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Monday Market Mania – Fukushima and Dollar Still Melting Down

How do you kill the Dollar?

That's the question that was on everyone's mind last week (and you can review our Billions of Dollars of profitable trade ideas in the Weekly Wrap-Up, many of which will be useful again this week if we keep falling!) as the smallest indication of Dollar strength caused a Global equity meltdown.  As Stock World Weekly has been pointing out all year and as evidenced by this 2-year chart of the Dow relative to UUP (Dollar index), essentially our entire 40% rally since last summer was at least augmented by QE2's 20% weakening of Dollar buying power.  

If we give the market the benefit of the doubt and say there should be a 1:1 relationship between the Dollar losing buying power and the price of equities (which are priced in Dollars) rising, then we could assume that 20% of the rise in the market was "natural" while the other 20% was inflated due to the weak Dollar.  BUT – you have to take into account the double boost that is given to commodity companies who get paid more for what they sell so that's tremendous over- PRICING of the energy, mining and agricultural sectors.  Our exporters also greatly benefited from the strong Dollar and that benefit will reverse itself should the Dollar reassert it's strength.  

Obviously, no one is ready for this.  The weak Dollar was pretty much the only reason we had the pretense of a global recovery.  It made is look like there was a demand for commodities (there was not), it made it look like there was a demand for American goods (there was not) and it made it look like we were paying our debts, which we were – but with discounted Dollars that were being created by the Federal reserve at a rate of over $50Bn per month.  

In fact, the Fed has expanded their balance sheet (ie. printed money) by $2Tn since October of 2008.  As you can see from the chart on the left (from the Cleveland Fed), there have been huge increases this year in "Long-Term Security Purchase" (T-Bills) as QE2's primary purpose was to keep our lending rate artificially low by faking a demand for the $140Bn a month of debt paper that is being issued by Treasury.

This chart just covers the first four months of the year and you can see Long-Term Security Purchases (in Red) grow from $700Bn to $1.3Bn in 5 months of QE2 (beginning in December).  This has not been an issue of the Fed putting training wheels on the bike for us – this is the Fed drugging us, sitting us on the floor, playing a video of a bike ride and pretending we are ready to go on our own.  

Clearly we are not ready at all!  Just the threat of the removal of QE2 has caused the global economy to begin to wobble and we've fallen 7.5% in 30 days and we can't get up.  The Dollar hasn't actually gone anywhere – it has simply stopped going down.  We spiked to a low of 72.95 at the beginning of May and are now back to the 75 lines, that's up 2.5% from where we called a market top due, in fact, to the Dollar bottom call we made at the same time.  Now we are, hopefully, about halfway through a correction IF they can get the Dollar to stop at the 77.50 line, which is the falling 200 dma.  We discussed this last night in Member Chat so I won't go back over it all here but it's all very dependent on whether or not we can slow this descent of the Global Markets to stop them from breaking critical technical support (as I mentioned last Tuesday, S&P 1,266 is the single most important line that needs to hold).  

The entire financial sector threw a temper tantrum starting with JPM's Jaimie Dimon, who whined almost as much as Bernanke as he spun his little tale of banking woe if Uncle Ben should cut off his QE2 money and leave him at the hands of the evil regulators and their "rules" that might stop him and his pals from destroying the Global Economy (again).  That sent XLF down to new lows and the financials are down over 10% since early April and we're now playing them for a bounce this week in to option expiration day on Friday.  What Dr. Bernanke and Mr. Dimon both seem to forget is we used to regulate banks just fine under the Glass-Steagall, which worked well for almost 70 years until it was repealed and replaced by the much more Republican Gramm-Leach-Bliley Act that paved the way for a decade of Bankers Gone Wild.  

So here we are, 11 years after Gramm-Leach-Bliley paved the way for the destruction of the Global Economy and what are we going to do about it?  We've created a monster and that monster is the heart of our economy – we can't kill it.  We could have/should have let it die back in 2008 when the whole system was collapsing but, instead of spending $8Tn on unemployment and infrastructure (enough to give 150M US workers $53,333 each!), we gave it to the Banksters so that they could get back on their feet and, hopefully, eventually, trickle down some of their wealth on the rest of us.  

Of course it's stupid.  It's also stupid that we have the World's lowest EFFECTIVE Corporate Tax Rate and that our top 400 households (who average $300M a year in income) pay an average of 16.6% in taxes while the average family earning over $1M a year pays an average of 22.8% in taxes – 33% LESS than families earning $50,000-250,000 a year!  Our ENTIRE deficit is right there – in our lack of collections, not our excess of spending, which is in-line as a percentage of GDP with the rest of the World.    

Keep in mind that the 11.2% per Million ($112,000) that a wealthy family doesn't pay, represents 11.2% MORE that 10 families earning $100,000 have to pay ($11,200) to balance out the revenues.  This does not even take into account regressive taxes like Social Security, Medicare, Sales Taxes and Property Taxes – all of which disproportionately tax the poor as a percentage of their income.  For people with fixed mortgages, rising property taxes are the number one reason families can no longer afford their "mortgage payment".  

This was a very clever offshoot of the Reagan Revolution, where home ownership was encouraged under the Tax Reform Act of 1986 while, at the same time, the Government "de-centralized" and shoved a huge portion of the tax burden away from the Federal Government (where income is taxed progressively) and down to the Local Level, where regressive taxes were the norm.  Over the past 24 years, this has shifted over $2Tn worth of tax payments from the top 1% to the bottom 90%.

Well, no use crying over spilled middle-class dreams, is there.  What we have now is an economy that is almost entirely driven by Banking Interests so, if we want our markets to be strong, we need to do what is good for the banks.  At the moment, that means keeping the Dollar as weak as possible and all the stops were pulled out this weekend, beginning with Jean-Clade Junker on Saturday, who lashed out at the US – calling our debt levels "disastrous."  That managed to knock the Dollar down from Friday's 75.30 level back to the 75 mark in early EU trading and at 9:30 this morning we will hear from the Fed's Fred Lacker and then, at 7 pm, it's Fred Fisher's turn to give us an Economic Update.  

On the other side of the pond, Bundesbank's Jens Weidmann says a Greek default would not destabilize the Euro saying:  "If the commitments are not met, that cancels the basis for further funds from the aid package.  This would be Greece’s decision, and the country then would have to bear the surely dramatic economic consequences of a default. I don’t think this would be sensible, and it would surely put partner countries in a difficult situation. But the euro would even in this case remain stable."  Weidmann’s depiction of a default as a liveable outcome contrasts with warnings from fellow ECB officials Lorenzo Bini Smaghi and Christian Noyer, as well as European Union Economic and Monetary Affairs Commissioner Olli Rehn, who described it as a “Lehman Brothers catastrophe” last week – causing the Euro to hit new lows for the month.  

Meanwhile, heading a little further East, China's June CPI will not hit a record high of 5%.  According to the China Securities Journal, it is now likely to hit 6%.  Meanwhile, our friends at the IBanks have boosted their bullish bets on Agriculture for the third consecutive week.  If all goes "well", maybe we can shove China's food inflation high enough to push the CPI over 7% in July!  It doesn't do any good to burst the oil bubble if all the money just moves into a food bubble.  We made great money betting that just 369,000 oil futures contracts were unsustainable at $101+, now there are 759,974 net long Ag positions.  This can get really, really ugly if they can't find some way to knock the Dollar back down.  

Let's be careful out there.  

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  1. Oil Lines
    R3 – 104.30
    R2 – 103.09
    R1 – 101
    PP – 99.80
    S1 – 97.71
    S2 – 96.51
    S3 – 94.42
    I filtered out the weekend action as it usually messes up the lines for Monday. These reflects what happened on Friday. 

  2. Thanks StJean. 

  3. I don’t want to start anything but guess which act that Phil cites above was signed into law by President Bill Clinton??
    Since when is Clinton a republican?

  4. Flip,
    Oh boy…..starting with the politics early this week.  Leave Teflon Bill alone.
    Looks like we might get the bounce…….or……are they setting up the perma-bulls for a head fake.

  5. PP for today.

    On another note:

    Over the past six months, food and energy prices have risen at an annualized rate of 17 percent, prompting speculation of a possible price-wage spiral that will result in rampant inflation. A wage-price spiral occurs when wage earners start to demand higher nominal wages just to keep up with rising inflation (trying to hold real incomes constant). In turn, these wage increases raise the costs of production, which squeezes margins and induces business owners to raise prices.

    In addition to inflation expectations, the University of Michigan’s Survey of Consumers also asks participants about their future income prospects. They are asked: “By about what percent do you expect your (family) income to increase during the next 12 months?” Individuals who feel confident about their ability to demand higher wages in response to rising prices would likely expect rising family income. In stable economic conditions, individuals typically expect their family’s income to roughly keep pace with inflation. However, about midway through the last recession, the median expectation plummeted from around 2.0 percent to near zero, and it has continued to hover at an all-time low of 0.2 percent. If inflation were to increase at about 2 percent over the next year and the income expectation materialized, that would mean the median individual’s real income would fall. (Below – YIKES!)

  6. flips – you do know that by saying "I don’t want to start anything," that’s an invitation to start something.  As its only a minor (and correct) point to say that Clinton signed it into law, I doubt it will be considered contentious. 
    As to Clinton being a Republican, of course he wasn’t, but the Act was indeed the continuation of Reagan/conservative deregulation doctrine.  I think that’s the point of Phil’s statement.

  7. @jCaesar
    Phil’s points are always lacking one thing: complete truth. How can anyone but rabid partisans take him seriously when he intentionally leaves out the most powerful man on the planet with a weapon of mass destruction:  The veto pen?
    But I don’t want to start anything and I didn’t.  Phil did by taking his once a day shot at partisanship. Just balancing the scales a bit, that’s all.
    Buy WOR at 19.95    Sell, and short at 20.95  for the umpteenth time.

  8. Pharmboy, good morning.  What do you think OPTR at current price($12.60).  Thanks. 

  9. Good morning!

    Oil way down at $98.22 and was low of $97.81 this morning!  I expect they will try for $100 again today so could be fun to go long on USO with the June $39s at .47 but if they fail $98 it’s a no trade so maybe best to give it a look first.  Below $98 we could be in for a party to the downside but I just don’t see it as I just don’t see how they can let June finish so terribly as that will pretty much close the coffin on 2011 as far as getting investors to jump back in the markets.  

    Also, Brent Crude is up today, not down so it’s very possible that the current down-spike in oil is just shaking out the weak longs prior to a move back up. 

    Meanwhile, we have the Dollar at 75.07, the Euro at $1.437, Pound $1.632 and 80.36 Yen to the Dollar.  They Yen is too strong and the Euro and Pound are a bit weak so there is the possibility of someone saying something to knock the Dollar back below 75 and give us a nice, fake rally to get us through the week.  

    Natural gas is plunging again at $4.66, gasoline doesn’t care how low oil goes, they still want their $3.027, which is good for crack spreads at refiners if it lasts but I doubt it will.  Either oil goes up or gas goes down at some point.  Silver is $35.60 and copper is $4.02 and if copper fails $4, we have a seriously downshifting global economy.  

    Same old, same old on the levels.  We watch and wait to see if they can take back the 7.5% lines (-2.5%) and, other than that, we don’t care.  We left the $25KP a bit bullish over the weekend but not our more conservative Income Portfolio so I guess, in my heart, I still consider playing for the bounce to be risky.  

    The NYSE must retake and hold 8,073 and the Nas must retake and hold 2,672 and we’re a long way from both.  Consider the S&P at 1,268 a death cross, where we’d damned well better get more short. 

    If we do get the BS move up I expect between now and the end of June and that move up does not take us over the positive 1.25% lines, then I will be looking to get very cashy into July 4th for reasons we discussed in the weekend chat.  Still, that’s a lot of time to find out a lot of data so let’s all relax and let it happen, not try to force a move.  

    Date ET Release For Actual Consensus Prior  
    Jun 14 08:30 Retail Sales May   -1.0% -0.7% 0.5%  
    Jun 14 08:30 Retail Sales ex-auto May   0.4% 0.2% 0.6%  
    Jun 14 08:30 PPI May   0.1% 0.1% 0.8%  
    Jun 14 08:30 Core PPI May   0.1% 0.2% 0.3%  
    Jun 14 10:00 Business Inventories Apr   1.0% 1.0% 1.0%  

    Monday’s economic calendar:
    9:30 Fed’s Lacker: ‘Manufacturing in the New Southern Economy’
    7:00 PM Fed’s Fisher: Economic Update 

    At the open: Dow +0.12% to 11966. S&P +0.14% to 1273. Nasdaq +0.19% to 2649.
    Treasurys: 30-year -0.25%. 10-yr -0.22%. 5-yr -0.16%.
    Commodities: Crude -1.1% to $98.20. Gold -0.16% to $1526.70.
    Currencies: Euro +0.16% vs. dollar. Yen -0.03%. Pound +0.59%.

    President Obama’s Jobs & Competitiveness Council makesproposals to boost jobs, including cutting red tape for construction, encouraging training for manufacturing through partnerships between the private sector and colleges, and making it easier for tourists to visit the U.S. 

    As a contingency should agreement not be reached on the U.S. debt ceiling, banks are planning on having cash available to use as collateral, decreasing the system’s reliance on Treasuries. Bankers argue systemic risk may arise if Treasuries role as a near substitute for cash comes into question. 

    EU peripheral CDS prices rise to new records today, with Greece getting hit the worst – the cost to insure against its default rising 4.5% to 1,612 basis points. Spanish and Italian CDS prices rise as well, but aren’t in the same ballpark as GIP.

    Talk about "buying on the news"!: The ISDA declares Allied Irish Banks (AIBhas officially experienced a Restructuring Event. As daily margin is required to be posted, the news shouldn’t trigger much action in the CDS market. Default has been allowed, CDS sellers pay up, the world keeps turning. Shares +3.4% premarket.

    Chinese lending and money supply growth continue to push forward, but come in lower than expected in May. The numbers are of questionable accuracy and importance, but Nomura suggests investors are positioned for continued hot Chinese growth, and unprepared for an actual slowdown.

    This says a lot about what people think of US consumers: HSBC (HBC +1.2%) will run down its $33B U.S. credit card business if it can’t find a buyer for the division. The move would be part of the bank’s strategy of slashing $3.5B in costs and cutting back on retail banking as it looks to lift its return on equity.

    And Europe’s: Best Buy (BBY +0.9%) is likely to decide against further expansion in Europe due to difficult market conditions, sources said. The electronics retailer initially planned to open 100 ‘big box’ stores in the U.K. by 2013 and 200 across Europe; so far, it has only opened ten stores in the U.K.

    Chesapeake (CHK) raises its quarterly dividend by 17% to $0.0875/share. It’s the company’s first dividend increase since June 2008 and reflects "the Board’s confidence in Chesapeake’s steadily strengthening financial position." (PR

    Another favorite of ours:  Iron Mountain (IRMannounces a quarterly cash dividend of $0.25, a 33% increase over the quarterly dividend previously paid. The dividend is payable on July 15 to stockholders of record on June 24. The payout is part of Iron Mountain’s program to return $2.2B of capital to stockholders through 2013, including $1.2B by May 2012.

  10. Phil,
      Do you still like Chimera (CIM)? I have JUN $4 puts sold for $.50 coming due with the stock trading at $3.57.

  11. CRIS has options now, so instead of buying the stock, I am going to sell some Aug 2.5 Ps for 40c or better.  This gives me my first DD from our last 1/4 of stock we had.

  12.  Phil,
    Any thoughts on Jul CMG bear credit spreads of 300/310 and 290/300

  13. I love watching that Chinese stock RENN go down.  Think it’s down about 35% over last two weeks.  Heard so many people telling me I should buy this BS stock.  Wouldn’t trust any stock in China.  I think even their govn’t numbers are more fixed than ours.

  14. Oops, CRIS Septs.

  15. Anyone know why the FTSE is sucking wind today compared to the other major European markets?

  16. Articles in the mainstream media about the dollar and the market make me wonder if the relationship is going to break down soon.

  17. Oil levels/StJ – $97.81 was the low (so far) , very close to S1, haven’t come close to $99.80 since they blew it Friday morning so not looking good if the markets don’t cheer up.  No Rent-A-Rebel action this weekend was surprising.  

    China finished a little Green on big moves up after lunch with India flat and Japan down 0.7% (and they should be with the super-strong Yen killing exports and all the kids in Tokyo walking around with Geiger Counters in what is now a 600Km radiation zone).  

    Europe is up half a point this morning so our markets are just being silly with this slow start and I think my BS recovery theory is intact at the moment. 

    Clinton/Flips – And if he had vetoed it and shut down government over Christmas, what would you have said Flips?  It was right after Bush "won" the election with a Republican House and Senate.  That’s like saying that the Democrats all "supported" the Iraq war – the mood in the country at the time was that anyone who didn’t support whatever dumb crap Bush proposed was "with the terrorists".  Anyway, happy to have this discussion next weekend, not now.  I have tons of links and charts and graphs with  8×10 color glossy pictures with circles and arrows and a paragraph on the back of each one explaining what each one is to be used as evidence that you will, as usual, completely ignore because it conflicts with your extremely narrow World view.  

    Wage-price spiral/Pharm – About time, that’s our entire long-term bullish premise!  

    10:00 AM On the hour: Dow +0.42%. 10-yr -0.19%. Euro +0.2% vs. dollar. Crude -0.72% to $98.58. Gold -0.25% to $1525.40.

    The potential for a persistent slowdown in hiring is the biggest threat to the U.S. recovery, according to economists in the latest WSJforecasting survey. On average, the economists expect the economy to add ~2.2M jobs over the next 12 months – down from last month’s forecast of 2.5M, and the first time the forecast has been lowered since October.

    Cutting risk positions in the face of economic slowdown has been a losing move as policy responses to trouble have been overwhelming. This time is different, says Steve Englander, as government will and resources are whittled down. He’s bearish on the "risk" currencies, particularly commodity producers: FXAFXC.


    "One striking observation that may be relevant to the possibility that growth underperforms for a sustained period is the apparent reluctance of many employers to add workers in the face of rising demand," Lacker told a business conference.  It was a remarkably downbeat speech from the vocal inflation hawk, who until recently was predicting the U.S. economy would grow between 3 percent and 4 percent.  Lacker, who opposed the Fed’s $600 billion bond-buying stimulus launched in November, did not directly address monetary policy or inflation in his prepared remarks.


  18. Hate that there are no weeklies during expir. week. Got in those USO calls at .49 with .10 TS.

  19. does anyone trade FOREX on TOS? if so what do you think? or is there a better broker for FOREX?
    thank you in advance

  20. Pharm/CRIS, do you mean the Sept 2.50 puts? No August puts

  21. it seems to me that govts globally want to see dollar demise as reserve currency…so i think they are trying to manipulate it lower when they can…re: dumb money chart….the dumb money has been MUCH more worried than the "smart money" and been right….until recently the "smart money" kept saying just mild pullback and then off to the races again….they were wrong…this is already more than mild in  most stocks….also vix too low and some other things i look at not that bearish…but overall sentiment bearish enough for nice bounce.

  22. euro finacial cds up big today..that explains the strength in the euro….hehe

  23. there was a spike in social unrest in china over weekend…and that is not including what they were able to cover up.

  24. Market looks weak still and cannot pop 12000 well.  Phil, would you add a few DIA puts here?

  25. CIM/Kevin – I think the last time I liked them, they were at $3.55 and now they are back at $3.55 from a brief visit over $4 so i guess they are still interesting back at $3.57.  You can sell the Dec $3 calls for .60 and the $3.50 puts for .40 for net $2.57/3.04.

    CMG/Rehat – Those credit spreads are not my thing.  If you want to bet CMG down from here,  I’d sell 5 June $270 calls for $6.50 ($3,250) and buy 4 Sept $310s for $7.50 ($3,000) and add another long if CMG pops $275.  Ideally, you collect your $3 in Premium by Friday without too much damage and you roll the callers to the July $280s (now $7.50) and pick up $3-4 per ($1,500-2,000) and then you have $2,000+ in your pocket on the bearish spread and you can even spend $1,000 to roll the longs down to $300s to balance the Delta a bit.  

    Even more fixed than ours/Rustle – Wow, that would be pretty fixed!  

    FTSe/JCaes – It’s up 0.36 vs 0.7% for the DAX and 0.5% for the CAC – not so terrible.  Probably on the AIB news above if anything but it’s a minor variation.  Friday they had rotten industrial production numbers.  

    Dollar/Seer – I think you may be right.  We have been tracking the relationship for almost a year but now that everyone is talking about it, it’s probably time to move on…

    Speaking of the Dollar – it’s holding that 75 line and that’s not good for our little "recovery".  

    Weeklies/Dday – The monthlies ARE weeklies during expiration week!  

    Mild/Angel – Again I would refer you to the bigger SPX chart.  This is VERY MILD so far off our 100%, 2.5-year run.  What damage has been done to NFLX, PCLN, CMG, OPEN – they are only  up 300% now?  What damage has been done to $98.50 oil or $1,500 gold or $35 silver?  This is a normal, healthy pullback so far that finally prices a tiny bit of risk back into the markets.  It’s just been so long since the bulls have felt any pain, they are being babies about it….  

    Frightened foreigners/StJ – Yes, that’s a big danger because a flight to the Dollar will tank commodities and foreign markets and that could turn ugly (for the short run).  That is a dip we’d want to buy but it hasn’t happened yet.  

    Richmond Fed’s Jeffrey Lacker doesn’t have a policy vote this year, but it’s noteworthy that one of the Fed’s hawks seems to be changing his tune. His remarks today underscored the weakness in the job market but made no mention of inflation threats, signaling he is in no hurry to tighten the central bank’s easy money policies

    Riot police pour into the southern China town of Zengcheng to quell protests in which government buildings were set on fire, police cars overturned, and downtown windows smashed. Incidents of unrest – numbering in the thousands each year – are not as uncommon in China as one might expect.

    More headaches could await Bank of America (BAC -0.6%), as New York AG Eric Schneiderman reportedly is launching a new investigation of the bank and the processing of potentially thousands of mortgage securities and related foreclosures. The probe is part of the AG’s comprehensive investigation into Wall Street activities before and after the credit crisis.

    German power companies prepare a lawsuit against the government for "wiping out … power production rights with a stroke of the pen." The recent decision to eliminate nuclear power nixes a decade-old agreement to allow plants a certain amount of production until closure.  EONGY.PK +1.4%RWEOY.PK +1.2%

    LDK Solar (LDK +5%) pops after announcing a deal with KDC Solar providing support services and $750M in construction financing for its project to develop up to 300 megawatts of solar energy facilities in New Jersey and New York.

  26. Rustle,
    They’re dipping the dollar to try and get it to pop……standard tactic……lots of sellers though…..I don’t think they’re all falling for the ol banana in the tailpipe.

  27.  z401/FOREX — I trade Forex at TOS.  It has been no problem at all, and is well integrated into the platform.  I can’t compare with other brokers, but I’m assuming that the no-commission spreads are going to be pretty much the same everywhere.

  28. What happens after the market has been down 6 weeks in a row. Barry tells us:
    It turns out that being down 7 weeks in a row is usually a good sign for the next year! Down, boy, down… 

  29. and there goes the market and I didn’t buy any puts yet.  Crappers.

  30. ESCOHEN 5
    it looks like they offer a standard account 10,000 units, but not a mini account, am i correct? and if they have a no commission section why would you ever use the commission area of FOREX ? is there an advantage to the commission section?
    thank you

  31. Interesting how the market is bucking the dollar.  Typically the market moves tic for tic with the dollar….particularly the RUT.  Today it’s moving up on a strengthening dollar.  Very odd.

  32. 12,000/Rustle – Same TZA hedges I liked last week.  They pay 1,900% – do you really need more?  I still think there’s little conviction to this sell-off and we’re just hugging our 7.5% lines although, after a day, stopping for a bounce quickly turns into consolidating for a move down so if we don’t get some upside action by the day’s end, I’ll be a bit more concerned. 

    LOL Exec!  

    11:00 AM On the hour: Dow +0.24%. 10-yr -0.15%. Euro +0.22% vs. dollar. Crude -0.82% to $98.48. Gold -0.19% to $1526.30.

    11:10 AM The Fed buys $4.6B in Treasurys maturing 2018-2021, of $16.214B offered by dealers, as QE2 trickles on toward this month’s conclusion. Treasurys have pared mild losses: the 30-year yield now +0.005 to 4.19%; 10-year +0.01 to 2.98%; five-year +0.03 to 1.58%.

    Recent comments by the president of Germany’s top courtindicate a challenge to the EU bailouts may get a sympathetic ear at a July 5 hearing. A "yes, but" decision appears likely, where the court doesn’t overturn the rescues, but attaches strings such as Bundestag approval for each individual bailout. 

    Greek Tragedy: The Unbearable Absurdity of the Euro.

    ANONYMOUS: BERNANKE IS NEXT. (video) Anonymous has set its sights on Ben Bernanke. The most well-known hacker group, Anonymous, uploaded a video message to youtube yesterday calling for Fed Reserve Chairman Ben Bernanke to resign, among other things. It’s embedded below.

    The Easy Credit That Fueled Brazil’s Boom Now Imperils It. Brazilian policy-makers have fueled their country’s economic boom through a state-owned bank that keeps business flush with credit. Now the engine that has helped the nation become a global player in beef, oil and mining is colliding with another policy imperative: battling inflation.

    Surging Corporate Profits Should Feed U.S. Job Growth (Bloomberg) but see The Balance Sheet Recession Continues (Pragmatic Capitalism)

    Industry Begins to Count the True Cost of ‘Climate Change’Heavy industry in Europe faces a crippling bill for global warming, says Christopher Booker.

    Seven Problems a Recovery Won’t Fix (Harvard Business Review)

    Cringly agrees with me on Apple’s real purpose:  iCloud’s Real Purpose: Kill Windows (Cringely). See also Apple Now No. 1 in Flash Memory Consumption (Computer World)

    Nickel Plunging Into Bear Market on Biggest Glut in Four Years

    Goldman(GS) Goes Short Nat Gas.

    ROFL – I told them so!!!  Macau casinos face uncertainty over whether the government will renew their licenses as the first of six licenses expires in March 2020, citing analysts and investors. SJP Holdings Ltd.’s and MGM China Holdings Ltd.’s licenses will run out in 2020, the report said. Those of Wynn Resorts Ltd., Melco Crown Entertainment Ltd., Galaxy Entertainment Group Ltd. and Sands China Ltd. will expire in 2022, the report said.

    The Boom and Bust of China’s Rise by Dee Woo. In 1994, Management guru Peter Drucker told Japanese retail tycoon Isao Nakauchi that even though the Chinese market is very attractive, it still has more systemic risks than others and China will eventually face very serious inflation.

    Short Sales Climb to 8-Month High in Hong KongShort selling in Hong Kong has risen to the highest level since September 2010 as concerns of slowing Chinese economic growth and further monetary-policy tightening intensify, according to a report from Data Explorers.   Watch these important weekly levels for the Shanghai Composite and Hang Seng.

    China Daily:  A clash between local authorities in southern China with a pregnant woman and her husband, who were suspected of illegally selling goods on a village street, set off riots involving more than 100 people. The woman fell to the ground during the clash that took place in Dadun village under the jurisdiction of the city of Zengcheng on the evening of June 10, citing mayor Ye Niuping. More than 100 people at the scene tried to "prevent" the woman from being "taken to a local hospital for examination" after she and her husband had agreed to stop selling goods in the street. The crowd attacked police with bottles, bricks and stones. At 3 a.m. on June 11, more than 100 people gathered again and attacked police that were investigating the case and clearing the scene. "Rumors" had spread that the woman was seriously injured and that her husband was killed by police. The government of Zengcheng has sent teams to the area to "talk" to local residents and "clarify" what happened.


    Tied as recently as last year, China overtakes Japan by a wide margin as "the most important partner of the U.S. in Asia," according to a poll taken for Japan’s Ministry of Foreign Affairs. Among opinion leaders, preference for Japan has evaporated at an even quicker pace.

  33. Exec / $ – Market,
    UUP down .3%, S&P up .3%

  34. Macau Casino / Phil – Looks like these guys have been had! I guess the house doesn’t always win… But I have no fear, some party official’s son will soon be talking a bright future in casino management. People will never learn. This happened in Russia and will happen in China! 

  35. Button,
    Do you typically use UUP to track the market movement?

  36. Crack Spread / Phil – Good times for refiners:
    The last 6 months have been the best for them for a long time! And it doesn’t look bad going forward. But this can collapse pretty quickly looking back at history. 

  37. Phil looking at rolls for my 5 rimm 40 puts at 2.03 now 3.75.
    I think I did this correctly-  selling the Aug 40′s would give me 1.78 in premum at 5.05.  Selling the Aug 37.50 at 3.55 would give me aprox. 2.81 in premum  so that would be the trade right?    Did I figure that out right?  Better idea?
    Thanks, Lori

  38. @ Phil, which WFR Puts do you like best to sell? Maybe the Jan $7.50? Thanks!

  39. @Felipe
    In order to keep focus on the market and out of your rage against the republic machine, and to avoid telling you that for every finger you point at the republicans there are 4 pointing right back at you and your democrats like Dodd, Frank and Franklin Raines who exploited G-L-B to the utmost, out of this galazxy, which lost Dodd his seat Finally, I’ll just let it go at

  40. Phil/KO – I had a Jan11 BC spread @ $45/$52.50 ($45s bought for $9.35 now $20.35, $52s sold for $5.50). exercised on Friday. Anything else to consider other than buy back the stock and selling the $45s?

  41. /CL


  42. mild..well i guess its all relative an 8% decline for me trading futures is MASSIVE.

  43. Pharmboy, good morning.  What do you think OPTR at current price($12.60).  Thanks.

  44. hey guys the republicans AND the dems are both dreadful..ok? the two party system isn’t working if you think so well you’re part of the problem..both sides are dysfunctional..with no signs of anything changing..the next meltdown will change first and last anarchist rant

  45. bobhu – hedged, I like them.  The Dec $12.5 straddle for $3.5 or better is a good way to play them. 

  46. ;)

  47. Can we start shorting FaceBook now.  Valuation over 100 Billion.

  48. As noted last week, rotation right now is out of biotechs, so many stocks are taking it on the chin (hence we started reducing right after my write up a few weeks ago).  Whilst now is the time to start accumulating, we need to be selective and stick with those that we know.  As I noted on Fridays post here, I am focused on IMGN, PLX, CRIS, and MITI.  There are others I own and am down on (cash wise including BSDM, OPK, UTHR, etc), but overall, we should be fine when Sept/Oct starts the next biotech run.  Patience is the key here, and staying vigilant on entry points for good science. 

  49. AA thinking about crossing its 200 DMA.

  50.  z401/Forex — I’m not sure what the minimums are, or what they consider a "unit," but I simply moved a small part of my cash over to a separate forex account, and that was it.  As for the commission structure, I assume, like everything else, "free" means that they take it out of your hide some other way.  Maybe the spreads are wider…I haven’t checked, as I don’t make many trades, and when I do, I use limit orders only.  I have it around so that it is available if something stupid happens, like that yen move in mid-March.  But you can’t beat TOS…it’s first rate (especially if they give you PM), and I love the iPad app!  And the iPhone app is good too.  All excellent products.

  51. Pharm/ IMUC
    I bought some IMUC around $1 and was wondering if this is a good hold as it has almost doubled.. Would appreciate if you have an opinion.

  52. Pharm--on ONTY would you hold ?—have a few shares left been selling as it moved up.

  53. Not W going H to EEEE say EE it, dont want to jinx myself

  54. Oh, forgot to mention Barron’s Mid-Year 2011 Roundtable – One of the more intelligent groups of prognosticators. 

    Dow volume 42M at 11:30 still pretty lame – no blow-off bottom each day increases the chance that we get a big negative spike at the month’s end (if we wait that long).  

    Oil probably not going anywhere until they work off some of these contracts.  They only have until next Tuesday to dump 170M of these (today not reflected yet) so 7 days to dump 170M is actually on track for them – if they can blow off a good chunk today and tomorrow, they could be back in business on Wednesday – especially if they get a draw. 

    Session   Pr.Day   Options
    Open High Low Last Time Sett Chg Vol   Sett OpInt  
    Jul 11
    99.01 * Jun 10, 17:20
    129025   99.29 203326   Call Put 
    Aug 11
    100.86 * Jun 10, 17:20
    34871   99.85 202913   Call Put 
    Sep 11
    100.14 * Jun 10, 17:20
    17056   100.40 147356   Call Put 
    Oct 11
    96.89 * Jun 10, 17:20
    10781   100.88 58936   Call Put 

    October is very think and under 500,000 front-month contracts is very controllable for Da Boyz and we’re looking at just about 600K on 4 months at the moment.  Assuming they leave 30,0000 in July, that’s going to be about 570K on the rolls but they should be able to cancel enough (eating losses) to get to 550,000 and November is also thin (52,935) so it’s very dangerous betting against oil under $100 at the moment – tempting though it may be.  

    If you want to make a realistic short bet on oil, the USO June $40/39 bear put spread is .66 and 100% in the money with USO at $38.86 so if USO simply does not go up .14 by the week’s end, it makes 50% and you can sell the SCO (ultra oil shorts) July $38 puts for .55, which makes this a net .05 spread with a 1,900% upside and SCO gets put to you if it falls back to $38, where it hasn’t been since the beginning of May, when oil was over $110 so, assuming you would want to short oil anyway at $110, it’s a great way to make a short play.  The bear put spread should be stopped out at .25 because that keeps this trade a winner all the way back to $37.80 on SCO (probably oil over $105).  

    WOR not looking too hot today Flips – What up with that?  

    China/StJ – That’s been their game plan since the 1500s, I don’t know why these jokers thought they would be treated differently than the last 500 years worth of mercantilists.  

    Crack spread/StJ – Very strange that VLO can’t stay over $25 with all this nice margin.  

    RIMM/Lori – Well you owe $1.72 more than you paid so that’s your only "problem" (assuming you don’t REALY want to own RIMM for net $37.93).  The July $35 puts are $1.98 and that makes your net sale .26 and your net entry $34.74.  If you don’t want to own RIMM for $34.74 then you REALLY don’t want to own RIMM, right?  Now, the other way to look at it is that you still have faith in RIMM but want to be sure so you take the $3.75 you do owe and KEEP the $2.03 in your pocket and roll them to the Sept $37.50 puts, now $4.45 for + .70.  That leaves $2.73 in your pocket with a net $34.77 entry in September.  Net margin on the short $37.50s is $7.25 on TOS so, if you are getting that, then you’re setting aside $7.25 for 3 more months to hopefully make $2.73 (37% of margin) so not a bad trade adjustment there.  The Aug $40s work but seem a little aggressive given that RIMM has sucked and the broad market is sucking and we don’t really have a good reason to think it’s getting better just yet.  

    WFR/Asaenz – At the moment, I’d go for selling the Jan $9 puts for $1.64 for a net $7.36 entry.  

    KO/Brook – So you sold the $52.50s for $5.50 and they exercised the call on Friday and now you are short KO at $52.50 with another $52.50 in the bank, right?  That’s $58 cash in pocket and you are down $6.90 on that side.  On the call side, you collect your $20.35 so you net $13.45 cash by shutting this down now (up 349%).  Why does that not make you happy?  The original spread only had $7.50 of upside – the guy did you a huge favor by blowing off his Jan premium (and shorting you the stock the day before it dropped).  

    Dollar broke back to 75.10 and the sellers came out in force.  This market is primed for a mega-drop if the Dollar heads back to 76!  

    Futures/Angel – Well if you are going to play with matches…

  55. escohen 5
    thank you for your time

  56. haha matches for you maybe…putting out fires with gasoline you mean?…BLOCK SALES USO NOW

  57.  Phil,  what does volume look like today?
    Does any one feel like they are playing chicken with a large truck with the registration plate $75.00$

  58.  anyone have the link to the TZA hedge?

  59.  Phil, scrap that, our posts crossed

  60. euro sov cds worsening over last hour…spain now up +4%..was up 1%

  61.  Phil / CHK
    it is sharp down today
    I have 10x short June 30s puts
    what do you recommend?
    wait for couple of days for bounce and after that roll to July 28s? or something else?

  62. Phil, oil just hit $97.50 in the futures and I just cashed out a double on my entire portfolio on this trade alone!   I didn’t risk it all.  In fact since you called the top in the beginning of May I have twice taken half off the table when this trade, which was 5% of my portfolio, doubled in the futures and I even when long when you called that and short again at $103 and long again at $97.50 and short again, etc. and I covered this morning with USO but left the futures short for a stop out as you advocate.  I just want to publicly thank you for your fantastic call and fantastic guidance and this will be the second time this year I will be thanking you with a donation to the Food Bank.  You are the best, this service is the best – I can’t wait for the next trade.


  63. s and p just downgraded greece again…    always jonney on the spot!

  64.  Phil/KO – thanks. I just wanted to make sure I wasn’t missing something becuase I was surprised by being exercised.

  65. Good evening,


    Well, I should have stuck with my original plan, but NOOOOOOOOOOO; I liquidated 40% of my shorts last week !!

    Fortunately, I still have a boatload and plan to sell this week, probably Wednesday. The sale trigger will be either a gap down open below the March lows, or a dive on large volume followed by a reversal during trading hours. I believe we will have reversed trend by opex !! (Friday)

    Good hunting and bonsoir  8-)

  66. sun power being sued by enviro groups in cali

  67. IMUC/rehat – if you are up, sell 1/2.  That makes the rest a free ride.  U can always jump on board if it starts to move again.  Charts look like consolidation, but it is hard to tell which way.  I would put tight stops on 1/2.


    Savi – they are a Street dot com darling, and we were in them as well.  I would cover them with something and sell a few Puts against it as well to make a bit more.  They have several steps in the charts to move through on the way down, should they fall.  What about taking the profits you have in the stock you currently have and making it a Jan12 5/6 bull calls spread for 45c, selling the 6 Ps for 55c, so 10c CREDIT for a $1 spread….. 

  68. @angelcur
    Precisely. And thanks for saying so.

  69. TZA/deano – there are a bunch in the weekend wrap up here.

  70. Facebook/Rustle – Only $100Bn?  Let’s wait until it gets to real money… 8-)

    VIX actually waking up a little – 19.45.  If you want some major crash protection, the VIX July $24/25 bull call spread is .10 so you can buy $1,000 and it pays $10,000 if the markets really crash and, if they don’t, you have a good chance of being able to get a nickel back in the first week of July (the June $24/25 spread is still .05) so maybe risking $500 to make $10,000.  Of course, if we get an early spike, you may "only" make a few thousand but that doesn’t suck.  

    Good catch on USO Angel.  Man did they start tanking hard.  Just made lowest on WTIC and USO since February, when oil was way down at $86.41 for the lows (USO $35.21) so a long way to go if they can’t turn it around and the Dollar is now 75.15 so Danger Will Robinson, danger, danger….

    Interestingly the markets aren’t collapsing with oil and XOM is only down a little (probably saved by the refining and chemical sides, where oil is an input cost), XLE down 2% though and OIH off 2.3% so that sector is killing the market today.  

  71. Phil, 
    CCJ sharply lower again. Are you planning any move on the short July puts from the Income Portfolio?

  72. Money flowed into defensive names, this confused the bots binary into thinking it was a bullish signal. This market hasnt gone sideways in a long time and no such thing when computers are doing the trading, we either sell off and hit our next support or some how they jam us higher.

  73. Pharm--Tx--

  74. Phil,
    I have sent off for funding of my ToS account, and should be in business by the end of the week.  I looked in the wiki, and see where it mentions the special pricing at ToS, but it does not mention our contact name there.  Is there a specific person i should talk to, or does it matter any more.  I am assuming those rates are still good for any site member?   Being a tiny account (starting cash of only $2k), I need the best rates I can get :) .
    thanks for all you do,

  75. I’m out of the rest of my oil shorts right here.  Awesome ride for the week.

  76. Volume/Malsg – Dow volume is just getting to 60m coming into 1pm, which is lame but normal for the past week and we have been finishing the day’s around 150M with 50-70M in the last hour.  Unfortunately though, no stick saves in the end, just more volume selling – this party may really be over although the indexes are just flat and Europe closed flat and Asia closed flat so hard to call this day a disaster if we hold the lines after all that relentless selling for the past couple of weeks.  

    TZA/Deano – Was in Stock World Weekly.

    CHK/Tcha – Today I’d wait, GS just downgraded nat gas this morning, probably trying to force this blow-off bottom in oil without looking stupid by calling a sell on oil itself.   They can just be rolled along later in the week.  

    Those gasoline short covers are working like a charm to offset the oil longs, now $2.96!  That’s insane money with /RB contacts at $4.20 per .0001 move!  

    Oil/Bruce – That’s great! Thanks so much for giving back, you are a great man and deserve your victory  but I would caution you to take a little break after a big win like that – it’s very hard to keep your head in the game when you are flushed with victory and feeling perhaps, a bit too invulnerable.  

    Greece/Angel – How much lower can it go?   That’s pushing the Europ and Pound down and getting the Dollar and Yen back up.  Now the danger is the BOJ tries to boost the Dollar to stop the Yen from hitting 80 and that will send the Dollar even higher and tank the markets more.  

    40%/JRW – No regrets, it was a great run!  

    CCJ/Amatta – Yes, we’ll have to roll them along eventually.  Now Italy doesn’t want nukes either…  

    I’m still expecting the "somehow they jam us higher" Kustomz but I’m rattling my brain trying to find where that somehow is going to be at this point….

  77.  Finviz is showing 74.60 on the dollar where is 75.10 coming from? 

  78. @Felipe
    re:  AGQ   Options
    31.50  46.90  50.70   bid ask last
    Is there any way to bid these things?   It seems ridiculous to even think about.  Or is my OpEx quote totally screwed up?

  79. 12:00 PM On the hour: Dow +0.06%. 10-yr +0.01%. Euro +0.13% vs. dollar. Crude -0.88% to $98.42. Gold -0.24% to $1525.50. 

    01:00 PM On the hour: Dow -0.05%. 10-yr +0.08%. Euro +0.1% vs. dollar. Crude -2.41% to $96.90. Gold -0.39% to $1523.20.

    ECB President Trichet, finding the root of the EU debt crisis to be poor budgetary governance, calls for more and tougher rules that can then be ignored in the future as governments see fit.

    S&P downgrades Greece’s credit 3 notches to CCC, saying any restructuring is likely to be considered a default. The euro is little changed from before the announcement, buying $1.4356, flat on the day. - What is the point of NOT defaulting if they are going to rate you that low anyway.  It’s like if the US ratings agencies zapped your credit score and declared you Bankrupt…  Would there be any reason at all to pay off your debts?  

    Struggling chip stocks take another hit as Baird downgradesDiodes (DIOD -7%) and Fairchild (FCS -7%), citing "field research (of a) sharp deceleration in semiconductor order trends in 2Q." Not even summer break yet, Baird says the chance of a weak back-to-school season bodes ill for 3Q.

    Good luck getting them to give back land now:   "We believe under Israel is more oil than under Saudi Arabia," says Howard Jonas, CEO of IDT, which owns the Shfela basin concession. Until recently, oil majors -afraid of getting cut off from Arab oil supplies – have been reluctant to invest or lend technology in Israel to unlock vast energy reserves. 

    The experience of Poland should give pause to those fanciful predictions of Greece easily wiping away chunks of its debt through privatizations. Poland, a vibrant economy, has had to pull or reduce several offerings of state enterprises this year.

    "There is no rationale for a country at that level of economic development to have not just duplication but triplication of those infrastructure projects," opines Nouriel Roubini, recounting a trip in China aboard a 1/2 empty high speed train, alongside a 3/4 empty highway, to a 3/4 empty station, next to a rarely used airport.

    Affected by markets in "risk off" mode as well as a string of Chinese accounting scandals, two China-based firms pull dollar-denominated bond issues. "Investors are now looking more closely at Chinese … corporate governance," says an analyst, and these 2 high-yield issues were particularly vulnerable.

    UBS gives a boost to Citi (C +1.8%), saying recent selling in the shares – dominated by retail investors - has exhausted itself. It’s an odd stance, given the recent reverse-stock split has lowered the proportion of the small-fry’s share of volume at the expense of larger institutions.

    As long as we’re just throwing numbers out there: Sources tell CNBC that Facebook could value at $100B and will likely go public in the first quarter of 2012. The social-networking company is likely to cross a reporting threshold of 500 private investors by year’s end. 

    Three lunchtime reads:
    1) Flawed titan of the Fed
    2) Roubini: "Perfect Storm" may arrive in 2013
    3) HST: Are financial markets still fair?

  80. JRW – Back in Europe, I am guessing a little east of Nice!
    Was that you driving? -

  81. Transports are falling and rising along with oil which makes absolutely no sense, seems today there is little human (emotional) involvement in the markets…

  82. Pharm – short term advice for DCTH?

  83. Phil / Oil   Unfortunately took my short profits on Friday.  Do you think we’ll get another bounce to short this week, or is it all down from here?

  84. Phil, on long term hedges like IYR, do you have a different philosophy on taking profits? I sold half up 30%.

  85. greece…they are out of euroland soon..btw the typical insult between  friends one of whom is greek and the other italian is when the greek native refers to europe the italian corrects him by saying ‘while europe ISNT your home"…the greek people are finished wiht th’s just silly to believe otherwise..btw tricchet clearly needs to get on a more regular schedule for his seems when some old men can no longer get hard ons they become one..this is what it looks like when a euro elitist becomes appended to a mooseknuckle

  86. All three rating agencies have now lowered their outlook for U.S. sovereign debt, with Moody’s saying it might downgrade it as early as July, if the debt ceiling is not raised and the government does not provide a long-term plan for reducing the federal debt.

  87. FAS – i am amazed it is holding up today.

  88. well i am sure that’s what boehner and obam are working on right kids!?

  89. DCTH – no short term advice.  I hold my Jan12 calls naked.

  90. TOS/Scott – Our guys name is scott at thinkorswim dot com.  He’s one of the founders and takes care of us.  

    Finviz/Amatta – We do this every week, we are using TOS, not Finviz.  

    AGQ/Flips – Those things are awful, just a way for the MM to take your money.   The only time they did well for us was when silver dropped 10% in a day and, even then, we really didn’t get paid that much.  Better off betting SLW in ranges. 

    RUT heading back for a try at 780.  S&P refusing to lose 1,268 – I smell a bottom!  

  91.  this is the pattern whole decline…msb steps in right when it feels like bottom about to fall out….and we cut losses into close…i know a few days have been excecptions, but not many.

  92. Phil, 
    TBT June short 37 puts (net 2.60). Looking like another even roll to July… would you wait a couple days to see if we get a bounce? Or go out to Sept 36′s?  Just about 10 days ago the roll was even for $1 down on the July’s… with volatility having gone up why would this not have actually improved (meaning the longer maturity ones would gain more value no? 

  93. Oil/Tusca – I am very surprised we got such a strong sell-off below $100 but I think that’s partly our fault as many of us were short and are only now releasing the contracts to let the bulls roll out.  This caused them to probably hold up the oil market longer than they would have, trying to pare down our short positions before they got really screwed on a real drop.  Keep in mind there is usually NOBODY outside the NYMEX club who is seriously shorting oil futures.  By taking it public, who knows how many of those 200,000 remaining contracts were held short.  Usually, the NYMEX boys can just roll a few thousand contracts down an instantly they are into the next month with no harm.  Notice how the pattern changed and now they have canceled tons of contracts.  Perhaps we have made the bullish manipulation just a little more dangerous than it used to be….

    IYR/RPME – It depends what you are protecting but good point on IYR in the Income Portfolio, we should ditch 100 of the Jan $50 puts at $2.07 as it’s $3K we can pocket and we can sell 50 of the June $58 puts for another .49 for another $2,490 in our pockets.  

  94. Oil – Now at S2 (96.51). That has been holding, but next line is at 94.42. I am guessing we hold S2 until end of trading as it is also a low from back in March so support there. 

  95.  Remarkable, Phil — you’re going to have to describe what a bottom "smells like" one day!

  96. And for those playing gold, S2 is at 1516 which where we are now. Interesting that gold and oil tank at the same time as the dollar… 

  97. Trichet/Angel – Actually, I like him.  Someone needs to be a hard-ass and run the Central Bank of Europe like a bank as opposed to a printing press, like some Central Bankers who will remain nameless…  As to our debt, it’s all if and if the House lets things go that far, they should be burned at the stake as traitors to this country (no matter what party they are in if they vote to destroy this country’s hard-won triple-A rating for the first time in 100 years).  

    FAS/Scott – I smell a bottom!  

    Bitcoins/StJ – As I said a few weeks ago, anything that has a verifiable scarcity and is difficult to duplicate can be a currency.  But none of the gold bugs ever listen….  Also, I 100% agree with nationalizing the banks or just building government banks to compete with them but I’m busy trying to get the oil companies nationalized….  

    TBT/Amatta – Not likely to get much worse so yes, I’d wait.  That’s why we begin watching the rolls the Wednesday before expiration week, so we can benchmark if it’s going against us and make the roll while we still can.  Once your front-month is out of premium, they have a 100% delta and begin to out move the longer contracts. 

    Oil/StJ – I don’t know, we slammed trough all supports on Friday and hit S2 today and broke a little below – I can’t see that trick going 3 times in a row with no bounce but, then again, we’re weak so far into the 2:35 NYMEX close so maybe they’re not done falling.  

    Smells/ZZ – That’s easy – It smells like…. victory!  

  98. Phil:
    I was going to start a new position using one of the current losers from the $25k.  Any pop-out at you?

  99. USO July $39 calls at $1.10 – 10 in the $25KP.

    Out of SDS June $21/22 bull call spread at .81 in $25KP.  

  100. Phil USO 39 call is this a buy or a sell ????

  101. LOL Dsheara, that was not an answer to your question, I just happened to be looking it over.  HOV Aug $2.50 calls at .10 are a really fun way to play for a comeback.  

    In $25KP, since we have useless C July $26 calls we paid .66 for, let’s sell 20 July $41 calls for .75 and buy 20 Oct $42 calls for $1.50 so we’re double covered and we pick up what we paid for the July calls.  

    As this move up was based on a Dollar drop that may not stick, let’s sell 40 FAS June $24 calls for .55 in the $25KP to lock in some of today’s gains.  

    Dollar trashed to 74.84 is the proximate cause for this stick – timed perfectly at 2pm.   Poor move in oil so far, considering.  

    Poor SODA getting roughed up.

    Still liking selling RIMM Jan $35 puts for $4.45 for a net $30.55 entry.  

  102. tricchet…we will have to disagree on this one….look at the reversal last little bit in fx…what happened did greece leave the euro…

  103. USO/$25KP, Yodi – We are now buying calls until/unless they fail $96.50 ($38.00 on USO).  

  104.  Yodi:  I’m pretty sure it’s always a buy unless Phil says sell.  I bought, so we’ll see.

  105. Phil/HOV:
    Okay to follow Thursday’s advice with a total downside of ($2.02) if they file bankruptcy?

  106. Todays a virtual carbon copy of Friday on the Dow,  Friday afternoon markets sold off

  107. zeroxzero
    Thanks That what I thought Just concerned as on the one site oil is going down. Other site OPEC did not agree to produce more oil at the one site so oil would go up Its like a two sided knife

  108. Phil on the other site we do still hold the USO 38 JUL p long ITM by some 40 % sell them?

  109.  Kustomz,
    Was just thinking the same .. oil as well

  110. GDX getting flushed.  Gold should follow here, soon.

  111. Phil--if I were getting into Ftr , Nly , csco etc in the income portfolio now, what would you use as a hedge ?

  112. Hi Phil may be too late to get your price posted on IYR  50 june 58 short put.  Is this a new position open today for income porfolio thx

  113.  Stick — is that all they got?

  114. I sold mine Yodi for 50%. Why risk?

  115. Out of FXE.  Will reenter at OH resistance 145ish.

  116.  HOV/Dsheara  - That’s a fix for Amatta’s existing bad position, doesn’t cost you anything like that if you start at the current price so, yes, still OK…

    Friday/Kustomz – All about the Dollar (currently 74.88).  

    USO/Yodi – Other side?   No, we are out of USO puts everywhere as far as I know.  

    Hedge/Gucci – I would not at the moment.  I’d bottom fish and, if the S&P fails to hold 1,268, then we can find some covers.  If they get back to must hold, then we can find some covers to but, if we’re in between – then just making a little rangey consolidation that we expect to last until July 4th.  

    IYR/Gucci – You can still get .40 for the June $58 puts and the idea was just to sell a quick 1/2 cover and raise a little cash (the original ideas was to do this and generate a free ride on the long puts) so anything helps.  

    Good call DC!  

    Doug Kass coins a new term – "screwflation" – to describe the combination of inflation and stagnating middle-class wages linked to the current malaise. And like stagflation, its 1970s counterpart, screwflation also threatens the general health and valuation of the U.S. stock market.  - WOW, now they pick up on this?  I talked about this last October!  

    Subjecting regional banks to the same regulations as the Big Six banks - BACJPMCWFCGSMS - hurts the economy, M&T Bank (MTB) CEO Bob Wilmers writes. The biggest banks have moved away from traditional lending to rely on speculative trading, forcing small banks to absorb more regulatory costs [which] "threatens to deny small business owners [and] innovators the credit they need."

  117. So Phil, you are saying that I should not go long on oil futures here?  

  118. Rimm — earning report is this thursday, would it be wise to wait till then or it doesnot matter since it is pulll back to almost 50%. thx Phil

  119. FXE/Pharm..   lookin  @ the july 147 put for entry again..   wait?

  120. Phil / T — What’s your take on T? Income play at 5.67% yield?

  121. FXE/toph – waiting now.  Things need to shake out and FXE is trading in a pennant. The 5, 20 and 50d MAs are all converging, and that is normally not good….. but I am hoping for one last push up, then BOOM!  With the long weekend coming up, and triple witching, things are going to get violent, but VIX is not falling and that is never a good sign for going down (for now).

  122. Oh, and 147s are DITM.  I would look at July 145s or 144s.

  123. Phil,
      I thought the Jul $38 USO puts were still open?

  124. C/$25KP – Phil, that is a pretty neat little add for the C. Took me a couple of minutes examining to make sure i understood it. Once i got it, i chose to modify by buying the sept 42, rather than Oct 42 for less out of pocket but still work so can burn off and up to profitiablity. thanks.

  125. Pharm, FXE…  ok, thnx..  good advice  :)

  126. Got a nice trade on TNA today, in at 67.30 out at 69.40.  Didn’t want to hold going into tomorrow.  Mostly in cash right now.

  127. I don’t Phil, dollar got jammed up over the weekend and here it is at Fridays high but weakening through out the day and the markets couldn’t gather steam. We are in an area where anything can happen but, I have to say down shows lots of promise.
    Im using logic here so you may want to use that ignore button…. ;-)

  128.  Pharm:  I assume you recommended buying the FXE July144s or 145 because they’re deep in the money.  I sold the  FXE September 147s because of it.  OK?

  129. NASDAQ to close down?

  130. That RENN stock is falling apart.  Love it so much.  So sick of hearing people say it’s going to grow 500% in the next 3 years, it’s Facebook of China.

  131. Zero – I would be buying the FXE July 145 Ps (I just sold for a gain from last week).  Selling the Sept 147 Calls is fine if you have margin…something I don’t have.

  132. Nice volume on FXE 146 july puts today (over 1MM)

  133. Strange move in gold today, weakened along with the dollar

  134. Long/Bruce – If I just made that kind of money the only thing I’d be going long on is a Vegas vacation!  It’s good to take a break after a big win to remind yourself what money is actually for and what things cost because it all starts to seem like play money when you have your head in the market too long.  I don’t care how aggressive you are, you just made 3-4 years worth of gains so be like Buffett and PATIENTLY wait for the next obvious move.  The oil short was very obvious, we caught it at just the right time and caught a break when the OPEC meeting went our way and Holiday demand was the disappointment we thought it would be.  If oil gets back to $85 and looks like an obvious long – THEN you can go back and play it but why play the middle?   

    RIMM/Gucci – After Thursday you probably won’t get that price.  I think it’s going to be hard for them to disappoint on Thursday.  

    T/Rain – I like T long-term.  At $30.72 you can sell the 2013 $30 puts and calls for $6.60 for net $24.12/27.02, which makes the $1.72 premium 7.13%.

    USO/$25KP, Kevin – If they are, then close them – problem solved!  I guess I actually said to take money and run if oil went back over $99.25 and it never did but, for whatever reason, I booked it as closed last Friday in the $25KP.  A lot better now at  $1.79 so why not lock in the massive gain? 

    C/Scott – That’s a fine adjustment.  I just wanted 2 full months to roll – just in case. 

    Cash is GOOD Rustle! 

    LOL Kustomz, that logic can kill you!  I am going with my gut call from last week which is, of course, based on the premise that the whole thing is a scam and "THEY" will not want more than a 2.5% drop from one option expiration (May 20th) to another and certainly they are not going to want the 2nd quarter to end in negative territory.  On that basis I just assume SOMETHING will happen to knock down the Dollar and boost the markets by Friday.  OK, also my long-term S&P chart last Tuesday did give us some oversold signals…

    03:00 PM On the hour: Dow +0.18%. 10-yr -0.1%. Euro +0.46% vs. dollar. Crude -2.03% to $97.27. Gold -0.84% to $1516.30.

    Unconcerned with the U.S. slipping back into recession, it’s slowing developing markets – "behind the dynamism of the global economy" – that worries ECB member Ewald Nowotny. "If these countries have to adopt cooling measures, this would be more dangerous."

    Pres. Obama’s jobs council, led by GE‘s Jeff Immelt and AmEx’s (AXP) Ken Chenault, present five "fast-action steps" aimed at creating 1M jobs through such moves as increased worker training and streamlined visa procedures to boost tourism spending. The panel says it looked for steps that would not require new legislation and could take effect quickly. 

    Where’s your money-market money? Buried a bit in NYT’s"Greece is the new Lehman" story is the news that 44.3% of prime U.S. money market funds were invested in short-term debt of Euro banks; not all of those are dangerously into Greece, but it does indicate some of the long-reaching repercussions that could occur in case of a run.

    Turkey’s current account deficit is on track to hit a whopping 9% of GDP this year. With the ADP safely ensconced in a 3rd term, can policymakers take the tough steps necessary – sharply higher interest rates, fiscal tightening, and a possible recession – to put the economy on a more sustainable path? TUR -5.9% YTD. 

    "When you have a problem, you should call the experts," says Mexican central bank president and candidate for IMF chief Augustin Carstens, contending Latin America’s experience with debt issues makes him an ideal choice. "The record of Europe in preventing the crisis is not very good."

    Nearly three years after its collapse threatened the financial system, Lehman Brothers can still move markets - this time, the battered municipal bond market. The firm charged with winding down the estate of the bankrupt firm is looking to sell a portfolio that includes $8B of municipal-bond debt CDS, about a quarter of the total known supply of outstanding swaps on large individual municipal issuers.

  135. Black Rock high yield funds have been getting flushed out the past few trading sessions as well.  CYE is down 2.3% today.  Either ‘they’ are rotating out, or someone wants in and a typical flush to get in is working its magic.

  136. Understood, thanks Phil. 

  137.  Bottom Fishing:
    AA 2013 $12.5 puts are selling for $1.445

  138. What’s up with gold and silver today?  Is this so that they can butcher the dollar in the next few days and have gold end up back at $1550, rather than $1600?

  139. @ Phil, not following either gold nor silver, but just saw that SLV (and AGQ) are getting crush today… do you like any options plays for silver at the moment? thanks!

  140. AA/Jbak – Good idea.  I like AA long-term and $15.07 is a good entry.  You can sell the 2013 $12.50 calls for $3.85 and the $15 puts for $4.10 for net $7.12/11.06 with a nice 75% profit if called away over $15 and 40% or higher as long as they are over $12.50.  So AA can drop almost 20% and you still make 40%!  

    Gold and silver/Wassell – They have to do something to trash the Dollar or the indexes are going to get ugly.  

    Silver/Asaenz – No because I don’t see what they can really do to keep the Dollar under 75 long-term.  You could just play SLV for a pop with the June $33/34 bull call spread at .60, selling July $30 puts for .50 for net .10 on the $1 spread with SLV at $33.88 but risky, of course.  

  141.  Ah ha – here’s what ditched the Dollar.  This could have some legs if confirmed along the way this week.  Nicely played by "THEM":

    Insisting the ECB is not precommitted, Jean-Claude Trichet nevertheless tells CNN there is a "likelihood" the bank hikes rates at its July meeting. The euro jumps a few pips before falling back as an increase is already expected. FXE+0.55%.

     Jim O’Neill’s lunch with some leading macro-hedgies leaves him shocked at how bearish they’ve become. Despite the overall "gloomy" atmosphere, he says the "soft-patch" in the economy is transitory, and the Fed will do what’s necessary to follow through with a QE3.

    Noting double-digit percentage declines in several Chinese internet stocks since Yahoo’s (YHOOtussle with Alibaba (ALBCF.PK), Eric Savitz wonders if the bubble in these shares is bursting, helped by IPOs of U.S. web companies such as LinkedIn (LNKD) and more to come. Today: DANG -16.7%YOKU -13.2%RENN -12.9%BIDU -2.8%SINA -2.5%

  142. Seems like gold is on the minds of a few here, I think the end of QE presents a nice short term opportunity to short.. chart looks bearish down to 1475..

  143. Phil / Options exp.   So your premise is that ‘they’ will hurt the $ by Friday to boost the mkts into expiration and will also want to keep the mkt up through June 30th so as not to frighten away the retail crowd?  With oil in freefall,  China slowing (commod/s weakening) and Greece wobbling and our unemployment #’s a rolling disaster how will ’they’ come up with a story to keep institutions and hedge funds almost fully invested without some form of QE extension? 

  144. Phil, your above AA play is off, the 2013 15P’s are 2.50, the 17.5′s are 4.10.

  145. Agreed on gold, the general feeling seems to be that it’s weakening for the next couple of months. I’m keeping my physical gold but rolled up my short puts to be in the money. I like gold in the long run, but I’m glad to be hedged for the summer.

  146. Phil
    As close to unchanged as one can get?
    Is there any implication in this?
    Disregard the day?

  147. Kurtww – " rolled up my short puts to be in the money"  so.. if you had a short put with an ATM 15 strike for example, you rolled that up to 16+? i’m not following this as a hedging strategy…

  148. Great start to the week.  Market seems very unsure which way it wants to go, but appears from today again, that there is no strength here.

  149. How/Tusca – That’s what we’re waiting PATIENTLY to find out.  The Trichet call was a good one but it didn’t stick so far.  We’ll see tomorrow as it came late.  The only way to weaken the Dollar is to strengthen the Euro and keep the Yen strong.  We have a lot of data tomorrow so maybe that can take the Dollar back down or maybe some Fed speak will get people back on the QE3 bandwagon again.  Of course, maybe we are so hopelessly screwed that all roads lead to more relentless selling.  In 2008, we didn’t lose 60% in a day – it was a long, relentless grind down that people kept calling bottoms on – bottoms that never came.  

    AA/Doro – Oops, the $17.50 puts are $4.10.  That’s no good then.  SORRY!  In that case, I’d rather go with the 2013 $10/15 bull call spread at $3.10 and sell the $12.50 puts for $1.45 for net $1.65 on the $5 spread with a break-even at $13.32 and you need $15 to make your 203% but it’s only a 1x assignment so easy to deal with if lower.  

    Disregard/Streth – Well. sometimes just holding a bottom off a long drop is a victory.  Best part is we shrugged off a 1.5% drop in the energy sector and a 1% drop in Basic materials.  That’s a nice indication that we may be rotating some cash out of commodities and into real stocks that might actually hire people (in America) one day and maybe (dare we dream) even build something in this country!  

    This is the most dangerous chart in the markets right now:   

    At the close: Dow +0.02% to 11954. S&P +0.07% to 1272. Nasdaq -0.15% to 2640.
    Treasurys: 30-year -0.25%. 10-yr -0.08%. 5-yr -0.01%.
    Commodities: Crude -2.32% to $96.99. Gold +0.13% to $1517.50.
    Currencies: Euro +0.51% vs. dollar. Yen +0.18%. Pound +0.96%.

    Market recap: The morning’s M&A flurry failed to sustain its early boost to stocks, as the leading averages finished mixed ahead of several key economic reports later this week. Among key S&P sectors, telecoms and banks rose, while energy tumbled. Oil fell another 2% on fears of economic weakness; gold and silver settled at multi-week lows. NYSE decliners led advancers nearly two to one. 

    AutoNation (AN -6.5%) plunged to lead S&P laggards amid chatter that Sears (SHLD +5.3%) CEO Eddie Lampert sold a block of his shareholdings. Lampert owns 42% of AutoNation’s outstanding shares, and the auto retailer is his third-biggest holding and 21% of his portfolio, according to

  150. Jack Barnes’ summary of key European governments: either failed, failing, or non-existent. "Europe is a fractured nation made up of unstable state governments struggling with a mutual bail-out approach that is going to shatter the system." 

  151. Pharm, speaking of Blackrock high yield, what is your take on BOE?  They lost 4% today, pay a 12% dividend…

  152. Phil:  How does Trichet figure that a 1.40+ Euro helps out their fiscal crisis?  It certainly does nothing for exports — Greek tourism or olive oil sales.  It holds inflation and interest rates down — but is inflation a threat in Europe?
     I assume you are focused on sovereign debt ratings — a falling Euro would spike Euro rates, and put even more sovereign credit pressure on the Peripheral nations.  But isn’t an expensive Euro the main problem for the Peripheral trade balance?   A cheap dollar might be good for the U.S. [a different discussion] but why would Trichet help the U.S.?  
    Bottom line, forcing a two-speed Europe to fit within an exchange rate favorable to Germany and no other seems like an odd prescription for the ECB to follow.  Or is it some diabolical procedure beyond my limited imagination to force Peripherals out of the Euro, now that Germany has had full advantage of a cheaper currency than they would otherwise have had for the last decade?

  153. Today’s Levels.

  154.  Phil,
    Do you have any favorites in the world of preferred shares that you would consider quite safe for a fixed income portfolio?

  155. cslanson2/preferred : One of the best newsletters on Preferreds is  www. Income

  156.  dflam

  157. Trichet/ZZ – Unless the peripheral countries are trading straw for gold, there’s nothing about their balance of trade that’s going to save them from this mess this century.  It’s like buying people at Nagaski umbrellas after the blast – too little, too late.  Europe imports most of it’s oil and many other things – they are already paying $8 a gallon for gas and the people really can’t take any more .  Also, Trichet and Merkel are A LOT more concerned about the US failing than Greece or Portugal or Spain for that matter as we owe them a couple of Trillion.  As it stands now, Greece, Spain and Portugal together would be about a $2Tn default – sucks but they can work through it and, of course, it would not be a 100% default.   A US default they cannot work through, their banks would implode, their markets would melt down, then their peripheral countries would spin out of control as the Euro went through the roof anyway on the sinking Dollar – very ugly stuff.  So they want whatever keeps our Ponzi scheme alive for another quarter….

    Levels – Not a robust looking chart but we pretty much held Friday’s lows with the Nas and the RUT weak on the SOX downgrade so we can excuse them for today.  The Nas is right on that -3.75% line, which would be the bounce zone off the 10% drop from the top.  The RUT’s line would be about 785 so they really need to get there tomorrow somehow.  

    We have May Retail Sales, which should be better than -1% expected ex-auto but with auto, maybe worse.  PPI is doubtful to be down to 0.1% although I guess we did pull back a bit off the crazy April commodity highs and it’s all relative to the prior month so maybe not so bad looking there either.  Business inventories in April (which did have weak retail sales) is very possibly a build and people still think builds are good (on the assumption that they will be sold) so, on the whole, we could have a positive data day tomorrow.  

    Preferred/CSL – Nope, I don’t play them.  Easier to just sell calls against regular stock.  

    Jack Barnes’ summary of key European governments: either failed, failing, or non-existent. "Europe is a fractured nation made up of unstable state governments struggling with a mutual bail-out approach that is going to shatter the system.

    Banks and foreign governments are mounting an increasingly desperate push against a sweeping U.S. tax law that will force overseas institutions to report their American clients to the IRS. Banks say the task of scouring records for U.S. citizens and then reporting them could run into billions of dollars and conflict with domestic privacy laws.

    The flood of Chinese money – already levitating Vancouver’shousing prices to absurd levels – is spreading over the planet. From foreclosed condos in Florida and Nevada to beachfront property in Vietnam and Thailand, everything’s a bargain compared to Hong Kong and the Mainland. "Our sales are determined by the Chinese," says  a Sydney-based broker. 

    Bank of America (BAC) may face a further $27B of housing-related losses between now and 2013 on top of the $46B it has already booked, analysts at Sanford Bernstein say. On the bright side for investors, Bernstein says BofA only needs to raise capital if it loses an astronomical $55B.

     Medicare saves money, Paul Krugman argues: Yes, adjusting for inflation, Medicare spending per beneficiary rose more than 400% from 1969-2009. But inflation-adjusted premiums on private health insurance rose more than 700% over the same period. "So while it’s true that Medicare has done an inadequate job of controlling costs, the private sector has done much worse."

  158. (deleted this post)

  159.  Oops – error – I need to fix the Dow chart.

  160. Latest fix. It’s the 2.5% line that has come into view on the Dow, and the RUT that has the 5% line coming into view now. Sorry for the mix-up!

  161. Phil, 
    Would you mind taking a look at the 4 positions I had missed some of the info on the Income Portfolio Part 3 chat… 

  162. Phil, 
    HCBK hasn’t been this low since 2003 not even after the 2008 crash…(being conservative in it’s mortgage loans then saved the bank in contrast to other S&Ls), but now they are getting hurt by low interest rates?? Aren’t they like all other banks getting free money and lending it at a nice spread? Do you think it is an overreaction to the possible regulatory backlash? and warrant buying at these levels to lower my basis on 1700 shares from 11.34 to 9.50? 

  163. BOE/jerconn – No idea about them, but if the emerging markets fall, then this one will go down with it.  Just wait it out and see if it goes to 15….which is a support area.

  164. As expected, the attacks have begun to weaken the Dollar – from the usual suspects, of course:

    The U.S. is actually in worse financial shape than Greece and other debt-ridden European countries when adding in all the money owed to cover future liabilities in Social Security, Medicare, Medicaid and other programs, Bill Gross says. All told, Gross puts the total at "nearly $100 trillion," a position he says hardly lends itself to an overnight solution.

    "The rating agencies have gotten it wrong for 10-15 years," says Jim Rogers regarding Fitch’s threat of a U.S. downgrade. "America is bankrupt," he argues, but QE3 is coming because "printing money is all the U.S. knows to do." 

    Preparing for trouble in Greece: a tunnel that leads from Parliament to the port of Piraeus is being cleaned out for the possible evacuation of MP’s in case the building is stormed following Wednesday’s vote on new fiscal austerity measures. 

    Standard & Poor’s lauds New York for spending restraint thatmay have put the state on the path to balanced budgets. With a $132.5B budget, the state is projecting a $2.4B deficit next year vs. $14.9B before spending cuts were passed. CDS pricing on the state’s debt has nearly halved over the last six months.


  166. Phil

    That last post……scary…..if our politians don’t get their heads out of the sand soon, we are in big trouble.

  167. Greece:  You’ve mistaken the new Greek construction initiative for parliamentary panic.  Those are subway tunnels that form part of a major infrastructure initiative which takes a page from the successful Chinese version.  It will be floated as a revenue bond, so no balance sheet impact, and includes a modernistic upgrade for the Parthenon [a Calatrava design] and a Piraeus boardwalk modeled on Santa Monica.

  168. Pharm, 
    I have one of your recommendations BSDM, looks like today it got clobbered… I couldn’t find any news…. I sold the August 5 Puts for 1.90. Are you rolling of doing anything at this point?

  169. zero actually the tunnels are for a blackmarket cafe environment where the mps can mingle as equals (for a change) with the hoi polloi…they will at some point dance and uulate as dishes are smashed (we greeks love to break things) and wax effigia of sticky tricchet  illuminate the will become a party because everyone in athens knows  there is no γαμημ?νο τρ?πο the banks get paid!! opa!

    i am going with dennis gartman on this…the euro is can now buy drachmae on a when issued basis btw

  171. i don’t see the irish paying up either..really is it logical outside of the loan documents they do?…if i loan money to a profligate and get saddled with a writeoff i have little recourse..if a country known to be effectively profligate is loaned money by consortiums of foreign banks and the debtor goes tits up…the country’s poor and middle class take on another 163000 in debt per family??..have any of you guys every tried to fuck an irishman over??…you would get your ass reduce that to the national consiousness and its collective attitude toward IT’S politicians and do try to segue that in exponential terms as their green collective rage turns its focused attention onto the euro elite..we can talk about spain and portugal later…things are bad in this country but we are one nation with all our differences we do confront a common foe failrly well..the euro nations have genuine contempt for one another…that is swollen by nationalistic pride..sigh

  172. i ve told you i am a greek right/?

  173. Phil--I was supposed to ask you the past weekend and forgot—-wanted to short RENN and VNET (chinese stocks)--they are down big already --too late?

  174.  Phil
    The July 24/25 VIX bull call spread, now at .09, what level of VIX would that have to reach to be a 10x return? Has VIX been at that level in the last 12 months? it assumes the 24 and 25 could diverge by .90.

  175. Angelcur, you mean sell drachmae on a when issued basis :)

  176. well we continue to slide..i remain on a intermediate term sell signal form may 19th..this market should have had at least one multiple day rally since then and has acquitted itself like dog crap..when the five day moving average of the daily percentage change is around minus 1%.. we tend to be near a rally..we have had many technical set ups for a rally none of these oversold gauges have been accurate but history puts the odds heavily in favor of a rebound..the fakery disguising itself as trading is going to take a heavy toll one day…and this is why that is why we can’t put in solid low….no vix spike with whoosh lower …canada and brazil trade badly as well..i have not played a bounce despite getting short term buys..when these gauges don’t work it is ominous..just my take..and of course i am trading futures

  177. lapper what!?…you think it goes lower? lol!

  178. I really find it interesting that Jim Rodgers thinks that the US who taxes its people at around 31% of GDP and has a debt to GDP ratio around 85% is bankrupt, but Germany who taxes its people at close to 50% of GDP with a debt load close to ours and demographics going the wrong way is apparently not worrisome. We are not bankrupt with money – there is plenty of it somewhere, we are bankrupt with political willpower. That’s a different problem that demands a different solution! But of course, the same Jim Rodgers would be opposed to any revenue "enhancement" in the US. Got to sink the dollar if he is to make any money on his large commodity bets… Self serving? All this guys (like Bill Gross and Jim Rodgers) make nice on CNBC, but they don’t have this country’s interest at heart. They could not care less! OK, end of rant!

  179. st j…jim rodgers is a tiny elitist who went to yale and got an m phil at oxford where he was a coxswain on the oxford 8..soros threw his ample ass out of quantuum very is said he made 25 million when he left…there is no way to track his trades only his book sales..i i used to follow him on the barrons roundtable years ago..he would tout being long pepper and esoteric stuff that maybe richard plantagenet gave a crap people who know of him and knew him say things like ‘he’s long cornichons and radiccio!…shhhhh"..felix zulauf would all but snicker….he has been short bonds since what 118?…a friend of mine got into an elevator with him on their way to do a segment at the old fnn…my friend noted they were from the same town in alabama and jimmy looked up at him and said ‘so?" friend who is 6 3 said never in his life had anyone made him feel so poorly and so enraged at the same time and that if he had a talent for the markets it was secondery to his complete self think the real traders like gross and tudor jones ever tell you what they are doing?…he’s very long hubris and  unhedged.

  180. BSDM/amatta – nothing to do yet.  Let’s wait until Aug 1 to react.  Their device for cancer is a good one, and we just need some time to shake things out.  There is competition from BSX and Angiodynamics, but they have the best machine out there.  This is the time that tries men’s (and women’s) souls in biotechs…..have  glass of Flora Springs…..and relax.

  181. Richard Plantagenet?  You’ve really outdone yourself this evening, Angel, Opa! indeed.  And your rant was, if you’ll permit me to say so, positively gooberesque, and I quote:
    "… We are not bankrupt with money – there is plenty of it somewhere, we are bankrupt with political willpower!"
    Blackmarket hoi polloi cafe — nice image, I thought perhaps a sticky tricchet had dripped on your keyboard towards the end of your comment when the letters went all funny, but then realized you were speaking a tongue of the ancients.
    I don’t agree that Germany is worrisome.  A German/American comparison is apples and oranges.  The Germans do have a demographic problem, to the extent they cling to their "volk" thing, but I’m guessing the Poles will fill the gaps and Germans are frugal, debt adverse, mostly don’t buy houses.  They  have decent social services, and have dynamic export industry selling products like automobiles made with actual German workers. It’s not the U.S.
    But in respect of the Irish. I think you’re dead on.  The Irish people are not going to pay this piper.  If they have to do an Iceland and come out clean they will.  They’ll end up coming out of the recession faster than the other Euroslave Peripherals. It’s a stretch to imagine Spain doing it — even though, with youth unemployment over 45% [and that's the official figure], it’s not impossible that the "European Street" becomes another meaningless CNN phrase in a year or two.
    Spain’s too big to leave. unless it comes to a total breakup, which seems improbable, since there is a political project at stake.  Bond haircuts, fiscal renegotiation and national bribes, by whatever name, will probably sort out the Euro, with perhaps a few outliers like Ireland, Greece and Portugal bailing out. 
    However Europe evolves, the dollar is starting to look good compared to the Euro, as well as FXA, FXC, and GBP. Or rather, the dollar looks so awful that you feel it must soon attract some sympathizers.  The U.S. certainly has problems, but Australia’s just a desert with minerals and a decent beer, after all.  If you chill it down and add oil shale you have Canada.  [Take away the decent beer and minerals and you have China, or at least the northern half.]  I would think the bad news on the U.S. is mostly out, and would be surprised if that were true of Europe.

  182. Good morning!  

    Markets up very nicely more than half a point in the futures, Europe up a very uneven average 1%, Asiad was up 1% on the Nikkei and Shanghai but down 0.4% on the Hang Seng (anti-stick at close) and the BSE was 0.0% – strange.  Dollar smashed down to 74.67 is cheering everyone up.  

    Oil at $97.61 and looking good for a move back to $98.50 or better.  Gasoline is $3.008, nat gas is $4.63, gold $1,520, silver $34.90 (nice futures long over the $35 line with a stop right below) and copper is rallying nicely to $4.0735.

    The Euro is $1.446, the Pound is $1.642 and it’s a whopping 80.40 Yen to the Dollar but that should be the 3am top and currency people may want to long the Yen (betting the number goes down) off that mark for the 3am trade. 

    Positions/Amatta – There’s another hour of my life I will never get back.  

    HCBK/Amatta – Oh wait, of course you are not done…  HCBK is not a primary broker, they don’t get POMO.  They are a good bank though who, like any bank, have delinquent loans.  Apparently about $800M worth of their loans are past due but that doesn’t mean foreclosure and it doesn’t mean they will lose $800M, of course.  The bank earns about $500M a year and currently has a $4Bn market cap (p/e 8) and, if they had to write off $400M (very doubtful) and skip a whole years earnings – that would leave them with ZERO bad loans and back to earning $500M a year going forward.  The bank cut their dividend to shore up capital due to the change in regs, not due to a shortfall in their books, which have $21Bn in cash, $50Bn in investments and $22Bn in short-term debt and $25Bn in current liabilities with a solid NTA of $4.5Bn.  Usually, they pay out about $300M in dividends (7.5% of current price) so cutting them to 3.9% makes sense rather than going out and borrowing money.

    Bottom line is the bank is under attack by hyenas, who are spinning everything they do as a negative in order to drive down the stock price so they can jump in and buy a stock that usually pays a .60 dividend for $8.  I love HCBK at this price ($8.23) and you can buy the stock and sell the Jan $7.50 puts and calls for $1.75 for a net $6.48/6.99 entry.  

    Trouble/Exec – A little late for soon at this point.  Revolution is our only option and we need to do that SOON.

    BDSM/Amatta – Is this part of your new, "conservative" investing strategy?  

    Drachma/Angel – People will gamble on anything.  If they do have drachmas, who the hell is going to want them?  The only reason they would issue currency in the first place is to print the hell out of it….

    Chinese stocks/Savi – I would not chase.  China very out of favor but I don’t bet them down (in general) for the same reason I don’t play them up – they are black boxes.  You have no clue what’s real and what’s not, you can’t read the unfiltered news about them, you don’t know the CEO, you don’t know their customers, you don’t know the economic environment, etc.  What’s the difference between shorting them and playing the "Don’t Pass" line on the craps table?  At least with craps, after the roll the dice, you’ll know why you won or lost…

    VIX/Streth – The VIX is not a stock.  It spikes up rapidly when the market breaks down.  To make 10x, the VIX has to be over 25 at July expiration.  That’s not really what we’re playing for as that would take a major catastrophe that does not calm down (like the ’08 crash) but the delta differential on the 2 calls is .03 with the VIX at $19.61 so on a net .05 entry, every $1 move up in the VIX is a 60% gain while, on the other hand, it’s going to be hard to lose 60% going the other way as the spread tends to maintain it’s value for quite a while (the June spread is still .05 with 4 days to go).  As to has the VIX been to that level in the last 12 months?  Seriously?  Now I have to look at charts for people???

    Tax/StJ – We collect $2.2Tn on a $16Tn GDP, that’s 13.75%, not 31%.  The only people in America who pay 31% are the losers in the bottom 90% who can’t afford tax planners and accountants to set them up with loopholes and any corporation who’s paying even 13.75% is simply not trying.  The funny thing about corporate taxes paid is that INCLUDES Federal taxes, sales taxes, state taxes and property taxes etc that they pay (all deductible) while when you think of 31% paid by middle-class schlubs (who vote Republican so they can continue to be screwed over by the people they aspire to be), you are thinking Federal Taxes only – THEN the bottom 90% get hit by SS, Medicaid, Sales Tax, Property Tax – all to support the infrastructure that the top 10% use 1,000% more than they do but pay virtually nothing to support.  That’s the American Way!  


  184. Oh no, Dollar came back from 74.63 to 74.80 and knocked the futures way back, now back to up 0.5%.  Oil fell an entire $1 on a .20 move in the Dollar, now back to $96.75, gold back to $1,518, silver fell from $35.25 back to $34.75 – this is violent stuff!

  185. Morning Phil. Seems the dollar is still indecisive.
    These GS guys really do have a good timing:
    I guess the pre-IPO investors get (got?) ripped off, or maybe they can pass it to the IPO still, but one year is a long time…

  186. ancient evenings/zero  yah that quote on will was… i think.. from that gartman quote zero offense to the gooberae among us but i  doubt he knows much about the plantagenets (and their pepper lust)..and that WAS the ancient  greek for ‘no effing way’…and its true i think tricchet’s arrogance is exacerbating a bad situation…the germans are the backbone of europe if it werent for them having their balance sheet leveraged the euro would be a memory…
    market is going to finally rally off a v oversold condition..let’s watch the quality of the move and see if there’s a hint of a more durable bottom..magical sloppy buyer was like a monkey humping a football yesterday and will not like the early tepidness of the maybe he keeps buying up the xlf like yesterday