, the world really is a scary place, I think I’ll just hide under the covers and let more qualified people care about this). Do I understand Iran’s military posture? They spend less in a year than we do in a week. They can’t compete with us. Or Israel for that matter. Period. Do they want nukes. Yes they do and that’s bad. Does Israel have nukes? Yes they do and that’s also bad (don’t talk about it though, that would be impolite). Perhaps in some distopian future in which we are competing for resources around the world we might find ourselves at war with Russia and/or China but it would be suicide – our nukes against theirs. We won’t go into a direct conventional war with them. We didn’t when we had more reason to than we do now when they’ve both adopted our economic system and have become trading partners. Am I a pacifist? (read: only a tree-hugging, grass eating buddhist would ever suggest reducting the American military budget)  Really, really??
    C’mon man, you gotta up your game here. How can I have a serious discussion when you insist on taking it into such ridiculous territory?

  257. I’m out, see you guys tomorrow at the bell.

  258.  Pak, I don’t have an issue for sensible cuts anywhere, including the military.
    That said, I never said anything about fear, and I find your comments to in this area to be both naive and anti-military.
    No offense.
    I believe that we have a role to play in the world and need a strong military, and if not for the USA, Europe would have been overrun by the Nazi’s and/or the Soviets; Asia by imperial Japan, and the middle east by Iran and/or Saddam.
    You don’t have to hide under your covers because the US has been the leader of the free world for the past century.
    If Israel has nukes (and I believe they do, but you can’t prove that they do) why is it bad ?  I know why its bad for Iran to have nukes and for N Korea and even for Russia (in part b/c of the corrupt nature of Russia and concerns about the safety of their nuclear material, but also b/c of political concerns)  but I don’t know why its bad for Israel to have them.  If Israel didn’t have the nukes that many believe them to have, would they be as safe as they are today ?
    Did the Berlin wall simply fall down on its own, or did we have anything to do with it ?
    If we did not have a strong military, would the Soviet Union still be intact ?  We didn’t go to war w/ the Soviets, but our military posture had a lot to do with the collapse of their corrupt and immoral empire.  Russia hasn’t exactly adopted our economic system; and neither has China.  Some elements yes.  And politically, both are still disaster areas.  Russia is an authoritarian kleptocracy run by corrupt oligarchs and the KGB.  Its sad.  So much potential to be better, freer.  
    China is certainly an economic rising power, built on the back of cheap (and non-union) labor and an authoritarian communist government.  Militarily, we have more to be concerned with about China than Russia I would think.  China will be a competitor economically, for resources, for technology and they are, at the end of the day, Communist with a decidely un-democratic outlook.  How could they support / prop up the regime in N.Korea.  They are hostile (historically and presently) to Japan.  They have territorial designs on Taiwan, a free democratic nation (part of China to them).  
    It would be nice if the world were filled with all nice countries, run by rational benevolent governments, everyone got along and traded with each other and visited each other, but unfortunately, it doesn’t work like that.
    We don’t have to have any discussion about this at all.  I don’t understand people who are reflexively anti-military, which is what you seem to be and do not deny.  I am not an isolationist.  And I am not a believer that there is a "world community" that can address and solve problems rationally or effectively, especially when 1/2 or more of this so called international community is comprised of corrupt and illegitimate governments.

  259. Gel – Sorry to see you go.  Subscription renewal?  Glad to know it was not just about Phil and the rest of us liberals…..
    Happy trails to you.  :)

  260. Woo Hoo!!!
    I got moderated!   :)

  261. I was just wondering if by chance anyone noticed a boarder patrol agent gave his life in the line of duty yesterday. I  don’t know what his pay or his pension was. and i don’t care. I wasn’t there but the people who would kill an agent wouldn’t think twice about harming one of us or our family.   i do know not many people are willing to put on a uniform  police or fire and defend the life of others even if it means sacrificing their own.  the people i know who wear uniforms are not there to make it rich or for the benifits they are there to help others whether that means pulling a teenager from a wrecked car, or going into a burning building to find an elderly person who could not get out, or going into building and confronting a gunman. ( the security guard in the FL school board meeting  who shot the gunman was a retired police officer.)   I just think that needed to be said.

  262. I had planned to post something that took me an hour to type, it was only 10 sentences long (I type slow) :-)
    Actually it was pretty long but I sat back and read it and felt it wouldn’t have done any good to add to the hostility and negativity we’ve been exposed to on this day. I think we all need to take a step back and realise that divided we will never solve the issues that plague the country we hold so dearly in our hearts. Its ordinary Americans such as ourselves that need to come together for better or worse and show Washington that we will not stand for the injustice that they’ve burdened our families with. This is the time to come together. Republican Democrat Independent Libertarian Christens Jews Muslims Buddhists Potheads Lesbians Dominatrix Dogs Cats, like the ark and Phil will be our Noah…

    I call for a truce and strict rules that we keep political discussions to a minimum or not at all. All in favor say I (eye)
    We need to focus on trading, that’s why we are here ..

    That doesn’t go for Phil, its his website and if you disagree with his statements of fact (cap) you can email him your rebuttal @


  263.  Cap – You say i’m reflexively anit-military, well you’re a kool-aid drinking rabid conservative. No offense.

  264.  Pharm
    I had negotiated acceptable rates with the HRH and then they added $500/day for our conference room, $500/day for internet access, and charging us if we brought out own AV equipment, required me to get a $1M liability policy and then I bailed. We got the minimum of 10 to confirm, but spreading those charges over that few a number didn’t work IMHO. I also work FT like you, and didn’t have the time to go twelve rounds to org. further. lvmoda talked about an alternate, but not sure where that ended up. Thanks for volunteering with the AV equipment though!
    Gel/Phil – I will miss a good member who contributed trade ideas. I think we’d all benefit from a little less politics, and a little more trading discussion/education. Phil has his points as does Gel & Cap, however american politics has become such a travesty of special interests i think we need to go back to basic questions – what is government for? Who get’s to vote? Does a corporation really have a right to free speech/unlimited campaign contributions if they pay no taxes or are simply tax shelters for the wealthy? Should education even be a responsibility of government? Healthcare? Retirement? How may levels of government should there be? Should the Fed have the right to loan taxpayer money to foreign entities without a vote or disclosure? (I’m still stunned on that one)
    Until we can agree on more basic issues, across the aisle, and have good discourse, we’re f****d.

  265. are we still on for Vegas--been out of the loop  for a few days

  266. Query:
    If a city like Chicago, or county like Orange in Californica, or a state like New York cannot be governed efficiently with a  minimal amount of corruption, incompetence, and sheer insanity at all levels, how in the hell do any of you all expect this grand experiment known as the United States to be governed AT ALL?  Several times now Gel1 and Phil and Cap and others have disagreed with my stance on the so blatantly obvious observation that the U.S. is— in its present state— only ‘governable’ in one respect with any degree of adequate results: sending out checks to the entitled. Hardly a booming recommendation for the continuation of this republic.
    Most people have a difficult enough time governing their own behavior (clinton, rangel, gingrich, packwood, Kennedy, and on and on and on) let alone their family,  let alone expecting an entity as massively spread out and as much of a mishmash and pastiche as the disUnited States with 310,000,000 self-interested citizens who don’t much care for one another. 
    The level of naivete and ignorance displayed here by those who compare one or two aspects of this so -called country to some pissant nation across the sea or over the northern border with less people than one of our states is bewildering in the extreme.
    It would do well to lower the level of performance that political animals can adequately be expected to deliver.  These people are mostly a reflection of the culture of narcissism that currently exists at all levels in our society. The blame for our current state of affairs can be set squarely at the feet of those who think some politician in the Congress or Senate deserves a significantly better life than they themselves lead.  What makes a voter in Massachusetts put a Kenney in office for 27 years?  He gets them more government contracts that you who do not live in Massachusetts pay for. If that isn’t blatant corruption at the most basic level, what is? 
    Personally, I will never vote for any politician for any more than three terms in the house and one in the senate. 6-8 years and out I don’t care what you deliver to me in my state  in the way of pork.  And no lifetime pensions, and other emoluments of your office to exceed more than a few years after you leave office.
    The voter who puts in office term after term any politician is as corrupt as any one who occupies that office.  If you voted for a McCain, Rangel, Kennedy, Byrd, McConnell, Cochran, Bush, Dodd, Frank, Pelosi, Waxman  or any one for more than two terms  in the senate and 3 in the house, there are 4 fingers pointing back at you for every one you are pointing blaming someone else for the state of affairs in this country.
    Until the citizens of this country realize that we will never progress until our fundamental thinking about government at all levels is vetted for its contradictions, essentially selfishly determined payoffs, I don’t expect to participate in choosing the next bought and paid for narcissist that can’t or won’t do something productive with his/her time on earth. 
    Arguing politics on this site—-always instigated by the owner—- is just upping the hits and like a hamster on a wheel accomplishing nothing as not one mind has been changed here in a year.

  267. Savi- it looks like it’s delayed indefinitely. Deano spent a lot of time working on it (thx again D!), but in the end not enough people committed and the hotels were jerking him around…I move that whenever we go, we don’t stay at hard rock bc of their shenanigans…

  268. Vegas / jromeha – thanks for the update. sometimes these conversations take place during market hours, and basic members such as yours truly are unlooped. Deano, I’m still on for a non-MLK day gathering. By the way, are there thoughts of a different venue, or would that add too much complexity? If we’re irritated with the Vegas people, a couple of wonderful places I’ve been for professional meetings are Tucson and Steamboat Springs.

  269. pakdog – Cap a rabid conservative?  Fool Me…. ;)