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Twas the Friday Before Christmas

Really guys! 

Don’t we all have something better to do than watch the markets today?

I’m embarrassed for all of us.  Even the crooks at the NYMEX are going home at 1:30 this afternoon, sacrificing an entire hour of losing money to us to be with their strippers.  That’s right we OWNED those people yesterday, hitting play after play after play on the oil Futures, all based on our very simple premise that – If the crooks at the NYMEX want to pretend they want to buy a barrel of oil for $100 – we are very happy to promise to sell it to them!  

Over and over they pretend to want to buy oil at or near $100 and over and over, as soon as we (real people) actually start accepting their offers – they quickly dry up and retreat – over and over and over again.  

This is how you beat the scam artists, call them at their game.  

At 3am this morning, they jammed oil up to $100.23 and at 3:51, in Member Chat, we were able to jump in and short the oil Futures (/CL) at $100 and by 5:30 we were out at $99.60.  That may not seem like a lot but, at $10 per penny per contract – it buys a lot of Egg McMuffins! 

As I’m writing this (7:35) we just caught another run up to $100 and already it’s back to $99.66 on fake, Fake, FAKE trading.  Yes, ALL THE TIME they are faking it.  ALL THE TIME.  It’s a SCAM – Oil trading is a scam, a lie, a con – and it’s played on the American people every single day and no one does a thing to stop them (except us).  

Click for
Current Session Prior Day Opt’s
Open High Low Last Time Set Chg Vol Set Op Int
Feb’12 99.48 100.23 99.24 99.77 07:33
Dec 23
0.24 11771 99.53 252713 Call Put
Mar’12 99.50 100.38 99.45 99.95 07:33
Dec 23
0.25 1801 99.70 155135 Call Put
Apr’12 99.62 100.50 99.59 100.17 07:33
Dec 23
0.31 1005 99.86 75457 Call Put

Do they REALLY want to have 252M barrels of oil delivered to Cushing, OK in February?  No, of course not.  Aside from the fact that Cushing can only physically handle, if it were empty (which it is not) 40M barrels a month – we are, in fact, EXPORTING oil products out of America as our usage of oil is down 10% from last year (see chart in yesterday’s post).  DESPITE a 10% reduction in refiner output, which helps to create an artificial shortage by the US energy cartel so they can charge the American public much more for less – we still are at RECORD levels of oil and product storage in this country.  

So why do the NYMEX traders pretend to want to buy February (front-month) oil for $100 a barrel when December 2014 barrels are trading at $91.37?  Because the front-month pricing determines what US consumers pay at the pump and even if the traders take a $10 loss on 250M barrels ($2.5Bn), that is just a drop in the bucket compared to the relentless price gouging at the pumps committed by the Evil Corporations that employ those traders.  

Americans consume 11Bn gallons of gasoline a month along with 5Bn gallons of distillates and 7Bn gallons of other products.  Last year (when we consumed 10% more), a gallon of gas was selling for $2.98 and now it’s $3.23, up .25 – that may not seem like a big deal but multiply that by 23Bn gallons and you have $5.75Bn of excess profits (and that’s giving them that $2.98 is "fair" in the first place) stolen from the American people EVERY MONTH.  And don’t worry about the oil cartel – they aren’t losing $10 a barrel at the NYMEX, maybe a dollar or two on average but worth every penny of $500M to have an excuse to charge consumers an extra $5Bn each month, right?  

The Asylum: The Renegades Who Hijacked the World's Oil Market

The underlying problem in the oil market and in the broader market in this country is that ordinary Americans are now seen as a resource to be exploited by those who are in power – by the wealthy and by those with political influence. We’re seeing Washington and Wall Street working so closely together that you really can’t tell the difference between them anymore. The figureheads of each like to go back and forth between both locations, picking jobs, then switching and going back again. The government officials we are trusting and paying to look out for Americans are using those positions to get really nice, high-paying jobs in private-sector places, including Wall Street, that are effectively being used as bribes. - Leah Goodman, The Asylum

Last night, the White House finally forced Boehner and his Congressional posse to extend the payroll tax cuts (and Boehner’s quote: "Why not do the right thing for the American People, even though it’s not exactly what we want" is sure to be the official Republican slogan for 2012!) of $140Bn and NO ONE denied that $140Bn is a lot of money yet NO ONE does anything about the $400Bn PER YEAR that consumers are now paying for oil ABOVE what they paid just 2 years ago.  

What’s really sickening about being ripped off for $400Bn a year isn’t just the 10,000,000 $40,000 jobs that $400Bn a year represents and it’s not the $400Bn boost to consumer spending, not even counting the potential new wage earners, that would go to industries that actually do create jobs in this country – it’s the fact that at least half of the $400Bn that the crooks at the NYMEX are stealing from us every year ($2,850 per tax-payer) is being sent overseas and tens of Billions of those dollars go to fund the very people who are killing our troops overseas as well as forcing us to spend countless hundreds of Billions of Dollars more to defend ourselves against people who buy our own weapons with our money to use them against us.  And then, THEN THEY USE THE WARS AS A REASON TO RAISE THE PRICE OF OIL – MADNESS!  

 So Merry F’Ing Christmas to all the Corporate crooks and their pet politicians, who are selling this Nation and its once-proud people down the river to line their own pockets.  Forcing people to overpay for necessities like food, fuel, housing and health care has created the largest wealth gap in recorded history for a developed nation.  Our Gini Score (income inequality) of 41 is certainly better than Botswana’s 60 but a far cry from Canada or Japan’s 25.  Even Bangladesh scores a 31 while our neighbors in the low 40s include China, Congo, Cambodia, Ghana, Morocco, Nigeria, Qatar and Mother Russia.  

Even Pakistan manages to score in the low 30s because, they may be poor, but the top 1% don’t have all the money.  Our top 1% have 40% of the money – that’s pretty bad – that IS NOT SHARING!  Isn’t Christmas supposed to be all about sharing?  Unfortunately, as sickening as these statistics are, they are getting worse.  Our score of 41 was last officially measured in 2000 but the estimates are that things in the US have gotten 10% worse (or better if you are in the top 1%) since then and our score is now 45 – one of the 10 worst on Planet Earth!  

Or, if you are in the top 1% – one of the 10 best, right?  

Go ahead, ask any warlord in Zimbabwe (rank 50) or Congo (47) and they will tell you that NOTHING needs to change.  It’s the greatest country in the world when you are the one at the top – just like America!  

Click here for more charts and graphics on America's plutocracyPrinceton political scientist Larry Bartels studied the voting behavior of US senators in the early ’90s and discovered that they respond far more to the desires of high-income groups than to anyone else. By itself, that’s not a surprise. He also found that Republicans don’t respond at all to the desires of voters with modest incomes. Maybe that’s not a surprise, either. But this should be: Bartels found that Democratic senators don’t respond to the desires of these voters, either.  At all!

It doesn’t take a multivariate correlation to conclude that these two things are tightly related: If politicians care almost exclusively about the concerns of the rich, it makes sense that over the past decades they’ve enacted policies that have ended up benefiting the rich. And if you’re not rich yourself, this is a problem. First and foremost, it’s an economic problem because it’s siphoned vast sums of money from the pockets of most Americans into those of the ultrawealthy. At the same time, relentless concentration of wealth and power among the rich is deeply corrosive in a democracy, and this makes it a profoundly political problem as well.

Just something to think about as you get together with your family for the holidays.  Perhaps you are all rich and successful and this is all very funny to you but perhaps, just maybe – if you look around the family table – you might realize that people who have the same background as you, with the same opportunities as you , through no fault of their own other than slightly different circumstances – are not as successful as you are.  Maybe, just maybe, if you can see that – you can see how our society as a whole may be skewing a bit too far to the right and perhaps, just maybe – you may see it fit to resolve to help change that in the new year.

Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income. This too is meaningless. -  Ecclesiastes 5:10

Have a very Happy Holiday, 

- Phil


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  1. Oil lines

    R3 – 102.12
    R2 – 101.12
    R1 – 100.51
    PP – 99.51
    S1 – 98.9
    S2 – 97.9
    S3 – 97.29

    Yesterday’s high and low – 100.12 / 98.51

    Breakout Lines – 102.72  / 94.29

  2. 38143a700f1b012f2fc600163e41dd5b?width=750  

  3. UK 10-YEAR gilt yield falls below 2% for first time ever…

    We truly are in a different world!

  4. PP for today:

  5.  Phil: QE3 and the economy
    RE:your earlier comment will both the economy and the market have to swoon before QE 3 is announced?

  6. Well if history repeats, they’ll dip the market red at some point this morning and stick it into the close.

  7. Made my ES 1255 target. Harder to say what happens now but there really is a lot of resistance above & EURUSD still gasping for air. 

    There’s the Santa Rally of course, but on the stats I posted here yesterday, just to hold the current level into the New Year would be one of only two occasions since 1940 when the Santa Rally has exceeded 4%. 

  8. Phil,
    Are the futures trading groups that manipulate the futures price up owned by the US energy cartel? Or are there other speculators?

  9. Jack- calls have been right on.
    What do you make of the 10 & 30 yr moves this morning?

  10. Phil/payroll tax cuts
    This is extraordinarily confusing. From what I have seen on CNN, the Senate says it can only be done for 2 months, because they don’t know how to fund it going forward, and the House said it can be done for 12 months and the funding is not a problem. If both sides actually want it for 12 months, then why can’t they agree on how to do it? Presumably the Democrats want to fund it with tax increases on Republican voters or by printing more money, and the Republicans want to fund it by invading Iran and confiscating the oil wells, as advertised in the Presidential debates, but spokespeople on TV for both parties are incredibly vague about what is really going on and why there is (was) an impasse.

  11.  pstas – Looks a little bullish for equities, but it really needs some support from EURUSD to get far I think. 

  12. short OIL again at $100 on the button with entry sell orders at higher prices……….took a reduced size long on EUR/USD at 1.3050



  15. Rising support from the low just broke on ES. Into a short-term topping process I think. Might take a couple of days though. 

  16. Good morning! 

    All nickels and dimes on the oil shorts this morning but we’ll take them when they give it to us every 10 mins like this.  Clearly they are desperate to get to $100 and it’s probably our fault it isn’t working.   We could experiment by all buying  back at $99.80 and staying flat until 10 so they can run it up in peace (and THEN we can short it) but that would be kind of manipulation so we shouldn’t do that…

    The Dollar is at 80.30 and TLT is heading down so we’re back to panic mode again.  The VIX is still flat at 21.16 and you can play the volatility by selling the next week VXX $34 puts for $1.12 and buying the Jan $32/35 bull call spread for $1.30 for net .08 on the $3 spread.  Let’s do 5 of those in the WCP over the weekend!  

    I’m still liking USO puts over the weekend, the next week $38 puts are still .40.  

    Otherwise, it’s a low-volume BS day that no one should take seriously.  If they can get the Dollar back below 80.25, they should be able to give us a boost but I do expect a little profit taking in the afternoon because not everyone cares about pinning the indexes.  


  18. Phil/NYMEX strippers
    Phil, they guys at NYMEX make a lot of money manipulating oil.  It is insulting to say they want to be with their strippers.  They are at the high priced escort level.

  19. AAPL 50k Portfolio – I need some information from lflan to update the positions. 

    FAS Strangle Experiment – So far, so good with the 62/67 held from yesterday. Even if we push above 67, we’ll be able to roll to somewhere next week!

  20. BAC up 10% since we sided with Warren!  

    Gilt/StJ – Hey, that was a nice early indicator to short TBT. 

    Swoon/Lincoln – I think the Fed needs a swoon to justify QE3 so it’s a chicken and egg thing but most likely they will want to see things getting worse before they act and I firmly believe that lack of action will make things worse.  

    Santa Baby/Jack – Yep and you can see Euro fatigue already setting in as the "fix" isn’t fixing things at the malls.


    Also, Monday will be an excellent day to attend the Build a Berkshire Workshop – I’ll move that post up front on Sunday.  

    Wow, 10 am on the dot and oil started plunging – I hope it wasn’t something I said!  


  21. Rustle, I don’t think it’s fair to be hatin’ on the strippers because they’re not (lah-dee-dah) "high priced escorts". These are honest hard working Americans doing a job that needs to be done. We need to celebrate that and give them the tax cut the so richly deserve!
    And don’t forget to contribute to the "Christmas Stocking" fund.

  22. I wonder what kind of bonus he will take this year…

    The Paulson & Co.’s Advantage Plus fund, which has been the firm’s worst performer all year, is down another 9 percent through December 16, sending yearly losses to about 52 percent, according to a person familiar with the numbers.


    The Paulson Advantage fund, the firm’s largest portfolio, is also hurting again this month, declining about 6 percent. The fund is down about 36 percent year-to-date. 

  23. Good morning,


    IWM  71.87,  72.15,  72.56,  72.98,  73.24,  73.61,  74.02,  74.66,  75.06  and  75.57

    Also, trend line resistance at IWM 74.44

    I am short

  24. JR
    Damn you’re good.  How did you know????  I gotsta know!!!

  25. House finally passes payroll tax cut extension – nicely played by the Prez!  

    Futures/Kallen – Many are, some aren’t.  The question is, who is it that’s buying and clearly losing money constantly and what is their motivation?  Follow the money on those guys and it’s Koch, XOM, BP, GS, JPM…

    TLT $118.37 – gotta love that thing, right Pharm?

    Impasse/JMM – I haven’t had time to get into the nitty gritty but it’s just the usual BS.  It costs about $16Bn a month to extend these tax cuts and the Senate wanted to fund the whole year by raising the fees people pay for mortgage financing.  The increase would have amounted to $8.50 per $100,000 per month for people buying new homes.  The appeal of this to the Dems is, of course, rich people pay more.   The Reps essentially want to pay for it by cutting Medicare and defunding Obama’s Health Care program (see a theme here?) and the Dems have proposed not doing that but instead fully funding the tax cut by adding a 1.9% tax on incomes over $1M along with many other alternate ways of taxing the top 1% – all of which were completely rejected by the Reps.  

    The House was also looking to cut 20 weeks of unemployment benefits and mandate drug testing for people receiving Government aid, which would cost more money (good for the "test creators" though) than it would "save" by forcing addicts to commit crimes to get money (where it creates additional income opportunities for "cell creators").  

    On the whole, the Republicans massively blew this and it’s not even over for them as now the Dems have until March 1st to make this a MASSIVE issue and put out a ton of information on what cuts the Reps will not accept vs. what cuts they are pushing for and Medicare – as we all know, is a major election issue.  

    Nice playing Roro!  

    80.34 on the Dollar and $99.78 on oil.  TLT $118.20 is holding. 

    AA Money/StJ – All good

    FAS Money/StJ – Weren’t we supposed to stop out the Jan $68s at $4?  Well, we’re at $66.38 so no biggie but I think selling another next week $66 for $2.30 and now setting a stop at $4.60 on the Jan caller is a good idea but we still intend to kill the Jan caller today in either case, hopefully at a lower price if we re-test $13 on XLF at about $3.80.

    IWM Money/StJ – Time to sell another Jan $46 call, now $3.90. 

  26. Strippers/Rustle – I take it you haven’t met those guys – they are the beer drinking and bra-stuffing crowd for the most part.  You should read that book, Asylum – a lot of these guys are like a roaming frat party with an unlimited budget.  

    $99.60!  That should give us a bounce.  80.32.  

  27. Phil/Extension,
    What a bunch of complete idiots these politicians are.  Both sides of the isle. 
    I have to admit….the republicans must have been on dope the way they let the Dems out maneuver them of this ridiculous political circus. 
    And Boehner…..christ….it looked like he had a scuba tank lodged up his *ss when he came out gave his press conference yesterday.  What a freaking moron.  They all have to go.

  28. Scuba tanks for all!

  29. Nervous banks stash cash with ECB

    FRANKFURT – The Associated Press

    Last updated Friday, Dec. 23, 2011 7:58AM EST

    Lead image

  30. FAS Money / Phil – Indeed, I thought I set a stop at $4 on the Jan call but seemed to have messed up somewhere! 

    As far as next week is concerned, we only have a 66 call now. The 68 are 1.48 now! What do you want to do…

  31. IWM Money – Selling another Jan TNA 46 Call (now 3.90).


  33. Politicians are like diapers, they need to be changed often and for the same reasons—-penned by a Portuguese author I think
    Traveling today to Philly--anyone in that area?

  34. Phil you are on the money with the NYMEX crowd, as a former CBOT trader, one of the best way I used to describe "those guys" was that they would blow me crap for eating meat during lent (which we all know was a ruse by the church to help the fisherman…nothing more nothing less).
    The fish lineon Fridays would be out the CBOT restaurants doors, when the bell rang at 1:15 or 2pm depending on the contracts you were trading. These guys would pile into Limo’s right out the front door of 141 W jackson and they would climb in with their "strippers/hookers"….so as I always say if your willing to screw your wife and children…you’ll screw anyone!  Aftter a decade of trading there I maintained friendship with not ONE person…that’s those guys in a nutshell

  35. I may make this a short morning, and if so……………………….

    Merry Christmas to all !! 

  36. Phil,
    What are your thgts on selling 115/116 TLT puts to hedge against a stk mkt drop, weaker econ data/ retail sales, broken Euro fix revelation, etc?

  37. Phil/MSFT
    How is this for a cash account or IRA trade?  MSFT is a software company…. OK, you will be aware of their product line, dividend, AAA rating, etc., so skip the crap.
    Stock seems to have strong support at $24, possibly because the founders stop selling stock at this level, I don’t know.
    Sell February ’12 $24 puts and buy $20 puts to complete the spread which pays $280 for a set of 10 and requires $3700 in cash in an IRA account. Repeat 6x annually for a return of $1680 on $3700 cash (depending on variances of VIX).
    Maximum risk is buying MSFT at or below $24 or hitting bottom of spread for a loss of about 17%.
    However, since the $20 puts are so cheap, triple puts can be purchased as additional disaster protection if required at little cost, so if the stock actually did to $18, the loss would zero.
    According to TradeKing estimator, for example. Sell 20 February $24 puts and buy 60 February $20 puts for net 20 cents (market price) would return $357 requiring cash of $4642 after commissions. Annualized this would return $2142 on cash of $4642 with maximimum loss occurring only  if MSFT finished at exactly $20. If it finishes at $19 or $22 the loss is halved.
    I would appreciate any comments on the concept and any possible pitfalls before committing substantial funds to such a trade.

  38. TLT/TBT – well, TLT is holding the 50d MA, down 1.27% and the market cannot do a thing to move up.  Call me crazy, but I do expect it to break its highs early next year.  As SJ noted that /ZB may break down (short term IMHO), but again the markets are doing nothing.  Bonds usually weaken in here as it is the holidays and the bond boyz have raked it in this year so who cares about a few basis right now?

  39. Oh, home building blew, and that durable goods was all airplanes (defense – cough cough govt).  If it were not for that, it was down 2%!  That bodes lots of confidence in my measly little mind.  Fundamentals don’t matter though, I guess.

  40. Jack Bogle always makes for a good interview:

    A: I believe the rich should pay more, but that’s not a good platform for tax policy. What has gone wrong is that we’ve failed to recognize the difference between earned income and unearned income. Is it really fair for gamblers on Wall Street to pay a 15 percent rate when they make a winning investment, and an honest working person — a bricklayer for example — may pay an equal or higher tax on their wages than a gambler? That’s absolute absurdity.

    Rates may have to be changed, but we also need to look at what is taxed, and how. Dividend income should be taxed at the same rate as ordinary income. As for capital gains, there ought to be some distinction between capital made by people who start businesses, and contribute value to society, and capital made by gamblers on Wall Street, some of whom win. Earned capital income should carry the regular dividend rate, but capital income gains by trading, and particularly short-term trading, should pay a higher tax, even than the present ordinary income rate.[...]

    That our financial system has gone off the rails. It’s something we think of as providing capital for new businesses, that will enable people to finance new companies or add to the capital of existing companies. We do that to the tune of about $200 billion a year in financing through Wall Street, or through the financial system. And yet we do some $40 trillion worth of trading every year. I’m selling my investment to you, and you’re buying it from me, and it creates no value for society. Indeed, it subtracts value, because the guy in the middle gets his piece.

  41. SGL, bogle always seemed like one of the sane ones.

  42. Scuba Tanks/Exec – Nice image! 

    Nerves/JRW – That’s one way to keep your borrowing costs down. 

    FAS/StJ – Oh so it did stop out?  Sorry, I meant sell another $66 for $2.30 – I was looking at the short calls when I typed it but note the word "another".  

    Philly/Savi – I am considering going to a poker tournament in AC on Sunday – close enough?  

    Nutshell/Sage – Sounds like the same guys I know.  

    Merry Christmas JRW and to everyone sensible enough to have a short day.  

    TLT/8800 – I am not a TLT fan but the Fed has a good floor under $116 so it’s a reasonable way to play.  I just wouldn’t go too crazy – as you can see from today’s quick and harsh dip – the thing COULD break down.  

    MSFT/JMM  - A software company you say?  Do tell….  Certainly nothing wrong with that plan except for the one time, a few years ago, when they declared a special $10 dividend and the stock dropped 30% overnight.  They have a lot of cash built up again so you just have to hope Melinda doesn’t need a new pair of shoes.  There are risks to NOT owning the actual stock you should always be aware of – I like the trade, just not the word "substantial".  

    TLT/Pharm – Just bustin’ you’ll have your day next time.  

    Trading taxes/StJ – Yes, it’s completely ridiculous the tax advantages to having a hedge fund.  That’s why you see guys like Soros – they kick out all the investors, but they’re not giving up the fund!  

  43. Phil
    Good morning!
    And happy holidays!
    Thanks for the clarification on AAPL yesterday.
    A couple weeks ago, I asked about my WFR puts, I was in the hole for, and you suggested rolling the Jan 2012, $7.50 puts which we’re $3.30 or so to the Jan 2013 puts, about even
    Well, I bought back the puts at $3.40 but still have not had the stamina to sell the 2013 puts, as I don’t have confidence in the stock.
    However, I WOULD be willing and able to own GE, VZ, T, or even ORCL?
    What Do you suggest to recoup in next 6 months or so? I had -30 WFR put contracts. Margin is , of course somewhat relevant.

  44.   AAPL portfolio/   stjeanluc and all:   Sorry for the sparse posting yesterday.  Computer issues.  I sold yesterday the  30 Dec 23 QQQ 56 puts for .60.   Analysis:   I don’t need DSP on AAPL the next 4 weeks (see below).    I closed the bull put spread for a profit……BTC 10  Jan 390  puts for 9.01 and STC  10 Jan 385 puts for 7.28. Analysis:   I can make more money by using the money to support calls only.   Finally,   BTC   20  Dec 395  calls for 4.40.  Analysis:  AAPL isn’t pinning today at 395.   Holdings are:   10  July BCS   390/415   and  20   Jan  390  long calls.    I’m convinced now that AAPL is going to 420 within the next 4 weeks.   I’m therefor holding the July spread and the Jan long calls as they are for at least the next 2 weeks.   I may ( or may not) cover the Jan 390s to make a full spread sometime after that.   But for now, I’m leaving the portfolio as it is described above.   This should also make it easier for all of us to keep track of the portfolio through the holidays, as it’s very unlikely I’ll be making any changes for the next 2 weeks.  Thanks!

  45. FAS Money / Phil –  OK, selling another FAS Dec5 66 call (now 2.40)

    The Jan call didn’t stop out, still on the books! Are you worried we go up and up from here as we could wait for a breather to cash in since it’s at 68 with 28 days to go!

  46.  Phil, with the VIX this low, I’m noticing that February calls and puts seem proportionally way more expensive than the Januaries; in some cases the delta and theta are both  higher, like CMG and even IWMs seem skewed this way.  It looks like one Feb CMG $310 put costs 3x a Jan 310 put.  We normally hold longer dated C/Ps and sell shorter dated ones.  Does it ever make sense to do the reverse? Or do we just go farther out and sell the Febs and buy say the Junes?  


  48. Thanks for the update lflan. I’ll update the position and let you know if I have any questions. 

  49. Phil/ Mandatory drug testing
    Good point. Rick Scott the new CEO of Florida has mandated something like quarterly drug testing for ALL government employees. Not just school bus drivers, but grandmas with office jobs.  (A logistics nightmare when you consider scheduling hospital and prison employees working shifts 24 hours per day and having to suspend people and pay someone else overtime if someone misses a test.) Mr. Scott is the proprietor of a company called Solantic which provides Workers Compensation and pre-employment drug testing to state employees. This is the advantage of having a job creator in public office--their knowledge of the business world is absolutely invaluable and like the missionaries in Hawaii, they enter office to do good, and they do very well.
    On the MSFT trade, if you were long  the triple lower end puts, then the 30% overnight drop would show a huge profit

  50. S&P @ 200 DMA

  51. WFR/Maya – I’d go GE as they have a nice dividend and should do well in aircraft engines and extremely well if commercial real estate comes back and super-extremely well if infrastructure spending is a solution employed by any Government on this planet.  You can sell the 2014 $17 puts for $3 and TOS says the net margin is $2.40 on the straight put sale so not too bad.  The current Jan $20 puts are $1.80 and they can be rolled to the 2014 $13 puts at $1.50 so figure if GE drops 20%, you can end up rolling to 2015 $12 puts about even – as long as you REALLY want to own GE for net $12 – why not?  ORCL I would stay away from, T has no direction at the moment and will take a hit on TMobile breakup fees and VZ I do like but not for $40.  

    FAS/StJ – I think either way we can’t keep it over the weekend – too dangerous.  

    Europe closing up about 1%, giving us a little push too – maybe see oil $100 again (now $99.93 and worth scaling in short).  

    VIX/Rdn – That’s because Feb is thinly traded by comparison and hasn’t adjusted yet – good thing to take advantage of if you can.  If you can actually get the prices, the trade makes a lot of sense.  

  52. Lflan – Just one question – you had sold some 395 calls on 12/20 for $3.10 (I recorded 10 but might have been 5) before selling the 20 the next day. Could you let me know when you covered and at what price? Other than that, I am up to date. Thanks.

  53. jmm / advantage — This is the advantage of having a job creator in public office--their knowledge of the business world is absolutely invaluable and like the missionaries in Hawaii, they enter office to do good, and they do very well.
    I like that! Especially at this time of year :)

  54. Maya / GE — in addtion to Phil’s points, if there are a lot of NG subtitutions for coal at power plants, they should also do well.

  55. Happy Holidays to all- enjoy your families during this special time of year. Thanks to all for your imput and to Phil for providing us a place to share ideas and fight the idiots that rule our world and our financial system- peace to all!

  56. David - thanks for the UCO trade on Monday, I closed out today with 70% gain on the options.  With you and I trading oil up and Phil trading it down, this site brings Balance to the Force

  57. JR/Holiday    
    Are you planning on holding long through the weekend?

  58. Phil / GE — How ’bout The Jan ’14 13/15 BCS financed by the Jan ’14 $13 puts putting you in the the $2 spread for $0.05 with a $13.05 entry worst case?

  59.  Mandatory drug testing – Phil/JMM
    Since I drug test people for a living, I have to chime in and say what a horrible idea it is.  First, it is easy to beat some drug tests.  Certain chemicals can help and if you have to pee in a cup, some people are very clever with a squirt bottle.  Plus it creates an underground market for clean pee.  You can’t watch people pee, because that is a huge civil rights issue.  Plus, synthetic pot (K-2) is not testable yet, except with an expensive custom test.  I have seen every trick in the book, and the people who probably need to get caught are often smart enough not to be.  Its expensive and unreliable to handle on such a mass scale.  And that is not even getting into the fairness issues involved.

  60. exec / weekend

    That will depend on where we close, but if we close up with strength, yes.

  61. drug tests — Affordable Urine Samples: :o

  62. Phil/rainman
    Appreciate your thoughts!
    Don’t like ORCL, eh?

  63. stjeanluc,
    Any thoughts on selling weekly premium over three day weekend?

  64. rainman – I guess there is a business for everything now.

  65. Phil, I was up late tradiing the oil moves, and when I closed out the last 2 contracts, I left a stop for them at 117.  Forgot it, and went to bed.  Just now noticed I have a position thats 500 dollars in the hole. Oil went up past my stop and filled it last night.   Bummer,…. thankfully  I made a whole lot more than that on oil in the last move to 92.5.  Question:  Is there a way, besides the suppliments I take for memory, to make sure this doesn’t happen again? Also, when is a good time of day to ask you a longer question about what moves oil?  I finally got it today in your leadoff that the guys at NYMX are taking a loss to keep the price  up so much more $ can be made on the other end. (the end where me and my wallet live)

  66. revtodd64/drugs
    Not to mention the horrific cost to the taxpayer, but it seems to be a vote winner, basically because Florida is full of little old men and women living in subdivisions who are terrified that the African American single mothers who work for the state in the Drivers License office will know their address and send their unemployed teenage kids to perform a home invasion, rape the wives, and steal the Jazzy scooters they obtained free via Medicare. They therefore vote for the Scottster, little knowing that it is he who is plotting to take the wheelchairs out from under their bottoms.

  67. Weekend / Kallen – That low VIX is really not helping! I think that we are bit complacent now…

    You could try a FAS 60/72 strangle over the weekend. It gives you 10% on both sides and can be sold for about $0.70. It’s not great but might be worth a shot. The 72 strike is where I would roll this week 67 if needed. But I can’t say I am in love with the play! And I won’t do it myself. This low volume can really mess you up. 

  68. nicha / everything — You bet. "one man’s trash…" and all that. I’m a wholesaler to them :)  

  69.  Agree Revtodd on drug testing.  Lot’s of gas station attendants will get fired.  Not many top level programmers for the defense department.  They keep changing for formula for the K-2 stuff, which they spray on inoffensive herbs.  Plus alcohol is legal, quite arguably the worst of drugs from an addiction standpoint.  I’d rather hire a pothead — or a junkie — than an alcoholic.   And the civil rights issues are, or should be, problematic.  Addiction is a serious problem — drugs, per se, are not.  You will not alleviate addiction by firing people, or threatening to do so.  But you will probably increase the number of people in prison, in a country that already incarcerates more citizens than any other developed country.

  70.  stj……that was   10   of the 395s       closed (bought back ) at 3.85.    Thanks.   i’m going skiing.  I’ll see you all next week.  Have a wonderful holiday everyone!

  71. Phil,
    Thanks for the reply on the GE trade and I appreciate your patience.
    From the Hills of Mendocino County California, have a Happy Holiday and a wonderful New Year.

  72. Happy Holidays to all of us too!  I have more cash on the sideline than I would have liked going into the end of the year.  Well, this means that I’m all prepared for a large move in either direction. Trade safe!

  73. phil, the USO 38 puts at .47 from yesterday (now .38).  would you hold into the weekend (DD?)

  74. Phil
    are we holding the USO $38 Put and DIA $120 Put over the weekend?

  75.  Phil, do you think its worth holding long over weekend based on the odds of a low volume pump job next week?

  76. in out out in out ……back in OIL short at $100……….probably just leave it open into next week as the roles have an average entry price over $100.50 so playing with profit

  77. S&P Hi-Lo Spreads chart: Returning to Normalcy?

  78. exec / 9:15 post

    Nice job !!

    Just like yesterday, TZA then TNA; I’m gone with 3+%

  79. Insight: More solar firms set to burn up as prices sink:

  80. Thanks lflan!


  81. JRW / job — So you already see the stick in that thing? :)

  82. best wishes for the holidays for all.

  83. A position I got my clients into was selling puts on Macy’s (M). The stock has been super strong. We like the $29 level to sell some puts for about 10% gain. Nice income trade. Accompany that with long stock.

  84. Jmm, Rick Scott was indited for medicare fraud I believe also. the company he ownes is involved in drug testing – as Dana Garvy would say "how convenient"

  85. Sorry, just noticed the PP sheet was off today.  Not sure what Google Docs was doing, as it is right in the docs, the the link is not.  I will most likely start doing it as an image.  Is that what you do StJ?

  86. Happy Holidays dudes and dudettes! May you all enjoy plenty of good health, family, food and peace of mind!

  87. Drugs/JMM – Yep, it’s the same on the Rep proposals only not quite as obvious as the Rick Scotts of the World simply make their campaign contributions in exchange for favorable legislation that. as Boehner says "may not be the right thing for the American people but…."  

    Kissy, kissy on that oil $100 line – you guys have got to stop triggering there or the NYMEX boys will be in no mood to tip later!

    Don’t worry though, CNBC has something bullish to say about oil every 15-20 mins today. 

    Thanks Jthom – Peace!  

    Balance/Mr M – Hey, I was bullish earlier in the week – I just have a top to my range….

    GE/Rain – Very nice set-up.  

    Drugs/Rev – My issue isn’t so much that the tests can be beaten but the cost etc of enforcing is ridiculous and the general indignity forced on the vast number of law-abiding people who are being treated like criminals because of their station – that’s not what this country is supposed to be about – that’s just another step towards Fascism, done in the interest of making sure the top 1% give as little as possible to an ever-more narrowly defined group of those in need.  Come on, you’re a preacher – why do we let them frame the debate in their terms when it’s a moral outrage that NO ONE should allow?

    If there is a poor man among your brothers in any of the towns of the land that the LORD your God is giving you, do not be hardhearted or tightfisted toward your poor brother. There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land - after they have peed in a cup and passed the test for drugs… - Dueteronomy, as amended by Rick Scott

    Samples/Rain – $100?  Wow, I guess we’d all be millionaires if we bagged it instead of flushing!  

    ORCL/Maya – Kind of a "where there’s smoke" sort of thing for now.  In a strong market, I’d be more interested in taking a chance.  They’ve been down before, never out.  

    Futures/2Can – On TOS, it tracks your long short so you can always make sure you have a 0 before going to bed.   Also, I find that waking up in the morning and being down $10,000 on a $5 move in oil tends to make you remember for years afterwords not to make that mistake again!  Best time to ask is weekends, when I have time to pontificate.  

    Florida/JMM – The whole state is on the Government dole and they vote Conservative – it would be funny if they weren’t our parents! 

    Alchohol/ZZ – You said it!  Drugs have been legal in Netherlands for decades and they have had a 33% decrease in heroine addicts and, despite the fact that every kid in Europe goes there to party, they have one of the lowest levels of overall drug use in Europe and the least amount of drug deaths and, of course, lowest amount of drug crime.  If you tried to take "snuff" and "hemp" away from our Founding Fathers – you would have quickly found out what the 2nd amendment was all about.  Drug laws are nothing but a corporate scam to promote one type of drug over another.  

    Have fun Iflan – I’m skiing next weekend. 

    You’re welcome Spare – happy holidays. 

    GE/Rain – Probably less than they spend to retain the lawyers.  Don’t worry, they’ll deduct it from the taxes they don’t pay.  

    Cash is good Peter!  

    USO/WCP, Lunar, Crussell – Yes, it was our intention to hold over weekend but no change in size.  

    Long over weekend/Tarp – No, I am very worried about the weekend.  Japan fell a point today and all we have here and in Europe is a low-volume pump job.  

    Oil/Roro – .50 is not a lot over a weekend.  if you can afford the miss – it’s fine but my attitude is that I can make $500 any 5 minutes while sitting there so why risk $5,000 or more leaving it open when I’m not paying attention?  Remember – it’s not a profit until you cash it in!  

    Normalcy/Rain – I guess if you widen what you consider acceptable to 2% a day.  Meanwhile, how insane was August?  

    Solar/Rain – So strange to have such a shake-out so early in the cycle.  

    Damn, oil back at $100 on the button again!  Topped out at $100.20 and then back to $99.90, which is great if you’re scaling in but don’t forget this is the run-up to the early 1:30 NYMEX close and they REALLY want a big number into the weekend.  Gasoline $2.66!  

  88. Heard on Bloomberg Radio that China has 25 SF of office space for every person in the country.  When this bubble bursts we’ll be able to buy a nice PSW HQ penthouse office in Shanghai for a song…

  89. Google Docs / Pharm – Yes, I take a screen shot and crop it to fit in the box.  Works fine. Might be a bit more work though…

  90. blew out 2 – $100 OIL shorts on that quick drop to $99.80………flat on the EUR/USd long
    all cash…….up almost 5.3% week over week. Thank You, Phil  !!!

  91. China / Mrm – That has been the premise for Chanos’ short position the entire time! He has been saying that the overbuilding is just out of hand…  

  92. Phil, since we are people also, my tiny little Sub-S Corporation wishes your (large, I am sure by comparison) Corporation a (politically  correct) Season’s Greetings!.
    As for me, I wish you and your family and all our PSW members a very, very Merry Christmas!

  93. Phil / solar — I think the cycle was cut short during the ramp-up stage. That’s deadly. Same thing is happening with LED’s.

  94. To All of you Thanks for the well wishes and I hope all here will have a nice Christmas and a Good an healthy New Year from sunny Cancun Yodi

  95. LOL – First time a President ever closed with "Aloha" – you know what’s on his mind.  

    $99.60 by the way – congrats and that is still our exit.  

  96.  Phil, what are the NYMEX closing times generally? Today was 1:30. Normally, is it 2:30?

  97. EDZ - sold some FEB 20/15 bull put spreads for $2.50, seems like reasonable, rollable protection.

  98. Phil/Florida
    Yes, it is unfortunate, but terribly significant since Florida more-or-less has the swing vote along with Ohio. If the small, poor, orange growing county with a few retiree mobile home parks where I lived in Florida had not voted for Bush by a few hundred votes, then you probably never would have heard the phrase "weapons of mass deception" or "War on Terror" or "Axis of Evil".
    Gore lost us by talking about putting Social Security in a lock-box. In Florida a lock-box is a small box with a padlock that  realtors use to secure the front door key of a vacant house so that any sales agent with a key to the box who shows up can open the house for a prospective purchaser to view it. People thought he was nuts.

  99. Shanghai Penthouse/Mr. M – I’m up for that! 

    Screen shots/StJ, Pharm – I use CaptureWiz Pro – it’s kick-ass easy. 

    $99.80/Roro – Perfectly good exit on that action.  Depending on your sizing, you might want to think of it as more fluid – in other words you want to be short 5 at $100 so you sell 1 at $99.90 and 2 at $100 and 1 at $100.10 and 1 at $100.20 for 5 at about $100.05 – at $100.25 you stop out one and another 2 $100.30 and then you’re down to 2 at an average of about $99.80 but at $100.50, you can sell a few more with tight stops and suddenly you’re short at $100.30 again.  You can scale out the same way and it gives you many, many opportunities to make small profits off the up and down moves between the brackets.  Then at a major support, like $99.80, you can cash half and then at $99.60, the rest because $99.50 is a line we can go short on again and treat is like $100.  It does take a lot of practice and the most important thing is learning how to take a loss but it sounds like you are on your way.  

    China/StJ – Also Hugh Hendry and Vitaly and myself have been pointing it out for years but it doesn’t seem to affect anyone’s investing decisions – until it does – and then it will be catastrophic.  

    Thanks Pstas – Same to you and your corporation.  From me and all my subsidiaries to you and yours!  8-) 

    Solar/Rain – I don’t think it’s worth making anything in this country that can be made in China these days.  What we need is to put everyone in America on reality shows and just export those.  

    Have a nice, sunny Christmas Yodi!   I look forward to a picture of Santa’s head on a pike….

    NYMEX/Mampcs – Usually 2:35

    EDZ/MrM – If we fail, emerging markets are likely to go down hard.  

    Lock box/JMM – Seriously?  I have never heard that interpretation of why Gore blew it.  Oh well, water under the bridge (along with thousands of lives and tens of Trillions of Dollars). 

  100. Phil,  Funny how it’s the bad events that get really burned into your memory, like a branding iron, but the great memories  have a different intensity.  More of a fuzzy halo of good feeling to the good ones. I’m out of here to go get the roast and potatoes.  A very merry Christmas and a Prospero Ano Nuevo to all of you!!  And thank you Phil, thank you so very much.
    PS.  Here in Costa Rica the general feeling is that this year is down about 15% at the retailers.  Lots of people on the street in San Jose, but not many packages to be seen.  We’re a tourism economy, and this year has been the worst in the last 10; about the same 15% down from last year.  Peace :)

  101. Phil and all  - Happy Holidays and God bless us, everyone!

  102. FAS Strangle Experiment – Closed my FAS strangle now to try to avoid a late stick/anti-stick action with 86% on the put and 67% on the call side. Good week with $1.31 of premium sold against $22 of PM margin. 

  103. Phil Thanks but hate to disappoint you as I have shaved off my beard and I am still sleeping with my doors unlocked and the keys in the car, however my dogs always keep a well watched eye out for unwanted father Christmas men !!!!

  104. Phil, I can’t say enough how much I enjoy your site and the members who contribute. Happy holidays to all of you!
    Phil, where are you skiing next weekend?

  105. China / Phil – I recall having the same discussion from my first day on the board!

    And also, I was thinking last night of all these politicians using China as an example of free capitalism (also pushed by Kudlow every day). Bachman was saying the other day that in China there is no Medicare, Medicaid and Social Security and they grow 10% a year. Talk about causation and correlation! They also have no minimum wage either, but that would be a feature, not a bug in the plan. What are they going to say when that house of cards comes crashing down and leaves 800 millions people fighting (maybe literally) for their lives!

    And by the way, these same guys never mention that the Chinese government has been pushing stimulus in the order of 10% of GDP for the last 2 years while our GOP friends fought tooth and nails against the 5% we passed here. Lost in the analysis I guess! As for Kudlow, I think that they have stiff penalties for drug users in China… 

  106. Pharmboy, I’m in your dour camp now, I think we’re topping.  EDZ and VIX spreads are cheap so I bought and sold lots of protection today.  In so doing, I hope I didn’t cancel your catastrophe!

  107. VXX/Phil – Thanks for the VXX trade this morning! jumped on that because it just makes so much sense! Though i know the VIX can get down and stay around 15 (as it did last year) it’s not feeling like that right now..   But a question: why did you chose to make this play with VXX rather than with VIX? thanks

  108. Phil / exports — I agree. We should export all those people on the reality shows. We’d be much better off  :)

  109. At the open: Dow +0.29% to 12205. S&P +0.37% to 1259. Nasdaq +0.26% to 2273.
    Treasurys: 30-year -0.57%. 10-yr -0.24%. 5-yr -0.11%.
    Commodities: Crude +0.33% to $99.86. Gold -0.08% to $1609.25.
    Currencies: Euro -0.06% vs. dollar. Yen -0.11%. Pound +0.05%.

    10:00 AM On the hour: Dow +0.27%. 10-yr -0.30%. Euro -0.13% vs. dollar. Crude +0.23% to $99.75. Gold -0.26% to $1606.55.

    11:41 AM Europe closes higher in quiet action. Stoxx 50 +0.7%, Germany +0.5%, France +0.9%, Italy +0.1%, Spain +0.9%, U.K.+1.1%. Euro -0.1% at $1.3037. For the week, the Stoxx 50 gained 3.95%, the euro is unchanged. 

    12:00 PM On the hour: Dow +0.62%. 10-yr -0.44%. Euro -0.08% vs. dollar. Crude +0.32% to $99.84. Gold -0.18% to $1607.65.

    1:00 PM On the hour: Dow +0.78%. 10-yr -0.48%. Euro +0.03% vs. dollar. Crude +0.58% to $100.11. Gold -0.26% to $1606.45.

    2:00 PM On the hour: Dow +0.78%. 10-yr -0.49%. Euro -0.04% vs. dollar. Crude +0.29% to $99.81. Gold -0.21% to $1607.25.

    Nov. Durable Goods: +3.8% vs. +1.9% expected, -0.7% prior. Ex-transport +0.3% vs. +0.4% expected, +0.7% prior.

    Nov. Personal Income and Outlays: Income +0.1% vs. +0.2% expected, +0.4% prior. Personal spending +0.1% vs. +0.2% expected, +0.1% prior. PCE core price index +0.1% in-line with expectation, +0.1% prior. 

    In an odd confluence of coincidental data meeting conspiracy theory, the Federal Reserve was created 98 years ago and the U.S. dollar has devalued 98% over the same time period.

    Long-term Treasurys sell off again as risk exits the market for the holiday break. The 10-year is 7 bps higher at 2.02%, and TLTgives up even more of its gaudy yearly gains. A few more days of this sort of action will see the twin asset classes of stocks and bondsmuch closer in performance for the year than it looked just a month ago. YTD: TLT +25%, DJIA +5.5%

    Despite claims it’s all one big risk on/risk off market, alphastill exists. A look at the individual stocks in the DJIA shows many up a double digit percentage and several down double digits as well.

    BI has cobbled together 2012 market targets from 16 of Wall Street’s chief strategist types. They see the S&P 500 ending 2012 flat to up as much as 20% from yesterday’s close of 1,254. Earnings are expected to end flat to up ~10%. Most see modest U.S. GDP growth, and many expect more QE from the Fed.

    When it comes to news on the U.S. economy, expectations have risen to levels where the risk of a disappointment may be starting to build, even on news that would have been positive a few months ago. If it’s going to get tougher for economic releases to surprise to the upside, as Citi suggests, it could make for a disappointing start to the year.

    Nouriel Roubini weighs in on the big jump in durable goods orders for November, saying (tweet) that excluding the "volatile" military and aircraft components the index actually fell off 1.2% – the worst mark since January

    Though retailers have had to offer major discounts to drive sales, the stars appear to be aligning for a decent close to the holiday season. The weather has mostly been moderate, and is expected to remain so over the next week, and Christmas Eve lands on a Saturday. Moreover, one survey found 30% of consumer had holiday shopping to do this weekend, up from 26% last year. - This is my single biggest worry for next week – I don’t know if those shoppers will ever show up at the last minute

     Optimistic plans by retailers entering the holiday season arenot panning out, says consultant David Bassuk, resulting in pre-Christmas markdowns that are more widespread than typical. Nomura analyst Paul Jejuez, after a weekend surveying malls, is concerned – "You have to be selling at 40% off to drive traffic."

    Miscalculating their pricing power, apparel retailers see their inventory-to-sales ratio move to a 2-year high, bucking a falling trend amongst the rest of the industry. In the meantime, costs continue their rapid rise, suggesting the margin pinch will continue.

    The arrival of Nike’s (NKE +1.2%) new Air Jordan 11 Retro Concords creates massive lines in stores across the county, as well as some unfortunate breakouts of violence over the iconic sneakers priced at $180. Industry analysts estimate 300K-500K pairs have been produced by Nike in a campaign light on marketing.

    Glut in March?  Refiners are booking tankers like mad to ship crude from the Persian Gulf, rushing to get product ahead of disruptions should the EU carry through on a threat to ban cargoes from Iran. The number contracted jumped to 140 in December, the most since January 2005.

    Natural gas futures fall off to 27-month lows as revised weather predictions call for "super above" normal temperatures for the short-term that will keep demand for heating low. The NAGS natural gas ETF is down 2.4% on the day, and has dropped 21% over the last 3 months.

    The payroll tax cut enacted by Congress wasn’t a complete "cave in" by the GOP as widely reported. As part of the bill, President Obama is forced to make a decision within 60 days on whether or not to approve construction of TransCanada’s (TRP +1.1%) 1.7K mile pipeline. Now the million-dollar (billion-dollar?) question: Will Obama approve, delay, or reject the pipeline that aims to link Canadian crude oil with U.S. refineries?

  110. Previously guardedly optimistic about the ECB’s LTRO, Peter Tchir gets a sinking feeling reading a footnote that says €40B of the collateral issued by Italian banks was newly issued state-guaranteed debt. While Italy implements (likely to fail) austerity measures, it quietly has added €40B in contingent liabilities. Maybe this is what has got Italian yields popping higher. (previous)

    S&P’s Scott Bugie says the ECB’s €489B liquidity infusion Wednesday was just that – liquidity, not solvency, and by itself will not prevent threatened ratings downgrades of the EU’s banks. "It’s kicking the can a long way down the road rather than just a little bit, but in the end it is still kicking the big old can down the road."

    While ECB actions have clearly had sharp effect at the short end of the yield curve, longer term Italian yields resume their march higher. After dropping to a 5 handle in early December as Mario Monti began his austerity charge, 10-year BTPs are threatening 7% again as the market prepares for €440B in Italian debt sales in 2012.

    It’s probably nothing given the thin volumes today, but the bid has vanished for Italian 10-year BTPs, the yield spiking to 7.08% from the low 6.90s just a few minutes ago. (earlier)

    France stands as the world’s gloomiest country in terms of economic outlook, according to a year-end Gallup poll. The nation’s pessimism dropped 34% Y/Y to register a -79, the lowest mark ever recorded in the poll’s 33 years of tallying sentiment. Gallup: "The French ‘Saviour State’ model, praised by both Left and Right for decades, is basically considered obsolete…What can the French be proud of tomorrow?"

    Brazil dips its toe into the QE business, de facto requiring large lenders use part of their reserves deposited with the central bank to purchase loan portfolios from smaller institutions. If the big banks don’t participate, they won’t receive interest on a portion of their deposits with the central bank, no small inducement when the rate is 11%.

    Game on: As opposed to this time last year, central banks across the globe are easing monetary policy (leave the Fed – which is in permanent ease mode – out). A partial list includes China, Brazil, Australia, U.K. (in the midst of its own QE2), and the EU. As of this morning, add Russia to the list. Invest accordingly.

    Outgoing ECB board memeber Lorenzo Bini Smaghi says the bank shouldn’t be afraid to use QE if conditions warrant. Price stability is a mandate on the downside as well, he says. With zero signs of prices actually falling within the EU (inflation is actually on the rise), is Bini Smaghi talking about stock prices? 

    The Fed may signal it could keep short-term interest near zero into 2014, the idea being this would cause markets to push long-term rates even lower, spurring spending and investment. But as Matt Phillips notes, firms "have tons of cash," and many consumers aren’t interested in, or able to, take advantage of current low rates.

    China plans to cut spending on its rail system to about $63B in 2012, a 40% drop from what it earmarked for 2011, according the the railway minister. China is the gorilla in rails worldwide, providing much of the business for the industry, but the rail system there is tottering under a mountain of debt as well as poor construction and other safety concerns.  -  Meanwhile, our entire budget for rail is $8Bn!  

    "The collapse in the real estate market has already occurred," says Steve Dickinson reporting from Qingdao, the only question is how the government will pick up the piecesThe only sales taking place are those at 30-50% discounts and work on uncompleted projects has slowed or stopped. Land sales – a key source of government revenue – are no longer getting a bid at any price.

    Murmurs of further monetary ease from Beijing increase as tightened liquidity leads to a sharp jump in interbank lending rates. Adding to the thought are 2 consecutive months of capital outflows, something that has never happened before, says an HSBC economist. Last year on Christmas Day, the PBOC hiked interest rates.

    Remember all those stories about China coming to bail out Europe by peeling off some of its reserves to buy sovereign and EFSF paper? They never made any sense, and thankfully, EU officials have stopped floating them. China will invest plenty in Europe, but it wants real assets, to wit today’s announcement of China Three Gorges taking Portugal’s stake in EDP (EDPFY.PK) off of its hands for a song.

    Turkey’s combination of economic growth and political stability is attracting cash-rich companies looking to make acquisitions. So far this year, deal volume has totaled $10.6B, ahead of European countries such as Austria, Portugal and Czech Republic. Turkey doesn’t have the economic baggage of its European neighbors, and it provides an opening to Middle East markets. 

    Ow, my wrist!  General Electric (GE +1.1%agrees to pay $70.4M to regulators in order to settle charges of muni bond bid-rigging by an extinct business unit. The firm maintains that it’s "pleased" to resolve the matter and has accounted for the settlement amounts in previous quarters.

    Enjoy those clips while you can:  The controversy regarding the online piracy bill dubbed SOPA swirling around Capitol Hill hits warp speed with the release by the House Judiciary Committee of the names of the firms that are supporting the bill (.pdf). Though the issue slices across political persuasions – at its core support hinges on whether a company benefits from a "free" internet with loose online piracy rules such asAOLGOOG, Facebook, and domain hosting firms or loses out from reproduced content along the likes of DISSNE, and TWX.

    There’s less than meets the eye in SunPower’s (SPWR+3.5%acquisition of Total’s (TOT +1.2%) solar subsidiary in return for Total increasing its stake in SunPower to 66%, Liam Denning writes. SPWR’s big plus is affirmation that it still has the backing of the huge, French-backed oil major. But TOT would seem to be doubling downon losses from its April buy of a 60% stake in SPWR.

    In another big institutional win for Google (GOOG), UC-Berkeley is replacing a legacy e-mail system with Gmail, which beat out Microsoft’s (MSFT) Office 365 to in the process. Among the university’s list of reasons for picking Gmail: fast deployment, inexpensive support services, and widespread developer support. (previously)

    In a move that Google (GOOG) and other tech giants have long lobbied for, the FCC has approved the use of a device that transmits data over "white space" TV spectrum. Over the long haul, the spectrum has the potential to enable more powerful Wi-Fi and long-range broadband solutions; and that, in turn, could benefit developers of wireless networking equipment and chips, as well as some upstart service providers. 

    Barclays’ Ben Reitzes now thinks global PC shipments will fall 0.3% Y/Y thanks to a combo of soft demand and hard drive shortages. Perhaps more stunningly, he sees shipment growth of just 0.8% for the whole of 2012. Reitzes expects mobile devices to continue cannibalize PC sales, and also thinks high unemployment will affect the pace of corporate upgrades. (Gartner forecast)

    Among Pyramid Research’s 2012 predictions for the mobile industry: the arrival of the Kindle Fire and other low-end tablets will trigger a "new era of growth" for the tablet market; sales of phones with near-field communications (NFC) functionality will skyrocket; nearly half of all smartphone sales will come from emerging markets; and Apple’s (AAPL) smartphone share will drop slightly, thanks to its premium pricing. 

    Three lunchtime reads:

    1) A Matt Taibbi Christmas

    2) New bubble in 30-year mortgages?

    3) Feldstein: The inevitable failure of the euro 

  111. Phil—-on the road—I am going to be in Ambler, PA—-e-mail me if you are near-could share a bottle of
    Lafite--what or where is AC?

    Happy holidays everyone
    Dudettes 4real?

  112. don’t know what RevTodd said about drugs and testing, but I’ll throw in my two bits. My understanding from a friend of my son’s who’s worked in a drug lab is that the only drug that stays in the system and is therefore detectable longer than a day is pot. So what you’re catching is pot users and the occasional druggie who’s using bad stuff often enough that he/she gets caught – in which case, why the hell did you need a drug test to notice that?
    My two bits with my public health practitioner hat on is, please, make it all legal. It makes it so much easier to diagnose and treat people, prevents so many street deaths and ER visits. And while we’re at, please legalize prostitution as well. With no little regulations and other crap that will result in a black market for any of this. That’s all I want, Santa.

  113. ;) mrm.  Patience will be rewarded.  It is VERY painful….

  114. My sentiments exactly snow. 

  115. Gonna take a spin around town and see how the 1% are doing here in Tribeca.  Enjoy your Christmas weekend Phil and everyone!

  116.  Phil – Deuteronomy   ROFL!   I share your outrage, and yes it is a moral indignation and not what America is all about.  But I’m not sure the people like Mr. Scott care whether I am outraged or not.  I debated this issue on a couple of websites with some gung ho conservative drug test advocates, and I found the only thing that really got through to them was taken them through the actual nuts and bolts of the drug testing process to see how ridiculous it was to attempt a social policy that requires 50 million people to pee in a cup.  I think this particular issue will probably die a quiet death because of the cost, but the bigger issue is the hundreds of ways even in a liberal state like New York finds to deny people benefits who really need them.  Many state and local governments have become quite adept at finding ways to not pay benefits without all the hoopla.  Bureaucracy is much more insidious and effective.  Bury people in paperwork and then talk about how lazy the poor are.
    I have been outraged so much lately, that I sometimes just need a break 

  117. stjeanluc/China has no minimum wage
    Au contraire, mon ami…

  118. You’re welcome 2Can – Have a great holiday.  

    Thanks Deano – U2!

    I’m actually glad Yodi – enjoy yourself.  

    And now, a word from our legal drug sponsor:  

    Skiing/DC – Hunter.  

    China/StJ – I find it amazing they have the balls to even say China and talk about "positives".  McCarthy would not be pleased.  

    VXX/Scott – The VXX options are more liquid.  We learned that from bitter experience!  

    Exporting people/Rain – reminds me of this:  

    The Circling Poets of Golgafrincham decided to rid themselves of the useless third of their population (including hairdressers, lawyers and advertising folk). 

    So they concocted a story that their planet would shortly be destroyed by a ‘mutant star goat’ and sent them away in a giant spaceship, B-Ark, promising to follow shortly. 

    The other two thirds of the population of course did not follow.

    Unfortunately, the end of that story is those are the people who ended up colonizing the Earth… 

    AC/Savi – Atlantic City, about 100 miles – very far by horse and carriage.  

    Legalize it/Snow – That’s Ron Paul’s position.  

    Enjoy Kinki!  

    Outrage/Rev – Yes, I’d say a weekend spent not worrying about it is called for by all.  Now that Boehner has shut up, maybe I can forget they have control of the House for a couple of days…

    China/JMM – I’m not sure if $5 a day can really be called a minimum wage.  My kids won’t work for that!  

  119. stjeanlucetmichellebachmann/Obamacare in China?

  120. Dollar popping again.  Oil holding $99.75 at the moment.  Gold $1,607.  

    MCD touching $100!  S&P over 1,260 – amazing and a great call by Jack.  

  121.  Woops, that last part trailed off and the phone rang.  I think what I was headed towards is this: too much outrage is sometimes bad for my soul, and I just back off for awhile and try to help the people in front of me.  I’m banning my outrage to after New Years!  I haven’t been on the list much the last few weeks, but thanks to all of you who make this the most interesting place to read on the web.  I tend to read things here before going to the newspapers and I’m glad to be a part of the group.  I look forward to the New Year and wish everyone a great holiday!

  122. Happy Holidays all! The airports are a zoo already (at least in ATL). Everyone enjoy a couple of days off, it’s well deserved by all I think!

  123. Simple question is there any trading on Monday ?thanks

  124. Phil—oh that AC—--do not forget what I fought you in LV. :-)
    Happy holidays

  125. yodi – markets closed on Monday.

  126. Thanks nicha

  127. Happy Holidays all.  It has been quite a ride.  I will be lurking in the background, but around.

  128. Happy Holidays, Pharm.

  129.  Phil, Guys.-
    Happy holidays and may we all have a very profitable 2012!!

  130. thanks and very much appreciate your insights re scaling into and out of positions, Phil………
    i err on the conservative side (the right kind of conservative) when it comes to position sizing so lots of room to improve for entries and exits……….over the 2 weeks plus 1 day since signing on to PSW the numbers look nice with a big bang week 1 and then a nice follow through bump up for week 2.
    overall coming up close to almost 30% on select trades here and there mostly shorting the DOW, buying the NASDAQ100, shorting the US Dollar with some short OILs in the mix since the run back to $100.
    kind of forgot about currency trades so far, but will bring that aspect back into the mix soon
    i like lots of practice……….this is a great place to learn!
    best regards

  131. Minimum wage / Jmm – I stand corrected but as Phil says, not much of a wage… Of course, our top 1% would be happy to pay that if they could.

    And don’t tell Bachman about health care reform in China… that would destroy her little fantasy world. That might of course not stop her from making up stories since they usually make up their own facts when reality doesn’t cooperate!

  132. Phil/ CHK,
    Do you like them long term. I wanted to go long on them with the following trade. Your thoughts.
    buying the Jan13 BCS 20/30 at 4 and selling the 23 Puts at 4 for a even cost? What do you think. Do you have a better trade?
    Happy holidays to all.

  133. Phil,
    Thank you for all the hard work, advice, and insightful discussions over the past few months. I truly enjoy the site and value the knowledge you bestow to members.  Happy Holidays to you and the entire PSW community!

  134. Looks like Santa is stuffing the stockings!

  135. Happy holidays to everybody! All I want from Santa is peace, health and prosperity for all… 

    Thanks Phil for your guidance throughout the year! It’s been fun.

  136.  Happy Holidays to all, it’s been a very entertaining first year at PSW, many happy returns!  ZXZ

  137. Have a merry Christmas Rev – Keep the faith bro! 

    Were we closed today?  Volume 54M on the Dow at 3:40….

    Airports/Kwan – Oh good luck!  

    Monday/Yodi – Closed.  

    Happy Holidays Pharm – AND EVERYONE ELSE – sorry but 20 is my limit!  

    Very nice Roro – Just don’t let it go to your head and you’ll be find – we’re wrong lots of times, just not lately.  ;)  

    CHK/Rehat – I think nat gas is being shoved down now ahead of legislation on CO2 that’s going to make it much more valuable.  CHK has plenty of it and it’s cheap to extract – over the years it’s a good bet.  I think they are low enough where the aggressive trade is a good idea but maybe pay net $2 to be in $15/25 instead of being greedy.  

    Your welcome Enni – have a good one.  

    OK, one more – You too StJ & ZZ – It’s been a very exciting year and I can’t wait for the next one.  

  138. The last week  used to be very positive, but the last 20 years have been more challenging…

  139. Barry’s weekly summary:


    1) ECB lends 489b euros to 523 banks. Weak or healthy, what bank wouldn’t take 1% funding for 3 years?
    2) German IFO business confidence unexpectedly rises a touch
    3) Multi family construction in the US rises to the most since Sept ’08
    4) NAHB index up at best since May ’10 at 21 (though still well below 50)
    5) Months supply of new homes for sale falls to lowest since Mar ’06 as absolute # for sale falls to lowest since at least 1963
    6) Initial Jobless Claims at 364k, 16k less than expected at lowest since Apr ’08
    7) UoM confidence rises to best since June, led by the Outlook. One yr inflation expectations drop to lowest of yr at 3.1% likely due to lowest gasoline prices since Feb
    8) Looking ahead, two 3 day weekends in a row for those of us working


    1) Italian 10 yr back to 7% as doubts remain with Monti budget
    2) Italian consumer confidence at lowest since at least 1996
    3) Shanghai index ends the week down for a 6th straight week
    4) US Q3 GDP revised down to a punk 1.8% growth, follows 1.3% in Q2 and .4% in Q1
    5) Existing Home Sales revised sharply lower back to ’07 but months supply falls to 7.0
    6) Non defense cap goods ex aircraft unexpectedly declines, where is the kick start from the 100% 1st yr depreciation expense tax credit expiring next week?
    7) MBA said even with mortgage rates falling to 4.08% on avg, a multi decade low, purchase apps fall to 5 week low
    8) Nov Spending and Income light, savings rate falls to 3.5%, matching lowest since Dec ’07

    I can never learn from books or other sources what I learn at PSW and am looking forward to a great next year.

  141. Enjoy the Holidays everyone!

  142. stjean/minimum wage
    No, it is not much, but surely better than if there were no minimum at all, and many things, like food,  are much cheaper in China than in the US. Of course the minimum wage in China is less than in the US, which can be said of many other countries also, for example the Dominican Republic where I am now, but that is not the same as saying that there is no minimum wage. I know you understand this, but do Bachmann and the other assorted psychotics running for President of the US?
    We should also note that the US is very wasteful and people are often forced to overconsume. Here in the DR you can buy a single band-aid, a pair of aspirins, or a spoonful of tomato paste for a very small amount of money. A refill for a 5-gallon jar of drinking water is less than a dollar. A commuter taxi ride for a 5 mile journey is 60 cents. In the US it is hard to buy less than a packet of 100 bandaids and drinking water cost five times as much.
    Joyeux noel! And thanks for all your great posts.


    Twas the night before QE3, when all through the Congress 
    No one in the Senate had a clue, or anyone in the House
    The stocks were still flying, on a wing and a prayer,
    In hopes that Ben Bernanke soon would be there.

    NYMEX traders were nestled all snug in their longs,
    With visions of strippers dancing in thongs.
    Obama in Hawaii, and Michelle in her cap,
    Had just settled in for a long winter’s nap.

    When over the wires there came such a clatter,
    We  sprang from the beds to see what was the matter.
    Away to the IPad I flew (lacking flash),
    opened the bookstore and coughed up some cash.

    The news in the Journal was more of the same
    They tax us too much and much more of the same.
    When, what to my wondering eyes should appear,
    But a wonderous story on page eight, near the rear. 

    Work in progress – have a great Christmas everyone!  

    Can you believe they stuck the close?  

  144. Phil, this has been a great experience so far.  Thank you for that.  Happy holidays to you and all on the psw board!

  145. Gasoline jacked up to $2.69 at the close – MERRY CHRISTMAS SUCKERS!  

  146. Happy holidays all! See ya on Tuesday.

  147. Over-consumption / jmm – It is indeed a problem here… I guess it was good as we drove the world economy, but if everybody consumed as much as we do, we would already be out of many resources…

    Joyeux Noel to you as well and maybe we’ll meet in the DR in 2012! 

  148. Hello Phil and all.

    Just dropping in to wish PD and family, and the rset of you a Merry Christmas and Happy Hannukah.

    Been real busy trading these markets; hope to spend more quality time here as we move into 2012.

    Dont forget, you can always keep up w/ my thought, trades and wisdom on Twitter as well.

    My best to you all !

  149. no worries Phil……….i have had my ass kicked lots of times, and sometimes hard so thanks for reminding me again about not letting trading successes get me a large head
    it won’t happen because i am just smart enough to know what i don’t know, and also know being here has put a kind of confidence in my trade selection and timing and position sizing that was not there before.
    there is a BUT here too…….there is lots of room for me to improve and i know that from having spent 7 years or so learning and trading on my own.
    i also know you and the others who write here deserve a LOT  if not MOST of the credit for what i did in terms of returns over the first 2 weeks.
    it is amazing what access to intelligent and experienced perspective can do to make a difference.
    it really is too bad you are not given the SPR to run at will

  150. Phil, what is VXX? I know it says "VIX futures", but the VIX was down today, and VXX is up 2.5%. wtf?
    Oh, and great holidays to all.

  151. revtod Phil
    I have been silent about my trip to SLC for neck surgery. I was lied to and waised time and money that I can’t afford. The issue that relates to drug testing and our over inforcement is what happened on the way back. I was stopped by the Idaho State Police for maybe getting a wheel on the yellow line, no ticket or warning, first the drug dog, then Arlyn dragged out, then me out handcuffed and put in the back of a cruser without a seat in it. Bottom line the dog did over $2,000 damage to the inside and outside of my car, I had to go to the hospital for injuries, 1 and 3/4 hour delay, and no drugs, guns, or intoxication. I have made a formal complaint but there excuse is we have a job to do and we don’t give a shit about you or your rights. This is 2  BS searches in less than a year but this time they hurt me! WTF is happening?

  152. S&P 500 in positive territory for 2011
    The above headline was from Google Finance — it’s almost like it could have been predicted and/or bonuses and fees are connected to it….
    Happy holidays to everyone.
    It has been an incredible learning and unlearning (bad habits and standard investment strategies) experience so far, and I have certainly "taken" more from PSW than I have "given" but hopefully that will change in the future as well.

  153.  Merry Xmas All!
    The shopping was brisk here in our visit to Leon, Nicaragua.  But brisk means ppl are buying lots of apples and fruit for presents, and lots of crappy chinese kids toys.  I had to walk around for 3hrs to find a nice handmade necklace for my gf…and that was only $20.  
    CAP, what is your twitter name?  I clicked on your name, but it takes me to a politco blog…

  154. stjeanluc, Joyeux Noel a vous aussi et Bonne Annee. I very much enjoy following you. Merci

  155. BurrbenCAP on twitter.

  156. Burrben – diamond has the correct link to @CapCube

    I would change where “cap” goes from a blog to twitter, I just can’t figure out how to do it.

  157. First Post ever here,
    To Phil , to all Contributors, to all Members
    Have a Great Christmas
    Joyeux Noel

  158. barfinger/VXX
    VXX and its inverse XXV are exchange traded notes that are supposed to track the VIX, though they tend to dampen sharp movements in the VIX. However, the actual value of VXX on a given day may also be affected by contango and backwardation. Friday was options expiration day, so my guess is that had something to do with the unexpected movement as VXX was up yesterday, and XXV was down, when VIX was down. You might have expected the opposite.

  159. Hope everyone has a great Xmas! I have a question. I use TD Ameritrade and yesterday $50 k disappeared from my account. Then a trade I didn’t initiate popped up on my screen (they shorted 1800 shares of TZA). I wrote to customer service and they didn’t have any good explanation. This morning the $50k is back in my account but the whole thing is worrisome to me to say the least. Has anyone else had something like this happen?

  160. Here is an interesting little tip. Yesterday the Guardian reported that BP was up a few pence on rumors of a forthcoming increase in the dividend. I can’t find any mention of this anywhere else on the Web or the BP website. There is also a mention of a non executive director buying a large slab of shares, though whether this might be connected with some inside knowledge is unknown to me.
    Really with a report like this you can take it 2 ways. 1. Some pipsqueak journalist just bullshitting, or 2. Journalist trying to get across some information without pointing the finger too obviously at sources.
    As you may recall, following the Macondo disaster BP put its dividend on hold and then restored half of the original dividend early in 2011. Last year BP reported its 4th quarter earnings on February 1st, so there is no expectation of an announcement until last week of Jan or first week of Feb, which makes you wonder where these rumors of an impending dividend increase come from. Of course it may be pure speculation as frankly I expect BP to increase the div at that time and so do lots of other investors.
    The stock price for the ADR  is currently about $43.23 . The February $40/$45 BCS for net $3 would return $5 at $45.00 and would break even if the stock just holds $43 ex-dividend.
    As this is a very popular stock with UK pension funds, there may be considerable demand if the scent of a dividend hike gets any momentum at all.

  161. Jmm: thanks for the explanation on VVX, although I must say if you tried to place a short term bet on the direction of the VIX,  how would you ever know how to use VVX or its inverse if they are free to move in the OPPOSITE direction from their design, and as on Friday, significantly so. XXV also moved in the wrong direction, just not as much.
    Odd stuff all around, I’d say.

  162. VIX/Barfinger:  Check out the VIX futures prices at this page:
    The VIX Jan futures were up 2.4% and Feb futures up 1.5% yesterday.  Back month futures are getting bid up.

  163. Merry Xmas All
    And a present " Stratfor Hacked, Private client list release"