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Monday Morning Musings

I’m back!    

We’ll see if being away for a week has given me good perspective.  It certainly seems like I picked the right week to skip as we’re right back where we were when I left so all that happened during the week (see Stock World Weekly for a great review) was just noise, I suppose.  

We finished the week on a bearish note, shorting oil and the Dow (Nov $120 puts came in at $1.05) on expectations that SOMETHING would go wrong over the weekend.  When the entire Global economy is held together by nothing but spit and bailing wire, it only takes just one more loose screw for the wheels to come off these bullish wagons.  

This morning it’s one of those "meet the new boss, same as the old boss" things as the European markets realize that Italy may have a new Government this week but that’s sort of like announcing to the passengers on the Titanic that you have elected a new crew AFTER they hit the iceberg – maybe the new guys are REALLY good at bailing out water but you’re still going down eventually… 

Italy’s parliament over the weekend approved additional austerity measures and economic reforms aimed at reassuring investors and Italy’s European partners that Rome can get its massive debt load under control. Silvio Berlusconi formally resigned as prime minister, with economist, Mario Monti, tapped to head a new technocratic government.  In a test of market confidence, Italy sold €3 billion ($4.13 billion) of five-year Italian government bonds Monday morning and the yield rose sharply to 6.29% from 5.32% – up almost 20% since last month.  

"It will take time for reforms to be implemented and for their beneficial impact on economic growth and debt dynamics to be realized," wrote strategists at Barclays Capital. "In the meantime, reforms are likely to contribute negatively to economic activity, suggesting that any risk rally on the back of the weekend’s news may not be sustained."

All right, we’re officially done worrying about Italy now.  We worried about it last week and where did it get us?  Nowhere!  Down 400, up 400 but the bottom line remains that we are still in our trading range and it’s going to take more than a new Italian Government to get us over those 5% lines – as well as the 10% lines that mark the true tops of our range (which were tested in July).  

We will still be considering it bullish progress if we can simply hold those Must Hold lines for the week on the Dow, S&P and Nasdaq but it don’t mean a thing if the NYSE and Russell can’t get over their Must Hold lines so we’ll be watching 735 on the Russell (-5%) as the critical indicator that will turn us quickly bearish if it fails.  

Our Financials are still weak with XLF at $13, still at the bottom of our target range for the year.  Please don’t tell me we have a global recovery when our financials are still in the toilet – it’s ridiculous.  While we were recently gung-ho buyers at $11, we are cautious buyers at $13 but I still expect a re-test of the 200 dma at $14.50 if we can catch a break by going maybe 3 consecutive days without another debt crisis (iffy).  

A fun way to play for XLF to go up 10% is to buy the newly reverse-split FAS Jan $65/80 bull call spread at $6.80 and sell the $55 puts for $6.85 for a .05 credit on the $15 spread.  While you risk being assigned XLF at net $54.95 (a 20% discount to the current price), the upside potential is a $14.95 gain or 29,900% on cash.  If you want to take a bullish poke at the market, that’s probably the way to go between now and January.  

Speaking of bullish pokes – Warren Buffett spilled the beans this morning on our IBM trade.  Both Warren and I have liked IBM as a long-term hold, even as they reached record highs this year only Buffett had $10.5Bn to buy IBM with so his call is getting more attention than mine did.  I feel better knowing Warren was the mystery buyer who was keeping the price higher than expected.  

Buffett said something all Members should take note of this morning – that he hopes that IBM goes LOWER now that he has accumulated a full position because then IBM will buy back more of their stock and his percentage of ownership will increase without him having to buy more.  As I often preach to Members, we don’t care about the PRICE of a stock that we are looking to hold long-term – we care about it’s VALUE – and those are two VERY different things.  My comment to Members on IBM in early October (after a poor ECRI report) was:  

Back to ECRI – I don’t really care if they are wrong or right. In a recession, I want to own IBM. In a flat economy – I want to own IBM. In an up economy – I want to own IBM. The trick is – when can I buy it cheaply? If the only time I get to buy IBM (or MCD, KO, VLO, XOM, X, AA, FCX, GE…) cheaply is during a recession – then bring it on!

(From 8/29 Member Chat): If you think IBM is just a number on a chart then you can worry about QE3 and Bernanke and Europe and animal spirts and whatever other BS but if you think IBM is America’s best Tech R&D company (yes, better than AAPL) with an incredible international sales force, 100 years experience and more patents than any two other companies who are still managing to drop 10% to the bottom line in this economy plus pay a 1.8% dividend – then IBM may seem like a bargain at $169.

Congratulations to all of our Members who’ve been accumulating IBM this year – we certainly beat Buffett’s entry by selling puts that kept us well below $160 and now I think we have a pretty solid floor although I still don’t see $200 being broken this year without a QE3 announcement – just because you love a company, doesn’t mean you have to value it unrealistically.  The same goes for our beloved AAPL at the moment, as we are back and forth on where a good re-entry would be.  More on that later.  

It’s not a huge data week but we have Fed speak from Bullard, Evans, Lacker and Fisher tomorrow and then Lacker again along with Renegren and Pianatto later in the week.  We have some short-term note auctions and a 10-year TIPS auction on Thursday.  PPI, Retail Sales, Business Inventories and Empire Manufacturing lead off our data tomorrow followed by CPI and Housing Data on Wednesday and Thursday is our big day with Housing Starts, Consumer Comfort (which needs to confirm Friday’s surprisingly good Consumer Sentiment), Philly Fed and, of course, another 400,000 Americans losing their jobs for the week.  Friday brings us back to ECRI which, if you were paying attention 3 paragraphs ago, has been indicating a US Recession since early October.  

The Dollar needs to get below 77.50 in order for the indexes to gain traction and, for that, the Euro has to show us something over the $1.36 line so those will be our critical watch levels today as we essentially cross our arms and dare the market to prove us wrong for shorting oil and the Dow into Friday’s rally.  Tomorrow morning is Germany’s Q3 GDP Report and we may see signs of significant damage as Germany gets "contagion" from the austerity measures they are forcing on their neighbors – so it would take a lot to get us to flip bullish today.

On the whole, we will see how the day goes before placing our bets for the week.  

 


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  1. Good morning Phil,
    Hope you had a good holiday.  Looking at gasoline futures and they are off quite a bit.  Any point playing them long?  Also while Oil had moved higher last week, /RB actually fell 4%, so is there no strong co-relation between the two?


  2. This is the best depiction of today’s Europe that I could find
    http://www.youtube.com/watch?feature=player_embedded&v=5xymh6P6n1o


  3. Phil/Titanic,
     
    Good analogy.  How do they think this new Government is going to do anything.  The root problem is they don’t want to do what they really have to do to correct the issue.
     
    Interestingly, I noticed while I was away last week that Issue 2 in Ohio went down in flames.  It’s laughable that the President is running around talking about how "we" need to stop being lazy and do more to encourage business to invest here in the USA, and the "people" are retracting policies that are designed specifically to make our State more attractive.  They have the exact same problem in Europe.  The politicians are saying one thing and the people are thinking the exact opposite. 
     
    How does the old saying go……what the government giveth….the government can’t taketh away.


  4. welcome back Phil


  5. Back in USA…

    Oil Lines

    R3 – 100.60
    R2 – 100.14
    R1 – 99.65
    PP – 99.20
    S1 – 98.71
    S2 – 98.26
    S3 – 97.77

    Yesterday’s high and low – 99.69 / 98.75

    Breakout lines – 101.21 / 96.28

    We have already tested S3 today!


  6. Phil
    Welcome back!


  7. exec/business
     
    Interesting interview with Jennifer Granholm on CNN Farouk Zachary this weekend.  She said that when a factory was about to move away she made them an offer they could not refuse, a new factory and 20 years of no taxes, but they thought about it for a few minutes and said there was still no way Michigan could compete with $1.70 per hour wages in Mexico, so thanks, but no thanks.
     
    All Western governments of nations that had the industrial revolution early are facing this dilemmma. At one time the American south used slave labor to produce cotton that was shipped to the cotton mills of Lancashire, UK where it was fashioned into loincloths and exported to India where billions had no choice but to buy UK merchandise.
     
    Now where are the cotton picking cotton fields? I don’t know, but the cotton mills of Lancashire, England are now converted into condominiums if they are located on a scenic canal (formerly used for Interstate commerce, but now only for leisure cruises and noncommercial fishing), DIY centers, and garden centers, or even worse, discount warehouses selling cheap clothing and household fabrics  imported from India. The Empire has struck back and will continue to do so. For a while the cotton mills did hang on, and survived by importing cheap labor from Pakistan, but in the end the business died, though the Pakistanis and their descendants remained plotting dark millennarian revenge from their quaint millworker’s cottages
     
    Manufacturing can only thrive when it has an advantage. Maybe that is the laws of an empire, a currency advantage, cheaper labor, a tax free environment, but rest assured that there is no free market and never was. It is a dog eat dog world and right now the US is getting eaten for breakfast by the Asian Tigers. The white picket fence, the model T Ford in the driveway, and a chicken in every pot are the American dreams of the past. The neat suburban home is in foreclosure, the Toyota with 350,000 miles is rusting, and the chicken is KFC.
     
    In my view the long term future of the US will be more like that of central America today. Here in the Dominican Republic six adults and a driver pile into a Toyota Corolla taxi, but a journey of 20 miles only costs $1. That is the future of the US. It may take a while to get there, but it is coming.


  8. Phil – Options start trading on GRPN today.


  9. For TOS users….make sure it is real time.  Mine has ‘partially delayed’.  PP for today.


  10. Hey all just a quick note for those using TOS.  The futures and forex in your account may be delayed with the most recent update.  It happened in mine and I called them and got it corrected while on the phone.  Check your "market Data" in the top left corner.  Mine said partially delayed when I started the platform this morning.


  11.  First sell rating issued on GRPN.   12 month target is $15, down 40%.


  12. 1.70 per hour or lower!..mexican nationals we know said or less..holy shit!
     
    http://www.businessinsider.com/congressional-insider-trading-revealed-on-60-minutes-2011-11


  13.  Welcom back Phil!, How’s the suntan?


  14. AA Money Recap

    Long strangle:

    Jan 13 12.5 calls – $1.27 now $1.36
    Jan 13  7.5 puts – $1.04 now $0.90

    Short:

    November 10 calls – $0.56 now 0.63
    November 11 puts – $0.85 now 0.58


  15. STJ, Did you backtest the IRA strategy yet? 


  16.  button – did you fix something on your end or did they? I’m still waiting for support, and I have the same problem.


  17. Learning new words from Barry:

    http://www.ritholtz.com/blog/2011/11/the-cognitive-dissidents/

    As we have seen, there is a cynical attempt to falsify the narrative of what actually occurred before, during and after the credit crisis. The data is overwhelming as to what did and did not cause the financial collapse. The belief that markets can self regulate, that bankers can be trusted to act int heir own best interest, even that people are rational, have all been shown to be siilly nonsense. [...]

    Some people have recognized their belief system was overrun by reality. They are chastened, have begun searching for a new or modified ideology.

    Many others refuse. Facts be damned, they double down, sticking with their beliefs, regardless of all evidence to the contrary.

    I have a new name for these folks: They are Cognitive Dissidents. They will continue to dissent from reality for as long as it takes to get everyone else to believe as they do, no matter how much evidence there is to the contrary.


  18. kurtww / TOS,
     
    They fixed it


  19. Backtest / l4real – I did the backtest on everything but verticals. The last 2 years have been tough on the system without proper stops. The moves are so violent that you get whipsawed in and out of the market. For these time, I am not sure that there is a "best" system. But I’ll publish what I have and we can maybe adapt it. 


  20. Phil:   I’m holding a number of Nov 19 GOOG 605/610  bull call spreads purchased at 3.00 with intent to hold thru the week to sell at 5.00.      If you had 100 of these right now what would you do with them?  


  21. Barry has a good graphic comparing the 2 protest movements:

    http://www.accelerated-degree.com/faceoff-occupy-wall-street-vs-tea-party-movement-infographic/ 


  22. Some market cycle rules from Barry:

    Here are Ed Easterling’s 12 Rules of Market Cycles:

    1. Secular cycles are driven by the inflation rate (deflation, price stability, and higher inflation)

    2. Secular bulls occur when P/E starts low and ends high over an extended period

    3. Secular bears occur when P/E starts high and ends low over an extended period

    4. Cyclical bulls and bears are interim periods of directional swings within secular periods

    5. Cyclical cycles are driven by market psychology, illiquidity, or other generally temporary condition(s)

    6. Time is irrelevant to the length of secular stock market cycles

    7. Secular bulls require a doubling or tripling of P/E

    8. Secular bears occur as P/E stalls and falls by one-third to two-thirds or more

    9. When real economic growth is near 3%, there is a natural floor for P/E between 5 and 10, a natural ceiling around the mid-20s, and a typical average in the mid-teens

    10. If economic growth shifts upward or downward for the foreseeable future, the natural range moves upward or downward, respectively

    11. Inflation drives P/Es location within the range; economic growth drives the level of the range

    12. The stock market is not consistently predictable over months, quarters, or periods of a few years; the stock market is, however, quite predictable over periods approaching a decade or longer based upon starting P/E 


  23. The trend is not always your friend:

    Scary stuff…


  24. Hello Phil, I am thinking about shorting ANF before earnings. Could you give me an advice about what would be a comparatively safe way of doing that? Also what do you think about shorting FRX and GRMN?


  25. Good morning! 

    It is so good to be back at the command center except I will admit it’s almost information overload after dialing it down to 2 laptops and an IPad for 10 days.  Still, I love immersing myself in the markets again – while I do love to sit on a beach once in a while, there’s no challenge to it – I still don’t know how people can retire.  My Grandfather finally did at 83 and he regretted it for the next 15 years!  

    Anyway, I talked about the Big Chart and Data and posted a good, bullish XLF trade idea in the post above so not much to say here except it’s great to be back live and let’s make some money this week!   

    Catching up on the news:  

    At the open: Dow -0.19% to 12131. S&P -0.38% to 1259. Nasdaq -0.25% to 2350.
    Treasurys: 30-year +0.39%. 10-yr +0.24%. 5-yr -0.738%.
    Commodities: Crude -0.66% to $98.24. Gold -0.15% to $1785.45.
    Currencies: Euro -0.74% vs. dollar. Yen -0.19%. Pound +0.85%.

    Market preview: S&P futures -0.4% and join EU shares in falling, with the effect of Super Mario’s appointment as pro consul of Italy wearing off following a rise in Italian bond yields at an auction. In corporate news, Boeing +3% in the wake of an $18B order, IBM +1% after Warren Buffett reveals a 5.5% stake, and JC Penney -3% following earnings. No economic announcements today.

    Shares are halted in Italy’s Unicredit after the announcement of a €10.6B loss in Q3 against expectations of a €7.4B profit. The bank will slash 5.2K jobs, eliminate its dividend, and proceed with a capital raise of €7.5B (market cap is €15B). Unicredit is the only Italian lender among 29 financials worldwide considered systemically important financial institutions. (earlier)

    It’s not impossible to achieve the kind of fiscal cuts Mario Monti will attempt in Italy, writes Gavyn Davies, observing Ireland (98-00), Belgium (95-07), and Italy (95-02) have done it in the past. However, those episodes all occurred alongside speedy economic growth; achieving the same in the midst of a recession "will be very impressive, to say the least." 

    Next! Spanish debt needs a little love from the ECB as yields on its 10 year paper jump above 6% and the spread to Italian debt – 150 bps last week – narrows to 65 bps. The country is trying to cut its 6.6% deficit/GDP ratio with austerity measures even as the economy – with 21% unemployment – has stagnated. The math doesn’t add up.

    On deck:  Dollars are exiting Argentinian banks just days after the country instituted currency controls aimed at stemming a drain on central bank reserves. The government insists there will be no freeze on dollar deposits, but citizens have seen this movie before. ARGT -24% since its March inception. [

    Greek opposition leader Antonis Samaras says his party will not vote for any new austerity measures demanded by the country’s creditors, arguing the mix of policies should be changed. Forget politics, of more import is an advertisement in the reporting paper offering a place for wealthy Greeks to stash their money.

    "Troika" inspectors are due in Athens today as Greece looks to qualify for its 2nd bailout and an €8B tranche from the earlier rescue. The EU and IMF say they won’t transfer the tranche without written pledges from Greece’s main politicians backing austerity, but the opposition’s Antonis Samaras says he won’t sign anything under external pressure. 

    While German Q3 GDP is expected to print positive tomorrow morning, it will be the "last hurrah before the recession," says Goldman’s Dirk Schumacher. The more recent indicators "point to a clear loss of momentum during (Q4)," suggesting the economy has already slid into recession.

    "Europe is in one of its toughest, perhaps the toughest hour since WWII," says Angela Merkel, speaking to members of her CDU party. She offered no new solutions to the crisis (we can be thankful for that), but reiterated her dedication to saving the euro, and Europe. 

    Eurozone industrial output -2% M/M vs. +1.4% in August, the biggest drop since February 2009. Germany -2.9%, France -1.9%, Italy -4.8%. (PR .pdf

    Things are really starting to get dangerous when "informed opinion is willing to turn a blind eye to EU sovereign trespass," writes Ambrose Evans-Pritchard following the fall (at German-Dutch hands) of 2 democratically elected governments. Can use of the courts, police power, and "ultimately EU border troops – for those old enough to remember the Soviet methods of fraternal assistance," be in the future?

    Should market voaltilty not get in the way, this week could be the busiest of the year for IPOs, with nine companies due to go public, starting on Wednesday. The standouts are Angie’s List, which is looking to raise $114M on the Nasdaq, and Delphi Automotive, which has a $578M offering on the NYSE.

    Warren Buffett claims IBM didn’t know about his 5.5% stake in the company until hearing about it this morning on CNBC which brings to mind a bit of a mad scramble at corporate headquarters among execs the news broke. The position – accumulated mostly in Q3 – will be detailed in Berkshire Hathaway’s (BRK.A) SEC 13-F filing later today

    Goldman Sachs raises its outlook for gold – backed by a scenario of continued low interest rates in the U.S. and support from an ongoing European financial crisis – now seeing prices jumping to $1,760/oz in 3 months and all the way up to $1,930/oz in a year. The firm also boosted its forecast on silver to $29.40/oz for 3-months and $32.20/oz for a one year time frame.

    The OECD’s composite leading indicator index falls in September to 100.4 from 100.9. previously, the 7th straight monthly decline. The index remains above 100 growth/decline line in the U.S. and Japan, but fell below in places such as Canada, Brazil, and China. 

    Robots and space elevators are among 100 "shoot-for-the-stars" ideas being developed at Google X (GOOG), a lab in the tradition of Xerox’s (XRX) PARC but so secret that only a small number of employees and the NYT know about its work. Sergey Brin is heavily involved in the lab, which hopes to release one product by the end of the year.

    Another stock on my Perma-Buy List:  Shares of Boeing (BA) tack on a 2.2% gain premarket after landing several contracts (I, II) at the Dubai Air Show from Mideast buyers. Nomura analyst Jason Adams says (video) the firm’s 787 is an incredibly good value proposition that has Gulf-region countries placing orders at a pace that may outstrip demand if economic growth doesn’t sustain.

    More from Boeing (BA): The company forecasts airlines in the Middle East will need an estimated 2,520 airplanes worth $450B by 2030. The Middle East’s fleet of passenger airplanes will surge to an estimated 2,710 from the current 1,040, with about a third of projected demand for replacement aircraft and the remainder for fleet expansion plans. (earlier: I, II)

    In a bad omen for Research In Motion (RIMM), mobile software developers who say they are "very interested" in RIM’s operating system fell 7 percentage points to 21% in a survey conducted jointly by researcher IDC and Appcelerator. Strong interest from developers in the firm’s QNX-powered Playbook tablet also fell lower – now standing at a paltry 13%. The usual suspects – Apple (AAPL) and Google (GOOG) – kept their high-visibility with app-writers, while Microsoft (MSFT) was the poll’s biggest gainer as it added 8 points to register a 38% mark.

    The first reviews for Amazon’s (AMZN) Kindle Fire are ambivalent. "The Fire does not have anything like the polish or speed of an iPad (AAPL)," says the NYT‘s David Pogue. Engadget calls the device "a great value," and loves its content integration, but also writes, "When stacked up against other popular tablets, the Fire can’t compete."  


  26.  STJ, That’s very interesting! I wonder if reducing the time frame for holding a large position might show a better result.


  27. Phil-can you keep us posted on the oil that is being rolled? I would like to know when to close out the puts. Thanks


  28. Phil:
    It will be great if, when u get a moment, do a summary of all our current holdings on the WCP. I still am holding short DECK 115 Dec calls and some of GNW Jan spreads. I know that GNW spreads are meant to be a longer term holding – but I am not sure if we exited DECK yet. Thx in advance.


  29. An interesting business cycle clock for the past 40 years 
     
    http://stats.oecd.org/mei/bcc/default.html


  30. Timing / l4real – I have the second method to test and it’s might produce better results as it keeps you in or out of the market only partially depending on different time frame. We’ll see. 


  31. RIMM / Phil – The news you posted earlier seems to confirm the trend – they have lost about 1/2 their market shares in handset sales in 1 year and if they can’t get developers to write applications for them, it’s another cut among the others. The OS is very good so maybe we’ll see a buyer, but the "standalone" future is not that bright. 


  32. Angel—that 60 minutes piece is incredible. Not surprising but incredible.
     
    FU CONGRESS!!!!


  33. Thanks Checho!  I think gasoline hits a similar cycle with oil so I’d stay away until we get a big dip, maybe down to $2.50 and, of course, we like to play gasoline into a holiday weekend and Thanksgiving is just around the corner.  Gas went down while oil went up because gas is harder to fake than oil and the move up in oil was totally fake – gasoline prices are more accurately reflecting actual demand (and where oil should be, relatively).  

    Thanks Savi, DC! 

    Titanic/Exec – It’s not up to the new Italian Government – It’s up to the entire EU to decide if they are going to pull together or break apart.  Much like the US, which didn’t draft a Constitution until 1789 as it took 13 years for 13 colonies to stop pretending to be independent.  Even then, we fought a whole civil war 70 years later so saying the EU seems fractious in year 19 is really just a "duh" sort of observation in historical terms.  It takes a few generations for nations to really change and we’re barely done with the first – there’s still plenty of time for them to get things right but the market seems to want IMMEDIATE SATISFACTION in matters that, by necessity, take years to resolve – so we’re in for a lot of this kind of nonsense for many years as far as I can tell.  

    Competition/JMM – The problem is we’re trying to compete in unskilled/semi-skilled labor.  That’s the key policy mistake that was made many years ago when we should have been training a generation of scientists and engineers to take the country to the next level.  Instead we’ve gone backwards, retreating from space and other exploration and everything else that didn’t pay off on the bottom line by the end of the quarter.  We also squandered our huge infrastructure advantage which, in itself was a reason to do business in the US.  Companies are happy to pay more for the skilled labor they require – we just don’t provide it and, in the current political climate – yes, we are more likely to take another giant step backward towards a 3rd World economy, even as the 3rd World, led by China, prepares to make the next Great Leap forward.  This is a nation of short-sighted people led by even shorter-sighted politicians and we can probably blame Television, which likes to solve all the world’s problems in 60 minutes or less (interrupted by 30-second stories in between) but it’s really the destruction of the US Education system that’s destroying this country and the people simply aren’t bright enough to vote for the kind of change we need to reset our path while our Corporate Masters could care less where their workers come from – as long as there are buyers somewhere…

    GRPN/Silent – They are not very exciting as they are already down to $23 from $30.  Until they make a big move up for silly reasons, I have no inclination to play (and, of course, no interest in being long).  

    TOS/Button – Is it something you can fix yourself or they have to do it?  

    Congress/Angel – I’m glad that’s finally getting some attention.  We were posting that stuff a year ago.  

    Suntan/L4 – I look Indian at the moment. 

    AA Money/StJ – Yawn…

    Cognative Dissidents/StJ – Good concept.  Barry had so much great stuff this week it’s hard to pick one thing out:  

    Great Occupy Wall St. vs. Tea Party Chart.  

    Occupy The Board Room

    Finally, a Judge Stands up to Wall Street (Rolling Stone)

    Breakdown chart of Household Spending

    12 Rules of Market Cycles 

    Is it 1973 all over again? (Market Watch)

    Earnings Season Update

    Europe’s Banks Turned to Safe Bonds and Found Illusion (NYT)

    Obama’s Flunking Economy: The Real Cause (NY Review Of Books)

    Why the Rich Get More Time With Congresspeople (WSJ)

    Robot-Run Warehouses


  34. DXY up market barely down???


  35. GOOG/Iflan – With 100, I’d take 20 $605s off the table at $14.50 at that’s net $619.50 and GOOG is only at $616.25 so free money and then I’d put a stop on 20 of the short $610s at $13 (now $11.50 and $12 was the spike high) as the only way you can get stopped out of those is if the other 80 bull call spreads are in great shape.  If they do stop out, you can start the cycle again with another 1/4 sell but, once over $620, you are in pretty good shape to cash in.  With 20 x $14.50 off the table ($29,000), that’s almost your entire investment in your pocket and a drop back to $610 gives you $30,000 more and anything over about $605.20 is a winner and your $30,000 max additional gain is dropped by $2,000 per $1 over $610 on the uncovered 20, of course.  

    ANF/Alik – Well "safe" and "before earnings" are not really things that go well together.  ANF is super-volatile at the best of times but they have been nicely beaten up and I like them down here at $57.16.  One play I see that’s interesting on them is the Feb $60/55 bear put spread at $2.70, selling the Dec $57.50 puts for $3.80.  That’s a net $1.10 credit on the spread and you don’t get into trouble until ANF drops below about $51, which is more than 10% down from here so a fun way to play them bullish – especially if you don’t mind owning them for net $51.90.  A more bullish play would be the Jan $55/60 bull call spread at $2.55, selling the $50 puts for $2.30 for net .25 on the $5 spread.  Here you are agreeing to own ANF for net $50.25 worst case with a nice 2,000% upside if they head higher.  

    Oops, you said shorting!  LOL – I don’t like them short here.  They had some trouble but nothing they shouldn’t get over and they are being priced like the World is ending with estimates now down over 10% (.72/share) from original projections (.82) just 3 months ago.  We’re just not seeing that kind of decline in retail and, even if ANF falls further, it then makes them extremely attractive under $50 as there has been no indication at all that they won’t make $3 next year (p/e 16) while a good XMas (last Jan was $1.38) could make $3 seem very conservative and last XMas sucked for retail and clothes do wear out.  

    GRMN/Alik – I can’t believe they are in business still.  We used to short them when they were silly high back in 2007 but now, down $80 from there, I have no interest in them.  FRX already sold off, seems chasey to me to short them now unless you know something terrible that will prevent them from recovering after a 25% drop-off.  

    NYMEX/Celeste – Sure:  

    Click for
    Chart
    Current Session Prior Day Opt’s
    Open High Low Last Time Set Chg Vol Set Op Int
    Dec’11 99.30 99.69 97.22 97.78 11:01
    Nov 14
    -
    -1.21 127357 98.99 189100 Call Put
    Jan’12 99.06 99.57 97.22 97.83 11:01
    Nov 14
    -
    -1.06 53905 98.89 292616 Call Put
    Feb’12 99.09 99.30 97.18 97.75 11:01
    Nov 14
    -
    -0.99 16791 98.74 85773 Call Put
    Mar’12 98.74 98.78 97.06 97.67 11:01
    Nov 14
    -
    -0.96 9749 98.63 84593 Call Put

    So they have to roll out about 160M of those barrels (1,000 barrels per contract) by Friday!  That’s 32MBd to dump, which is a lot of pressure this week so I’m still confident oil will sell off and, if oil sells off then the indexes should get dragged down so that’s also keeping me a bit bearish on the market until that situation resolves itself.  


  36.  Phil,
      What would you do to deal with 15 Jan 12 Sold Puts on RIMM? I’m afraid one more misstep on their part could be fatal at this stage. I’d like to switch to BA or AAPL as you suggested, but the 15 contracts makes those switches a pretty big margin number for me. 
     
      Glad to hear the vacation went well!


  37. Phil-do you still recommend holding the USO Dec 35 puts? Rolling up to the 36s? The 35s are down today even with oil down a buck…


  38.  Phil,
      Sorry, those were $24 Jan 12 sold puts on RIMM (15 of them).


  39. Pharm,
     
    OPK breaking out??  Interestingly, The chairman of the board, Phillip Frost has been buying 25,000 shares per day for the past week.


  40. The housing bubble in the USA looks quite modest when you put it in a wordly perspective:

    Bad new for German real estate owners though! 


  41.  Yo Phil! I would like to consider dollar cost averaging a longer term core position in IWM. My thought is to buy small amounts on dips since I can obtain them commission free and also sell some puts and collect income or get IWM put to me at a lower price. Of course this all depends on the ranges and if we hold our levels. What are your thoughts?


  42. I guess we’ll be up tomorrow then:

    http://www.bespokeinvest.com/thinkbig/2011/11/14/the-market-is-down-it-must-be-monday.html

     

    Pretty amazing stats…


  43. Stjean / German Real Estate – Reunification really put a stake in the heart of German real estate.  It would be interesting to see how all of those countries have done since 2008.


  44. Methinks there may be a rotation out of AAPL and into GOOG.   I’m all over it.  


  45. ANF. Here are my reasons for shorting them: bad comps, decision to stop announcing month to month comps, uninspiring Fall collection (according to my wife), some slippage out of fashion in my daughters middle school (as opposed, for example, to three brands still owned by LIZ that are very much in fashion). All that probably would not be that bad, if not their very high valuation (unlike, for example, GES). On the other side they probably benefited from the falling cotton prices. Also I do not have any info about their popularity outside of North America, so I am not at all sure if my intention to short them is correct.
    FRX. Their P/E is projected to rise to >20 in 2013 due to patent losses (assuming that the share price remains unchanged), and I am not aware of any remedy for this problem.
    GRMN They recently rallied on unexpectedly good earnings, but I do not see any reason for them to continue their rally.


  46. Good morning,

    I’ve had a lot of reading and charting this morning, but the levels really haven’t changed:

    IWM   71.33,  71.87,  72.56,  72.99,  73.24,  73.51,  74.14,  74.61,  74.86  and  75.37

    The key is IWM 73.51 as it is also now the location of the 377 SMA, long term key line !!

    Here is a little history :

     


  47. AAPL-GOOG / Iflan – The numbers would seem to confirm your assumption. GOOG up 28% since the lows of October while Apple up only about 8%. 


  48.  Any GLD play this week?


  49.  JRW, very interesting historical chart! Not a bad idea to be cautious until Mr. Market proves otherwise!


  50. Phil / TOS,
    If you have an issue with the market data showing "Partially Delayed" call TOS tech support and they will fix it as there are new real-time quotes agreements that have to be signed with the exchanges. Takes a couple minutes to do on the phone and then you have to log on to Ameritrade and digitally sign them on the my profile page. 
    Hope this helps


  51. AMZN – Welcome back, Phil.  I wouldn’t mind from you or others some ideas on a this-week AMZN play.  Specific trade idea would be fine – but I guess I’d be equally if not more interested in take on "how" to think about them this week – with perhaps a 10%-20%-ish return on risk.  I’m feelin’ weak and gun-shy – would normally just write some puts or conservative bull PS. Not sure what to make of the tepid reviews versus the early ship announcement, etc.  Thank you. 


  52. TASR popping!  

    WCP/Etrad – Yep, on my list to update.  Very few trades since our 11/3 update as I went away but they’re right in the comment section under the WCP post.  DECK is doing just what we thought, the stock is at $108.22 and we have naked $105 calls we sold for $7.50 and we already cashed out the longs for a nice profit.  I don’t know why you have Dec $115 short calls but it’s the same thing.  GNW is simply on track for our $7.50 target in Jan, not much to do there.  

    Cool clock Joe.  

    RIMM/StJ – Things are looking worse for them. 

    Dollar got slapped back down from move up to 77.75, now down to 77.65.  I think a break over 77.80 would really hurt the indexes but it looks like they’re running it down for the moment to try to force a market recovery.  

    Those DIA $120 puts are still $1.05!  

    RIMM/Kevin – If I knew what strike and how much, I could probably give better advice but If they were, for example, $22.50 puts that are now $5.30 and you sold them for $2 then I would roll the $3.30 loss down to 22 short $17.50 puts at $2.05 as I don’t think RIMM is going to completely melt down but, if you have lost faith, HPQ trades at $27.20 and you can sell 22 Jan $27 puts for $2.05 there instead or AAPL Jan $280 puts at $2.10 if you have the margin or you can sell just 3 AAPL 2013 $250 puts for $15 to get $4,500 back (TOS says margin on that is $7,500, which is only $2,000 more than 15 short RIMM Jan $22.50 puts – but for a longer time, of course).  

    BA still cheap at $68.  2013 $60 puts can be sold for $6.85 for a net $53.15 entry.  You can pair that with the $60/75 bull call spread at $7.70 for net .65 on the $15 spread that’s already $8 in the money – that’s up 1,130% if they flatline!  

    USO/Jrom – Yes, I still like them at .80 (Dec $35 puts) and I also like the roll up to the $36 puts for .35 or less.  I always like rolling $1 for .35 or less – good rule of thumb!  

    RIMM/Kevin – Ah, a number.  OK, still need price you sold for but same general idea for fixing.  Just look to make up the loss, not the whole amount.  

    Wheee, Dollar snapped back up and down we go again.  


  53. JR/Chart
     
    They do have there similarities. 
     
    Will be interesting to see if they can break the trend line with a low volume Christmas rally.


  54. Phil—are we doing anything with the sco bcs in the WCP today or waiting?  45/48 nov bcs with sold 42 put
    Thanks


  55. Phil,
     
    I am still trying to determine the best times to roll so if you could help?  I have MAR 12, $5 covered calls on TASR that I sold for $0.45.  At one point would you adjust?  Thanks


  56.  Phil,
    Help…did some brainless trading while you were getting some sun…
    Have One leg of the SCO in the wcp portfolio….Nov Call 45 Buy at $2.32; sold the other legs at small profit.
    Need your help in ravelling this F!up…
    Thank you.


  57. OPK – when the CEO already owns 30% of the float, 25K/day is nothing.  They ahve a 1.5B market cap, and no earnings.  Not saying that they don’t have a ton of things in the pipe, as we played them up to the 4.30 range, but I am not into chasing in here.  Sell some puts to establish a new position.


  58. Don’t you think that the reason the DAX and other EU exchanges were down was the same reason we were down last week….it’s called bond sales.  The Italian bond sale spiked yields, then they fell back.  I would be very leary in here shorting, using anything less than a day trade, as tomorrow everything will be ok, markets will soar.  I would even go long in this range after the close in london, as WS cannot afford a negative year……JMHO.

     

    SPY calendars from last week…..can it get any better?  Out of the Put side for 35c, going to stay in the calls a bit longer……..


  59. Pharm / OPK,
    Yeah I saw that after I posted.  The guy owns 109,000,000 shares give or take.  My thought is as long as he is buying & not selling, the price could go higher.


  60. Housing/StJ – That’s one MoFo of a Global collapse still ahead of us if the rest begin to fail.  

    IWM/L4 – Never underestimate how far the RUT can fall if things really collapse.  To me, an index is not a long-term core position because it’s not actually worth anything.  I like companies that make stuff that people buy – those tend to be around a long time.  XLF I like because it’s stupid cheap (assuming the World doesn’t end) but general indexes can flatline forever and IWM won’t pay you a dividend when you tie up $7,300 per contract’s worth.  

    How about playing 6x the 2013 $70/77 bull call spread at $3.70 ($2,220) and selling 1x TNA Dec $48 calls for $4.50?  Every month (out of 13) that you make a sale like that which expires worthless, you knock out 1/5th of the cost of your long spreads.  IWM is now $73 and of course you can roll the short calls higher so your 6 longs will be worth $4,200 before you have to give any cash to the TNA callers so figure TNA would have to be well over $75 before this trade causes you any trouble.  

    By the way, StJ – THAT would be a fun trade to track over time.  

    FRX/Alik – That’s the best reason yet.  I’d check with Pharmboy as to whether or not they have a pipline or if they are, in fact, dead in the water.  If so, you can sell calls to other suckers who are more hopeful than you.  GRMN I agree but I haven’t looked at them lately.  ANF I think that sector has micro-cycles that come and go each season so I’m very reluctant to bet against them when they are testing lows but I do like your logic.  

    Dollar rejected on first attempt at 77.80!  12,050 on Dow, 1,250 on S&P, 2,650 Nas, 7,470 on NYSE, 731 on RUT.  

    GLD/Sun – I think they are in a very in-between spot at the moment, which makes them dangerous to bet on. 

    TOS/Rehat – Thanks.

    AMZN/NF – Is something happening this week?  I hear negative notes on the Kindle not comparing to IPad but coming into the holidays it would be foolish to short them so I think taking 10% of what you were willing to risk and buying a nice dinner is the best way to play at the moment.  

    SCO/WCP, Savi – Ah, thanks for reminding me.  At $40.65 I’m inclined to wait until tomorrow but it does look like we’ll have to roll the short $42 puts, now $2, down to the Dec $38 puts, now $2.25.  That would give us a net .45 credit on 5 short puts, even if the bull call spread goes out completely worthless but we can also pull another .25 by cashing the $45 calls by tomorrow and leaving the naked $48 callers and that would leave us in 5 short Dec $38 puts at net .70 credit – we can live with that.  

    TASR/Button – You have the stock, I take it?  Well they are $1.05 now and the stock is at $5.84 so no point in rolling yet.  If you are worried you are missing out then why not sell June $5 puts for .40.  That buffers your roll and, since you don’t throw away the $1.05 of protection, it’s not a bad way to pick up some extra cash.  

    SCO/Jasu – As above, we’re not there yet but you can’t shred a spread apart and ignore the fact that your remaining leg loses all of its value.  Those $45s are almost worthless so it’s a new trade next time – just do a realistic assessment of your losses because this is not a roll, it’s a new trade.  

    Bonds/Pharm – That does seem to be driving the markets.  Still, those bond sales did not go well today and that’s nothing to rally about.  If the ECB can’t keep rates down for the PIIGS – Then BIG TROUBLE will follow.  


  61. Phil
     
    Do you think there are any downside risks to owning BA until the so called super committee decides our fate? The automatics target defense spending amongst others. May get a better entry in BA if they fail to come to any agreement.


  62. Phil / TASR
    Thanks Phil


  63.  Phil, Good info! Thanks!


  64. The President (CSO) also owns a ton of stock as well, and the CEOs buying has slowed down from the spring FWIW..  They could take it private.  It is such a mismash of different companies, etc.  Their flagship is the eye business, but it is not approved here, yet.


  65. Bonds / Pharm – Yeah, I don’t think it’s a done deal that they have interest rates for the PIIGS under control.   I’m worried when I’m more bearish about Europe than you are.  Something must be wrong here.  ;-)


  66.  Phil – Any update on your XLF/FAS trade idea of this morning?


  67. Phil--TASR— 60 minutes had a positive spot on them yesterday
    btw I have some shares  @ 4.75  uncovered--would you suggest covering them on this uptick?
    Thanks


  68. AA Money / Phil – I know, yawn… But a) I was looking at something less volatile and b) you chose AA! So we have no one to blame but ourselves.

    In the flight home, I tried to run the numbers on that trade and I am not sure that AA lends itself to a weekly trade – the cost of the strangle (decay) over 60 weeks comes to about $0.04 per week. Rolling 20 short options every week (at $1.00 per contract which is probably the average for members) adds another $0.04 of premium we need to sell per week to cover the cost. That means that we need to sell $0.08 of net premium per week just to break even. As of today, our average is around $0.11 per week. So we would be positive, but that’s not FAS by a long shot (we made more the first week with FAS) and we have been lucky to be in a trading range the last 3 weeks. There doesn’t seem to be enough premium in the AA weeklies to absorb a bad week and make it interesting. 

    Would it make sense to make that trade a monthly trade instead. As you say, it’s boring now, so who cares. We could pick something else for the weekly trade that’s more "interesting" and move along with the AA trade for the next 13 months or so. BTW, we made almost 30% of the FAS Money in the last month when we switched to a monthly trade (not by choice!). There was luck involved but that’s part of the plan as well. Right now, you could sell the 10/11 strangle for December for $0.80. One of these strikes (or both if we stay in the same range) will expire worthless and cover the cost of the strangle and more! The other one can be rolled. And we cut down the cost in almost 1/2 to about $0.05 per week.

    The truth is, we could run a handful of these monthly trades that people could jump in without big investment and make that good learning experiences. I was thinking of adding that to the IRA Strategies for example as they can be run in an IRA account. 


  69.  I have 29/32 BCS on TZA as a hedge.  The advice is usually to not hold past Wed correct?  I seem to either close to soon or hold on too long on these type of hedge.  What is the best way to handle?  I would still like to be hedged.
    Thanks


  70. IWM, TNA / Phil – I think that there are a lot of possible fun trades to track. Consider me interested! We just have to keep them small enough so that everyone can participate without risking big % of their portfolios. 


  71. By the way, $1.40 is good money on those DIA puts – don’t let it get away. 

    BA/DC – I would certainly keep dry powder for a DD until well after we get our next budget but AA’s growth is all about airline delivery for the next decade.  In fact, logically, the Pentagon should cut them out entirely as it would be less damaging to BA than to other firms they may end up cutting but that’s not how things work, of course.  

    You’re welcome Button, L4!  

    FAS/Aussie – Not really.  They dipped and gave an even better entry opportunity.  That’s the point I was making with Buffett – if you are a Fundamental investor, sell-offs in positions you want to own are nothing more than opportunities.  

    TASR/Savi – Unfortunately, they don’t have $1 increments yet so the in-between spots are not really good to sell.  I think a 1/2 cover with the June $5s at $1.20 is not bad as you are effectively selling for $6.20, which is still up nicely from here and, in theory, you should be able to make a 2x roll to 2013 $7.50 calls once we get to June.  

    AA Monthly/StJ – Sure, I’m for that.  How about we add that IWM/TNA spread too.  Hopefully that one won’t be too exciting but I think we can pull a nice double off of them with little hassle.  As to an active trade, I still like FAS but let’s do that one like the IWMs with 10 XLF 2013 11/15 bull call spreads at $2 ($2,000), selling 2 FAS Nov $68 calls for $2.10 ($420) and one $61 put for $2.10 ($210) for net $1,370 on $4,000 worth of long spreads so plenty of room to roll and the decay should work in our favor as we’re not buying long FAS.  We can have lots of fun dynamically adjusting this one.  

    TZA/Joe – That would be last Wednesday, the week BEFORE expiration.  Fortunately, you still have $2.28 left in the calls, so all you have to do is spend $2 to roll them to the Dec $30s and then wait for the Nov $32s to expire and then sell whatever December call is $2 to pay for the roll.  


  72. Thanks Phil


  73. New Trades / Phil – OK, I’ll start these up and post the trades I get… I’ll keep the Money name running so IWM Money and FAS Money. 


  74. FAS / Phil – I am sure you meant XLF 2013 11/15 BCS in that new FAS Trade? 


  75. New FAS Monthly — Phil, are you sure about the 2012 11/15 BCS?  It’s those old 20/100 contracts…could be volume problems, and just plain confusing?


  76. IWM Money

    Long

    2013 70/77 BCS – $3.64

    Short

    Dec TNA 48 Call – $4.40 


  77. Phil I surely think you got the wrong computer FAS Jan 11/15 the only go down to 35 to much tequila??
    like the IWMs with 10 FAS 2013 11/15 bull call spreads at $2 ($2,000),



  78. Gosh I thought my ETrade disconnected – just 58M traded on Dow at 2pm!  Meaningless day.  

    11:36 AM European shares close lower with Spain hit hardest as its bond market comes under fire, and ahead of weekend elections that should sweep the conservative Partido Popular party into power in place of the Socialists. Stoxx 50 -1.6%, Germany -1.2%, France -1.3%, Italy -1.8%, Spain -2.3%, U.K. -0.5%. Euro -0.8% at $1.3636.

    1:00 PM On the hour: Dow -0.76%. 10-yr +0.43%. Euro -0.95% vs. dollar. Crude -1.04% to $97.86. Gold -0.6% to $1777.35.

    2:00 PM On the hour: Dow -0.7%. 10-yr +0.35%. Euro -0.92% vs. dollar. Crude -0.57% to $98.33. Gold -0.51% to $1778.95.

    A new survey from Lender Processing Services shows a 3.8% Y/Y decline in U.S. home prices in August, 28.3% off the June 2006 market peak. The national average home price slipped 0.9% following a 0.4% drop in July, and partial data for September sales indicates a likely decline of ~1.1%. As of the end of August, the national average home price was $205,000.

    S&P Chief Economist Beth Ann Bovino reduces the risk (video) of a recession in the U.S. to a "still-high" 35%, citing modest economic improvements in the face of dark headlines from Europe. She jumps on the common refrain that government policies in the U.S. and abroad are still weighing down the potential for the economy in keeping the recession risk uncomfortably elevated.

    The Philly Fed’s Q4 economist survey turns up a consensus forecast of 2.4% U.S. GDP growth in 2012, down from Q3′s estimate of 2.6%. In addition, unemployment is now expected to average 8.8% next year, above a prior forecast of 8.6%. 1.8% GDP growth is now expected for 2011, slightly above Q3′s 1.7% forecast.

    More on the Philly Fed economist survey (previous): Despite projecting lower growth and higher unemployment, economists see a lower risk of a downturn over the next year. The odds of a recession are rated at 11.8%, down from a previous reading of 20.9% just 3 months ago.

    German finmin Schaeuble reminds his fellow CDU party members that ECB purchases of sovereign debt are not in violation of EU rules disallowing central bank funding of governments. The rules only apply to direct funding, he says, and secondary purchases are more about reducing short-term volatility. 

    The collapsing Greek economy is making a myth of the purported wages and benefits enjoyed by workers. Companies are using the crisis to tear up collective bargaining agreements and forcing labor into more hours and lower-paying contract work. "Politicans are fighting for something which does not exist anymore," says an electrican of the EU/IMF push to cut minimum wage.

    Blackrock calls for more aggressive EU policy action – private creditor writedowns of 75-80% in Greece, Portugal, and Ireland, thus allowing a relaxation of austerity measures which threaten to turn a mild recession into something worse. The world’s largest long-only fund manager remains bullish on equities unless the EU deteriorates further. 

    India’s annual wholesale inflation stood at 9.73% in October, nearly unchanged from September and worse than expected. A 14.8% increase in fuel prices (partly due to a declining rupee), and an 11.1% jump in food prices, were major culprits. The RBI has lifted interest rates 13 times since early 2010 to combat inflation, but to little avail.

    More tales from the Chinese real estate slowdown, where 3 recent land auctions brought either no bids or lowball offers. To review: Local government revenues (40% in 2010) are dependent on land sales. As prices fall, governments must make it up with volume, hitting prices even more.

    WTF?  Canadian Prime Minister Stephen Harper says his country will push to sell its crude oil to Asian markets to make up for the derailment of TransCanada’s (TRP -1.4%) Keystone XL pipeline following up similar comments from officials with his administration. Though he expresses confidence the pipeline will ultimately be operational, he calls selling oil to Asia an "important priority" moving forward for Canada.

    Moody’s places Credit Suisse’s (CS -3.6%) Aa1 rating under review for downgrade following the bank’s CHF 800M Q3 loss (after stripping out CVA gains). While noting the powerful Swiss franc as having caused some of the loss, Moody’s sees the difficult macroeconomic environment as a bigger issue

    Bank of America’s (BAC -2.2%) decision to sell its stake in China Construction Bank – with its potential to grow into a global bank – smacks of desperation, David Weidner writes. True, surviving the short-term is Brian Moynihan’s first order of business, but selling the stake reminds Weidner of "a mortgage borrower dipping into their 401(k) to make the monthly mortgage payment." [

    Sounds good to me!  Dreamworks (DWA -2.8%) CEO Jeffrey Katzenberg says his company and Intel have developed new animation software that will enable the company to operate 50-70x faster. He says the average animator now produces just three seconds of video a week, while the new technology will revolutionize the industry simply in terms of waiting. 

    Maxim Group initiates coverage for a group of airlines, believing "it will be possible for at least three of the four legacy carriers (UAL, LCC and DAL) to produce earnings even in a slow economy," due to industry consolidation, cost-conscious management and other factors. Initiated at Buy: UAL, DAL, LCC, ALGT, ALK, HA, SAVE. Started at Hold: AMR, LUV, JBLU

    Though the Kindle Fire is receiving less-than-glowing reviews, Amazon (AMZN +1.7%) is outperforming today, while Barnes & Noble (BKS -2.7%) is selling off after rallying strongly last week (I, II). An in-depth Wired interview with Jeff Bezos, in which he goes over Amazon’s hardware, content, and web services strategies, could be giving bulls some encouragement.

    It’s scary that this is "news" to the investors – how can you own a company and not be aware of these things?  Green Mountain Coffee Roasters (GMCR -3.99%) dips after Argus Research cuts the shares to Hold, citing the company’s recent earnings miss, concerns over K-cup patent expirations and accounting irregularities.

    A123 (AONE -7.5%) is selling off again today, after Friday’s report of a Chevy Volt catching fire at a testing center triggers a regulatory probe into the safety of lithium-ion car batteries. Shares are now down over 12% since the news broke. GM (GM +2%), however, is recovering from Friday’s drop.  

    Sprint (S -1.1%) reduces its prices for WiMax broadband customers to better position itself against rivals before the holiday shopping season kicks up in earnest. The company will now charge $50 per month for 6 GB of data, compared to its previous offer of $60 a month for 5 GB.

    Fusion-IO (FIO +7.9%) shares spike as the firm’s Chief Scientist Steve Wozniak – yes, that Steve Wozniak – takes to the CNBC airwaves to talk about internet advances. He mostly talks about Apple (AAPL -1.2%), expressing faith in Tim Cook and Siri; he says little about his own company, but his remark that it’s "growing as fast as Apple" is enough to send shares popping.

    Three lunchtime reads:
    1) The only way to save the eurozone from collapse
    2) The housing recovery will take many years
    3) Greece, Italy, and financial stability


  79. FAS Nov $62/65 bull call spread at $1.80, selling $60 puts for $1.80 for a "free" shot at $3.  


  80. You’re welcome Savi!  

    XLF/StJ – Yes, thanks.

    FAS/Esco, Yodi – See above (fixed), it was long XLF spreads, not FAS.  

    IWM Money/StJ – It was a 6x purchase on the long spread ($2,184), selling 1 call for $440 for net $1,744 on the spread in its first month.  

    FAS/Yodi – I would not pair FAS with IWM, they don’t correlate well enough and you are playing with fire.  

    Goldman/Rain – Now why would they want to knock down the Nas today?  

    More good reads from Barry:  

    Gold Traders Most Bullish Since 2004 on Debt Crisis (Bloomberg)

    Is Europe On The Verge Of Another Great Depression – Or A Great Inflation? (Baseline Scenario)

    This 28-Year-Old’s Startup Is Moving $350 Million And Wants To Completely Kill Credit Cards (Business Insider)


  81. EDZ back to $19 and we still like them as hedges.  Still expecting oil to sell off so the Dec $17/23 bull call spread at $1.60, selling $17 puts for $1.50 for net .10 on $6 spread.  


  82. FAS/AMZN – Thanks for the FAS reco, Phil.  Perfect.  Re AMZN: no, nothing up.  But the FAS play is the kind of AMZN weekly play I was thinking about – only because I trade AMZN a lot.  My goal, however, is/was something like the FAS play (which I only know thru you for now – so yet to craft a trade on my own):  nice gain or income opp for the week in a $25,000 "fun" – now all cash portfolio.  


  83. AONE
    Volt doesn’t use their batteries.
    AONE supplies to BMW and somebody else


  84. AAPL pulling back nicely.  My levels are:  370…. buy a little     360….  buy more     350  …..back up the truck


  85. Great (but long) article in Rolling Stone:

    http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109?print=true

    Plenty of stuff for you Phil… I only read 1/2 of it and I want to puke now. Nothing really new, but well presented and documented. Cognitive Dissidents from the GOP should of course not read it! 


  86. Did you boys dump those  AAPL longs last week like we talked about?       :)    


  87. IWM Money Recap

    Sorry didn’t post the quantities last time!

    Long

    6x 2013 70/77 BCS – $3.64

    Short

    1x Dec TNA 48 Call – $4.40 


  88. FAS Money Recap

     
    Long
     
    10x 2013 XLF 11/15 BCS –  $2.06
     
    Short
     
    1x Nov FAS 61 Put – $2.05
    2x Nov FAS 68 Call – $1.94

  89.  Comic relief:  Headline from the wackiest website I know: 
     
    22 Signs That The Thin Veneer Of Civilization That We All Take For Granted Is Starting To Disappear
     
    Don’t say you weren’t warned!!


  90. stj – I read that rolling stones article this morning and since then have been bummed.


  91.  buffett on cnbc saying he cant buy msft due to appearance he would have inside info….when has that EVER stopped him? his whole business-model is getting govt inside info last 5 years…lol!


  92. guys don’t get depressed about one party bcause our demmie leadership is getting fat to..the problem exists on both sides of th eaisle..this is what keeps escaping everyone..what a cover!


  93. Rolling stones / Nicha – There are some bad people in DC, but some are obviously much worse than others. 


  94. AMLN – Buy in here, sell the January $11/10 strangle.  Round 1 for 1/2 entry.  I think the company has significant hurdles, but for a 500/1000M/yr drug, the PE would not be too bad.  Do they have more? Not that I see, but the Japanese are on the hunt, and this could be well worth their ‘yen’….


  95.  STJ/Phil, That’s 6 each long 2013 IWM BCS @ $3.64 and sell 1each, Dec TNA 48 Call @ $4.40 against the 6 each BCS’s.


  96. just a nice graphic:


  97.  Phil/ABB or FWLT. Thoughts on either of these beaten down engineering businesses as a buywrite? ABB at $18.20 would be through June 12 and nets 27% return ($17 call, $16 puts) plus the annual dividend; DD at $14.70.   FWLT currently $19.64, would be Jan 14 $18 p & c’s for net $7.72, DD at $12.86 and 130% if called away at $18?


  98. oops can’t seem to figure out how to post a pic…


  99. FRX/alik – we did that last year and did ok, not as much as I would have hoped.  I don’t like them at all, and their pipeline sucks.  My only fear is that Lilly walks in and says….thanks, I will take that.  For a $7B market cap, and a few things in the pipeline for CNS and IBD, the synergies fit very well……Now that Lilly is divorcing AMLN, it could happen.  I don’t have a problem with shorting at all, though……


  100. This sounds like a bad cycle:

    http://thinkprogress.org/yglesias/2011/11/14/367709/the-cycle-of-eurodoom/ 

    Spain could really stand to increase its net exports. Part of the idea of Spanish austerity budgeting is to achieve “internal devaluation” and do this. But unfortunately for Spain, thelargest market for Spanish exports is France, which is implementing austerity and seeking to hike its net exports. Number three on the list is Portugal, which is implementing austerity and seeking to hike its net exports. Fifth up is Italy, which is supposed to implement austerity and seek more net exports. Italy’s second-largest export market is France and number three is Spain. France’s second-largest export market is Italy and Spain is number four. Portugal’s number one export market is Spain, and France is number three. In other words, austerity in Spain is likely to hurt Italy and austerity in Italy will hurt Spain. Both of those countries will also be hurt by austerity in France, and France will be hurt by Spanish and Italian austerity. Portugal is set to be absolutely crushed by austerity in Spain. And all of this economic pain will induce the need for additional austerity measures, further deepening the cycle.


  101. l4real – Yes, we buy 6 BCS and sell 1 TNA call to finance it. 


  102. Look at our old SPPI.  Many many years ago, in a galaxy far far away…..


  103. Phil, 
    You asked me to remind you on my positions:
    WFR Jan 2012 25 10 puts sold for 1.50. 
    CCJ Dec 10 25 Puts sold for 2.40 
    Thanks


  104. Out of TZA and gone for the day; good hunting !!


  105. Congrats NF – That’s the idea, keep it fun and you might accidentally make some money too!  

    AONE/Lol – Interesting if that news is wrong.  Then they are down by mistake? 

    AAPL/Iflan – Be lucky to see $360. 

    Rolling Stone/StJ – Amazing how we now have to go to RS for serious journalism in America.  On the other hand, Hunter Thompson was the only guy who cut through the political BS back in the 70s too:

    For every moment of triumph, for every instance of beauty, many souls must be trampled.
     
    America… just a nation of two hundred million used car salesmen with all the money we need to buy guns and no qualms about killing anybody else in the world who tries to make us uncomfortable.
     
    In a nation ruled by swine, all pigs are upwardly mobile—and the rest of us are fucked until we can put our acts together: not necessarily to win, but mainly to keep from losing completely. We owe that to ourselves and our crippled self-image as something better than a nation of panicked sheep."  —The Great Shark Hunt, 1979
     
    We are turning into a nation of whimpering slaves to Fear—fear of war, fear of poverty, fear of random terrorism, fear of getting down-sized or fired because of the plunging economy, fear of getting evicted for bad debts or suddenly getting locked up in a military detention camp on vague charges of being a Terrorist sympathizer." —"Extreme Behavior in Aspen," February 3, 2003

      

    Civilization/ZZ – We take a lot of things for granted.  One of the reasons people were interested in wiping out poverty in the 60s was that it clearly led to crime and made people feel less safe.  50 years later, we now have to "prove" the link all over again to Conservatives who think law and order come from the point of a gun and not through a contented lower class.  Unfortunately, it will probably take a generation to re-learn the lessons of the past. 

    Buffett/Angel – The guy has principles.  I guess that seems funny given that no one else does…  Where do you think Buffett traded on inside information?  Where has it even been hinted that he has?  

    IWM/L4 – Yes, we’re only looking to slowly but surely work off the price of the long spread.  If we get a big move up, we can roll to a 2x and down or flat and we make $440 against the long spread, which should hold value pretty well.  

    ABB/Brook – I prefer them due to the dividend (3.6%) and perhaps in a bit better shape than FWLT as they are more diversified.  Your spread is good as is FWLT as long as you really intend to DD if it hits the fan on them (falling oil prices would hit them hard).  

    Picture/Rok – You can’t but you can put up a link to it.  

    Players Reject NBA’s Offer, Begin to Disband Union

    In a move that likely jeopardizes the season, the NBA players have rejected the league’s latest offer and are beginning the process to disband the union.

    Good timing JRW – getting out of Mr. Stick’s way.   Dollar being slammed back down as we speak.


  106. Stj:  Austerity appears to be the only answer for the  Peripherals within the Eurozone because they cannot devalue their currency.  But the cure is obviously worse than the disease — austerity simply reduces economic activity more than any savings that might be realized in a relevant time frame.  On the contrary: with their sovereign yields rising due to the [correct] investor perception that austerity is making things worse, the effect has been to increase, rather than reduce, the crushing debt levels they are trying to support.
     
    Some guy supposedly put up a money prize for anyone who could come up with a way out of this mess.  I doubt anyone’s going to send me a check, but what I would do would be to create a thinly-veiled guise for Peripheral devaluation.  I would create a "Euro/A" and a "Euro/B", which each country could, at it’s option, elect to use, all supervised by the ECB, that would provide the opportunity to devalue in a more orderly way than announcing "We have a Drachma again [or Peso, Peseta, Lira et. al.].  Rather than just "cutting them loose", the ECB would create an institutionalized manner for Eurozone countries to effect a devaluation.  It would perforce be a "one size fits all devaluation", perhaps not optimal but arguably preferable to total dissolution — which is where this is going to go otherwise.


  107. AONE is down because they supply for another GM car (Chevrolet Spark) and people worried that fire of Volt may affect GM.
    Anyway this business is not profitable so far


  108.  iflan/AAPL – How do you feel about a Feb 12 370/390 bull call spread for about $10.50?  


  109. Sold Dec AAPL 360 puts for 7.65


  110. NBA – Sorry, union guy here:  What does it tell us about player leverage in the NBA and NFL when their best play (yes, I know the strategy) is a decert?  Despite good media spin, NFL players got absolutely crushed.  So will NBA players – but for different reasons than the football goons.  Ever see the MLBPA make the weak man’s play?  For better or worse, given pay levels, hands-down the MLBPA is the strongest U.S. union of the last 30+ years.  


  111. Phil/WFC; Welcome back.what do you think of buying WFC at $25 and selling 2013 $22.50 P& C for net $ 15.75/$19.13?


  112. BUFFET..well youer right i have no idea..i am sure he has played it straight every step of th eway and NEVER done thst ever!..i feel so cheap and sullied but that thought!


  113. i just wish i could type like the rest of you!


  114.  My two cents on the euroland situation is that the gridlock between german/banker-driven austerity and the failing health of the peripherals will last until the unholy alliance between the banks and german politics is broken.  I suspect it will be broken very soon, when the ECB or IMF dictates terms of additional funding to the banks as they breach insolvency.   One idea (unbaked at the moment) is to have ECB drive bank nationalization under strict conditions including 80-90% haircuts on sovereign debt, as a interim move towards breaking up the TBTF eurobanks into smaller, ECB-guided banks.  To do this, they will need a eurobond and a license for a printing press to re-stimulate the euroland.   That will be judgment day for the germans, whether to allow the ECB to do what it must and settle for EU-mandated fiscal policies onto the sovereigns, or simply do nothing and let the whole thing fail.  Somehow, I don’t think germans understand or believe that they will suffer greatly under a euro-depression.  Unfortunately, the do-nothing option has been used so many times now, my bet is more of the same.


  115. Phil
    I think you meant the January calls on the EDZ 17/23 spread, correct?


  116. can’t finish at lows…can’t finish at lows…can’t finish at lows
    magical sloppy buyer hear my prayer


  117. france cds up 15% to new record in 5 days..VERY surprised market doesnt care more..SHOCKED


  118. Euro / Zero – Good luck with that plan… it would take 10 years to discuss it and they would hire 10,000 people to administer it. OK, I jest, but there doesn’t seem to be a good plan to get these guys out of the mess except a time machine to make sure that they don’t get in the euro bandwagon…

    As Yglesias and others on PSW have argued, austerity is not the solution to their problems but it seems to be the only choice they have so they are screwed! Default is probably the only possible consequence from these moves and maybe that is what is needed now. Even a 50% haircut doesn’t save Greece… So go for the full Monty, everybody take their lumps now and move on.  What worries me though would be the behavior following a default – would Greece go back to the horrible fiscal discipline (I mean tax avoidance and other book fixing deals) that lead them to today or would they learn their lesson. My guess is that we would look at another default 20 years from now. As JRW pointed the other day, Greece has defaulted many times over the last century. Italy and Spain are probably salvageable given a debt reduction deal.


  119. Phil your thoughts?
    The bill (HR3313) was introduced and if passes, it will end day trading futures and other securities. The bill calls for a .03% tax on the underlying specified base amount for the instrument.
    This would mean $10,000 worth of stock would be taxed $3 in addition to current commissions and fees. A $9.99 transaction will be $12.99. For ES the base amount would be ~1250 X $50 per contract = $62,500. The tax would be $62,500 X .03% or $18.75 per side and $37.5 round trip. Add that to the current $6 per round trip and you get $43.50 per round trip. I don’t know how many day trading systems can handle $42.50/contract in transaction costs.
    Peter DeFazio (D) Oregon has said he wants to eliminate day trading, claiming it is a useless and destructive endeavor. Am I interpreting this wrong?


  120. NF**X…….AAPL  Feb 370/390  BCS       High  probabity it wins easily. 


  121.  On the lighter side of uneventful day, Frank Deford has a good idea for Greece:

    OK, here’s the idea: Greece leaves the EU and jumps to the SEC (college football conference.)
    Bingo! With all the television and bowl money it would get, Greece would be solvent again, and the Southeastern Conference would get that big Athens TV market.
    Read the full article here:

    http://www.npr.org/2011/11/09/142128332/in-with-the-south-out-with-the-east


  122. iflan/AAPL – thank you.  Trying to learn to trade spreads with sense – rather than a prayer.


  123. lvmoda – as we have discussed, and I agree with your sentiment/wordings to a T – I think the can will be kicked down the road for a few more months.  Xmas is coming, and we cannot have a failure until after the New Year……


  124. yes what difazio means is that he has no idea what he is talking about..he confuses the uselessness of i bankers and hft distortions with small players who actaully make money trading..what a curtain rod


  125. next thing is no fat people will be allowed to trade and no burkhas on the nyse floor!


  126. Stuff/Amatta:

    • WFR – Those puts are $5.30 so down $3.80 on those ($9,500).  I like WFR and you can sell 25 2013 $7.50 puts for $3.25 ($8,125) and just ignore your problem for a year and hope they come back over 14 months.  This is not a stock that fell suddenly, they went from $15 in February to $12 in April to $10 in May to $8 in July to $6-7 through October and now $4.50 – at some point along the way from $1.50 to $5.30 you could have taken a loss at $2 or $2.50 or $3 or $3.50 or $4 or $4.50 or $5 – rather than sit here now and wonder what to do about a position you are down 250% on.  Even so, if you REALLY wanted to own WFR and it was an initial entry, the whole thing would be a non-issue as you can simply roll the Jan $10 puts ($5.30) to 50 2014 $5 puts at $1.70 and buy 5,000 shares of stock stock for $4.70 and sell 50 2014 $5 calls for $1.55 and then you collected $3,750 for 25, and bought them back for $13,250 and sold $8,500 and $7,750 and spent $23,500 on 5,000 shares, which would put you, overall, into a 5,000 share buy/write at net $3.35/4.17 where you STILL make 49% if you are called away at $5 despite the fact that it’s 50% below your initial entry.  
    • The only reason this position is a loss is because you didn’t REALLY want to own the stock (and probably allocated WAY too many shares in the short puts) so, instead of having a 49% potential winner, you are looking at taking a 250% loss to avoid owning it.  By not stopping out, you allow one loss to wipe out 5 potential winners.  Had you taken a $1,000, $2,000 or even a $3,000 loss (40%) on this trade – you could have easily done something else to recover. 
    • CCJ is pretty much the same story but not so bad at $19.75.  The Dec $25 puts ($5.30) can be rolled to 2013 $20 puts at $4.50 and that’s pretty good because you are only down 120% on those! 

    Euro solution/ZZ – Force cancellation of all interparty loans so that only actual imbalances remain.  This means that $3Tn or so flows back to whoever lent the money and has been salivating over the interest but no other harm is down.  That leaves (and we did this math a while ago) about $1.5Tn that needs to be paid off.  Balanced budget amendments are passed across the board and all countries that comply have access to 0.5% loans from the ECB to recapitalize debt.  Loans roll over each year to any who have balanced budgets (including 5% paydown of debt) and, if not, they go back to the free market, who are sitting on $3Tn of cash to lend.  Cost to ECB is the differential between the $1.5Tn they lend and what they can borrow it for, perhaps 3% over 10 years or $45Bn a year, which is not even a rounding error on the the EU GDP and can be made up with some silly fee or something.  There, crisis solved – where’s my check?  

    Sports/NF – They are ridiculously overpaid at the top much the same way CEOs and officers are in corporations.  I don’t advocate the players get less so the owners can get more but I do advocate that a ticket to a ball game be $50 for great seats and $20 for cheap seats so $30 average x 15,000 seats x 41 home games is $18.5M plus TV money should be plenty for the players and coaches to split with the owners and the owners can get a bonus off the concession sales and parking AFTER they pay back the city for building the stadium.  Then the FANS would be happy and could afford to go see the games and kids would get into it the way we did when we were kids and going to the ball-park or MSG was something our parents could actually afford to do a few times a year. 

    WFC/Dflam – Another one on Buffett’s accumulation list but I’ve never warmed up to them.  Nothing wrong with your spread but my attitude on banks is either spread the risk with XLF or go for JPM or one of the strong regionals, who hopefully don’t have crazy exposure to foreign debt (but watch out for muni debt, of course).  

    Buffett/Angel – Not everybody cheats.  I know it’s popular to think so but it’s not the only way to play.  We don’t have insider info and we can outperform most hedge funds by simply being smart.  Not every successful person got there by screwing someone else but, as Thompson points out – many unfortunately do to the point where you can’t imagine someone doing well and still having principles – sad actually…

    EDZ/DC – No I meant December, it’s more aggressive than Jan.  If we get a dip in the short-term, the Jans won’t pay off very much but the Decembers should do well as time moves quickly against them as well as direction.  

    Day trading/Vic – Frankly I don’t even worry about things like this as they will be changed 25 times between now and when they are voted on and then another 25 times while the committee hammers out details and then MAYBE it becomes a new rule except, by then there are 10 ways around it thought up by the Banksters.  Yes they need to curb HFT and yes, this would be overkill but if all day trading were banned tomorrow – I’d be a happy camper because I could start coming in once a week instead of daily!  

    Greece/Rev – Brilliant!  I have an even better idea.  Everyone likes to go to Greece for a vacation so they should rent out the country for the summer for about $30Bn (population 11M so about $10K per home for the summer) and the population should all leave and take summer jobs on cruise ships or something and make $10,000 each ($110Bn) and put 1/2 into the kitty when they come home.  That’s $80Bn a summer and they can pay off their debt in less than 10 years!  

    Well that wasn’t such a bad Monday – now let’s see if they can pull something together to give us another Tempting Tuesday…


  127. just not oging to happen this is one time i am thankful the repulbicans can help us out..what a dreadful idea…


  128.  Relative strength – I like to look at which ETFs have the best relative strength in the market at a given time.  (You can create your own sort here http://www.etfreplay.com/screener.aspx)  One of my favorite sorts is to plug in a 40% weight for the 3- month RS, 30% weight for the 20-day RS and 30% weight for the 20-day volatility.  Note how many dividend funds are in the top 10.  SDY, VIG, DVY, VYM and utilities (XLU), which are a traditional dividend payer, holds the number two spot.  It looks to me like investors are loading up on the dividend aristocrats and defensive stocks.


  129. AAPL – Looking at charts, since September it seems that people have backed up the truck around 370. That would be my first line right there! 


  130. Sounds like a great plan from your GF Phil:

    "If you look at China, they don’t have food stamps. They don’t have the modern welfare state, and China’s growing. And so what I would do is look at the programs that LBJ gave us with the Great Society and they’d be gone," - Michele Bachmann,

    Why is China such a model for these people? Is it just the growth? Obviously a great plan for the top 1%. Might be a tough sell for the rest of us (the non Cognitive Dissidents at least)


  131.  Stj / Phil:  Of course you’re both right — given the implicit assumption that an economic solution is required to solve what is in essence an economic problem.  Stj is probably understating the case in saying it would take 10 years to discuss and 10,000 monkeys with typewriters about 1,000 years to draft.  And Phil’s idea is brilliant if the Eurozone’s current dilemma were steady state — if rationalizing the existing debt problem would solve the core issue.  But the proper framework is a dynamic one — if all Peripheral debts were paid off by the Gods of the Market, how would Portugal survive on tourism and olive oil sales in the future with a currency 1/3 stronger than the U.S. dollar?
     
    What is being lost here is that the Eurozone was primarily conceived as a political project – a unifying structure to prevent the many conflicts and wars that have bedeviled Europe for centuries.  Dissolving the Eurozone for economic reasons is therefore entirely wrongheaded.  At the same time, I concede that the sovereign debt pressures weighing upon the Peripheral Nations as their yields soar are clearly unsustainable, and will lead from bad to worse.  Hence my suggestion that The Euro currency should be partitioned rather than dissolving the European currency union.
     

    I do not underestimate the complexities of converting current Eurozone debt in Euro/A to Euro/B.  Yes, of course it would amount to a “national haircut”, but Greek bondholders [some of them, anyway] just took a 50-60% haircut, and we all know that’s what will happen in Italy and Spain if the current situation remains unresolved.
     
     I would rather think that, over time, the ultimate haircut would be less, because you would be creating a mechanism to restore the labor and export competitiveness of the Peripheral Nations without forcing an exit from the currency union, leaving these smaller countries to the mercies of world financial markets, without allies, and without external support.  This is a recipe for Totalitarianism.  Exactly what the European Union, and the Eurozone, was designed to prevent.  
     
    If I seem overly earnest, my apologies, I am mostly bored, and probably should have saved this for the weekend.

     


  132.  Angel:  I’m so glad to hear that.  I was afraid you couldn’t spell!  Try Naturally Speaking, it works very well.


  133. 4:36 PM It looks like Warren Buffett is officially comfortable with investing in tech: Bloomberg reports that, in addition to acquiring a stake in IBM, Berkshire Hathaway (BRK.A) has taken a position in Intel (INTC). INTC +0.9% AH


  134. Sports/Phil – Amen to that.  Unfortunately, a good outcome for fans would require principled bargaining by the two sides – not positional. And like no others, Stern and Goodell are positional sharks.  I’ve been in DC for 15 years, but I still dutifully pay for the NFL and NBA packages to watch my Broncos and Nuggets.  For the sake of my kids, I need to get into the Capitals, I guess – cuz there’s nothing like a sold-out NBA/NHL arena.  (For whatever it’s worth, both Denver’s Pepsi Center and DC’s Verizon center were privately financed – as was FedEx Field – never happen again.  You can probably find the stats quicker than me, but I saw an article recently about various tax-payer-funded pro sports complexes in U.S. – the return to payers is sick.  Many that never paid off "bonds" were already rolling into new tax-payer funded complexes…)


  135. Europe / Zero – I am glad you are bored as it makes for great after hour talks…

    As far as Europe is concerned, I will disagree with the history. As I mentioned last week, my daughter just wrote a paper about that and if we recall, the entire experiment started originally as an economic project – based around the coal and steel industry. I don’t want to second guess the intent of the founders – for all I know they did have a vision to finally get rid of conflicts in Europe. But they didn’t specify a political framework the way the USA started. The political stuff was added by ways of various treaties over the years and that’s part of the problem. And they slapped on the euro without a strong political base later on at a time of economic boom when the possible problems where hiding behind good growth numbers everywhere. Nothing like a good crisis to unveil cracks in the system… and what cracks they are!


  136. i agree WE don’t cheat ..aside from our high moral fibre.WE don’t because .WE can’t…and i of course believe that nearly everyone who has put together a billion dollar fortune cheats..it you have dinner with hans dietrich genscher  and he saiys "oh my the plaza accord is going to rankle currency traders!" and the dinner guest just happens to be soros and you overhear this in quaint dinner parlance.you think GS trades it or thinks" i would never trade on that" .he’s having dinner and doesn’t even think of it….I JUST NOW REMEMBERED that today i was on the phone with a guy in forbes 400..we were talking about a company we both know well..i said something about receiving some information quite by mistake and he said ‘well don’t say anything about it to me ok?" so neither he or i cheated..so yes you are right..fuck i thought i had you there"…so one out of ten doesn’t..but you are correct all of these guys do not cheat..theres hope!..


  137. zero my writing is strictly in the personal voice if thats what you mean



  138. Phil/education
     
    Yes, it is strange that such an advanced country as the US cannot produce anything close to the number of doctors required, and in fact relies on importing large numbers of doctors educated, at least partially, at the expense of taxpayers in India and other less developed countries.
     
    However people in the US workforce usually have good technical education. Even people who mow your lawn or cut your hair have to go on courses and learn about plant diseases or human parasites and get certificates, and have licenses and renew the licenses all the time and so on. 
     
    However, although they are technically competent, they generally seem alarmingly uninformed about the broader world, even the issues related to their own professions. For example in the UK the nursing profession is considerably concerned about recruiting nurses for the National Health Service from other English speaking third world countries such as Jamaica or Nigeria, because this will deprive the populations of  originating countries of much needed skilled health care personnel. Yet no one I have ever met in the US health industry is even aware of the issue, let alone cares a fig about it. Some hospitals rely almost completely on importing hard working nurses from the Philippines who are grateful to have a well paid job so they can send money home to support their families, and never complain about mandatory overtime, etc.
     
    The level of literacy is also low in the US. Goodness knows how many times I remember employees who were high school graduates could not distinguish between similar names like Robinson, Robertson, and Roberson, and would fetch the wrong medical chart for emergencies, which would sometimes be detected when an observant doctor noticed that a male patient had a negative pregnancy test. (Fortunately we had few doctors who attended high school in the US.)


  139. What do make of this Angel:

    http://blogs.reuters.com/felix-salmon/2011/11/14/europes-liquidity-crisis/

    What is true is that Europe is in the middle of a textbook liquidity crisis. Banks are not lending to each other — and the ECB isn’t stepping in to solve the problem. This is a serious structural issue with the way that the European monetary system was constructed: the ECB is tasked only with guarding inflation, and not with ensuring the health of the banking system. Individual national central banks are meant to do that. But they can’t print money — only the ECB can. So when there’s a liquidity crisis, no one’s able to step in and solve it. 


  140. angelcur – I believe what zeroxzero meant was the speech recognition software: Dragon NaturallySpeaking.


  141. Pharmboy - my EMIS crashed hard today, is that one of your holdings or did I get theidea elsewhere?  Thoughts?


  142.  Diamond — Yes I did, thanks.  Angel:  Would I diss you?  Dragon Naturally Speaking is a program I was using much more than a decade ago,  it was great then and is now much improved.  I don’t use it much now, because I couldn’t get a real job in NYC after my first year of law school and so worked for Manpower as a temporary secretary, boosting my typing output to 100+ wpm.  The gig didn’t pay much, but parachuting into a few dozen secretarial pools over the course of the summer came with unanticipated benefits. 



  143. Scorpion antivenom has stinging cost
     
    Excerpts:
     
    "… Metro Phoenix hospitals are billing as much as $12,467 per vial of the antivenom approved to help children, the elderly and others quickly recover from severe reactions from scorpion stings."
     
    "With a typical dose of three to five vials to counteract the venomous sting, hospital bills for patients and their insurance companies can exceed $62,000."
     
    … "The price is ridiculously high," said Dr. Alejandro Alagón, a scientist who advises Mexico-based Instituto Bioclon, which makes the drug.
     
    "The Mexican biotechnology company produces more than 250,000 vials for Mexican residents, who are charged about $100 per vial at pharmacies or even less at government-funded clinics for a drug that is administered intravenously, Alagón said."
     
    "But the cost inflates when the serum is sold in the United States. Each link in the U.S. pharmaceutical supply chain, from the Mexican factory to Arizona patients, raises the price."
     


  144. EMIS/mrm – not one of mine that I have (or remember).  The data were ok, but the primary endpoint was not met, of course, was the killer.  They have many other things in the pipe coupled to big project/products, but years away.   Read a SA article on them from the other day…..let’s just say Josh Franklin is not so hot now….!!!


  145. well zero it just goes to show you that i am like the hedgehog and not the fox because i thought you meant my language was stilted or somehting..and of course i am thinking the ultimate notch on our big boys belt is acheiving the personal voice..bwhahahahaha…pathetic huh?..
    st jean the obstacles are politically sustained and the banks have no money so if the ecb won’t print then….output rates are going to cintinue to tumble


  146. Good morning!  

    Futures not so bright but Dollar rejected again at 78 so still hope for the bulls until that pops.  The fact that the market goes down so violently on a small move up in the Dollar is not a good sign though.  

    Oil held $97.50 so far and gold is back down to $1,767 with silver at $3.48 and copper $33.85. 

    Natural gas (/NG) looks good at $3.42 for a long play (but only if the Dollar heads lower – over 78 is a no-play zone!) and a stop at $3.40, gasoline (/RB) hit our $2.50 target to go long yesterday for a long entry and is now at $2.57 but the big action should come into the weekend – hopefully a chance to re-load for the non-believers from yesterday as that’s $420 per penny per contract!  

    If you are not already bearish, you might want to short the Dow futures below the 12,000 line (there now) – just in case.  Tight stops over the line should keep you out of trouble at $5 per point. 

    Police "cleared" Zuccotti Park last night, arresting 70 people.  They say they will let protesters back in but will ban tents going forward.  Unions are now organizing a march to join the protesters (escalating already!).

    Still not a bullish day:  

    Tuesday’s economic calendar:
    7:45 ICSC Retail Store Sales
    8:30 Producer Price Index
    8:30 Retail Sales
    8:30 Empire State Mfg Survey
    8:55 Redbook Chain Store Sales
    10:00 Business Inventories

    Notable earnings before Tuesday’s open: COV, DKS, HD, SKS, SPLS, TJX, WMT

    Notable earnings after Tuesday’s close: A, ADSK, DELL, PPDI

    3:32 AM EU stocks add to yesterday’s losses and open down as Mario Monti sturggles to form a cabinet and rising Spanish bond yields return to the fore. Euro STOXX 50 -1.6%, London -0.1%, Paris -0.5%, Frankfurt -0.5%, Milan -0.8%, Madrid, -0.6%

    Eurozone Q3 GDP +0.2% Q/Q, 1.4% Y/Y, with both figures in line. (PR .pdf

    German Q3 GDP +0.5% Q/Q and +2.6% Y/Y, in line with forecasts. Q2 GDP revised upward by 0.2 point Q/Q and Y/Y to +0.3% Q/Q and +2.9% Y/Y. Economists expect a considerable slowdown in Q4 and early 2012. (PR

    French Q3 GDP +0.4% Q/Q (0.3% forecast) vs -0.1% (revised) in Q2. Household +0.3% vs. -0.8%, domestic demand +0.3% vs. -0.3%. Production in goods and services +0.4% vs. -0.1%. (PR)

    U.K. October inflation 5% (5.1% forecast) vs. 5.2% in September, with the fall due to lower food, transport and gasoline costs. 

    Italian 10-year bond yields climb 23 bps to 6.927% despite ECB bond buying, while Spanish yields are +17 bps at 6.279% ahead of an auction of €3.4B ($4.6B) of 12- and 18-month T-bills. The spreads on French and Austrian debt over German debt hit euro-era highs, with Dutch-German spreads also increasing.

    More "mark to fantasy" action:  The EU will propose tomorrow the suspension of credit ratings for those countries in the midst of bailouts. Ratings agencies "won’t have the right, if the EMSA decides, to rate certain countries," says markets commissioner Michael Barnier. Short sale bans, deposing of governments, and now a ratings ban? This is going well.

    Investors are losing confidence in the euro, says Warren Buffett, and it has all the earmarks of turning into a run. Stopping it will be difficult, and unfortunately Europe doesn’t have anyone with the authority – comparable to our Federal Reserve – to take the necessary measures to defend against it. They’ve found a fundamental flaw in their system, Buffett says: "They can’t print money." (video

    Too big to save, Europe’s banks need to be broken up, writes restructuring expert Jim Millstein. The assets of France’s 5 largest banks are 3X the size of the French economy – it’s clear the country can’t afford to save even one of them. Millstein would like to see a EU version of the Dodd-Frank rule giving regulators power to take apart banks with more than $50B in assets. 

    The odds of an early 2012 U.S. recession now exceed 50% as a result of Europe’s debt crisis, according to San Francisco Fed economists. The weak U.S. economy is more vulnerable than usual to turbulence beyond its borders, as the unexpectedly severe U.S. effects from Japan’s earthquake in March demonstrates, the researchers say.

    Two recent Gallup polls reflect the current despair among the U.S. public: 92% of Americans think it’s a "bad time" to find a good job, and two-thirds say unemployment/jobs or the economy in general is the country’s most important problem, with 86% expressing dissatisfaction with current conditions in the U.S.

    An interactive map from IHS drives home the depth of the U.S.’ employment woes. Only a handful of states will see employment reach pre-recession levels by the end of 2012, and the median point of recovery is pegged at the fourth quarter of 2014. 10 states, including California, Florida, Michigan, and Ohio, aren’t expected to see employment fully recover until 2016 or later. (earlier)

    Some U.S. states would be hit harder than others if Europe falls into recession, according to Wells Fargo research. Utah, where European exports make up 5.6% of its GDP, tops the list because of its gold and silver exports. South Carolina, an auto-producing state, comes next, and coal exporting West Virginia rates third most vulnerable. 

    For once not leaving it to the 11th hour, congressional negotiators last night agreed to extend funding for various government agencies until mid-December or until the end of the fiscal year in September, thereby avoiding a shutdown this weekend. The House and the Senate must approve the deal. 

    The Federal Housing Administration could require a government bailout next year, as a rising number of mortgage defaults and falling prices have caused the agency’s reserves to drop to just $2.6B, the WSJ reports. Any rescue and its scale would depend on the house prices – a fall of over 5.6% would force the FHA to seek help.  

    As the PC industry tries to rebound from a rough 2011, the European market could remain an albatross around its neck. Gartner estimates Western European PC shipments fell 11.4% Y/Y in Q3, thanks to an 18.8% drop in consumer sales. Top vendor H-P (HPQ) saw its market share grow by 90 bps to 22.7%, while Apple’s (AAPL) share surged by 190 bps to 7.6%. (Q2 data)

    Apple (AAPL -1.4%) has sold off to a 5-week low, and a bearish note from Goldman’s Bill Shope could be playing a role. Shope is worried about a weak forecast from contract manufacturer Hon Hai Precision, and thinks it could be due to soft iPad demand. He adds that the release of a cheaper iPad could be needed to stoke demand, given the price-sensitivity of tablet buyers. (earlier)


  147. Morning Phil,
    Talking about dollar and indices, have you seen the latest version of my chart:
    http://www.pentaxon.com/psw/spy_worldcurrency.html
    I found out that the SPY index shows the lowest volatility when calculated in non-USD currencies. Very interesting. This might be a good tool to see trends and trend-breaks on a short to medium term time scale. However when assessing "real value" of the stocks I like the old chart more because it also includes one third of gold as a measure for currency debasement.


  148. Cheating/Angel – Historically, we are only looking for 10 righteous men and there’s still hope…

    Good point on US not giving a damn about how hiring policies affect other countries.  That is what’s happening – we’re even outsourcing education and training to other nations – anything that saves a buck for the top 1% in this country – no matter how much it costs the bottom 99%.   

    Dollar popped over 78 – indexes dropping hard!  Oil $97,69, gold $1,763, Dow futures 11,953.  

    Dragon – It’s a great app on the IPhone too (free), works amazingly well.  

    Unanticipated benefits/ZZ – Nice!  

    Hoover book/Pstas – Thanks!  Too bad for Hoover they didn’t have Fox back then – he’d be bigger than Rush…

    Costs/Diamond – That’s the issue with most of our drugs.  Same drug sold in another country for $1 costs $10 here is typical for pills – we are the World’s suckers in overpaying for medicine and everything else health-care related and THAT’s the system that the Reps are trying to defend – the system of gouging the American people.  

    Nice charts, Pentax.  Notice you have a very neat 20% band on the non-USD currency, that is worth paying attention to and, unfortunately, we’re nearer the top of the channel than the bottom there too.  

    SPY in world currency

    SPY in world currency


  149. They knocked off 34Mb yesterday but still a lot to go by Friday:  

    Click for
    Chart
    Current Session Prior Day Opt’s
    Open High Low Last Time Set Chg Vol Set Op Int
    Dec’11 98.04 98.35 97.56 97.73 06:13
    Nov 15
    -
    -0.41 22937 98.14 155648 Call Put
    Jan’12 98.11 98.43 97.66 97.79 06:13
    Nov 15
    -
    -0.43 10403 98.22 311696 Call Put
    Feb’12 98.11 98.30 97.65 97.78 06:13
    Nov 15
    -
    -0.37 2307 98.15 85548 Call Put
    Mar’12 98.05 98.22 97.62 97.62 06:13
    Nov 15
    -
    -0.48 1740 98.10 84922 Call Put

  150. Notice 20Mb were rolled to Jan but nothing really to Feb or March.  That’s interesting as they are the same price, which indicates that oil traders do not feel that time is on their side.  Notice oil is getting slightly cheaper as time goes on – VERY INTERESTING!  


  151. AAPL
     
    7:41 AM In-line with prior speculation, DigiTimes’ sources claim Apple’s (AAPL) suppliers have begun shipping components for a "15-inch ultra-thin notebook model," which could be either a MacBook Air or a thinner MacBook Pro. The Air has become a runaway success for Apple, accounting for 28% of its notebook shipments in October (according to NPD). [Tech] Comment!


  152. I realize that Bill Gross’s impeccable timing on his U.S. Treasury short disqualifies him permanently from being a Great Seer, but I think it’s safe to say he’s stating the obvious here.  From FT:
     

    Markets Insight: Bill Gross – Take flight from Europe’s policy foodfight

    Euroland’s fingers are pointing in all directions, each member believing they have done more than their fair share to resolve a crisis that appears intractable and never-ending. The world is telling them to come together; they’re telling each other the same; but as of now, it appears that you can’t tell any of them very much