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Friday Follies – Greece Job

 

Papandreou is trying to convince us he almost destroyed (the) Universe to get my consent. – Opposition leader Antonis Samaras

Ah the old "destroying the universe" ploy.   It's the same one the Republicans are using in the Senate as they once again kill Obama's $60Bn infrastructure program that was meant to provide direct aid for highway and rail projects and set up an infrastructure bank.  Without 60 votes, bills can't even make it to the Senate floor so nothing gets done.  

This is ironic because, on the same day, China APPROVED another $160Bn of infrastructure spending –  just to build new underground subway systems in 28 cities by the end of the decade – creating millions of Chinese jobs, lowering transportation costs  and laying the foundation for continuing to kick our asses in the 21st Century.  So, to be fair, the Republicans aren't destroying the Universe to advance their political agenda – just America.

Meanwhile, China's subway plans are coming AFTER they have developed the World's largest high-speed rail lines to connect to their World class shipping ports so goods can now be whisked around the country in a cheap and efficient manner while the knuckle-draggers in Congress debate whether or not it's worth fixing the potholes that are ripping the tires off trucks on our nation's roadways.  

You don't make a nation great by talking about how great we are – you make a nation great by building a great nation and we are doing almost the exact opposite – squandering what once seemed to be an insurmountable lead in education, transportation, utilities, health care, housing and even environmental progress – and turning America into what is now one of the lowest-ranked developed nations in each of those categories. 

Rather than employ millions of people to maintain our infrastructure, we allow it to decay and ship our manufacturing and jobs overseas to Nations that are willing to invest in their future and that leads to trade deficits that suck hundreds of Billions of additional Dollars out of our economy along with the hundreds of Billions of Dollars we ship overseas every year to pay for our addiction to oil because, for 40 years now – our Republican leaders have told us it's too difficult to kick the habit.  Vote these fools in again and we're doomed – that's all I have to say about it.  Fail to give Obama the majority he needs to get this country back on track and we're doomed.  That's right, DOOMED!

In more bad new for the Republicans, 50M of the bottom 99.9% woke up this week and made a commercial telling them it's time to look elsewhere if they want to balance their budgets on the backs of the poor.  Like the man said, they are 50M seniors who EARNED their benefits and every time these jackasses pontificate in their debates that our nation's retirees are holding their hands out for entitlements, as if there were no promises made to them by the "job creators" for the past 40 years, they just push more and more people over the picket line.   

8:30 Update:  Speaking of our "job creators," America only added 80,000 jobs in the month of October with unemployment (as undercounted by the Government) still at 9%.  This is what we expected as we stayed a bit bearish into yesterday's rally and ahead of the weekend but we blew it with oil puts (USO) and took a quick loss there and I imagine we'll be lucky to get even on our QQQ puts, which were a bit too aggressive, perhaps with today expirations.  

The bulls are pointing out that revisions to September were pretty good but I will point out that we got very weak consumer confidence, comfort and spending data in October so if that was the result of BETTER jobs numbers than we thought we had, then the suckiness of these numbers cannot be understated!

While the jobs report may not have been a big downer, we still may have a no-confidence vote in Greece, which is fun for chaos and then we have Groupon's (GRPN) IPO today and that may not do so well and that could send the Momo's back down on a sea of doubt.   Meanwhile Canada, very surprisingly, LOST 54,000 jobs with unemployment spiking to 7.3% over there – and they have oil!  Come on folks, something is wrong with the Global economy as that's like the US losing 500,000 jobs in a month. 

You won't hear about Canada in the MSM because it doesn't fit the current bullish narrative but let's stay ahead of the curve and remain bearish into the weekend and until they prove they can hold those +5% lines on our Big Chart for more than a couple of days. 

Of course I still like shorting oil over the weekend.  We got blown out of USO puts yesterday but I love playing the futures (/CL) bearish below the $94 line ($10 per penny per contract, so be careful) as well as those USO Nov $35 puts at .67 and we'll be grabbing 20 of those in our White Christmas Portfolio.

Be very careful out there and have a great weekend, 

- Phil

 


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  1. Phil, one of the statements i hear all of the time is that Obama’s original 800 Billion stimus was just a payoff to unions to get him elected.  They also claim that only $200 billion of that money went for "stimus" (read infrastructure).  Do you have any facts as to how the 800 billion stimulus was spent?  If you have time, of course, since you are on Vacay.


  2. Phil- LOVE that retiree commercial!


  3. Unemployment…..just a bit outside…..


  4. unfortunately a few dems seem to be involved in this calumny..chinese built 1800 km of highway LAST YEAR!


  5. Way to start the vacation Phil… In a fighting mood this morning.

    Once again, this morning we find out that another 25K public employees have been laid off. We now have the leanest government since what, Kennedy? So much for Obama being for big government. It’s tough to kill those myth, just like the one that markets do better with the GOP,  or that regulation explode with Dems (when the numbers don’t support it). Oh well…


  6. Oil Lines

    R3 – 99.06
    R2 – 96.83
    R1 – 95.32
    PP – 93.09
    S1 – 91.58
    S2 – 89.35
    S3 – 87.84

    Yesterday’s high and low – 94.61 / 90.87

    Breakout lines – 100.66 / 81.07 


  7. roberthjrfl/stimulus – That is, indeed, a line promoted by Rush. But this seems to be a fairly objective breakdown: http://money.cnn.com/news/storysupplement/economy/bailouttracker/. Not a lot of unions or union jobs covered here. If, in fact, $200B – or more – went for infrastructure, it’d be great if union members got that work. But less than 14% of the construction industry is unionized nationwide.


  8. Anyone planning to play for a GRPN bounce today as did Linkedin when their IPO came out?


  9.  It has been a rough period for solar, but there might be rays of sunshine coming through:

    http://motherjones.com/kevin-drum/2011/11/solar-powers-good-news


  10. well don’t worry..perry has killed off the gops only chance of beating O..the presidents administration doesn’t get alot of credit… has also deported more illigals than bush did in his entire term i believe..of course the underground economy is the one thing no one really talks abour..that being that with 10 million undocumented workers getting about 8 dollars an hour in wage and benefits less than their citizen counterparts american industry is saving about 640 million a day…or roughly 12 billion a month in labor cost assumming a 40 hour work week which is probably aggressive….so if you wonder why the gop and dems pass the stop the amnesty initiatives interchangeably the last two decades that’s why..pathetic..


  11. Futures at morning low….I guess the market did not like the unemployment numbers….
     
    Is the market unhappy that the numbers came out too low…or too high?…..


  12. Barry seems to be upset at people who keep on lying about the origin of the financial crisis:

    http://www.ritholtz.com/blog/2011/11/preview-the-big-lie/ 

    And I agree about Joe Kernan – he should move to Fox Business News!


  13. Classic cartoon at the top Phil, where do you find these things?


  14. Futures / 1020 – It’s getting tough to tell now what is good or bad for the market. Good numbers = no more free money, but still good numbers for the economy. Bad numbers = more free money, but bad for the economy. I guess cash is good!


  15. 1020 a bit of risk off…$ moving off good jobs # (QE3 why?) and Euro is still in a soup of shat.


  16. Instead of using the unemployment numbers which are rigged and inaccurate, it would be better if we used monthly food stamp numbers, currently running at over 45 million Americans out of a population of 300 milllion, as an economic indicator. To qualify for food stamps one must have a net worth of less than $2000 including retirement accounts.
     
    See article below. Note that the number receiving food stamps actually increased by 1/2 million between July and August of this year
     
    http://www.huffingtonpost.com/2011/11/03/number-of-americans-on-snap_n_1074344.html


  17. Kernan would be a star at Fox…. and take Mitch ("You know I’m right" – her book) Caruso-Cabrera with him!…. :)


  18. Yes – repeating the PSW mantra, Cash is good….cash is very good…. :)


  19.  ECB should have cut .50 at least considering Germany’s man. #s, 3 months of declines = weaker Euro


  20. I won’t be surprised if we close in green today


  21. Big drop of long-term unemployed…. I guess for those, the checks have stopped coming….


  22. the numbers werent good private expands public shrinks..and yes this should ice the fed..they know shit will hit the fan soon in europe..this time hit it blades whirring shit flying hit it..and that they will need to do something later..


  23. Michelle Caruso-Cabrera had the CNBC line of the day when she said "Disparity comes from growth and freedom" in a deal with it type attitude.


  24. AA Money Recap

    Long strangle:

    Jan 13 12.5 calls – $1.27 now $1.43
    Jan 13  7.5 puts – $1.04 now $0.82

    Short:

    Next Weekly 10 calls – $0.90 now 0.82
    November 11 puts – $0.85 now 0.57 (33%)

    I am planning on posting an online spreadsheet with all the transactions to keep track of the P&L more accurately. It will reflect what I get though so your results may vary.


  25. now i wish i had held all those shorts over night.


  26. I like this comment on Joe Kernan from Barry’s blog:
     
     
    "It figures that Kernen would use the CRA as a red herring, seeing as he spent the whole MBS melt-up kissing Angelo Mozilo’s ass from coast to coast (or cheek to cheek). The “lax, government tolerated underwriting standards” wouldn’t have blown up the financial system if the predators hadn’t moved those robo-mortgages on to be sliced, diced and leveraged beyond all reason."


  27. we have some slight selling pressure in the pre-market today…. not much happening, really….  maybe we need a headline or two out of Europe to get anthing going…DOH!..i am building a position in NGD..i know the company and like its prospects take a look…look at hecla as well HL


  28. Pharm,
    What happened to SGEN? Is it a good time to take a position?


  29. Mitch "You know I’m right" Cabrera is a reporter – nothing more…..


  30. morxintway
    Cash is king! I held the QQQ’s from yesterday (although I DD at the lows before the close) and bailed this morning with a much smaller loss than expected. Just not sure how this market will react to anything these days. Still holding USO puts.


  31. Pharm – good news for AMAG this morning.


  32.  
    JOBS/ TO BE MORE PRECISE :everything in this morning’s jobs report moved in the right direction…. no evidence of a double-dip recession…. but all the positive moves were small… corrosive fear continues to hold back robust growth…



  33. And already preparing for the next victim – China…

    http://ftalphaville.ft.com/blog/2011/11/04/727171/five-steps-to-financial-crisis/

    More fuel on our fire Angel…  


  34. Reuters MF Global clients face day of reckoning as margins call By Jeanine Prezioso and Karl Plume NEW YORK/CHICAGO | Thu Nov 3, 2011 6:12pm EDT
    (Reuters) – Call it the mother of all margin calls: Up to 50,000 former customers of bankrupt broker MF Global must find some $1 billion in additional collateral almost overnight, or be forced out of their trades.


  35. Good morning!

    My plan is to go have breakfast with the kids at 10, then back until 11:30 then we’re off to another hotel, we scored the 3Br Suite at the new Bay Lake Tower that’s supposed to be really nice so I thought that would be fun for the night (supposed to have a view of the Magic Kingdom and fireworks at night outside the window).  

    Dollar not too strong at 77.22 and that’s a problem though because the markets are falling without the Dollar’s help and the global situation plus Japan’s continuing tinkering means the Dollar doesn’t have much more to fall so it’s all up to the markets to make their own progress – without a boost from a weak dollar. 

    I’m not sure WHEN the Greek vote is or how many times they will have to vote before it’s final so plenty of uncertainty this morning.  Euro clearly being held over $1.375 at the moment by EUR/CHF, which is flatlining at the Swiss 1.22 target to which they have promised to throw "unlimited amounts of money".  

    USO Nov $35 puts coming in at .60 is a great deal (see main post), 20 in the WCP, as above for a weekend hold, at least unless, of course, we can get .90 today – in which case we’re not greedy!

    Same old, same old on the Big Chart – we must hold the Must Hold levels and we’re not impressed until ALL of our indexes are over those Must Hold lines.  Since there is more money to be made within what we still think is our range to the downside than the upside – it’s prudent to lean a bit more bearish until the 3 majors prove they can pop those 5% lines and hold them for more than 2 days.  

    Those Canada jobs numbers were very disturbing and Germany’s Sept Manufacturing orders fell 4.3% (flat expected by Economorons) and the EU Composite PMI was a ridiculously low 46.5 (below 50 is contracting) for October, down from 49.1 in Sept.  This is a trend that leads to a negative growth quarter which can lead to two in a row which some would call —-- a Recession!  

    So it’s Cashy and super-Cautious into the weekend, volume is still low so we could go either way and we could certainly pop if Papandreou survives his vote and says something pro-EU but it won’t change the Global economy and it will take more than words from Bernanke to keep Europe from heading towards negative growth.  

    At the open: Dow -0.7% to 11961. S&P -0.77% to 1251. Nasdaq -0.58% to 2354.

    Treasurys: 30-year -0.09%. 10-yr +0.11%. 5-yr -0.409%.

    Commodities: Crude -0.09% to $93.98. Gold -0.43% to $1757.55.

    Currencies: Euro -0.41% vs. dollar. Yen +0.11%. Pound +0.27%.

    Market preview: Stock futures pare losses after data showing nonfarm payrolls grew by 80K in October and were revised higher in August and September. S&P futures -0.5%. Papandreou faces a confidence vote, and the G-20 tries to get the IMF to play a bigger role in sorting out the eurozone mess. Groupon makes its trading debut; will it follow LinkedIn’s lead and soar on the first day?

    Congratulations eurocrats! Sovereign bond yields in the EU now fluctuate like currencies. Italian bond yields are spiking higherover the past minutes, with the 10 year BTP moving to 6.35%, about the highest level since the debt crisis erupted. The BTP/Bund spread now sits at 450 basis points, the line at which collateral requirements for Italian paper could be raised.

    Some more color on the weak German factory order number shows the series on a losing streak only matched by the 2008 crash, with the Y/Y decline clocking in at 28%. The "last bastion of health in Europe" may not be so anymore.

    Commerzbank (CRZBY.PK) shares sink 3.9% in Frankfurt after the company reports a 3rd quarter loss as it writes down the value of its Greek holdings. The lender becomes the latest in a string to take the marks on its Greek paper, and all have taken their lumps, but they’re still standing. Makes you wonder what all the fuss has been about.

    The U6 rate - a broader measure of unemployment that some prefer to the headline number – drops to 16.2% in October from 16.5% previously. The figure is essentially flat over the past quarter, but down from 17% one year ago.

    One month’s payrolls data doesn’t matter very much, Barry Ritholtz writes; more important is the overall trend as it impacts the general economy: "Are jobs readily available? No… Are we even creating enough new jobs to keep up with population growth? No… Is the overall employment situation having an impact on consumer confidence? Yes, negatively."

    A report from the Citizens for Tax Justice (.pdf) claims of the 280 most profitable companies in the U.S., 78 paid no federal income in at at least one year over the last three and 30 reported a cumulative negative income tax over the period. The report’s author pegs the tax subsidy at $223B – a figure that is not likely to add support to a bipartisan tax holiday bill floated by Senators McCain and Hagan.

    Now this is the kind of regulating I like!  The EU seems to have had enough of Apple (AAPL) and Samsung’s (SSNLF.PK) patent suit free-for-all (IIIIII): regulators are investigating whether the companies have broken antitrust laws by trying to have each others’ products banned, rather than attempting to license their IP on reasonable terms. 


  36. Good call for oil this morning Phil, reloaded lightly on SCO.   Last two weeks, this has been a great in and out play.


  37. SGEN – yes, I like them and the data are not changing.  Shorts are trying to take it down.  Here is a good article that I don’t need to rehash.  I ease into them.  How about selling the 17.50 Dec straddle, buying stock.  1/4 entry…althought this will be a 1/2 for some b’c of our position a while ago at $15.  This is a frickin’ gift.

     

    AMAG – our rules — sell into the excitement!


  38. How am I going to get thru life now that Dippin’ Dots has filed for bankruptcy?
     
    I’m not surprised…..


  39. Pharmboy,
    What’s the fair price of INHX? Thanks in advance.


  40. @1020
     
    Never had Dippin’ Dots, better try it now.


  41. Stimulus/Robert – Remind me on the weekend but it’s just another one of those BS statistics the right loves to use since no one ever challenges them and their audience will swallow anything it seems. 

    Commercial/Jrom – Very big deal finally get the AARP to weigh in on this.  We need to wake these people up.  

    Highways/Angel – It’s tragic how we’ve just given up our position as the World’s best place to do business and it has nothing to do with taxes (businesses don’t pay them anyway) – it’s all about infrastructure and having a well-educated work-force.  Imagine how insane it seems to global companies to come to the US and have to pay for health care for their employees (and management) because our Government doesn’t?  Our internet systems are out of date, we’re only just discovering HDTV, you can’t get there from here on public transportation and the cost of renting cars is out of control – just some of the 1,000 cuts this country is dying from…

    Fighting mood/StJ – On vacation, like weekends, I have time to read more and that’s never a good thing for the Conservatives as I usually get pissed off about something or other..

    Thrilled to get .50 back on those QQQ puts in the WCP so don’t let it disappear on you if Obama starts the happy talk.  

    Sorry but late for breakfast – I’ll try to catch up when I get back. 


  42. Info on the Greek vote from the BBC
    "The vote of confidence in the Greek parliament has been scheduled for midnight (2200 GMT) so that markets in Europe and the US will be closed, such is market sensitivity to events in what is actually a small European economy."


  43.  Phil,  Whats your opinion on FTR?  They have tanked after earnings and I have to decide whether to double down, or close out the position.  All I am really worried about is there dividend.  Do you think there is a chance they cut their dividend?


  44. INHX – well that is a hell of a premium to pay for a company that is early on, and Hep C has so many things in the pipeline (see MRK, VRTX, Roche’s acquisition, and on and on).  Not interested now, but will put them on my radar.  CRIS should be $10 then….!  Sell a put on them for the longer term.  Probably $3….where they were.


  45. checho / Greece – It’s a small European country!?!?

    What do you have to say about that Mr. Angelcur?


  46. rustle – I’m a icecream/gelato snob – Dippin’ dots seemed to have a synthetic look to them…. :)


  47. USD is just smacking us around 77.44


  48. http://www.reuters.com/article/2011/11/03/us-ecb-mersch-idUSTRE7A27CL20111103
     i think whether or not european economies are in freefall is key to knowing if we can rally further into year-end…if they are just slowing to stagnation or mild contraction maybe we are ok for awhile longer…but if "freefall" is occurring and they are moving into big full blown recession….that means huge sovereign downgrades coming and market will start anticipating that within the month and swoon.


  49. well jonnnnnnneee..my italian friends remind me constantly that we greeks are NOT europeans..so if we are we must be small!


  50. Phil – "the cost of renting cars is out of control"….
     
    I would think it difficult to rent a Volvo wagon these days…..  ;)


  51. Pharmboy,
    YMI may have a good potential.


  52. Phil, you may want to hang on to this site:
     
    http://www.carrentals.com/
     
    No credit card needed….


  53. Pentaxon – i love your SPY charts, thanks!   but i do not understand how to interpret/us your VIY indicator. do you have a link or description on just how to comprehend this? thx


  54. Market is superantiresilient today


  55. Pentaxon – that would be "..interpret or USE…" 


  56. here comes th erumors cnbc talkin up big imf action


  57. Oh Angel, such bad form.  I’m jcaesar here!!! ;-)

    Yeah, I had an English buddy in town and he was going on and on about how the Greeks should never have been admitted into the EU (he had nothing to say about the Euro understandably).  That said, he’s a funny guy, because he’d be glad for England to get rid of Scotland, Wales and Northern Ireland.  A bit snobbish one might say.  ;-)


  58. sorryyy i meant juliussssssssssss!


  59. groupon up 40% on open!!!!! BUYBUYBUY


  60. scottmi: sorry that shouldn’t be the answer, that was just a reflection of the charts of today. I’ll write something later


  61.  O just said with a straight face "the least of my concerns are the politics surrounding the election a year from now"….HAHAHAHAHA..i love these guys!


  62. with the clown field the gop has put up he might just mean it!


  63. Wow, he’s still talking?


  64. No content from Big-O so far….don’t expect any either.


  65. Wow, he’s still talking? Mumbling not talking


  66. We’re officially out of the QQQ puts in the WCP at .60.  We have other bearish bets, don’t need them and thank goodness we’re done. 


  67. Angel, I just imagine Perry at the same conference 2 years from now…. pulling that plan from his pocket like the other day in NH. And all giddy…. or high! LOL 


  68. Phil:
    I bailed on QQQ puts much earlier after DD yesterday at the lows. It was a directional trade with a broken premise yesterday and I was happy to take a small loss and get out. You held on and broke even. What were you thinking that let you hang on longer than I? I know you were just trying to get out without too much damage as I was, but what do you look at to determine when enough is enough on a bad trade? Thank you.


  69.  Always good for a good quote:

    “China should be thanking Greece every day, for keeping the World’s financial gaze away from East Asia.”

    -James Chanos, Kynikos Associates

    Of course, he has to talk up his short position. But I like the guy….


  70. Pharm—-bought GTHP on your comment—what is your target? Cost around .72cents
    Thanks


  71. Well, when do we start shorting Groupon? 


  72. Phil:
    Your opinion on this article and short term price range target for crude?
    http://seekingalpha.com/article/305274-greek-referendum-inventory-impacting-oil?source=yahoo


  73. Dollar topped out right at 77.50 so the lows should be safe if it doesn’t break over. 

    Regrets/Morx – You can always re-enter when you feel that way, as long as you’re not chasing. 

    SCO/Rustle – Yes, it does work better as an in and out trade, doesn’t it?

    Dippin’ Dots/1020 – That’s good stuff.   I was surprised how fast they got imitated, you would think that would have been a solid patent by someone (I suppose not them).  

    Late Greek vote/Checho – That actually opens up the possibility that there will be a relief rally on Monday – very tough betting over the weekend. 

    No great shakes in World Currency is it?

    FTR/Craig – My understanding is they are fine long-term, just burning through the acquisition and a build-out of infrastructure, which investors hate.  I don’t think I’d go DD but I still like them for a long-term hold. 

    Dots/1020 – It’s not about the taste, they are just fun.  I wonder if that process could be applied to better ice cream?

    Free Fall/Angel – Data the past week is not looking good for them and EFSF does nothing for the economy – just a bank/bondholder fix.  

    Car/1020 – That’s nice but I use AMEX as you get the upgrade and free insurance.

     LOL Angel!

     Qs/DC – As I said yesterday, it was a risky hold but we had enough chances for bad news today and the way we crashed pre-market yesterday made for an attractive risk-reward if Greece had blown up overnight or jobs were a big miss.  The more conservative play (and the one that will give you a longer career as a trader) is to take the loss and reload the next day if you get a chance.  Had I not been out the door early, that’s what I would have done but I thought we’d get an anti-stick in the very least as yesterday’s run-up (obviously in retrospect) was silly.  

    Good quote StJ. 

    Groupon/JC – They already failed out of the gate, down from $31 spike at open back to $27 is terrible.  Too dicey to play with now, I’d much rather see them hit $50 and then short them to $5.  

    Oil/DC – But the drawdown was, in fact huge and, as the article says, rampant speculation on the long side so I really like (obviously from today’s USO trade) oil for a sell-off between now and rollover on the 20th.  Remind me on the weekend and I’ll dig up the NYMEX charts – I don’t have them on my laptop but I can find them.

    OK, gotta go – hopefully we have WiFi at the pool (Beach Club Pool one of my favorites on Earth) and, if not, then I’ll be back at new hotel by 2.  


  74.  Enjoy Phil!


  75. Phil/car  I too, use AMEX with the free insurance, but I save a sh*tload of $$$$ as well…. :)
     
    It’s kinda like those AMEX reward points. You pay with too many points for travel and merch. Your dollar/points ratio works much better for dining and Home Depot….


  76. Thank you Phil. Enjoy your vacation.


  77. YMI/nee – we are in them for a DD at 2.14 (by my calcs).  For 1.8X, I think they are a good gamble as the drug is almost exactly the same as Pharmasset (VRUS) and look at their stock price!

     

    GTHP/savi – a double.  Maybe more.  Friend told me about them, and the technology is sound.  What woman wouldn’t like a scan vs invasive ‘scrape’? 


  78. Phil/dots  I’ve often thought – who’d eat that stuff?  Takes all the "fun" out of eating a drippy cone and keeping it off your shirt….


  79. Pharm—thanks
    Ouch-just saying scrape hurts


  80.  1020 – totally off-topic, but the best use I’ve found for Amex points is to shop around for air travel. I used Air Canada’s program to buy first class tickets on Lufthansa from Denver to Frankfurt last summer. Had to plan 9 months ahead, but 120k points per ticket is hard to beat. LH wanted $18k each to buy them. At 1 cent per mile (comparable to what you get for gift cards) that’s about coach fare. Even at 2 cents per mile it’s a great deal. 


  81.  NFLX – Whatcha wanna do with those 87.5 Ps, PD?  I played them too.   You wanna roll ‘em?  Lead me, brotha.


  82. Adding to TRGT for 1.80 or better.  Feb 20/25 BCS.


  83. Good morning,  nothing new;

     

    IWM   71.33,  71.87,  72.56,  72.96,  73.51,  74.04,  74.59,  and  75.37

    We’ve based and should climb from here today, imho !!


  84. Savi – :) wouldn’t know!


  85. NFX.
     
    I think he stoppes out at 1.75 if I am not mistaken


  86. RNN – sell.  Didn’t show efficacy….which is important!  Down 40%, but it was a small position.


  87.  QQQ  58 calls – a toss for .06


  88. Oh good, I have access. 

    Looks like we’re calming down now but it seems to me they just ended the G20 without a deal to DO SOMETHING!!!  That’s not good. 

    We’ll see how Europe closes (down 2% now for DAX and CAC) but no reason to be bullish at the moment other than easy to stick low-volume. 

    NFLX/NF – Do you mean the momentum play $87.50 puts that had a stop at $1.50?  Long gone – it was a momentum play, that means when the momentum turns against you, you get out.  

    Based/JRW – Wow, that’s optimistic!


  89. Deano – how about the 125 SPY weeklies.  Sell today’s, buy next weeks.  Should be good for 50c/contract by EOD if we fade up into the close….125 pin.  Seasonally, on NFP down open, close higher than low, if we open up, we close lower than the high.


  90. I have done the same for the puts FWIW.


  91.  GNW having a good day!


  92.  Pharm – interesting – take a look at it.


  93. kurtww/AMEX  -  I prefer 32" of leg room.  Thanks  ;)
     
    You guys/gals ever flown these guys?…. http://www.spirit.com/Default.aspx
     
     
    I flew to Vegas from San Diego, mid week, for zero (gov. fees only) in the last couple of months…. and with no charge for the restrooms…. 8-)


  94. Good Friday everyone.  Since being a member/subscriber I have more than paid for PSW’s subscription cost. While a student of options for a number of years I had never made any good returns, now I am !!  There is a way !!  Phil’s way !! 
    Has TOS gotten its act together ?  I have been using Fidelity’s Active Trader Pro and while it is workable, it doesn’t have Futures and I can’t track the US $, oil easily.  BTW, I could follow Phil USO put rec.; the premium didn’t compute ??
    Thanks for the ideas and suggestions !!!


  95. ronnewton/TOS:
     
    Seems much better. From my persepctive, they’ve been very stable for several weeks. Their latest release contain new functionality, which may be indicative of confidence/progress on their past.


  96. Good SPYdea Pharm!

    Spirit/1020 – I joined their $9 club when my Dad was sick and they saved me a fortune when I was bopping back and forth to Florida every other week.  If you are flexible, you can find some really stunning fairs on them and then you can spend $50 to upgrade to first class seats which don’t have a lot of competition because most people aren’t flying that airline with the intention of spending another $100 for the trip but the food sucks on Delta and Continental anyway so, to me, it’s just about getting a comfy seat and the one on Spirit is just as good as the one on Continental for 1/4 the price.  

    Congrats Ron, glad we can help.  The USO puts were Nov (monthly) $35 puts and they are still .62.

    TOS – Yes, they seem to have worked the bugs out.  

    77.33.  Yen making a big push to 79 (so trying to push up the Dollar) and Pound struggling at $1.60 with Euro rejected at $1.375 so watch closely (while I go for a nice swim). 


  97.  For some reason TOS is giving 4x margin to short a stock but wont let me sell a naked call.  So, to take advantage of it I am Shorting VXX at 43.42 and selling the next week 43 put for $2.14. My plan is to keep collectiing $200 a week against the $1000 in buying power reduction till I get called away.


  98.  Greek confidence vote expected at 18:00 ET…


  99. JFTR, now that I’ve had some coffee, gap down with lower low after 10:30 Eastern Time has a 90% chance of a close lower than the open (IWM 74.18); but I’m still long looking for 74.59-86 as a set up for Monday’s fall !!

    BTW, my friends here were so impressed with the accuracy of my prognostications yesterday, making in one day the equivalent of a half year’s return for them, they may join the board !!

    Maybe Phil will give me a McDonald’s gift card  8-)


  100. Impressive drop in /DX to 77.15


  101. Phil – what do you think of next week’s TZA 29/35 spread offset with a sale of 28 puts at $.57? Seems like good risk/reward?Selling the 27s would be safer, but cost $.95. 


  102. http://www.businessinsider.com/tremonti-if-berlusconi-doesnt-resign-disaster-on-the-markets-monday-2011-11
    Italian Finance Minister Warns Berlusconi: If You Don’t Resign, There’s Going To Be A Bloodbath In The Markets On Monday

     


  103.  I have created the spreadsheet for AA Money on Google Doc. The link is below:

    https://docs.google.com/spreadsheet/ccc?key=0Asgfso25VaEPdGgtbnVFeWl1aGdoTVVmQ3Y0U0wzelE

    Let me know if you have trouble getting in.

    To summarize, so far we have sold $3.87 of premium against our $2.31 strangle. But the big gyration of the last 2 weeks have had us rolling the 3 previous positions (sold for $2.12) at a cost of $2.36 resulting in a $0.24 loss. But we are in the positive column with the current position, hoping that AA settles between 10 and 11 for the next 2 weeks! And over 60 weeks to keep on selling premium!


  104. VXX/Craig – i like the sound of that but TOS not letting me sell that, at least not as a combo sale. guess i gotta do it the hard way..


  105. Impressed/JR – so am I!


  106. GNW breaking out. 


  107. This is not going to help:

    http://blogs.wsj.com/economics/2011/11/04/economists-forecast-longer-deeper-euro-zone-recession/

    The outlook is particularly grim along Europe’s struggling periphery. Ireland will stagnate next year, J.P. Morgan estimates, making it the economic champion of the periphery by default. Greece will contract 6.6%, Portugal by 3.9%, Spain by 1.1% and Italy by 1.5%, according to the bank’s revised estimates. 


  108. I have the sense that no one wants to hold Euros over the weekend, given the political fibrillations, which are holding the Euro down, arguably positive for U.S. bulls.


  109. Pharmboy,
     

    Thank you !!   8-)


  110. rainman
    Any idea about why DX dropped so much? 


  111. @JR, wow you are on fire, we are now on your target, when will you go short? until monday? too dangerous to hold tza through the weekend? thanks!


  112. Wow, another great call by JRW!  What did I miss?

    Dollar back to 77.07 and all is well since the EU close, I guess. 

    Good VXX plan Craig.

    Gift card/JRW – Keep making calls like that and we’ll buy you a franchise!

    TZA/Kurt – I think it’s a bit too bearish using the TZA offset, better if you can identify something you really want to buy if it gets 10% or more cheaper and sell short puts on that.  That way, if the market goes up – free insurance. 

    Now Berlusconi has to resign too?  This is starting to sound like the long-warned Bilderberg plot to take over…

    GNW/Terra – Wow, nice improvement on our position!

    Well this move seems pretty unwarranted to me (but so did yesterday) so time to catch up on news…  


  113.  Yep, JRW, your crystal ball is rock’in!


  114. Five major dealers contacted by IFR all denied quoting CDS on Europe’s sovereign bailout fund, citing the potential political fallout of doing so…bahahahahaha


  115. Phil/SAVE   Spirit’s 9 dollar club is great and they’ve shown a pretty good performance since the October low….


  116. ESFS / Angel – FT has some information on that:

    http://ftalphaville.ft.com/blog/2011/11/04/725481/pricing-cds-on-the-efsf/ 


  117. Great work JRW!  Have a safe trip home.  :)


  118. 1:00 PM On the hour: Dow -1.27%. 10-yr +0.21%. Euro -0.54% vs. dollar. Crude -0.29% to $93.8. Gold -0.59% to $1754.75.

    2:00 PM On the hour: Dow -0.56%. 10-yr +0.17%. Euro -0.23% vs. dollar. Crude +0.24% to $94.3. Gold -0.34% to $1759.05.

    European shares close sharply lower for the day and the week, giving back some of the major gains of the past month. Stoxx 50 -2.4% for the day, -3.9% for the week. Germany -2.6%, France -2.1%, Italy -2.5%, Spain -1.4%, U.K. -0.2%. Euro -0.6% at $1.3745.

    Oh here it is – Greece is fixed, of course:   While you were at lunch, the EU debt crisis was again solved after a top PASOK MP turns around and indicates he will vote "yes" in a confidence measure for PM Papandreou. A positive outcome means the stage is set for a coalition government to be formed as early as Monday, with snap elections avoided. The euro jumps 50 pips to $1.379. The DJIA sheds 75 points of its loss.

    And MORE FREE MONEY:  An interesting comment from IMF chief Lagarde at the G-20 summit in Cannes. She says there will be "no cap, no floor" onnew resources for the IMF. Such news might be of interest to the U.S., which funds nearly 18% of the agency, about 3X as much as #2 Japan.

    And EVEN MORE FREE MONEY:  Those ECB swap lines with the Fed? They’re bi-directional, tweets Dan Davies. So what? It means there’s nothing – other than the prospect of rioting in D.C. – to stop the Fed from printing $500B, swapping it for euros with the ECB, and then using the funds to bail out Greece (or Italy) through QE.

    On the other hand:  A closer look at today’s EU PMI report shows the weakest numbers came from the "highly systemic economies of Spain, Italy, and France," writes Mike Riddell. Already likely in the midst of recession, action on France’s AAA rating is inevitable, with widening spreads eventually triggering a multiple notch move and making the EFSF – already in trouble – even more unworkable.

    EPFR’s October fund-flow data shows investors around the world re-embraced risk in a big way; emerging markets saw $3.5B worth of inflows, while money-market funds saw outflows of $25B. Nonetheless, investors continued to be partial to precious metals, which saw inflows of $493M.

    Are corporate stock buybacks propping up equity markets? According to Citi, U.S. investors have pulled $80B out of equity funds this year, but this has been more than offset by $200B in buybacks. With the cost of debt very low for many firms, and the cost of equity very high (thanks to strong earnings yields), many find it logical to float debt to repurchase stock.

    Calculated Risk updates its invaluable and not pretty jobs chart following this morning’s NFP report. It tracks the job losses and recoveries in 11 post-war recessions, and illustrates just what an outlier the current non-recovery is.

    HSBC’s (HBC) systems are failing in the U.K and maybe worldwide as customers cannot withdraw cash from ATMs, make debit card purchases, or use internet banking services. The company tweets it is "experiencing some problems – sorry for the inconvenience."

    Should have thought of this one!  Shares of LED lighting leader Cree (CREE +6.3%) pop on an AP report that China will phase out incandescent light bulbs within five years. China will ban imports and sales of 100-watt and higher incandescent bulbs from Oct. 1, 2012, the country’s main planning agency says. Related stocks: LEDS +8.1%VECO +7.1%AIXG+2.7%.

    Green Mountain Coffee (GMCR +2.5%) appears to be getting a lift from remarks made during  Starbucks’ (SBUX +7%) FQ4earnings call. CEO Howard Schultz said Starbucks expects to ship 50M K-Cups by month’s end, and that K-Cup sales will drive future EPS upside. Green Mountain receives a royalty on every Starbucks K-Cup shipment. (SBUX FQ4) - Yes, all those machines they sold will be using SBUX coffee, not GMCR – all the forward estimates for GMCR are overblown.  

    S&P places Sony (SNE -2.8%) on a credit watch for apossible downgrade after the bleeding (III) continues at the company. "The likelihood of Sony’s weak earnings persisting has increased as there are no signs of a halt to the deterioration in the earnings of the company’s core flat-panel TV business."

    In spite of its iPhone shortfall, Canaccord’s Mike Walkleyestimates Apple (AAPL) took in 52% of mobile phone industry profits during calendar Q3, up from 33% in Q4 ’09. Nokia’s (NOK) profit share is estimated to have fallen to just 4%, compared with Q4 ’09′s 39%. Walkley thinks Apple could command 60% of industry profits in calendar Q4, thanks to strong iPhone 4S sales. (previously

    Three lunchtime reads:

    1) Billionaire Julian Robertson’s 6 new big buys

    2) Looks and smells like bear-market rally

    3) Tett: Subprime moment looms for ‘risk-free’ sovereign debt

    It’s an interesting question…who owns the Fed? And who better to answer it and try to dispel rumors than the Fed itself: "Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year." 


  119. russellb73 / dx — No idea why DX dropped like that. The $ seems to be the latest instrument for market manipulation. I don’t trade currencies but use them for confirmation of moves.


  120.  out of the qqq’s for 35% – too bad the bet was small!


  121. 77.15

    Oil selling back off into NYMEX close (2:35)


  122. asaenz,
     

    I only hold over the weekend in specific cases which are documented in my summary post; as to going short, I will when my chart suggests that I should (a break below 74.40), I will take profit on another break of 74.59 !!

    Watch the 3 minute chart, it will usually tell you where I am !!  8-)


  123. Mr Corzine, who will not seek any severance payments, is also said to have hired Andrew Levander, a criminal defence lawyer who has represented Wall Street executives including John Thain, the head of Merrill Lynch.

    Mr Corzine has not been accused of any wrongdoing.m [Daily Telegraph]
     
    Just an expensive way to get a golf partner, then.


  124. Pharmboy, my RGRX went boom today, you in this one?


  125.  So, on the whole, a whole lotta FREE MONEY and not much of a move from it.  With Obama obviously hog-tied by the Senate and the G20 breaking up without a deal – I don’t think there’s enough gas to get us over the top.  


  126. If anyone needs some protection for Mon on downside, on TZA you can do a bcs of 29/31 with a 25 put for about .10


  127. dmoroz, 1020

    Thank you !!


  128. ROFL JMM! 


  129. No, I was in RNN….that also went Boom….looks like RGRX missed two endpoints, but was significant in others.  I am no eye expert, but this is a hot field, and Allergan is trying to stay on top of it.


  130. JR – looks like they may close this on the 10% chance side, although I am still looking for the 125 Pin on SPY.  Volume is drying up.



  131.  OK, time to switch hotels. 


  132. stjeanluc
    AA good spread sheet. Some where along the line 10/27/11 Phil advised to buy an other 10 long AA 15c Jan 13 possible we have forgotten about them so I am playing with 20 lon AA and not 10 However wonder if I should buy another 10 Jan 13 long puts to make it an even play?


  133. Pharm…..Whats your current take on SVNT? I’m taking a bath on them vs 6 months ago


  134. SVNT/490 – U are not alone. I have bought back the 15 Calls (Jan2013), and now have the 10 Calls and the 10 Puts (Sold).  Just waiting them out.  IF you have stock, you should be selling premium against it.  I would start doing this against the calls as well.  2013 is a long ways off.


  135. This may be an interesting source for monitoring what media services american’s pay for if it’s maintained over time.


  136. I have a target of IWM 75.02, for a gap fill. That said, I bailed at 74.66 !! ( for 4%)

    Here is the problem:


  137. Look at ARRY.   OH MY!  The Phoenix is rising (I love old X-men cartoons!)


  138. All in TZA !!

    asaenz,
     

    I only hold over the weekend in specific cases which are documented in my summary post; as to going short, I will when my chart suggests that I should (a break below 74.40), I will take profit on another break of 74.59 !!

    Watch the 3 minute chart, it will usually tell you where I am !!  8-)


  139. F’in beautiful…..


  140. Incredibly, I think they are trying to pin AAPL at 400.  


  141. Phil, the rant at the top of the page is absolutely perfect. When you travel around, especially to Asia but also to Europe, you realize that America now has Third World infrastructure. Unlike bombing goat herders on the other side of the world, spending on American infrastructure actually makes the country better.


  142.  They dont have central banks spread there so they need to bomb them. 


  143. lflantheman - you ARE the man — yesterday when you warned me to bail the 400/405 bull call spread, I did and instead sold the 400/405 bear call spread, so this pin is perfection!


  144.  Hey Phil,
     
    Just confirming you endorse holding USO short thru the weekend.
     
    by the way… very impressed you can do this on vacation… my family would kill me.


  145. Rok/Infrastructure,
     
    I really never understood why they don’t repair our infrastructure in a meaningful way. 
    They can send money all over the globe on god knows what, finance our enemies, blow money on things that are so foolish it boggles the mind, spend billions on bombing campaigns in the desert, waste uncountable amounts on corrupted government programs, and yet they won’t fix our infrastructure. 
     
    In my City the freaking bridges are crumbling in front of your eyes.  They simply barricade off a lane so that the deteriorated structures can handle the loads.  The sewers are a mess.  The water system is a mess.  The power grid is a mess.  The entire downtown area is a mess.
     
    I guess it just makes more sense, or buys more votes, to blow money on senseless items than to hire people to upgrade our country.  What a friggin disgrace.


  146.  exec,
     
    ditto


  147. Phil, good morning post. In Seattle it takes 6 years to extend the "subway’ by one station that’s only 1 mile away. WTF?? Wasn’t the entire NYC system built in like 5 years? To fire a shot across the other bow, if we didn’t need to spend three years investigating every bird nest in the way and paying non-market rate salaries for the low-education jobs maybe it would move along faster. And maybe if we raise the divs & capital gains tax (gasp!) from 15 to 25%, or just simply treat all income as income (what a concept), we’d certainly be much further along. And also, Buffet would be paying a lot more than his secretary.
     
    Also, let’s push this solar-on-every-roof idea. I went long FSLR stock at 52.


  148. exec—where do you live Cleveland? ;-)


  149. Exec:  Hey an electrified fence ringing off the southern border would be a huge infrastructure project! :D


  150. BDC—did you get my e-mail re vegas ?
    e-mail me please


  151. Pharm - good call on ARRY. 
     
    PLX and ELN’s charts look good. Might be time to re-enter these two…. (?)


  152. AAPL trade:    I sold a bunch of November 19 380 puts some time back which are now 60% profitable.   Today I sold November  19 410 calls to turn this into a short strangle.   My premise is that AAPL is just not going to make any big moves in the next 2 weeks.  If it does move I’ll just roll them up and out.  


  153.  I noticed Jan14 options are being printed. Low volume and big spreads in some cases — might be able to scalp a few for on the cheaper end (e.g. ELN Jan14-20 calls don’t even have a bid).


  154.  I guess Phil is off line?


  155. Savi – I sent you an email just now. Thanks so much!


  156. Sorry, the last post didn’t; target remains 74.86-75.02 !!

    I’m out of TZA with a few cents on the break back over74.28; I expect Monday to have an ugly beginning !!

    Have a good weekend all !!


  157. BDC – no interest in ELN.  PLX…been in them a long, long time.  How about sock with Dec 7.5/5 strangle.


  158. looks like the pin move is on.


  159. OUT OF SPYs…..thx you very much. 


  160. I agree with JRW.  Next week won’t be too pretty.  And that’s another reason for selling those AAPL calls (above).   AAPL will move with the market over the next 2 weeks and we may as well profit from it.   


  161. SPY Calendar: Call side 127 weekly sell, buy 129 M (9 c credit) — put side for downside  move 122s.


  162. Kink,
     
    Ya it would…..unfortunately it would be just another waste of money since it wouldn’t stop anyone from crossing our border.
     
    Jabo…..you don’t have to advertise it.  One thing you can’t take from us is our outstanding sports teams…….speaking of which……does anyone miss the NBA??? 
     
    Bio………don’t get me started.  I can tell you things that would enrage even the biggest tax and spend liberals out there.


  163. Wow, this room is gorgeous. 3br suite at the Bay Lake Towers on the 15th floor with a2-story living room and balconies that practically hang over the Magic Kindom. super-modern, very nice…

    Looks like the markets are dribbling in to the close – a blah day overall.

    Yes to holdin USO puts over weekend.

    Have a great weekend everyone!

    - Phil


  164. Pharm - ARIA still marching, halfway from my DD at 8 to my 16 target, go baby go!


  165. exec—doesn’t Cleveland have professional sports teams ;-)
     
    ouch!


  166. Adam F put a show on them at the street dot com MRM.  Should have been in them when we started covering them @ $3. 


  167. meant to say Cleveland doesn’t….
    crazy week ;-(


  168.  Out of TNA at IWM 74.72 for 1% Thanks JRW!


  169. Early next week I will be sporatic as well….heading to Phil’s stomping grounds.  Will be around on the weekend.  Oh, and TRGT and BPAX are on deck!


  170. Seasonaly oil stocks rally in the winter months. I placed a 3 part option play on Suncor including selling Jan 2013 $40 calls, selling Jan 2013 $32 puts and buying March 2012 $33 calls. Hoping for a quick oil run into the end of the year to flip out of the trade. Currently made $6.25 premium, so worst case scenario, I own Suncor at $26 which is a steal of a deal.
    Does anyone else in this chatroom trade oil stocks?


  171. Damn Phil…..those rooms are typically reserved for those highfalutin, greedy, inconsiderate, tree killing, water polluting, filthy rich, republican bastards.
     
    I’m starting to think you might be a closet.


  172. They are going for 126 SPY in the AH.  Unreal.  Buy back the 122 Ps now.  This is ridiculous.


  173. Ging – we normally short them!  LOL. 

     

    Just joshin’ you.  Yes, for trades like that, we do play oil stocks.  Nice play on them.


  174. AA Money / Yodi – I think that we were thinking of adding the long Jan 13 15 calls if we had to DD on a roll which we didn’t do so we are still at 10 now (some people might have started smaller which is OK). IMO, and this is what I told Phil in a post this week, I would rather be 1/2 covered most of the time because it gives you more options when you roll the shorts and not have to add to your long position at the worst time. And when things calm down, you can reduce your shorts again. So, if you want to add the puts, go ahead. They are cheaper now anyway! As long you have the margin to spare because it’s also a consideration.


  175. Some big moves on earning:

    http://www.bespokeinvest.com/thinkbig/2011/11/4/best-performing-stocks-on-earnings.html

    Some might be worth a follow through!


  176. And some interesting earning stats as well:

    http://www.bespokeinvest.com/thinkbig/2011/11/3/a-look-at-earnings-reactions-and-report-day-volatility.html

    Volatility seems to be increasing (and taking up toward more positive responses)

     


  177. And to follow up on Phil’s rant today – not going to end well for the 99% it seems!

    http://www.frumforum.com/libertarians-for-oligarchy 



  178. No-cash-vember
     
    My credit union, which bills itself as "MidFlorida Credit Union--what a bank SHOULD  be!" has announced a No-cash-vember plan in which if you agree to use no cash in November and pay for all your purchases with your debit card, and reach a target set for you by MFCU, then you get a $10 gift card at the end of the month. I don’t really know what it is all about, but I can’t help thinking they are targeting Bank of American customers.


  179. On further investigation here it is:
     
    We’re Open for ‘Bank Transfer Day’!
    Saturday, November 5
    9:00 am – 4:00 pm
    November is bonus month and it’s your chance to get paid BIG to bank with us. Move your accounts to MIDFLORIDA and we’ll give you $127 with a new checking account*. That’s an extra $50 on top of our existing bonus! It’s only good for this month so come in today to make the switch to MIDFLORIDA and take advantage of this incredible offer!


  180. anyone read this

    The most important news announcement of the day was not anything to came out of Cannes  (as nothing did), nor from Greece (the merry go round farce there continues unabated). No, it was a brief paragraph distributed by the CME long after everyone had gone home, and was already on their 3rd drink. It is critical, because not only is this announcement a direct consequence of what happened with MF Global several days ago, but because also it confirms one of our biggest concerns: systemic liquidity is non-existanet. We confirmed interbank liquidity in Europe was at an all time low earlier today, and can only assume the same is true for US banks. But what is very disturbing is that this is just as true at the exchange level, where it appears the aftermath of the MF collapse is just now being felt. What exactly was the announcement. Unless we are completely reading it incorrectly, it is nothing short of a margin call for tens if not hundreds of billions worth of product. Because as of close of business on November 4, today, the CME just made the maintenance margin, traditionally about 26% lower than the initial margin for specs, equal. For everything. Which means that by close of business Monday, millions of options and futures holders will be forced to deposit billions in additional capital to the CME just so they are not found to be margin deficient, and thus receive a margin call. Naturally, since it is very unlikely that this incremental amount of liquidity can be easily procured in one business day, we anticipate the issuance of hundreds of thousands of margin calls Monday, followed by forced liquidations of margin accounts across America… and the world. Just like when Lehman blew up, it took 5 days for Money Markets to break. Is this unprecedented elimination in the distinction between initial and maintenance margin the post-MF equivalent of the first domino to fall this time around?
    From the CME (source):


  181. Savi,
     
    I just read the CME margin bombshell. I am not sure what it means and what to do… oh boy talk about monday madness. I guess I will have to spend hours with TOS support this weekend.. If I get through.


  182. CME/ Futures,
    This could be just for futures though. I am still trying to figure out if options and stocks will be impacted as this is the CME and not the CBOE.
    Anyone with more info/ insight please post.
    TIA


  183.  its looks like all products..i am calling some folks who would know…


  184. Savi
    If this turns out to be a true magin call for everything (which kind of sounds like the doomsday machine) then whatever goes down the most on Monday is probably just getting dumped for no good reason so likely a long term buy, like pm?


  185. Hey you guys are hanging out late into the night!  For CME, I did some digging and found that the Maintenance Margin is usually 10-15% lower than Initial Margin:
    http://www.cmegroup.com/clearing/margins/
    You can see the list of products in the Zero Hedge article.  Stock Futures on Indices are listed on page 70 of 71, including /ES and /TF, etc:
    http://www.zerohedge.com/news/cme-goes-margin-defcon-1-makes-maintenance-margin-equal-initial-everything
     
    A 10-15% margin increase in Maintenance Margin doesn’t sound significant if people are not over leveraged.  Since people would have the money when they buy/sell futures to cover the Initial Margin, the change would only take effect if the market moves against the position.  Previously, there is a 10-15% cushion with a lower Maintenance Margin, i.e. just a 1% to 1.5% move in the /ES for example.  Now there is no cushion.  However, I would think that the Futures players won’t load their account 100% all the time, so it may only affect a small number of players.  With that said, people may assess their positions and decided that they should have 10%-15% smaller positions and need to lighten up.  If there is equal number of longs as shorts, then the net is zero impact, but volatility increases with the whipsaws.  Yes, there may be panic selling or even short squeeze on Monday.  I’m not the expert on futures, so I’ll watch for more articles to come out in the next few days.   Hopefully CBOE doesn’t increase our index options margin!
     
    Hey, JRW warned us twice today at 1:09 and 3:46 PM that Monday could be "ugly".  He does have the crystal ball, doesn’t he?


  186. Hi Savi (and everyone), Yes I saw this on ZH, but I’m not sure where ZH got the definition of the margin hike to include Options as well as futures. I’m thinking this is just for futures. I don’t know how my positions would be affected, but I’d hate to get burned as I do have lots of spread trades, (ratios, calenders) on. If anyone gets thru to TOS please post it here.
    Wow, could be a wild week; of course it always is when Phil is traveling. I seem to remember reading the archives from some of the big market drops in ’08 and there were some comments from Phil like “ok kids, I’m gone for one hour and you let the market drop 400 points?” In fact, he mentioned he would be out of pocket one day and we need to nail that down so we can hedge accordingly.


  187. Good morning!

    Not sure how to take CME news. It might relate only to MF account transfers, in which case not a very big deal. If it’s a general call, it’s going to hit pretty hard, especially in pre-market trading (very good for our oil puts!) as forced liquidations in thin trading can be brutal.

    Be careful of apocalyptic warnings though, because someone like ZH (who have been praying for the World to end) throws out numbers like “billions” of dollars in liqudations – but that’s out of millions of accounts with trillions of Dollars.

    I hope no one here is even remotely close to fully invested and neither are any intelligent fund managers or other investors. So, even assumuing it has a brod effect, it simply means a reduction of buying power for most people.

    We’ll certainly find out more this weekend and there’s nothing we can do until Sunday night in any event but Futures players may want to log in at 6pm as it could be interesting.


  188. Barry’s succinct summation of week’s events:

    Positives:

    1) While Oct job gains were only 80k, the weakest in 4 months, the prior two months were revised up by a net 102k

    2) Initial claims below 400k at 397k

    3) Oct Vehicle sales in line with estimates but best level since Feb

    4) China service indices mixed relative to expectations but both firmly above 50

    5) Inida mfr’g PMI rises to 52 from 50.4 and South Korea rises a touch although remains below 50

    6) RB of Australia cuts interest rates 25 bps to 4.5% to help economic growth as one of the only responsible central banks in the world gave themselves bullets over the past few years

    7) ECB cuts rates to help economy but inflation is their mandate, Phillips Curve faith

    Negatives:

    1) Within payrolls, avg hourly earnings up only 1.9% y/o/y vs CPI near 4%

    2) ISM mfr’g and services both slightly below forecasts

    3) US Oct retail comps light

    4) Canada reports unexpected sharp drop in jobs

    5) Papandreou creates chaotic situation in Greece with referendum call. I’m all for democracy but that’s what elections are for and he made a deal with his EU counterparts

    6) Italian gov’t losing the faith of the markets to liberalize their economy, yields spike across their yield curve

    7) EFSF can’t sell bonds, an embarrassment for this supposed AAA paper

    8) German Sept factory orders unexpectedly fall for a 3rd straight month

    9) Euro zone mfr’g and services composite index revised down to 46.5 with Italian mfr’g specifically down to 43.3 and services at 43.9

    10) Euro zone CPI at 3%, holding at highest since Oct ’08, ECB bets it’s not sustainable with slowing economic growth, we’ll see

    11) China mfr’g PMI falls to 50.4 from 51.2, Taiwan drops to 43.7

    12) Bernanke officially lays groundwork for QE3. I say he is the most dangerous impediment to sound economic growth, more so than Congress that he has enabled and financed to spend the way they have.


  189. A much simpler summation of the last 4 years’ events


  190. I’m not sure, but could the CME news have something to do with this? :
     
     

    1020
    November 4th, 2011 at 9:57 am | PermalinkIgnore this user
    Reuters MF Global clients face day of reckoning as margins call By Jeanine Prezioso and Karl Plume NEW YORK/CHICAGO | Thu Nov 3, 2011 6:12pm EDT
    (Reuters) – Call it the mother of all margin calls: Up to 50,000 former customers of bankrupt broker MF Global must find some $1 billion in additional collateral almost overnight, or be forced out of their trades.


  191. I too, was curious why JRW was negative on Monday….
     
    Have a great weekend everyone!  :)


  192. Another article on the MF global mess…
     
    http://in.reuters.com/article/2011/11/04/idINIndia-60330920111104


  193. Yikes – after that Italian PMI, yields spiked again to 6.4%.


  194.  One of the reasons for the across-the-board margin change is likely that MF customers had positions held and cleared through CME which can be transferred to other clearing brokers, but the collateral (ie. cash) supporting the margin which was held be MF will likely be tied up by the bankruptcy trustee and process for a very long time.  Thus, the collateral held by MF will have to be replaced by its customers on those accounts transferred to other clearing firms.  Unless, of course, CME and the trustee can work out other arrangements on behalf of customers…


  195. Oh, and the other reason is that the $600 million of "missing" customer cash hasn’t been reconciled and is clearly not accounted for the at the CME…in other words, risk, to the current positions at the exchange that won’t be covered any time soon by MF…lol.


  196.  jmm/Bank Transfer Day – This is your credit union?  Do you have other bank accounts?  


  197. this isnt the mf cash which was found in custodial accounts at jpm is it …that HAD been missing


  198.  Not sure if this helps to clarify the CME situation, but Doug Kass has this letter from CME posted on his Twitter account:
    http://www.cmegroup.com/tools-information/lookups/advisories/clearing/files/Chadv11-400.pdf


  199. Thanks Manitow!

    Well so much for fretting over that one. Poor ZH – the “inevitable” collapse of the markets will have to wait another day…


  200. Web is very slow on this ship and we’re still in Florida! Does not bode well for the week but we’ll see…


  201. Streaming Content – FYI re the ongoing discussion of death of NFLX, rise of AMZN, Hulu, etc – there’s an interesting IPad app called Fanhattan that is kind of like a streaming/online movie/tv aggregation site. I haven’t used it much – but can take you to free content and wherever you subscribe. I was poking around last night – apart from grabbing content, it gives a pretty good comparison of who has what. Only NFLX and Hulu show as bonafide subscription streaming services. But AMZN, AAPL, etc are all repped there too.


  202.  My experience is that the web has always been slow on all the ships I’ve been on in the Caribbean. It doesn’t matter that you’re still in Florida as you’re still using a satellite connection.


  203. Here is a hometown firm that will be a big help in the future with satellite broadband:
     
    http://finance.yahoo.com/news/ViaSat1-Satellite-Reaches-prnews-4049194842.html?x=0&.v=1


  204. We have golf clubs as well….
     
    http://finance.yahoo.com/q/pr?s=ELY+Profile



  205. ….life is rad in Carlsbad…  :)


  206. the intial CME note on margin was unequivolcal doing away with maintenance levels and having a singular margin…INITIAL..what weenies..now instead of cutting back positions by 20% or infusing 20% more cash the boys will LEVER UP…yeehaw!



  207.  Greek PM set to resign today.  Selected interim leader convenes parliament to vote to approve Oct. 27 package.  Get money by Dec 11 to avoid default.  Hold elections after that to throw out the bastards.  Can successfully kicked down the road. Now, what’s so complicated about that?!  :)


  208. http://www.calculatedriskblog.com/2011/11/recent-rarity-forecast-upgrades.html

    A couple of forecast upgrades:

    Merrill Lynch: "An improvement in domestic demand and inventory rebuilding has led us to revise Q4 GDP growth to 3.0% from 2.3%"

    Goldman Sachs: "We have revised up our Q4 GDP forecast to 2.0% (quarter-over-quarter annualized) from 1.0% previously. The revision primarily reflects an upgrade to consumer spending, which showed solid momentum at the end of the third quarter."

    It is important to remember that this is still sluggish growth, and not enough to reduce the unemployment rate. And there are significant downside risks from the European financial crisis and U.S. fiscal tightening in 2012.


  209. Yeah, we sure have a lean 3.7 Trillion per year government StJ, one that cant find anything at all to cut. Its also amazing that in the 3.7 Trillion of annual spending that they could not find specific funds for infrastructure. stunning.

    surely Harry Reids Senate budget deals with all this and more.

    whats that you say ? Reid is ignoring his obligation to produce a budget, and hasn’t bothered for 3 years ?

    How can that be ?

    Yes we need to give Obama another supermajority in Congress because that worked so well during 2009 and 2010.

    Uh huh.


  210. Joe kernan – just turn off the sound man, we know how painful it is for you to consider views not aligned with yours. hands over ears and say “cant hear ya Joe and not listening anyway”

    :wink:


  211. bad manager super intentions


  212. AA / Will we have to roll the short weekly calls tomorrow or is it too early?


  213. Web access way worse here than Europe was but I’ll be able to do non-live things. Probably won’t be able to see streaming option chains though..

    Not too much excitement over the weekend.

    I should have a brif post up in the morning.

    For now I have to catch up on reading.


  214. Nf^^X \\banks
     
    Excuse the Spanish keyboard. The asterisk is some kind of alt key combo.  I am going to close my other bank account at the end of the month and open another in the DR, so I will just have the credit union in the US. The people there are very friendly and helpful and my banking needs are not complex. Anyway, it is just a bank by another name. And no checking account charges if you can manage to keep a balance of  $100 in a savings account.


  215. Hey Ya Cap!   Screw Politics – How ’bout them PACKERS?!!!  :)


  216. jmm/Banks – Thanks. I’m actually just trolling for anecdotal observations about CU’s as I’d like company to set one up for our base/membership. Much easier than “buying” even a cheap bank, etc.


  217. Phil,
    If you use the web versions of trading software (tos, ib, td am, etc) it will go much faster than "fat" clients like TOS desktop, IB TWS, etc.
    PS: Any thoughts on the greek puppet resigning?  I’d guess we’d be looking for a nice boost?  Y / N?


  218. 1020 – man, the Pack is looking good – Rodgers unreal; defense needs work. fun times.

    We should take in a game together.

    Anyone who scores Packers vs. giants in Dec for me will be BFF.


  219. This is somewhat lengthy, but given the potential impact of the event hypothesized, I thought it best to post most of it,  in case some members are hanging out there with USO short positions — from the Financial Times last week: FWIW
     

    The rhetoric in Washington and Tel Aviv is rising, and next week’s report into Iran’s nuclear program from the International Atomic Energy Agency, the nuclear watchdog, could further inflame the war of words.

    The US, France, Germany and the UK – as well as Israel – are concerned that Iran is developing a nuclear weapon capability. Tehran says the program is peaceful and is aimed at producing energy and for medical purposes. 

    If the IAEA report next week makes clear that Iran is working to develop a nuclear weapon, the chances of an attack against it would increase.

    What would be the impact on oil prices of a surprise attack and – as is most probable – the subsequent closure of the Strait of Hormuz, the main gateway for oil exports for key Opec producers Iran, Iraq, Kuwait, Saudi Arabia, Qatar and the United Arab Emirates?

    The Rapidan Group, a Washington-based consultancy, has just released a survey that offers a crucial insight into the market psychology in the event of an attack. The consultancy, run by Robert McNally, a White House oil adviser from 2001 to 2003, asked market participants what price response they would anticipate in the event of a surprise, overt Israeli attack in March 2012, taking into account current supply, demand and stocks fundamentals.

    The analysis is part of a broader analysis of the impact of a disruption. Mr McNally knows about it: he was doing the same job for real at the White House during the Venezuelan oil strike in early 2002 and at the start of the War in Iraq in early 2003.

    In the first hours of the attack prices would surge, on average, by $23 a barrel, according to the survey. Some market participants anticipate a spike of nearly $45 a barrel.

    The consultancy also asked market participants about their price view a month after the attack, depending of the magnitude of the supply disruption and the response of the International Energy Agency.

    If the supply outage is short-lived, the survey points to prices up by $11 a barrel. But a prolonged disruption – three weeks closure of the strait, with 15.5m barrels a day lost – with no IEA action would see prices up, on average, by $61 a barrel. The most extreme view puts prices nearly $175 a barrel higher. If the supply disruption is prolonged, but the IEA uses the strategic stocks, offsetting half of the supply loss, prices would be, on average, $39 a barrel higher.
     


  220. Oil
    even if there is no attack on Iran – persistent rumors may drive short term prices up
    I wouldn’t be surprised if those rumors subside as soon as backlog of Dec contracts is successfully rolled over


  221. FWIW A no fly zone was set up over Iran last week, but as soon as any immediate threat had past it was pulled.  I think if this was an imminent event the no fly zone would still be in place or a new one issued.  As of right now flights over Iran are a go, so sort of last weeks news I think.


  222.  Good morning!

    Better web connection in calmer seas.  For 30 cents a minute I should be getting T3 and a massage…

    So Greece is still fixed and now we’re back to worrying about Italy.  Italy is not like Greece, which I pointed out way back was simply not big enough to take the markets down by itself.  It has always been selling the contagion story that made Greece work as Greece, by itself, could vanish in a puff of smoke and the World would move right along, including the Financial sector, after shuffling a few dollars around.

    Italy is different.  They owe about $2.6Tn against a $2Tn GDP so 4x Greece, which means, by themselves, they can take us all down.  It doesn’t matter whether Greece is actually in trouble or not, the rumors should be enough to unsettle the markets so we have more weeks of violent, rumor-driven nonsense to contend with.  

    The Iran Oil thing is the same crap they bring out whenever the supply/demand story dies in oil.  Raise  your hand if you did not think Iran was working on a nuclear weapon.  There, see – no one.  This is not news and this will not be the first official report that says they are.  When oil was falling from $140 back to $20, they suckered a ton of people back in with pictures of Iranian processing plants that "proved" they were enriching weapons-grade uranium.  

    Yes, oil can spike up on these stories but it doesn’t change a fundamental trend once they start failing.  

    Click for
    Chart
    Current Session Prior Day Opt’s
    Open High Low Last Time Set Chg Vol Set Op Int
    Dec’11
    -
    -
    -
    94.07 * 20:07
    Nov 03
    -
    -
    270125 94.07 281300 Call Put
    Jan’12
    -
    -
    -
    86.87 * 20:04
    Nov 03
    -
    -
    76385 93.91 209962 Call Put
    Feb’12
    -
    -
    -
    76.68 * 20:04
    Nov 03
    -
    -
    31060 93.74 67141 Call Put
    Mar’12
    -
    -
    -
    100.44 * 20:04
    Nov 03
    -
    -
    21137 93.59 69760 Call Put

    We’ve got about 550M barrels on order in the front three months and they have done a good job working down from + 600M and, even more important, we’re past that fat December contract for rolling purposes so they can load up Feb and March now.  Contracts expire on the 20th, so a dozen trading days to dump 250,000 Dec contracts should not be a big problem.  In short, if we don’t get a good move down today, it’s not going to be worth sticking with Nov oil shorts.


  223. By the way, let me know if the times are right as I’m all confused here – for some crazy reason, they are keeping ship time at the old time until Wednesday.  

    Hey Berlusconi stepping down – time to go long on the futures!  RUT (/TF) over 740 with a tight stop is the easiest call.  


  224.  


  225. 6:00 AM Overseas: Japan -0.39%. Hong Kong -0.83%. China -0.73%. India closed. London -1.44%. Paris -1.45%. Frankfurt -1.30%.

    Monday’s economic calendar:

    8:40 Eric Rosengren speaks at "New England Works" conference 

    3:00 PM Consumer Credit 

    Notable earnings before Monday’s open: CCJDISHHPT,KWKMFANGLSNNNSYY 

    Notable earnings after Monday’s close: BEXPBIDCFN,GTATHOLXOASPCLNRAXWMSYOKU

    EU stocks are down in early trading after Greece agrees to form a new coalition government but fails to name a PM, while thepolitical turmoil in Italy continues to intensify. Greek shares are +3%, but Euro STOXX 50 -2.1%, London -0.3%, Paris -2.3%, Frankfurt -2.7%, Milan -1%.

    Market players reckon Italian bond prices would recover and the yield spread over German bunds would fall by a percentage point if the government were to collapse, a Reuters survey has found.Conspiracy theories abound that the ECB is letting the yields rise to put pressure on Berlusconi to quit.

    Following the resignation of Greek PM George Papandreou last night, he and opposition leader Antonis Samaras are due to meet today to discuss who will become PM and the makeup of the Cabinet in the new interim unity government. The frontrunner for PM is Lucas Papademos, former Deputy President at the ECB.

     “I am impressed that the people have not yet stormed into Parliament and burned the politicians alive – like a souvlaki,” says a retired truck driver in Greece who just sent his life savings of €50K to Sweden. With eyes often focused on the latest from Berlin or Brussels, forgotten is the economic devastation on the ground in Greece, the tinderbox it has created, and the accelerating bank run that may ultimately end this.

    German travel agency Tui has asked Greek hoteliers to sign a contract amendment agreeing to accept payment in drachma should the country leave the euro. "We have to protect ourselves," says a company spokesman. At the moment, it appears Greek hotel owners have no intention of agreeing to such a deal.

    Good news on deck for tomorrow: France will slash its budget deficit by 20% in 2012 from €113B ($156B) this year, PM Francois Fillon says, with half the savings coming from spending cuts and the rest from increasing state revenue. The government could reportedly announce the measures tomorrow.

    Next crisis!  Japan’s debt is on course to top ¥1 quadrillion ($12.8T) – or ¥1,000T – by the end of the fiscal year next March, a report says. Debt is rising quicker than expected due to earthquake reconstruction spending and efforts to weaken the yen in the currency markets.

    Those bashing Ben Bernanke over his inflation record should look at the stats, says Jon Hilsenrath in the WSJ. CPI on Bernanke’s 67-month watch has averaged 2.3%, giving him one of the best records of all Fed chairmen. It’s lower than Alan Greenspan’s 3.1% and Paul Volcker’s 6.2%, although the latter did inherit double-digit rates.

    Speaking of stats:  The number of jobless receiving unemployment benefits has plummeted to 48% from 75% early last year, with nearly a third of the 14M people without a job not having worked for at least a year. Around 2M have used up 99 weeks of checks and still haven’t been hired. - So that means unemployment is more like 11% – we just stopped caring about 2% when their benefits ran out

    Matt Taibbi rails at Mike Bloomberg’s attempt to pin the prime-lending implosion on Congress: "Far from being dragged into poor neighborhoods and forced to give out home loans… companies like Countrywide and New Century charged into suburbs and exurbs from coast to coast with the enthusiasm of Rwandan machete mobs, looking to create as many loans as they could."

    Mounting evidence that sugary drinks and fatty foods lead to addiction could spark the most important consumer safety battlesince cigarettes. One-third of U.S. adults and 17% of children are obese – adding about $150B to healthcare costs and shaving anywhere from 2-10 years off people’s lives. 

    Day after day of wild stock-market swings may have obscured the fact that the S&P 500 has gone almost nowhere over the past three months, Floyd Norris notes. Look at "excess volatility" – and smooth out the rough spots – and you can see whether the market is really backtracking, suggesting an economic shift. Or is a structural shift on?


  226. Must read from Barry:

    >

    My Sunday Business Washington Post column is out. This morning, we look at The Big Lie and the Financial Crisis.

    The print and online versions had the same headlines: What caused the financial crisis? The Big Lie goes viral. (You can see the excised bits that did not make it to the final version here).

    Regardless, here’s an excerpt from the column:

    “A Big Lie is so colossal that no one would believe that someone could have the impudence to distort the truth so infamously. There are many examples: Claims that Earth is not warming, or that evolution is not the best thesis we have for how humans developed. Those opposed to stimulus spending have gone so far as to claim that the infrastructure of the United States is just fine, Grade A (not D, as the we discussed last month), and needs little repair.

    Wall Street has its own version: Its Big Lie is that banks and investment houses are merely victims of the crash. You see, the entire boom and bust was caused by misguided government policies. It was not irresponsible lending or derivative or excess leverage or misguided compensation packages, but rather long-standing housing policies that were at fault.”

    I like the layout and art work in the dead tree version of the paper:

    >
    click for ginormous version of print edition

    >

    >

    Source:
    What caused the financial crisis? The Big Lie goes viral.
    Barry Ritholtz
    Washington Post, November 5, 2011 
    http://www.washingtonpost.com/business/url.html

    Washington Post Sunday, November 5, 2011 page G6 (PDF)


  227. Berlusconi NOT resigning – out of long futures!
    Isn’t this fun?


  228. Warning Ratio Highest In a Decade (WSJ) 

    Taibbi: Mike Bloomberg’s Marie Antoinette Moment (Rolling Stone)

    Looks and smells like bear-market rally (Market Watch)

    How Appraisals Are Derailing Home Sales (Smart Money)

    Is The U.S. About To Invade Iran?

    Generation Jobless: Young Men Suffer Worst as Economy Staggers. Few groups were hit harder by the recession than young men, like Cody Preston and Justin Randol, 25-year-old high-school buddies who didn’t go to college. The unemployment rate for males between 25 and 34 years old with high-school diplomas is 14.4%—up from 6.1% before the downturn four years ago and far above today’s 9% national rate. The picture is even more bleak for slightly younger men: 22.4% for high-school graduates 20 to 24 years old. That’s up from 10.4% four years ago.

    Rising Poverty is bad, but less bleak than originally depicted (NYT)

    Hedge Funds Curb Raw-Material Bets for First Time in a Month: Commodities. Speculators reduced wagers on higher commodity prices for the first time in four weeks on mounting concern that Europe’s failure to contain its debt crisis will slow economic growth and demand for raw materials. Money managers cut combined net-long positions across 18 U.S. futures and options by 3.9 percent to 798,787 contracts in the week ended Nov. 1, Commodity Futures Trading Commission data show. The Standard & Poor’s GSCI Index of 24 raw materials tumbled 14 percent since reaching a 32-month high in April. “When you look out and see what’s happening in Europe, you get very worried that demand could disappoint,” said Nic Johnson, who helps manage about $30 billion in commodity assets at Pacific Investment Management Co. in Newport Beach, California. “How stable is industrial demand? Is it sustainable? People are waiting to see whether weakness shows up in the numbers.” Fifteen of 24 commodities tracked by the S&P GSCI fell last week, led by a 5.4 percent decline in cotton, a 4.6 percent retreat in aluminum and 4.1 percent drop in nickel.

    Goldman Sachs(GS) On The One PIIG That Really Matters: Italy.

    Europe’s Rescue Fiasco Leaves Italy Defenceless. The six weeks allotted to save monetary union have expired. The G20 has come and gone, yet no workable firewall is in place as the drama engulfs Italy and threatens to light the fuse on the world’s third largest edifice of debt.

    Europe’s Struggle to Keep Growing – And Avoid Vicious Cycle. Europe is at risk of a potentially devastating negative feedback loop. The economy is "practically in free fall," says Yves Mersch, a member of the European Central Bank’s governing council. ECB President Mario Draghi has warned publicly of a recession. The latest economic data bear out their gloomy assessments. Failure to tackle the sovereign-debt crisis has fueled the downturn, but a new recession makes the crisis even harder to solve.

    Credit Agricole Freezes Leveraged Loans. Credit Agricole’s (ACA.FR) London leveraged finance desk has put a freeze on lending until the new year, according to six people familiar with the matter. Credit Agricole declined to comment. Other European banks are considering stepping back from corporate lending in the face of macroeconomic uncertainty and the euro-zone crisis.

    Crisis will not go away until banks face reality (Fortune)

    Old Debts Dog Europe’s Banks. European banks are sitting on heaps of exotic mortgage products and other risky assets that predate the financial crisis, adding to pressure on lenders that also are holding large quantities of euro-zone government debt.Four years after instruments like "collateralized debt obligations" and "leveraged loans" became dirty words because of the massive losses they inflicted on holders, European banks still own tens of billions of euros of such assets. They also have sizable portfolios of U.S. commercial real-estate loans and subprime mortgages that could remain under pressure until the global economy recovers.

    Greece Euro Exit Threat is ‘Pandora’s Box,’ Morgan Stanley Says. European leaders may have opened a "Pandora’s box" of unintended consequences by raising the possibility of Greece leaving the euro, according to Morgan Stanley. Responding to Greek Premier George Papandreou’s plan to hold a referendum on the nation’s second bailout, Angela Merkel and Nicolas Sarkozy last week said the question must be framed as a choice between staying in the euro and submitting to the bailout, or exiting the single currency. Papandreou canceled the vote amid growing pressure on him to resign. The possibility of leaving the euro has been "so far a taboo in European political circles," Joachim Fels, Morgan Stanley’s chief global economist in London, wrote in a note to clients today. 

    Sad Proof of Europe’s Fallout. WHO are you going to believe — me, or your own lying eyes? That old line from the Marx Brothers came to mind last week as MF Global, the brokerage firm run by Jon S. Corzine, was felled by over-the-top leverage and bad derivative bets on debt-weakened European countries. Suddenly, all of those claims that American financial institutions have little to no exposure to Europe rang hollow.

    China PMI, Inflation Signal Rate Cut Unlikely. China’s central bank probably won’t follow G-20 counterparts such as Brazil and Australia in cutting interest rates unless there is a deeper slowdown in manufacturing and inflation, history shows. The PMI was at 38.8 and inflation 2.4% in November 2008 when the People’s Bank of China last lowered its polity rate below the current level of 6.56%. The most-recent figures for manufacturing and CPI are 50.4 and 6.1%, respectively. "There’s no urgency for a rate cut," Ken Pang, senior economist for China at BNP Paribas SA, said in an interview. "Shifting to a loose monetary policy needs a consensus among government officials, which will only be reached when economic growth weakens more obviously."

    China Credit Squeeze Prompts Suicides, Violence. Wenzhou’s 400,000 businesses are facing financial hardship because of rising costs, soaring black market interest rates and a sudden credit squeeze, Zhou said. Similar problems are happening across China because private enterprises in China rely on underground borrowing rather than banks to operate, he said. “This is a much bigger problem across the country,” said Tao, who estimates outstanding private loans stand at 4 trillion yuan, or 8 percent of total lending in China. “Wenzhou is just the tip of the iceberg.” Most of the informal lending has been pumped into real estate developers riding China’s property boom that is showing signs of slowing, said Tao.

    Berkshire(BRK/A) Profit Declines 24% on Buffett’s Derivative Bets. Buffett, 81, uses derivatives to speculate on long-term gains in stocks and the creditworthiness of corporate and municipal borrowers. The contracts tied to equity indexes, which aren’t scheduled to settle until 2018 or later, produced a loss of $2.09 billion in the period as the Standard & Poor’s 500 Index posted its biggest decline since 2008. Liabilities on the equity derivatives rose to $8.85 billion. “He’s been in the negative position for some time now and I’m not worried yet, but it’s something to keep an eye on,” said Tom Lewandowski, an analyst with Edward Jones & Co., who has a “buy” rating on Berkshire. - If they sell off on this, it’ a good buy.  

    High Yield Bonds – Signs of Recovery in US and Europe. There are now tentative signs that the high yield market is recovering from the third quarter’s panic – particularly in the US, the largest and most developed junk bond market.

    What’s Wrong with Groupon? (Baseline Scenario)

    Apple’s Siri is eating Google’s lunch (Market Watch)

    china GDP per capita japan

    Signs of demand in this chart but probably caused by lack of imports and SPR transfers we have noted:  

    rail petroleum shale


  229. where was this rumor about Berli?..he won’t leave til after christmas..he loves those huge parties!


  230. hahahaha…they call europe a welfare state….


  231.  cnbc said "oil is so strong global economy must be pretty good."….not acknowledging the massive dump of "israel is about to attack iran" stories…ha!


  232.  Angel:  Both the U.S. and Europe are welfare states, but the U.S. has the rather useful habit of permitting employers to fire everyone with 6 months of unemployment benefits.  "Jungle Capitalism", the French call it, but the Chinese are apparently more admiring.
     
    "If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack.
    "Why should, for instance, within [the] eurozone some member’s people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair. The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard."
    Jin Liqun, the supervising chairman of China’s sovereign wealth fund"
     
     Does it matter?  If Europe is looking to China for a bailout, it does.  We already have our Chinese bailout through Chinese purchases of Treasuries.  Although they may have to sell them to bail out their impending housing crash.  There are no "angels" here.  Excepting yourself, of course…


  233.  Same story, another day — IWM trades almost tick for tick against FXE.  No one is making judgments about individual stocks, apparently.  I don’t even look at the indices — when FXE loses or gains a few ticks, I dump TNA/TZA and I’m good.  I find this strange.


  234. From a British fund that is 30% invested in equities, reflecting their very conservative view of the current market:
     
    "we have significantly added to our Seagate positions at $12 following the onset of the floods in Thailand as at least 40% of the world’s hard disk drives production and related components is located there and the company is unaffected. This means that supply will remain very tight for at least 6 months and should result in very strong pricing for Seagate. In addition, the shares are cheap at 9x earnings and the merger with Samsung has been approved by the European authorities, paving the way for further market share gains. Separately we have added Nokia to the portfolio at Eur 4.25 after noticing a marked improvement in their low-end offering in the Indian market. Our purchase was ahead of the new Windows phones announcement which gave us further comfort that the company has reversed its negative momentum. Its performance in emerging markets should continue to surprise in the coming months."


  235.  Note:  Seagate is now $18.