Archive for 2011

Osama Bin Laden Killed: Implications First Take

Courtesy of Tyler Durden

From Stratfor

Osama bin Laden Killed

The United States has killed al Qaeda leader Osama bin Laden and recovered his body, according to numerous media reports May 1 citing U.S. officials. U.S. President Barack Obama is scheduled to make an announcement on the subject. It is not clear precisely how bin Laden was killed or how his body was recovered, but the assertion that he is dead is significant.

Bin Laden had become the symbol of al Qaeda, even though the degree to which he commanded the organization was questionable. The symbolic value of his death is obvious. The United States can claim a great victory. Al Qaeda can proclaim his martyrdom.

It is difficult to understand what this means at this moment, but it permits the Obama administration to claim victory, at least partially, over al Qaeda. It also opens the door for the beginning of a withdrawal from Afghanistan, regardless of the practical impact of bin Laden’s death. The mission in Afghanistan was to defeat al Qaeda, and with his death, a plausible claim can be made that the mission is complete. Again speculatively, it will be interesting to see how this affects U.S. strategy there.

Equally possible is that this will trigger action by al Qaeda in bin Laden’s name. We do not know how viable al Qaeda is or how deeply compromised it was. It is clear that bin Laden’s cover had been sufficiently penetrated to kill him. If bin Laden’s cover was penetrated, then the question becomes how much of the rest of the organization’s cover was penetrated. It is unlikely, however, that al Qaeda is so compromised that it cannot take further action.

At this early hour, the only thing possible is speculation on the consequences of bin Laden’s death, and that speculation is inherently flawed. Still, the importance of his death has its consequences. Certainly one consequence will be a sense of triumph in the United States. To others, this will be another false claim by the United States. For others it will be a call to war. We know little beyond what we have been told, but we know it matters.

Regression to Trend: A Perspective on Long-Term Market Performance

Courtesy of Doug Short

About the only certainty in the stock market is that, over the long haul, over performance turns into under performance and vice versa. Is there a pattern to this movement? Let’s apply some simple regression analysis (see footnote) to the question.

Here’s a chart of the S&P Composite stretching back to 1871.

The chart shows the real (inflation-adjusted) monthly average of daily closes. We’re using a semi-log scale to equalize vertical distances for the same percentage change regardless of the index price range. The regression trendline drawn through the data clarifies the secular pattern of variance from the trend — those multi-year periods when the market trades above and below trend. That regression slope, incidentally, represents an annualized growth rate of 1.71%.

The peak in 2000 marked an unprecedented 157% overshooting of the trend — about double the overshoot in 1929. The index had been above trend for nearly 18 years. It dipped about 9% below trend briefly in March of 2009, but at the beginning of April 2011 it is 45% above trend. In sharp contrast, the major troughs of the past saw declines in excess of 50% below the trend. If the current S&P 500 were sitting squarely on the regression, it would be hovering just above 900. If the index should decline over the next few years to a level comparable to previous major bottoms, it would fall to the low 400s.

Check back next month for another update.

Footnote on Calculating Regression: The regressions on the Excel charts above are exponential regressions to match the logarithmic vertical axis. I used the Excel Growth function to draw the lines. The percentages above and below the regression are the calculated as the real average of daily closes for the month in question divided by the Growth function value for that month minus 1. For example, the monthly average of daily closes for April was 1331.51. The Growth function value for the month was 912.11. Thus, 1331.51 divided by 912.11 minus 1 equals 45.98%, which I rounded to 46%.

Footnote on the S&P Composite: For readers unfamiliar with this index, see this article for some background information.

Think Or Swim Hikes Silver Margin To Double That Of CME

Courtesy of Tyler Durden

On Friday we reported that MF Global hiked silver margins to roughly $25k per contract (following the CME’s own two consecutive margin hikes of 9% and 10%). On Sunday night, not letting any public hysteria go to waste, Think or Swim follows suit and hikes the /SI margin to $30,037.50 and $6,007.50 for the /YI. At this point there is an outright scramble to get anyone with margin out of precious metals positions, which of course in the long run will merely reinforce the holding hands.

h/t Biff Malibu

Rating Junk Economics

Courtesy of Michael Hudson

Michael Hudson appears on the Renegade Economists podcast to discuss the motivations behind rating agencies, austerity aiding bankers, the disintegration of the EU and how property bubbles are to blame for so many of the global economy’s problems. Michael Douglas from Wall St: Money Never Sleeps makes a cameo appearance.

Listen now

Subscribe to the podcast 

Toyota May Report First Half-Year Loss Since Financial Crisis

Toyota Motor Corp. (7203) and Nissan Motor Co. may forecast first-half losses as Japan’s two biggest carmakers struggle to restore full production disrupted by the nation’s record earthquake.

Toyota may post net losses of 155 billion yen ($1.9 billion) in the three months ending June 30 and 241 billion yen for the six months ending Sept. 30, according to the average of analyst estimates compiled by Bloomberg in the past four weeks. Nissan’s six-month net loss may be 48 billion yen, based on the estimates.

In the worst case, combined losses for the nation’s carmakers and suppliers may be “the biggest ever,” surpassing those at the time of the 2008 to 2009 financial crisis, Noriyuki Matsushima, an analyst in Tokyo at Citigroup Inc., said last week. Citigroup also downgraded Japan’s auto industry to “sell” from “buy” on April 8.

More here: Toyota May Report First Half-Year Loss Since Financial Crisis – Bloomberg.

An Estimated 5 Million Chickens Dead in Alabama

Courtesy of Jr. Deputy Accountant 

For any of you in the DC metro that aren’t government operatives or psychotics, you’re welcome to stop by JDA’s backyard chicken farm (dubbed "The Chicken Ranch" after the whorehouse in The Best Little Whorehouse in Texas - inspired by the recent Gay Men’s Chorus of Washington’s production of the show) where you’ll find all manner of poultry madness. You’ll even find a Polish that strangely resembles me named Adrian, who is "special" just like his namesake.

But I digress. For 5 million chickens in Alabama, the suffering is over.


Alabama officials estimated that up to 25% of the poultry houses in the state were destroyed or damaged Wednesday by the tornado outbreak, likely killing millions of birds.

Government officials in Alabama, the No.3 chicken-producing state behind Arkansas and Georgia, said Thursday that preliminary reports indicate that about 200 poultry houses were destroyed and another 180 were damaged by the fierce storms.

It’s a good thing we don’t burn chicken blood to run our cars like we do corn or else we’d really be hurting.

Chicken prices have been low through spring due to low demand but this could change things unless we get moving on our chicken breeding plan and somehow crank out a few million birds by summer. So far we’ve hatched 20 this spring, with another 30 eggs ready to hatch any day now. Getting there! 


You Know We’re Screwed When Wal-Mart Says We’re Screwed

Courtesy of Jr. Deputy Accountant 

That’s right, folks, even the Wal-Martyrs are running short on cash, not that they had huge stashes of $100 bills to begin with.

CNN Money:

Wal-Mart’s core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.

"We’re seeing core consumers under a lot of pressure," Duke said at an event in New York. "There’s no doubt that rising fuel prices are having an impact."

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in.

Lately, they’re "running out of money" at a faster clip, he said.

"Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern.

This comes on the heels of comments by Wal-Mart U.S. CEO Bill Simon, who said "inflation is going to be serious" earlier this month.

Who shops at Wal-Mart besides the People of Wal-Mart? Maybe not Mike Duke, who has been caught at Target in Rogers, Arkansas just down the street from the exclusive gated community where many Wal-Mart big wigs live.

You’ve been warned, people. 

Follow The President’s Announcement To The Nation That Osama Bin Laden Is Dead

Courtesy of Tyler Durden

Update: It is now confirmed that Osama Bin Laden was killed in an air strike last week, and the US has the body. Expect the media to be drowned with stories of imminent terrorist "retaliation" which will push a flight to USD "safety" and purportedly drop commodities.

Lots of wild rumors about Obama’s imminent late Sunday announcement to the nation, chief among which is that Bin Laden has been killed. The address can be followed live here.

The Global Economy’s Corporate Crime Wave by Jeffrey D. Sachs – Project Syndicate

By Jeffery D. Sachs, Project Syndicate

Hardly a day passes without a new story of malfeasance. Every Wall Street firm has paid significant fines during the past decade for phony accounting, insider trading, securities fraud, Ponzi schemes, or outright embezzlement by CEOs. A massive insider-trading ring is currently on trial in New York, and has implicated some leading financial-industry figures. And it follows a series of fines paid by America’s biggest investment banks to settle charges of various securities violations.

There is, however, scant accountability. Two years after the biggest financial crisis in history, which was fueled by unscrupulous behavior by the biggest banks on Wall Street, not a single financial leader has faced jail. When companies are fined for malfeasance, their shareholders, not their CEOs and managers, pay the price. The fines are always a tiny fraction of the ill-gotten gains, implying to Wall Street that corrupt practices have a solid rate of return. Even today, the banking lobby runs roughshod over regulators and politicians.

Corruption pays in American politics as well. The current governor of Florida, Rick Scott, was CEO of a major health-care company known as Columbia/HCA. The company was charged with defrauding the United States government by overbilling for reimbursement, and eventually pled guilty to 14 felonies, paying a fine of $1.7 billion.

The FBI’s investigation forced Scott out of his job. But, a decade after the company’s guilty pleas, Scott is back, this time as a “free-market” Republican politician.

Full article here: The Global Economy’s Corporate Crime Wave by Jeffrey D. Sachs – Project Syndicate.

Bernanke’s Unconvincing Press Conference

Courtesy of Comstock Partners Inc.

Although at first glance Chairman Bernanke’s press conference consisted of the usual "boiler plate" Fedspeak, a more attentive examination leads to a number of disturbing conclusions that support our negative stance on the economy and stock market. Our observations are as follows.

1)  The Chairman confirmed, as expected, that QE2 would continue until its conclusion at the end of June and would not be extended.  He then stated that there would be no tightening of monetary policy until it was clear that the economic recovery was self-sustaining and strong enough to lower unemployment. However, his definition of initial tightening was an actual drawdown in the Fed’s balance sheet.  He said that he did not regard the ending QE2 as a tightening since the Fed’s balance sheet would remain at the same level.  To us, this is quibbling over semantics.  The fact is that since November the Fed has been expanding its balance sheet at an average of $3.8 billion every day of working week and this will come to a sudden halt. Call it whatever you will, but there’s no denying that this is a big difference.    

2)  When asked why the Fed wasn’t doing more to create jobs, the Chairman spoke about a "tradeoff" between further stimulation and inflation.  He was in effect stating that more easing of monetary policy was highly unlikely, meaning the unemployment would remain uncomfortably high.  Since short-term interest rates can’t get any lower and additional quantitative easing is off the table, it seems to us that monetary policy gets a lot less easier by the end of June. 

3)  When asked about Professor Rogoff’s book showing that recessions following credit crises are always far deeper and longer than garden-variety recessions, Bernanke suggested that perhaps previous monetary authorities had not done enough to stimulate recoveries.  However, with additional stimulation virtually being ruled out and the economic recovery still fragile, the question arises as to how this time will be any different.

4)  Another questioner, expressing some doubts about the effectiveness of QE2, asked what proof Bernanke had that the policy was really working.  In answering, the Chairman pointed to the higher stock market as his proof, confirming that the Fed’s actual policy was to goose the stock market in the hopes that the increased wealth would spread to the economy.  However, housing prices, which are much more important, are continuing to drop, and stock market gains alone do not have a high correlation…
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Phil's Favorites

Congress is considering privacy legislation - be afraid


Congress is considering privacy legislation – be afraid

Courtesy of Jeff Sovern, St. John's University

Supreme Court Justice Louis Brandeis called privacy the “right to be let alone.” Perhaps Congress should give states trying to protect consumer data the same right.

For years, a gridlocked Congress ignored privacy, apart from occasionally scolding companies such as Equifax and Marriott after their major data breaches. In its absence, ...

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Zero Hedge

Key Events This Week: Trade War, EU Elections, Durables, PMIs And Fed Minutes

Courtesy of ZeroHedge

Looking at this week's key events, Deutsche Bank's Craig Nicol writes that while the unpredictable nature of US-China trade developments will likely continue to be the main focus for markets again next week, we also have the European Parliament elections circus to look forward to as well as various survey reports including the flash May PMIs which may offer some insight into the impact of trade escalation on economic data. The FOMC and ECB meeting minutes are also due, along with a heavy calendar of Fed officials speaking.

The European Parliament elections will kick off next Thursday with voting continuing into the weekend across the continent, with results expected on Sunday. With the elections surrounded by internal and external challenges for the EU, members di...

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Kimble Charting Solutions

Will S&P 500 Double Top Derail The Rally?

Courtesy of Chris Kimble.

The rally off the December stock market lows has been strong, to say the least. The S&P 500 rallied 25 percent before hitting and testing the 2018 high.

The old highs proved to be formidable resistance and ushered in some volatility in May… and a 5 percent pullback.

In today’s 2-pack, we look at that resistance level – could that be a double top? We can see similar patterns develop on the S&P 500 Index and its Equal Weight counterpart.

Both indexes are testing short-term Fibonacci retracement levels of the recent decline at point (2).

What takes place here after potential double top highs will be important. Stay tuned...

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Insider Scoop

60 Biggest Movers From Friday

Courtesy of Benzinga.

  • Fastly, Inc. (NYSE: FSLY) shares jumped 50 percent to close at $23.99 on Friday. Fastly priced its 11.25 million share IPO at $16 per share.
  • Outlook Therapeutics, Inc. (NASDAQ: OTLK) shares climbed 37.3 percent to close at $2.10 on Friday after the stock rose over 68 percent Thursday following an Oppenheimer initiation at Outperform with a price target of $12.
  • Cray Inc. (NASDAQ: CRAY) shares rose 22.5 percent to close at $36.52 after Hewlett Packard Enterpri... more from Insider

Chart School

Weekly Market Recap May 18, 2019

Courtesy of Blain.

China – U.S. trade talk continued to dominate the week.   A heavy selloff Monday was followed by 3 up days, with Friday moderately down.

On Monday, Chinese officials announced retaliatory tariffs against the U.S., hitting $60 billion in annual exports to China with new or expanded duties that could reach 25%.

Then on Wednesday:

The Trump administration plans to delay a decision on instituting new tariffs on car and auto part imports for up to six months, according to media reports.


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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control


Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...

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DNA as you've never seen it before, thanks to a new nanotechnology imaging method

Reminder: We are available to chat with Members, comments are found below each post.


DNA as you've never seen it before, thanks to a new nanotechnology imaging method

A map of DNA with the double helix colored blue, the landmarks in green, and the start points for copying the molecule in red. David Gilbert/Kyle Klein, CC BY-ND

Courtesy of David M. Gilbert, Florida State University


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More Examples Of "Typical Tesla "wise-guy scamminess"

By Jacob Wolinsky. Originally published at ValueWalk.

Stanphyl Capital’s letter to investors for the month of March 2019.

rawpixel / Pixabay

Friends and Fellow Investors:

For March 2019 the fund was up approximately 5.5% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was down approximately 2.1%. Year-to-date 2019 the fund is up approximately 12.8% while the S&P 500 is up approximately 13.6% and the ...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...

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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism


The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...

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Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.


This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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Free eBook - "My Top Strategies for 2017"



Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:


·       How 2017 Will Affect Oil, the US Dollar and the European Union


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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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