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Whipsaw Wednesday – What Us Worry?

That was easy!

Only 3 days of panic and we're back to manic already – I'd say that was a record but our last panic only lasted two days, on August 18th and 19th, when we dropped 600 points before bouncing back 800 points the next week so this last 3-day, 600-point drop was gentle by comparison.  That, of course, did not stop the usual round of Doomcasters from declaring the end of the World (especially the European section) as we know it but that was all so yesterday morning and now it's 24 hours later and the Dow is up 300 from that bottom in the pre-markets.  

Pre-market yesterday we were bullish but cautious, going long on Dow (/YM) futures at 11,000 (now 11,227 – up $1,135 per contract) and Russell (/TF) Futures at 666 (now 688, up $2,200 per contract) and our bullish EWG spread from the morning post should be going gangbusters already as the DAX pops 3% this morning! 

We also laid out new hedge ideas on EDZ and GLD but the point of those was, wisely, to take the money and run on our old hedges as they bottomed out in the morning (max profit), trading in our well-ridden horses for fresh ones that have more time to expiration and lower deltas to snap back on a bounce is all part of our range-trading strategy – we may need those hedges again, just not now….  

By the time the market opened, things looked too good not to play bullish and we ended up picking 19 bullish plays in yesterday's Member Chat with not one bearish one.  My comment to Members in the 9:44 Alert, where we took a very aggressive upside play on the Dow was: "Damn, and I said I wasn’t going to get too bullish. Oh well, what can you do?"  As I have been pointing out in our Range Trading posts – sometimes you just have to go with the flow

Just 18 minutes later, I put up 6 long-term trade ideas on CAT, DIS, HOV, JPM, SKX and T as we took advantage of low prices, a probable bottom and a high VIX.  The nice thing about our buy/writes is that they have a built-in 20% discount (see "How to Buy a Stock for a 15-20% Discount") and can usually be scaled in to ride out a 40% drop – so we have all the time in the world to add some protection if we do end up failing our range bottom.  We also, of course, had our September's Dozen list of 13 (as with donuts, you get a bonus) aggressive upside plays that we finally got a chance to fill in on this dip.

So our day was busy to say the least.  Today, I already warned Members in an early Alert that we have a ton of profits to protect so we'll be looking out for shorting opportunities other than TLT (which is working already) and GLD (which stopped working).  Perhaps we will turn our attention back to oil if the scam artists at the NYMEX are going to pretend to want to pay more than $87.50 a barrel when, in fact, they have 678 MILLION Barrels of oil scheduled for delivery between now and the end of the year to Cushing, OK – a facility that can only handle 40M barrels a month!

Click for
Chart
Current Session Prior Day Opt's
Open High Low Last Time Set Chg Vol Set Op Int
Oct'11 86.50 87.42 86.15 87.10 08:07
Sep 07

 


-
1.08 30981 86.02 274510 Call Put
Nov'11 86.73 87.68 86.45 87.34 08:07
Sep 07

 


-
1.03 8870 86.31 195265 Call Put
Dec'11 87.11 88.05 86.85 87.70 08:07
Sep 07

 


-
1.00 6757 86.70 209213 Call Put
Jan'12 87.41 88.21 87.21 88.14 08:07
Sep 07

 


-
1.09 1081 87.05 94826 Call Put

These are the opportunities we look for in shorting oil because those October contracts (/CLV1) were $83.20 in pre-market trading yesterday and have been jammed up 3.8% already and we'll be looking for 5% over $83.20, or $87.36 as a good line in the sand to begin shorting this contract again so PUMP IT UP boys (when you don't really need it) – we'll be waiting for you!

Yesterday morning I said we could remain bullish if the Dow finished over 11,000 and the Nasdaq held 2,473, which is our -5% line on the Big Chart.  The Dow finished at 11,139 and the Nasdaq finished at EXACTLY 2,473.  While we do use charts to illustrate our 5% rule, Members know I could care less about the squiggly lines on the graph.  These are the same levels we have been using since the Spring of 2009 and that's where we get our ranges from.  Our goal for today is to get the Russell over 697 and hold it – 700 has been an upside line in the sand for the RUT and, frankly, it's where we intend to start buying TZA hedges as they've performed so miserably at that spot in late August.  

There has been no major news, no data and no new announcement to turn this market around – we are simply bouncing around in a trading range as we wait on the Beige Book this afternoon at 2pm (probably bearish) and then a speech from Bernanke at 1pm tomorrow and, of course, Obama's not very exciting jobs speech tomorrow night – which may end up disappointing investors again and send us back into panic mode.  

For now though, fear is subsiding, gold is falling and the bears will be squeezed once again as it turns out the EU didn't fall apart overnight and still no major banks have failed and, of course – the IPhone 5 is coming!!!  

This should be a great day for the bulls – let's have some fun. 

 

 


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  1. Oil Lines
    R3 – 90.88
    R2 – 88.74
    R1 – 87.57
    PP – 85.43
    S1 – 84.26
    S2 – 82.12
    S3 – 80.95
    Yesterday’s high and low – 86.60 / 83.29
    Breakout lines – 91.95 / 74.62 


  2. Some thoughts about the dollar and implications on exporting companies stock prices:
    http://www.bespokeinvest.com/thinkbig/2011/9/6/is-a-bottom-in-for-the-dollar.html 


  3. For those seeking high yield (and potentially high risk)
    http://investwithanedge.com/latching-on-to-a-double-digit-yield-with-mort 



  4. Phil:
    Where would you roll the BNO Sept $75 puts to in October. Obvious that we need more time for this trade to come through. Thanks.


  5. So I got cleared by my boss and wife to go to our Vegas gathering in October.  Are any of the off strip hotels nice, yet cheaper?  I have never been to Vegas so I have no clue about anything there.  Suggestions would be appreciated!  This should be an eye opener.  
    I am a conservative Republican (although Phil is slowly winning me over), I have never played blackjack or poker, I have never been to Vegas and I am not the best trader….I am psyched about this weekend!  Teach me boys (and attending gals)!  
    Thanks,
    Dan


  6. Dan, Vdara has ok rates.  Off the strip hotels are fine, but taxi rides will take some of that money, and walking it is too much fun. Try travelocity to check rates on the strip.  Any are fine.

    Bar – you mentioned this morning Japan….yes.  We are.  Rates are going to stay loooowwwww for a very long time, regardless of this market.

     

    PP for today:

     


  7. dan – I am in the same boat as you. Let me know if you find a decent hotel. Thanks.


  8. Travelocity has a ‘priceline’ type function called top secret hotels.  Put in your price range and go with that.  4-5 star (out of 6) will do.  Just make sure you check the LV strip and not LV checkbox.


  9. Dan,  Gold Coast and Orleans are casino/hotels off-strip that are cheaper.  Go to their websites to check on rates.


  10. Great job calling the turn yesterday.  I am so glad I loaded up on those short puts.  Thanks.  Oil is over your target, what are your thoughts for hedging with USO?


  11. I think a lot of us have played TBT ever since you were touting it heavily (with what seemed like impeccable logic). Those of us still in it have taken a huge percentage beating. In my case, I have rolled several times only to find myself further behind. The management of these trades is straightforward, and we have techniques to come out whole. I had already rolled some short puts on TBT to short calls on TLT, and things appear to be a bit better. But here’s the question:
     
    Phil, do you still believe in the premise that T-bill buyers will someday insist on higher real returns, as in NOT NEGATIVE? Or should we give up and admit that we have become Japan?


  12. danosu77,  you can try hotwire.com, they basiclly have the best rate, they tell you where the hotle located, what is the rate per night. The down side are, they don’t tell you the hotel name and you don’t get your money back if you are not going.  Good luck.


  13. FAS Money Recap

    Long Strangle –Jan 12 Puts (3.01 average now 2.79) and 15 Calls (2.75 average cost now 2.53). 
     
    Weekly –1/2 September 13 Puts (1.03 now 1.08) and 1/2 weekly 13 Puts (0.80 now 0.55)
    Monthly – 1/2 September 13 Puts (1.03 now 1.08) and 1/2 weekly 13 Puts (0.80 now 0.55) 
     
    Nice recovery from yesterday’s open…


  14.  Nicha, Gold Coast sold out on the 9th.  The Orleans looks ok.  I will look at price line later this afternoon.


  15. Incredible AAPL call by Iflantheman yesterday.  Nobody knows that stock better than him.


  16.  If someone wants to book the hospitality suite at Vdara it looks like there is 2 master bedrooms, PLUS plenty of room for poker games and trading futures in the wee hours Sunday/Monday ;-)


  17. Phil,
    Could you help with some hedges I have that are expiring in Sept.  You seem quite bullish at this point and I am concerned these could all be out of the money by Next Friday.
    I have
    40 IWM 73 / 68 Bear Put Spreads in at 1.87 – now 2.80
    40 SDS 22/25 Bull Call spreads in at 1.20- now 1.40
    40 SQQQ 25 / 28 Bull call spreads in at >95 – now .90
    I have had a tough time getting out of the ultra spreads but the IWM is pretty liquid.  What do you think, hold till expiration or roll?? I know I should have unloaded them yesterday morning but I thought the dead cat may fall over the cliff.


  18. Good Morning—
    Phil—is /HG still a good short at 4.1175?
    Thanks
    danosu—if two attendees get together and book the suite at Vdara we can have the poker game  there—just a suggestion


  19. danosu—bdc is coming


  20.  Speaking of Vegas, I’m in the same boat as Dano. I could book a room at the Vdara, but it ends up being almost $400 with the "resort fee". Since it’s just me, it seems excessive. Does it make sense to rent a car, or is it a hassle/expensive to park? Anybody want to share a cab/car from the airport? I’m getting in around 4:45 on Saturday afternoon. 


  21. Kurtww – there is a cheap shuttle from the Vegas airport and you don’t need a car 


  22. zeroxzero
    i agree , France lags far  behind Germany , and they’re well aware of that. But they figured years ago they could become as big as the US if they could muster the ‘wasted’ forces lying around Europe. De Gaulle was saying that Europe was a horse and France was riding on its back. Germany doesn’t used to care so long as they could make good money out of it. Notice that the German are edging their bets too by expanding on the other side into the Balkans, former USSR republics, Turkey and Russia.


  23. Good morning! 

    NYMEX October contracts expire on Tuesday, the 20th, which is 2 days after options expiration so it’s a little tricky as October is too long (they can pump it up again by then) and September is too short but it’s not too likely they’ll hold all these open barrels over a weekend, knowing they have to be out of them the next Tuesday.  

    Oil inventories are not until tomorrow and we could get a huge, fake pump-job if they get any kind of good news from the holiday driving/hurricane affected numbers so it may be a little early to go short but we will be looking for a cheap entry at around US $34, perhaps the Sept $34 puts for .65 or less – those are ones we wouldn’t mind doubling down on at .45 and, if that sounds familiar – that’s the reason we do these reviews!  That trade at higher prices gave us 20 at .75 average in the $25KP and we cashed out at $1.40 two weeks ago – the last time USO went to the top of our range ($34.50).  

    Obviously, anything down is bad at this point on our indexes and we need to watch the RUT very carefully as a rejection at 700 was a big sign of troubles to come in our last run.  We were a little too forgiving last time (another reason why I love to review our moves) and will not make that mistake again as I’d rather take a loss on a too-early TZA hedge than miss another opportunity to catch a move from 45 to 60!  

    Europe is still going strong with Germany up 3.7% (congrats to the EWG players!), CAC up 2.9% and FTSE up 2.25% (they were holding up best before).  We also have been holding up better than Europe so a muted response is to be expected but not too muted and I will not be happy if we can’t put up 2% gains on the day.  

    Unlike yesterday, we’ll be playing this one by ear as we move into the middle 10% of our range, where it is beyond foolish to think you are sure what’s going to happen.  Our goal as bulls is to see those -5% lines form a base.  Before that can happen, we need the RUT and NYSE to cross them in the first place and that is not going to happen today and, if it doesn’t happen this week, we’ll have to protect ourselves into the weekend.  

    Gold $1,815!!!  

    Wednesday’s economic calendar:
    7:00 MBA Mortgage Applications
    7:45 ICSC Retail Store Sales
    8:55 Redbook Chain Store Sales
    11:15 Fed’s Evans: U.S. monetary policy 
    2:00 PM Fed’s Beige Book
    4:00 PM Fed’s Williams: Economic Outlook

    At the open: Dow +1.27% to 11281. S&P +1.43% to 1182. Nasdaq +1.39% to 2198.
    Treasurys: 30-year -0.6%. 10-yr -0.18%. 5-yr -0.07%.
    Commodities: Crude +1.8% to $87.56. Gold -3.58% to $1803.55.
    Currencies: Euro +0.22% vs. dollar. Yen -0.42%. Pound -0.22%.

    European shares leg up to new highs on the day. Stoxx 50+2.8%. Germany and Italy lead the way, +3.8% and +3%, respectively. The euro +0.4% vs the dollar at $1.4050, and flat vs. the swissie at CHF 1.2065.

    Market preview: S&P futures +1.3% and tracking Europe higher after Germany’s highest court rejects lawsuits aimed at blocking the country’s participation in EU bailouts. Yahoo +6.9% on the Carol Bartz firing, although analysts aren’t so impressed. Walter Energy +20.3% on takeover speculation. Nvidia +6.6% on strong guidanceLater: Fed’s Beige Book.

    President Obama’s job-creation program, which he is due to detail tomorrow, will inject over $300B into the economy next year, Bloomberg reports. Almost half the stimulus will come from tax cuts, and will also include infrastructure spending and direct aid to state and local governments. - TAX CUTS?!?  Are they freakin’ kidding me?  

    Redbook Chain Store Sales: +4.9% Y/Y vs. +4% last week. The strength in sales is attributed to to successful Labor Day promotions, although the back-to-school seasonal sales was interrupted by Hurricane Irene.

    ICSC Retail Store Sales: -0.7% W/W, vs. +0.1% last week. +2.7% Y/Y, vs. +3% last week. ‘The report attributed the latest weekly slowing to the lingering effects of Hurricane Irene which triggered heavy stockpiling in the prior week’.

    Just when you thought the eurozone’s core was on the brink of recession, German July industrial production jumps 4% M/M, well above the 0.5% rise expected, with all sectors except energy showing gains. While welcoming the data, analysts remained cautious about Germany’s prospects.

    At least 10 people have been killed and 45 injured after a bomb apparently hidden in a briefcase exploded outside India’s high court in New Delhi. The outlawed militant Islamic HUJI group, based in Bangladesh and Pakistan, has claimed responsibility.  - Terrorism?  Yawn….  

    Dollar booster:  The Bank of Canada leaves its benchmark rate unchanged at 1%, as expected. There had been some chatter of a surprise cut, but the bank brushed of a Q2 contraction in GDP as "due to temporary factors." The loonie +0.3% at $1.013. 

    As expected, the BOJ keeps its key interest rate at zero to 0.1% and says it will maintain this policy "until price stability is in sight." The bank, which is refraining from more easing, notes that output and exports have nearly recovered to pre-earthquake levels. Yen +0.3% vs. dollar. (.pdf

    The Treasury has approved $4.3B for 382 financial institutions as part of its Small Business Lending Fund. The program was created in Sept 2010 to provide low-interest loans to community banks that expand their lending to small firms. 

    If a bear gets squeezed in China, does it make a sound?  Jim Rogers believes the Swiss have made a mistake by putting a floor under the euro/franc exchange rate. All the exchange the SNB is buying up will end up being sold at a loss, he says, and any benefit to the exporters will be offset by "destroy(ing) the traditional Swiss financial industry."

    Same question in Europe:  "This crisis has the potential to be a lot worst than Lehman," says George Soros, who hopes current events will push theEU into creating an overarching authority to oversee the continent’s banking system. Yet at this point "there is still no understanding as to what the authority will do."

    Paul Krugman wedges the soaring gold price into his idea governments aren’t spending and printing enough, i.e. a deflationary signal. Those who bought gold because of inflation worries are "right for the wrong reasons," he says. Hopefully, his analysis of the 1970s bull run is forthcoming. What might Emerson say? 

    Yeah, yeah, blah, blah:  A Greek newspaper reports private sector participation in the Greek debt swap at 75%, well less than the hoped for 90%. Greece has threatened to scuttle the 2nd bailout if the target isn’t reached, but a finance ministry official, calling the process "ongoing," says it’s too early to start talking percentages.

    "(It) remains a possibility," says Finnish PM Katainen of the idea his country will not contribute to Greek bailout v 2.0. "It depends on the collateral issue … but we can’t wait forever, as the issue must be resolved in the next few days." (previous

    While saying the rescues are going swimmingly in Ireland and Portugal, the head of the bailout fund, Klaus Regling, says theGreek adjustment efforts have stalled – strong words from a man not paid to make such judgements (at least not in public). 

    The Greek 10 year bond yield briefly climbs over 20% for the 1st time before falling back to 19.8% as Finland threatens to walk away from the bailout. Two year notes are up 61 basis points to 53%. One year yields are actually falling, down 200 basis points to just86.4%.  - Could be the blow-off spike. 

    The Italian Senate is due to vote today on a widely criticised austerity package aimed at strengthening confidence that the country is serious about cutting its crippling debt. Should the bill pass the Senate, it will go to the lower house for approval.

    ECB funding to Italian banks rose to €85.09B ($119.84B) in August from €80.49B in July and €41.32B in June, lenders increasing their reliance on the central bank as market funding costs rose sharply. 

    A good example of what’s lurking on the books of Spanish banks: Lender CAM reported its bad loans soaring to 19% from 8.5% previously after regulators spent some time reviewing the books. The central bank today began looking for a buyer for the troubled savings bank.

    Slow down boys – we have nowhere to put it and that’s another year of imports!  BP says it may have landed a giant deepwater oil find in the Gulf of Mexico in a previously untested part of its Mad Dog field. Total hydrocarbons could top 4B barrels of oil equivalent, according to initial reports. BP owns a 60.5% stake in Mad Dog, and minority owners include BHP Billiton (BHP) at 23.9% and Chevron (CVX) with 15.6%.

    Video game sales could increase 23% to $81B by 2016, according to a report from DFC Intelligence. A "slow and steady" decline in physical game sales will be more than offset by online and mobile revenue, as gaming consoles peak. Publishers face a business disruption, but also an opportunity for "untold riches" if they can adapt with the changing gaming climate. 

    In a sign the industry remains healthy for now in spite of growing solid-state drive encroachment, IHS estimates hard drive shipments grew 4.1% Q/Q in Q2, and expects 3.4% in Q3. Western Digital (WDC) was estimated to have 32% of the market in Q2, and Seagate (STX) 31%. However, Seagate’s revenues were 21% higher due to greater enterprise exposure.

    We have officially run out of good names for processors:  AMD has begun shipping processors based on its delayedand much-hyped Bulldozer architecture for servers and high-end desktops. The first product to go out the door is a 16-core server chip code-named Interlagos, which AMD is hoping will help it reverse Intel’s (INTCrecent share gains in the server CPU space.


  24.  sec looking into ultra etfs….they are a huge problem…so it will tell us alot about sec depending on their findings.


  25.  GLD / Phil,
    I’ve taken significant profits this morning from the fall on other GLD Puts and so, don’t have as much at stake on "Your call from Friday, 9/2 to pick up Oct $168 Puts at $2". This position of course has doubled now.
    I need some thoughts on how I’d manage this trade. While I can take the profits off the table now, I may be leaving a substantial amount on the table if gold falls further. This is exactly what happened with the AGQ trade you put up a few days ago. While I made some nice profits, I left a lot more on the table.
    How do I let such winners ride, especially given the amount of time we have left, for large moves?
    Appreciate your thoughts.


  26. Market manipulation?
    http://ftalphaville.ft.com/blog/2011/09/07/671416/more-than-2-8m-tonnes-of-hidden-copper-stocks/

    Slowly, the truth on whether the global copper market is really tight is coming out. It illustrates just how large an involvement the financial institutions have become to the copper industry. It shows, too, that by throwing money at a market, prices can be driven higher. In the process, however, the delicate balance between supply and the industry’s requirements for a basic material used to produce a range of essential products is destroyed. In short, copper is becoming a financial asset in place of its historic role as an industrial metal.

    It is becoming very hard to invest when so much is being hidden from the retail investor! 


  27.  GLD / Phil,
    And did I say "Thank you very much for the bundle you’ve made me today, Sir!". Truly appreciate it.


  28.  I’ll echo sank1 on both the "how to manage now" and the "THANK YOU VERY MUCH" for the GLD Put call…


  29.  Friends and Vegas Attendees:
    I will be going out of town tomorrow for a wedding.  I won’t be checking the board as often as I would like.  It any attendees want to brain storm hotel ideas, please use my email:
    drdanwilliams@mac.com
    Since Saturday night is dinner and social time, around strip would be nice, but Sunday and Monday are at Cafe Moda and hopefully more serious "work" days for at least part of the day.  I just don’t think cab fares would add up to the fees of Vdara, but that suite looks great, but I can NOT afford it on my own!  
    Let me know any ideas or give me your email to keep in touch as I do some research.
    Dan


  30. Vegas — Checking in from vacation today.  Bill’s is centrally located on the strip and runs $100-$250 for that weekend. Never stayed there but it might be an option (it’s only a couple floors so it’s probably noisey). I’ve never rented a car in vegas, traffic can really suck on the weekends ( I like to walk off the libations walking between casinos :)  Cab is about $12-13 from the airport to ceasars or so. I don’t know how much to lvmoda’s but that can be split 3 ways. Old town might be another option, forget what the cab to central strip is but it seems to me that was around $15, you can find cab rates online.
     
    I’ll be there. Got a comp’ed room at the Paris hotel.


  31.  Sank1,  One Idea would be to close the position,  then half the profits and invest them in something like the GLD 150 or 160 puts.  That way you book a profit they cant take away from you and if there is a giant move down in GLD you can still capture a lot of it.


  32. Phil- Would this be a good time to DD on BNO Sept $75 puts or perhaps roll them to $76? The $75′s are down to $1.


  33. MORT/StJ – That sounds interesting.  

    BNO/$25KP, DC – We gave up on oil shorts yesterday morning, those BNO puts should have come off the table at $2.15 in the morning, the same time we took $1.75 and ran on the USO $34 puts.  If you are still in BNO (now $1.25) at least you know it can move back in your direction but not really enough to be a great help.  I think I would take the $2.25 loss and move it to the more liquid USO contracts, perhaps 2x the Sept $35 puts at $1.20 and be VERY happy to get out even or near even if the move up over $2.  The entry would be on the same basis as our new $34 put play, you would have to DD if they drop to around .90 on a big move up and then there would be a very expensive roll to October if we don’t get our dip so make sure you think about all that before making a commitment.  On the other hand, just going for 10 of the USO $34 puts, now .70, and adding 10 more at .50 or less is 20 at .60 and if those get to $1, that’s $800 back on a much smaller risk – we don’t need to win it all back in one shot.  

    $25KP – To be clear, I do want to go for 10 of the USO $34 puts at .65 and DD at .45.  

    Vegas/Dan, Nicha – I like Travelocity, they show you good deals and you can sort by price.  I see plenty of $50 a night deals but why on earth would you go to Vegas to not stay in a strip hotel?  The Stratosphere is $122, the Excalibur is $127, Golden Nugget is old Vegas at $132, the Rio is all suites at $152 (a bit off the strip), New York is $165.  They are pretty accurately priced in order of how nice they are.  The Rio is a great deal EXCEPT you end up spending so much on taxi fare to get to other places that your savings evaporate.  The Hard Rock has the same problem as it’s off strip but $192 a night is a great rate there.

    11,300!  Very nice.  RUT 697.  Dollar 75.70 and oil $88.50.  

    Thanks Chaser.  USO see above but be aware they could head up to $90 and if RUT breaks over 700, shorting may not be a smart move on anything. 

    TBT/Barf – See yesterday’s comments.  I haven’t changed my mind.  Long-term, rates will rise but TBT has a nasty rate of decay that makes long-term holding unpleasant and, now that TLT has gotten so high, I find shorting TLT to be preferable to being long TBT.  I have said before that we can’t become Japan.  Japan was unique in that they were the only nation playing the ZIRP game – everyone can’t have zero interest without printing TONS of money and printing tons of money causes inflation at some point and inflation causes rates to go up so, unless we want to become Zimbabwe and not Japan, at some point rates will have to get more realistic – certainly more realistic than negative returns for loaned money.  

    FAS Money/StJ – We need those $13 puts to expire worthless, that would be a huge relief.  

    Poker/Dan – I want to play a proper tournament (private), not just in a room somewhere.  Surely a group can arrange this in Vegas?  

    Hedges/Button – Yes, we’ve been bullish since yesterday morning, why would you not take profits off the table?   As I said earlier, we can add a TZA spread if the RUT is rejected but if you’re not going to take what yesterday were at least 50% profits on your hedges – what’s the point of having them at all?  If you don’t want to be naked, at least roll your end of the spread (not the short position) to the next month so you don’t get destroyed by the premiums expiring next Friday.  

    By the way, I don’t remember to say this over and over and over again but NOBODY should be in a September position as of the Wednesday before expirations (today) unless they very specifically are looking for a move that will happen in the next few days.  If you don’t like a position enough to roll it to October – then what is the point of holding on to it while it’s premium expires?  


  34. I loaded up yesterday, and have a confusingly large profit this morning.  I feel like a guy running across a minefield with a bag of gold on my back [OK, I didn't have any gold, thank you Phil for yesterday's gold comment].   What’s the hedge du jour?


  35. What’s up with Annaly [NLY]?  Any enthusiasm? 


  36. Vegas — couple other thoughts: Rio has a free shuttle to a couple other Ceasar’s properties, there are other free suttles: http://www.lasvegas-how-to.com/free-shuttle.php Also, you might try signing up online for the player’s cards (MGM and Harrah’s/Ceasars own most of the strip), you might get discounted rooms just for signing up.


  37. Thanks Phil’
    I am still trying to figure out when to take profits on the hedges.  Last month we had the drop and my spreads expired 100% in the money. 


  38. Any idea why the RUT is so much stronger today?


  39. Good morning,

     

    IWM  68.10,  68.69,  69.15,  69.53,  69.95,  70.12,  70.64,  70.98,  71.33,  71.87,  and  72.09


  40. FAS Money / Phil – It was your original plan to have these 13 Puts expire worthless. We got off track for a couple of hours yesterday, but seem on track again. Of course, there is one weekend left in between now and the expiration of the September puts so who knows. Depending where we end on Friday, we might want to examine our options (no pun intended) then… 


  41. Good morning; will try to spend some time here today during RTH.
     
    Another crazy pump in the markets.   I see some are very bullish here. 
     
    I am not.  Cautious.  As I said 2-3 weeks ago, more wild volatility expected.
     
    I think there is a good probability of a lower low (1100 or lower).  Probably in Sept.
     
    Be cautious and take profits where you can.
     
    As for today from here; its anyone’s guess.   Energy Strong.  Tech mixed.  so far.


  42. Copper (/HG)/Savi – Too dangerous at this point.  Could be stimulus, could be a crash from Europe.  

    Speaking of TZA:  Sept $43/47 bull call spread is $1.60 and you can sell the TM $70 puts for $1.85 or the HPQ Oct $24 puts for $1.65 to pay for it.  The logic of a spread like this is you can roll the short put for a better price (with $4 in your pocket from the hedge) if we go lower and it’s very unlikely that the spread costs you money (TZA is $45 at the moment) without the short puts being on a good track to expire worthless.  This is a good way to put on some tentative protection.  

    Ultra ETFs/Angel – The biggest problem is they let average investors hedge with the kind of leverage that is usually reserved for hedge funds so the money boys want to get rid of them.  Of course the ultras have their own flaws and screw people who play them wrong so a good case can be made to cut them but that would be a real shame. 

    GLD/Sank – Thanks for reminding me to say SHAME ON YOU PEOPLE FOR NOT TAKING SOME SHORT GOLD PROFITS OFF THE TABLE AT $1,800!    OK, now, where were we?  Oh yes: Shame on you for not taking a quick double off the table you greedy bastard!  When in doubt, sell half.  I’m sure you’ve heard that one before.  If you take 1/2 off the table you have a free ride and a 100% profit, even if you stop the rest out 50% down from here, you still make 75% on the total trade.  If the 2nd half doubles again, you will be up 150% on the total trade (just 1/3 less than what you would have made if you kept it all on the table) – also not a bad thing.  I do think gold could have a major breakdown here but it’s a very tough play.  You could sell the GLD $166 puts to cover for $3.80 and that’s almost 100% up on the whole trade locked in with a possible $2 bonus for a 200% gain and if you can’t be satisfied with locking in a 100% gain and still having the potential for a 200% gain – I can’t help you (but maybe gambler’s anonymous can).

    And what Crag said! 

    Hidden copper/StJ – Oh I’ve been saying it for years and everyone thinks I’m a conspiracy theorist when all I’m doing is pointing out how crooked the whole thing really is.  They don’t even mention the warehouses filled with copper in China – like that scene from Raiders of the Lost Arc….

    GLD/Sank, Haschade – You are very welcome (you greedy bastards). 

    BNO/GS – See above, USO more attractive now (but still scary).  

    Hedge/ZZ – Good instincts, see above TZA. 

    NLY/ZZ – If you don’t have them (we do in the Income Portfolio), I love them at $17.42 as a new entry with a buy/write like the 2013 $15 puts and calls sold for $5.50 for net $11.92/13.46 but make sure you get at least $2.80 (+.40 premium) for the calls or you are very likely to get called away.

    Drop/Button – Yes but luck cannot be your strategy.  If you bet $1,000 and your hedge goes to $1,500 then it’s time to cash it out (with stops, of course) and then invest $1,000 on the next hedge (and the $500 should go into improving your long positions as they bottom out).  

    RUT/Exec – Still lagging big time, they need to out gain the rest to catch up.  Stronger Dollar is good for them, as is Obama jobs speech so hopefully we can get through 700 this time and hold it.  


  43. Anybody know how the Circus Circus hotel or Tuscany Suites is in Vegas? Half price on both these in Travelocity.


  44. Phil, 
    I am confused, yesterday you responded to me saying "Was that it?/Amatta – I believe that the entire thing was an artificial construct designed to panic retailers out of their holdings so the IBanks and fund managers could scoop them up cheap ahead of Obama and the Fed (and probably the EU and China and Japan) injecting a new and massive round of stimulus into the Global economy.  The reason the VIX didn’t spike is because "THEY" were prepared for the drop (as were we!) so there was no reason to load up on puts and there was no major capitulation because no one who counts was actually selling their shares…."
    But today I understand you are saying there isn’t going to be a positive reaction to Obama’s speech and that panic will ensue?
    Thanks for clarification


  45. JR/Chart
     
    What does the "RS??" on the chart mean?


  46. Alright Phil, I am just trying to learn something here.  I have as a longer term hedge a TZA BCS January 32/40 that I got in ages ago for $.95 now $3.75. What would you suggest doing with this as I still need the protection.


  47. exec, I’d guess "right shoulder" of a H&S formation


  48. Chart / Exec – RS = Right Shoulder 


  49. Exec – I think it means right shoulder.


  50. exec / RS

    Right Shoulder


  51. Dollar dropping into EU close – maybe they are going for a big push – watch that 75.50 line, very bullish if we fail it. 


  52.   EVANS URGES "VERY SIGNIFICANT AMOUNTS OF ACCOMODATION"….HAHAHAHA..O"S FED POODLE


  53. Actually, I do think "they" will take us higher; next resistance on SPX is 1190 !!

    Originally I thought two weeks in this box:

    But given the weakness of the last few days, we could fail at any of these points on the Russell !!

    The first is only 6 points away !!


  54. JR,
     
    You trading today or fishing?


  55. nicha
    Circus Circus has always been worth less.


  56. GERMAN COURT/ The court imposed merely a committee speed-bump… rather than a parliamentary road block…in front of future German EFSF guarantees….this to my mind does nothing to dampen increasing public outrage over the program’s implications to the German taxpayer..and I am betting on the constituency here not the judiciary.


  57. Also, Dollar going down SHOULD drop TLT/boost TBT as the currency unit TBills are priced in loses relative value.   Think of TBills as interest bearing commodity contacts on which the Dollar is the commodity.  So imagine that you are being asked to PAY interest to hold contracts in Dollars, which are declining in value – does that make sense?  While the Dollar may be a "safe haven" – a mattress is safer than that deal!  

    Plans/StJ – As Von Moltke the Elder once said: "No battle plan survives contact with the enemy." 

    Hey Cap!  How was the summer?

    Circus/Nicha – It’s fun with kids and they have an indoor amusement park.  

    Confusion/Amatta – I think you missed the part where I said "which may".  As we are getting a move up in our range ahead of the speech, it is now prudent to assume that we are moving up in anticipation of the speech (so we were only a day ahead of the masses in anticipating the move) and, since we now have NEW information, that the stimulus is just $300Bn and $150Bn of it is tax cuts (another Bush-style giveaway that will do nothing in the long run), rather than some sweeping long-term program – I am now WARNING you that there may be disappointment on that speech.  Again, this is like surfing when playing a range-bound market – as soon as you begin going one way, you have to start leaning the other way or – WIPEOUT!  Here’s another helpful way to look at it:  


  58.  JRW,
    You are not expecting a very big rally today. Are you expecting a fall tomorrow.
    TIA


  59. Phil -

    What you think of silver today?

    Nice volume coming in and looks technically good…


  60. SLW up a dollar from low to high so per my rule, I sold weekly 39 calls here.


  61. Ahh, SPY calendars….so nice.  Tomorrow, if we fall, the calls that were put on yesterday will be wonderful.  The puts, ooohhhh so nice.


  62. exec

    All you need to do is to look at the 3 minute chart; I’m in TNA !!

    85% chance of a green day with a gap up open and higher high follow through after 10:30, we should close at HOD; I will be taking breakfast off though !!   
     

     

    rehat / Tomorrow

    See my 11:20 post !!  My plan for a fall was Friday or later; we’ll just have to see !!


  63. Weekly SPY put spread is good insurance into Friday.


  64. Oh, and this move is absolutely comical.


  65. Phil – summer was good; kids spent 7 weeks away at camp.
    August ?  well … you know about August LOL.
    Have you been impacted by the rain / floods;  been seeing your area on the news.


  66. Pharm re calendars: I was too late for yesterday’s spread. Didn’t want to chase. Which puts are you talking about? Thanks. I assume you are still in the 120 calls?


  67. Mr Mocha -

    Selling calls? So you think SLW is going back down?


  68. TZA/Button – Yes but your protection is now only a potential 100% gain and you are risking a 300% gain to get it.  See how that makes no sense.  Even if you don’t offset it, you can switch to the Jan $43/47 bull call spread for $1.50 and you lock in $1.30 of gains (145%) and you end up with $4 more if TZA hits $47 and the spread is currently $1.30 in the money.  Yesterday your spread was about $4.50 so .75 would have been nice to hold onto, right?  With your sidelined $2.25, you can always add more protection – IF YOU NEED IT – but the idea isn’t to let your gains die out when the market recovers – the same range we play for applies to shorts and hedges as well as our longs – PROFITS NEED TO BE TAKEN.  You can always buy a new hedge but at least lighten up when we’re testing the extremes of our ranges!  

    Silver/David – They are holding up well against the gold sell-off but a lot of that is bargain hunters grabbing the 5% drop at $40.50.   I’m not bullish on silver or gold but I did put up a gold hedge using ABX as an offset in yesterday’s post that I think is a good, cheap way to play the upside.  

    Floods/Cap – My town was practically wiped off the map but my house is on top of the mountain so we’re dry as a bone.  My kid’s school still isn’t open and may not be next week either.  Fortunately, we still have the pool open at camp Davis. 

    Here are the levels where we are running into trouble:  Dow 11,300, S&P 1,190, Nas 2,525, NYSE 7,150 and RUT 700 – intra-day, we need to watch these closely to see if we should be bullish or bearish at this point (3 or 5 rule of course).

    11:00 AM On the hour: Dow +1.52%. 10-yr -0.24%. Euro +0.4% vs. dollar. Crude +3.59% to $89.11. Gold -3.42% to $1806.55.

    If 5% inflation would have our hair on fire, so should 9% unemployment,” says Chicago Fed chief Evans, pounding the tablefor significant Fed easing. "A temporary period of inflation above 2% is (not) something to regard in horror." The speech is from London, where inflation has been "temporarily" above target for several years.

    For the technicians out there, making the rounds on trading desks is a chart of the S&P 500 priced in gold forming what appears to be a head and shoulders bottom.

    Europe closes the books on a big day following losses of around 10% the previous 3 sessions. Stoxx 50 +3.5%, Germany+4%, Italy +3.9%, Spain +2.7%, France +3.7%, U.K. +3.3%. Enjoying a bit of currency weakness, Switzerland tacks 2.5% onto yesterday’s 4% gain.

    "If the euro fails, Europe fails … Treaty amendments can no longer be taboo," says Angela Merkel in a speech before the Bundestag, making perhaps her most forceful push yet for tighter European integration. 

    ING’s Carsten Brzeski doesn’t think today’s court ruling will change Germany’s "piecemeal approach" to the debt crisis, but does expect its parliament to vote for a second Greek bailout and stronger rescue fund. Meanwhile, concerns are being raised by politicians about Greece’s commitment to the austerity demands attached to the second bailout.

    Italy’s €54B austerity plan hasn’t even passed (or not passed) yet, and lawmakers are already talking about a 2nd one. "We may need another adjustment in three, four weeks which will be the real answer to the EC and to market," says the head of the Senate Finance Committee. The vote on the initial plan is set for 2 PM EST. 

    The Riksbank leaves its benchmark rate unchanged at 2%, and lowers expectations for future rate hikes as both domestic and global growth prospects deteriorate. In fact, some analysts are calling for the next move in Sweden to be a rate cut. Swedish shares ETF:EWD +1.7%, Krona ETF: FXS +1.3%.

    Greek bond yields take a new leg up, with default now nearly 100% priced in. The 1 year Greek note yield is up 556 bps to 94.04%. The 2 year, 225 bps higher to 54.56%. Shares in Athens+6.4%, possibly pricing in a denouement to this crisis.

    Fitch affirms the AAA rating of Canada. "Canada’s culture of conservative policymaking and 11 consecutive years of fiscal surpluses at the general government level placed it in an enviable position to face the global financial crisis," writes the agency.

    The plot thickens:  The FHFA blows up the meme that it’s Countrywide to blame for Bank of America’s (BAC) problems. Excerpts from the lawsuit quote Countrywide execs as shocked at BofA’s aggressive mortgage origination practices in 2005. It’s no wonder Angelo Mozilo went to Ken Lewis when it was time to parachute out of his firm.

    Big U.S. banks have benefited by at least $15B-$23B from perceived government support after being labeled “too big to fail," enjoying lower borrowing costs and operating with less capital than other lenders, according to a Philly Fed study. “They’ve gotten this protection and they’re not paying a fair price for it,” says Julapa Jagtiani, the study’s co-author.

    Josh Brown thinks the Bank of America (BAC +3.5%reorgisn’t going to save Merrill Lynch, and Sallie Krawcheck "never really had a shot" to make it work: "Sallie couldn’t change the fact that the brokers have no interest in peddling bank products or making referrals to other divisions… [or] change the fact that once the brand name is tarnished, there is little reason for the salesforce to stay." 

    Mortgage insurance stocks break higher after MGIC Investment Corp.’s (MTG +13.5%) main mortgage insurance unit says it wrote $1.3B in new insurance in August while its inventory of delinquent loans fell. Other mortgage insurers also rise: RDN +8.9%,PMI +3.7%.

    Coal stocks (KOL +4.6%) are soaring after Walter Energy (WLT +24.4%) looks to be in play as a takeover candidate and investors ponder who might be next in line. Gainers: ANR +8.3%,CHNR +5.8%ACI +5.6%BTU +5.6%LLEN +4.7%.

    European drug regulators approve Johnson & Johnson’s (JNJ +0.6%) prostate cancer treatment Zytiga for men whose disease has progressed after chemotherapy. Wall Street expects the worldwide market for prostate cancer therapies, now approaching $1B, to grow to $5B by 2015 as a result of the influx of new treatments.

    The biotech industry looks ripe for more gains after posting a second consecutive year of profits and seeing M&A activity heat up, says Karvy Global Services. Crunching the numbers reveals 8 stockswith implied upside potential based on quarterly results and analyst recommendations. Picks: HITKCELGDNDNWXTEVAILMN,CRLBIIB.

    Southwest Airlines (LUV +4.2%) outpaces other airline stocks (FAA +2.2%) after reporting paying passengers flew 9.4M miles last month (+3.9% Y/Y) and passenger revenue per mile grew 6% – alleviating some fears (for now) of a slowdown in its top-line results.

    United Online (UNTD) is up 8.9% after Benchmark’s Daniel Kurnos starts coverage with a Buy and $7 PT. Kurnos thinks the strength of United’s Content & Media division, which includes Classmates.com and the FTD floral services business, will offset ongoing subscriber losses at its cash-cow NetZero dial-up Internet business. 

    Shares of Officemax (OMX +6.3%) and Staples (SPLS+3.5%) feel the upward pull of gravity from rival Office Depot’s (ODP+11.2%) big gain in share price following its update on the back-to-school season at the Goldman Sachs retail conference. Staples CEO didn’t provide much color at the same conference, saying the season was "OK," neither a "downer" or "robust."

    Fuel Cell Energy (

  69. Cap

    JRW … the best laid plans ….


  70. Thanks Phil. I appreciate your help.  I should be able to play it better next time.


  71. Fuel Cell Energy (FCEL +24.3%), a maker of stationary fuel cells, soars after reporting FQ3 revenue of $31.2M (+65% Y/Y) and EPS of -$0.07, beating consensus by $2.2M and $0.02. The company’s backlog stood at $230.6M as of 7/31, up 70% Q/Q. 2011 cash burn is expected to be at the low end of a prior guidance range of $24M-$32M.

    ROFL!  A recent court ruling against Wal-Mart allows it to pay$27.5M in claims to Netflix (NFLX) customers in the form of Wal-Mart gift cards (on which there is prominent advertising for the retailer’s video rental service Vudu). "The equivalent of a marketing campaign that costs WMT only $0.68 cents per potential customer," says Netflix, which is fighting the decision. 

    Piper’s Gene Munster thinks investors are being too cautious with their 2013 forecasts for Apple (AAPL). Munster sees the company generating $164B in revenue and $40.50 in EPS during calendar 2013, on the back of continued iPhone momentumMunster also sees Apple closing 2013 with a whopping $140/share in cash, up from $82/share today.



  72. lvmoda – you here today?


  73. 120 calls, yes – holding those.  We have the 116 puts as well.  Should be good for a buyback.


  74. We are now free of 2 resistant trend lines; only R/S levels remain !!

    I need to feed the crew; out of TNA with $ 1.80 !!


  75.  GLD / craigzooka, Phil,
    Had to be away and just came back.
    craig, Thank you for the suggestion.
    Phil, If there’s one thing I’ve learnt from you, it’s to take the 1/2 off. If there’s a second thing, it’s to sell into the excitement. I cashed in the bulk (more than 80% of my net GLD Puts) between 9:32 and 9:37 this morning.
    Nice idea on protecting the profits on the Oct $168 Puts by selling the $166 Puts and "locking in" most of the profits, and yet allowing for room to make more. Maybe this was an Options 101 call for you. But, I was racking my brains this morning after seeing gold futures for ideas on how to handle such a situation and couldn’t think of anything but "ask Phil". This has certainly been a learning. Thanks.


  76.  Good call on the RUT 700 and TNA Phil/JRW !


  77.  Wheres are next resistance on the RUT? Is 710 reasonable?


  78. I find it amazing that they can take down the dollar with Greece already pricing in a default, with no one actually stepping up to  pay Greece’s bar tab.  . That’s why I have taken the money and run today — quite a bit of it — and am now suffering with my TZA hedge, which is taking a slight shine off today’s profits.  I hope official PSW policy is to sell the rips under current conditions.


  79. l4real / Resistance

    See my 10:51 post !!

    IWM 70.64 then 70.98 !!


  80. Phil, what would be a counter-hedge against short puts (was holding a bunch from yesterday) I have going into beige book? (a company or sector that would jump if numbers are better than expected… or are we pricing that in already at this point in this huge move up? 


  81. Well I got motivated to book Vegas finally.  At the moment I’m at the Venetian in a suite but I still have to call Caesar’s and see if they’ll still comp me a suite.  I haven’t been there since my kids were born so I wouldn’t blame them for forgetting me – I was at the Venetian last time I was in Vegas and they seem to like me well enough.  Got $450 on Continental round trip (Wed – Mon).

    Cashing in/Sank – Great job!  Once you get used to doing that, you quickly stop regretting early exits as you realize how relaxing your life becomes by cashing out.  That’s also what that whole 10,000 hours to expertise thing is about – the more you do something the more you get these little experiences that get added to your tool kit so next time, it’s the obvious thing to do.  I reflexively look at how much I can get paid to stay in a play before I get out of it – still following that rule of SELLING into the excitement – just from another direction. 

    600 romney hands REUTERS CHRIS KEANE.jpgGOP/Kramer – Apparently Romney has released a jobs plan with 59 "specific proposals" all ironic as Romney made his money as a management consultant who consulted companies on how to ship jobs overseas, bust unions and raid pension programs.  

    Of course his plan includes lowering taxes for Corporations (how else do we create jobs but by rewarding corporations who save money by cutting them?).  He also want to repeal Dodd-Frank before it’s implemented (because regulating banks is bad) and he wants MORE free trade agreements – just like the ones that have already shipped 40M jobs overseas – BRILLIANT!  

    But it gets better:  He wants to reduce taxes on savings and investments, to eliminate the death tax (yes, you may wonder how this can possibly create a single job but it may, in fact, save the job of the family butler!), cut and cap the budget and reduce the Federal Workforce.  Really – all that is in his "jobs" proposal.  

    We are seriously looking very much like the idiots in the above balance video – lack of sharing will leave the last man standing, but he still won’t get what he wants.  

    Thanks L4!  If we base RUT at 700, then 1.25% is 708.75 and 2.5% is 717.50, then 735 – those are the next lines to watch but the 5% rule says 2 lower than that.  

    Greece/ZZ – There are over $100,000,000,000,000 of global assets priced in Dollars and Greece is, in total $500,000,000,000 in debt (0.5%) – who the F*CK cares about Greece’s debt in the grand scheme of things?  That’s why they should have just defaulted and then that probably would have pushed Spain and Portugal into default and maybe Italy but it all would have been done with, without all the drama for the past two years and maybe $2Tn in assets globally would have been wiped out (1%) but then Greece, Italy, Spain and Portugal all would have had great economies as they would be able to run stimulus programs and borrow more money to put people to work and those people would have bought goods from the other EU nations and the remaining $198Tn in global assets would have quickly gained 5% and we’d be $3Tn ahead by now instead of rolling around in the same pile of crap.  As to policy – not the lack of additions to the $25KP or Income Portfolio.  I’m just hoping we keep this going after the BBook but I certainly stand ready to pull the plug and get back to cash on the short-term positions.  

    BBook/Amatta – We expect it to have weak overall growth but I guess commercial real estate has the most room for improvement as an upside surprise.  VNO is a strong company and worth owning long-term anyway and you can sell the Oct $80 puts for $2.70 or the Sept $85 puts for $1.80 with tight stops in case things go the other way.  


  82.  Phil,
    What time do you leave Monday?  Also, we are starting the group events on Saturday night after sundown, right?
    I called the Monte Carlo about the poker table.  They said if we call during the day Saturday they will "put us down" and it "should not be a problem."  If you are getting comped suites, maybe you can have more pull then I can generate!


  83.  British Soldiers Plundering an American Colonist's Home under the Quartering Act, c.1700 Premium Poster

     

    When your most elite, most powerful members of society, adopt a strategy of what Bastiat, the famous french economist called plundering, then as he said, they will develop a morality that doesn’t simply permit plundering, but valorises it. And when that happens the moral structures of the society will inevitably deteriorate. In the upper classes that leads to polite looting. In the underclasses that leads to street looting.


  84. Would someone remind me of the Las Vegas dates?  I have not signed up, as I expected to be thousands of miles away at the time, but it looks like I might be considerably closer than that and would come if possible.


  85. zz—oct 8th thru the 10th


  86. Thanks, Savi, I’ve a complicated bureaucratic situation [i.e., not in my control] but I’ll let you know, and send money, as soon as the vapors clear and I know I can make it..


  87. zz—great if you can come


  88. Poker/Dan – I’m sure LV knows where we can get the best deal, 20 people should be a simple two table tournament and we can play a couple of rounds at $50 if people are willing.  If we do that, the winner can take $200, $100 for 2nd, $75 for 3rd and next 7 can get $50 back and the bottom 10 get $32.50, less whatever the house charges for dealers.   That way, only the bottom half actually lose any money (and not much) and we all get a nice chance to sit at tables together, play poker and chat.  

    Monday/Dan – I have a 9pm flight, I plan to be there for the whole trading day and people should plan on my being very tired that Tuesday!  I decided to leave Wednesday night as I have people out West to meet with for business so I’m killing another bird with that stone.  I’ll be working from Vegas Thurs and Friday (Oct 6th and 7th) and then Sat night we all get together and Sunday (9th) we do the seminar maybe around 11am and trade futures at 3pm until we get bored and then Monday we’ll do a whole live day from Vegas with whoever wants to hang out that day.  

    I’m thinking what would be cool on Monday is if we (who are in Vegas) all watch screens and help answer questions for other Members together so all can benefit from going over the logic to the kind of things I’m saying and seeing live, during market hours.   Keep in mind Monday markets start at 6:30 am in Vegas! 


  89. Beige Book generally lame.  Slow, sluggish growth.  Economic Uncertainty.  Manufacturing down, outlook negative.  Profit margins squeezed, auto sales down, retail impacted by hurricane,.Government demand down but shortages of skilled workers.  

    Pretty much what we expected, now we’ll see what kind of reaction we get.  


  90. Oh sorry – So bullish because it puts the Fed firmly on the table and it should be obvious, even to a Republican, that more stimulus is necessary.  


  91. We’re bullish because the government teat is hoving into view, then?


  92. from my conservative friend…(after hours humor)?
    http://www.youtube.com/HowTheWorldWorks#p/u/0/Xj7nRc3_EG0


  93. Phil / ZSL  Shorted silver and perplexed that it’s not keeping up with the slide in gold?


  94. BBook Summary:  



    Prepared at the Federal Reserve Bank of Kansas City and based on information collected on or before August 26, 2011. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

    Reports from the twelve Federal Reserve Districts indicated that economic activity continued to expand at a modest pace, though some Districts noted mixed or weakening activity. The St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts all reported either modest or slight expansion. Atlanta said activity continued to expand at a very subdued pace, while Cleveland reported slow growth and New York indicated growth remained sluggish. Economic activity expanded more slowly in the Chicago District and slowed in the Richmond District. Business activity in the Boston and Philadelphia Districts was characterized as mixed, with Philadelphia adding that activity was somewhat weaker overall. Several Districts also indicated that recent stock market volatility and increased economic uncertainty had led many contacts to downgrade or become more cautious about their near-term outlooks.

    Don’t forget the BBook is really just an opinion survey.  The Fed people call up their pals in the business community and say what’s up and then they all report what they heard as the meeting (all filtered through the local Fed Gov’s individual viewpoint of course).  Notice I am pointing out the couching language – be very careful as they often have one exception out of 13 districts and they end up giving more space to the exception than the majority. 

    This allows the punditocracy to spin these reports any way they want to – the trick is to look through the BS and figure out what matters (like who cares if Cleveland had poor tourism?).  

    Consumer spending increased slightly in most Districts since the last survey, but non-auto retail sales were flat or down in several Districts. Although poor weather dampened growth in some areas, tourist activity remained solid in most Districts. The demand for services was generally positive throughout the nation, but one region said conditions were deteriorating. Of the five Districts reporting on transportation, three said conditions were mostly positive, while the other two reported activity as flat or slightly below expectations. Manufacturing conditions were mixed across the country, but the pace of activity slowed in many Districts. Residential real estate markets remained weak overall with only a few slight improvements in some Districts. Most Districts characterized commercial real estate and construction activity as weak or little changed, but improvements were noted in several areas. Loan demand remained stable or slightly weaker, and lending standards were largely unchanged with an improvement in loan quality. Harsh summer weather negatively affected agricultural activity, although recent rains in several Districts provided some relief. Districts reporting on energy activity said it generally expanded, with further growth expected.

    Price pressures edged lower, although input costs continued to increase in some industries and retail prices rose in several Districts. Labor markets were generally stable, although some Districts reported modest employment growth. Wage pressures were generally minimal outside of some upward movement for skilled positions.

    More green than red is good!  This is certainly not recessionary and falling prices is like ringing Bernanke’s dinner bell on the helicopter…

    Consumer Spending and Tourism
    Overall consumer spending increased slightly in most Districts, but non-auto retail sales were flat or down in some Districts. Hurricane Irene evacuations also produced widespread retail disruptions in late August in the New York District, where activity had been close to or above plan in July before slowing somewhat in early August. The Minneapolis and Kansas City Districts reported moderate increases in non-auto retail sales during the survey period, and sales in the San Francisco District were mixed but up slightly overall. Retail sales were up single-digits from a year ago in the Cleveland and Dallas Districts, although Dallas reported no growth in sales since the previous survey period. Retailers in the Chicago District reported strong back to school sales, while Atlanta said growth slowed in retail sales. The Boston and Philadelphia Districts said sales were flat to down but with sizable variation across stores, while sales mostly weakened in the Richmond and St. Louis Districts. Sales of apparel and luxury items were characterized as strong in several Districts. The Boston, Chicago, Kansas City, and San Francisco Districts all noted sluggish sales of big ticket household items such as furniture and appliances, and contacts in several Districts thought that heightened consumer anxiety was weighing on sales. Contacts in some Districts continued to indicate profit margins were being squeezed by rising input costs, although grocers in the Cleveland District were passing cost increases through to customers.

    Most Districts reporting on auto sales noted increases in activity, despite lingering supply disruptions for some Japanese nameplates. The Kansas City and Cleveland Districts reported especially strong sales of fuel-efficient cars, while luxury vehicles sold well in the Minneapolis District. High demand for used cars was reported in several Districts. The New York and Philadelphia Districts reported somewhat softer auto sales in July, attributed in part to continued supply disruptions, although sales firmed somewhat in August. Tight vehicle supplies were noted in some Districts, and the San Francisco District noted ongoing shortages of Japanese nameplates. Auto contacts in the Dallas District believed the supply issues from Japanese manufacturers should be resolved by the end of September. Auto dealers in several Districts were optimistic about future sales, although contacts in the Philadelphia District said uncertainty clouded the outlook. The Cleveland District noted some easing in auto credit restrictions, and New York said both retail and wholesale auto credit conditions were good.

    Tourism activity remained solid in most Districts, although poor weather affected growth in some areas. Travel activity was reported as robust in the Atlanta District, especially for airport traffic in South Florida. Tourism in the New York City area was also very strong prior to Hurricane Irene, and city theaters planned to re-open the Monday morning after the hurricane. Both business and leisure travel posted further improvement in the San Francisco District, and tourism activity was solid overall in the Minneapolis District despite heavy rains in Montana. By contrast, tourism activity slowed in July in the Boston District, leading hotels to increase promotional offerings, and the Long Island and Jersey Shore areas of the New York District as well as coastal areas of the Richmond District were heavily affected by hurricane evacuations in late August. Hotels in several Districts were raising room rates, although the Kansas City District noted some easing.

    Nonfinancial Services
    Nonfinancial services activity edged higher in most Districts, although Minneapolis and Dallas characterized growth as flat or steady, and New York said conditions deteriorated. Richmond, St. Louis, and San Francisco reported generally solid demand for health-care services, although Richmond noted lower occupancies at senior care facilities due to difficulties among potential residents in selling their homes. Software and information technology firms in the Boston District reported mixed activity since July but expected to return to previous strong growth patterns by late 2011. The San Francisco District reported expanded sales for technology service providers due to heightened demand for software, e-books, and mobile applications. In contrast, an information technology contact in the Minneapolis District noted a decline in sales as a result of reduced demand from the government and financial services sectors.

    In transportation services, Cleveland, Atlanta, and Dallas reported mostly positive conditions, while activity was flat in the San Francisco District and below expectations in the Kansas City District. Railroad shipments rose slightly in the Dallas District, with particularly strong volume growth in metallic ores, petroleum products, and non-commercial building products. Cleveland noted an acceleration in capital spending, mainly to replace aging equipment and support demand growth from energy customers. Trucking firms in the Cleveland, Atlanta, and Kansas City Districts reported a shortage of qualified drivers, and a few firms noted concerns about higher fuel costs. Many services contacts expressed substantial uncertainty about future business activity, with a few Districts reporting weakened outlooks for transportation.

    Not much to complain about.  No way is this a recession so far!

    Manufacturing
    Manufacturing conditions were mixed across the country, but the pace of activity slowed in many Districts. The New York, Philadelphia, and Richmond Districts reported declining activity overall, and contacts in the Boston and Dallas Districts noted slowing demand from European customers. Cleveland said factory production was stable, and manufacturing activity in the Atlanta and Chicago Districts grew at a slower pace. Minneapolis, Kansas City, and San Francisco reported slight expansions, and St. Louis said activity continued to increase and that several manufacturers planned to open plants and expand operations in the near future. Most manufacturing contacts were less optimistic than in the previous survey; however, future capital spending plans were solid in a few Districts.

    That’s 6 of 13 districts expanding.  Cleveland is stable and 6 are off slightly – not a catastrophe.  

    Looking across factory sectors, auto production decreased in the Cleveland District due to normal seasonal retooling for model changeovers, and the Chicago District said auto production leveled off in August after a strong July. Textile manufacturers in the Richmond District said markets have grown weaker due to declining consumer confidence. Construction-related manufacturing was characterized as weak in the Dallas and Philadelphia Districts, and Boston noted a cyclical decline in semiconductor demand. Philadelphia reported a decline in food manufacturing, and the Kansas City District noted weakness at nondurable goods plants. In contrast, commercial aircraft manufacturers in the San Francisco District reported solid production rates due to new orders for narrow-body aircraft and a growing order backlog. A metal fabricator in the Minneapolis District announced plans to expand a facility in northwestern Montana. Capacity utilization in the steel industry remained at record high levels in the Chicago District, and a tire manufacturer in the Atlanta District noted particular pressure in meeting a recent surge in new orders due to supply chain normalization after the Japan disaster.

    Real Estate and Construction
    Residential real estate activity remained weak overall, although a few Districts noted some slight improvements. Contacts in the Boston, Atlanta, Minneapolis, and Dallas Districts reported an increase in home sales over the previous year’s weak levels; however, the uptick in the Atlanta District was concentrated mainly in Florida. The remaining Districts all reported stable or slower sales from the previous survey period, with several citing greater economic uncertainty as the primary cause. Both the New York and Philadelphia Districts reported that a growing backlog of foreclosures in New Jersey continued to weigh down the housing market. Home construction was down or stagnant in most Districts, with the exception of Minneapolis and Kansas City. However, several Districts indicated an improvement in home remodeling activity, and the New York, Philadelphia, and Cleveland Districts reported increased demand for multi-family housing projects. Home prices were flat to slightly down in several Districts, although New York said prices in many areas edged higher but remained below year-ago levels. Contacts in the Boston District reported competitive pricing by sellers with even lower prices negotiated by buyers, but in the Cleveland District many builders have shifted away from discounting. Inventories were elevated or rising in the Boston, Atlanta, and Kansas City Districts, particularly for existing homes, and demand for apartment rental space increased in the San Francisco and Dallas Districts.

    Commercial real estate conditions remained weak or little changed in most Districts, although some improvements were noted by New York, Minneapolis, and Dallas. Commercial real estate activity was sluggish in the Boston, Cleveland, Richmond, Atlanta, Kansas City, and San Francisco Districts. However, San Francisco noted some areas have benefited from technology sector growth, and Boston noted investor demand for prime office buildings remained strong. New York said office vacancy rates declined noticeably in the Buffalo and Rochester metro areas and modestly in Manhattan and Long Island. Lower commercial rents helped push down vacancy rates in the Kansas City District, and the Dallas District noted strong demand for leased space in Houston due to solid energy activity. Commercial construction was characterized as weak or limited by Cleveland, Atlanta, Chicago, and Kansas City, although Atlanta noted some strength in the healthcare sector. St. Louis described conditions as mixed, with some improvement in education and energy-related construction, while Minneapolis District contacts reported an increase in small retrofitting projects and rebuilding in flood-damaged areas. The Chicago District noted continued strength in industrial construction, particularly in the automotive sector. Credit for commercial development remained an obstacle for small retailers in the Richmond District, although Boston said aggressive competition among lenders led to reduced borrowing rates.

    Signs of life!  That’s all we ever wanted…  Congrats to the VNO players – they are reacting as expected.  At this point, the biggest obstacle seems to be Consumer (and Business) Confidence – if people were less worried, they would be out doing something and this data was gathered while the markets were falling apart so the spin is probably extra negative.  

    Banking and Finance
    Most districts cited overall loan demand as stable to slightly weaker, with the exception of St. Louis, which reported a modest increase. Demand for business loans remained unchanged or weakened in the New York, Chicago, Kansas City, and San Francisco Districts, but was moderately stronger in the Philadelphia, Cleveland, and St. Louis Districts. Demand for consumer loans increased somewhat in the St. Louis District, but was unchanged to slightly weaker in the New York, Kansas City, and San Francisco Districts. While Kansas City reported a decline in commercial real estate loans, St. Louis cited a modest increase. New York and Cleveland noted increased demand for residential mortgages.

    Most Districts said that loan quality was generally improving and that credit standards were largely unchanged. Cleveland reported a decline in delinquencies across all loan categories, and Richmond and Kansas City also indicated a continued strengthening in loan quality. However, New York indicated that delinquency rates increased on most categories of loans and that banks tightened standards for commercial mortgages and commercial and industrial loans. Banking contacts in several Districts also referenced concerns about the economy. The Chicago District cited recent volatility in financial markets and reduced expectations for economic growth, while Kansas City District contacts listed a weak economic recovery and uncertainty about financial regulations.

    Agriculture and Natural Resources
    Harsh summer weather strained agricultural activity in many Districts since the last survey period. Hot, dry weather stressed crops and livestock in the Chicago, St. Louis, Kansas City, and Dallas Districts, with poor pasture conditions hastening herd liquidations in the Kansas City and Dallas Districts. Recent rains provided some relief to agricultural producers in the Richmond and Atlanta Districts, but Hurricane Irene caused extensive damage to field crops not yet harvested in North Carolina. Shrinking production estimates pushed up crop prices and the Chicago District noted that robust ethanol production was also driving corn prices higher. Crop and livestock sales rose in the San Francisco District, and the Dallas District reported strong beef exports. Farmland values rose further in the Chicago and Kansas City Districts, but rising input costs trimmed farm capital spending in the Kansas City District.

    Energy activity generally expanded since the last survey period, with additional gains expected in coming months. The Minneapolis, Kansas City, and Dallas Districts reported an increase in land-based oil drilling activity, and the Atlanta and Dallas Districts reported a modest rise in off-shore drilling operations in the Gulf of Mexico. Natural gas exploration rose in the Cleveland District, and remained steady in the Kansas City and San Francisco Districts. Additional capital investments in oil and gas production were expected in the Cleveland, Atlanta, and Kansas City Districts. Energy contacts in the Cleveland and Kansas City Districts noted some new hiring, although permit delays and environmental compliance could constrain expansion. Coal production rose in the Kansas City District, held steady in the Cleveland District, and fell in the St. Louis District. Higher metals prices spurred mining activity in the Minneapolis and San Francisco Districts, especially for iron ore.

    There’s a metal we actually WANT to go higher!  

    Employment, Wages, and Prices
    Labor markets were generally steady, although some Districts reported modest employment growth. Several Districts reported a shortage of skilled workers such as engineers, mechanics, and software developers. Jobs in the health care industry continued to increase, and the Cleveland, Minneapolis, Kansas City, and Dallas Districts indicated growth in energy-related employment. Many Districts reported an increase in auto sales and service technician positions, and several companies in the Minneapolis District announced new manufacturing jobs. The Atlanta District noted that many contacts were focused on productivity and efficiency increases with existing staff, and Richmond said one firm would rather pay overtime than hire new workers. A large staffing firm in Chicago reported a decline in billable hours for staffing and professional services as well as fewer permanent placements, while Boston said demand for permanent and temporary-to-permanent hiring continued to grow. A major New York City employment agency reported unusually slow hiring activity in August but remained cautiously optimistic about future recruitment. Most Districts reported that wage pressures were minimal, but contacts noted some wage gains for several skilled positions as a result of heightened demand.

    Any wage growth is good and lack of overall pressure is good for business so they can afford to pay skilled labor a bit more (it’s a start!).  

    The majority of Districts reported fewer price pressures, but input costs continued to rise in select industries. The New York, Philadelphia, Cleveland, and San Francisco Districts noted some stabilization or decline in raw materials prices but Chicago said elevated commodity prices continued to put pressure on costs, particularly copper and steel. Manufacturers in the Boston District were able to pass through input price increases with little resistance, although a semiconductor firm was one exception. The Kansas City District reported construction materials prices as steady, excluding prices of petroleum-based products such as roofing shingles and asphalt, which continued to rise. Retail prices were steady or rising slightly in New York, Richmond, and Atlanta, although some Atlanta District retailers mentioned that weak sales could prompt them to lower prices. Retailers in the Dallas District noted a slight decline in overall prices, although increases were observed in certain high-end goods and cotton-based products. Prices for cotton-based products, such as clothing, also increased in the San Francisco and Cleveland Districts. Food prices climbed higher in the Cleveland and Chicago Districts, and restaurants in the Kansas City District expected further increases in menu prices as a result of rising food costs.

    This is not a bad BBook folks!  It is certainly not a book that tells us that we should be trading below the middle of last year’s range (S&P 1,150).  It’s not a strong speedy recovery – heck, it’s hardly a recovery at all but Recession – no way!  And we are priced for a recession at 1,150.  10% up from there takes us back to around our 5% line at 1,297 so we can fully expect to see 1,235 (our Must Hold line) re-tested as long as we can get past Jobs, Bernanke and Obama tomorrow.  That’s another 2.5% gain from here so let’s say we can expect to test it by Friday!  


  95. Phil--I know we bought the sept 34 uso  puts and can roll if needed—but what is your overall position on oil thru next week?
    Thanks


  96. Government teat/ZZ:

    Do you ever wonder, Jabob, why it is that these "home-made" conservative videos have such huge production values?  Well-lit, good sound, flawless editing, expensive graphics – when you get your brain washed 10 times do they give you a free 11th?  

    ZSL/Tucsca – Poor man’s gold, looks like a cheap hedge to the Greeks!  


  97. Phil- If the economy is growing modestly,wages are growing modestly and inflation is modest could you tell me again why we need QE3?


  98. phil--hilarious..11th and 12th time is free ;-)


  99. Asingle IWM trader sold 52K shares!


  100. jabo – That’s a classic.  Have gotten that several times from conservative friends.  I mean, how can you argue with that!  Glad to know some people are keeping track of "How the World Works."


  101. Also, that guy looks like Fred Savage (from the Wonder Years).


  102. USO/$25KP, Savi – We’re still at .62 on the $34 puts and we’re expecting what we always expect in the last 10 days of the contract cycle when there are too many open contracts – we expect a sharp sell-off at some point.  A $3 drop in oil is a $1 drop in USO and USO is now $34.65 and oil is $89.25 so, as long as we think oil can get back to $85, we should be able to at least get our .65 back and, of course, the plan is to DD at .45 so all we have to do is get .55 back.  If that doesn’t work by Monday, we’ll probably have to roll to October before all our premium is gone.  

    Why QE3/Jake – We don’t NEED it but we’re not creating jobs at a good enough pace to GROW the economy and if we don’t grow the economy then our debt will become a larger and larger portion of it every year until there is no economy outside of debt service and military spending and, like Jabob’s silly video – all the people who can afford to will leave the country and it will simply fall apart.  Every person in this country has $175,000 in debt.  For each wage earner, that’s over $350,000 and, since the bottom 50% can never be expected to pay, that puts you $700,000 in debt and, one way or another, it will have to be paid one day.  You can’t reduce your way out of it and you can pretend it’s not there but – it is.  So, logically, if I move to a country where there is no debt, then Tina and I save $1.4M – either for ourselves or our family down the road.  Without expanding this economy to bring in more wage earners and allow that debt to be paid over a wider base – about when that number hits $2M, you will see a lot of people begin to re-locate.  

    03:00 PM On the hour: Dow +2.33%. 10-yr -0.28%. Euro +0.66%vs. dollar. Crude +3.78% to $89.27. Gold -3.1% to $1812.65.

    Employers posted 3.2M job openings in July, little changed from June but 1.1M more than a year ago, the Bureau of Labor Statistics reports. But it’s the 31st month during which the ratio of unemployed workers to job openings has been "substantially above" 4-to-1; by comparison, the job seeker’s ratio in December 2000 was 1.1 to 1. 

    The World Economic Forum’s 2011 Global Competitive Index shows Switzerland, Singapore, and Sweden continuing to lead the way, with the U.S. dropping a spot in the rankings to #5. Greece continues to fall, now #90, below Algeria, but above Syria.

    "Listen to the markets," writes Martin Wolf. Historically low bond yields in most of the G-7 are saying "borrow and spend please." The trouble with such analysis is that markets fluctuate. Six months ago yields were far higher and rising. Were the markets then saying, "stop borrowing and spending please?"

    Bank of America notes a sharp rise in Chinese money market rates may be pointing to a bank funding crisis in that country. Curiously, the solution might be higher policy rates that would lure customers – currently fleeing as deposits pay far less than the inflation rate – back to Chinese banks

    The Fed Beige Book says the U.S. economy is expanding at a "modest pace, though some areas noted mixed or weakening activity." Five of the 12 Fed districts saw modest growth, with the Philadelphia region "somewhat weaker." Also, "stock market volatility and increased economic uncertainty had led many contacts to downgrade or become more cautious about their near-term outlooks."

    Speaking tomorrow, Ben Bernanke has another opportunityto provide color on the Fed’s options for further accommodation. While the Chairman may not show his cards, Vince Reinhart says to listen to his comments about higher inflation – if he backs away from that risk, "that sets the stage for being able to do something." 

    Extend AND Pretend:  Due to market turbulence, the EU is pushing back proposals that would have forced senior bondholders of failing banks to book losses. The draft legislation is now not due until October at the earliest. Yields on bank debt had initially spiked in January when the idea of "bail-ins" first appeared. 

    Italy’s Senate approves an austerity package aimed to reduce the government’s deficit by €54B over 3 years. The legislation – which includes an increase in the VAT and a "solidarity tax" on the wealthy – now moves to the lower Chamber of Deputies where the Berlusconi government also holds a majority.

    Another guy who went too short:  Barry Ritholtz asks: "Is Wall Street setting itself up for another huge earnings miss?" The significance lies in what might happen if the economy slips into recession; if it does, current 2012 earnings forecasts might too high by as much as 20%-40%.

    Fitch Ratings keeps its transportation-related ratings unchanged saying signs in the sector point to an economy growing, albeit at a slower rate. The usual suspects – higher oil and commodity prices, lower government spending and consumer tightening – were pinned by Fitch as leading causes for a slowdown in transportation activity.

    The EIA is slightly lowering its global energy consumption forecast for 2011 and 2012, thanks to growing pessimism about economic growth; the agency now expects oil consumption to grow by 1.4M barrels/day in each year. The EIA’s report isn’t doing much to keep oil prices down: NYMEX crude is currently up $3.15/barrel.

    Natural gas futures move 1.6% higher breaking through the $4 level after another Tropical Storm looks set to track towards the U.S. and oil prices gain. A few natural gas players are soaring on M&A chatter, easily outpacing other energy stocks: Fuel Systems Solutions (FSYS +8.5%), Westport Innovations (WPRT +18.2%), Clean Energy Fuels (CLNE +12.9%).

    Even with a weak economy luxury retailers are doing just fine even, say execs at the Goldman Sachs retailers conference in NY. "We do not see the high-end consumer falling apart,” says Saks (SKS +4.1%) CEO Stephen Sadove. Tiffany’s (TIF +2.6%) CFO also chipped in, reporting revenue in Q3 was exceeding estimates.

    Two analyst approvals for General Motors (GM +5.4%): Citigroup adds the stock to the firm’s "Top Picks Live" list, and Morgan Stanley deems it "most likely to succeed" in another recession, thanks to its "fortress balance sheet" philosophy. Citi cites its vehicle density survey which suggests auto buyers may be showing a "surprising" level of resiliency in the weakening economy.

    Chip equipment industry association SEMI estimatesindustry billings grew 31% Y/Y in Q2, fueled by strong growth in North America, Europe, and China. However, bookings for new orders fell 8% Y/Y. Industry leader Applied Materials (AMATreported a major decline in bookings last quarter. 

    Shares of Amedisys (AMED +16.9%) pop on volume 2X normal trading activity after investors start to eye undervalued takeover candidates in the sector. Industry insiders say companies are now looking towards M&A activity with more intensity as a way to help them create cost efficiencies.

    Boeing (BA +3.6%) raises its 20-year forecast for commercial aircraft demand in China by 15%, saying the nation will need $600B worth of planes before 2030. China’s government created a state-owned plane manufacturer to challenge Boeing and Airbus’ (EADSY.PK) dominance in winning orders. 

    Workers of the World Unite!  Workers at a Peruvian mine in which Freeport-McMoRan (FCX +2.2%) controlling stake have begun a 2-day strike, and are threatening to strike indefinitely on Sep. 14 if their demands for higher wages aren’t met. Freeport shares don’t seem affected by the news, but those of Peruvian miner Buenaventura (BVN -3.6%) are moving lower.

    Netflix (NFLX -1.9%) is down in an otherwise up market, as its recent string of announcements (III) have put a sour taste in the mouths of customers and investors. The latest: new limitations on the number of concurrent streams allowed per account. "It doesn’t make a lot of sense to give subscribers less at the same time that they are charging more," Wedbush’s Michael Pachter says.

    Three lunchtime reads:
    1) Five dividend stocks to buy now for profits in 2012
    2) More on transatlantic cash flows
    3) A dangerous war against U.S. banks


  103. The extra air traffic in south Florida is Europeans flying into Miami to buy cheap vacation homes. Irish golfer Rory McIlroy is one of that number. He probably also accounts for the uptick in home sales.
     
    The growth of jobs in the health care industry is to be expected as the baby boomer generation is aging and getting sicker and the general health of America is declining. Sales of narcotics.
     
    This summary of the report mentions nothing about state governments laying off swathes of workers, but here in Florida many former civil servants are standing unshaven at traffic lights with signs saying: PLEASE HELP FORMER BUREAUCRAT  FALLEN ON HARD TIMES. GOD BLESS!
     
    Still not a bad day, and my largest stock position (ANR) is now up over 10% on the day.  My family gets to eat again today. Maybe the dog too if it plays its cards right.


  104. Thanks Phil—-and really looking forward to learning to play poker


  105. Volume sucking today, just 98M on the Dow at 3:20 – has to make us question this rally.  S&P 1,200 is stopping us now at Dow 11,400, Nas 2,550, NYSE 7,150 and RUT 707 (1.25% over 698).  Same as before with the higher targets and we can consider the lower targets from noon to be very bearish breakdowns now (Dow 11,300, S&P 1,190, Nas 2,525, NYSE 7,150 and RUT 700).

    How can you argue/JC – I hope you don’t seriously mean that…  


  106. Cap and/or Phil
    NYB- a guy I know at Edw. Jones called touting NYB- a New York/ northeast regional. They pay a nice dividend- don’t know anything about them. Do you guys have any insight?


  107. FAS Money – The last 2 weeks trade recap
     
    Week 10 – On Wednesday 8/24, we we stopped out on the 15 Puts we had sold for a $1.00 (x20 contracts) profit and were left with only 1/2 cover on the Call side (13 Strike) and naked on the Put side. On 8/25 we sold the 14 Puts as full cover for 1.24. Half of these 14 Puts were stopped out the same morning at 1.80 for a loss of $0.56 (x10 contracts). We sold half the 13 Puts in the afternoon for $1.61 to go to full cover again on the Put side. On Friday, we bought back the 13 Calls with a $0.24 profit (x10 contracts). We also rolled up the long 10 Puts to the 12 srike in the strangle for $0.86 (x10 contracts). Overall, we collected $860 of premium after paying for the roll in the strangle.
     
    Week 11 – On 8/31 we bought back the 14 Puts for $0.68 which gave us another $560 of premium collected. Later that day, we went full cover on the put side again by selling half the 15 Puts for $1.14. On 9/1, we were stopped out of the 13 Puts at $0.65. We collected $960 of premium in that transaction. On 9/2, facing a drop, we went aggressive and sold thet 13 Puts again for 1.03. Meanwhile, the market kept on dropping and stopped our 15 Puts at 2.32 which cost us $1180 as we had sold them for 1.14. We replaced these 15 Puts by half the weekly 13 Puts sold for 0.80. We ended the week naked on the call side and fully covered on the put side with 1/2 monthly 13 Puts and 1/2 weekly 13 Puts. We finished the week with a profit of $340.
     
     
    Summary
     
    Week 1 – $820 of premium collected ($0.45 call side and $0.37 on the put side)
    Week 2 – $1180 of premium collected ($-0.02 call side and $1.20 on the put side)
    Week 3 – $400 of premium ($-0.40 on the call side and $0.80 on the put side)
    Week 4 – $1470 of premium ($1.17 on the call side and $0.30 on the put side) 
    Week 5 – Loss of $500 (loss of $1.00 rolling the calls and gain of $0.50 on the put side)
    Week 6 – Gains between $540 and $1150 depending on your timing.
    Week 7 – $700 of premium (gains of $1.20 on the calls side and loss of $0.50 on the put side)
    Week 8 – We rolled Puts and Calls finishing the week long 10 Puts and 20 Calls. Rolling the original position cost us $100 and adding 10 Calls cost us $2000.
    Week 9 – We collected $520 of premiums selling calls, but spent $2700 to roll the short puts! And spent another $3370 to roll the calls and add 10 Puts.
    Week 10 – We collected $1680 of premium but spent $860 to adjust the strangle.
    Week 11 – $340 of premium collected – all on the Put side.
     

    The last time I summarized the position, I subtracted the strangle adjustment from the premium sold, but then also added it to the strangle investment. This summary will separate the 2. I am also now calculating the total profits as opposed to differences between sales and cover as we are playing with multiple levels of cover (10 or 20 contracts)! So far, in 11 weeks we have sold for $4450 of net premium (Gain $7650 – Loss $3200). We have also invested $4800 in the initial strangle and $6330 to adjust it for a total investment of $11,130 in the strangle. So far, we have 40% of the total investment in premium sold with another 20 weeks to go.


  108. FAS Money – Position Recap
    Long Strangle –Jan 12 Puts (3.01 average now 2.49) and 15 Calls (2.75 average cost now 2.77). 
     
    Weekly –1/2 September 13 Puts (1.03 now 0.68 – 34%) and 1/2 weekly 13 Puts (0.80 now 0.24 – 70%)
    Monthly – 1/2 September 13 Puts (1.03 now 0.68 – 34%) and 1/2 weekly 13 Puts (0.80 now 0.24 – 70%)
    Might want to protect these gains…


  109. Phil / Seriously – You should know me well enough to know I wouldn’t take such nonsense seriously!  But it is a classic in it’s own special way.


  110. stj—-always appreciate you recap--thanks


  111. Cleveland is stable???
     
    I wonder who put that report together.


  112. China, China, China….
    http://ftalphaville.ft.com/blog/2011/09/07/671821/the-chinese-funding-risk-is-everywhere/
    Oh wait, this one is bad!

    It was reported that some banks in Wenzhou offered rates as high as 60-80bp per day for 30 June and 1 July, even though paying higher than the PBoC-published rates is against the rule. 

    0.6% per day… that’s 156% annual rate (business days only)! Sign me up….


  113.  Phil, 
    Any thoughts on the QQQ Sep Weekly 54 or 55 calls to play a pull back in the morning?
    Thanks,
    Dan


  114.  PHIL
    There are a couple of stocks/funds that have pretty good dividends. I’m curious if you have any strong feelings against any of these… 
     

    CenturyLink (CTL) has a 8.56% dividend 
    http://www.google.com/finance?q=NASDAQ%3ACTL
    - quarterly
     
    PenGrowth Energy (PGH) has a 7.8% dividend
    http://www.google.com/finance?q=NYSE%3APGH
    - monthly
     
    Enerplus Corp (ERF) has a 7.7% dividend
    http://www.google.com/finance?q=NYSE%3APGH
    -monthly
     
    PowerShares Closed-End Funds Index (PCEF) has a 7.3% dividend
    http://www.invescopowershares.com/products/overview.aspx?ticker=pcef#hold
    - monthly


  115. Phil/QE3- I thought QE2 was supposed to help deliber jobs?? If QE2 didn’t do it then what is different about QE3?? Maybe I’m simple but I’m just not seeing it. Seems like a "real" jobs plan would do it without the need for QE3 but what do I know?


  116. NYB/Pstas – They were not regional enough for me as they are out in Florida and Arizona as well (following New Yorkers as they retire).  Now they are interesting at this price as the Dividend is rocks steady at .25 per quarter, even through the crash so, at $12.25, that’s over 8% and you can drop your net to $8.30/9.15 by selling the 2013 $10 puts and calls, which makes for a good cushion to build on and, even if you get called away at $10, that’s $1.70 plus $1.25 in dividends for a 35% profit.  Good enough to put 1,500 shares in the Income Portfolio, selling 15 of the puts and calls.  

    Thanks for summary StJ!  

    I’m glad JC!  

    China/StJ – Do you get a toaster with that?


  117. Toaster / Phil – Heck, for that rate, I will give them a toaster! 


  118. QQQ/Dan – I’m not into guessing at the moment.  We have jobs in the morning so it’s more a matter of will we hold our lower set in the morning.  Asia should be very happy with the way we and Europe performed today, EDZ is already down 15% from yesterday’s open, which will put them back on the table as a good hedge if we head higher.  

    Funds/Itrade – I like PGH a lot, don’t follow the other ones.  It takes a great deal of due diligence to determine if these plays make good investments.  None of them perform particularly better than the overall market so it’s really a matter of which one you can hedge properly and that you will be comfortable with riding out for the long haul.  The biggest problem with dividend-payers like this is that most people are in for the dividend and, if anything happens to it – the stock dies and does not recover and you will very likely NOT be the first person to find out about a dividend cut. 

    QE3/Jake – It’s good that you are realizing how confused you are – perhaps there is hope for you after all.  8)  As I’ve said in the past but you could not get past the word Obama without something triggering in your brain that blotted out any other words, the President can’t stimulate the economy because he is blocked by morons.  That means ONLY QE is on the table as an option.  Bernanke said he can’t do it alone and needs Congress to act, hundreds of respected economists and pretty much all of recorded history have said the same thing so it is very simple and yet, you are not seeing it.  

    Toaster/StJ – Only if you can afford the inflated toaster by the time you take the money out!  

    VERY lame volume day but we cound not have asked for a better move – now we just have to hold it…


  119. As predicted, close at HOD, @ IWM 70.98 !! Hope all bet on the 85% call !!  I missed half, but having a great time , and 4% before breakfast is not bad !!  8-)


  120.  Do you have protected trade ideas similar to NYB for PGH?


  121. Thanks JRW and Phil for yet another best week ever!  You guys are amazing, probably the only people I know of who were buying yesterday morning.  Thanks for a great call.


  122. Phil
    So you can tell Tina I am showing my cats in The Cat Fanciers Association or CFA at the Dam Yankees Cat Club, Groton CT, both Saturday and Sunday.


  123. So what’s QE-Next going to look like, Phil?  Mortgage bailout / real estate schemes, more useless "money" in the vaults of banks, or — the blindingly obvious but not necessarily clever  "21st Century WPA", with legions of cheerful ex-office workers shedding their pounds and picking up a shovel? 
     
    I would be most grateful for a serious answer; I just couldn’t think of a serious way to pose the question.


  124. Phil, in regards to your comment this morning on Darden lowering estimates and that there are more to come. I have been reading that everywhere, that September is the month for adjustments and Bespoke had an article about the lowest number of companies issued forward guidance, ever.
    Why do you feel there are more to come?


  125. Phil/Obama- Unfortunately, there is little doubt tomorrow will be more of the same from Obummer. It will be tax increases disguised as job’s programs. Nothing that demonstrates real jobs vision. Why? Because he has no vision.  QE3 will likely happen anyway because Obummer needs the markets propped up if he has any chance of being re-elected.  Obummer/Bernanke and friends are going to have little to make their case with the current direction this market is moving.  Seem’s like being short for the next two week’s would be a prudent move.


  126. i reiterate if politicians were smart they would throw big multi nationals under the bus and concentrate efforts on small/mid-sized companies that hire in america…strong dollar would collapse commodity bubble again…boosting domestic biz at expense of big commodity producers like brazil, china…capital would FLOOD back into US.


  127. Angel:  What do you do for the small and midsized, if you’re the government?  Hiring subsidies/tax breaks?  Finance subsidies [loan availability]?  The famous but vaporous "removal of onerous regulations?  I haven’t heard a good idea yet, nor had one.


  128. Phil, 
    I am looking to make back a $14K loss… Based on the bullishness I see you are predicting and an expectation of QE3, what do you think of this play on TNA (since as you say RUT its the index that needs to catch up to others):
    Buying 30 next weeks 44/49 BCS for net $2.30 and selling 30 Oct TZA 32 Puts for $1.20 for net $1.10 on $5 Spread (with the idea that we are going higher now up at least another 3% on the RUT in the next week, but then we take a breather and so RUT would have to climb another 9% plus for the TZA puts to become a problem (and then at that point can be rolled)…
    Thanks


  129. Phil / TLT – The last suggestion I recall from you about our Sept TLT puts was "Savi – Yes, roll ‘em up, of course!   In the $25KP, the Sept $107 puts are now .63 and we want to rill those up to the $110 puts (now $1.45) for .85 and DD for 20 at net $1.78."  Would you suggest holding them till Monday to see if we can break even or rolling them to October TLT puts this week?
    On a side note….I was finally able to put some of your advice into action and erase a significant loss.  I was able to bail on my AGQ Sept puts this morning to actually BREAK EVEN after being down $7K just a few days ago…YEAAAHHHH!!!.
    I’d bought Sept $180′s for $4.5, saw them go to down to $1 and doubled down there for net $2.75 per your recommendation. Things were not looking any better so I then rolled up  the $180′s to $190′s for $.75 (paid $1.36 for the 190′s and got only $.61 for the $180′s during the roll up…the low point of the trade) for a net of $3.50….the same $3.50 I sold them for this morning.  Thanks for guiding me out of the minefield.  Let’s hope I’ve turned the corner here. 
    I was also able to get rid of the Sept GLD puts this morning for a profit……had bought them when gold had hit $1850 a few days back and you had written something to the effect of being confident it was a good short there.  GREAT CALL YET AGAIN!!!


  130.  Vegas itinerary sounds good, can’t wait to watch the political back and forth between Phil vs the conservatives as they sit in the same room at their respective laptops :)


  131. zero i am workng on an answer for you


  132. re NYB
     
    Interesting interview with the CEO (text, pdf)
    http://www.capitallink.com/press/nycbceointerview.pdf
     
    Here’s what may be the key part:
     
    "On the lending
    side, our focus is on a very specific niche."

    "The production of multi-family loans
    on non-luxury apartment buildings in New York City,
    most of which are subject to rent stabilization and rent
    control laws. This is very different from the type of
    lending done by most banks and thrifts in our market
    and, for that matter, the country—and certainly different
    from the type of lending most consumers and investors
    equate with a bank or thrift.
    First of all, most of
    the buildings we lend on are low to middle-income
    apartment buildings where the rents are below-market.
    As a result, they tend to retain their tenants even in
    difficult times.
    Second, the property owners we lend to generally have
    a long record of professional property management
    through multiple credit cycles. More often than not, the
    buildings they own have been in their families not for
    years, but generations—so they have a reputation and
    record of stability and responsibility.
    In addition, their business models are consistent with
    our focus on cash flow lending. The loans we make are
    based on the actual rent rolls produced by the building,
    and we tend to value them very conservatively. In fact,
    at the end of June, the average multi-family loan in our
    portfolio had a principal balance of $4.0 million—and a
    loan-to-value ratio of 58%.
    The property owners we lend to typically use those
    funds to make improvements to their buildings. This
    enables them to increase their rent rolls and thus
    increase the cash flows they produce. The vast majority
    of our borrowers refinance their properties every three
    to four years, as their cash flows increase, and it’s not
    at all unusual for those borrowers to refinance with us.
    Whether or not we refinance a loan, we benefit from the
    prepayment, since prepayment penalties are added to
    interest income and result in additions to our margin
    and spread."

     


  133. jmm
    That says they primarily lend to multi generational owners of below market (euphanism for slum) rent  controled (euphanism for government subsidized) housing, who re fi ( euphanism for pull out cash) every 3 to 4 years. Not to judge or anything.


  134. Lincoln/Vegas
    That is a picture that brings a smile to my face.


  135. Sparky/slums.
     
    Yeah, well. In northern England they have a saying: "Where there’s muck, there’s brass", which roughly translates into investor-speak  as follows: "Manure is a very valuable commodity."


  136. sparky:  Not necessarily slums.  There are many rent controlled and stabilized buildings that are privately or family-owned that generate enough money to pay-off mortgages and turn a profit (even in NY).   Of course in the good times you make more on a brand new upscale luxury condominium at market prices, but in the lean times, its amazing how stable an income generator a rent stabilized building is in NYC.


  137. kinki,
    Was not familiar with the rent stablilzation program which appears be a NY thing for municipalities that have not declared an end to the post war (WWII) housing emergency.  Buracracy in its finest I guess.


  138. Las Vegas -
     
    Reading about all the planning, I’m getting a little jealous.  Congrats on finally making it happen.
     
    I would like to make it, but the dates don’t work for me due to the holiday observance.
     
    Enjoy !


  139. $2 / gallon.
     
    I don’t know if Bachmann has a plan, but gas did fall below $2 gallon in 2009 in the aftermath of the financial crisis / meltdown, so its not a crazy thought, however unlikely it may be.


  140. Low rates:  Borrow & spend please ?  
    And after you borrow, and rates get jacked up, you’ll go bankrupt when you can’t service your debt.
    Unless rates stay low forever.


  141. Pstas:  NYB — I have no particular info.  I know they do some real estate lending in NY.
     
    The website says they are presenting at Barclays conf. next week & its webcast … maybe you can check it out.
     
    Sorry I can’t do better.  Nice dividend if sustainable.
     
    I would try to figure out what their risk is to real estate loans.


  142. Today’s levels.


  143. Good morning!

    Futiures off their highs but we’re more or less flat 90 mins into the EU open.  They are up about half a point with the Dollar at 75.64 so boring so far this morning. 

    Gold popped back to $1,840 – THAT’s why we take the money and run on a $100 sell-off!  

    People waiting on ECB and BOE statements and then Bernanke Speech this afternoon and Obama later.  Obviously, simply not pulling back off yesterday’s run is a victory for the bulls but not enough to make us more bullish if we don’t start taking back those Must Hold lines!  

    Thursday’s economic calendar:
    8:30 Initial Jobless Claims
    8:30 Current Account
    10:00 Quarterly Services Report
    10:30 EIA Natural Gas Inventory
    11:00 EIA Petroleum Inventories
    3:00 PM Consumer Credit
    4:30 PM Fed Balance Sheet
    4:30 PM Money Supply 

    SF Fed chief Williams sticks to script, patting the FOMC on the back for QE2, and calling for additional monetary easing. He forecasts inflation – currently running at 2.75% – to decline below the Fed’s target of 2%, giving the bank ample room to ease without fear of jacking the price level too far. 

    Morgan Stanley puts it out there: The chance of "a coordinated monetary policy easing move… perhaps as early as the G7 meeting this weekend. The Fed, the ECB, the BoJ, and the BoE could all participate."

    EU shares open slightly higher ahead of the ECB’s policy announcement later, when it could signal a change in approach to support the weakening eurozone economy, and ahead of President Obama’s jobs speech. Euro STOXX 50 +0.4%, London +0.1%, Paris+0.3%, Frankfurt +0.1%.

    Neither the ECB nor the BoE are expected to change policy at their meetings, but – given recent turbulence – a surprise cut in Europe and more QE in the U.K. cannot be ruled out. Of interest is sterling, at a 2 month low and unable to rally despite today’s return to risk.

    The Dutch PM and finmin pen an op-ed calling for the appointment of a EU commissioner for budgetary discipline, with powers over the budgets – even as far as raising taxes – in states "that run excessive deficits." "Countries that do not want to submit to this regime can choose to leave the eurozone."

    China will today give formal support to turn London into anoffshore trading center for the renminbi, government officials say. The move is due to be announced in a joint statement when U.K. finmin George Osborne meets Chinese Vice-Premier Wang Qishan.

    Chinese officials tell EU business execs that the yuan will achieve "full convertibility" by 2015. However, Standard Chartered’s Stephen Green thinks 2015 sounds "a bit too early," especially given that global volatility "looks set to continue for the next few years."

    Japan July current account surplus -42.4% Y/Y to ¥990.2B (12.8B), with imports +13.6% M/M, exports -2.3%. Imports rose due to utilities ramping up purchases of non-nuclear fuel as reactors sat idle. Meanwhile, core machinery orders fell for the first time in three months in July.

    The economy appears to be slowing down dramatically, both in the U.S. and Europe, observes Blackstone’s Steve Schwarzman. "In the first quarter, our companies were growing around 9 and a half percent. ..In the last two months, it looks to be around half of that.” (Video). - But that would still be GROWING 4.5%!  

    The bulls are setting up for a monster rally through the end of the year, asserts Forbes contributor Ali Meshkati. He says the present level of bearishness in the market is extreme, and accentuates the fact that many portfolio managers are currently underallocated and underwater. With that mix, any sustained rally is likely to be explosive when investors start chasing performance going into the final stretch.

    On the other hand:  It’s the demographics, stupid… and that’s why a long bear market has begun, Michael Dolan writes. Movements in the ratio of people in their prime saving years to both retirees and younger adults has presaged long cycles in equity prices from the 1970s swoon to the 1980s-1990s boom, as baby boomers swelled the ranks of prime savers. The worry for the U.S.: the ratio peaked in 2010.

    Morgan Stanley’s Greg Peters, whose firm has a year-end target of 1200 for the S&P, urges investors to "sell the rallies and don’t get cute," believing a broader "de-risking trend" makes cheaper valuations "somewhat secondary" in importance. Of course, a similar downplaying of valuations could be found near the height of the tech and real estate bubbles.

    A U.S. probe into whether interbank lending rates were rigged at the peak of the financial crisis is reportedly looking atpossible violations of a commodities law that has been used to send offenders to jail. (previous)

    The SEC inspector general is due to issue several reports this month that could provide fodder for the agency’s critics in Congress. The reports include allegations of document destruction; alleged conflicts of interest in payments to Bernard Madoff victims; and the "revolving door" between the SEC and Wall St.

    Sources say Federal Express (FDX +3.3%) execs are talking with Boeing (BA +3.4%) and Airbus (EADSY.PK) about multi-billion dollar orders to replace its older fuel-hogging fleet of jets. FedEx’s board may consider the issue at a meeting tomorrow, although a final announcement is not expected for a couple more months. 

    Go HOV!  Hovnanian’s (HOVFQ3 beats across-the-board as losses narrowed on fewer land-related charges. Net contracts increased 33% Y/Y to 1,297 homes, while the contract backlog on the same basis ended up 13%. Shares +4.3%.

    As soon as I book the Venetian!  Shares of Las Vegas Sands (LVS) gained 4.7% on the day after Goldman Sachs lifted its rating to Buy from Neutral with a $52 PT. The firm likes the casino operator’s positioning in Asia, along with same-store sales and unit growth potential that compares favorably to peers.


  144. WOW – The RUT bounced off 700 to the UPside!  That is new and exciting!!!  


  145. Phil,  Just scanned the notes for logistics on Vegas.  Start at 11am on Sunday is good, and I’ll set up for informal lunch buffet at 1pm.  I’m thinking that the best colloaboration might be achieved on Sunday and Monday with GoToMeeting(.com).   That way, screens can be shared, whether or not we use a projector.  Also, people not physically present can participate online.   Your thoughts?   Regarding poker rooms,  those who have comp’ed rooms should ask their host, and I will check around also, shouldn’t be a problem.   Also, once we have a firm number and schedules, I have a friend who owns a limo company and can get a quote for having our own limo available.   Maybe around October 1st, we can lock down logistics.  


  146. Dow held 11,300 as well – maybe this day will be interesting after all…

    PGH/ITrade – PGH has lower premiums to sell as they only run to April.  As a buy/write entry, I’d sell the April $10 puts and calls for $2.65 against the $11.04 entry for net $8.39/9.20, which is pretty nice.  

    You’re welcome Dennis!  Keep in mind we’re just playing the range but that range is unique to us, as I invented the 5% Rule, that’s why no one else seems to play what looks like an obvious level to us.  The 5% rule could care less about moving averages or Head and Shoulders patterns or Elliot Waves or short-term support and resistance lines yet it’s more accurate than any of them for short or long-term predictions.  Actually, I would have to say I didn’t so much "invent" the 5% rule as discover it – as it developed out of what I observed over years of consulting on various trading systems, kind of like Fibonacci discovered his series.  I think that’s why it works, it’s not an invention I’m forcing on the market – merely an observation of how the market actually behaves…

    Cats/Shadow – She’s very impressed, says that’s the good show.  Good luck.  

    Lots of good charts at Russell.com (thanks Elliott).  Notice jobs picture really not terrible but it will take forever to put 14M people back to work:  

    QE Next/ZZ – You have to be realistic about what the Fed can actually do.  Bernanke has been generally conservative in his interpretation of what they can and cannot buy (and why shouldn’t he as it favors the banks to run all the money through them first?).  It would be nice if they purchased non-commodity equities while letting rates rise (the BOJ does this but rated don’t rise anyway due to deflation) or the derivative markets but that kind of market floor intervention would have people screaming murder and it does set up a very artificial market (but it also allows retail customers to participate more safely – good for pension funds etc, bad for IBanks).  Realistically, they could lend money CONDITIONALLY this time – in other words, the money must translate into loan growth, not just short-term market gambling or rate swapping.  The Fed, as a bit of a stretch, could buy Municipal securities and bail out local Government – that would create a lot of jobs.  They could set a HIGHER inflation target.  Right now Core CPI is around 1.6%, if they decide 2.5% is healthy, then they are setting policy to print money under that level and that right there would peg the dollar quite a bit lower for quite a while but then we’re back to commodity inflation and I’m not sure how they can selectively avoid that.  Outside Bernanke’s comfort zone would be possibly lending directly to small businesses or local banks or reinstating TALF through the Fed.  That about sums it up, I think.  Anything like a WPA HAS to come from the President and his always-cooperative Congress, not the Fed….

    More to come/Rpme – I meant hurricane related guidance adjustments.  

    Obama/Jake – You really have to try to be less of a cartoon character.  Earlier I said you can’t get past the word Obama and it prevents you from hearing anything else someone has to say once that red flag is waved at you and what is your response?  You literally say Obama (or some derogatory derivation) 4 times in a paragraph.  That just makes you a joke.  This isn’t some conservative chat board where you’re going to get ROFLs every time you find a new way to insult the President and parrot Rush’s latest BS.  Go ahead and short – we need the counterparties…  If you won’t give us the money through taxes, then liberal investors are happy to take it from your miserable anti-anything the Administration does ass – just like the Clinton years, when all the internet hippies got rich while the Conservatives went broke betting on DOOM for an entire decade (and 20M jobs were created under a Democrat). 

    Small business/Angel – I agree.  I’d even go with tariffs at this point.  We are, generally, a self-sustaining economy – there’s not much from abroad that we really need (nothing a good energy program couldn’t fix, anyway) and if we close the loop, we can bring 40M jobs home in short order.  Multinationals would make less but, if they want to have a temper tantrum and move out – good riddance because there would be millions of small businesses, where the CEOs don’t make 1,500 times more than the average worker, and don’t pay only 12% of their income in taxes – that would be THRILLED to pick up the slack.  That’s the emptiness to these Corporations saying they will move their ops overseas if we tax them or regulate them – it’s not like we don’t know how to make a car, or a jet engine or an MRI machine or drugs or – WHATEVER, right here in the USA but keep up these moronic policies for another decade or two and maybe we won’t be able to anymore.

    NationalDebtChartFxsmWhat to do/ZZ – First of all, re-energize the SBA, which once was an excellent program but now is a joke.  Credit back 25% of increased workers salaries (more US head count than 2010) towards taxes paid (not unpaid).  That is a 100% credit to small businesses who make new hires but nothing for GE and others who pay no taxes anyway and nothing for people who outsource.   See – it’s a tax break I would actually vote for!  It’s revenue positive for the Government because you are giving the business a $10,000 credit on a $40,000 salary but the salary is new and the worker pays $14,000 in taxes.  

    TNA/Amatta – With TNA at $45.50 and TZA at $42, it’s an interesting bet on the RUT with about a 27% cushion before the puts crush you (9% gain in the RUT) and you’d have $15,000 in your pocket from the longs before you had to pay off the shorts so I kind of like it!  I agree with your logic that TZA can be rolled if we head to RUT 770 as long as you are willing to carry that burden for the long haul.  Keep in mind that, if the RUT falls, you are still out that $3,300 net and the RUT has only had 2 up weeks (including this one – so far) in the last 7 so you are betting on a long-shot from a statistics standpoint.  If you are bullish about next week’s close though, can’t argue with betting $3,300 to make up to $15,000 – I’m very proud of you for thinking of that!  Do keep in mind that there is the worst-case scenario on this trade that we gap down Monday and stay there, killing your weeklies (down $3,300) while the high VIX actually increases the price of the long puts and then something happens to rocket the market and you are stuck with the short puts at RUT 800+. 

    TLT/GS – Here’s what you need to consider.  We CAN’T hold them over the weekend.  If we end up out of position on Monday, there’s no time to recover.  The $110 puts are now $1.14 and the Oct $108 puts are $2.30 with a bigger delta so you don’t lose anything by rolling sooner rather than later.  Mechanically, I like rolling them now (Wednesday before expiration, before your premium is burned – and those $110 puts were $1.32 in the morning) and, if no drop in TLT, then selling the Oct $107 puts for $1.95 and spending 1/2 of it to roll up to the $111 puts and then you are in a $111/107 bear put spread for about net $2.  Since you need to make $1.78 back, the key is you need to execute the vertical before it goes below net $1.80 but, other than that, you can afford to hold the naked put for a little while.  Congrats on breaking even on the silver – that’s a good exit!  Gold also a good escape for our shorts…

    Vegas/Lincoln – Oh please no politics, we only have 2 days.  I had enough of that crap watching last night’s debate to last me through the election already! 

    NYB/JMM – A bank with an actual plan – isn’t that amazing!  

    Bachmann/Diamond – That’s why Mishy’s my gal!  Who says promising a chicken in every pot doesn’t work with modern voters.  They still sell hair tonic in the stores, don’t they?  


  147. Phil
     
    The Gotomeeting idea would be great for Vegas for those of us that can’t physically get there.  Hope you can implement that. 


  148. Stabilization/Sparky – Obviously you don’t understand the dynamics of New York real estate so I won’t even get into it with you.  Just consider the fact that you need your maids and street sweepers and cops and teachers to live SOMEWHERE and if you allowed all housing in Manhattan to rise to the unregulated $50 per square foot ($50,000 per year for a 1,000 sq ft apartment) – you’d be pushing anyone with a salary of less than $100,000 out about 20 miles (2 hours commute at least) from the city and the tolls are $10 a day or $2,400 a year to move away plus parking and the car, etc).  So the rent stabilization is what makes it possible for New Yorkers to actually live in the city without paying taxes that would allow teachers, cops, firemen, etc to actually live in the same place.  

    I think that’s the biggest problem with the top 10% in this country – they actually believe (the Conservative ones, anyway) that they don’t need the bottom 90% – as if all those things that make daily life possible are just some act of God that would happen no matter how impoverished they make their fellow man.  That’s what leads to heads being put on pikes in revolutions – when you place no value on the life of your fellow man – don’t be surprised if one day he decides your life has no value to him….

    No rate changes from the BOE – still waiting on the ECB. 

    Holiday/Cap – I can fast in Vegas.  

    Gas/Cap – So you think Mishy’s plan is to have a financial crisis?  That’s pretty likely if she’s elected – you may be on to something…

    Vegas/LV – I don’t see how go to meeting can work.  We need at least 2 laptops with projectors plus several other live screens to replicate even part of a trading set-up and I very much doubt there’s anything that can be accomplished across multiple PCs with go to meeting but maybe a web cam would be interesting for people.  Whoever is in charge of planning the actual thing on Sunday/Monday MUST make sure we have 2 laptops with fast web connections and some way to hook up a few more along with at least 2 projectors (and screens, of course).  It would also be good if there was a drawing board for me to use.  As far as people on-line participating – I’m not planning on sitting at a desk reading comments – that would be kind of silly when the whole point is to do something different where we can directly interact.  Also, if you are going to start with webcasting, you’ll need to deal with lights, mikes etc. – I don’t care as I have nothing to do with setting it up but it seems like a recipe for disaster if you are going to try to turn this into some kind of show vs. the intimate seminar it was meant to be.  Actually I do care as my name is associated with it, regardless…  

    Why penalize the people who are coming to Vegas to actually sit and take a day to get some live training by trying to cater to 500 people who didn’t want to go?  If I were putting this on as a professional seminar, I wouldn’t even consider it.  

    As to poker rooms – I would have thought that setting up a private tournament is a normal thing out there.  I don’t need a limo – just one of those golden chairs with 4 guys to carry me around would do fine…  8-)

    Go to meeting/Seer – See above.  It’s not like there’s some one-screen presentation.  The idea is to discuss how we look at stocks, charts, options chains, etc. during a trading day and the idea is to do it live, not sit there typing on a screen.  There’s a reason people still go to conferences, there are still a lot of things that can’t be conveyed on a computer.  


  149. Poker/LV – I see Station Casinos advertises private tournaments can be arranged.  Maybe the big boys can’t be bothered – especially on a Saturday night.  Golden Nugget says they have private tables available and I hear they have a good steak place too (although I still want to go to Nobu if people are into it).  


  150. By the way, for you East Coast people, Barry’s conference is on the Tuesday I get back from Vegas, otherwise I would have been there myself.  You can still get tickets for $495.  


  151. Phil – Yes, I agree that the live meeting is for the participants, and the thought was that it’s not that easy to see screens projected from a distance versus everyone having the screen on their own screen, locally.  Opening up to online participants would likely bog the whole meeting down.   The software I’m looking at is called join.me, and it shares multiple monitors.  I have a dual-monitor desktop that I can bring in for the meeting.   We’ll get a flipchart board, and we can broadcast the screens on a big-screen tv.   If we only have 10-20 participants, we should be able to set up tables in a U-format and see each other and the screen well.   And, I think everyone has the same expectations ( I  hope):  live, informal, intimate, fun and dynamic. 


  152. From a poker dealer:  "…While we cannot arrange a "private" game for you and your party, we may be able to arrange a tournament/sit n’ go style game or spread a new cash game if you have a group of players. Give our Poker Director, Rob Moore a call at 702-891-7407 or 1-877-757-0007 so we can discuss if we are able to set something up for you and your group at the MGM Grand."   I’ll check with a friend at Caesar’s also.   Again, if someone is comp’ed their host can probably arrange something.  I’m not a poker guy myself so I don’t have all the details firsthand but I start calling my contacts.
     


  153. go with 8 guys til your knee heals..plus its more regal!


  154.   that beloved euro getting mighty heavy lately near big technical support…even with equity rally and our govt doing everything they can to hurt dollar….maybe the china msb..(magical slopppy buyer) stepping away finally


  155. For those going to Vegas who have not booked hotel arrangements yet,  Would anyone be interested in splitting One of These Bella Suites at the Venetian with me for Saturday and Sunday night?  I have 1 extra bed and a pull out sleeper sofa of some sort.  If you pick up the bed it would be $75 a night, the sofa would be $50 a night.  Any takers?