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Happy Martin Luther King Day!

It's Martin Luther King day so the markets are closed.

It's a good day to read his "I Have a Dream" speech – really is amazing when you think of the great social change in this nation that was set in motion by one man with a vision.  Here's a great video of the actual event.

It is a testament to the power and effectiveness of Dr. King's movement that, even to those of us who were alive at the time, it seems like it must have been another world where a man had to speak out against such injustice as if it wasn't obvious to the majority of people that segragation, whether by law or by practice, was an outrage.

Sadly, many of the lessons he taught us have already been forgotten, some great quotes:

  • Nonviolence is a powerful and just weapon. which cuts without wounding and ennobles the man who wields it. It is a sword that heals.
  • Nonviolence means avoiding not only external physical violence but also internal violence of spirit. You not only refuse to shoot a man, but you refuse to hate him.
  • It is not enough to say we must not wage war. It is necessary to love peace and sacrifice for it.
  • The hope of a secure and livable world lies with disciplined nonconformists who are dedicated to justice, peace and brotherhood.
  • Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.   
  • Never forget that everything Hitler did in Germany was legal.
  • We will remember not the words of our enemies, but the silence of our friends.
  • The past is prophetic in that it asserts loudly that wars are poor chisels for carving out peaceful tomorrows.
  • A nation or civilization that continues to produce soft-minded men purchases its own spiritual death on the installment plan.
  • A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual doom.
  • One of the greatest casualties of the war in Vietnam is the Great Society… shot down on the battlefield of Vietnam.
  • Our scientific power has outrun our spiritual power. We have guided missiles and misguided men.
  • Rarely do we find men who willingly engage in hard, solid thinking. There is an almost universal quest for easy answers and half-baked solutions. Nothing pains some people more than having to think.
  • Take the first step in faith. You don't have to see the whole staircase, just take the first step.
  • The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.
  • The time is always right to do what is right.
  • Our lives begin to end the day we become silent about things that matter.
  • Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.
  • If physical death is the price that I must pay to free my white brothers and sisters from a permanent death of the spirit, then nothing can be more redemptive.

Dr. King also had a sense of humor:

  • I want to be the white man's brother, not his brother-in-law. 
  • It may be true that the law cannot make a man love me, but it can keep him from lynching me, and I think that's pretty important.  

It is very important to remember that people do, in fact, have power.  Last year we had the "Arab Spring" where protests eventually toppled dictatorships.  Maybe this year will be Europe's turn – not so much political dictatorships as economic ones.  Have the 99% slinked away, never to borrow the wealthy again or are they merely hibernating for the Winter?  

Did Doctor King Imagine, almost 50 years ago, that the lines in 2012 would no longer be drawn between black and white but between rich and poor.  Who will speak for the downtrodden masses in the 21st Century – how does one represent the bottom 99% when the smallest bit of fame is likely to take the speaker out of their ranks?  

Fortunately, President Romney will put a stop to all this nonsense:  

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  1. OK, let's see what news we've been missing:  

    2:09 AM Asian stocks fall the most in a month after S&P's nine eurozone downgrades. Japan -1.4%. Hong Kong -1.0%. China -1.7%. India -0.3%.

    3:33 AM EU shares are mostly flat-to-higher in early trading despite S&P's mass downgrade on Friday, as the action on France was well baked in. Euro STOXX 50 flat. London +0.2%. Paris -0.1%. Frankfurt+0.1%. Madrid -0.4%. Euro -0.15% at $1.2673

    Japanese core machinery orders +14.8% M/M in November,well above forecasts of +5.6%. The data shows signs of recovery following a sharp turn for the worse in the previous two months due to the Thai floods and the EU debt crisis.

    A shutdown of Nigeria's oil production for today has been averted after union leaders agreed to maintain output while talks continue with President Goodluck Jonathan over the cutting of fuel subsidies. Industry officials doubt unions can prevent crude oil exports totally, as production is mainly automated and Nigeria has crude in reserves.

    Analysts predict $4/gallon gasoline in various parts of the U.S. by spring, and some big cities such as NYC, LA and Chicago could see record Memorial Day averages of $4.55-$4.95. "Motorists who drive a SUV may want to consider calling their banking institution and obtain a credit limit increase so they can afford this summer’s fuel expenses," quips

    The five-year slide in U.S. home prices will end this year, according to a Reuters poll, followed by the start of a weak recovery in 2013. However, a stagnant 2012 and the meager 1.5% gain expected in 2013 will offer little comfort to the millions of Americans trapped in negative equity — owing more to their mortgage lender, in some cases much more, than their houses are worth.

    As with EU shares, yields on 10-year EU government bonds aren't reacting too drastically to S&P's ratings action. France +3 bps, Spain +4 bps, Italy +4 bps, Austria flat, Belgium +4 bps, Germany flat.

    S&P's slash-and-burn extravaganza on Friday makes German bunds more attractive than ever. Despite two-year yields that have tumbled as low as 0.134% from last year's 1.95%, strategists expect investors to keep piling in to what is seen as the eurozone's only safe haven.

    More from S&P: The agency faults the EU for focusing too much on cutting budgets and not recognizing the issues "are as much a consequence of rising external imbalances and divergences in competitiveness between the (core and the periphery)," i.e. Italian, Spanish, and Greek labor can't compete with Germany.

    Euro sovereign debt yields had more than baked in S&P's latest downgrades (III), says Mohammed El-Erian, but that doesn't mean they don't matter. The moves could encourage other agencies to follow, and stand to alter investment flows. El-Erian's broader thesis: "the balance of risks is to the downside, for Europe and for the global economy."

    Dow Jones reports S&P Managing Director John Chambers as saying the agency will complete its review of the EFSF next week. Given the downgrade from AAA of one of its key backers (France), it's hard to see how a downgrade of the rescue fund can't be in the cards. (previous

    In addition to the EFSF, the next target in S&P's sights could be beleagured French banks, which have suffered due to their eurozone debt exposure. Still, BNP Paribas (BNPQY.PK) could be spared – for now – as France's downgrade was only one notch, while some analysts played down the affect of further ratings cuts on banks.

    The Eurogroup hits the tape saying it will do "whatever it takes" to overcome the crisis, and is exploring options to maintain the EFSF's AAA rating. France and Austria together account for 23% of the rescue fund's backing. Add in the PIIGS, and a majority of the EFSF's capital comes from non-AAA countries – it's unclear how a AAA can be maintained.

    The EU states with negative outlooks following today's actionFrance, Italy, Spain, Ireland, Austria, Belgium, Portugal, the Netherlands, Finland, Slovenia, Cyprus, and Estonia - are deemed by S&P to have a 1 in 3 chance of a lower rating being assigned through 2013.

    Following S&P's downgrade fest (III, IIIIV) on Friday, Angela Merkel yesterday said the eurozone needed to speed up the implementation of its fiscal compact, "and to do it resolutely, not to try to soften it," as has been proposed. Merkel also wants to hasten the deployment of the permanent bailout fund. 

    Hearing Angela Merkel's response to the S&P downgrades, one wonders if she took the time to read the agency's statement. It's not just about government finances, argues S&P, but a fundamental competitiveness imbalance between the core and the periphery. "A reform process based on a pillar of fiscal austerity alone risks becoming self-defeating."

    Also in Merkel's response to the S&P downgrades comes this chilling idea: She says she will consider legislation to bar institutional investors such as insurance companies from selling bonds when ratings are downgraded, or fell below investment grade. If banning short sales doesn't work, why not step it up a notch and ban selling altogether?

    From blogger Alea comes a shot of the clever front page of this morning's edition of the Libération in response to last night'sdowngrade of France. It's another blow for President Sarkozy, headed to the polls in less than 100 days and currently trailing the Socialist Party's Francois Hollande, who has indicated he's less willing to parrot German demands for EU-wide austerity. 

    Greece will resume meetings with private creditors on Wednesday following the breakdown of talks on Friday. With the sides agreeing on most things, the main dispute is the coupon on a new 30-year bond. Greece and bondholders had agreed to 4%-5%, but Germany wants it to be 2%-3%, which would increase bondholder losses from 60% to more than 80%. "That would amount to wiping out Greek lenders," says an Athens banker.

    The IMF-ECB-EU troika may reportedly withhold Greece's next aid tranche in March as officials come to the conclusion that many others have believed for a long time: it's time to end the pretense that the country can or wants to undertake reform. The aim now is less to help Greece and more to avoid an uncontrolled default. 

    As if it will end with Greece:  Spanish unemployment hit the "astronomical" level of 5.4M at 2011's end, says PM Rajoy. With the official figures not yet out, a bit of math suggests the unemployment rate jumped from 21.5% to about 23.2% – an astounding move in just 3 months. One wonders what's ahead as the government is set to unleash a new wave of austerity measures.

    In an attempt to promote "insourcing," President Obama yesterday said he'll make tax proposals that will reward companies for bringing jobs home and investing in America, while he also reiterated his pledge to end breaks for companies that move jobs overseas. (video

    You can't tell what stocks to buy just from analyst calls, notwhen there are 10 "Buys" for every "Sell." But you can learn from studies that show that "Sell" calls - like those recently issued for PLLand GPS - tend to be more prescient than Buy picks. Those calls with recently raised near-term earnings forecasts (as recently with ROST,BRCM and DFS) also move prices more than those without.

    The risk-on trade is back, says BlackRock's Bob Doll. "Valuations are very cheap," and investors should capitalize on the situation by adding a mix of defensive and and cyclical plays. Healthcare shares are a favorite defensive pick, due to their high free cash flows and growth exposure, while energy stocks remain favored cyclical plays.

    Don't get out the champagne yet - the 2012 economy will still be disappointing despite a run of good data culminating in the last jobs report, Laura D'Andrea Tyson says. Growth should fall short of what's needed to absorb labor even under good assumptions, and an output gap of more than 7% will be hard to bridge. And don't forget still-high household debt is pumping up.

    China launched its first physical iron ore trading platform today. As the world's biggest iron ore consumer, China has long believed it's entitled to a bigger say on prices, and is hoping the new platform (along with a new pricing index) will give it greater sway over the Big Three miners: Vale (VALE), BHP (BHP) and Rio Tinto (RIO).

  2. Carnival (CCL) shares -17.6% in London following the capsizing of the Costa Concordia cruise ship at the weekend. The company said the hit on 2012 earnings for the loss of use will be $85-$95M, or $0.11-$0.12 a share, while the firm will also suffer further undetermined costs. (PR

    More from Bloomberg on the iPad 3: Sources claim the device will feature 4G LTE connectivity to go with the high-res display it's long been rumored to contain. Also in-line with recent speculationis a claim the iPad 3 (AAPL) will feature a quad-core processor (likely the A6). If accurate, Bloomberg's report makes it almost certain theiPhone 5 will support LTE. 

    Mitt Romney maintains the U.S. needs a president who's been successful in business to fix the economy, but Paul Krugman says there's a big difference between "running a business and managing an economy." When a business cuts costs, the more the better from the point of view of the owners, but "the story is very different when a government slashes spending in the face of a depressed economy."

  3. Phil, I think that the hit Carnival is taking provides an excellent PSW entry, what do you think?  At 20% down or more tomorrow they are very cheap, they are best in their sector (holiday cruises) and they pay a 3% plus dividend.  I don't think this incident is taking them down long term, maybe til the summer when tourist traffic picks up…of course sorry it happened and all that but this is not the equivalent of an airline crash, moreover they are insured acc to what I was able to ascertain…what about a long-term buy-write on CCL?

  4. Paul Krugman is just plagiarizing what I said here yesterday.
    Carnival Lines has said that it does not expect the Costa Concordia to be back in service for the rest of the fiscal year, or possibly longer. This is what is called a "forward looking statement".
    On Friday  I was explaining to a Haitian friend that Monday was Martin Luther King Day Holiday in the US. Although she is quite knowledgable about such greats as Toussaint L'Ouverture, she had not heard of MLK,  so I showed her his picture on Wikipedia and told her about some of the things he had done and why he was killed. To do this I had cast my mind back  to the 1960s and the days when it seemed that Americans were killing great leaders almost every week, so I explained to her that back in the day black people in parts of the US were not allowed to eat in the same restaurants as white people, or watch movies in the same theaters, or use the same bathrooms and had to stand at the back of the bus and not use the seats reserved for white people.
    She looked a bit puzzled, and asked "Why not?"
    I can see that being a history teacher is not easy.

  5. jerconn/Carnival
    Just wait until the public picks up on what death traps these "pile 'em in and stack 'em  high" cruise ships really are. Then you will be able to get the stock for pennies.

  6. Phil/view

    What’s your view on Dents latest video.

    Sent from my iPhone

  7. Costa Concordia, the stricken cruise liner, is slipping from the rock shelf into the sea, triggering a warning from Italian environment minister that an ecological disaster could follow its sinking.
    The ship's fuel tanks are full of diesel. Nice.

  8. jmm – it's one of 100 ships that CCL owns/operates.  I don't think one ship is going to put much of a dent in their operations.  Environmental disaster?  Don't know, have to see how that pans out.  Doesn't look like it's another BP Gulf of Mexico type thing tho…

  9. CCL/Jerconn – I think they may be sued, find and suffer lost bookings.  Long-term, 20% is a reasonable haircut and, if no more incidents, a good recovery point but, short-term, they may go lower.  If I didn't think the whole economy may go off a cliff, I'd be all for taking a chance but that's not the case so not one I'd jump on.  

    Dent/Exec – All valid points but QE3 wipes out all that BS and it looks to me like at least some people think that's in the bag.  He's an austerity guy, even though he does realize it will collapse the Global economy which, to me, makes no sense.  

    Death traps/JMM – It is amazing to me how big they are building these ships now.  Has nobody seen Titanic?  

    Ron Paul is pissed:  

  10. Hi Phil
    Good morning and thanks for reminding us about these great quotes on this special day.
    Also thanks for the guidance and the opportunity to follow this forum. Same thanks to all members posting their insights, thoughts, idea's, question.
    As a starter I'm not up to these levels and still learning and growing.  From that angle I would like to ask if you could explain a little bit more in detail by means of examples your statement of last week Thursday that I copied below (it is hanging around in my mind since that day)
    "I really, really do not understand people's fascination with shorting verticals.   A bullish vertical is one of the smartest bets in the market – it gives you leverage without premium so, if you are right half the time, you should do very well.  A bearish vertical is the opposite, unless you are an absolute targeting genius who gets it right about 75% of the time – you will lose.  And, like any good casino game where you are the sucker – the more you play, the more certainly you will lose. "
    An example, I think would make it very clear.
    I thought it was a good moment asking this on a day the markets are closed.  But of course feel free.

  11. jerconn/BP/Carnival
    Yes, I was long on BP after the disaster and made a lot of money, but then BP has a lot of oil and oil is not likely to go out of fashion. On the other hand there were claims of massive cancellations of Florida vacations after the BP disaster even though only ONE Florida beach right next to Alabama was affected. There is already a multiyear recession going on in the US (in spite of official claims) and people don't seem to need a lot of encouragement to cancel vacations. Remember how the Ryder Cup was cancelled after 9/11 because the US golfers were too scared to fly to Europe, even though scheduled flights were carrying less talented passengers daily.
    Big ships.
    I was in Athens, Greece about 1975 outside the National Museum, which is free to enter 2 days a week, and it was one of those days when it was free. A busload of cruise passengers pulled up each clutching a $15 admission ticket in their hand, which was solemnly torn in half by the gatekeeper, even though admission was free. This is how cruise ship companies really make their money. A captive audience, overpriced shops on board like in airport concourses, changing local currency for passengers at rates of usury, offering on board entertainment like casinos with games with impossible odds, overpriced beauty salons, selling on shore tours at a ridiculous mark-up.
    So sell the tickets cheap, cram them in and pile them high, then make sure that they don't spend a dime off the ship,, dump the garbage at night at sea, and the shareholders will be very happy.
    This is why the ships are so big.
    [Disclaimer: I worked for the government of Bermuda for 11 years, so the cruise ship business helped to pay my wages, and was a constant subject of discussion in: ]
    See also

  12. I don't really spend that much time reading ZH now that they always have that doomy slant, but this article had me thinking:

    Back in August 2010, we presented an idea proposed by our friends at SK Options trading for a very simple trading strategy: being long gold in the overnight session, and shorting it during the day. At the time of writing, such a strategy would have returned $2.16 billion from a $100 million initial investment in 10 years, a 37.46% annualized return. 

    I wonder if there are any other such anomalies….

  13. And more evidence about the slave labor used by Apple in particular but many others…

    I am sure that Apple and others could lower their margins, still be very profitable and manage to have more human working conditions in China. Better yet, build these devices in US in automated factories….

  14. Congress logs most futile legislative year on record
    It’s official: Congress ended its least-productive year in modern history after passing 80 bills — fewer than during any other session since year-end records began being kept in 1947.

  15. Hello Phil, What is your opinion about RCL? It is also sharply down, but obviously is not
     going to have any direct losses. Also, RCL has only about 10% of its income coming from Europe (unlike CCL). Thanks.

  16. working link for MLK speech

  17. stjean/APPL working conditions
    Actually we have a couple of million people in the US who sleep in crowded dormitories and get paid about $1 per hour for menial  work with no overtime pay or unions. We call them prisoners.

  18. stj –  Much as I despise Henry Bloget, I read his article and it correctly points out the core of the global competitiveness problem, which is also the core of all the financial instability in the world currently.  Labor inequality, whether it be China, Europe or the USA is the crux of the issue.  
    Having been to mainland China on a few occasions, and specifically Shenzen, I can confirm how shocking it can be to see the scale of building and the number of high-rises, the population density and to me, most shocking is the monotone nature of peoples' life there.  They are a highly conforming society and have a real and valid fear of their government and its ability to intrude and destroy their lives.  For that reason, once labor unrest begins to show itself within China, the potential for the lid to blow off the whole country is quite high.  People are emotionally repressed by both the cultural norms promulgated by the government (one child, hard work, no complaining, etc) as well as the new exposure to western ideas via the internet and the material desires of the new generation.   BMW's and Mercedes cost more than twice the price here in the US, and China has now become the second largest market behind the US.  In fact, I am partnering with my former cook (Chinese) to export 5-10 new cars/month to China in a small scale arbitrage.
    Anyway, my main point was to provide the direct link from Bloget's article, which is a transcript from the journalist who visited the Foxconn plant and others.   It's a very interesting read…

  19. Phil,
    The Michael Hudson article, I think correctly, frames the current economic situation as a war between "finance and labor." This is, perhaps, a nice distinction from your Republican/Democrat or even Liberal/Conservative labels but an important one. 

  20. By the way, when I was 13 I was paid 90 cents an hour to work at an A&W root beer stand for 12 hours/day one summer in Mesa,  Arizona.  No A/C, only a swamp cooler and flipping burgers on a grill and with sticky grease and soda syrup all over me.  
    And you know what, I think that experience could account of some of the drive I've had to achieve above the norm during my career.   It would also be interesting to contrast the buying power of 90 cents in 1970 to that of the real china economy today.  I knew I was getting screwed even at the age of 13, but I was glad to have a job and the social benefits…it would have been a much more boring summer otherwise!

  21. kramer36350:
    That's funny. I watched Meet The Press yesterday and listened to Harry Reed claim that it was the most productive congress ever.
    MR. GREGORY: But Senator, you are talking about the fact that Democrats are dug in on the idea that the rich should pay more in taxes. We know Republicans feel the opposite is true, that taxes would hurt economic recovery. And I asked you, what can the president do to break this log jam? And your answer is, well, let's just hope that they'll do better and come to their senses and the president's been trying so hard. I mean, there's nothing here for people listening to this to say, oh, I can see something changing in Washington. The tone from you is not changing. You're blaming the tea party, Republicans are blaming this president for not, you know, reaching out in a real way, not really trying to compromise. Is there anything that can be done that can really change the dynamic?
    SEN. REID: I don't think, David, anyone can question or they shouldn't question our having reached out to the Republicans. I say Obama, I say me. We've done everything we could to work with them. We're going to continue to do that. In spite of the obstructionism, we've been able to accomplish a lot of good things during the last Congress, even someone as conservative as--Hornstein said it was the most productive Congress in the last 75 years. So we can't talk about not having gotten anything done. In spite of the Republicans, we've gotten a lot of things done. We had the most productive Congress in the history of the country just last Congress. I think we can build upon that. This Congress isn't over. All I ask is for the Republicans to understand what legislation is all about.

  22. Verticals/Jomme – It's not very complicated.  Let's say you buy a $40 call for $3 and sell a $45 call for $2 and then you paid net $1 for a $5 spread.  So, if you are wrong, you lose $1 and, if you are right, you win $4 so, if we assume being wrong and being right are random events – you can be wrong 4 out of 5 times and break even.  If you sell the $45 puts for $3 and buy the $40 puts for $2, you get a $1 credit and have made the exact same bet (that the stock will finish over $45) and you are 200% ahead of the game to begin.  Unfortunately though, if we assume your chances of being correct are the same random event, then if you are wrong just one time out of 4 – you blow all of your winnings.  So, buying a vertical – odds 4:1 in your favor, selling a vertical – odds 1:4 against you.  The money you are paid up front is an illusion – it's the payment you get for taking an extreme risk and, like all odds payouts – you are being inadequately compensated for your risk.  That's why we prefer to BE THE HOUSE, and make those inadequate payouts to other fools who think they are smarter than the odds.  This is why the rich get richer – there is always some sucker willing to stick his neck on the chopping block in exchange for a little money up front – try not to be that sucker.  

    As anyone who goes to the track hopefully understands, the odds derived in parimutuel betting are not a joke – they pretty accurately reflect the chance of each horse coming in the money.  You can never be certain and, in any given race the long-shot can win but anyone with a long-shot betting "system" doesn't last very long.  In fact, the entire reason the track exists is because the combined wisdom of a few thousand people who attend a race ends up losing more money than they make on a very regular basis.   Both the Mob and the State love the numbers racket – people love to pick random numbers chasing a big payoff.  Again – it's a suckers game, especially when a few percentage points are shaved off the payoff.   Casino games we've discussed in detain and options are no different except for one thing – with options you can BE THE HOUSE – on any options trade you can simply choose to sit on the other side of the table and be the guy who has the money to make the pay-off and, in exchange for that – suckers will line up TO PAY YOU MONEY to gamble and they will happily accept the fact that you are shaving the payouts by charging them a premium. 

    There's nothing complicated about this.  I don't think AAPL will fall below $300 this year and there's a man willing to bet me $13.20 that it will, if I run that bet to Jan 2014, I can collect $28.50 as short-term VIX is lower than long-term VIX at the moment.  That's $28.50 I get to put in my pocket today that is out of my put seller's hands today.  And, if I REALLY want to own 100 shares of AAPL for net $271.50, then the $30 of margin would be inconsequential.  $30 is how much risk my broker (TOS) thinks I'm taking selling this put and BELIEVE ME, they are professional odds makers and are very conservative in assessing margin risk.  In fact, if they assume I am a professional in my Portfolio Margin account, my margin charge is a token $3 – a more accurate reflection of the real risk against AAPL's current trend.  

    So, if I have $41,981 to buy 100 shares of AAPL and I expect it to go up 10% this year, I can buy the stock and perhaps hedge my investment (which would eat into my potential profits) and I would need AAPL to go up 13.5% in order to make $5,700 against $21,000 in margin tied up.  On the the other hand, if I sell 2 2014 $300 puts for $28.50, I collect $5,700 TODAY and tie up $6,000 in ordinary margin and my worst case is owning 200 shares of AAPL for net $54,300 so my "risk" is spending $12,319 more than I intended but, for that, I get 100 more shares of AAPL at net $123.19 a share.  If you don't REALLY want to buy 100 shares of AAPL for $123.19 then WHY THE HELL would you be buying 100 shares at $419.81?  

    This is VERY SIMPLE STUFF folks.  It mainly requires you take a longer-term view of things and develop the BELIEF that the stocks you buy have an actual value.  It requires you to stop chasing idiotic momentum stocks that may not even exist 5 years from now, it requires you to pick stocks based on their own merit and not based on how loudly some monkey on television screams about them.  It requires patiently waiting for a good opportunity to buy and it then requires PATIENTLY riding out fluctuations in the PRICE of your stock.  

    You will not get a rush out of investing this way, you won't have fantastic stories to tell people about your 800% gains and your friends will not think you are a genius as you make 10-20% year after year after year – this is the opposite of gambling – this is selling risk to others and letting statistics to the rest and it's also not foolproof because even the best casinos in the World have losing quarters and even losing years (Berkshire Hathaway has had 9 losing years out of 47 – 20%) so you can't over-extend yourself, which makes it even duller the first 5-10 years you pursue this strategy as you stay 50% in cash.

    The only way to learn to be the house is practice and patience.  Most casino owners start out as gamblers and wise up later in life and move to the other side of the table.  The same can be said for Investment Bankers and Hedge Fund Managers – they start out as traders and then realize the real money is made collecting fees while others take the risks.   If you could make more money as a trader than a fund manager – why are there no traders in the year's 100 top income producers?  Who's the richest gambler you know?  

    These as simple truths that people don't want to accept because it means there is no "system" and no way to "get rich quick."  This is getting rich slowly and it's certainly not as much fun – we're teaching a trading discipline to those who want to learn – if you want to gamble – that's what the other 10,000 stock sites are for…  

  23. Prisoners / Jmm – Sure we do. I guess we could put them to work for AAPL!

  24. Phil / Deep ITM verticals?
    I used to be a IronCondor trader back before I went to a hedge fund.  And then 2008 happened, and Thank God I wasn't selling credit spreads any longer!  Anyway, I've been toying around with buying two deep in the money verticals on the SPX or RUT, and holding them until they realize full value close to expiration.  Sort of the opposite of a Iron Condor.  Buying a Bull Call Spread and buying a Bear Put Spread…  
    Make any sense at all to do a trade like this?

  25. Cruise con/JMM – LOL, thanks for the insight.  That's one of the things I find truly amazing about cruises as I end up spending more money on "stuff" on the ship ABOVE what I pay for the ship, than I would have spent if we just went on a damned vacation somewhere else.  If it wasn't for the Disney cruises and how much fun it is for my kids – it would never be a way I choose to vacation.  However – I already get offers to get a free ride to lecture on ships and one day, when the offer is for a first-class cabin and some cash, I probably won't turn them down but, as above, I don't want to be one of the suckers paying the premiums to ride along…

    Overnights/StJ – I think you could go long on oil every day at 2pm and get out at the 2:35 close.  I'll bet you could make $2Bn on that as well…

    Slave labor/StJ – Hey, we are working as hard as we can to make US wages "competitive" with 3rd World nations – give it another decade or maybe much less under a Romney administration…

    Congress/Kramer – Sad, isn't it?  

    RCL/Alik – I think there may be opportunity in that sector and RCL is a very good company but my problem with them (and anyone in that sector) is they are MASSIVELY recession-sensitive.  RCL fell to $5.40 in 2009 from $45, CCL was $15 down from $50 – If you intend to be a LONG-TERM investor and buy some now and buy more at $15 and buy more at $5 – then sure, I like RCL but, if you are making a bet on RCL based on the fact that CCL had an accident and you would lose you nerve if they dropped 20% – then you're just gambling with not particularly good odds.  

    Speech/Lunar – Thanks. 

    Good article Sparky.  

    Prisoners/JMM – True.  Why can't they make IPhones? 

    Cars/LV – I would think that would be a customs nightmare.  

    Hudston/Sparky – Not if you consider who represents who.  What terrifies me more than anything is the way finance has gotten their hooks into the Dems and the new regs may mean the Dems can't be competitive without Corporate sponsors and that's game over for labor anyway.  

    Jobs/LV – I was a paperboy at 10, up every day at 5am for an hour and a half and 3 on Sundays to make $20 a week (1973) so pretty good pay by comparison.  I remember I got $1.65 an hour as a busboy when I was 13 plus some of the tips and considered it a big improvement.  By 15 I was a waiter as I'd put in most of my 10,000 hours and had my first profession.  I never considered the alternative of doing nothing because it wasn't a choice – my parents didn't have money to give us but their attitude was that we could do whatever we wanted with the money so we all worked.  Of 5 kids, one of my brothers started his own personnel business, one has a car dealership, one is the Sr. VP of a big company and there's me (sister raised 3 kids) so I think, on the whole, working our whole lives wasn't a bad thing.  What I think is a bad thing is this new attitude that kids shouldn't work so instead they load them up with ridiculous amounts of homework when what they really need are life experiences.  My oldest daughter is 11 and none of her friends work at all – not even helping out in their parents' stores as it's now frowned upon if parents "make" their kids work in the family business – crazy.  

    Reid/DC – What planet is that guy on?  

  26. Speaking of China – here's the reality:  


    A quick search turned up this Federal Reserve Bank of San Francisco research report: The U.S. Content of “Made in China.”

    What did they find?

    “Goods and services from China accounted for only 2.7% of U.S. personal consumption expenditures in 2010, of which less than half reflected the actual costs of Chinese imports. The rest went to U.S. businesses and workers transporting, selling, and marketing goods carrying the “Made in China” label. Although the fraction is higher when the imported content of goods made in the United States is considered, Chinese imports still make up only a small share of total U.S. consumer spending.”

    The Fed researchers fastidiously backed their with deep lots of data sourced from BEA, BLS, and the U.S. Census Bureau. Their conclusion was a surprisingly low number — I would have guessed closer to 10%. But i cannot argue with their data or methodology.

    Perhaps a reason for believing China’s share of the US consumer market is how often we see the Made in China label. They dominate the toys, clothing and electronics that get sold in stores like Wal-Mart and Target and Toys-R-Us.

    Morgan Housel explained:

    “A common rebuttal I got was, “How can it only be 2.7% when almost everything in Wal-Mart (NYSE: WMT ) is made in China?” Because Wal-Mart’s $260 billion in U.S. revenue isn’t exactly reflective of America’s $14.5 trillion economy. Wal-Mart might sell a broad range of knickknacks, many of which are made in China, but the vast majority of what Americans spend their money on is not knickknacks.”

    We also spend far more on others than we realize: Housing, Commodities (especially Food and Energy) and Services (Health Care, Financial, Accounting, Education etc.). Housel noted that in 2010, “we spent 34% of their income on housing, 13% on food, 11% on insurance and pensions, 7% on health care, and 2% on education. Those categories alone make up nearly 70% of total spending, and are comprised almost entirely of American-made goods and services.

    That’s one more piece of misinformation put the rest. Now if we can only do something about the Laffer Curve . . .


    SSSources:  The U.S. Content of “Made in China” (Mirror)

  27. China / LV – That was my impression in China as well. I only visited Beijing and Shanghai, but it gave me the impression of living in 19th century France as described by Zola. Not certain it will end well….

    As far your first job is concerned, a lot of us have been there, but at least we had were presented with some opportunities and luck along way! Not sure that the average Chinese worker will have the same…

  28. Romney / Phil – Your view on him seem to be evolving as I recall you saying that you could consider voting for him. The more I see the guy, the more nauseous I get. He seems to be absolutely tone deaf to the struggle of the average American (not surprising given his upbringing). His comments about envy are just amazing! And his solutions are the same as his GOP colleagues – tax cuts for the rich and entitlement cuts for everybody else. As I was telling my friend yesterday, why don't the republicans just run on their true message – "We don't care about the middle class, jobs, the poor, the sick…. All we care about is for corporations to make more money so that our friends can profit!" and of course add "We are against gay marriage and abortion" just to make sure to get some votes!

  29. Hi Phil
    Thanks a lot for this great RECAP/SUMMARY
    This points my mind in the right direction.  Your statement of thursday got me thinking  if I understood the semantics correctly and I was not sure on how to read " shorting vertical" and this combined with odds.
    The examples given make the statement as clear as water.  In fact the recap above goes beyond my expectation.
    It clarifies much more then the underlying technical elements and odds and trading.  It also explains PATIENCE..Thanks for emphasising that again and again 
    And PATIENCE is not only good for trading, it is a good asset for life in general.
    I hope some other members did benefit of this summary also.
    Have a great day

  30. Speaking if Europe, this is a scary chart and shows how unsustainable things are (from a John Mauldin article on Barry's site – long and somewhat gloomy):

  31. angelcur and or roro:
    I've seen you both note some subtle things you have picked up from Phil and I'm wondering if there are examples you could share.  I would really value your input because clearly you are both pretty seasoned traders and also the fact that you can be objective about trading ideas from Phil while putting up political and philosophical differences.  TIA

  32. Autos to China/Phil   Actually the customs process into China is a snap as long as you pay the 25% duty tax, 17% VAT and if over 3.0L engine another 25% "consumption" tax.  Paperwork is easy, if you're Chinese of course!  And all of the demand right now is for the super premium cars, consumption tax notwithstanding.
    Anyway, the problem is the new german car dealers in china are on allocation and never can get enough premium cars.  So independent chinese dealers (of new cars) contract with us to deliver new cars in shorter time for a premium.   The issue is on the US side where the authorized dealers stipulate that the sale is for "private use – not for export", in a feeble attempt by the factory to protect their distribution network and allocation system.   So it's not that easy to procure the cars on this side – doable but not as straightforward as it could be.    
    Obviously, the irony of doing business in a communist country being easier than in the capitalist USA is not lost on me!

  33. Envy
    Interesting to hear Romney compare a call for fairness in the economy to the politics of envy and class warfare, and then say that it is against "one nation under God."  I am not only appalled as a citizen, but as a theologian. It one thing to have a reasonable argument over what the definition of fairness should be in an economy.  But Romney's philosophy/theology seems to be that if you are one of the wealthiest 1% in the nation, then you are therefore one of the successful people and blessed by God.  This is not a new phenomenon created by Republicans, it is as old as the Tower of Babel.  It is the royal theology of oppressive kings that the biblical prophets denounced, and more recently a stream of Calvinist predestinarianism (a belief that God has already planned out your lot, and the most righteous are the most economically prosperous.)  
    If this were true, then some of the most righteous people in the the last century would not be MLK, Gandhi, Dorothy Day or Oscar Romero, but rather Mobutu, Mugabe and Kaddafhi.  It means that the Walton family and the Koch brothers, George Soros and Warren Buffet are all better human beings than any silly Nobel Peace Prize winner, a relief worker, or for that matter a Mormon missionary.  (and I like Warren, but would not put him above MLK and Jesus because he is worth $60 billion.)  By Romney's logic we should not have holidays for people like MLK, but rather for Henry Ford, Andrew Carnegie and John Rockefeller, his true saints.  Romney may defend one nation under God, but apparently his God has quite a few zeros on the end.    

  34. @burrben, there is no difference between buying a deep in the money spread and selling a way out of the money spread. I believe if you graph the position you are talking about, it’s p&l would look exactly like an iron condor.

  35. Our futures are now up 0.25-0.5% but here's more news items:  


    U.S. retail industry sales growth will shrink to 3.4 percent this year, hampered by the lingering housing slump, a trade group forecast. Sales will total $2.53 trillion in 2012 after inflation helped boost growth to a greater-than-projected 4.7 percent last year, the Washington-based National Retail Federation said. 

    U.K. Home Sellers Cut Prices as Recovery in ‘Paralysis’: Economy

    Cost of globalization: White House Brags About Falling Wages (Business Insider)

    Obama, Romney: Scoffing at Job Creation Myths (Ezra Klein, View)

    Portugal's bond yields sky in the wake of Friday's S&P downgrade which brought the rating on the country's paper down to junk status. The 10-year bond is 125 bps higher to 13.71% (euro-era high is 14.13% hit in December), while the 2-year is up 140 bps to 14.07%.

    Irish stockbroker Davy sharply cuts its 2012 GDP growth estimate for the country to 0.4% from 1.7%, citing the deteriorating outlook for the rest of the EU region. "(The) benign environment underpinning fiscal plans is unravelling," says the firm, expecting the government will not hit its deficit targets in 2012 or 2013. The meme of the "success" of the Irish bailout may get tested in 2012. 

    Efforts to toughen budget laws and make Greek debt more sustainable “deserve far more attention than these rating changes, which as usual are lagging fundamental developments,” Joachim Fels, chief global economist at Morgan Stanley in London, said in a note to clients yesterday.

    Draghi Rate Cuts Fail to Boost Confidence

    U.K.’s Osborne Sees Some Grounds for Optimism on Europe’s Economic Outlook

    Only the gloomiest of Wall Street's prognosticators got it right in 2008 and 2009. Since then, their pessimism has been infectious. On almost any investing topic — from emerging markets to U.S. stocks, from commodities to sovereign debt — there are respected experts predicting the worst.

    Among the Wealthiest One Percent, Many Variations (NYT)

    The Bifurcated Society (Rick Bookstaber)

    The income gap: Unfair, or Are We Just Jealous? (NPR)

    Ivy League recruiter protests: Elites Occupying Elites (Inside Higher Ed)

    “Princeton’s motto is: in the nation’s service, and in the service of all nations,” the students recited, to the clear surprise and discomfort of a handful of recruiters. “JP Morgan, your actions violate our motto. Your predatory lending practices helped crash our economy. We bailed out your executives’ bonuses. You evict struggling homeowners while taking their tax money. You support mountaintop removal mining in Appalachia, which destroys our ecological future. In light of these actions, we protest the campus culture that whitewashes the crooked dealings of Wall Street as a prestigious career path. We are here today as a voice for the 99 percent, shut out by a system that punishes them just for being born without privilege. What we need is not a university for the 1 percent, but a university in the nation’s service, and in the service of all nations.”

    Higher purpose?: Why Occupiers Aren’t Running for Office (WashPost) 

    Very Good Article:  Mr. Davidson’s Planet: NPR/NYT Guru Adam Davidson’s Discredited Economic Principles (AlterNet)

    Financial blogger and author Yves Smith (whose Naked Capitalism website is a must-read for the financially-literate) noted that Mr. Davidson’s recent column, "The Other Reason Europe is Going Broke," “manages the impressive feat of making you stupider than before you read it.” She catalogues the misrepresented facts and appeals to American prejudices that form the hallmark of Mr. Davidson’s work. 



    Gold traders are the most bullish in two months after mainland China imported the most metal ever from Hong Kong and investors bought U.S. bullion coins at the fastest pace in more than two years. Eighteen of 23 surveyed by Bloomberg expect the metal to gain next week, the highest proportion since Nov. 11. 

    Natural gas supplies may reach a seasonal record of 2.4 trillion cubic feet in March, which is when heating demand usually ends and producers begin piping more gas into storage, Cooper said. Unless production falls or cold weather bolsters demand, prices will drop to $2.40 per million Btu, and perhaps below $2, as gas overflows storage caverns and clogs pipelines, he said.

    EU Nations to Sell 124 Million Carbon Permits in 15 Months, Tschach Says

    Oil climbed from the lowest price in almost four weeks as Iran said that a disruption to crude supplies through the Strait of Hormuz would cause a shock to markets that “no country” could manage.


    Australian aircraft engineers have called for Airbus A380 – the world's biggest passenger aircraft – to be grounded, after Singapore Airlines and Qantas found cracks in the wings of their super-jumbos.  'We can't continue to gamble with people's lives and allow those aircraft to fly around and hope that they make it until their four-yearly inspection,' said Steve Purvinas, secretary of the Australian Licensed Aircraft Engineers Association.

    Bordeaux Goes Unsold, Price Qualms Damp $18.7 Million Sales

  36. Phil: verticals
    That summary earlier epitomizes your real strength as a communicator.  Thanks

  37. Phil,
    i am wondering if the equity indexes are turning into a slow grind higher kind of trading environment?
    the thought crossed my mind. i don't know but the daily ranges are becoming more shallow.
    again, i don't know and maybe it is related to low volumes at the beginning of a new year. i got so used the wide swings it seems like a mental adjustment since the gap up opening from first day january 3rd.

  38. Phil – you guys were underpaid. I was working in libraries (bottom rung, filing books and cleaning up) for $2.10/ hour in California 1969 thru 1973.  Or maybe I was just a little older than you (high school and college at the time). 
    But Phil, here's a question.  Okay, as long as we are selling calls and puts, we are selling premium, and that's fine…However, the main profit vehicle that we are using is still the call that we are buying (usually as part of the BCS) here in PSW, so we cannot really say that we are "learning to be the house," can we?  I mean, we're still buying premium, it's just that we're offsetting it and mitigating it by selling premium as well.  If we were truly "the house," then we wouldn't buy at all…or am I missing something here…?

  39. Value ideas 
    I have been messing around on Finviz looking for some good value ideas for my watch list.  I am using price/sales as my main value indicator and looking for midcap and above stocks with dividend payouts of over 2 percent.  One thing I notice in the top 20 are a number of refiners (VLO, NPC, SNP, BP, COP) grocery and food related stocks (SWY, DEG, ADM) and consumer stocks (SPLS, BBY, WHR).  VLO, SPLS, BBY and SWY are all PSW recommendations I have invested in at one time during the past year.  (In VLO ad BBY right now.)  I'm looking harder at the others.
    Two stocks I'm paying attention to now are AFL and RSH.  Aflac seems to be significantly undervalued, even though they have sold most of their European bonds already, and their cash flow is from Japan (80%) and the US (20%)  I think they are being priced as if they had greater EU exposure.  I also like RSH because they are being priced as if they are going to be destroyed by Amazon and Walmart.  They have made some recent deals to move more towards wireless products and they have a 5% dividend.  In my IRA I'm thinking of buying RSH at $9.90 and selling the April $11 calls for .45.  That makes for a 4.7% premium sold and an upside of 18% if called out in 3 months, plus the dividend.  
    Any thoughts?

  40. China/Stj  -  Glad you notice the "grayness" of chinese life.   Actually Bejing and Shanghai are very colorful, but they are about the only cities that seem to have it.   I was in Yiwu, considered a second city with only population of 6 million, and in Jiangmen in the south, about the same size.   I fortunate enough at the time to be guided by my chinese ex-girlfriend, showing off her country and her skill in both cantonese and mandarin.   So I was able to talk to real people about real things, and the fear of the government is very real there.  Even more so for the fortunates who work in government. 
    That being said, there is definitely a middle class being created in real time in China, and I happen to believe that trend will continue for some time.   Sure, they are all speculating on real estate to try to make some real money and of course that will end badly for the newly emerging consumers!  But the domestic economy related to consumption is building quite nicely in a reasonable way.  Only a global collapse will knock China (and the rest of us) off course.  My view is that China has the tools, information and capital reserves to manage their economy through these times.
    The big risk I've read about is the demographic shift due to the one child policy and a rapidly aging populace.  Personally, I didn't really see it and I was surprised to see how youthful (twentys and thirtys) the country looked.  I suppose they could collapse in another thirty or forty years.   

  41. Jobs 
    I used to make $3.35 an our walking soybeans in Iowa in the late 70s.  I could make $5-$6 an hour loading hay and took those jobs whenever I could.  But the most important job I ever had was watching my grandfather's feed store while he did other work.  Farmers would come in and buy futures contracts to hedge their crop deliveries and arrange for my grandfather to haul or store their grain.  I suddenly understood why he was the one with the Winnebago, Rolex and how he gradually bought all the land around him.  He was the house!
    I think I did my son a favor by getting him a job on a horse farm cleaning stalls and grooming horses when he was 14. He decided to be an entrepreneur and has a gamer website that someone offered him $300,000.  That is a huge temptation for an 18 year old, but he turned it down and is shooting for $ 1 million.  I may not have to pay for all his college after all.

  42. Phil, based on your discussion above about being the house, what do you think of selling GS $50 2014 puts for around $5.40.
    Would you consider that low risk and being the house?

  43. Deepness/Burr – Sure, it's sort of an extended Iron Butterfly and, when the markets are dull, we combine that with put and call selling in the middle, kind of like our AA money but with verticals on the long end.  As Craig points out, in  a fund, if margin is not an issue, it would graph about the same as a condor but it does have it's uses if you can work the premium.  For example:  

    • 5 TNA 2013 $68/50 bear put spread at $10 ($5,000) – TNA currently $49.44
    • Sell 5 TNA Feb $37 puts for $1.20 ($600)
    • 10 TZA 2013 $35/25 bear put spreads at $4.65 ($4,650) – TZA currently $23.81
    • Sell 5 TZA Feb $21 puts for .90 ($450) 

    So here, we are betting the two ultras to go down, taking advantage of their decay over time and, of course, they can't both win.  The payoff potential on TNA is + $6,500 and the payoff potential on TZA is + $5,350 so + $11,850 on $9,650 invested if both simply don't go up from here.  Meanwhile, you're selling $1,050 a month in premium so potential to get $10,000ish in income while you wait selling out of the money puts which again, can't both pay off at once.  The key to this play is you are selling a massive amount of premium and anything but a harsh move against you one way or the other should pay very well.  As I described above – it is possible to lose on very bad luck but, over the long haul, this strategy has a good chance of generating a nice income.  

    Romney/StJ – The more you get to know him, the worse he gets.  I was liking him based on what he did in Mass but based on what he now SAYS – I don't like him but still the best of the bad choices from the GOP.  

    No problem Jomme – you just have to catch me when I'm in the mood to pontificate.  

    Autos/LV – Anything my brother can help with?  Currently he has VWs and Volvo but he's with Auto Nation and just switched from Mercedes to manage this new place and before that he managed Lexus so he knows many people.  

    Good point Rev. 

    You're welcome Lincoln!  

    Grinding/Roro – Sure.  As you can see from the copper chart – the market has been manipulated and will probably continue to grind up until the damn finally bursts and it all collapses around those who currently have their fingers plugging up the holes.  Of course, if we get massive, coordinated QE – then the current values can be justified until it runs out and that's probably what everyone is counting on but it's not a reason for me to buy IBM for $180, is it?  

    Missing/Jerconn – Yes, you are missing that we sell more premium than we buy and so – net SELLERS of premium.  If I buy the above TZA $35 puts for $18.30 and I sell the $25 puts for $9, I haven't bought any premium at all because TZA is at $23.81 so my $35 puts are $11.19 in the money and I only paid $9 for them so my caller paid a net $2.19 premium to me.  You had better go over these until you understand that math as it's kind of critical to the whole process.  

    AFL/Rev – They are my favorite insurance play.  RSH does keep coming back from the dead and it's interesting because they can't be replaced by WMT as WMT will never cover the depth of inventory that RSH does and AMZN can never have the guys on staff that can help you find the right do-hickey to make something work but that doesn't mean Radio Shack survives – it just means you'll have to call the Geek Squad every time you need new batteries for your watch.  I like RSH but not for a retirement portfolio as I think the odds of them making it to 2020 are slim.  

    That's cool Rev – I hope my daughters will be able to support me in my old age!  8) 

    GS/Aug – I like that play.  Hard to imagine GS really collapsing but the trick is, as always, scaling in.  GS fell to $57.50 in 2009 so that's not out of the question.  It won't be an issue if they do fall that low and your attitude is "Oh boy, I may ACTUALLY get to buy GS for net $44.60!"  If, on the other hand, you attitude is "Oh my god, I'm down 120% on my short puts and I have to stop the bleeding" – it's a dangerous bet in this uncertain environment.  The house never refuses a bet and they spin that wheel no matter how much the gamblers place on a number – keep that in mind and make sure you always have enough on the side to cover the occasional losses because they will come.  

  44. Autos/Phil – Maybe there is something possible with your brother.  Let me pull together more details and I'll give you a call later in the week.  

  45. Hey Phil,
    Are you looking for explicit QE3 talk out of the next meeting?  Or can they keep expecting us to get excited over implications?   Seems like CNBC has really put it out there that we're getting some good old fashion QE, so maybe a big disappointment if it's not outright?
    Is it politically viable with the S&P pushing 1300?  Or will it be saved to deal with a crisis?
    Personally, it's depressing that our bullish case is manipulation coming from the Gods(criminals) on Mt. Olympus… but I force myself to invest in the world as it actually is, and not how I wish it would be.  Got doubly depressed watching MLK's speech this morning… WHERE ARE MORAL LEADERS TODAY???

  46. Best of bad choices / Phil – Well, when you set the bar that low….

  47. @craigzooka 
    Thanks, I did know that synthethiclly they are the same.  But from what I understand you would want to look at credit spreads in a high vol environment, and debit spreads in a low vol environment.  I'd rather be long vega, than short vega with what we have going on in the world at this point.   At least that's what I gather from doing reading today…
    Phil had another interesting take that I will have to sit down and walk through.  I don't have TOS anymore, and IB doesn't have as clean of a PnL/Risk graph as IB does.  

  48. Request for graph
    Can anyone plug this into TOS Risk Graph and post it?  I don't have TOS, and IB is a pain with these.  It's a modified iron condor…
    Buy 2 RUT February 640 puts
    Sell 10 RUT February 630 puts
    Buy 8 RUT February 610 puts
    Net credit of about $680
    Buy 2 RUT February 820 calls
    Sell 10 RUT February 830 calls
    Buy 8 RUT February 850 calls
    Net credit of about $700

  49. Market Trends:
    Martin Luther King, Jr. WeekCobra's Market View
    Holiday WeeksCobra's Market View

  50. This can not be repeated enuff:
    "So, if I have $41,981 to buy 100 shares of AAPL and I expect it to go up 10% this year, I can buy the stock and perhaps hedge my investment (which would eat into my potential profits) and I would need AAPL to go up 13.5% in order to make $5,700 against $21,000 in margin tied up.  On the the other hand, if I sell 2 2014 $300 puts for $28.50, I collect $5,700 TODAY and tie up $6,000 in ordinary margin and my worst case is owning 200 shares of AAPL for net $54,300 so my "risk" is spending $12,319 more than I intended but, for that, I get 100 more shares of AAPL at net $123.19 a share.  If you don't REALLY want to buy 100 shares of AAPL for $123.19 then WHY THE HELL would you be buying 100 shares at $419.81?"

  51. I with you on that Flip.  

  52. Virtual portfolio weekend updates:

    lflan, I didn't add any comments on your moves. 

    Phil - I have listed all the trades and current position of the 25KP portfolio for your review.

  53. Phil,
    I too want to make sure I understand Buying vs Selling spreads. For the TZA/Jerconn example you responded to, is this correct? If so, it seems different from numbers you stated or I am misunderstanding your response (all quotes per ToS):
    TZA Close 1/13: $23.81
    Buy TZA Jan 2013  $35 Put: Midpoint=$17.50, $11.19 ITM, Premium paid=$6.31
    Sell TZA Jan 2013 $25 Put, Midpoint=$8.60, $1.19 ITM, Premium sold=$7.41
    Buy TZA Jan 2013 $35/$25 Bear Put Spread, Midpoint=$9.03, Premium sold=$1.10

  54. S&P did downgrade the EFSF fund to AA+ today following the France downgrade.

  55. Phil and kallenjr, I too find that the TZA put spread doesn't compute.  Basically costs around $8 with max return around $10.

  56. Phil,
    To Kallen's point above, I think you had the 30/25 TZA Bear Put up (mid 4.60 in TradeStation) rather than the 35/25 spread.

  57. Autos/LV – I'll be with him this weekend. 

    QE3/Peedle – I think a disappointment in store if no mention at the Fed meeting on the 26th – you can't string people along for too long. Unfortunately, money is the new morality to our leaders.  Listen to Romney, a "religious" man who believes that our nation must be under God and that God wants the bottom 99% to know their place and stop complaining – it's like  a throwback to the middle ages!  I guess the next move will be to purge the heretics from the bottom 99% – I can see Newt as Grand Inquisitor and Santorum will, of course, be Defender of the Faith.  Ah, it will be good to have leaders who tell us how to think and what to believe again!  

    Thanks StJ – That's very nice. 

    Numbers/Kallen – Well I see that now too so I don't know if they changed or I read it wrong but $9 for a $10 spread makes no sense, nor does $4.60 for a $5 spread.  Obviously, if you can't get good prices the spread makes no sense.   You could go with a TNA call spread, as TNA is more reasonable with the $37/45 bull call spread at roughly $4 and then you'd only need to buy 5.  You lose the benefit of the double win, most likely but still a broad target zone and better selling premiums for short calls and puts.  

  58. Phil/Why does AAPL not use prison labor?
    There are currently at least thirty seven states that have sanctioned the outsourcing of prison labor by private corporations that base their businesses within our state prison system.
    The list of companies participating in this kind of labor schemes comprise some of the United States leading corporations.
    IBM, Boeing, Motorola, Microsoft, AT&T, Wireless, Texas Instrument, Dell, Compaq, Honeywell, Hewlett-Packard, Nortel, Lucent Technologies, 3Com, Intel, Northern Telecom, TWA, Nordstrom's, Revlon, Macy's, Pierre Cardin, Target Stores, among many others.
    Each and every one of these businesses are thrilled about the financial success produced by prison labor.

    I don't know why AAPL is not on the list, but my guess is that Chinese labor must be cheaper.

  59. Oh my… Just watched Romney.  Looks like I'm pushing all my chips into the Ron Paul camp if for no other reason than I love watching people on FOX news trying to explain away his support.  He's the only one not owned by this Orwellian nightmare system.  Are we destine to become a "capitalist" totalitarian state?

  60. This just out:
    Finnish foreign minister raps euro pact plan
    By Michael Stothard in Helsinki
    Finland’s foreign minister says a proposed new European fiscal treaty for the is “unnecessary and harmful”, raising fears that one of the few triple A rated countries left in the bloc could try to block the new rules.
    Erkki Tuomioja said in an interview with the Financial Times that Finland should not sign the proposed treaty enshrining a fiscal compact, and that “the majority of [the Finnish] parliament has the same view as I do”.
    He said the treaty, which would requires members to reduce their structural deficits to below 0.5 per cent of gross domestic product, was “about Germany’s domestic policy needs” and “we should not be taking orders from anybody.

  61. the only thing romney loves is money……….just another hypocrite like the rest.
    Phil……….at least McGovern (the CIA analyst) spoke out publically against the war and the contrived WMD falsehood as the premise for it. the witch herself VOTED for IT………and, not that i have anything against people making money, but i keep asking myself how people like Hclintion have become sooooo wealthy from being in a lifetime of public service/politics unless the answer is selling influence………… have to wonder how talented these people are to be able to run a country and accumulate such vast fortunes in such short time spans.
    what amazes me, and i really mean this, is that a flake like Romney can even get 1 vote. the interviews are painful to listen to. Romney says NOTHING which begs the question about the intelligence (or sheer stupidity) of the audience he is pitching.
    i am off the soap box on my personal views about politicians……..
    i guess we are onto earnings tomorrow so maybe we get some vol back in price. hope so. ….and the S&P other downgrade today……..
    i did the paper route too. always worked when i was a kid, and always had money

  62. GHASTLY// Newt as Torquemada!!!..althoughi think newt would be better at in this dedevilling of candidates would make obama say Saladin?..maybe Abelard?
    All i can say is what a bunch of lousy choices for America including the President..who couldnt run a hot dog stand (but he sure could sell em) i can't see Elder Mitt getting the nod..its a guaranteed loss to the GOP..i  had a single very revealing dealing with him he has been 'smitten by the bump of acquisition"..that intereaction at BCG  showed he wanted no one but himself to succeed and when you were in a room with him (and his hair) the room got smaller fast and he was very distracted. He had a chance to help a kid who had been admitted to 'his' B school.. that kid needed an unpaid internship as part of  fulfilling his admissions requirements..Mitt said no..later someone called me and said he couldnt stand the fact someone had been deferred without an undergraduate degree…he is named for a wonderful man who was a Mormon (of a different calling) was his father George..Mitt is a hollow man.

  63. one other thing i want to relay here, especially since it is MLK……….when i was a boy and had my paper route i delivered to maybe 7 or 8 black families that lived in a segregated part of the town next to the the town dump.
    the road was dirt and i walked it everyday except sundays. the people who lived there were direct descendants of slaves who had come north on the underground railway and escaped into canada, although i have to admit the treatment they got was pretty poor, and if you take into consideration when i was delivering papers  the shameful treatment lasted a pretty long time too.
    these people had nothing, but every saturday when i did my collections they always paid their paper bill on time.
    it is a real shame their history was not celebrated and their struggle was not understood by the local population.
    later in life when i was in the investment business i was invited to the opening of an upscale department store in downtown Montreal. MLK had performed in Ogilvies Tudor Room at one time as part of a  group known as the Fiske Jubilee Singers…….there is a modest black and white photograph of the MLK with the Fiske singers that hangs outside the door of the Tudor Room still to this day.
    it would be nice to see some politician of whatever strip step up and own moral responsibility while at the same time putting personal gain aside for the benefit of all………probably what it will take and angelcur is right as far as i can see.

  64. roro are you in montreal?

  65. i'll take a shot angelcur……….you can get me at rorotraderathotmaildotcom.
    you are welcome anytime whenever for whatever reason………you don't need a reason………i had no idea you had posted as i was writing that piece about delivering papers.

  66. angelcur……….the answer to your question is, yes.

  67. Angel,
    "As a result, Obama has brought in more money from employees of banks, hedge funds and other financial service companies than all of the GOP candidates combined, according to a Washington Post analysis of contribution data." (One could argue that WP  now has conservative side, but that doesn't mean these facts are incorrect.)
    And according to the same article Bain Capital employees gave Romney $34,000 and Obama $76,000. WTF?
    My earlier point: The war is between Labor and Finance, and the problem I have with Democrats, (and I am not a Republican, nor conservative) is that they have their hands securely in the pockets of both! Until we frame the arguement correctly and take off partisan rose colored glasses, we will scream at each other until we are exhausted and the real issues will remain out of focus. I have been reading Phil since 2008. I can't claim a trading history as long as yours, but certainly an investing history that much and longer. I too gain a subtle edge from Phil's intelect and view.  I respect others perspectives, but if ideas cannot compete on their own merits, and must be defended by attacking the person behind the idea, I know for sure that there is a problem at the core of the arguement. I do enjoy your often subtle and entertaining comments.

  68. Check out Zero Hedge's last article tonight. Didn't see it before I posted but a table of who contributed and how much is worth a thousand words.

  69. SAN ANTONIO, January 17, 2012 – Valero Energy Corporation (NYSE: VLONews) today announced that the company expects to report earnings per share in the range of $0.00 to $0.10 for the fourth quarter of 2011.  Included in this estimate is an after-tax benefit of approximately $161 million, or $0.29 per share, from a year-end LIFO inventory decrement.
    The fourth quarter 2011 results were negatively impacted by weak margins on refined products, particularly for gasoline and petrochemical feedstocks.  In addition, refining margins in the fourth quarter were negatively impacted by reduced discounts for heavy sour feedstocks and the narrowing of prices for West Texas Intermediate versus Brent crude oils, resulting in higher-priced crude oils flowing through the system.
    Despite the lower results expected for the fourth quarter, Valero expects to report its highest annual earnings per share since 2008 with full-year 2011 income from continuing operations per share in the range of $3.59 to $3.69, including the LIFO inventory benefit

  70. Let's say you buy a $40 call for $3 and sell a $45 call for $2 and then you paid net $1 for a $5 spread.  So, if you are wrong, you lose $1 and, if you are right, you win $4 so, if we assume being wrong and being right are random events – you can be wrong 4 out of 5 times and break even.  If you sell the $45 puts for $3 and buy the $40 puts for $2, you get a $1 credit and have made the exact same bet (that the stock will finish over $45).
    For both the bull call spread and the bull put spread, the P/L graph is flat below 40, increases dollar per dollar between 40 and 45 (slope of 1) and is flat above 45. Hence if the market price of the call spread is $1, the market price of the put spread should be $4, not $1. In other words, the market should price the two spreads so that the P/L is the same for every possible outcome, rather than price the call spread the same as the put spread.

  71. Futures are reaching last Thursday highs… Oil is $100 again and dollar a bit weak!

  72. chaps,
    I think Phil was referring to buying the 40/45 call spread or selling the 40/45 call spread. I don't think he mentioned Puts. Or am I missing your point?

  73. Futures up probably on this:
    News Alert
    from The Wall Street Journal

    China's gross domestic product rose 8.9% from a year earlier in the fourth quarter of 2011, slower than the 9.1% expansion in the third quarter, China's National Bureau of Statistics said Tuesday.

    The increase was bigger than the median 8.6% gain forecast by 12 economists in a Dow Jones Newswires survey.

    /ES- upside resistance in the 1310 area; Support at 1286. Technical resistance should be strong as it is the intersection of two trendlines.

  74. stjeanluc………..they are talking a trillion Euros for the Feb 29 LTRO and i guess the FED is still standing there with its  bazillion BAZOOKA
    the trade last week was buy into the European mkt for a rally and then sell it when NY opened.
    wonder what the playbook has in store this week, but with a bazillion from the FED backing a trillion of fun money from the ECB who the fuck knows?
    maybe 1245 for the S&P by the time 0930 est tomorrow? party like its your birthday

  75. Phil
    Fun in the oil patch. Now Iran is threatening its neighbors.,0,6929597.story

    Good article on oil. At least I thought so.  Looks like we may have more opportunities to short oil.

  76. /ES- check that- intersection of the trendlines is more like 1304-5.

  77. looks like it is 6400 for the DAX at 3AM

  78. Phil,
    everything is wonderful, in Mitt's own way………there is a politcal slogan.
    i know, i know,  i promised, but really, i will shut the f— up

  79. i love milos..nick the old four seasons hotel the habs..the bar at the ritz..first time i saw gretzky was at the old forum…

  80. just sold the AUD/CAD again at 1.0540 which puts cost at around 1.06 plus some so if it gets there (1.0650) i think i may sell it again.

  81. it is a very cool city………the french culture is a gift.
    i love the outdoor rinks for pickup hockey, but have slowed down on that score. the river views are gorgeous. ritz in boston on Arlington was a place a went to once in a while when i lived there but liked the Oak Room at the Copley on Dartmouth
    live here for now, but always liked the red wings.
    i think the ritz was redone

  82. SPARKY/ Its a type of doctrinaire attitude of unwaveringly left or right..its keeps the asshats in congress employed and the implicit understanding they have is to agree to disagree which insures  the further life of this fossilized corrupt system  ..these roots need extirpating..and frankly i don't care if its a republican or a democrat that does alien landing would be fine..we should all be embarassed that we dont' react to  the game as it plays out day in and day out and then have a national vomit day into the refllecitng pool..the stench wouldn't be any less palpable than the one wafting over the potomoc now..from sea to shing sea

  83. Phil regarding the above Euro post - that chart is missing probabilities for each outcome :)

  84. Romney will likely win because he may be the only thing Americans can agree on this year.  Obama has not provided leadership, only management. As a consequence, Romney's politics won't matter.  Ron Paul has no chance. Obama could win if he catches a break; too close to call for now..  

  85. Prisons/JMM – There's a reason that our country has just 5% of the World's population but 25% of the World's prisoners – it's good business!  We have 1 out of 100 adults in this county in jail, which is more than Russia (#2) with 0.6 and 10x more than UK or even the Global average (raised by US) of 0.125.  That's why "three strikes you're out" made so much sense to Conservatives – it was really called "three strikes and we get us a new slave!

    Asia in a good mood at midnight, up almost 2% in Hong Kong, up 1% Shanghai and India and 0.7% in Japan.  Of course Dollar down almost 1% as Euro pops to $1.2725 – a miraculous comeback since 6pm (1.265).  Oil back over $100, gold $1,659 – all look shortable to me but I've been reading so maybe not the best time to make a bet.  I need to switch my brain off to play this market!  

    Dow Futures over 12,450 so below that line (/YM) is a good place to go short and, of course, oil below $100 (/CL – now $100.21) and RUT below 770 (/TF – on that line now) – That's how I'd play the futures at the moment, especially if the Dollar bounces off 81.40.  

  86. 00//I don't think there is a chance that Romney could win..the US will never elect a Mormon the droves of Christian right wingers stay home if he's the nominee..scary to believe but listening to people in SC at my club talk about Joseph Smith and his talking 'lizard"..I interjected "that lizard was actually a salamander"..I got tthe following response form a Caolinian Yale grad..'OK then Mike A FANCY LIZARD"..forget friends who are serious Dems want him so badly..they want nothing to do with GIngie..

  87. RORO/ 5 Arlington was my home in Boston..loved it!

  88. Phil as always thanks for your help.Stupid me, I  have lost a few k playing the EK patent story..any wild option plays to get any of my money back? I always buy PREMIUM ! LOL

  89. Holy smokes, what happened to the BDI?
    It's fallen off a cliff! Is this dollar related only or what?

  90. the only thing I'll say about Ron Paul, who's one of the more likeable republicans (I like how he handles himself in the debates), is he is too old. An effective president will be in term 8 years to get his or her work done, so it's not how old you are now, but how old you;ll be in 8 years. You can't age discriminate when you're interviewing someone for a job, but that's not the case when you exercise your constitutional right and duty go in the booth, close the curtain and pull the lever.
    So Ron Paul will turn 85 in his potential 8th year. Reagan was 77 in his, and Reagan was definitely checking out near the end at that. (and read the link, Reagan makes a funny joke in there).

  91. Voted for it/Roro – Voted for what?   Do you not remember the environment at the time?  EVERYONE voted for it, Bush and his cronies were portraying anyone who didn't vote with them as traitors and, of course, the Administration was falsifying evidence of WMDs and murdering people who tried to bring contrary evidence to light, possibly including Senator Wellstone, who vocally spoke out against the idea of going to war in Iraq and also was sponsoring the "Wellstone Ammendment" to McCain-Feingold, which sought to close the loophole that would allow corporations to form Super Pacs.  

    Mitt/Angel – Yep, the more you get to know him, the less likable he becomes. 

    Donors/Sparky – I love the fact that it's now possible to taint a candidate simply by donating to them.  What a joke it is to see all the ways public opinion is manipulated by people with money…  Also, comparing Mitt Romney 2012 Primary Campaign to Obama 2008 Presidential Campaign is completely meaningless – it's not even apples to oranges, it's like apples to a Bic Pen.  

    Prices/Chaps – That's true when you look at the bull call spread vs. the bull put spread but think about it in short strangles.  In GMCR, for example (as it's on my screen at the moment), if we want to spend $1, we can pick up the Feb $50/57.50 bull call spread at $1 with GMCR at $46 and if you want to collect $1, you can buy the $36 puts for $1.05 and sell the $40 puts for $2.05 so both bullish bets that suffer from a move down but one much more so than the other.  If you were to sell the $57.50 puts ($12.10) and buy the $50 puts ($6.60), you would get a $5.50 credit so pretty much reciprocal there but then you need GMCR to be over $52.50 just to break even on the put side while the calls would have a 150% gain at $52.50 so many, many layers to discuss.  Also, the relative decay is miles apart and that's what really kills you in the end as the short put seller is the idiot paying the most premium and suffers decay the moment he enters the position.  

    Dollar getting weaker (81.35) and futures heading up, not down so far.  Shanghai taking off like a rocket – up 3.5% now, Hang Seng up 2.25%, Nikkei up 1%.  

    China GDP/Pstas – Now there's a number we can hang our hats on!  

    1,245/Roro – You mean 1,295?  

    Oil/DC – Not only is Iran on the warpath to support oil but now the Saudis want the band raised to $100.  I guess their short bets on Global markets are not paying off fast enough.  

    Probabilities/Yshen – Clearly a lot of effort is being put into keeping it together.  I think the problem most people have is that they think the ECB (or the Fed) will somehow run out of money.  I bet we could pull articles from 1975 where the greatest minds of the time would say the US will run a $100Bn deficit and there simply isn't enough money in the World to cover it.  Now that's considered a good month for us!  Back before the crash, I did an article predicting the BOJ would be using quadrillions on a regular basis by the end of this decade.  Maybe I'm a touch early but the point I was making was that we shouldn't make fun of Zimbabwe as all Global currencies were heading down that path at a very rapid rate.   

    Primaries/Angel – The Social Christian Conservatives got together this weekend and decided Santorum was their guy.  That's opened the door for Foster Friess to pledge another $500K to Rick's Super Pac in some kind of "one man buys 5,000 votes" deal.  Usually the Koch's go with Friess and, if they do, Romney could be buried by an avalanche of Santorum cash.  

    Wild plays/490 – Stay tuned, I'm sure we'll find a few this week. 

    BDI/BDC – No one is shipping anything.  There was no Christmas rush and now inventories are just sitting around while AA and many others shut down production but hey – look at the markets go! 

    81.35 holding on the Dollar at the moment.  $100.42, 12,478, 771.8, $1,659.50. 

    Ron Paul/BDC – He seems to be pretty energetic to me.  I'll take 4 years of Ron Paul over 8 years of Santorum.  Of course you want to play the statistics with age but Buffett was 77 5 years ago and Berkshire got some good bang for the buck for not putting him out to pasture yet.  Betty White just turned 90 and has a hit show and of course it's a rare thing for someone to be able to do the job at that age but I have never heard anyone ever even insinuate that Ron Paul is not up to the rigors of a campaign or the Presidency.  

  92. Good morning!

    Karen/Diamond – I think that's kind of an unfair thing to bring out about a person.  Is Rick so squeaky-clean that they have to dredge up his wife's old boyfriends?  This is the kind of crap that keeps good people out of politics – who wants this kind of scrutiny?

    The Hang Seng followed the Shanghai up 3.24% and the Shanghai popped to 4.18% at the close.  The Nikkei stated up 1.05% as the Dollar got weaker (now 81.16) and the BSE also gained 1.7% so everything is great in Asia.  Europe is in a pretty good mood with the FTSE up 1%, DAX up 1.6%, CAC up 1.4% and the Euro is at 1.2779, Pound $1.538 and 76.77 Yen to the Dollar.

    It's the same old first day of the week pre-market BS but we're in good technical territory so hard to bet against.  S&P 1,300 in Futuers (/ES) is a line we can short off and oil just touched $102 (/CL) and the Dow (/YM) tested 12,500 so a good line there to short off and the RUT just failed 775 to confirm. Of course all those lines can be played bullish if we pop over as well so let's watch that 81.15 line on the Dollar but I'm still leaning short until we break those lines again.  

  93. i meant 1350 for the S&P, ….not feeling so hot…….not far off with he DAX call
    i remember that weird time……Clinton voted for it. 29 Dem Senators voted against. ….the politics is so divisive
    The Iraq Resolution or the Iraq War Resolution (formally the Authorization for Use of Military Force Against Iraq Resolution of 2002

  94. 2:04 AM Asian stocks pop, with commodity-linked stocks showing strength. The Shanghai Composite, which earlier registered little response to China's GDP data, is now +4%. Elsewhere: Japan+1.1%. Hong Kong +2.3%. India +1.6%.

    6:00 AM Overseas: Japan +1.05%. Hong Kong +3.24%. China+4.13%. India +1.71%. London +0.91%. Paris +1.41%. Frankfurt+1.42%

    Tuesday's economic calendar:
    8:30 Empire State Mfg Survey

    Notable earnings before Tuesday's open: AMTDCCHKPEDUFRXMMRWFC

    Notable earnings after Tuesday's close: ADTNCREEFULTLLTC 

    China's urban population surpassed its rural population last year for the first time in the country's 5,000-year history, intensifying the challenge of providing jobs and social services. (see also: China GDP)

    China's Q4 GDP grew 8.9% Y/Y, the slowest growth since mid-2009, but ahead of expectations of 8.7%. For the entire year, growth clocked in at 9.2% vs. 10.4% in 2010.

    U.K. CPI comes in as expected at +0.4% M/M and +4.2% Y/Y in December, down from +4.8% Y/Y in November. Core CPI +3%, down from +3.2%. The easing was led by fuel and clothing.

    UK ‘already back in recession’, warn forecasters (Guardian)

    The eurozone's annual inflation fell to +2.7% in December from +3% in November. Core CPI steadied at +1.6%. 

    S&P goes ahead in downgrading the EFSF to double-A-plus from triple-A. The move was hardly a surprise, but could make things interesting when the rescue fund tries to sell six-month bills for the first time tomorrow.

    Spain sells €4.88B of 12-month and 18-month bills in its first auction since a two-notch ratings downgrade on Friday. Yields fell to 2.049% and 2.399% respectively, down from 4.050% and 4.226% in mid-December. Euro +0.9% vs. the dollar. - Probably propped up by ECB but it sounds good.

    Portugal's bond yields sky in the wake of Friday's S&P downgrade which brought the rating on the country's paper down to junk status. The 10-year bond is 125 bps higher to 13.71% (euro-era high is 14.13% hit in December), while the 2-year is up 140 bps to 14.07%.

    Crisis, what crisis?  Banks park a staggering €502B at the ECB's overnight facility, crossing the half a trillion mark for the first time ever. It's likely to be at least a temporary peak, as the ECB's monthly reserves cycle ends today; deposits generally drop when the new cycle begins and banks have more funding freedom.

    Germany's ZEW Economic Sentiment Indicator rises a whopping 32.2 points to -21.6. It's still below the historical average of 24.5, but suggests the next six months will see a stabilization of economic activity and that Germany will face a "dent" in its economy rather than a full-on recession. (previously)

    Greeks hold yet more strikes against austerity as officials from the EU-IMF-ECB troika visit Athens today to go through the books as part of efforts to put together the country's €130B rescue. Greece is due to renew talks tomorrow with private creditors over the terms of the haircut they'll take.

    How’s That Austerity Working? (Tim Duy’s Fed Watch)

    Why Greece Doesn’t Tell the Germans to Piss Off (MoJo)

    Irish stockbroker Davy sharply cuts its 2012 GDP growth estimate for the country to 0.4% from 1.7%, citing the deteriorating outlook for the rest of the EU region. "(The) benign environment underpinning fiscal plans is unravelling," says the firm, expecting the government will not hit its deficit targets in 2012 or 2013. The meme of the "success" of the Irish bailout may get tested in 2012.

    Game on again:  Oil futures are hovering in triple digits, +1.7% to $100.35, as France pushes for faster enforcement on an Iranian oil ban and Saudi Arabian oil minister Ali al-Naimi says the country wants to stabilize prices at around $100 this year.

    U.S. companies repurchased $397B of stock last year and issued $169B of new equity, marking the first market shrinkage since 2009. "Having that equity base shrink and starting from a relatively pessimistic point usually sets up pretty well in the long term," says money manager Laton Spahr. "It gives you some hope that valuations have perhaps bottomed.

    Apple Is Said to Ready iPad 3 With Sharper Screen, LTE Access (Bloomberg)

    Apocalypse How? Dire 2012 Forecasts (Bloomberg)

    Barron’s Roundtable 2012 (Barron’s)

  95. What you don't seem to remember Roro (and it was 21, not 29), was that it was not a resolution to go to war, that was just how it was quickly perverted by the Administration:


    The resolution "supported" and "encouraged" diplomatic efforts by President George W. Bush to "strictly enforce through the U.N. Security Council all relevant Security Council resolutions regarding Iraq" and "obtain prompt and decisive action by the Security Council to ensure that Iraq abandons its strategy of delay, evasion, and noncompliance and promptly and strictly complies with all relevant Security Council resolutions regarding Iraq."

    The resolution authorized President Bush to use the Armed Forces of the United States "as he determines to be necessary and appropriate" in order to "defend the national security of the United States against the continuing threat posed by Iraq; and enforce all relevant United Nations Security Council Resolutions regarding Iraq."

    At the time, the bill was sold as having to give Bush a credible stick to use in order to force Iraq to comply with the UN inspections.  They did comply, there were no weapons – but that wasn't the story we got over here and Bush used this resolution to march us to war, based on lie after lie after lie.


    The assertion such weapons posed a threat towards the U.S. was not supported by the available evidence at the time, according to an editorial in the New York Times. The Bush administration asserted that two small trailers that had been found in Iraq were "weapons factories," despite the fact that U.S. intelligence officials possessed evidence to the contrary at that time.[38] Weapon inspectors were given access to the alleged weapon factories, despite statements to the contrary by the Bush administration. Continuing these inspections was made impossible by the U.S.-led invasion of Iraq which forced the U.N. inspectors out, ignoring their requests for more time.[39]

    Skeptics argue that the administration knowingly distorted intelligence reports or ignored contrary information in constructing their case for the war.[40][41]

  96. I think that's probably the thing that bothers me most about the Iraq war – our own Government faked pictures of these trailers that were their "proof" of WMDs and committed this country to a multi-Trillion Dollar war that cost thousands of Americans their lives and was part of the sequence of events that destroyed our economy and ruined millions of lives but they all just walked away, not only scott-free but many of the same people who engineered this fraud are still active in politics.  Instead, Conservatives want to investigate whether on not Obama was born in Hawaii – as if THAT's the biggest lie in politics.  This is why we are doomed.  

  97. Well, we didn't get the entry signal earlier this morning but it was worth the wait as we're getting a nice little dip now.  Dollar 81.22 so 81.20 is now the stop line.  

  98. i think clinton tried to use that as an excuse later……that the bush admin duped people into supporting it…….which was accurate and also sick
    i think it is all pretty perverse or has become that way at least. i used to like clinton, but my impression is there is and was a lot more political calculus in her vote than she ever admitted later….she went along with it using the lame justification that was sold using fear and ignorance………it was her political cover to vote with bush when i think she thought it served her political purposes and then later tried to backtrack
    in my book all she had to do was admit she made a mistake but she would never own her own mistake……..i lost respect for her then.
    politics is so smarmy and dirty and divisive………i really think most of these people are sick and cannot tell the truth if it is starring them in the face.

  99. HRC
    Obama, in his famous speech, pointed out that the war in Iraq would cost an infinite amount of money, and last an infinite time, and that it was just a distraction from the Bush regime's involvement in the Enron scandal. HRC never answered or refuted any of these points (as far as I know). Given that her claim to be qualified to be President was based largely on having been in the White House for 8 years as a close confidant and advisor to a former POTUS, she should have had access to better behind-the-scenes information about the reality of WMD and the motives of the Bush regime. She had a chance to show leadership in opposition and she blew it. As Senator from New York State, she held one of the safest seats in politics, so she had no excuse.

  100. I too think Clinton  was just playing the political "safe" game, like a mutual fund manager dosen't want to fly too far from the pack or he will lose his job. Sadly politicans just care about themselves staying on the gravy train and keeping power – the country comes in a distant 2nd. Kind of like GS (as long as I got mine). Some are much worse than others but as a general statement I believe the above it true.