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Tempting Tuesday – Greecing the Wheels for an Uphill Climb?

The Dollar is at 75.24 at 7am

That's because the Euro is back to $1.436, the Pound is $1.619 and it's 80.16 Yen to the Dollar.   The weaker Dollar is pushing the futures up another half a point this morning and oil has flown back to the $95 line, where were shorting it again so thank you NYMEX crooks for another crack at a Billion-Dollar winner this week.  Our trade ideas on the oil futures racked up several Billion in profits in the past couple of weeks and you can read all about that strategy in June 11th's Weekly Wrap-Up so I won't get into that here.  I already called a futures short in early morning Member Chat and we caught a quick ride down to $94.40 but now we're back at $95 as the Dollar gets back to 75.20 and we're going to go short again for the same reason.  

What is that reason?  GREECE IS NOT REALLY FIXED!  

There, that's not a complicated premise, is it?  If Greece is not fixed then the Dollar should get stronger and if the Dollar gets stronger then oil heads lower (read all about that relationship in Stock World Weekly) because it's priced in Dollars.  Aside from being priced in Dollars that are priced too low – there is simply WAY too much oil floating around the World.  Although the NYMEX crooks have gotten rid of all but 65 Million barrels of oil that they pretenedted they wanted for July delivery (down from 425M barrels of fake demand at the peak), they have done so by pretending to want 519Mb in the next 3 months.  So, like Greece, the NYMEX crooks have simply extended their problem (ordering barrels they don't REALLY want delivered) and they are pretending the demand is still there.  

Unfortunately for them, the clock is ticking as they have already stuffed 188M barrels worth of contracts (188,000) into December and, as you can see from July as we tick down to the last day – they don't really want even 1/3 of that amount to be delivered (more like 35Mb tops) so there is going to be hell to pay at the end of the year, no matter how successful they are at kicking the contracts down the road for the next couple of months:  

Month 
Click for chart
Session   Pr.Day   Options
Open High Low Last Time Sett Chg Vol   Sett OpInt  
Jul 11

-

-

-
99.01 Jun 20, 20:10 93.26 0.25 98356   93.01 65994   Call Put 
Aug 11

-

-

-
100.86 Jun 20, 20:10 93.63 0.23 261068   93.40 295536   Call Put 
Sep 11

-

-

-
100.14 Jun 20, 20:10 94.07 0.23 32888   93.84 155921   Call Put 
Oct 11

-

-

-
96.89 Jun 20, 20:10 94.46 0.23 16417   94.23 69175   Call Put 
Nov 11

-

-

-
78.01 Jun 20, 20:10 94.85 0.22 9306   94.63 58136   Call Put 
Dec 11

-

-

-
101.31 Jun 20, 20:10 95.19 0.21 30889   94.98 188553   Call Put 

Normally, the 3rd month out looks like October – with about 50,000 contracts open (50Mb).  That's because 50Mb is about the upper limit of real demand and those people (airlines, truckers, chemical plants) hedge their consumption for a year or so at a time to lock in steady prices.  That is the LEGITIMATE use of futures hedging.  Then come the speculators, who pile onto that 50Mb of real demand and they PRETEND to want another 250-400Mb in a single month.  That drive prices sky-high and forces US consumers to pay almost twice as much as they should for the 600 Million Barrels a month that they actually consume, all so a bunch of crooks at the NYMEX can rake in fees as they trade over 400 Million Barrels PER DAY!  

Back and forth, back and forth, back and forth they trade – churning and churning the contracts and racking up fees that are passed to the US consumers.  Globally, it's $2.5 TRILLION in excess fees and costs all so GS, for example, can make their magic $100M a day of trading profits.  That August contract started the day yesterday at $91.51 but, 261,068 contract churns later and they had it up to $93.63 at the close but then they took it all the way to $95 in overnight trading.  US consumers use 17Mbd so that $3.50 costs us $59.5M per day and that's $1.8Bn a month that's taken out of our disposable income and sent overseas where it helps pay for roadside bombs that blow up our troops.  Yes our "leaders" do nothing about this blatant crime!

Notice in the chart on the left, they are also shipping us 1 Million barrels a day LESS than they did last year – that's been going on since April so figure 60 days or 60M barrels less oil shipped than last year yet, looking at the chart above, our crude stockpiles are much higher.  Now, I'm not an "expert economist" (or "Economoron" as we now call them) but it seems to me that if supply is down 10% and inventory is up 10% then DEMAND must be LOWER than last year.  Sure it seems obvious but why then do you hear nothing from the Corporate Media but the EXACT OPPOSITE?  

What about China?  Yes, they love to shout China as if it solves all bullish arguments but China "only" consumes 9 Million barrels a day and 5Mb of that is produced domestically so their total imports are just 4Mbd so it would take a 25% jump in Chinese imports to offset a 10% drop in US imports and that is certainly not happening.  In fact, China's copper imports are off 32% this year already and it's accelerating, with May down 47% from a year ago at 149,235 metric tons – off another 6.9% from April.  “The London price ($4.10 per pound) is still too high for any restocking plan,” said Zhao Kai, an analyst Jinrui Futures Co., a subsidiary of China’s largest refined copper producer Jiangxi Copper Co. “As the June-to-August period is the usual slack season, we probably won’t see a strong rebound in imports, despite the significant decline of domestic stocks,” he said.  

China stocks are likely to post a record stretch of monthly declines after government measures to fight inflation pushed down financial companies on the benchmark index to an all-time low relative to earnings. Banks and developers slid to a record 8.8 times estimated earnings in the week ended June 3, and were at 9.14 on June 17, Bloomberg data show. Non-financials are valued at 19.2 times estimated earnings, compared with a record low of 14.8 reached in October 2008. "When you rule out financial companies, Chinese stocks are actually not cheap and most of them are still way above their valuation bottoms," siad Li Jun, a strategist at Central China Securities Co. in Shanghai. "On the back drop of the government tightening liquidity, it's hard for valuations to expand so high-valuation stocks risk converging with low-valuation ones."

Speaking of BS Chinese stocks, John Paulson Just Dumped All His Sino-Forest After Taking a Gigantic Bath.  Paulson, the billionaire hedge fund manager, has sold all his shares of Sino-Forest, the Chinese timber company whose shares have collapsed in the wake of fraud allegations, according to Bloomberg.  Paulson had a huge holding that has scorched his returns for June — he's reportedly down 13% this month alone (also in part due to wrong way bets on financials).  Originally, Paulson defended the stock in the wake of allegations from short-selling research firm Muddy Waters, but the negatives keep piling up.  This weekend a Canadian newspaper basically corroborated the claims against Sino-Forest.

If China bubble talk sounds familiar to you, perhaps this is why.  The Financial Times has a great article comparing the state of the economy in pre-crash 2007 to (probably pre-crash) 2011 in which they say: "Current market conditions are, in many ways, reminiscent of the benign market conditions of 2007. Volatility and cost of debt are low, highly-levered buyout deals have returned and the credit market penalty for being more levered is once again minuscule."  

This is not complicated people – look at the chart!  What happened in 2008?  Are we better off or worse than we were in 2007?  OK then – LOGICALLY, what would be the proper course of action in 2011?  Forget Greece, forget Japan, forget Riots in the Middle East, forget the US Budget Crisis that didn't exist (to this extent) in 2007.  Based on the data alone – is it time for risk or a time for caution?  I am appealing to your rational sensibilities here – I don't have sound bites, I won't repeat it 500 times between commercial breaks and I don't have a sponsor but, if I did, my sponsor would be CASH!  Cash is good, cash is smart – cash will let us buy things if the market collapses – again – because all the same mistakes are being made – again – only this time we don't have any room for error, do we?  

Our plan last week was to ride the "Greece is fixed" rally into the close of the Quarter and get to cash but I'm not sure we have that long.  The last crash was "fixed" by throwing Trillions of Dollars into a black hole that apparently opened on the other end at Goldman Sach's Prop Desk, which then used all that free money to pump up commodities despite an overall lack of demand.  

That then began a process that siphoned Trillions of Dollar of cash away from the global consumers by force and that forced spending gave energy and commodity sectors a lift and before you knew it we had a market rally.  Unfortunately, we bled those consumers dry and now they are rioting in the streets and there is no longer enough of a tax base for countries to repay their debts so the International Banksters have sent out foreclosure notices on Greece, Ireland and Portugal and they have their eye on Italy and Spain next.  

To "celebrate" Greece being fixed if they manage to hold onto their Government this afternoon and then manage to make a deal that assures a decade of immeasurable suffering for their people that is almost certain to end in default anyway is not smart.  Who will bail out the next PIIG?  Who will bail out the UK, with their 83% debt to GDP ratio?  Who will bail out the US with our 99.5% ratio (and we need to raise that limit or we go BK first!) and our 10.8% of GDP deficit.  10.8% means our deficit doubles in less than 7 years to over 200% of our GDP and we'd STILL be better off than Japan is today.  

As Bill Clinton tells us – It's Still the Economy, Stupid – and the President has 14 ways to fix it and none of them involve giving another Trillion Dollars to Investment Banks.  As Clinton points out – this country can be fixed and our unemployed people could be put back to work if only our current "leaders" would show a little political backbone.  Sadly, that's just not likely to happen so it's back to cash as we wait for the crash (oh good, we found a catchy phrase!).

 


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  1. 0×0 / juggling -- congrats on finding your groove!


  2. Oil Lines
    R3 – 98
    R2 – 96.20
    R1 – 95.12
    PP – 93.31
    S1 – 92.23
    R2 – 90.42
    R3 – 89.34 



  3. Phil – Here’s an article exactly to your point.    http://www.reuters.com/article/2011/06/20/us-oil-ftc-probe-idUSTRE75J6J020110620
     
    The FTC suspects refiners of lowering production as a means to keeping the price high.  It is so suspicious they never look at the NYMEX as the source of manipulation…that’s where the money is!    As you say, refiners and producers are seeing the decline in demand and doing what is natural.  What is unnatural is the stacking, shuffling and rolling of phantom undeliverable oil contracts and stoking all kinds of "premiums" – any thing other than fundamental demand for the commodity.   It’s the demand for the contracts which has increased, not the commodity, and it is so simple to see speculation as the root.   The only reason I see for no investigation of NYNEX is that these exchanges and their customers have bought protection from the politicians.


  4. Also suspicious:   The Greek confidence vote is scheduled for immediately after the market close today.    I’m thinking today will be a waste of time trying to trade, won’t the markets simply wait for the vote before movnig substantively either way?  Nothing else seems to be moving the markets these days.
     
    My opinion is the Papandreou confidence vote will pass, since only a simple majority is needed and his party controls 155 of 300 seats.  Futures will pop after-hours, as the Euro strengthens and drives the dollar back down and equities and oil back up.  Maybe good for a day or two before the realization sinks in that Greece is still not fixed!


  5. lv / wait — Not only are the markets waiting for the vote, they are also going to be focused on Uncle Ben’s presentation tomorrow.


  6. PP for today:

    RIMM outlook on a monthly chart.


  7. Phil, whats your opinion on ECA? We had a B/W awhile back selling the 30 puts and calls I played, not too worried about the 2013 options but taking a nice hit here.
    Also thanks or the encouragement on my AAPL short puts, looks to pay off today.


  8. Can we, once and for all, dismiss that myth and move on with a discussion based on facts – the US, just like Greece, has a collection problem.
    http://capitalgainsandgames.com/blog/bruce-bartlett/2276/no-gov-pawlenty-tax-cuts-dont-pay-themselves 
    Even Greenspan said so….


  9.  My inclination will be to short rallies today, as I can see all this hope for the Greeks evaporating into uncertainty by the close. 


  10. See the butterfly (from 99er). 


  11. Phil I do not have many times this position so I like your thoughts on it AET Bought stk for 30.14 now 45.15 sold Jan 12 c against it for 5.55 now 15.15 with a delta of 1. Question close position all together or roll the caller possible to Jan 13 40 call for a cost of 5.88 thks


  12. AAPL, bought back July 300 short puts for +26%


  13. Good morning!

    Wheeeeee on oil already – $94.40 again!  Stop at $94.50 when that happens, no need to be greedy as we expect a pump into tomorrow’s inventories when we get to short them all over again.  

    Dollar was smacked down to 75.12 and it’s not helping oil or the Futures and that’s a very bad sign as the Dollar is way ovesold at the 75 line.  The Greek no-confidence vote should hit us around our close and I was reading last night that he has about a 5-vote margin IF 100% of his party goes along.  As we saw from our own Congressional fiasco in 2008 – you may THINK you have the votes but you never really know until they count them.  

    The prediction was that we’d be back to the "Must Hold" lines by next Friday and it’s looking good on the charts so I hate to go short but now is a good time for a short-term disaster hedge like the DXD July $17/18 bull call spread at .60, which makes .40 if they just hold $18 (now $18.20).  If a 66% gain does not satisfy you, we have the usual offsets plus the XLF short July $15 puts at .45 or consider that the RUT short weekly $760 puts pay $1.60 so you can sell one of those (big margins) and buy 3 of the bull call spreads for net .20 on $3 worth of spreads.  

    $94.08 – I love it when a plan comes together!  That makes the stop $94.25 and a very nice win to start the morning.  

    If you want to gamble on Greece falling apart this evening, the IWM weekly $80/78 bear put spread is .90 and there we’re betting for the Russell to fall below 780 again.  

    It’s going to be a crazy day and there’s more of a chance of a sudden global collapse than a sudden rally at the moment but, if Greece looks fixed again, it should be the beginning of a nice rally and we can go shopping then.  

    Tuesday’s economic calendar:
    FOMC Meeting, Day 1
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    10:00 Existing Home Sales 

    Notable earnings before Tuesday’s open: BKSCCLCMCJEF,WAG

    Notable earnings after Tuesday’s close: ADBEJBL 

    At the open: Dow +0.24% to 12110. S&P +0.28% to 1282. Nasdaq +0.39% to 2640.
    Treasurys: 30-year -0.1%. 10-yr -0.04%. 5-yr -0.03%.
    Commodities: Crude +0.48% to $94.08. Gold +0.01% to $1542.20.
    Currencies: Euro +0.41% vs. dollar. Yen +0.16%. Pound +0.01%.

    Market preview: S&P futures +0.5%, following strong gains in overseas bourses, as nerves settle over a possible Greek default ahead of a confidence vote, which the government looks set to win. Investors ignore Fitch warnings that it would place the U.S. in restrictive default if an Aug. 15 coupon is missedLater: existing home sales, FOMC Day 1.

    ICSC Retail Store Sales: -0.7% W/W, vs. -0.8% last week.+2.2% Y/Y, vs. +2.4% last week. Sales were weak as Father’s Day failed to spur interest.

    Redbook Chain Store Sales: +4.2% Y/Y vs. +3.2% last week. Warm temperatures drove up sales of seasonal goods including durables like air conditioners.

    Tie-breaker:  Canadian April retail sales disappoint, coming in flat ex-autos, and the March figure is revised downward, as the country joins its southern neighbor in a Q2 slowdown. The loonie gives up ground, but quickly resumes higher as a "risk on" day trumps weak economic figures. Loonie +0.5% at $1.0253. 

    confidence vote for Greek PM Papandreou is set for midnight in Athens, 5 PM ET. Seemingly having stemmed defections, the PM looks set for victory as his PASOK party controls 155 of the 300 seats in Parliament. A sharp rally in global equities and the euro are anticipating a positive outcome

     

    The ZEW economic sentiment indicator for Germany plunges 12 points in June to -9 as worries over the EU debt crisis appear to overwhelm what appears to be a robust domestic economy.

    The BoE’s Paul Fisher worries over the fragile state of the U.K. recovery and hints more QE may be necessary. It’s a far cry from market expectations where traders are trying to figure when the 1st tightening will come. Sterling drops sharply before recovering a bit to $1.6197.

    Fitch warns again that any extension of loan maturities to Greece would be considered a default, as the move would not be voluntary, but instead made under political duress. A downgrade to default would cause forced selling of Greek paper from entities no longer allowed to own it.

    Fitch’s head of Asia-Pacific sovereign ratings opines on U.S. paper, saying if a August 15 coupon payment is missed, Treasuries will be placed in "restrictive default … it’s highly unlikely after such a default that the rating would move back to AAA."

    S&P joins Fitch and Moody’s concluding a voluntary debt restructuring along the lines being discussed by eurozone leaders would be considered a default. "Past experiences show that restructuring the debt of a country, whose creditworthiness is rated at CCC … tend not to be voluntary and investors must sustain losses."

    Bank of America’s Ethan Harris is so worried that overly swift spending cuts resulting from a debt ceiling deal could cause a 1937-style recession, a temporary default on U.S. debt might be preferable: “The risk of a bad outcome is high. We are not sure whether it is worse to do nothing and temporarily default on the debt, or to do too much and enact big front-loaded deficit cuts.” 

    Inflation in Hong Kong rises to a near 3-year high of 5.2% in May, above expectations for a 5% gain. Mortgages in the territory are available around 2% – the question isn’t why are property prices sky-high, it’s why aren’t they higher?

    The FTC is investigating whether oil companies, refiners and traders have engaged in anticompetitive practices or manipulated crude oil prices. The inquiry follows soaring refining margins and reports that refiners were using less of their capacity than they did last year.

    Coca-Cola (KO) accuses Goldman Sachs (GS), owner of the largest metals warehouse in the LME system, of inflating prices by restricting the amount of metal released to customers. "It takes two weeks to put aluminum in, and six months to get it out," says Coke’s strategic procurement manager. "The situation has been organized artificially to drive premiums up." 

    Corn is slated to open sharply higher on a continued bounce from last week’s drubbing that saw July futures drop around $1/bushel. The latest concern is severe flooding in China’s Yangtze River valley threatening recently planted crops. JJG +1.9% premarket.

    The government finally launches a $1B scheme to help save delinquent homeowners from foreclosure. However, borrowers only have a month to apply for zero-interest loans of up to $50,000, while the government only has until September 30 to approve them. 

    The long-shot campaign for a bill to allow companies to bring home hundreds of billions in overseas profits at a bargain tax rate gets a boost as sources say NY Senator Schumer is warming to the idea. If it passes, look for share buybacks and dividends to increase at the affected firms.

    Best Buy’s (BBY) board of directors authorizes a $5B share repurchase program and a 7% dividend increase. Shares +4% premarket. (PR). 

    Oppenheimer cuts its price target for Apple (AAPL) shares to $420 from $450, primarily due to uncertainty around plans for the next iPhone. Oppenheimer had been anticipating a full month of new iPhone sales for September, but now expects sales to begin at the end of the month. AAPL shares, +0.5% premarket, have recently slumped below their 200-day MA.

    Cheap doesn’t do service to describing Apple’s (AAPL) stock, now trading at a 15 PE. Adjusting for growth, Apple is trading at the same valuation as it was during the depths of the GFC. Is the market saying a company this big can’t keep growing earnings at a decent pace?

    Carnival (CCL): FQ2 EPS of $0.26 beats by $0.03. Revenue of $3.62B (+10.8% Y/Y) beats by $0.11B. Sees FY’11 EPS of $2.40 – 2.50. Shares +0.8% premarket. (PR


  14. Another great oil call to start the day – thanks Phil!


  15. Hey all,

    We have a new story published about Apple (AAPL), and why the stock is worth more than $550 currently.

    With today’s downward spiral, it begs the question…is now the time to buy.

    Check it out at: http://www.philstockworld.com/?p=392141

    Good Investing!


  16. phil the IWM put spread is much cheaper right?


  17. Here is the "income" FAS situation as of now:
    FAS – 23.84
    Short Weekly 23 Call – 1.055 (Mark) / 0.28 left in premium
    Short Weekly 24 Put – 0.69 (Mark) / 0.44 left in premium
    P&L is at $240 with 10 contracts.


  18. Housing/StJ – We get some data at 10 but not likely to be pretty. 

    FTC/LV – That’s all part of the plan.  They heavily restrict what each government agency can regulate so the FTC can’t touch the NYMEX, no matter how much evidence they have.  I’ve been speaking to people SINCE 2007 about this stuff and only now are we starting to get a coordinated attack going – which is what you need.  It’s like organized crime – you need a special task force to take them on because they know how to work all the jurisdictional tricks inside government so no one can touch them.  

    Waste of time/LV – You are right  there.  It seems that they are going to spin Greece positive no matter what but this is really going to be a case of "better safe than sorry" as they spun the first vote on TARP the same way and we all sat here with our jaws open as it was voted down and collapsed the Dow 800 points the next day.  The Greeks have a lot more reason to vote down the EU FORECLOSURE (as it’s not a bailout) package than we did to vote down TARP.  Of course, as Rainman says, the 1-2 combination of Greece being fixed and the Fed announcing some kind of new QE could send us to the moon again.

    RIMM weekly $25 calls at $1.90 – 10 in the $25KP


  19. Going through the various indexes, P/C ratios are >3 on SPX/SPY, >1 for DIA and <0.5 for NASDQ.   What’s up with that…..?  I don’t usually follow the P/C ratio on the DIA and QQQ, but SPY is a bit over the norm, so either there will be a short squeeze, or someone is loading up with the collapse of the VIX.


  20. @ Phil which USO July Puts do you like best? I think that i prefer the July rather than the weeklies because of the time…thanks!


  21. A positive spin on Netflix:
    http://www.theatlantic.com/magazine/archive/2011/07/why-content-isn-8217-t-king/8551/1/
    I guess we have to look at both arguments to make an informed decision! 


  22. Good morning,

    IWM 78.19, 78.51, 79.14, 79.59, 80.01, 80.36 and 80.76


  23. phil--you were right about the MoMos again


  24. VIX down 6% today because there is less risk today than yesterday! Useless…. 


  25. ECA/Jomp – In a weak market, I only have interest in CHK as they are, by far, the best in that sector but the long-term ECAs are fine.   We take the $30 puts and calls because we’d be happy to scale in at $30 or less so we shouldn’t be unhappy when it looks like we may get our price.  

    Tax cuts/StJ – Sadly, the only people who still claim that tax cuts increase revenues have a completely unquestioning audience to preach it to.   Many of these economic theories are based on faith and parables, which is perfect for the target audience.  It reminds me of the song from "The Book of Morman" – "I Believe."  

    AET/Yodi – I’d be careful into earnings as we don’t know what kind of hit they took on floods, earthquakes and hurricanes last Q.  After earnings, you can emerge from your very safe position and roll to something that gives you a better call away. 

    AAPL/Jomp – Very nice!

    You are welcome chaser!  

    IWM/Jabob – Wow, that jumped fast!  I certainly like it at .48!  That’s the IWM $80/78 bear put spread, playing for the possibility that Greece does not work out as well as expected.  

    FAS Money/StJ – A watched pot never boils and a watched trade never profits the way you want it to.  Those things will fluctuate like crazy intraday.  

    USO/Asaenz – I wouldn’t go for short-term puts at the moment because if Greece is "fixed" we could fly back to $100 and THEN I’ll be loving USO puts again.  If you want to stake out a position, I’d go for the Oct $35 puts at $1.95, selling 1/2 weekly $37 puts at .47.  If you sell about .20 of premium each week, you work off the calls in 10 weeks without too much downside risk but, as I said, the entry is a bit early and you may need to spend $1 to roll up as well.  

    Good morning JRW – back in real time?  

    SQQQ just got interesting again at $28.50, the July $27 puts can be sold for .75 and you can buy the $29/32 bull call spread for .70 for a .05 credit on the $3 spread.  

    And there goes RIMM!  


  26. TBT at $33 again – so far, they have been rejected there pretty harshly.  

    MoMos/Jabob – Sadly predictable.  

    VIX/StJ – Another tempting long.

    10:00 AM On the hour: Dow +0.54%. 10-yr -0.14%. Euro +0.53% vs. dollar. Crude +1.19% to $94.74. Gold +0.21% to $1545.20.

    May Existing Home Sales: -3.8% to 4.81M vs. 4.79M expected, 5M prior (revised). Inventory of unsold homes -1% to 3.72M; months supply 9.3. Median sales price -4.6% Y/Y to $166,500. "Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May," NAR’s Lawrence Yun says.

    South Florida is looking like one big going out of business sale to Brazilians, who are arriving with cash and leaving as owners of multiple pieces of real estate. "If you buy similar units in Brazil, you’d pay double the price and double the interest rates," says a buyer, summing up the attraction. 

    Growth in earnings and revenue among S&P 500 firms isexpected to slow in Q2, according to Zacks, with total Y/Y growth of 9.33% in earnings and 0.62% in revenue. Q1 came in strong, with 17.1% earnings growth and an 8.8% boost in revenue, both dragged down by weakness in financials. 

    Top executives from German and French companies take out full page ads in European newspapers under the headline, "The euro is necessary." Keeping to form for such pleas, the chiefs call for stricter measures to ensure member states can no longer get their debt levels so out of line.

    Told you so!  Research in Motion’s (RIMM +2.1%) 4.7x forward P/E, lowest among communications equipment providers, makes it takeover bait, Bloomberg speculates. One fund manager thinks RIM may attract interest from Microsoft (MSFT) and Dell (DELL), since paying $40/share would still value it at a discount to comparable firms in the industry. RIM shares are at their lowest since 2006


  27. NSPH – FDA will not approve its Plavix Metabolism diagnostic test until the company submits additional data. As a result, Nanosphere said it does not foresee being able to launch the product in the U.S. until 2012, if it is approved. The test is already on the market in Europe and will be launched in additional European and Asian markets by the end of the year.  Unreal.  Have to look into it, but it is a good time to DD.  Let’s see where they fall to for our entry.


  28. Phil
    Why SQQQ? If Greece is gets fixed won’t this sink further? What do you see with QQQ? Just trying to understand the trade. Thank you?


  29.  Phil,
    I think google or apple might buy RIMM. fits perfectly well in andriod or IOS respectively.


  30. 75.15 on the Dollar not sure they can get us much lower so this may cap the "rally".  

    Dow volume just 29M at 10:30. 

    SQQQ/DC – Because I think the MoMos are still way overpriced and will drag the Nas but it’s a disaster hedge in case Greece is no fixed – it it is fixed, we take the loss on the bull call and roll the short puts and hopefully it ends up costing zero to play.  

    Buying Rimm/Rehat – I doubt AAPL would pay that much just for the client base (they don’t want anything else of theirs) and I don’t see GOOG alienating their other clients by owning RIMM.  S, DT or VZ or T may consider it a strategic acquisition as they get a small % for selling them now so the math of capturing the full sale and forward revenues is appealing.  

    Bonus cuts, pay raises, then layoffs: Wall Street’s new pay structure is now resulting in some unintended consequences, Andrew Ross Sorkin writes.


  31. Phil,
    Quick 20% on the RIMM Weekly $25 C.  THANKS


  32. Thank you Ole’ Wise One!


  33. PCLN up 17? WTF? FU Momos!!!


  34. FMD to the up side.


  35. Interesting read. I don’t know, it doesn’t sound like such a sure thing after reading it. And even if he does receive a positive vote (barely), they still will have to agree on austerity measures that satisfies other EURO members (France and Germany).
    http://www.cnbc.com/id/43464308


  36. Crap!  I got out of those RIMM Weeklies too quick!


  37.  Wow, RIMM is on quite the tear. I took the $25 calls at 1.78, and I’m keeping a loose trailing stop as I go. At some point the giddiness has to end today as reality sets in. 


  38. 75.09 on the Dollar, nice rally!  

    $25KP, Trying to decide if we are being greedy on RIMM but I think at least we should see if we get to $25.50.  $25 calls now $2.45 so up nicely and a stop at $2.30 locks in a 20% gain on the day ($400) so let’s do that but, hopefully, we won’t need them and we’ll set a .25 trailing stop at $27.75.  

    MoMos/Jabob – Leading us to the promised land.  

    Voting DC – Remains to be seen.  

    Early/Button – No one ever went broke taking a profit.   


  39.  PHIL   What do you think of PGH.  I was wondering if it would be a good fit for the income portfolio. Thanks for all you do!


  40. "Now I’m more towards thinking that it is going to be a public rejection of the course that Papandreou’s been taking for the past two years, and the only way that is going to manifest itself is large numbers of people in Syntagma Square," he added.
    The potential for the protests to turn violent quickly is high, analysts have said.
     
    As Egger noted, there is "ample precedent" for protests to turn into riots. In 2008, demonstrations over the shooting of Alexandros Grigoropoulos, a 15-year old boy, by police in Athens, turned into a week-long riot, with public buildings, including a police station, set on fire by protestors wielding Molotov cocktails.
    The riots escalated so quickly and were so widespread that the Athens police reportedly ran out of tear gas. With tensions as high as they are now, Egger said, overzealous policing could see the situation spiral out of control.
    "Until the vote of confidence and after that, until the vote on austerity, there is a very explosive situation there," he said. "The Greek police are not known to operate with a soft touch. This is a very risky situation. If they injure or kill somebody with whom they are fighting these running battles, then the whole thing is going to go up in flames, like it did in 2008."
    "In that case, the government could become unable to function," Egger warned.


  41. MoMos are not Moshe—promised land? Probably leading everyone to the meat grinder ;-)


  42.  jabobeast:MOMO’s
    FWIW, not sure how you are playing these stocks but to me knucklehead moves back up makes them more attractive to short some more.  scaling in and patiently of course  :)


  43. Phil,
    I use TOS through Ameritrade.  They let me set trailing stops on stock but I don’t see the option to set trailing stops when I sell puts & calls. Do you or anyone else know if it is possible on this platform??


  44. LULU is close to all time high.


  45.  Well, they got my stop on that one. Still looks pretty bullish if they don’t fail the 8 ema. 


  46. Wow  /QM going for 2 round trips 95 to 94 in three hours, someones making a fortune, I’m  making a little too :)


  47. Giving RIMM one more chance to beat $27.50 then we kill it at $2.50 or better in the $25KP.  Right now (11.05).  

    PGH/Willsons – I love them but I was waiting for oil to sell off so they get cheap again.  At $10 I would get excited but not $12 as you really can’t do too much with their options.

    Greece/DC – That’s why I like the short plays!  

    TOS/Button – When you have the stock and you click on "Create Closing Order", change the "Order" box from Limit to one of the stops.  You could do a whole seminar on how to set stops in this thing – I would suggest asking TOS if they have on-line training or if a support person could work with you for a quick lesson. 

     


  48. Phil:
    But I am thinking tomorrow after the vote that I think will pass. It’s a false sense of hope. The vote of confidence means nothing to the people that will get stuck with the plan!


  49. Phil – What do you think of selling $130 calls on FSLR?


  50. GLD/ Phil..    
    We rolled  out of the Aug140 puts to the Aug 146 puts about a month ago @ 4..   Trading @ 1.80 today..   should we be scooping some up in here?  Thnx


  51. Wow, RIMM made it that time!  Now a .25 trailing stop or a stop if they fail to hold $27.50.

    Oil/Dave – If that Dollar comes back, oil is toast – $92.50 is beckoning…

    FSLR/David – I like that trade.  You can always roll them out if they fail but it’s a rough day to try to short them as we could get a huge pop off Greece being "fixed" this evening.  

    GLD/Topher – Hell yes, if taking half off the table gives you a free ride – then why not?  

    11:00 AM On the hour: Dow +0.6%. 10-yr -0.16%. Euro +0.5% vs. dollar. Crude +0.54% to $94.14. Gold +0.34% to $1547.30. 

    "It will not be the case that the south will get the so-called wealthy states to pay. Because Europe would then fall apart … There is a ‘no bail out rule,’" said then German finmin Koehler in 1992. Openeuropeestimates the cost of the Greek bailouts will sum to €1,450/EU household by 2014. 

    Noting consumer spending growing at the unprecedentedly low annualized rate of just 0.5% since 2008, Stephen Roach labels today’s Americans the "zombie generation." Especially impressed with China’s new and improved central planning, Roach believes Asia’s consumers will pick up the slack. 

    Banks and other lenders are engaged in an increasingly pitched fight for some corporate borrowers, raising concerns that the banks are not charging enough to cover the risk they are taking on. They’re "climbing over each other" to increase loan volumes, says a ratings firm exec, worrying that banks are relaxing their lending standards to make more loans. 

    Sino-Forrest (SNOFF.PK -45%) shares are pummeled again following news its largest shareholder has jettisoned all of his stock.


  52. Don’t you think that fix is priced in?


  53. Phil, FAS INCOME:  roll to 24-25?


  54. Hah……as Bill Clinton tells us….if that doesn’t beat all……
    Too funny.


  55. someone asked about NLY ex div date —it is 6/28


  56. FAS Income / Phil – There is 0.13 of premium left in the calls and the puts are all premium for now. As Lapper suggest we could roll to 2x 24 Calls and 2x 25 Puts for about even. Too soon?  


  57. Savi
    Thanks that was me


  58.  Yo, USO falling off the table!  Sweet.


  59. USO just turned.  Hummmm…..FWIW, the butterfly pattern info can be found here.  Very interesting….


  60.  Pharm:  I’m no lepidopterologist, how do butterflies affect oil prices?


  61.  The SQQQ play is even better for entry now .. for the sale of the July $27 puts you can buy the $28/$32  Bull Call Spread.


  62. Phil--I have  5 BIIB Jan 65 calls @ 9 (now 35)--I want to roll up to protect some profits but still hold   as I think they may be taken out--any thoughts would be appreciated
    Thanks



  63. Phil, 
    I have the TZA july 38/42 hedge for net 1.90… getting close to $1.00 would you still hold it expecting TZA to be above 40 to break even by expiration? (I sold the Aug DIA 113 Puts for 1.55 against it)


  64. Until then…………………………………………………………………………………………………………………………………

    0518-surreal


  65. ES Force Ramped Above 150 DMA, At 10 Points Divergence To Risk Basket

     
    Tyler Durden's picture

    Today’s ramp in stocks, courtesy of the ES, was purely an attempt to force technical short covering at the 150 DMA which was just retaken, as was the April 18 swing low, as well as 1.44 on the EURUSD. Yet on the other hand, the dispersion between ES and the broader risk index is now at a 2 day wide, or about 10 S&P points. It seems that stocks are once again doing their headless chicken dance certain that either the Greek vote of confidence will pass, or Bernanke will announce QE3 tomorrow, or both, while everything else is reacting in a far more subdued way. The two technicals heading into the close will be the push to close the spread on one hand, and the ongoing short covering from the 150 DMA on the other, as well as the second consecutive day in a row with a 150 pip move higher in the EURUSD on Chinese buying.


  66. JRW – yes, but if this wave count is right, then it will be bad both ways!  1297 has been hit.


  67.  Not sure what happened to AA, up 3.15% today.


  68. From
    CHS

    Take a look at this chart, courtesy of the excellent Market Ticker. It shows how much GDP has been created by each additional unit of debt. In other words, if we add $1 of debt, how much did that goose the GDP? If you follow the zero line, you will find that $1 of debt rarely boosts the GDP more than $1.


  69. Dollar down – Markets Up – Commodities Down
    What’s wrong with this picture?


  70. jbaker – look at Phil’s SA news comment at 9.36 in regards to KO and GS…..


  71. Wheee on oil again – nice ride to $93 despite Dollar at 75. 

    FIx/David – Not if they want to mount a real rally.  We’re looking at retaking those Must Hold lines on our charts.  

    FAS/Lapper, StJ – Not when we don’t believe in the rally.  I wish we would have taken them out  yesterday but we didn’t but now I’d rather stick them out until we have a weekly roll on Thursday.  Some things are judgement calls and I’m focused on the July $26 calls at .64, which is $3 over our calls and we’d be fine with those if forced but I doubt it will come to that.  

    SQQQ/Jbaker – Funny how the more a trade goes against you the cheaper it gets!   8-)

    75 has got to be the bottom on the Dollar – it’s just gotta!  

    BIIB/Savi – If you think they might be taken out over $100 then cash the $36 on your calls and buy the 2013 $90/115 bull call spread at $12.  If making another $13 doesn’t float your boat, you can sell the $80 puts for $7.50 to knock it down to net $4.50 with a 455% upside and if that sounds risky to you – all the more reason to cash out your calls!  

    Bing/StJ – There is no freaking way that Bing is 1/3 of all searches!  

    TZA/Amatta – Well that was a net .35 hedge that made a max of $3.65 at TZA $42 and now TZA is back to $38.25 but the other end of the hedge is doing it’s job and the DIA $113 puts are down to $1.05.  So, the net, if you kill it now is a .55 credit and then do you plan to stay bullish and leave the Dow puts open or will you take the loss there?  Also, do you no longer need to cover longs with this hedge?  The idea was we expected a sharp downturn after the 30th (after July 4th) but 2we did feel 11,200 would hold on the Dow.  As a specific hedge – it wasn’t meant to be day traded in and out of so it’s up to you to decide if you need this coverage or not vs. the net .35 that was risked on the overall trade.  

    Headless chicken dance/JRW – I like that! 

    AA/Jbaker – We picked it as one of our short puts. 

    GDebtP/Pharm – Scary.  

    Dollar/Vic – Masking a sell-off I think. 

    UUP July $21 calls at .43 were .74 last week.  10 in the $25KP and we’ll DD if they go lower.


  72. Pharm,

    Here’s my best guess; we may go higher, but after that………………………………………….

    SHJ sees it even higher !!


  73. YMI – Hope for a bottom.  Buying round 1 here, and the Jan12 $2.5 P/C are $1.40.  Remember, start small with these types!


  74. Thanks Phil


  75. JRW – yeah, I saw those.  IWM I can see.   SHJ….not so much.


  76. By the way, my day after POMO theory looks good today!  11:43 AM The Fed buys $4.909B in Treasurys maturing 2016-2018, of $12.713B offered by dealers, and bonds are trading lower: the 30-year yield +0.03 to 4.23%; 10-year +0.035 to 2.99%; five-year +0.03 to 1.56%; two-year +0.01 to 0.38%. Another test for 10-years’ 3% mark ahead for Treasury investors: Greece’s confidence vote at 5 p.m. Eastern. 

    12:00 PM On the hour: Dow +0.84%. 10-yr -0.06%. Euro +0.69% vs. dollar. Crude -0.27% to $93.38. Gold +0.14% to $1544.20. 

    The Greek crisis and concurrent market jitters spreads to Mexico, where the formerly strong peso is the 2nd worst emerging market currency over the past month. Were Mexican policymakers ever doing anything right, or was peso strength no more than an offshoot of the "risk on" trade? FXM +0.3%.

    A Greek default and devaluation might be a win for all parties, posits Charles Dumas, as it would allow the economy to grow and raise the present value of currently highly discounted Greek debt. Without the devaluation option, there is little chance Greece can grow enough to achieve a primary surplus. 

    Tomorrow’s news today: a massive rally in European shares and the euro, now spilling over into the U.S., is a pretty fair signal Greek PM Papandreou will win his confidence vote slated for midnight in Athens. Stoxx 50 +1.9%, Athens +3.7%,  FXE +0.7%

    UK Treasury Plans for Greece to Go BustTreasury ministers have admitted that the Government is drawing up contingency plans for a Greek bankruptcy after being warned by a former foreign secretary that the euro “cannot last”.

    Piling on after a horrid run for the shares, Citi downgrades the chip sector, saying H2 estimates will have to come down. If current market action is any indicator, the call may be a little late to the party.  The sector is rallying sharply despite the downgrade. SOXX +2.2%.

    The government has to do more than it’s doing to support job growth, Bill Gross says, noting that it’s "fiction" that all the jobless can go to Silicon Valley and make the next Facebook. "We need to go back to the manufacturing roots of this country as opposed to the financial roots," he says, echoing his latest Investment Outlook

    All Work and No Pay: The Great Speedup (MoJo)

    North Korea has recently bought tear gas, helmets and shields in volume from China.

    European Union Energy Commissioner Guenther Oettinger said nuclear power will continue to play an important role in Europe’s energy production in the coming decades, citing an interview.

    Along with turning negative on Motorola Mobility (MMI), Credit Suisse flips on Research In Motion (RIMM +5.5%), downgrading to Neutral – and CS was one of the last remaining RIM bulls. "Innovation is coming too slowly," the firm says, and RIM could be punished if and when Apple (AAPL) comes out with its rumored low-end iPhone.

    "This is a tsunami," says former banker turned author David Lender of e-books, where sales hit $441M in 2010 from $61M 2 years ago. Lender and others are selling e-books by the millions, often for as little as $0.99, without going through traditional publishing deals.

    More crap to buy:  Chinese internet dating site Jiayuan.com (DATE +14%) jumps after Stifel Nicholaus initiates it on valuation. The stock is down over 30% from its May high, and despite today’s bounce, still remains below its $11 IPO price.

    Bruce Bartlett: Are Taxes High or Low? A Further Look (Economix)

    Nanoparticles hit tumours with one-two punch (Nature News)

    Three lunchtime reads:
    1) Is 6% unemployment the best we can do?
    2) Banking’s moment of truth
    3) A lesson on the Federal Reserve board and the deficit

    http://www.ritholtz.com/blog/wp-content/uploads/2011/06/g.png


  77. Pharm,
    I wouldn’t put to much trust in JRW USD chart (from allabouttrends). Firstly it starts freevolosly with wave 1 (like there was nothing before wave 1), secondly wave 1 is longer then wave 3, that makes count even more suspicious, atleast until we see wave 5.


  78. vic – ;) .  I saw David’s (AAT) chart last night.  There are some very good chartists out there….but EW theory is a very hard tool to use real time.  I just follow the trends….and right now, unfortunately, it is up.  Well, it was…..!


  79.  I almost got into PCLN calls yesterday. Those were WAY under-priced. The whole chain is up 5-20X today. Nuts….
     
    A close miss ….. damn it


  80. SHJ, I would dismiss that chart as lunacy. Where does the next stimulus come from to create the shoulder?


  81.  FAS / Phil – I guess it all comes down to Greece now!


  82. Wow, that $15 line on XLF is like a magnet!  

    Don’t forget that today should be the last day for the July NYMEX contracts.  Most likely the move heads up from here so we have the 15 USO Oct $40 calls at $1.85 ($2,775) covered with 20 July $38 calls at $1.06 ($2,120) in the $25KP and the Oct $40s are still $1.50 ($2,250) and the July $38s are .65 ($1,300) for a net $295 profit but let’s take a chance on a bounce tomorrow and take out the July $38 calls at .65, which leaves us in the Oct $40 calls for net $1,955 ($1.30) and we’ll stop out even if they head down on us.  


  83. Hi JR,
     
    Welcome back.  You’re still leaning bearish eh. 
     
    Don’t you have confidence that they will have it all fixed soon?


  84.  LULU


  85. Nailed it again on oil, Phil.  How do you do that?  Is it your note that causes us to buy the calls that creates the run in oil?  The timing is amazing.  


  86.  Phil,
      I have FAS JUL $24 calls. Would it make sense to roll those to the JUL $23s?


  87. Pharm - ISTA is turning back upwards, thoughts?  I did a Hail Mary play on them last month – when you said they could go either way from 10 I bot some 7.5 puts for a nickle.  ISTA dropped from 10 to close at opex at – guess where?  7.53.  Close but no cigar!


  88. exec / Bearish

    Just trading what’s in front of me. I expected a gap up today, but not this much follow through; I think this is fake and a red day tomorrow, but you know I try not to let my opinions interfere with my trading !!    8-)


  89. Agreed Pharm,
    I myself looking for very obvious 5 waves in multiple time frames. Sometimes it happens (once in a blue moon). What I find more useful is differentianting motive versus corrective waves, I also like triangles in wave 4.
    I call EWT – abstract expressionism - wave theory is too scientific.
    http://sj7g09.files.wordpress.com/2009/12/painting_jackson_pollock.jpg
    http://3.bp.blogspot.com/_AFepa9sf8ug/Ssg2QDzghTI/AAAAAAAAA3M/SirhvGZzPxs/s1600-h/current.jpg


  90. WTF is PCLN up $25 today???


  91. @ Phil, how about a PCLN short play here? thanks!


  92. @ JR, do you trade TZA calls? or just the stock? thanks!


  93. For BA lovers
    http://www.bloomberg.com/news/2011-06-20/airbus-neo-gains-momentum-with-boeing-737-shutout-as-show-begins.html
    Does anybody knows if I can get european indexes in TOS? Like DAX, FTSE, CAC. If not in TOS, where is the best place to look?


  94. asaenz

    TNA / TZA, the ETFs ; I use SPY and IWM options for mid-term plays on occasion, as mid May to last week !!

    Most of the details are right here.


  95. Greece is the word StJ.  

    Oil/Bruce – I’m sure, to some extent, our sudden flurry of call buying may prompt a buyer who was on the fence to push the button on USO but that’s a short-term effect we can’t count on.  I’m sure not playing for the 5-minute trade but looking at the bigger picture which is, in this case, that the pressure to sell on the NYMEX may have been caused by the termination of the July contracts today and, once that pressure is gone – the normal shenanigans can resume and oil heads higher.  Add to that the possibility of Greece being "fixed" and we have a good enough reason to gamble the $300 we’re ahead on the oil trade as a double or nothing.  

    We may get a blow-off drop on oil into the NYMEX close (2:35) if they have to scrap more contracts than we thought so stay alert for that.  It could make a nice futures buying opportunity when it stops.  

    FAS/Kevin – I am not a fan of rolling down without getting paid for it (by selling a call) and also, as a rule of thumb, I don’t like paying more than .40 for a $1 roll and right now it’s .63.   Better to save your money for a roll to Aug.  

    PCLN/Jabob – I guess the bullishness at the Air Show is encouraging the travel stocks.  

    PCLN/Asaenz – Not ahead of Greece being fixed.  Could be up another $25 tomorrow for the same no reason.  

    European/Vic – What do you mean by "get"?  I don’t know any EU symbols – I just use stockcharts.  

    Woops and there goes oil again.  


  96. my bad, those are ETFs not stock!
    thanks JR !


  97. Out of TZA with a whopping 19 cents !!


  98. @ Phil, closed the USO $38 Calls as you said with a nice gain. Didn´t quite get what we should do with the Oct $40 Calls? Since we expect a bounce on oil tomorrow, should we close them on that bounce and try to break even on those?


  99. USO/Asaenz – I don’t care about even, we’re ahead on the spread and it would be nice to get more ahead, that’s all.  We will have to play it by ear as it’s an October call we have plenty of time.  

    Dollar testing 75 again so giving us the best possible rally into NYMEX close right now.   We’ll see if they can take out $94 or if this is masking a sell-off.  


  100. PCLN/asaenz, be careful on PCLN, it droped from $561, I think it very easy to get $500+.
     


  101.  Its a profit JRW!  Still as long as we don’t talk about it as 19 cents per hour … that might give the impression incomes are going down or some other crazy communist idea ;-)


  102. The dollar getting crushed but TBTis  down?
     
    So let me get this right, investors are STILL OK with losing money to a declining dollar and having no commensurate interest return to make up for it? That’s a great investment strategy….
     
    No wonder PCLN goes up $25 in a day. As long as the gov’t buys it’s own bonds from itself, interest rates won’t rise to the market rate necessary to make up for the return lost from the increase in the monetary base (inflation), that was caused by them buying their own bonds in the first place, so investors gamble on the Momo musical chairs game instead. Is that about right?


  103. Bio, it’s not the government buying bonds, it’s a bank, that despite the name has nothing to do with the federal government.  It’s a private bank that controls liquidity and always acts in it’s own interests, not the country, not the people.


  104. Volume is horrendous. 


  105. stick time???


  106. ISTA – mrm, not interested anymore in them.  I was going for a binary event, and they did not produce.  The chart says it could go back up, but to me the chart looks like it will fail and go right back to where it started.  Generic version is out, and if the 1X/day is not better than 2X, who will pay the premium for a generic drug? 

     

    Here comes 1300 on SPX


  107. TLT is a rising wedge.  The Bond Kings still don’t buy it.


  108. Pharm, yesterday I asked you about ONTY, today they’re going parabolic…any suggestions how to play that?  I assume whatever goes up must come down, but how to play it, that’s the question…


  109.  PHARM, What is your thinking on FXE now? Are you reloading or waiting?


  110. By Jove I think you’ve got it BDC!  And tomorrow Bernanke may find some way of saying they will continue to buy TBills no matter what the price to keep this charade going for yet another quarter.  

    Good point Lapper but they are a bank that is allowed to print US currency so some sort of quasi-government nonsense at work here.  That’s the real joke of the Fed – they have the right to dip into our pockets any time they want and take as much as they want of not just our cash but by devaluing all of our assets.  We never cared before because they never took more than 1% but, over the past 10 years, they have taken 20% of our assets yet still the sheeple do nothing.  Those Greek protesters should make us feel ashamed because at least they care about what is being done to them and their country – we just bend over and accept it.

    Looks like $94.15 at the NYMEX close – let’s give Da Boyz a round of applause!  

    Dollar 74.98.

    01:00 PM On the hour: Dow +0.84%. 10-yr -0.05%. Euro +0.7% vs. dollar. Crude -0.22% to $93.42. Gold +0.2% to $1545.10.

    02:00 PM On the hour: Dow +0.79%. 10-yr +0.05%. Euro +0.58% vs. dollar. Crude -0.2% to $93.44. Gold +0.27% to $1546.20.

    Mort Zuckerman contends the employment picture is much worse than it shows. “We have seemingly added jobs, but it’s not because of increased hiring,” he says. It’s merely "one part hiring, and two parts reduced firing," and most of the jobs we’ve created are only part-time

    Presumably not one of the solutions being discussed for Greece, Harrisburg’s mayor is to embark on a 3 day fast and prayer campaign to seek a solution to the city’s budget issues. The PA state capital is in a state receivership program and could easily be tipped into bankruptcy if the chips don’t fall just right.

    Two research firms split on their chip forecasts but agree Japan’s earthquake and tsunami won’t hurt that bad. IHS iSuppli raises its earlier call, predicting 7.2% growth to $326B; meanwhile, Gartner cuts its forecast to a 5.1% increase to $315B. The global supply chain is holding up amid strong demand in tablets and smartphones. (earlier: Citi downgrade

    Home sales dropping 3.8% may not sound like a lot, Stephen Gandel says – but it’s a lot for June, part of homebuying’s prime time. And first-timers are exiting faster than other buyers. The government still needs to do more, mostly in foreclosure mitigation and job-market stimulus. 

    The Natural Resources Defense Council warns Union Pacific (UNP+1.3%) and Burlington Northern Santa Fe (BRK.A +0.5%): Get ready to get sued in 90 days if they don’t clean up diesel emissions from 16 California rail yards. A successful case would open the door for action against any site with diesel equipment, including seaports and airports.

    A check of the Peru ETF (EPU) finds it retesting the low it hit as shares collapsed in the wake of Ollanta Humala’s election. A poll showsthe president-elect, a pal of Hugo Chavez, but promising policies more in line with Brazil’s Lula, with a 70% approval rating. Down 25% YTD, EPUremains higher Y/Y, +9.5% .

    Awwwww!  Wall Street’s switch to higher salaries and lower bonuses to avoid TARP caps may have unintended consequences: mass layoffs. Without the flexibility to cut bonuses during lean periods, fixed costs such as high salaries leave firms with little alternative but to cull the ranks. 


  111.  Phil – re: the FAS income trade, when do I need to plan to make the weekly adjustment/roll? I’m assuming Thursdays, closer to the end of the trading day? I’m just asking because we’re traveling over the summer and I’m not always in front of the computer. Obviously I want to make sure I remember to check in and make any needed adjustments. 


  112. Also FAS – I have the july 24s naked, would you recommend the weekly 24s for cover? now almost .80c


  113. ONTY/jer – I think I said take 1/2 off and let the rest run.  After that, it is up to you! Cover? Take the money and run?

     

    FXE – I have a few 140 July Ps still.  Just waiting now.  FXE has been very good to us, this is just play money to see if they can keep things together.  So, I am waiting.  1.44 is key, and 75 on /DX just broke.  I do not understand how a concerted effort to move a currency almost 1% in a day is something good for the markets…..


  114. Phil – the problem is the sheeple know nothng. It will take austerity measures like Greece’ to wake us up. But, by then it will be too late.


  115.  Anyone know why high yield bond funds HYG and JNK have cratered but not COY?


  116. QQQ is up $1.18 today at $55.25 and the weekly $54 puts fell from .50 to .13.  As a fun gamble on Greece falling apart, I like them overnight, figuring we should be able to get out with a nickel so risking .07 to make maybe .30 (time is fleeting!) 

    74.95 on the Dollar.  Dow volume 87M at 2:52.

    FAS/Kurt – Usually Thursdays, when the new weeklies come out.  Get an IPhone  - we even have a chat mode that puts the last comment first.  

    FAS/Morx – It could be a blow-out one way or the other tonight so you might want a 1/2 cover.  

    Sheeple/Nicha – The beautiful sheeple:  

    Marilyn Manson – The Beautiful People from Tragamin on Vimeo.


  117. Phil / Obama risk    Reflecting that his advisers know that Ddip is likely and certainly no job creation (so Obama is likely toast without ‘change’), so they have to announce some big fiscal initiative to create jobs, eg Pickens plan, or Clintons office building refit etc.  Might be painful to be caught short when they announce a massive stimulus?  Doubt the GOP could safely block the promise of a million jobs given current voter sentiment?


  118. Pharm – on ONTY we’re past "take the money and run."  I’m asking how to play it on the way down…maybe the July $7 P’s – what’s your opinion?


  119.  Phil – thanks, I have an iPhone and I have been known to obsessively use it to check in while traveling, but at the moment we are in Turkey and going to France tomorrow. I have my iPhone on airplane mode for the summer. With all the progress in communications you’d think there would be a better option. We either pay totally outrageous sums for the data/calls and keep using the iPhone, or buy a different SIM in every country. This would be OK if I could use it with the iPhone, but no… it’s some crap phone too. I will be settled and checking on Thursday for the adjustment.


  120. Down, I don’t know when they are coming down….The volume today is very large so they have more room to run.  Every bar in that ghart since April shows them closing near the high of the day, so….up up and away.  In addition, they were also upgraded, so I would just watch the chart and when it starts to roll over, then jump on board. 


  121. Pharm, Okay, thanks…when they’re going up like this I tend to think the downside is happening sooner rather than later but I’ll take your advice…


  122. Well, I guess we have to put up with more of this:

     

     

    Bear ride

     

    before we get this:

    0621-rut 


  123. Pharm,
    which volume you are talking about?
    I watch NYSE volume and its below average now


  124. COY/Nicha – I have no idea why but that’s interesting.  

    Change/Tusca – Hard to say what the Reps will do.  Don’t forget they actually did shut down the Government once and the same guys are in charge now.  The chance of a Republican Congress passing something that creates jobs (raising the cost of labor) and saves oil is not very high at all.  Don’t confuse what’s good for the country with what’s good for the contributors – not at all the same thing in America.  Look at the above news item from Harrisburg – they are PRAYING and FASTING to end their budget problems.  That’s the capital city of one of our largest states…  This country is massively screwed up!  

    IPhone/Kurt – Wouldn’t Vodaphone have a single European solution?  If you have Amex Platinum, try their travel services – they just send me a phone for whatever country I need – very nice!  Also, you just have to find WiFi somewhere, not use the phone mode…

    03:00 PM On the hour: Dow +1.1%. 10-yr -0.14%. Euro +0.82% vs. dollar. Crude +0.44% to $94.04. Gold +0.32% to $1546.90.

    NYT‘s Joe Nocera revisits the argument that the current debate about capital requirements for Wall Street banks is more important than any other issue of financial reform: "Adequate capital hides a plethora of sins. And because, by definition, it forces banks to use less debt, it can also prevent sins from being committed in the first place." 

    The Greatest Trade Ever … part II. While everybody knows the yuan can only move in one direction, some traders are placing betsoffering staggering payouts should the currency drop vs. the dollar. "The potential of the trade is so great … it’s silly not to buy it," says Cullen Thompson, who owns puts on the yuan.

    Advanced Micro Devices (AMD +4.8%) jumps as investors reactto a report on brightsideofnews.com claiming the company is expected to introduce, as soon as today, a new CEO from IBM. AMD has been without a permanent CEO since January, when its previous leader was forced out. 

    Monster Worldwide (MWW +7.1%) is the day’s largest percentage gainer on the S&P 500 after UBS raises its rating on the online job search company to Buy from Neutral. Fears of big cuts in corporate recruitment budgets "have not meaningfully changed to date," according to the UBS note. Monster’s shares have fallen 44% YTD.


  125. Oil back to $93.50 and falling.  Those NYMEX pump jobs are gold mines to short!  

    Dollar only at 74.98, I’d hate to see oil if the Dollar hits 76!  


  126. I’d like to think that I can read a chart, but this one, not so much !!


  127. 5,278 contracts @.13
    What are the chances of a fill?


  128. SPY daily volume on TOS.  If I look at the past few weeks, it is still a very large negative divergence.  Doesn’t matter though, does it?  We are still up!


  129. $DXY sits on very strong support that constructed out 3 Fibs from different time frames 2 targets from old patterns. So 74,5 on DXY (75 on /DX) will be tuff to break.


  130. Euro couldn’t cross resistance from 6/15, I think dollar shorts get clobbered and Greece no matter what happens is sell on the news event…


  131. JRW – Whadday think of this?


  132.  Re: iPhone, I haven’t checked Vodafone for a solution, but that is a good point. I will also look at the Amex idea, that sounds nice. I dropped back down to a gold card a while back because I wasn’t traveling enough to justify the platinum, but starting to do more of it again.
    You can use wifi on the iPhone in airplane mode, it just avoids any chance of accidentally getting on 3G and getting hit with a huge bill. But I’m surprised how few public places have decent wifi available. We are traveling with 2 iPhones, 2 iPads and 2 laptops, but are reliant on finding wifi somewhere. We’ve had good luck in places we’re staying, just not out in public. Hopefully that will change. I’m surprised AT&T doesn’t offer some kind of reasonable package for international roaming. Seems like a big opportunity. 
    Just to make this tangent somewhat relevant, I was surprised to see the number of iPhones in Turkey. They also seem very common in western Europe, but that surprises me less than here. Apple is definitely doing something right… not noticing very many Droids or Blackberries, but that could be my uneducated eye. 


  133. ONTY/jer – well there you go!


  134. HOLY MOLY, creaming it now.


  135. Too bad those RIMM calls stopped us out, they hit over $3 in the end…  Sill good for our longer RIMM plays at least – hopefully they found an actual bottom.  

    Nice chart JRW.

    QQQ/Shadow – No fills at .13 but no problem at .14 (well, maybe now it’s a problem).  

    AAPL/Kurt – I think they are being hugely underestimated. We’ll find out in a couple of weeks.  

    RBC notes a decade of wage inflation in China vs. stagnation in Mexico has left the U.S. southern neighbor quite competitive. Toss in a new world of expensive energy, and Mexico’s advantage over China gets clearer. Look for Mexico’s share of U.S. imports – 12.5% in 2010 – to keep rising.

    Eddie’s Waterloo:  Sears’ (SHLD -2%) debt moves another notch deeper into junk as Fitch downgrades to B from B+, citing concerns over the "magnitude of decline" in profitability, and a "lack of visibility" to turn operations around. Both Sears and Kmart stores continue to lag their peers.


  136. Kurtww / AT&T --They do


  137. phil--your call on the momos yesterday was the best prediction I have seen you make since I joined! Wish I listened ;-(


  138. pcln up 30 now


  139. Well, I couldn’t find my Trader God costume this morning — my kids must’ve swiped it — and I’m stuck short oil, equities and long dollar. But I’m not taking any crap fills, I’m going to revert to my Tyro identity and place my trust in the Greek street, in the hope they put on a "how to deal with banksters & bureaucrats" seminar overnight.  Although I’m perfectly aware that hope is not a strategy.


  140. Phil,
    is it manipulation that dollar keeps going down today? thanks,


  141. Pharm / Butterfly

    Well, it’s not conclusive; it should be a sell signal, but D is higher than X (see below)

    It’s good to be in cash each night !! 8-)


  142. kustomz,  sure hope we’re right.
     
    I think dollar shorts get clobbered and Greece no matter what happens is sell on the news event…


  143. don’t forget – we have FOMC tomorrow


  144. Listening/Jabob – Well as long as you learned something…  

    Good luck ZZ – hard to imagine a vote with a 3% margin is "in the bag".  

    Dollar/Ethan – I would think so.  It really doesn’t make any sense to make big bets on the Euro based on a Greek vote of no confidence this evening.  You would think the Dollar would at least get bid up as a hedge but the Euro and the Pound are at day’s highs as if there is no question about the vote and no question about Greece accepting the bailout conditions next week and no question that the EU will ratify it and no question that will fix everything despite the fact that it only actually takes care of the smallest EU nation’s small debt for one year and then we are right back where we started.  

    FOMC/Lol – That might be keeping the Dollar down but we haven’t heard anything about QE3 lately – maybe a sneak attack?  

    Wow, that was a fun day – see you guys in an hour for the Greek vote – just 15 mins to play the futures off that.  


  145.  Rain – yes, but… the rates are still quite high. Data is $20/mb and calls are $.99/min in western Europe and $1.99/min in Turkey. I need to make more money trading before I am willing to pay that. 


  146.  pHIL: greek futures
    what would you play re: Greece?  /dx, /es /cl ???  TIA



  147. Phil,
    what’s the benefit for them to mannipulate dollar this way? thanks again


  148.  Vic:  A friend from an EM country read the Lookout piece and commented dryly "where I come from there is no medical care in jail; more likely they would beat you up on the way to jail for pulling such a stunt.  Americans don’t have it as bad as they think they do,"


  149. Futures/Lincoln – I think if the Greek vote fails, then we should just short the Dow (12,094 on /YM) or the RUT (800.30 on /TF)  or the Nas (2,242 on /NQ) rather than mess around with oil.  They should drop right back to the 5% line if the Greek vote fails and the Euro tanks and the Dollar pops.  Of course, if the vote is good – we can go long on the same things!  

    Bank robbing/  - That’s smart.  It’s a win/win, he either gets the money or the medicine.  

    Dollar/Ethan – Knocking the Dollar down boosts the price of stocks and commodities that are priced in Dollars – very simple. 

    At the close: Dow +0.91% to 12190. S&P +1.34% to 1296. Nasdaq +2.19% to 2687.
    Treasurys: 30-year -0.27%. 10-yr -0.08%. 5-yr +0.01%.
    Commodities: Crude +0.16% to $93.78. Gold +0.08% to $1547.70.
    Currencies: Euro +0.7% vs. dollar. Yen +0.17%. Pound +0.22%.

    Market recap: Stocks extended gains in a session framed byexpectations of a positive outcome from Greece’s parliamentary confidence vote. Favor for risk stoked plays in energy, materials and tech; Nasdaq was a big winner. The dollar fell further vs. the euro, Treasurys slid, August crude moved past $94, and gold gained for the sixth straight day. NYSE gainers led decliners four to one. 

    The confidence vote for the government of Greek PM Papandreou, tipped to pass if today’s market action means anything, is set to take place at 5 ET. Watch the debate and vote live here.

    Sounding like he’s reciting a list of ECB talking points, Simon Nixon says Greece is not insolvent, default is not in the country’s interest and would create another Lehman moment, and kicking the can down the road is not only possible, but a great idea.

    gauge of consumers’ anxiety about their personal finances is the latest indicator to ring up trouble for the economy. The index is not only at its highest level in 30 years but dangerously close to showing a double dip.

    Despite signs that the economy is slowing, most analysts remain bullish on stocks. Among the 9,000-plus analyst recommendations on S&P 500 stocks, only 300 are to sell – the same proportion as a month ago, when the economy was considered to be in better shape. But with big banks cutting GDP growth estimates, cuts to earnings estimates – and analysts’ bullish sentiment – could soon follow

    Adobe (ADBE): FQ2 EPS of $0.55 beats by $0.04. Revenue of $1.02B (+9% Y/Y) beats by $0.07B. Sees FQ3 EPS of $0.50-0.56. Shares-1.7% AH. (PR)

    Jabil Circuit (JBL): FQ3 EPS of $0.58 beats by $0.01. Revenue of $4.2B (+22.3% Y/Y) beats by $0.06B. Shares -1.1% AH. (PR)


  150. Greek streets:  

    EURO

    In Athens, Prime Minister George Papandreou said his country was negotiating a new deal of roughly the same size as the one granted just last year—about another €100 billion—and urged his parliament to back him in a vote of confidence scheduled for Tuesday. The Greek premier, fresh from a cabinet reshuffle meant to lift his political fortunes, will travel to Brussels on Monday for talks with European Union leaders.

    Europe thought it had put Greece’s troubles to rest last spring with a mammoth bailout that rewrote the contract among the euro’s member countries. Now, Greece needs more help, and there’s fatigue all around.

     


  151.  Phil: "It’s greek to me"
    I had a little trouble following the live greek  TV feed.  Maybe I’ll just watch the Daily Show later and see if they can make sense of it,( hope they delay the taping)


  152.  As I said earlier, the VIX is useless or worse, misleading!
    http://ftalphaville.ft.com/blog/2011/06/21/601301/crouching-vix-hidden-volatility/


  153. Greek/Lincoln – They are running long.  A crowd of 15,000 is yelling "Theives" at the Parliament Building but CNBC says they are going to do a double vote on no-confidence AND the austerity vote that was scheduled for next week now, which is really going to piss the people off if they ram it through. 

    This could drag on a while and I bet they are trying to drag it on past the close of futures at 5:15 (reopens at 6). 


  154. @Felipe
    You mentioned earlier today that the $456 Billion Greece borrowed went to the billionaires.  What is to prevent the additional money that is given to Greece doesn’t wind up in the same bottomless pit?


  155. Greece – This entire thing is a joke. Part of the measures are sales of public assets and that’s a one shot deal. For the rest, once austerity sets in and revenues start drying up because the economy slows down or people take their money out, what makes people think that they won’t need that same help again in 1 year when they are done with today’s down payment! The other solution of default is not that great either because I worry that 10 years from now we would be in the same spot as people get complacent and think that they are out of the woods. Add the fact that Greek workers now need to compete against Chinese workers for wages (http://www.npr.org/2011/06/08/137035251/in-greek-port-storm-brews-over-chinese-run-labor?sc=tw) and we can all see that it’s not going to end well no matter what.


  156. Damn, it looks like Papandreou has at least a dozen pages left to read – we won’t make the futures close a this rate.  

    Dollar at 74.965, Euro $1.440, Pound $1.624, 80.259 to the Dollar.  

    Oil $93.58, gasoline $2.88, Nat gas $4.40.  Gold $1,547, silver $36.75, copper $4.085.  

    Index futures same as above plus S&P 1,287.75.   We could have a huge gap in either direction after the vote.  

    Billionaires/Flips – Nothing.  It’s the same as America.  The top .01% have taken over the Government and everything flows to them.  Papandreou is a 3rd generation Prime Minister who was actually born in Minnesota with a law degree from Amherst.  


  157. Today’s levels.


  158. Seeing more no than yes on the votes so far


  159. @ Phil if the greek PM does gets the votes, shouldn’t we short the market tomorrow if they open higher? seems like a classic sell the news event. thanks!


  160. haha great reaction!  everybody is long.  sell off in 3…2….1….


  161. He won the vote!  

    Is this a sell on the news event?  Now we have to see what happens at our levels.  They still have to vote in the austerity measures and we’ll see if the people riot over this vote.  

    Dollar flat but Euro went down to $1.438 and Yen dropped (went up) to 80.29 so interesting – looks like it’s going to be Dollar strength in 5 mins and that will knock the futures down a bit.  But hard to read much into early reaction.  


  162. It passed, 155/143.  We’ll see whether the winners or losers end up crying over this "success."


  163. thank god I can turn cnbc off.  ready to puke from all the cheerleading and lies.  oops…. they are playing where are those stops game on euro…


  164. 155 Yes votes.  Certainly no big celebration in the futures.  

    No riots from the crowd.  

    Looks a bit like sell on news at the moment but no big reaction so far.   Have to wait for Asia to open I guess.  

    Actually, the dollar isn’t moving yet but Euro falling pretty well so I think it’s prudent to short the indexes (as above) with tight stops and just forget it if they head back up and we’ll short into that excitement most likely.  

    Me, I’m going swimming…


  165. Swimming good idea, im headed to Boca.. hit the beach then some drinks and depending on how much I indulge I may possibly incite a riot in support of my Greek brothers.


  166.  Euro fibrillating between 1.47-1.49, tells me nothing.  Swimming sounds about right.


  167.  That was 1.437-1.439, sorry.


  168. If weopen gap down, the gap will likely NOT be filled !!


  169. JRW,
    Why do you think the gap down will not be filled?  Is this all the bounce so far?


  170. Very muted reaction so far. Looks like the bulls might be disappointed and I would agree with you JRW! But 90% of Europe was sleeping when the vote happened so 3:00 AM will be the key now. 


  171. VEGAS
     
    with re to Vegas I am not sure what I am supposed to do now—I know everyone is staying at different hotels —-are we going to have the meeting on Sunday and trade together on Monday at lvmoda’s , is that right?
     Sunday meeting be at Phil’s apartement de luxe ?
    how about your poker tournament on Saturday?
    I would love to have some help and  feedback  on coordinating all this--or are we just leaving it open?
    I guess we fly back Monday night or Tuesday!--since PSW members want to trade futures
    Just throwing out some questions and thoughts


  172. Vegas/Savi – I thought we were meeting at Cafe Moda on Sunday.  Did you get my message from early am in yesterday’s blog?


  173. VEGAS
    lvmoda—Cafe Moda is fine—I am sorry, just went and read your note--that is great—thanks  so much --saves me a lot of work — then everything is a go—we can  decide on the Saturday dinner etc later—
    I guess we can book our flights but  I would like to know where the majority are staying as I would like to stay  at the same hotel
    Am I missing anything else that has to be done before booking flights and hotels?


  174. Comments by a University of Athens economist Yanis Varoufakis: http://www.guardian.co.uk/world/2011/jun/19/athens-protests-syntagma-austerity-protests
     
    A sample: " 50,000 businesses went bankrupt last year, industrial production fell 20% and will drop another 12% this year… Greece’s debt has ballooned to 153% of GDP; on [Varoufakis's] projections, even if ministers manage to make all their promised cuts, the government will owe three times the entire national income."


  175. Not a big surprise on the vote. His party controlled 155 seats and…oh lookey, he got 155 votes. Politics is politics no matter where in the world you lay your head.

    On another note I picked up weekly USO puts today with the intention of closing them out with a 20% gain. I fell asleep & woke at 4:10. Oops. Guess we’ll see what the morning brings.


  176. Savi – If Im able to make it I will be staying at my friend’s place in summerlin.
    DDay – not always true….YOu can NEVER count on dems to have that unified of a front…. It’d be nice if they DID do it, but it doesnt happen with dems….


  177. zero – you not coming to Vegas?


  178. jromeha--hope you can make it


  179. Nicha / Savi:  Thanks for asking; there’s a 30% chance.  I live quite far away and have a very complicated summer & autumn season, with my wife studying in NYC for part of it while I play Mr. Mom, and a need to be in Europe for a part of September.  But I own a residence 100 miles from Vegas and am due for a western swing this fall, so I will try to work it out as a last minute deal.    


  180. IMF Sees ‘Considerable’ Risks in Spain
    The International Monetary Fund said Spain must step up efforts to overhaul its economy as Europe’s sovereign-debt crisis threatens to damp growth.
    “The repair of the economy is incomplete and risks are considerable,” the Washington-based IMF said in its annual appraisal of Spain yesterday. There must be “no let-up in the reform momentum” to bolster the recovery and reduce a 21 percent unemployment rate that is “unacceptably high,” the fund said.
     
    Yes – statements of the obvious always bolster ‘credibility’ . . . . on  another note:
    Internal IMF Audit Finds Bailout Fund Has Zero Credibility
     "policy conclusions from International Monetary Fund research don’t always follow the underlying analysis, thereby potentially harming the institution’s reputation, according to an internal audit. “Many staff indicated that they often felt pressure to align their conclusions with IMF views,” . . . . . IMF economists missed signs of fragility that led to the 2008 financial collapse, partly because agency staff were “in awe of” monetary authorities in the U.S. and other major economies."
    http://www.zerohedge.com/article/internal-imf-audit-finds-relegated-bailout-organization-has-no-credibility



  181. Good morning!

    Not much going on in the futures all eyes are back on the Fed now and the afternoon decision.  

    The Hang Seng was flat but down 200 from the open, Shanghai also ended flat but rose from a poor start.  BSE was flat but the Nikkei was a star with a 1.8% gain.  Europe is off about half a point and our futures are off about a quarter point so far.  

    Dollar 75.05, oil $93.91, gasoline $2.900, nat gas $4.385.  Gold $1,547, silver $36.355, copper $4.077 – boring….

    Probably boring is not good, we just have the Fed to add bullish fuel and if they can’t do it, then we’re at the mercy of earnings and those aren’t going so well so far. 


  182. Riots/Kustomz – You can go to Opa in Ft. Lauderdale or Miami and at least break some plates!  

    Vegas/Savi – I like the idea of dinner and a poker tournament Saturday (night, I can’t do anything before 6) – I’m going to vote for Nobu at the Hard Rock or Yellowtail at the Bellagio – my two favorite Vegas restaurants and both have great meat and cooked fish for non-sushi people.   You guys need to collect money for equipment and food and then we’ll know how many people are really going.  Flights and hotels are up to each person.  

    Spain/Kramer – That’s right, all fixing Greece does is chase the bond sharks off to the next struggling swimmer.  Look how great this game is – they drive Greek paper up to 20%, then force the long-term bailout to save them, paper drops back to 10% and the bondies unload their 20% paper with a massive profit.  Of course they want to do it again and again if they can. 

    Alan Blinder worries about damage that might result from the "wrong-headed idea" that government spending destroys jobs: "How can the government destroy jobs by either hiring people directly or buying things from private companies? How is it that public purchases of computers destroy jobs but private purchases of computers create them?"

    The Fed is making a big mistake in believing that more stimulus can fix the economy, Allen Meltzer says. What’s more, with rising wholesale costs for raw materials a red flag for inflation pressures, it needs to boost rates now. But too hyper-focused on jobs data to notice, the Fed will likely keep buying bonds and suppressing rates long after QE2 ends.

    David Rosenberg feels like Bill Murray in Groundhog Day: "Whenever the fiscal and monetary spigots are turned off, we go into a soft patch." While the Fed likely won’t make waves at tomorrow’s FOMC meeting, his prediction of a "99% chance" of a recession ahead means QE3 is sure to be "next year’s story.

    U.S. pension funds are underfunded even when allowing them their projected 8% annual return. Given a risk-free rate of 4%, not only is 8% unrealistic, but the scramble for yield could result in something worse. Imagine 0% returns for 20 years. "Fingers crossed and eyes closed" isn’t an acceptable strategy.

    BoE minutes show a vote of 7-2 to keep interest rates on hold, and a vote of 8-1 to keep its asset purchase plan on hold, though some members saw the risk more purchases may be needed. Broadbent voted with the majority at his first meeting.

    The pound is -0.53% against the dollar in the aftermath of BoEminutes which showed the governing council is mulling expanding its asset purchase plan in the face of weakening growth in the U.K.

    HSBC downgrades Lloyds (LYG), Barclays (BCS) and RBS (RBS) to Neutral from Overweight, saying U.K. regulatory reforms could cost the three lenders up to £10B ($16.2B). Ring-fencing proposals mean I-banks would get no gov’t support in a future crisis, leading to lower credit ratings, higher funding costs and potentially the need for Tier 1 capital as high as 13-15%. 

    Uh-Oh!  Philips (PHGplunges 11.9% premarket after warning weak demand in Western Europe will hurt results at its lighting and consumer lifestyle units. Margin pressures and higher marketing spending will result in Q2 EBITA for the lighting unit of ~€85M ($122M), down sharply from €193M in Q1, and ~€50M for consumer lifestyles . 

    Philips’ (PHG -11.9%) margins must have dropped ‘massively,’ says analyst Victor Bareno, to account for such a hefty cut to the firm’s earnings outlook. Philips’ failure to provide a "credible explanation for the extent of the shortfall" and its decision to wait this long to report the profit fall is a "blow to the company’s credibility."

    The women suing Wal-Mart (WMT) for gender bias say they’ll fight on, but the Supreme Court ruling against them may sound the death knell for such suits that seek money from employers for discrimination. A victory for legal fairness and economic growth in recognizing that some class actions are "too big to succeed," or another step closer to the U.S. as a "gated community" for the wealthy?

    Ugly chart of the day: U.S. household debt may not return to its pre-credit bubble trendline until 2020.


  183.  Phil: FAS income
    Do you have a suggestion of an alternative to FAS, or could you tell me criteria I might use to find an underlying I like better.  Or is the point of this approach to use something with high volatility, liquidity and weeklies which make FAS the best choice?  TIA


  184. Kramer- that only includes direct costs… It’s funny the article mentions the US leaving or ‘keeping troops in Iraq after the withdrawal deadline.’ out of 9 classmates in the AF Grad School I just finished, 8 of us got hit with year long deployments upon graduation in March. 3 of those were to Iraq and all the 365 day deployments to Iraq begin in Dec or sometime in early 2012….it’s important to realize when they talk of withdrawals they are usually talking ‘combat troops’ and not boots on the ground. We will be keeping troops there until we attack Iran, which will probably happen sometime over the next 2 years (careful on those oil shorts)….


  185. FAS/Lincoln – Yep, it’s the last.  The reason it works is because of the volatility.  You can try it with XLF but I very much doubt you will get the same returns.  


  186. Bomb Iran/Jrom – That’s been the plan for a while: