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Which Way Wednesday – Will Ben Blow It?

We are at a serious inflection point!  

As you can see from Springheel Jack's chart of the S&P, we've fallen out of that uptrending range and tested our support yesterday, saved only by a very weak Dollar in anticipation of massive dilution of said Dollar by our own Federal Reserve commencing sometime around 2:30 this afternoon (FOMC announcement at 12:30, Bernanke Speaks at 2:15 and "new open guidelines" somewhere around there) that has sent the Dollar down 2.5% in two weeks.  

The Fed will do whatever the Fed will do but, since easing is already widely anticipated, we've generally bet against it into this meeting.  Last night, the bears got quite a jolt at the end of a generally bearish day when AAPL announced blow-out earnings, with an 83% improvement in American sales and a 219% gain in Japan. Only the slow rollout of IPhones in China (remember the riots at the Apple store) stopped the company from having a $50Bn quarter.

This is good stuff, it's nice to know that it's still possible for US companies to USE (rather than complain about) the changing Global Infrastructure to create, manufacture and distribute profits to make oodles and oodles of money.  So much money, in fact, that AAPL now has $97,500,000,000 in cash and investments on their books – which kind of puts their soon to be market-leading $450Bn market cap into perspective.  If AAPL were a country, it would likely be passing Argentina ($435Bn GDP) to become the 28th largest country in the World and settling in right behind Norway ($479Bn) and Iran ($475Bn) – not bad for a country started by two hippies in a garage, right?  

Still AAPL is only 1/33 of the entire US GDP so let's not get too excited and pay a little attention to what the other 96.7% of America is up to.  That was neatly summarized for us by President Obama last night in his 4th State of the Union message.  

I'm already a fan but I thought it was a great speech and I'm sure a lot of top 1%'ers were tossing and turning last night as the President asked for a 30% minimum tax on people earning over $1M per year.  While that may not seem like a big deal to you – to someone earning $1Bn and paying a Romney-like 13% tax rate – that's a $170M kick in the ass – annually.  Methinks the Republicans will find their campaign funds overflowing with contributions after that one!  

Gone was the soaring language of his last State of the Union address, when the president spoke of winning the future — a challenge he likened to “our generation’s Sputnik moment.” With the tents of the Occupy protesters catching snow in American cities, he was tapping into a national sense of grievance. “When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich,” Mr. Obama said, answering Mr. Romney’s charge that the president engages in the “bitter politics of envy.” “It’s because they understand that when I get tax breaks I don’t need and the country can’t afford, it either adds to the deficit or somebody else has to make up the difference.”

Now I know many of you out there think it's horrible that a person earnings $2M a year will be asked to pay an additional $150,000 on their 2nd Million in income – because that tax is more than 3 times the average US household's earnings and leaves the poor Job Creator with only $1,550,000 after taxes to scrape by on (30 times the average family's entire pre-tax income) and it's a valid point but keep in mind there's always a bigger fish.

Romney, for example, earned $42.5M and paid $6.2M in taxes in the past two years.  Under Obama's proposal, he would have to pay about $13M – this could possibly make Mitt Romney the most motivated Presidential Candidate of all time!  Romney's tax rate of 13.9% is very fair and you can read his 500-page tax return yourself to understand why.  Every American is free to hire a team of accountants, tax planners and tax lawyers to bury the IRS in paperwork and chop off 60% of their taxes so why should Romney not take full advantage of what is available to any average family?  

GE is one of our Corporate Citizens and they paid more in dividends ($26Bn) over the past 3 years than taxes ($954M) on $488Bn in sales and $104Bn in EBITDA – that's not even 1%, which means Obama wants to whack GE for $30Bn!  

Now, if you have $2M in income, while you may think it's terrible that the President would like to get $150,000 from you, perhaps you should consider that the $10Bn (annually) that GE and other Corporate Criminals would have to pay covers 66,666 (coincidence?) of your $150,000 payments.  That's right – the reason you need to pay $150,000 more is BECAUSE GE pays zero.  THAT is the real problem in America – Corporate Taxes – or lack thereof!

While our official Corporate tax rate is 35%, the effective tax rate paid by US Corporations is 6% – barely 1% of our GDP while ordinary citizens cough up 12% of our GDP in taxes to compensate.  In fact, if Corporations actually paid 35% in taxes – people wouldn't need to pay any.  That is not the spin you will ever get from the MSM – who happen to be owned by Corporations but that is what this is really all about.  It is the UNWILLINGNESS of the GOP to close Corporate tax loopholes that creates the need to tax the top 10% – isn't that ironic – it's like they say they are working for you but they are totally lying to your face (unless you happen to OWN one of those Corporations that pay 6% – then they ARE working for you). 


Bernanke's solution to this problem is, of course – to give more money to Corporations.  Obama also wants to give more tax breaks to Corporations but at least he is tying it to the provision of creating ordinary jobs.  

We'll have to wait for the official word to see how this all plays out but, officially, I'm still bearish – but I am willing to change my mind for about $1 Trillion Dollars!  

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  1. Oil lines

    R3 – 102
    R2 – 101
    R1 – 100
    PP – 99.16
    S1 – 98.14
    S2 – 97.23
    S3 – 96.21

    Yesterday's high and low – 100.18 / 98.25

    Breakout lines – 103.30 / 93.19

  2. Obama must have been reading Adam Smith in his vacation. Extracts from The Wealth of Nations:

    What improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves well fed, clothed, and lodged.


    That a little more plenty than ordinary may render some workmen idle, cannot well be doubted; but that it should have that effect upon the greater part, or that men in general should work better when they are ill fed than when they are well fed, when they are disheartened than when they are in good spirits, when they are frequently sick than when they are in good health, seems not very probable.

    And finally…

    The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.

    He would be branded a socialist today by the GOP candidates!

  3. Phil/Taxes

    How do you expect the market will react if they increase capital gains up to the income tax rate?
    As for the SOTU address, I couldn't take more than a few minutes of it.  I don't know what was worst, Obama or the idiots in the audience.  I couldn't help but think about this when I listened to Obama's expansive ideology and pandering to every class except the 1%'ers. 
    I think we are well on being the next failed state.

  4. PP for today:

  5. FAS Strangle – Looks like FAS will open lower this morning. I will probably close the 82 calls quickly depending where they open and not do anything until after the Fed announcement this afternoon.

  6. ILMN….being bought by Roche…..Roche is on a buying frenzy. 

  7. LFlantheman / AAPL
    Any words of widsom for the weekly 425/430 spread?  Close it down or pull the short and let it run?

  8. "… 30% minimum tax on people earning over $1M per year.  While that may not seem like a big deal to you – to someone earning $1Bn and paying a Romney-like 13% tax rate – that's a $170M kick in the ass – annually…."
    But what does anyone actually do with this kind of money? It is just vanity. My current living expenses are about $1200 per month, (including health insurance) and I live in complete luxury and have all that I could possibly want and then some. My standard of living is considerably better than that enjoyed by the most wealthy of the Roman emperors (mind you they didn't even have potatoes.) But even if I played golf and went sailing every day and gave six other people $1000 per week each to be my ser vants (chauffeur, cook, housemaid, personal trainer, masseuse, secretary) and ten other people $1000 per week in income support,  educational expenses, etc , my expenditure would still not get close to $1 million per year, so any tax that I had to pay on my income over $1 million per year would still just be a number on a piece of paper and would not affect me in any way.
    To the man who pleases him, God gives wisdom, knowledge and happiness, but to the sinner he gives the task of gathering and storing up wealth …. This too is meaningless, a chasing after the wind.    [Ecclesiastes2:22]


  9. jmm – thanks for the quote. A good reminder of what I am!

  10. stjean/working conditions in the US in 1840
    I happened to arrive at the first factory just as the dinner hour was over, and the girls were returning to their work; indeed the stairs of the mill were thronged with them as I ascended. They were all well dressed, but not to my thinking above their condition; for I like to see the humbler classes of society careful of their dress and appearance, and even, if they please, decorated with such little trinkets as come within the compass of their means…
    These girls, as I have said, were all well dressed: and that phrase necessarily includes extreme cleanliness. They had serviceable bonnets, good warm cloaks, and shawls; and were not above clogs and pattens. Moreover, there were places in the mill in which they could deposit these things without injury; and there were conveniences for washing. They were healthy in appearance, many of them remarkably so, and had the manners and deportment of young women: not of degraded brutes of burden.
    [Charles Dickens: American Notes (1842),  Chapter 4, A Visit  to a Factory in Lowell, Mass.]

  11. Money / Jmm – My thoughts exactly. As my best friend usually says, it's not the taxes that you pay that are important, it's the money that you have left after taxes. So yes, if you make $10 millions and have to pay 40%, you pay $4 millions in taxes, but have $6 millions left. That's still 200 times the average salary here and plenty to live on. But these same people insist on people making 200 times less than they do to pay their "fair share" as well….

  12. DEPO news.  This one will also be wonderful for PK patients. 

  13. FAS Strangle – Close the 82 calls…. We'll take what we can now!

  14. Good Morning!
    exec/failed state   Enjoy!

  15. jmm/
    Now you have let the cat out of the bag……Romney and his peers will be coming down to live in your land of luxury….so, they can pile up more money…… LOL

  16. Phil, both short positions show a 50% profit ahead of the Fed. Do you want to ride them?

  17. WTF is CMG up again???

  18. Phil/25KP – would you suggest getting out of the MON short calls ahead of FOMC?

  19. Pharm – what is your take on IMGN now?  From an earlier spread, I was assigned 1000 shares, hold on to them or sell them? 

  20. 'only' 18K shares on CMG jabo.  I have been trying to short that beast off and on for over a year to no avail…..some day.

  21. jmm
    Where do you live?

  22. Wow…..

  23. jercon – not sure what your basis is, but I would sell a higher call (3/4 cover).  I like them a ton…..

  24. Good morning!    AAPL 50k  looking mighty fine this morning.  I have placed an order to close the Jan 425/430 bcs for a credit of 4.95.   I won't take a penny less because the spread is worth 5.00 today and it will be worth 5.00 on Friday.  The other bull call spreads I will leave alone for now.  

  25. Phil,
    For the TRILLION are you thinking an outsized long trade for OIL?

  26. Good morning! 

    Got caught up on a CC for the last hour, couldn't get off but looks like we were right to stay bearish as Angela tanked the markets: 

    9:24 AM Angela Merkel sticks out her chin in Davos to say that Germany doesn't have "unlimited resources" to pay for a European rescue package. She notes that a strong Germany – not a broke Germany – is better for Europe as a whole.

    Oil bravely holding $98 ahead of inventories, Nas giving up most of yesterday's gains but morning sell-off will give way to some optimism, I would think, into the 12:30 Fed release.   

    Dollar 80.37, off the highs, Euro at $1.296 and watch the Pound at $1.558 as below that $1.55 line is very bad.  Yen pinned at 78, EUR/CHF at $1.2078.   

    Gold $1,654, silver $31.67, copper $3.79, nat gas $2.63 and gasoline $2.813 – certainly not a group I want to be in.  

    DMND flying still -isn't that special?  

    At the open: Dow -0.42% to 12622. S&P -0.26% to 1311. Nasdaq +0.82% to 2454.

    Treasurys: 30-year -0.04%. 10-yr +0.02%. 5-yr 0%.

    Commodities: Crude -0.62% to $98.33. Gold -0.49% to $1656.35.

    Currencies: Euro -0.49% vs. dollar. Yen +0.49%. Pound +0.17%.

    Market preview: Apple charges 9.1% higher following its mega Q4 and is taking Nasdaq futures (+0.8%) with it. However,eurozone woes are helping to cause a divergence with S&P futures, which are -0.3%, while Europe is lower as well. Illumina +40% after ahostile bid from Roche. From the earnings waterfall, CA +16% and Textron +8.75% but Ericsson -15%

    Tech stocks could enjoy an early pop after Apple's (AAPL)blockbuster report, but it may not mean much for the broader market. Each time Apple has gapped up 5% or more on the morning after earnings to a new 52-week high – 11 times in the past 14 years – the Nasdaq 100 has typically been lower one month later, by an average decline of more than 3%, according to Sundial's Jason Goepfert.

    Although eurozone woes have hit Germany's economy, the country is still a safe haven, with yields at its latest auction of 30-year bills falling to a euro-era record low of 2.62% from 2.82% at the previous sale in October. €5.04B of bids were made vs. €3B on offer.

    While politicians vex over Greece, Portuguese CDS pricescontinue to hit fresh records on fears that the country may also need to restructure its debt. The spread on the 5-year CDS widens to 1,310 bps from 1,279 bps yesterday, meaning that it costs $1.31M/year to insure $10M of debt against default for five years. (previous)

    The IMF is reportedly pressing the ECB and other entities to take writeoffs on Greek government bonds despite facing ongoing deep resistance. Christine Lagarde dances around the issue – telling reporters that the balance between the participation of the private and public sector is a "concerning question."

    The Baltic Dry Index loses another 4% – carving out another low after moving down 54% YTD. Analysts aren't worrying as much as they did in the past when the canary in the coal mine stopped whistling – as they tie the move to a global oversupply of ships.

    Boeing (BA): Q4 EPS of $1.32 beats by $0.31. Revenue of $19.6B (+18% Y/Y) beats by $220M. Shares -0.6% premarket. (PR)

    More on Boeing's (BAQ4: Commercial Airplanes revenue increased 31% to $10.7B. Boeing Defense, Space & Security's sales grew 4% to $8.5B, while operating margin was 10.2%. Backlog grew to $356B, including $103B of orders during 2011. Sets 2012 guidance for revenue of $78B-$80B and EPS falling in a range of $4.05-$4.25. Expects cash flow of greater than $5B including $1.5B of discretionary pension contributions. Shares -0.9% premarket. (PR)

    Corning (GLW): Q4 EPS of $0.33 in-line. Revenue of $1.89B (+7% Y/Y) beats by $0.05B. Company expects significant double-digit price declines over the cumulative two-quarter period of Q4 and Q1. Shares -4.4% premarket. (PR)

    Hudson City Bancorp (HCBK): Q4 EPS of $0.12 misses by $0.03. Shares -1.4% pramerket. (PR)

    The new gold standard for Apple's (AAPL) target price: $650, from Morgan Keegan and Cannacord after the company'sblowout quarterKeegan sees 15x its FY12 EPS estimate as reasonable given its expectation of "substantial double-digit EPS growth beyond 2012." Cannacord eyes continued growth driven by new product introductions such as the iPad 3. AAPL +8.2%premarket, to $455. (earlier

  27. stjeanluc…Thanks for the portfolio update today and every day.  We have doubled the AAPL portfolio value in 50 days!   I am really happy about that.   My goal now is to double it again before August 1st.   I think we can do it.  

  28. Jabp/Pharm/CMG — Misery loves company.  I thought I was the only one dumb enough to short them — at least, that's how the stock seems to behave!

  29. Phil, not sure whether it is protocol to ever break the veil of anonymity on this board, but on Bloomberg today I make some points that echo what you have been saying for a very long time, and with which regular readers of the chat will be familiar:


  30. P.S.  - My short gold calls are looking like a stroke of genius, on the other hand.  Next stop, $1500?

  31. I had a friend years ago, Vietnam Vet who was in the thick of combat and experienced much in Vietnam.  He was very blue collar and used to butcher meat for a large grocery chain.  After 20 years of corporate bullsh** he quit to restore antique and muscle cars (great talent with turning junk to treasure with welding, fine sanding and paint).  Many wealthy people would approach him to restore cars and beat him down on price…. Many, he would tell to F**koff.  He always said, he would like to drop them in the jungles and see their survival skills….. he knew, he would make it out……. LOL  

  32. 1020/Sunshine

    Nice,  I feel better now.

  33. exec – :)

  34. lflan – You are welcome! I really hope you can pull that off for August, that would be phenomenal!

  35. The low yesterday established a support trendline from the Dec 19th low on SPX:. Testing that now:

  36. SPX rising support on the hourly chart now broken. We might see a bounce here, but a new high seems unlikely before a correction. 

  37. Lflan/Phil – thank you guys so much for your guidance.  I religiously follow about 5 stocks but AAPL being the motherload.  I have done very well for myself following you guys.  Much praise and many thanks.   

  38. Oh also – what's the verdict on NFLX?

  39. Fyi for the OXY trade:
    Occidental Petroleum (OXY): Q4 EPS of $2.02 beats by $0.08. Revenue of $6B (+19.2% Y/Y)beats by $0.35B.

  40. Phil,
    From Jamie Coleman at FOREXLIVE; "Expect FED to keep the notion of QE as an option but only to be used in case of the current modest recovery shows signs of stalling. If Europe develops deeper into crisis, QE is a clear option".
    This kind of assessment fits pretty well with managing the psychology of QE as has been pointed out in discussions late last week and this week by zeroxzero.
    If this is the call by the FED how do you think the market will react? Big question.
    My impression so far is the central banks have pretty successfully created a psychological environment of the market being surrounded by a minefield of QEs, both real and faux, and both working as part of the same design…….kind of puts limits on a downside with the threat always being there as a reminder of risk of selling TOO MUCH.

  41. Adam Smith/StJ – Actually a Commie, Obama's a Socialist and this Smith guy sounds way worse – maybe Santorum can have him investigated (I figure Newt and Romney may actually know who he is).  Good overbought list, thanks! 

    Capital gains/Exec – Well, I can't see saying – I'm not going to play the market anymore because I can make more money at the track or the craps table.  As Buffett said, he's never heard of anyone not making money to avoid paying taxes – lowering cap gains is meant to encourage long-term investments in corporations but the way funds operate, all gains are capital gains even if they exclusively HFT so it's BS and it doesn't have any social value and it funnels money away from poor people (who can't participate in hedge funds by law) and gives it to rich people in the form of lower taxes and more income so good riddance to it – even though it will, of course, affect me too. 

    Again, people fail to appreciate that a strong Middle Class is GOOD for the top 10% – it means they have more money to give us.  It means our cousins don't need loans and our parents don't have to eat cat food in some crummy home.  It means our country isn't $16.5Tn in debt and that we have the best roads, rails, internet, air, water, etc – these are some of the things you pay for when you contribute to your Nation's well-being.  We used to do that, then a bunch of scavengers showed up and declared us too healthy to live and have spent the last 30 years picking the meat off the bones of our still-living (barely now) country. 

    What do they do/JMM – I know, the worst part is (and I tried to explain this to a Billionaire in Florida this weekend) that the people who fly in a private jet use as much gas as 50 people flying in a commercial jet   That raises the price of gas for EVERYBODY.  I had a chart last week illustrating that "good" restaurants simply waste a lot more food than "cheap" ones (mostly in preparation, as they are more selective of ingredients) – well that food wasted makes the food everyone else eats more expensive.  People who buy 100 acres of land make the land for 100 other families more expensive, etc – so the COST to society of some people having ridiculous amounts of money is tremendous and it's completely ridiculous when those same people are unwilling to contribute to the greater good.  They take but they do not give – it's that simple.  

    This guy has about $4.5Bn and if he just stuck it in a 4% bond, he would make $180M a year – $500,000 a day.  Every hour he's awake that he doesn't spend $30,000, it just gets added to his money pile.  If he manages to scrape by on $100M a year and there is no inheritance tax, in 20 years he leaves his kid (or clone, more likely) $6.1Bn and if during that time he is able to secure a 5% tax-free bond, then he has over $300M a year to live on.  If he spends half for the next 40 years, he has $12Bn and $600M a year to live on etc until, in about 200 years – he has as much money as Gates from just sitting around and not spending more than $1M a day on average.  

    This is happening now with thousands of people around the world and where do you think the money comes from?  It is sucked away from the rest of society until, long-term, those people in the Forbes 1,000 will literally have all the money in the World.  This madness has to stop and it will stop, either voluntarily (doubtful) or violently down the road.  

    I like the way that AAPL trades in Asia and Europe for 12 hours after earnings but US traders think they are smarter than those people and run the price up $10 at the open – on a major stock like AAPL, 12 hours of price discovery usually does the trick!  

  42. Phil, 

    Current policies impoverishing the middle class. Very bad longer term. 

  43. Phil / Feb BKS Put in 25K.  Looks like it's up around 66%.  Pull it? 

  44. Sorry Nicha but that's just a quote to keep poor people from complaining.  8)  

    CMG/Jabob – Just silliness, I'd ignore.  

    FAS Money/StJ – $80.17, right in our range and we don't know that the Fed will do so why risk?  Let's buy it all back and go clean into the afternoon.  

    AA Money/StJ – $10.14 in anticipation of QE3 and the Feb $9s can roll to 10 July $10s ($1.08) against 5 short $10 puts (now $1) which isn't great but it's another $100 a month, which was our goal anyway.  Not to do this now, just looking at the outs.  

    IWM Money/StJ – Same as FAS money, not worth risking the Fed so we should clean house and reset later.  

  45. Mick Jagger had the good taste to bail on Davos.  It would be embarrassing for "Street Fighting Man's" author to do less, I suppose.

  46. MON/Jerconn – I'll be contemplating those shortly.  

    Very nice on AAPL Portfolio – up 100% already is very impressive.  

    Oil build 3.6Mb, gasoline down 400K and distilates down 2.5Mb is exactly what I said last night and oil just tested $97.50 but it should be a fight for every dollar lower now – very bouncy.  

    EIA Petroleum Inventories: Crude +3.6M vs. consensus of +0.7M. Gasoline -0.4M vs. consensus of +1.4M. Distillates -2.5Mvs. consensus of -0.5M. Futures -1.19% to $97.78.

  47. Phil:  I have a small position in the AAPL 300/450 bull call spread, off-set by AAPL 2014 300 puts.  Profit is now about 50%. Normally, I'd take it on a spread that has so long to run, but I am worried that I may not be able to reload.  After yesterday's earnings, should I just forget about this spread and wait?

  48. Phil / Berkshire Idea
    I was at a party this weekend and met a investor from Texas.  He started up a company that buy's cheap homes from the banks, fixes them up a little bit with simple things to make them "look" nice.  Paint, new rugs, towels, etc… eye candy.  Then he will figure out the property taxes, insurance, etc.  Once that's down he's packages it into a note with a interest rate around 11%.  That note might then be paid off around 500-600 per month.  That payment is lower than the rent someone would pay to rent a comparable house.  
    He then finds a buyer for the house who makes the monthly payments on the note.  The buyer get's to "buy" the house and not feel like he's renting.  His investors return 11% on that property.  Once the note is payed off the house is owned by the buyer.  Seems like a good system that's a win-win for everyone.  Just a thought….

  49. Phil/ AAPL protection
    Good morning and thanks for your help over past couple of days!
    Here is what I did to protect my hypothetical 1000 AAPL shares before earnings.
    B 10 feb 420 puts @ 12.70
    S 10 feb 400 puts @ 5.60
    S 10 feb 385 puts @ 2.66
    Net cost for protection: $5.04 per share before earnings.
    This morning, I sold the $420 puts for 1.20
    The short puts I will allow to expire.
    I also sold 5 AAPL Mar 460 calls for $9.50
    If my short puts expire worthless and the short calls expire worthless, it will have cost me $1 per share for the protection. Worst case scenario, I may have to roll the short calls.

    So, question for you, Phil is: was there a better way to do this?

  50. interesting…….OIl inventory up 3.6 million/barrels, and price bounces from 97.50 up to 98.

  51. FAS Money – Buying back all short options. FAS has moved up a bit since this morning but still a profit on all side.

    IWM Money – Buying back all short options as well in TNA.

  52. burbenn/housing
    At 100k, 11% and say a payment of $925; It would take about 510 months to pay that off…without any writeoffs for interest…seems like a win for the master not sure about the servant, except the servant can bail and I assume lose all the payments toward the principal.

  53. Phil/Gains

    Times have changed, however, there are still some buy and hold dividend seeking investors still left.  There is a relatively large contingent that believe raising CG will negatively effect the market which in turn will snowball throughout the economy.  (pensions, investment savings, retirement accounts etc.)
    I just believe that the Dems are being disingenuous with the entire issue and it's nothing more than a class envy campaign ploy.  Some say that you can take 100% of the top 1% income and it would hardly put a dent in the deficit.  I never ran the numbers so I don't know if that comment is accurate, and the politicians lie so fluently that who knows what true anymore.  What I do know is that if they raise gains and it causes the market to drop, then anything they hope to gain from the top 1% will be offset ten fold by the damage to the economy from the falling market.
    Of course if that happens, then the politicians can campaign next term on how they have great ideas to fix the mess they created, and we all know how good they are at fixing their messes.

  54. Phil
    Your thoughts on HCBK earnings and the stock reaction afterwards (up 2.54% $7.28). Thank you.

  55. $25KP:

    • MON – $79.73 – it's not really a profit since we rolled.  I don't have reason to change my value ($75) and these calls can be rolled to 4 long March $80s ($2.75) and 4 short $77.50s ($2) about even so that's a comfy exit strategy so no reason to panic into the Fed unless there is no way you can go 2x the March $82.50s (now $1.69) if we pop 5% (doubtful but possible).  
    • DMND – $36.69 very nice, at the money now.  At this point we need to consider that our max gain on the spread is $8 and we can cash out for $7.50 so now it's no longer a question of are we worried DMND will under-perform but are we worried they will come roaring back to their former glory.  As $45 was my original and conservative (I thought) target for them – I'm not inclined to get out this early, tempting though it may be.  
    • BKS – $12.50 is Fine and dandy.  At .20, this is a place where you can free up margin ($500) if you need it but I see no point in throwing away $100 to free up $500 for 23 days. 
    • SQQQ – $15.84 below our comfort zone but they either get worse or better later and I think better.  
    • MA – $343.27 is not very impressive but this is a bet on the Fed blowing it and earnings missing so holding 
    • XRT – $55.14 is crazy!  Likely we'll end up cashing out the March calls and rolling the Febs to naked if we don't get a sell-off, that would put $200 in our pocket against, what at this moment would be naked short March $53 calls (now $3.15). 
    • GLL – $17.50 is on track but also QE-dependent. 
    • SLM – $14.60 also on track but this one is bullish.  

    On the whole, much more balanced than we were.  Once we have the Fed behind us, we'll be able to make more bets but, for now, we just need to see where our current batch shakes out.  

  56. Good morning, nothing new……again:


    IWM    75.54,  75.80,  76.02,  76.36,  76.66,  76.82,  77.04,  77.20,  77.48,  77.96,  78.34  and  78.78


    I am currently in TNA off 78.34; I will likely be in cash at 12.30 !!    Good hunting !!

  57. I've heard of people buying and rehab'ing homes here in CA, finding people to move into the homes and then selling the notes to CalPERS.

  58. So exec,
    then are you saying you would hold less investments in the stock market and more in your passbook savings account? Seems like a standard GOP response, the job creators would just all move to Monaco, I guess. where would the money then flow to in order to maintain the lower tax rate, just asking?

  59. i agree with exec's take that "politicians lie so fluently that who knows what is true anymore"…….right to the crux of the real issue and it does not matter what side of the isle they lie from, they all lie.
    just my impression and hate to come across like a cynic, but the sad part is it is my impression, and i bet i am in the top 99.9% on that call.

  60. Updated FAS Money and IWM Money

  61. Burrben, so the guy makes the potential buyer obligated to pay the expenses (taxes insurance etc.) and rent. So if the person stops paying on the note and rent the investor is stuck with the 11% note and a deadbeat renter?

  62. wealthwarrior
    Here is where  I live.

  63. Homes 
    I don't know all the gritty details.  I know that the investment company pays the taxes and insurance FOR the "buyer" of the home out of the monthly payment, so the property doesn't go into a lein or fall out of insurance.  If the person stop's paying, after two months they are evicted, and they find another buyer and the note starts over.  The payments aren't more than $600/mo.  
    That's about all I know.  I could find out more next time we talk.  

  64. BTU (Peabody Coal)
    Well, further to discussion yesterday, it is down 3% today, so that is 3% saved already by masterful inaction. The $25 2013 put can be sold for a hair over $2, so that represents 8% annualized in a cash or IRA account, more in a margin account, but I would not be surprised to see the same puts priced even higher within the next quarter.

  65. pharmboy,
    Any thoughts on Zogenix on their sustained release hydrocodone? Thanks

  66. Spreadsheet madnesss!!


    I figured out a way to get google docs to parse the yahoo options price pages.   So, the IRA Portfolio should automatically update itself.  The portfolio will be accurate at the close of each day however intra day the stock quotes come from GOOG and the options quotes come from YAHOO and they are on different delays so if things are moving around prices will get out of wack.  But, it should be perfect at the close of each day.

  67. Phil / DMND – I'm in the June 30/44 bull call spread (it's up about 4.5k) and sold the June 20 puts back on 12/13.  I sold the 44s at $3.45.  is it worth rolling them up or taking them out for $1k so I can participate in the potential extra upside?  I'm not sure on timing re the different investigations but if they are resolved favorably then I would think this will rise well above 44.  what would you do here?

  68. Phil, was that an official roll on MON or a wait and see after the FED? On the 4 short 77.50s ($2) was that the March puts?

  69. Viruses
    I just had half an hour of downtime on my laptop as I was hit with a virus program that called itself "System check" and alleged that my hard drive was operating more than 20% below the correct speed and that the system was overheating.  A payment of $82.50 was demanded by VISA  to get the full "System Check " program and have it "repaired". I have a cpoy of the system on a backup hard drive, but I was able to reboot in  Safe Mode and use System Restore to go back in time a  week (and cancel out some losing trades!, not.)
    Why can't Congress enact a SOPA law to shut down VISA if they process payments for these crooks? VISA clearly benefits from this kind of cyber crime, which cannot be achieved without the use of a credit card or debit card processing system, and which must cause  thousands of computers to be prematurely replaced or repaired at expense to the owners. If this was someone putting sugar in gasoline pumps, then offering to flush your system,  they would soon be defined as a terrorist and given a nice vacation in Cuba with plenty of water to drink up their nose.

  70. Homes in Cal./ Inkarri1982
    I have a friend whose been making a good living for years in LA doing that.

  71. CL/   Phil,   What's up with oil.  I got a nice .40 drop off 98 today but now it's testing 99.50.  Wish I'd gone long at 97.50.  any clue why the 2.00 surge?

  72. maybe the OIL barons got tipped off ……….up $2 off the inventory number.

  73. craig / yahoo — A couple of things to watch out for: 1) Google caches pages retrieved by UrlFetchApp so you need to add an extra "&param=" to the url making it unique to force the fetch (I used a timestamp). 2) You need to force the option quote to update somehow. Using a trigger will work if you want to walk the option cells. I used the underlying quote as an input to the option quote fetch function. That works but the fetches are fairly often and when you start fetching a lot of quotes, you'll end up with a "service invoked too many times error". Probably not a problem for a small spreadsheet (< 50 quotes or so).

  74. Spreadsheet / Craig – I use the Google prices to update to the stock prices, but pulling the Yahoo options quotes looks way to risky for me! Actually, the Google stock prices have messed up some my calculations – still need to track the problem. But let me know how that works for you.

  75. Craig, would you mind posting that link again?

  76. Be ready to take profit here !!    (IWM 78.78)


    This would be a double top if we fail !!

  77. Pump up….Really, I mean really?

  78. It might be worthwhile taking a flyer on gold going into Ben…it should launch if he confirms QE3

  79. stjeanluc / google — Yeah, Google's tag line should be "It's beta, but hey! good enough for our users!" Spreadsheets seem to get f*cked up once a month or so in some way or another.  It use to be worse. Make sure you make backups and make sure you have another way to track things. Grabbing yahoo quotes isn't all that risky, you just need to be aware of the limits. I wouldn't trade off of yahoo's 20 minute delayed data anyway.
    Oh, and if you need to force a recalc of an entire sheet (which I've had to do on several occasions), open the script editor and modify the script and save it (add a space or something).

  80. Lflan
    Well done!
    Now how about a $500,000 Aapl portfolio?
    Yes, one could simply multiply the $50k portfolio by 10 but I imagine your risk tolerances will be different for the two portfolios?

  81. reuters has quotes for Google spreadsheets FWIW.

  82. I still say no chance of QE3 with inflation as high as it is and oil as high as it is.  Think he will confirm zero interest forever and give hints again to QE3 later in the year if needed.  Still have no idea what that will do to the market but hoping it tanks.

  83. JRW — nice call! :envy:

  84. Pharm / Reuters — for options? got a link? Google has built-in stock quotes.

  85. Quotes / Pharm – Stock and options? Free?

  86. For those who like to use spreadsheets to pull in stock or economic info this guy wrote a add-in for Excel that freaking rocks.
    It allows you to directly link to anything on the web through Excel. It also has built in functions to pull from Federal Reserve Bank of St. Louis (about 40 thousand data series), Bureau of Labor Statistics (about 40 million data series) and NASDAQ.COM (50 quarters and 13 years of financials of public firms). This isn't a paid plug, I've been using it for a couple months now and I think it's an analytics game changer.

  87. Sorry….Options no, stock, yes.

  88. Thanks for the information Rainman…

  89. A little humor from Davos…

  90. Sage

    It wouldn't impact me very much because I don't have a lot of CG income. 
    I'm just like the rest of the sorry upper middle class saps paying close to 45% a year in taxes.

  91. jimm,
    do you get any hurricanes there? I remember a couple years ago they had a prety big one.

  92. OIL may be a great short here at $99.25/50 if the FED does not bring it.

  93. Sank1 / company suggestions
    Are you looking primarily for dividend stocks for long term income?

  94. Exec/Cap gains
    It was not meant as a dig on you personally…I just love the thought of Mittens having 10mm in a passbook savings account paying ordinary income to spite the markets having to pay say 30% on cap gains…it would have very little effect except maybe in the munis, my 2 cents

  95. Rain,

    Thank you !!  Just trying to do my part  8-)


    TBT colapsing now, btw !!

  96. @rainman, do you know of a website that has synced options and stock data that I could pull from?  I was just looking for a way to update the portfolio spreadsheet without having to manually do it each day.

  97. Good info JRW!

  98. LlFlan, yes speaking of risk tolerances, even though your portfolio has a good cushion
    Of house money to play with, do you yourself maintain the same level of risk for each trade as you progress. In other words. I would assume that your discipline and trading style does not change in terms of capital preservation and % you are willing to risk on any one trade. So, for those of us following who started later and have not yet doubled their virtual aapl portfolio, (just up 2,000), so essentially have half the value of your portfolio at this point, how would you advise us to look at your suggested trades. Thanks very much for sharing your talents with us.

  99. Maya1
    Would you actually feel comfortable with $500,000.00 of "Real" money, all on apple?

  100. jomptien
    Because of the pattern of ocean currents, the jetstream,  and the placement of mountain ranges, it seems that hurricanes nearly always go along the south coast of the Dominican Republic and Haiti and then head off towards Jamaica and the south coast of Cuba, and  very rarely affect the north coast of the DR. Of course nothing is ever certain, but hurricanes  don't seem to like  running from north to south.

  101. jomtien:  I think jmm is on the north coast of the Dominican Rep.   Hurricanes wander all over the Caribbean, but the Dominican has the highest mountains in the northern hemisphere east of the Rockies — higher than the Appalachians.  Cuba, which is regularly destroyed by hurricanes, has 3,000 ft. peaks, while the Dominican has the Cordillera Central with the four highest peaks in the West Indies: Pico Duarte (3,087m), La Pelona (3,085m), La Rucilla (3,049m) and Pico Yaque (2,760m).  Bottom line, if a hurricane is large enough to do damage, the leading edge will either bounce off or the system will get ripped apart.  There's a bolthole on the north coast [Luperon] which is the only place in the Carib where companies will write hurricane insurance.  But it does have earthquakes, I believe.

  102. Mike Luckovich cartoon: Romney’s income tax

  103. Craigzooka, can you share with us how you got google docs to handle options prices from yahoo? Thanks.

  104. Note:  I quoted Cuba in feet, the DR in meters.  Big difference.

  105. JMM1951
    Another trick I found works is force a shutdown, First by order but if all fails pull the AC and battery on laptops. Reboot and first thing delete all cookies and browsing history. Sometimes you can't get to safemode. I agree with you on charge cards. If you have a router secure it with a long complicated password. Best to you.

  106. NFLX weekly premiums are juicy here, anybody got a fun earnings play?

  107. @mampcsA Ok, here ya go

    type the following into a cell


    =(Index(importHTML(";; "table";2),6,2)+ Index(importHTML(";; "table";2),7,2))/2


    replace ACI120218C00015000 with the id for the option you want to look at. This will add the bid and ask together then divide by two.

  108. Hurricanes/  jomptien     That's the norm, but the last few that hit Honduras and Nicaragua were real killers.  They gain strength when they turn south at the DR or below.

  109. Sage

    I'm not opposed to them raising CG on the upper 1% percent.  At least it would shut up Buffet who apparently has some kind of agenda.  I don't believe for a second that he believe the answer to our problems is raising CG taxes on the upper 1%.
    The issue I have is that they the lying politicians say one thing and do another.  So when they say they're going to "tax the rich" or "stick it to the upper 1%" or "make the greedy rich pay their fair share", you can bet they're going to hit the middle and upper middle class right in the pocketbook.
    Does anyone happen to know what the threshold income is for the top 1%?

  110. craig / synced — Not realtime that I know of. I'd think the yahoo data is in sync though, even if delayed. You'd have to scrape the data from the option chain page which includes the underlying quote.

  111. jimm,
    thanks for the info. I was there about 10 years ago but in the sticks as a friend had a house in the hills outside of town about 1 hour away. Beautiful setting but he got robbed when they were out. Are you in one of the resorts or serviced apt – I think I recall you were renting if not mistaken. I like the place when I was there and people seemed friendly.

  112. @rainman, the problem with yahoo is that the quotes are not delayed for the stock, but are at least 20 minutes delayed for the options.  Google wont give me time specific intra day quotes or I could just fetch the time the options were quoted and then request that specific time for my stock quote.

  113. ZXZ, thanks for the info also on DR

  114. Interesting build a berkshire project,  Could we build a database which contained quotes at 10m intervals for every stock and option in the market?  Then open this database up to people through api's for a nice fee.  We could even start small with just the stocks in the DOW.

  115. Crowder Options/  JRW III,     I used to follow Crowder, before I started with this forum.  Is he one of the indicators you use regularly?  What other studies/ indicators are your favorites, if I may ask?   What issues are you watching now?  Thanks for the help : )

  116. Phil – How are you liking GLW right now? JRW, will be looking forward to your directional post after the announcement… Im going to be up late processing paperwork to make sure former Taliban (reintegrees) get their 6$ a day we are paying them  to not attack us…. Hoping to make some cash while Im paying it out to these cavemen….

  117. JRW
    On top of it again, excellent! I have a line from yesterday that points to a top around 78.80ish.

  118. Someone is betting big on USO.  24K Mar $36 P contracts went through…….

  119. OOPS !! 

    All short now !!

  120. rainman/craigzooka: real-time option quotes

    FWIW: I do DDE (dynamic data exchange) into Excel spreadsheets from TOS.

  121. NFLX - I decided to buy the FEB 92.50 puts and calls and sell the weekly 92.50 puts and calls, makes money from 78-111 on Friday.

  122. wow, VIX dropped with the market…isn't it supposed to go the other way?

  123.  the msb 10:30 low in place once again…hahahhah…its insane…im starting to wonder if the ultra large hedige market neutrals that had massive gains last year(bridgewater, citadel, renaissance, etc.) have cut a deal with Timmy G that as long as they step in on every down day…that SEC will look the other way on market manipulation….it is crazy and very unnatural…and a printing press.

  124. I could try that, but I have never experimented with dde and Google docs, I don't even know if that is possible.

  125.  weekly mba purchase apps -5.4% this week….they have been trapped in tight range since May 2010…no improvement…and lumber still trades terribly despite all the hedgie love for homebuilders

  126. Beaufleurs…. I manage risk about the same for a $5,000 account as I do for a much larger account.  The first rule is always "don't lose money" .   You don't want to lose any of your 5k and you don't want to lose any of your 100k.   But you will see, as I trade AAPL with the larger amounts, that I'll just be moving larger amounts around.  My style won't change much.   I think the reason good traders can make money but not a large amount of money is because they sometimes become more fearful and conservative as their account increases in size.  But, if I am willing to risk  $500  or 10% of my 5k account on a trade, then I am also willing to risk   $50,000 or 10% of my $500,000 account on the same trade.   But I never take inordinate risks on the account.  For the 50k yesterday my instinct urged me to push everything in on the  AAPL earnings trade, as I knew with a high degree of certainty, that it would be profitable.   But the other part of my brain, the conscious part, says "No, that's greedy, and if you lose, you threaten the integrety of the account."   So  you lower your portion invested, you reduce the speed at which your account grows, but you increase your likelihood of long-term success. 

  127. Phil,
    I've got some of those DIA Puts that I did not trade out. Obviously hoping for downside market action now. Any idea whether selling would be just for today (if it happens)? Or spilling over to tomorrow and Friday? What are the signals to sell the Puts (selling into excitement)? Just the Put prices themselves?

  128. chaps / craig / TOS — I was going to suggest TOS. I haven't looked that closely at it. The problem for Craig would then be to export to google docs (for sharing). I didn't notice that the yahoo underlying quote was realtime.

  129. Phil w
    ould a this week bear put spread on an issue like netflix be a silly play or if you think they will drop a few bucks perhaps make it a worthwhile play as premiums seem to be very high as earnings are today I beleive

  130. craig / DDE — No, I'm sure it's not. DDE is a hack from windows v2 days using the windows messsaging system for IPC.

  131. Sabrient/Stockfinder:
    In this post last night, Revtodd refers to using Sabrient Stockfinder as a search tool, stating we all have access as gold members. When I go to the Sabrient tab and link to the "gold" section, I don't see any search tool, just search results.
    Am I missing something?

  132. Did someone jump the gun on the Fed….

  133. QE3 or no QE3???

  134. Trillion/Roro – I'd rather put the money into DMND…

    Anonymity/"Tarpoon88" – Oh no, now we have to put you in witless protection (not a typo)!  No biggie, I'm proud to be Phil – just a personal choice you are free to make.  You don't have to be embarrassed to have a Harvard PhD, not too many people here will hold it against you…  8)  

    Discounts/Acobra – The best thing to do in a service business like that is to establish a reputation for never giving discounts.  It makes the rich people think your work must be better and, when push comes to shove, they pay for quality.  

    Support/Jack – The only support the S&P has is the promise of $1Tn.  I think if we don't get it today but it's expected later, we could hold that broad uptrend (until the next disappointment) but I think 1,250 is more of a top without QE.  Oops, I guess you turned more bearish right after that chart..

    NFLX/LOL – You're welcome!  On NFLX, I think they are worth $50 at best but that doesn't stop people from buying them.  Strategically, I like to short them when they run way up.  While it's tempting here, they are down from $300 and miles below the 200 dma at $170 and barely above the 50 dma at 80 so kind of a zone of no interest until we see a new range established.  

    Notions/Roro – Sure, "notions" are cheap so we spend them when we can get away with it.  I'm not so sure the Fed can get away with it this time and this "clarification" BS is the way they think they can say "here's your QE3" and you say "where" and they say "maybe in the future" and that's supposed to make you all confident an BUYBUYBUY.  I expect they will have some guidlines that say if our inflation is X and our unemployment is Y and Europe is Z then we'll get some XYZ formula of liquidity subject to review or some such crap.  I think the promise of action will be supportive, but not of the current levels – maybe -5%. No promise of QE3, much worse.  

    Middle class/Jack – And what's amazing to me is how the upper class in this country doesn't get it.  The top 1% of this country are more detached than the top 1% of England ever were.  Even top 10% people think they are somehow "entitled" to their position, through hard work and struggle and whatever it is they think gave them their money as opposed to not having had absentee parents (because both had to work) or poor teachers or having had to work themselves to support their families from the age of 15 or getting sick and going broke or getting into a lawsuit and going broke (whether at fault or not) or simply buying a house or a business at the wrong time, etc.  And yes, I'm sure many people even overcame some of those obstacles and made it into the top 10% but the only reason they think that's "normal" is because they are now surrounded by other people in the top 10% who also won the game of life and they no longer hang out with their grade-school classmates who, statistically, are 95% or more still in the same economic bracket they started in.  

    BKS/Burr – See above, no reason to pull JUST because you are up.  We make 20% on margin in 23 days – do you have some sure thing that does better with $500 than leaving it in a short put with a 20% cushion?  

    Jagger/ZZ – Was he there?  Amazing the paths that life can take you on…

    AAPL/John – I assume that's a next Jan spread?  As you are in the money and expecting a $150 payoff, I'd spend $44.50 on the AAPL 2014 $460/600 bull call spread and, as long as you REALLY want to own AAPL for $300, then no reason to touch the $300 puts and your $300 calls are $157 so you can put a stop on them at $150 and then your long spread would cover the short $450s ($51) and, if that's a margin issue, you can stop out the short puts (profitable, I'm sure) and it should even out.   Then you have a $140 buffer to the upside to work with and, of course, you can always spend $40 more if you think you need to cover a move from $600 to $750.  If AAPL does not go down and keeps going up, You get $150 on your spread and another possible $100 on the bull spread so fun either way. 

    Housing/Burrben – I do like that concept (although the rate's a bit harsh/usurious  to charge) – taking rent-to-own to the next level, but please submit it in the proper forum.  I had a similar idea with franchise – many, many top-level executives out of work in their 40s and 50s who can totally run a McDonalds or whatever but simply don't have any possible way to get a hold of $1M – in that case, your fallback position in a default is owning a MCD's or other blue-chip franchise and you hire another guy to run it.  

    AAPL/Maya – You are welcome.  Not really a "better" way to go.  Super-unlikely that AAPL fails $400 in the next 3 weeks.  As you can see, you sold into a panic and could have done a little better being patient but no biggie.  Meanwhile, getting called away at $460 is certainly no crime (if it happens).  With the puts open, I would have gone for a more conservative cover but the $440s are just $20 so another $10 is what we're talking about (because I can roll the $440s along, so why not take the protection – and the money!). 

    Oil back over $99, hit $99.50 and a big rejection there.  All about the Fed. 

    Taxes/Exec – I think the "threat" that the economy will collapse if we tax the rich is ringing kind of hollow these days as we tried not taxing them and that was a total disaster.  In fact, the Reps should be embarrassed to even have those words come out of their mouths (that if we tax the rich, there will be hell to pay) but I guess they have to stick to the rhetoric since there isn't a fact in the World to support that argument.  Believing voters are idiots and will fall for the usual BS will be the doom of the Reps this election – you don't see it with your top 1% mindset but some of the stuff these people say is simply repulsive to average people.  My Mom was singing in a home on Saturday and these people were maybe a bit upper middle-class retired and we got into a big conversation with a dozen people about how they hope people don't screw up the election again and let a Republican win – this is the same county (Palm Beach) that had chad issues in 2000.   I was very surprised at how strongly they blame Bush and the Reps (and themselves) for this mess.  

    HCBK/DC – No change to me, the loss was expected and they are right on track:

    “Our net loss for the quarter was a result of the previously announced extinguishment of structured borrowings. During the past year, the low interest rate environment resulted in elevated levels of liquidity as borrowers prepaid or refinanced their mortgage loans and we experienced a significant increase in the calls of our investment securities. Our options for reinvesting this excess liquidity were limited since the yields available on mortgage-related assets remained at or near historical low levels and we did not believe it would be prudent to put such long-term assets on our balance sheet.”

    That's simply the price paid by a hugely conservative bank during a rough market.  They will come back when housing comes back and, like HOV, it's not a stock for the impatient.  

    Since nothing is wrong with the Dividend (.32) at HCBK, $7.34 is a sweet spot where you can buy the stock and sell the July $7 puts and calls for $1.35 for a net $5.99/6.50 entry, which is a nice 11.4% discount on a 2x entry and makes the dividend 5.3% with a 16.6% profit if called away – in 6 months!  

    Monaco/Sage – Three great professions this year will be tax advisers, relocation specialists and GOP Fundraisers.   

    Very nice JMM.  

    BTU/JMM – Sitting right on 50dma at $35.80 – that's no a bullish position until we know they aren't consolidating for move below.  

    DMND/Terra – Well, you have $10.50 in the $30 calls and, as I said before, I think $45 is at least where we go but that's another 100% up for you and you want to risk how much to be more greedy?  If you want, you can switch to the 2013 $35/50 bull call spread at $5 so you take your original off the table with $15 more upside possible less whatever you end up paying the caller.  If DMND goes over $40, you can add a $40/55 spread for another $5 and so on – or you can just leave it alone and be happy with "just" a 200% gain. 

    MON/Jrod – No, just outlining potential next steps.  

    Visa/JMM – I have the same question about my phone company.  Why can't I give them a list of people who are authorized to call me?  It blows my mind that we still get spam phone calls.  Their solution is you pay for caller ID and choose not to pick up the phone but there's money to be made by someone who can take this to the next level and "white list" home phones.  As to holding Visa liable – how do they know?  Just call them and demand a refund, after too many refund requests – they will deal with their bad vendor.  

    Oil/2Can – Well it's back to $98.75 now.  Just the normal BS – we're early in the delivery cycle so no pressure on the NYMEX boys to come up with a real price.  

    Cool sheet Jrod – too bad I'm not a spreadsheet guy. 

    Davos/1020 – That's very good!  

    GLW/CJ – I'd wait for the Downgrade police to have at them.   Their order cycles are strange and a lot of people have been holding out orders for Gorilla Glass 2 and, of course, the people who THOUGHT they had an IPhone/IPad killer and made big orders are, for the most part, not repeating those orders this year.  

    Almost Fed time already! 

    1%/Exec – $365,000 a year, quite a bit below the proposed raised tax level.   I know $1.6M is the top 0.1% but not sure where exactly $1M a year in income puts you. 

    NO CHANGE on the Fed (no surprise).  

    Expanding moderately, nothing here about QE AT ALL!  

    Only bullish thing is they see no inflation so QE not off the table and they see a need to push jobs. 


    For immediate release

    Information received since the Federal Open Market Committee met in December suggests that the economy has been expanding moderately, notwithstanding some slowing in global growth. While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed. Inflation has been subdued in recent months, and longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth over coming quarters to be modest and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that over coming quarters, inflation will run at levels at or below those consistent with the Committee's dual mandate.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy.  In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

    The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen.  Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.

    Not at all bullish!  

  135. Or mistimed some insider information? But that dollar move was really suspicious… 

  136. This market is totally crazy! Dollar sold-off in seconds!

  137. CNBC trying to spin this as kind of like QE since they are not taking existing program away – DESPERATE!

    Bill Gross calling it QE2.5 as they are extending the time-frame to 2014 but that's nonsense – certainly not what people were expecting jacking up the markets.  Bernanke can put a fork in it when he speaks later.  

  138. jromeha - Does the colder weather dampen the smell over there at all? That's about all my son ever mentions when you ask him about the place. And for him it's not as bad as his base is on the edge of the city in the north east.

  139. Yo, what's up with the dollar?  No QE is bearish for the dollar — and not bullish for stocks?  H'm.  Why do I have a feeling this is some sort of head fake?

  140. JRW
    Are you in cash waiting for confirmation of the next move?

  141. We are 18 months away from ZIPR ending and they felt a need to extend it for a year and a half beyond that point.  Why would they do this unless they knew things were bad?

  142. If the Dollar didn't just plunge – 0.5%, we'd probably be down now.  As it is, the spin on CNBC is relentless so that's the message the retail crowd is getting and we may get a move up until those people finally pick up a paper and find out what's real (unless it's the WSJ, of course). 

    Seems like a head-fake to me but I'm staying agnostic until 2:30.

    As expected, TLT back to $117 – that's where MORE FREE MONEY works every time.  

    Oil $99.25, maybe a short at $100 again.  

    Dow volume 53M at the moment, good to track.  

  143. Treasuries and TIPs through the roof!

  144. what else to expect from this market?  No QE3?  No problem, buy them anyway.  absurd…

  145. Low volume being a Fed day. Financials perky

  146. No QE buy the rumor and more on the fact??

  147. So dollar down, stocks up, gold up, oil up. Bonds up?

  148. Did Rick Santelli just say "Welcome to Japan"?

  149. That move is TLT has to be put in perspective – we were at $121 5 days ago! We have had much bigger moves on non-Fed days. Overall, not impressive on many fronts.

  150.  fed statement doesn't acknowledge any improvement in economy…from what i can tell..(.are they idiots or is it me) exude WEAKNESS

  151. greenwoods- Yes, it does. But the smoke and sh!t in the air is still there, you just dont smell it… You can tell b/c everyone on this base has a cough.  It doesnt really stink at all in the cold… Our  offices do though when the Afghans come and clean them. Where is your son at? Im at New Kabul Compound… I dont know where that is in the city, I have only been outside the base once (took 1 hour to get 1/2 mile away b/c of all the security).

  152. Breakdown of Apple's revenues:

    Weird that iTunes is only 4%. But 53% of revenues from the phones only… And just 14% from Mac. I guess the transition to retail electronics has been completed.

  153. Kydweb/jrod – thanks for the tip!

  154. Phil—why do you think the market is taking this news so positively so far?

  155. FU EDZ and CMG!!!

  156. one of the things that sticks in my mind from reading Lee Adler yesterday was the comment about the volume of money flowing out of Europe and into the US…………that can prop a lot of price if the flow keeps coming, FED QE or not.

  157. just pounding DX??

  158. Phil, short GLL calls are back down to .20. Should we take profits here?

  159. Phil any thoughts on UUP?

  160. Interestingly, european indices are not flying after hours..

  161. Dollar down 0.8% since the announcement supporting equities, and TLT through the roof!! Something's gotta give…

  162. I will say that I have noticed in the past the initial reaction to Fed speak is dead wrong but this wave is intimidating?

  163. Somebody is selling that dollar off big time to float the market! Must be trying to protect and offload their longs!

  164. 14real / Position

    I'm in cash waiting for a failure of 78.76, or a breakout above 79.12 !!

  165. Phil/HCBK,
    What do you think of a buy/write here. Selling the July p & c for 1.30? Or wait for a higher vix? Thanks

  166.  its comical that some want to brand china currency manipulators with what we are doing….we are the biggest of them all.

  167. GLL is hurting me

  168. GLL is hurting me

  169. SHJ,Pharm, etc
    TLT broke dn thru the H&S nkline @117.92 on 1/19 and has just pulled back to the neckline. Any thoughts as to validity of H&S pattern and whether TLT will now reverse and head back south on technical grounds – against fundamentals which suggest higher numbers in the absence of QE3 .

  170. UNCLE!!!

  171. last years stock world weekly  NEW YEAR STARTS WITH A BANG..we are still banging..not sure what's going on but i am not fighting it i am short form 1307..and fully expect a correction to lead to higher prices..

  172. Short squeeze to the max. 

  173. Database/Craig – I have no idea what the regulations are but not a bad idea.  More to the point, I would love an easy way to get earnings and revenues by Q going back many years – that would be more valuable to me. 

    GLW/Jrom – I like them long-term but they should sell off a bit short-term.  See, this is what's sick about trading because I imagine the same guys, for $60, would be very happy to attack an oil well and that's all it takes to manipulate the market…  

    USO/Pharm – Puts?  That's interesting.  

    VIX/Lunar – I guess you can say the uncertainty was elevated into the Fed and now that we didn't get a sharp drop, it's calmed down.  

    Deals/Angel – That's a good idea for them.   Lumber not a bad idea long-term.  

    What a burn this is for all the "smart" people who thought they would make money buying strangles looking for big moves one way or the other!  

    Good outlook Iflan! 

    DIA/Kallen – If "those" were the $123 puts, they were at $1.10 this morning and then down to .80 just a few minutes ago and now .85 again.  So you don't have the conviction to DD and you don't have the conviction to sell when you get a break – that means either you totally luck out or they expire worthless seems to be your strategy, right?  There are 3 weeks left and I would certainly DD if I were behind but it's a huge risk into Ben's speech so waiting is the way to go at the moment with the goal of either getting a cheap DD or getting out on  a nice move down.  The "signals" are what do you expect to make and are you on or off track and, if off track (and that includes making too much) – have the fundamentals changed to support it or do you expect it to revert to the mean?  I know it would make your life so much easier if there were magical dots that lit up and told you what to do but trading (as opposed to gambling) requires you to have a plan and make a trade within that plan and know what action you intend to take if the results go off plan by a certain percentage.  Hope, sadly, is not a valid investing strategy…  

    NFLX/Sage – They report tonight so you win or lose, pretty simple.  If you take the $100/97.50 bear put spread for $1.60 – you make money unless they hit $99.10 and have a pretty good chance of getting 1/2 out up to about $105 so risking .80 to make .90 – is it worth it?  I guess I would if I felt compelled to gamble on it but it's not something I would make a general pick of.  

    Dollar still diving to 79.81 but the only way that sticks is if Europe doesn't ease but if Europe doesn't ease then the economy goes down and if the economy goes down then people will panic back to the Dollar and then the Dollar will go up so down is simply not logical for the Dollar and UUP $23 puts can be sold for .80 – that's a fun way to play it as it's a premium free way to be long.    

    63M on the Dow now so 8M shares traded since last check (30 mins) – not exactly a big volume move.  

    AAPL/StJ – Not as much Mac improvement as I'd expect after shipping 100M IPhones.  I guess the IPad is the new trade-up and not much reason to go for an IMac from there for most people.  Really amazing how IPod dropped to 5% – if they had said IPod was going to be 5% 3 years ago – investors would have freaked out and dumped AAPL.  

    Positive/Jabob – Because the Media is spinning this as More Free Money and it is nice for the Banks but that's about it.  As Santelli said – we're now Japan.  How does their market do with ZIRP?   It's not a real policy, just welfare for the rich.  

    GLL/$25KP, Jrod – Yes, that was the plan – let's buy back the $18 caller at .20.  Thanks for reminding us.  

  174. JRW
    Do you think there is a chance of going over 79.12, That is my new point up from 78.80? It is a slowly riseing line but if a BANKSTER is disappointed with BEN?

  175. TLT – no idea what/where it is going.  H&S still intact until it breaks up through the neck line from the way I understand it.  VIX down again…..

    Gold – wow.

  176. In extending the low-rate pledge through 2014, the Federal Reserve may have exhibited “regency bias,” a leading economist says.

    What’s that? It’s when people assume the future will be like the present. Wells Fargo Chief Economist John Silvia says it’s “very unlikely” that the current moderate growth/subdued inflation scenario will extend that far.

    “Remember the Great Moderation story of the last decade?  How about 1994-1995? 1998? 2000-2001,” he said in a note to clients.

  177. "We are now Japan…." – I think I said that last year when TLT was at $89……

  178. VIX bounced right off the lower BB……

  179. JRW
    We're sitting on the IWM 79.12 line!

  180. Phil, as the qqq's are so far out front, should I use that as a hedge?

  181. Earning Database / Phil – Already done -

    Not cheap though and I wonder if we could get a deal with them for members!

  182. UUP/Sage – Very good – GMTA! 

    HCBK/Jomp – Isn't that what I just said?  

    Oil over $100, Dollar 79.68, Euro $1.309 (and what did they do?), Pound $1.564…  Such a joke.  It's like a wave coming in at high tide and coming 10 feet from your beach house – is it time to move?   

    And what a coincidence that CNBC had all these very bullish guests lined up just after the Fed – they say that this (more of the same) is the greatest thing since sliced bread.  

    Coming into one hour from the Fed, already 11M trades seem to agree.  Let's not worry about the fact that 30M trades an hour is "normal" but let's take everything at face value, right?  

    No thanks – Ben needs to confirm at 2:30 and meanwhile we have adjustments to make:  


    • XRT – Selling March $55 calls for $1.95, selling 5 March XRT $55 calls for $1.95 and putting a stop on XRT Feb $52 calls (now $3.70) at $4.20
    • GLL – Rolling 20 $17 calls to 20 $16 calls for .50.  
    • SCO (new) – 10 Feb $35/37 bull call spreads at $1, selling 10 $35 puts for .90.  

    FAS Money: 

    • Selling 2 FAZ WEEKLY (Friday) $30 puts for $1
    • Selling 2 FAS WEEKLY (Friday) $81 calls for $1.50
    • Selling 2 FAS Feb $73 puts for $2.05

    IWM Money 

    • Selling 2 TZA WEEKLY (Friday) $22 puts for .95
    • Selling 2 TNA WEEKLY (Friday) $55 calls for $1.05
    • Selling 2 TNA Feb $49 puts for $1.55

  183. Oh, (/CL) short at $100, of course!  

  184. Phil,
    I actually don't have the 123s, I have 126 Puts. Not sure why I made it sound like 'those' puts. Needless to say, I did not sell them in earlier move down today – your tone had remained bearish up through FOMC announcement – and I felt the same way. So I will look at DD or sell if we go down after Bernanke speech.

  185. Wild Card Fed Day not over yet. We still have Benny the Beard at 2.30pm.

  186. I have a very old resistance line at IWM 79.34, fwiw.

  187. DIA March $128/122 bear put spread getting very reasonable at $2.  I like that as a hedge and you can offset with a bullish put like GOOG $500 puts ($2.15) or VLO June $22 puts at $1.30.  

  188. Gold $1,703, up $48 from today's low. 

    Oil $99.73 so don't cry to me if you blow the gain!  

    NYSE 7,884 – we're over the top (7,866) if we hold it and it will be time to switch off our brains and go bullish if the Dow confirms at 12,749.

  189. volume is horrid….I mean abysmal.

  190. IWM 79.37!

  191. Phil, don't understand the XRT trade in 25KP. We have 3 March 55 calls already. You want us to got net 2 short the March 55 calls?

  192. Pharm
    Great pump job with no shame!

  193. JRW
    Did you go long @ IWM 79.12?

  194. jromeha – All I know is that he's part of Operation Attention and his camp is called Alamo – he doesn't leave the camp for the entire time he's there for safety reasons. There's a larger European base nearby that they'd love to go to because they have a really good bar – LOL.

  195. Phil Did we not roll the XRT Feb53c to Mar 53c as per this morning where do the Mar55c comes in ?

  196. @Felipe
    Thanks for the suggestion of selling the 2013 or 14?  $290 AAPL Puts.  It's no IFLAN gain, but it does mean another entry in the IRS Schedule D, Form 8949 this year on the plus side.

  197. Any other recommendations to play the oil short in the 25KP? TOS is showing $20K in margin for the current trade.

  198. Phil/IPod
    Yes, it is interesting about the iPod. Apple creates this hand held minicompter that makes phone calls and it is wildly popular. However the version of the same device that doesn't make calls (except VOIP calls on Wi-Fi) and that sells for about half the price and doesn't need a contract is wildly less popular. And yet you can get a pocket phone to make calls and text messages for $10. I think what this tells us is that there is a huge "cool factor" related to iPhones, that is not necessarily related to function. After all, you are probably not going to invest in an iPhone for your kid to do their homework on.
    I do have an iPod, and I do use it quite a bit as an e-reader, music player, alarm clock, and camera and occasionally to browse PSW if I wake up at 3:00 a.m. As a camera you can take reasonable snap shots, and sometimes it can stand in for scanning a photograph or map or taking a screenshot from my laptop, but it is awkward to use as a camera, and not at all easy to use in strong sunlight. However, I don't like it much for calls as the shape is awkward in my hand (too thin)  and to hold to my ear, and the dialing is not very easy. Again not good in bright sunlight. Of course I am not a normal person, haiving no sense of humor at all. I remember a work acquaintance of mine who was a middle aged Registered Nurse who had bought an iPhone, and as far as she was concerned the best thing about it was that it could run a program whereby you spoke into it and your words were repeated back to you in a funny voice.
    The interesting question to me from an investment point of view is whether we can expect the whole population of the world to demand an iPhone or something similar in the years to come, or whether the phenomenon is confined only to the Apple models and does not necessarily point to very widespread demand for minicomputers with phone calling as a general concept.

  199. jromeha – I forgot to mention that my son absolutely hates it when the Afghans invite him for lunch. Hates the food but it would be an insult not to go. He told me they were serving tea once and they ran out of cups so an Afghan elder poured out the tea from his cup and refilled it without cleaning it. My son had to drink it but it left him feeling ill. He says the "normal" food they eat is pretty good and is served by a US company. Once a week they get Chinese food and that's his favourite day.

  200. Phil, is there any significance to the Dollar and IWM coming to parity beyond coincidence?

  201. craigzooka – if you figure out a way to get DDE to work in google docs please let us(me) know.

  202. This might be useful for mining historical data or building your own database.

  203. Strong resistance @79.80 weak @79.50

  204. 14real / Long

    Yes, the FED said that things were even worse than they thought and had to extend 0% money at least another year beyond their last forcast BUT would NOT stimulate with new QE; so of course I'm LONG !!

    Sad, but as I said yesterday:




  205. JRW - What was the source of the charts you were posting last Oct-Dec that showed the market going off a cliff in Dec?  I am curious to know if the author has abandoned his thesis or just changed the timeline…

  206. SGEN is …..  um….  rockin…..

  207. I have rising wedge resistance on SPX in the 1329 SPX / 1325 ES area. 

  208. mampcsA
    XRT as I got it we sold the 3 FEb 55 long calls for a profit and rolled the 5x 53short c to Mar 53

  209. JRW – 18 months beyond their last forcast of mid 2013

  210. Update to the Money portfolio positions…. keeping me busy today!

    I don't update the $25KP in real-time but it will be done tonight!

  211. 1325 mrm … that is the line that all are watching.  Demark also said 1338-1342, and said the top was close…then this guy said 8000 on the DOW by year end.

    Friend of the devil is a friend of mine!

  212. Qs/Rpme – Yes, I like SQQQ for leverage.   You can get the March $14/17 bull call spreads for $1.10 and sell the $15 puts for $1 and that's a nice .10 on the $3 hedge with SQQQ at $15.44.   If you end up with the ETF, consider that, at $15.44 (you'd be net $15.10), we can sell the June $14 calls for $2.75 and the $13 puts for .90 to drop the basis to $11.45/12.22 and that's a good 10% Nas gain away from here.

    Bespoke/StJ – Feel free to represent us!  Maybe they will trade for featured articles by them or something.  Since they are good, I wouldn't mind that.  Anyway, the point is you need an expensive service to get that but here's the data right on that spreadsheet so there's a business if someone wants to build it.  

    DIA/Kallen – There's a difference between being bearish and letting a good move slip away.  We were taking a big chance into the Fed (not good so far) but the $123 puts or $121 puts, which we were using, had just .20 and lower deltas so the damage expected was small (and, in fact, the $123 puts are still .70).  The $126 puts, on the other hand, have a .41 delta and the fell 33% since this morning's high and this morning's high ($2.20) was a 50% move up from Monday's low ($1.45) and I don't know where you came in but it doesn't usually get any better than that!  As you can see above, I'm still bearish but hedging a bit now.  Depending on where you came in, you could roll up to the $129 puts (now $3) and sell the $126 puts to someone else for $1.50 and then you are in for $1.50 on the $3 spread.  That way, rather than spending $1.50 of your own money to hopefully get back even, you have a chance to get even now and, if the Dow goes even higher, THEN you can use that $1.50 to buy short March positions.  

    Volume/Pharm – That's because there was nothing in that note to get more bearish or bullish about.  The meat of the deal is 2:30 but I don't see how you go from that statement to "Yes, we have QE3 for you" 2 hours later.   That statement said "You already have QE3 – enjoy".  

    XRT/$25KP, Mampcs – We had 3 long March $55 calls.  We are Selling them.  We are then selling 5 March $55 calls to become net short 5 March $55 calls.  It's essentially the first stage of a roll that becomes a roll IF the short Feb $52 calls hit our stop.  We're pro-actively selling more premium in case there's a big run-up but also holding out hope it reverses and we get a double win on the way down.  

    XRT/$25KP, Yodi – It wasn't in the spreadsheet so I just called it off what was still there.  If you rolled (not a bad thing) to the short March $53s (now $3.45) it's essentially the same play with maybe a stop at $3.80 instead of $4.20. 

    You're welcome Flips, keep making those contributions!  

    Oil alternative/Jrod – How about 5 USO March $38 puts at $1.60.  They have a .45 delta so should make over 20% if oil moves down $1.50.  

    Speaking of which – Dollar bottomed at 79.625 it seems – 79.885 as the suckers begin to be cleared out.  

  213. seems like after the big push up takes less and less volume to make new highs damn may as well put my entire account on a 3x bull and retire, right?

  214. StJ i'm not sure i want to see the $25K update. It will be a sea of red.

  215. Bespoke / Phil – I'll be in touch on that topic!

  216. Mr M / Chart

    A comparison of the 2006-2009 and 2010-2012 !!  Here:

  217. Mr m,

    If we break above SPX 1327, the pattern is negated !!  Update:


  218. Phil, i have this open trades:
    sqqq feb bullcallspread 12-16 (10 @ .50 and 20 @ .60) now .30 
    tza bull call spread feb 22-24( 10 @.62 and 10@.63  Now @.44).  
    edz bcs feb 18/22 @1.00 now @ .15 + edz bcs feb 17/22 @1.15 now @.25 + edz apr 15/22 @1.70 now @1.00 + edz bcs feb 16/19 .80 now @.35 + edz bcs feb 14/16 @.70 now .55
    what would you do?thanks

  219. Large bid orders, big gap to large bids? Where are the buyers?

  220. IStuff/JMM – If you look at the IPod, what has AAPL been good at?  There are now tiny little square ones that perform only the basic functions and those sell like hotcakes.  So they will adapt the IPhone as needed and I expect there will be a texting device for kids at some point.  That's all they want to do anyway and I'd be happy to get an IPod or whatever with skype and texting that the kids can use on my home network with no contract than go to the phone store – that's a no-brainer.  Maybe AAPL will write an app but they already have face-time and that works quite well.  I'm pretty sure, if you are a Nigerian villager and you can get a $50 IPod that lets you go to the internet cafe in town and text or phone whoever you want – you would find a way to get that $50.  NOK's plan failed ($50 phones) BECAUSE of the cost of the plans.  I have a lot of faith that AAPL will make profitable $50 IPhones the same way they make IPods now.  The problem is (and here's where the law of large numbers comes in) once IPhones are $50 and they are down to 5% of AAPL's revenues – what's filling the gap?  

    Parity/Chasw – Interesting but no real sign there. 

    Oh no, it's BEN!!! 

  221. $25KP / Dpas – Well, it's an aggressive portfolio… The one last year started badly as well on a big FAS bet if I recall properly. It ended pretty nicely! 

  222. Sorry large sell ask!

  223. I cant sell the other 5 XRT Mar Calls, not enough margin… I am sure i am going to regret it :-( Any trade i missed so far was a profitable one

  224. Basically saying 2% is the target inflation rate.  That's BEARISH becasue inflation is coming – in fact, inflation is over 2% now because oil and gold ran up on the Fed news.  It's an automatic brake on easing – one that the BOE has violated so often it's just a joke now.  This is silly if this is their new "clarity".  

    Now jobs – I wonder what they consider "maximum employment"?  

    5.2%-6.0% is what he thinks is good?  

    Well, we're sure not there either so there's reason to ease (when inflation is 2%, of course).  

    There – now we know what the Fed is doing – doesn't that make you want to buy CMG for $363?

  225. XRT/Dpast – How about if you buy the $60s for .20?  

  226. StJ, i know i am following you guys for some, ;-) i have full faith on the turnaround! Just waiting to shout the big "WHEeee".  Bring it on!

  227. Speaking of wheeee, nice job shorting oil at $100. I have PP at 99.16 and we are approaching so better be careful!

  228. XRT / Phil – Sorry lost you there. I thought you were selling the calls expecting a pull back from the 55$.  Buying the 60$ call would be betting the other way no?

  229. That can't be a good sign…

    The chart below shows the net number of analyst upgrades (upgrades minus downgrades) for each trading day of 2012.  So far this year, there hasn't been a single day where analysts collectively upgraded more stocks than they downgraded. 

  230. any chance of broken stick to end the day or is that only wishful thinking?

  231. Jabobeast : i am almost on my knees praying for mr anti stick!! But i suggest we prepare for the worse.. reaching for the vaseline jar

  232. Awwwww – this is like that commercial where they tell the little girl she's going to get a pony and she gets a toy pony and then the next kid gets a real pony and the first girl is devastated – that's about the story with the $1Tn QE3 the bulls were expecting – they may not cry right away, but you can easily see how, 20 years later, that's the point where the psychiatrists will say they snapped.  

    Good retirement plan Sage! 

    Open trades/TraderM – 3 weeks left, I'd just wait and see unless you have a reason to be more aggressive right now.  You don't want to throw good money after bad if the Dow and NYSE confirm our breakouts.  

    2 hours later, volume is 84M on the Dow so averaging a blazing 15M an hour now (would give us 90M in a day, 1/2 usual).  Usually by 3pm we're well over 100M, even on a slow day.  So this is how we're trading with supposedly bullish "certainty" – no thanks…

  233. Sorry FAS Strangler, looks we missed out on some good moves today but I could not bring myself to play in this craziness. I was happy to get out of my calls with a profit this morning. Already over $0.80 of premium cashed in this week with 2 more days to go….

  234. OBV  says Granville….we are going down… the video….

  235. Dupont makes 35c, where last Q it was .69 and they are still trading like they are making tons of money.  GE, same. 

  236. obv?

  237. Pharm Granville…Gospel to a bear like myself.

    I dont recall Bernanke ever using the term 'price stability" in the past

  238. Pharm, got a link to Granville and OBV comment?

  239. Stj:  Thanks for the cheerleading, but not enough "whee" for me, buddy. Grim day, but I'm still breathing, and where there's breath, there's hope.  Hope – now there's a real strategy! :)

  240. Phil / DIS  - Thanks!  Got out of my short DIS Jan13 puts for around 70% win.  
    BKS – I understand now.  Even though we're up 66% since there is only 23 days to wait, might as well wait.  If there was a year to go, then look at cashing out.  Plus it's a very aggressive portfolio.  Got cha.

  241. CNBC really working Ben in search of something better. Know when to walk away, Ben is the master at vapor talk!

  242. Dollar sold off, down .27 cents! They're going for the stick!

  243. And yes, Phil, it's a toy pony for sure. HOV up over 7% with zero mortgage relief or dollar devaluation to erode those pesky d/s payments.  This is going to require some deep meditation.  Or a good stiff drink.

  244. Link is above in the 8000 Dow. OBV is on the balance volume.

  245. Stj / Phil – the AA Feb $9 calls can be rolled to 2X the March $10 calls even – is that a good roll to take? or better wait for a pullback now?

  246. i did a mistake in writing my edz trades.These are my open EDZ  trades:
    10 feb bcs 18/22 @ 1.00 now .15
    10 apr bcs 15/22 @1.70 now 1.00
    short 10 feb 19 calls @ .64 now .20
    long 10 feb 14 calls @1.32 now 1.025
    just wait and see? thanks

  247. Greenwoods – yeah, Ive had some friends at Camp Alamo. What a name for a base! The food isnt that bad, it just gets old afterwhile…

  248. Markets up up up yet Bernanke talking down the global economy, just does not jive with me.. I would expect markets to be near 13k with an all out QE program….yet here we are nevertheless.

  249. Hope / Zero – I guess your short euro and short gold positions have not worked out well today… Have no fear, I predict bad news in Europe over the next 6 months. Now that's hope!

  250. Good turn call on oil StJ – back over $99.50 now so another line to short off later!  

    XRT/Dpast – We OWNED 3 March $55 calls.  We SOLD those for $1.95.  THEN we SOLD 5 more for $1.95.  That leaves us SHORT 5 March $55 calls at $1.95 along with the original 5 calls we were already short (Feb $52 calls or March $53 calls if someone rolled there). 

    Vasaline/Dpast – You are way too directional if one day makes or breaks you.  That's a terrible way to trade as one day the break will certainly come.  Even if you think it's a 1/100 chance – you trade 250 days a year! 

    Wow, someone is working hard to talk down rates:

    Pimco's Bill Gross weighs in on the Fed's action today – calling it "QE 2.5" and tipping off that he sees QE3, QE4, and QE5 on the horizon. He's not quite on board with the FOMC though, as he calls the roadmap of the central bank "financial repression."

    That means we'll soon hear from El-Erian and their flunky Greenspan so don't expect an instant reversal until they've shot all their bullets. 

    11:33 AM The Treasury sells $35B in five-year notes at 0.899% (.pdf). Bid-to-cover ratio of 3.17, vs. a recent average of 2.99; indirect bidders take 43.4%, vs. a recent 47.8%. Direct bidders take 15.1%.

    12:54 PM Treasurys move higher after an auction of 5-year notes and the FOMC extended rate lock brings in buyers. Yields: 2-year -2 bps to 0.22%, 5-year -12 bps to 0.78%, 10-year -10 bps to 1.97%, 30-year -4 bps to 3.11%.

    2:00 PM On the hour: Dow +0.35%. 10-yr +0.74%. Euro +0.15% vs. dollar. Crude +0.77% to $99.72. Gold +1.93% to $1696.65.

    3:00 PM On the hour: Dow +0.44%. 10-yr +0.47%. Euro +0.38% vs. dollar. Crude +0.77% to $99.72. Gold +2.58% to $1707.45.

    Fed Open Market Committee: Stretches the near-zero interest-rate policy through late 2014, beyond the previous mid-2013. The Fed will continue stretching out maturities via Operation Twist, but there's no QE3 today. Lacker objects, but just over the fed funds rate time period.

    More from the FOMC: Since December meeting, economy is "expanding moderately." Household spending advancing but "growth in fixed business investment has slowed, and the housing sector remains depressed." Along with extending maturities, Fed will keep reinvesting principal from agency debt and agency MBS.

    Not much so far from Bernanke's press conference (video). He calls the economy “mixed” despite some stronger-than-expected recent data reports, and notes European “headwinds” to growth. He’s “not ready to declare” the economy has entered “a new, stronger phase.” Says there could be a case for further policy action if inflation remains below target and employment remains slow.

    Is recency bias the new buzzwords for Fed bashers? Wells Fargo Chief Economist John Silvia waxes historical in a note to client as he pulls out the term to describe the Fed's assumption that the future will always set up like the past. 

    BlackRock's Bob Doll reiterates his forecast that equities will outperform cash and Treasuries in 2012 – shrugging off an impending European recession and an earnings season that has tipped off weaker than expected. But with cash returning near 0% and Treasurys close to a ceiling – does Doll's bullish call for equities in 2012 mean returns of over 5%?

    George Soros tells policy makers in Davos they should work to save the rest of the eurozone rather than focusing on Greece. He asserts the ECB and others should act in concert as “lenders of last resort” to governments, which would allow Italy and Spain to issue treasury bills at ~1%. If austerity measures are pushed, the eurozone will fall into a debt-deflation spiral prompting widespread social disorder. (earlier

    In what might reflect a willingness to grant more authority to Brussels, Angela Merkel tells a Davos audience the eurozone needs to see major "structural reforms," and that the move towards fiscal union needs to be accelerated. However, Merkel fails to provide any concrete suggestions, and rejects calls to significantly boost the size of the EU's bailout funds. (previously)

    Greece is "about to hit the wall," euro-bear Mark Grant predicts, citing the deteriorating talks between European policymakers and Greece’s bondholders and IMF suggestions that the ECB take losses on Greek debt it purchased. “Ground Zero is fast approaching [and] a number of the EU nations are no longer in the mood to hand Greece more money knowing full and well that it cannot be repaid.”

    Hedge funds blink first, or try to anyway, in their game of chicken over Greek debt. Having recently bought an estimated €4B ($5.2B) of March 2012 bonds, the funds are scrambling to unload as it's becoming clear that Greece will impose a big haircut, voluntary or otherwise. The problem for the funds is that unsurprisingly, there 'aint no takers

    If there’s a silver lining to the IMF's cut in its economic forecast for EU growth in 2012, it’s that the slowdown could make it easier to implement the new ban on Iranian crude oil imports. If the EU economy shrinks as the IMF has newly forecast, oil demand should fall even more sharply. Add in the anticipated return of Libya to full production and Iranian crude might not be missed. 

    Rare earth miners, who had a difficult 2011 thanks to falling metal prices, are shooting higher today. Short-covering could be a factor: As of Dec. 30, Molycorp (MCP +6.6%), Avalon Rare Metals (AVL +3.8%), and Rare Element Resources (REE +6.5%) all had large chunks of their floats shorted.

    J.D. Power sees U.S. vehicle sales picked up in January to reach 10.9M units – marking a 5.8% Y/Y gain but a slight decline from last quarter's total of 11.3M. The firm says an important metric – average days that vehicles spent on dealer lots – has moved to a multi-year low for January.

    Airbus (EADSF.PKconfirms that recent reports of wing cracks in A380s are correct -  but deems the aircraft "safe to fly." The company says that it's now worked out a solution to the design and manufacturing flaw that created the issue. Though the shares of rival Boeing (BA +0.5%) perked up a bit around the time of the report, the action could be related to other matters after BA reported Q4 earningsand a major sales contract earlier in the day.

    Corning (GLW -10%) shares continue their post-earnings slide, as investors focus on dismal conditions in the LCD glass industry. Prices will continue to fall rapidly, GLW warns, with no growth in the core display glass business over the next few years. "We believe Corning is approaching a new floor in terms of profitability, [and] our plan is to grow profits from this new level," CEO James Flaws says.

    Though IDC estimates global PC  shipments grew only 1.6% last year, it believes shipments to the Asia-Pac region (exc. Japan) held up much better, growing 11% on the back of surging Chinese demand. The industry's growing reliance on Asia-Pac sales should help Lenovo continue its share gains, but is a mixed blessing for Microsoft (MSFT), given the region's high piracy rates


    Mobile infrastructure giant Ericsson (ERIC -15.8%) isn't seeing any mercy after delivering a weak Q4 report that featured a 20% Y/Y drop in North American sales, and confirmed existing fearsof a soft telecom capex environment. A 640 bps Y/Y drop in Ericsson's gross margin is also a point of concern. Falling in sympathy: ALU-7.5%JNPR -2.7%CIEN -2.2%TLAB -2.8%. (transcript

    As Apple (AAPL +5.9%) celebrates a very strong FQ1 fueled by soaring iPhone sales, a source at contract manufacturer Foxconn tells 9to5 Mac the iPhone 5 will feature a 4" display, in-line with prior rumors. The source adds that while Foxconn has received a variety of sample devices from Apple, none feature the same form factor as the iPhone 4 and 4S. (more) (transcript)

    "Awe-inspiring," "stellar," "blowout" and "blockbuster,” are just some of the superlatives gushing from the keyboards of analysts following Apple's (AAPL) jaw-dropping (and there's one from us) FQ1. MarketBeat rounds up the love-fest as Ticonderoga's sets a "devilish" price target of $666, while Hudson's is $700. Shares +6.2% to $446.56. (earlier: III)

    Three lunchtime reads:
    1) The 10 commandments of commodity investing
    2) China: On building debt
    3) Strong dollar advocates make a weak case

  252. The streets are safe today. The stranglers (including me) are sitting this one out.

  253. Holy cow – they still have German guys with that accent?  I though the Bernanke conference had accidentally switched to Dr. Strangelove for a minute.  

  254. Why isn't this freaking market moving??? (Down!!)

  255. OBV / Pharm – I had seen the interview yesterday, but he needs to be specific. OBV on a daily chart is not bad now. On a weekly chart, we are down but rising. But I agree that if you compare to the highs of last year, there is a discrepancy that is hard to explain!

    Weekly SPY Chart

  256. CAT straight 45 degree angle UP since 10 am PST….. They better blow away earnings.

  257. Oh! I know… is waiting for me to go long!! ;)

  258. Gold/Silver – what a day! sometimes you just gotta have faith!

  259. what's really odd about all the this pushing is that usually they will do this overnight.  We have not seen a decent 3am run in a long time (actually everything is under pressure at night), yet they push NY, which is more expensive.  The only explanation that comes to mind that there is a lot more pushing to be done, so they actually want to buy size rather than just gap and park like when just want it higher????

  260. XRT / Phil – I totally got that part, but after selling the existing 5 XRT 55$ calls, i couldnt sell the second batch as i run out of margin.  
    And then you suggested "How about if you buy the $60s for .20? " This is the part that confused me. Sorry if i am a bit slow, will catch up, i promise :-)

  261. Pharm….Granville prediction seems very unlikely

  262. Phil/1%
    $365,000 a year……that's it???? 
    I thought you were supposed to be filthy rich to be in the top 1%.

  263. StJ – probably wants you to read his book, but the jist that I understood is that price proceeds volume.  Volume has been tapering off b'c there are no sellers, but when they do come in…..then the descent begins.  If you look at your chart, at the top in Apr 11, we were at 137 on the SPY and OBV was at 4000M.  Now we are at 132 on SPY and we are -3700M!  Yikes!

  264. Phil
    If you want to be on TV first go to accent school!  You must at least sound like your FROM somewhere to be believed, not US.

  265. BDI is down another 4%.  I guess they are shipping everything though the cloud……

  266. From jarbo at Cobra's site:

  267. Phil,
    Any other adjustments before EoD for $25kP? Bullish now?

  268. Goldbugs – a good overview on recent gold price action and technical supports from goldbugs perspective. Support/resistance lines discussed. You might not like gold, but do you really want to bet against it?

  269. Hi, All,
    Took two days off because a good friend of mine stopped by.  Didn't seem like I missed anything. :)
    Have you folks heard of; This is a place where people who need some short-term, small loans can come and borrow money.  And people who have money to invest can get a decent return with a reasonable risk.  Has anybody invested any money on that site?
    BTW, this is not a bad idea for PSW's Berkshire-like enterprise.  It helps people, too!

  270. Bloomberg says Timothy G announcing some breaking news at 4:00. Any speculation from anyone?

  271. Phil – XRT Feb Bear Put Spread
    A week or so back you like the 53/55 Bear Put for $1.  It's down about 50%.  Would you roll out to different strikes/months?

  272. Fed did less than expected… Are we so fully in an Orwellian world that it doesn't matter?  Low rates until 2014?  DUH!

  273. stj…..Closed out the Jan 425/430  bcs on AAPL for 4.95 per contract.    That's  22.58 and 17.63.     Took most of the day for the trade to go through.   That's rule # 324, or whatever……….Never accept or pay what they want on a trade, but always what you want.   So right now we are about 40% invested in long-term AAPL bull call spreads, about 60% in cash.  I'll probably just sit back and watch for a day or two to get some sense of where we should go next.  We might even get a little pullback in the stock in the meantime.  That would be a good thing, for the next entry.   As for now, we are safely in cash and long-term bull call spreads.   What could be better than that?  Oh yeah, Red Snapper and vintage Carbernet S. 

  274. Looks like Mr. Stick is going to show up today.

  275. JR/Negated

    NEGATED!!!!……..what do you mean negated…..!!!
    I've margined everything we have on that pattern.  Including the island property….the boats….the fancy cars….my matching father/son Bush bobbing head dolls….the platinum NRA membership plaque….our butlers coach house…..the Rush autographed "impeach Clinton" jersey…….the Harley………the G4………the  Gold Mine……EVERYTHING!!!!!
    I demand that you retract that post.

  276. You're welcome Burr!  Those guys went on a nice tear.   Right on BKS (or anything like that). 

    AA/Yshen – I don't see anything yet that means Europe will buy more aluminum now or that Asia's economy goes back on a tear just because the Fed keeps rates at 0.25%.  

    Dollar down from 80.40 at the open to 79.75 now so .65 is just under 1% and the markets are not up 1% – REALLY?

    Shorts/TraderM – Whenever you get a sharp move against you, the two best moves are nothing or rolling/DD to take advantage.  If the move continues the 2nd day, THEN you have to begin to capitulate/counter-hedge.  So, it depends if you are trading, in which case you might want to be aggressive, or hedging, in which case you should be making money on the long side, only less than you wish.  

    Pushing/Lapper – I think they were heli-pushing ahead of the Fed and NOW they need to do whatever they can to make their exits.  If I'm right, we'll see volume pick up into the close but down or flat moves in the indexes and then we'll see flat or up overnight and big volume in the morning, also not moving us up.  

    Dow volume now 93M at 3:20

    XRT/Dpast – In other words, you end up with a $55/60 bear call spread for net $1.75 as that keeps margin at $5K.  I don't like those spreads but, if you need it to cap margin, then it's a tool that's available.  

    1%/Exec – No, that just illustrates how little most people make (something people in the top 10% generally don't understand).  1% is 14M wage-earners in the US.  1.4M make $1.6M a year – that's a lot really.  140,000 make $5M a year, 14,000 make about $13M a year ($1M a month if you can spend it) and then about 1,400 people make $40+M a year.  Keep in mind that's INCOME, not assets.  For many people, they have one really good year when they sell their business or have one of their stocks turn 10-bagger, whatever.  Those people blip up on income once and then drop back down but the asset money stays and makes more money.  

    Income Change 1970 - 2008

    $25KP/Kallen – I was looking at a bullish financials play, that's logical if we have QE fever.  I suppose we can go for 5 FAS March $83/88 bull call spreads at $2.20 as they shouldn't get hit too badly if we pull back and easily in the money if XLF goes over $14.50.  

  277. UK double dip, French and Euro zone in recession, Japan first trade deficit in 30 years……………………………….


    BUY, BUY, BUY: what could possibly go wrong?        8-)

  278. Oil coming back to $100 but Dollar back down to 79.57 (new low).  Dow volume coming close to 100M with 20 minutes left.  

  279. JRW
    You must be right! Buy! Buy! Buy! It's safe to go back in the water now folks!
    Nevermind the large gray dorsal fin swimming in circles!

  280. Financials not participating in today's move at all. hopefully this is a blow off top.

  281. I think that grey dorsal just took off my right leg!

  282. I wound up today with a spread on SPX, long 1330 and short 1335 (weekly, this Fri). The spread is worth $1.60 net (3.20-1.60). Do any spread players out there care to suggest a move for me? I'm leaning toward cashing the 1330s and leaving the 1335 naked (and rollable)

  283. Target 1327 on SPY today?

  284. Any play on CAT running very high at 109! reporting tomorrow

  285. I4real

    Careful….JR might be loosing his touch.  He just retracted his prediction.
    Christ……last time something like that happened was when Dent predicted the sky was falling and to sell everything.  Then he came out a year and 6000 DOW points later and said……never mind.

  286. Phil:  My hedges are below.  I'd appreciate any suggestions regarding adjustments after the market closes when you have more time.  Thank you.
    EDZ Feb 16 /20 BCS @ 1.35, now .30 offset by short Feb 15 puts @1.18 now 1.85
    EDZ Feb 18/23 BCS @ 1.28, now  .15 offset by short Feb 16 puts @ 1.03 now 2.65
    EDZ April 14/19 BCS @ 1.4, now .95, offset by short April 13 puts @ 1.21 now 1.50
    EDZ April 15/20 BCS @ 1.65 now .70, offset by short April 14 puts @ 1.25 now 2.10
    TZA Feb 24/28 BCS @ 1.09 now .37, offset by short Feb 21 puts @ .93 now 1.33
    TZA April 26/38 BCS @ 2.17 now .98, offset by short VLO Jan 15 VLO puts @1.45 now .75
    VXX Feb 29/33 BCS @ 1.19 now .61, offset by short VXX Feb 27 puts @ 1.18 now 1.86

  287. Exec:  That's pre-tax.  With ordinary income rates or short term capital gains taxes, you're down to $240,000.  Throw in three kids in college, a mortgage and a wife with ordinary tastes, and you hardly qualify as the stuff of proletarian fantasy.  But democratic politics require stereotyped victims and villains, because reality is irritatingly complex and not sufficiently conducive to simplistic slogans.. 

  288. Hedge maintenance/Phil – any good weeding, rolling or sowing to do with various EDZ, SDS hedges?

  289. Thanks lflan… up to date now!

  290. Phil/1%

    You're right about that.  With two income families I would have expected that number to be much higher.

  291. Capitulation throw-over top?  Could be.  Where's the juice coming from in the days and weeks ahead?

  292. Chart / Pharm – Agree, that was the point of my comment – the divergence between last year and this year's volume. On the other hand, it seems to be rising now and we actually broke over the previous resistance level which would be bullish. For now, I am cautiously neutral and aggressively cashy!

  293. I believe the 1% threshold is right at $500k.

  294. New low in the dollar now; who could have guessed?


    And what was all that talk about shorting the market?   Tsk  Tsk !!

    User avatar

  295. Lending club/Cwan – Seems like a nightmare to administer with regs and all but some people seem to be working it out on the Web and in India it's a very big thing.  

    Timmy G/IZega – Wow, they are really bringing all guns to bear today.  

    XRT/Burr – Yes, that ended up being our $25KP play, we took the $55s off the table and essentially ended up with naked calls, which can be rolled to the next month.   So you can cash your call at $1.50 and roll the short $3.15 caller out to March $54 calls, now $2.88 and I'd ask for an even roll as it should happen eventually.

    Orwell/Peedle – Well, that's what Bernanke said.  The economy is bad enough that the Fed sees no sign of improvement between now and 2014 so they will keep rates "accommodative" unless inflation goes over 2% (a sign of growth, which they don't see happening) AND unemployment goes below 6% (another sign of growth they don't see happening).  Therefore – we buy stocks, right? 

    LOL Exec – not the coach house!

    CAT/Yodi – Too burned on shorts to look but you can sell Feb $110 calls for $2.85 and buy a $105 put for $1.90 if you want to short them aggressively.  

    Hedges/John – Not a lot you can do when you slip that far down.  You can pull the calls out of the EDZs to get a little extra (and leave the naked puts to hopefully expire worthless) and then use that cash to roll your April calls lower and just hope that pays off.  TZA is the same deal, you can still get .62 for the Feb $16 calls and that money pays to roll the April $26 calls ($1.81) down to the April $23s ($2.42) and there you go.  You're only down about $1.50 that way with TZA at $21 so not much of a move up and you're in good shape again.  All your offsets are aggressive so you'll have to roll them but next time, try just having one position and working that one by rolling, etc, rather than 7 with 21 different things to adjust that all actually are the same bet (market down) anyway.   Look in the Income Portfolio – we have 2 hedges against the whole portfolio – when we want to get more bullish – we sell against one of them and we're done in 2 seconds.  

    Various hedges/Scott – Yes, now is the time to press them or at least roll them out to longer months at lower strikes.  If they are a hedge, then that's the cost of your next few month's insurance.  

    1%/Exec – No, sadly for most people, $49,000 per family is with 1.5 people working on average.  

  296. Phil
    What are you thinking on GLW at this point?

  297. So here we are with the Dow near Monday's high with all of this positive news…

  298. so geihtner is done I wonder which fund he will go consult with?

  299. The news is that Timmy G will not stay as Treasury Sec. for another term…

  300. How is GOOG down $10 today? 

    GLW/Seer – The same thing I thought of them earlier.  

    Well, there's the bell and we sold off into the last minutes and volume jumped to 125M on the Dow.  Still, we'll have to respect the technicals if they make it through tomorrow and it still looks like financials are going to be my favorite bull trade.  

    Nas futures are lower now (2,460) than they were on yesterday's AAPL spike (2,469) and the Dollar is down at 79.55, 1% lower than they were when AAPL spiked to $468 yesterday (now $447).  You can draw your own conclusions – you know what mine is!  

    NFLX flying – don't know if they announced or someone just loves them but $107!  

  301. Phil?NFLX
    Thanks for the Sage advicethat the bear put spread would be akin to placing my bet on red…my butt hurt too much already today so a no trade there is a nice bright spot for my otherwise tough day

  302. Phil / GOOG — CSCO and INTC didn't participate either.

  303. Phil,
    I don't know what your conclusion is re dollar and 1% lower than AAPL spike. I'm sure it will be obvious when you tell me. Perhaps you should have a conclusion lookup number that I could reference and I wouldn't have to ask. :-)

  304. xero It's all relative, isn't it?Maybe Phil needs to post nickel and dimed again.

  305. At the close: Dow +0.61% to 12753. S&P +0.86% to 1326. Nasdaq +1.22% to 2464.

    Treasurys: 30-year +0.41%. 10-yr +0.53%. 5-yr +0.41%.

    Commodities: Crude +0.81% to $99.75. Gold +2.77% to $1710.65.

    Currencies: Euro +0.58% vs. dollar. Yen +0.09%. Pound -0.29%.

    QE Victims:  Life insurers Lincoln National (LNC -4.5%) and MetLife (MET -2.9%) slide as investors question how they can maintain bond portfolio income after the Fed said its benchmark rate would stay low until late 2014. U.S. life insurers hold more than $2T in bonds including corporate debt, munis and mortgage-linked assets, which they use to cover policyholder obligations and generate profits.

    Gee, ya think?  A federal appeals court late yesterday upheld a ruling against General Electric's (GE +1.5%) financing arm, charging that it allegedly used a complex partnership arrangement to skirt its U.S. tax obligation. The company already attracted similar attention last year, after reports surfaced that it effectively paid no federal income taxes in 2010.

    Valero Energy (VLO +2%) gets a boost today from positive comments out of BofA Merrill Lynch, who reiterated the stock as one of its Top Picks. 

    Netflix (NFLX): Q4 EPS of $0.73 beats by $0.18. Revenue of $876M (+47% Y/Y) beats by $18.1M.. Shares +12.9% AH.

    By the way, he're a nice picture of what I mean about earnings (from this morning):  


    January 25, 2012

        Before The Open Ticker Actual   Consensus Yr Ago   Yr/Yr Rev  
    Conference Call (Telephone) Abbott Labs ABT 1.45a 1.44 1.30 4.1% Guidance In-line
    Conference Call (Telephone) Allegheny Tech ATI 0.31a 0.54 0.15 20.6% Guidance Downside
    Conference Call (Telephone) AmeriGas Partners APU 0.55 1.12 1.06 -2.3%  
    Conference Call (Telephone) Applied Industrial AIT 0.56c 0.54 0.49 7.7%  
    Conference Call (Telephone) Automatic Data ADP 0.68a 0.68 0.62 7.4% Guidance Mixed
    Conference Call (Telephone) AVX Corp AVX 0.22 0.27 0.36 -16.0%  
      BankUnited BKU 0.41 0.39      
    Conference Call (Telephone) Bemis BMS 0.45a 0.39 0.49 1.7% Guidance In-line
    Conference Call (Telephone) Boeing BA 1.32a 1.01 1.56 18.2% Guidance In-line
    Conference Call (Telephone) Callaway Golf ELY -0.41 -0.40 -0.47 -17.2%  
    Conference Call (Telephone) ConocoPhillips COP 2.02a 1.79 1.32    
    Conference Call (Telephone) Corning GLW 0.33a 0.33 0.46 6.9%  
    Conference Call (Telephone) Cullen/Frost Bnkrs CFR 0.90 0.87 0.87    
    Conference Call (Telephone) Delta Air Lines DAL 0.45a 0.35 0.19 7.8%  
    Conference Call (Telephone) Dover DOV 1.07a 1.04 0.94 15.4% Guidance In-line
    Conference Call (Telephone) Exelon EXC 0.82 0.88 0.96 -6.1%  
      First Cash FCFS 0.70 0.69 0.59 14.9% Guidance In-line
    Conference Call (Telephone) First Commonwealth FCF -0.05 0.09 0.11    
    Conference Call (Telephone) First Midwes

  306. Kallenjr, i believe Phil's point is that the Nasdaq should be up 1% based on AAPL's price movement and that the 1% drop in the dollar did not contribute anything to the Nasdaq today. So, really weak action on Nasdaq hidden by AAPL.

  307. Damn, that didn't all come out but it's 24 out of 54 misses with 6 lower guidance and one raise?  This is every day.  Usually you have 60-70% beats but you never have 40% misses – they are usually mainly in-line.  



  308. Junior gold miners up 7% today.  I just don't get it.  If I had the balls I would short the hell out of this bullsh!t… But I like my $$ too much.  Also feel like I've missed the run… Boring boring cash (hedged completely… lost $78 today.  At least I've learned how to hedge affectively.)

  309. For every 10M today in treasuries…one would have made $60K.  Now, may not sound like much, but when you are moving hundreds of M or several B in a market…that is GOOD money.  They probably covered the move with the dollar……primary dealers are tricky bastards, as when there is competition for capital, they sell the market, when they need to move treasuries after the Fed announcement, the trash the dollar to boost their carry trade.


    AMGN to buy DNDN.  Keep 'em comin' boyz….SGEN would be better plz.

  310. Woops, Dow volume officially finished at 135M so 35M (1/3 of day) in last 20mins and it was down volume.  

  311. SNDK misses by 40%….

  312. mampcsA,
    Thanks. So possibly Nasdaq may be first index to show correction? Or Dow, S&P, Russel to outpace Nasdaq going forward?

  313. And THAT is how you manipulate a Treasury Auction!  

  314. Pharm, what was that about AMGN buying DNDN?  Like, "yeah, sure…" or  "it's happening but it's dumb"  -  I couldn't figure out how you're spinning it…

  315. Phil,
    I'm not feeling very smart today. But are you saying there was a Treasury Auction at the same time the FOMC news was released (12:30 EST)? Only news I saw was a $35B 5 yr bond auction at 11:53.

  316. exec: 3:33 comment
    Thanks for that post, caused my first smile all day ;)

  317. CMG will have weekly options, finally.   First one coming out tomorrow to expire 2/3.

  318. hi Phil,
    Jan 2013 12.5/15C debit spread, entry cost $1.51, currently around $2.1.  Looking to sell $12.5 call and buy 2014 $15C, for about $1.45 credit, to pull cash out, before Feb earnings date.  Net position will be a calender spread Jan 2013/14 $15 call with a $0.8 debit and hopefully, Jan 2014 $15C will retain more than that in additional premium, to generate net return of $2.5 or so.  
    Do you see any scenario where this could end up in trouble? How would you manage such a trade?  Would it be good to sell some puts (1/2?) while waiting for the calender spread to work? What strikes would you suggest? (2013 17.5P, is about $1.4) Thanks in advance. 

  319. drmtv10: love those trades
    great idea, set up complicated trade and then have Phil fill in the stock…:)

  320. Did anyone notice Obama said a 30% tax rate on income over a million REGARDLESS OF SOURCE? That means the coveted 15% on long terms capital gains is included.
    If so, this is big. Very big.

  321. LVModa, Yay to CMG weeklies!!!  Since it never goes down it should make an excellent strangle candidate!  Check out the IV between the front month c/ps and, say, June.

  322. AMGN/DNDN – just saying that rumors were floated today.  Last month is was Novartis (thus the pop in late Dec).  I don't see AMGN buying them in any way shape or form…..could be wrong, but from a strategic standpoint, it makes little sense.

  323. biodiesel: Fortunately, it ain't gonna happen. And that's not because people in that high income class are going to the mat to fight it. In the end, you are required to show how taxing away honest gains (well, mostly) actually HELPS your poster children in the middle class. The dems will fail to make that case. Unfortunately, I am afraid the other side will choose not to press it.
    Oh, and for those concerned about my SPX spread, I cashed in half the long 1330s, and held the short 1335s.

  324. Taking a quick look around it looks a lot like everyone is drinking the imaginary kool aid…….I guess you really can slide farther on bullshit than gravel, and I know too because 9 PhDs confirmed that today.

  325. DXY:SPX pdf.  Interesting…..

  326. no QE but QE forever and ever, or as Walt Disney put it; "what a wonderful world after all"!

  327. Phil / XRT Bear PUT Spread  -  I don't have a bear call spread on, I have a bear put spread on.  I think from another trade reccommendation you had in quotes when we were discussing hedging.
    If I understand you right though I should cash in the long put, and, roll the short put out to march?  

  328. Speaking of taxes….


    Johnston: The Romneys gave $100 million to their sons and paid not one penny of gift tax. They were able to take assets they have that are producing enormous income and,

    under the law, give that money to their children and not pay any taxes on it.

    Sambolin: Is that something you specifically found in what has been released to you?

    Johnston: Yes. I have suspected this and written about it in my column that this is what happened, and last night, Brad Malt, the attorney for the Romneys, confirmed to Reuters that we were correct. They have not paid a penny of gift tax. That's because Congress allows a very tiny group of people — the Romneys by their income are in the top 1% of the top 1% — to not count as having any value the real source of their income, something called carried interest, if they give it to their children.

    Welcome to the wonderful world of estate planning for the super wealthy. The Romney kids will have to pay taxes when they start taking income from the trust their father set up for them — at the usual 15% rate paid by millionaires, of course — but the inheritance itself is blissfully tax free. It's just another of the many benefits of running a private equity firm.

  329. The EDZ hedge is eating the portfolios it was supposed to protect like Langoliers in the countryside.

  330. Bio:  Never going to happen.  The essential distinction for which Long Term Capital Gains legislation was passed was to recognize the difference between investing longer term to as a means of providing capital to industry [yeah, I know other stuff counts, like holding gold, a useless rock, for more than one year] and HFT.  They will go after HFT and short-swing trading, but leave the long stuff.  
    Just my guess -- and, on today's form, I wouldn't put much stock in my guesses.  Oh,I called "no QE3" quite accurately — but apparently couldn't work out the implications correctly, which was the whole point of the exercise.  I'm in self-immolation mode tonight.  

  331. Zero – I have been on the no QE3 bandwagon since last November….has done me no good.  I still think they are messing with the TA people, and just when, just barely when they go long…..

  332. One thing everyone notes is 30 min into trading (I have mentioned it several times here before), go long, as the low of the day is in. 

  333. zeroxzero…… need to be too hard on yourself. after all you were up against the MACHINE so i hope you didn't take too much of a risk.
    no QE, but QE forever and ever……….all of the analysts are drinking the kool aid form what i can see. amazing how the headline suddenly turns to QE all over the place.
    who guessed that outcome. last time the FED met i shorted right off the release without hesitation. this time the shorts i did i got burned with and the DAX short i took yesterday i closed out today on the pullback.
    i think there was a HUGE amount of timed manipulation-makeup put on during the recent trading sessions and almost impossible to trade. can't prove that but price action and the timings certainly gave that impression.
    you have to believe that whatever the FED has prepared is not really embargoed form the PDs or insiders.
    live to fight another day, right? if you were in the neighborhood i would buy you drinks.

  334. barfinger – " NoshNoshNoshNoshNoshNoshNosh….."   hehehehehehhehe

  335. CaFords – thanks for providing that link. It may be useful to me for another issue I've been trying to address.

  336. Given all the hand wringing about taxes today, it is clear Obama Central Command has been successful (initially anyway) in implementing their re-election strategy. Namely, emphasize class inequity , etc to deflect from the actual record. Just sayin'…
    As to shorts- I too have been getting hosed a bit more than is comfortable. The market has plowed through technical barrier after barrier with hardly a pause worth mentioning. I just know this will reverse likely in a wave of selling but I have nonetheless been forced to trade what is there and trim the shorts and add to the longs. Hopefully I will be nimble enough to adjust quickly when it happens.

  337. not sure what to make of today? you are not alone;

  338. roro — Thanks for the words of cold comfort.  I own longer term equity funds which I don't manage, and try to console myself with the fiction that I was hedging them by being short.  Unfortunately, my definition of "hedge" is to make money with a shorter term fund when the longer ones may tend to decline in value, not to simply take opposed positions to cancel out potential gains and losses — that could be accomplish by just investing less and going to the beach.  I have at least learned to not rationalize my stupidities — in the present case, the stupidity of assuming that I knew what effect a no-QE announcement would have on equities and the dollar.
    "It ain't what you don't know that hurts you, it's what you know that ain't so."  

  339. St. Jean Luc
    How do you determine your oil lines each morning? Thank you

  340. Phil—do you remember a PSW member by the name of Kim Iskayan—-some time back he contacted me re contacts in Sri Lanka as his wife was being posted there by the US govt—to make a long story short , yesterday one those contacts had a charity fund raiser and I met Kim—-just thought I would let you know as to the very wide reach of your site—-and reiterate that I am very glad to be a member

  341. FWIW, I think today the Fed did little to nothing. Today’s rally was a show engineered to make Ben look good on his big day. We will see if I am reading this right.

    meanwhile, AAPL – wow. sure wish I just did whatever Iflan has been doing.

    Congrats to those of you who profited.

  342. Savi – funny coincidence.

    I met Kim in NY shortly berfore he left.

    Nice fella.

  343. Cap—that is a funny coincidence

  344. Hang Seng is open again, up 1% but playing catch-up from last week.  Nikkei down half a point at the open, Shanghai still closed.  

    Japanese shares reverse opening gains to trade lower this morning on some early profit taking. The Nikkei Average is currently down 0.1% at 8,876 with exporters leading the selling: Toshiba (TOSYY.PK 1.7%), Sharp (SHCAY.PK -0.6%), Hitachi (HIT +1.2%) and Elpida Memory (ELPDF.PK -2.9%). 

    Our futures dead flat – even oil flat.  Dollar 79.58,

    Market recap: Stocks bounced higher and Treasury yields tumbled as investors took the FOMC's dovish statement as QE-lite. Three- and five-year yields plunged to three-month lows; the 10-year fell to 1.92% before rebounding. The dollar fell to its low for the year, and gold spiked past $1,700/oz. Apple's record quarter helped boost tech stocks. NYSE advancing issues surged past decliners two to one.

    Notable earnings before Thursday's open: ABCANAVT,BAXBMYCATCELGCLCNXCOV



    Timothy Geithner says that he doesn't expect to be asked by President Obama to serve a second term if he's re-elected – telling Bloomberg TV that he's "pretty confident" he will be out of a job next January.

    A Way to Make People Buy Homes Again (NYT

    Oh no, now Mitt wants to tax the rich too?  Mitt Romney was just following the tax laws when he paid a rate of 13.9% on income of more than $21M in 2010, Carlyle Group's David Rubenstein tells a Davos forum on the future of capitalism. But if elected, the presidential candidate reportedly might consider ending the carried interest tax break which allows PE executives like himself to pay such a low tax rate.

    Mitt Romney Is in the Top 0.0025% (WSJ)

    Billionaires at Davos Bemoan Inequalities (Bloomberg)

    Will Emerging Markets Fall in 2012? (Jeff Frankel)

    A Pentagon budget proposal that will be previewed this week will feature $260B in budget cuts through 2017, and $487B in cuts over the next decade. Lockheed Martin (LMT) stands to be among the defense contractors hardest hit; the cuts include deferring the purchase of 179 F-35 jets due by 2017 to later dates. (previously)

    Long-term investors might want to look past the headline decline and consider a buy-and-hold stake in Corning (GLW -10.7%), which Jeff Reeves believes has the prospect for a "significant rebound." Corning is a well-run company with a history of good numbers, and its new Gorilla Glass 2.0 could begin boosting results just in time to stabilize the stock and help it bounce back. 

    Netflix confirms during its earnings call it won't enter the video game rental market, as it claimed it would during the short-livedQwikster era. Meanwhile, Erick Schonfeld notes Netflix's 10.9% domestic streaming margin, while beating guidance, is a fraction of its 52.4% DVD rental margin. With the former business growing and the latter one declining, margin pressure is likely to continue. NFLX+13.6% AH. (more

    More on Netflix: Its Q4 beat was mostly due to a 220K Q/Q increase in domestic streaming subs, beating guidance for a 1M-1.5M decline, and contributing to a division margin of 10.9%, above a forecast of 8%. Domestic DVD subs fell to 11.2M, near the high end of Netflix's guidance range. International streaming subs grew by 380K to 1.86M, and are expected to reach 2.5M-3.1M in Q1, though a Q1 loss of $108M-$118M is forecast for the division. NFLX +14.3%AH. (.pdf

    Research In Motion (RIMM +8.6%) surged today, and many are left wondering exactly why. Short-covering could be a factor, especially with many shorts sitting on large gains. Reuters made noteof the hopes surrounding the appointment of Canadian activist investor Prem Watsa to RIM's board, though Watsa's appointment was already known. 


    Google (GOOG -2%) underperformed the tech sector today on strong volume. Apple's (AAPLresults, and the share gains they imply for iOS relative to Android, could be one reason why, though Google generates plenty of ad revenue from both platforms. Another factor could be the strong backlash to privacy changes announced yesterday, the second major controversy Google has ignited this month (previously).

    Fascinating history: How Slavery Led to Modern Capitalism (Bloomberg)

  346. Phil/ JNPR
    What are your thoughts on the following:
    Planning to institute an earnings play, with earnings being reported after market open, Thurs, Jan 26.
    Feb 23/25 BCS at net debit of $0.66, financed by selling 2X the Feb $20 puts for $0.64
    The stock’s low over past year has been $18, and given CSCO’s upturn the past quarter, JNPR has not yet benefited.

  347. many of my trading associates are saying what so many on the site are…it's manipulation it's the bots.. the sovs are buying the fed is buying…BUT today's action builds on recent gains.. DESPITE rising eurozone debt angst…rising energy prices..uninspiring Fed commentary and profit taking…. many of my posts are satiric outrages with the non stop onslaught of buying i also think we are going much higher..i wouldnt get too obsessed with WHY we are moving higher it really doesn't matter..the trend is up…the cliches are aligned with the bulls …particularly 'don't fight the fed'…i am short from 1307..( i thought i was patient waiting.HA!)….remember what Keynes said about th emarket 'can remain irrational longer than you or I can remain solvent'

  348. Looks like South Korea is having some engine problems as well:
    South Korea’s Economy Grows at Slowest Pace in Two Years

    "South Korea’s economy grew the least in two years in the fourth quarter as exports sank because of Europe’s sovereign debt crisis and a faltering global expansion.

    Gross domestic product expanded 0.4 percent from the third quarter, when it gained 0.8 percent, the central bank said in Seoul today. That was less than the median 0.5 percent estimate of 10 economists surveyed by Bloomberg News. From a year earlier, growth was 3.4 percent. "

    Hey a little free money here, a little free money there and it'll be running like new in no time!

  349. Correction/Kallen – I think the Dow is still far enough ahead to make the best short, RUT probably best bet to catch up (if we're going higher) and yes, I meant bond auctions. 

    Mystery stock/DrM – I want to go with GLW but no way do they have those spreads so it's got to be something over $15 so I'm going to go with CSCO, who do have earnings Feb 8th and do have 2014s to sell.  So, you have $7.60 in the 2013 $15s and you want to roll to the 2014 $15s, now $6.20, which is a $1.40 credit and I guess $1.45 we can work with there.  What do I think of that?   I think you have $2.15 of a possible $2.50 in the spread and you can just take it off the table and be happy without the .35 after another year.  The calendar spread is crap as the caller is deep in the money and you're paying more premium than he is and you have a lower delta than he does so a move up would crush you.  So I would manage such a trade by taking my money and looking for a cheap stock to play with my $2.15.  If you want to play CSCO long and you are willing to own some, the 2014 $15 puts can be sold for $1.65 and that pays for most of the strike spread of the 2014 $22/2013 $20 spread at net .20 and I like CSCO well enough that I'd do a 4/3 spread (25% more bullish) so you have virtually no chance of losing to the upside and your worst case downside is owning CSCO for net about $15.65 (a 21% discount) or less if you want to sell 4 puts instead of 3.  

    Tax/BDC – I think he said minimum tax and if that applies to Corporations, I am 100% in favor.  

    XRT/Burr – Yes, sell your calls into the initial excitement and roll the short calls to be naked short calls at a higher strike with more time to fail.  Set an action line, like $56, at which you have to take some sort of cover action and then don't worry about it otherwise.  

    Big Chart – So impressive now, if we can just hold it over the weekend…  

    Wealth Transfers/StJ – Good stuff, isn't it.  Hey any ordinary American can do this too.  Just have your lawyers and accountants get together and set up some trusts and transfer the funds to them to avoid that pesky "death tax".  

    Pain/ZZ – At this point (tippy top of our range) the only thing we can do is switch off our brains and go technical.  Like with the FAS trade in the $25KP, if the rally is real – how can it not pay?  You can go for a few conservative, in the money bull call spreads that pay UNLESS the market drops to pay for the rolls of your short positions.  If we do drop, you still have the covers and, if we don't, the rolls were free. 

    Kim/Savi – That's great.  Say hi for me if you're still there.  I'm really envious of your trip, love it when you check in! 

    Show/Cap – I hope so as I'm misreading the markets otherwise and I really hate it when that happens!  

    JNPR/Maya – Techs have been all over the place on earnings.  That's fine if you REALLY want to own them, of course but keep in mind the only way you'd be owning them is on bad earnings.  

    Higher/Angel – If we hold our breakout levels we have no choice but to switch off our brains and go with the flow until a new range is established.  Tomorrow we'll see how Jack's line holds up and, of course, I can't see jumping on the bull wagon ahead of the weekend but Monday, if the World is still all happy – then we need to be too, so call Pharmboy and tell him to whip up a batch of happy pills for everyone!  

  350. Today fade aapl at the open was a nice trade as historically they pull back a little. I usually buy puts next strike down for a quick hit with just for fun money.  I was able to get almost 200% today.   Maybe tomorrow NFLX will give the same?   I've never done with this with nflx.  Has anyone ever tried this play?

  351. PHIL//I am not sure if he has any happy pills left given his (at least previous bearishness)..the markets have frustrated a lot of very cool heads..i ve gone form up 12% in futures this month in futrues to down ..11bps..still short index long bonds short euro long oil short RBOB long gold silver and copper…my equity porfolio is up about 10% this month..tomorrow that will change a bit as i am short nflx..we are extremely overbought but that becmes a sign of strength at some point

  352. Phil………..the Beige Book was fairly upbeat, right? so how does the FED go from an upbeat outlook to a much more downbeat outlook at the FOMC only a few weeks later?
    OIL is back over a 100

  353. i like this one by Bruce Krasting; Bernanke Goes All In
    BK………. "My question: “Why is the Fed using CPCE versus another measure of inflation?

  354. I guess Portugal must be kosher because it seems to be chopped liver ;)

  355. Zero Hedge ????  Jeepers —  Not that there's anything wrong with that!!

  356. thanks Phil—will say hi to Kim --I will be seeing him tomorrow at another function

  357. ‘Fool in the Shower’ to Give Fed a Good Scalding: Caroline Baum
    (the picture says it all . . . .)
    The bottom line is, when financial institutions can borrow for free and are encouraged, verbally and nonverbally, to take risk, eventually they will.

  358. Geithner out of a job???????????
    There few things in life as sure as the fact that  Geithner's 'job' —-after serving as Sec/Treas to  the Top .01% of the 'murican people—- was lined up three years ago, with appropriate guarantees, emoluments, and perquisites to make Soros blush.
    To say he will be out of a job is like saying Babawawa, Regis Philbin are 'retiring'. 

  359. Phil / XRT PUT Spread – I'm confused why you keep talking about calls.  I have a PUT spread open.  Here is the trade rec:
    Just looking for a good roll or adjustment recommendation.  I like keeping a few downside plays like xrt, and hedges like tza and edz.

  360. Good morning!

    Quite the head fake in the Futures earlier, down 0.4%, then up 1% from there and we're netting out +0.25% from yesterday's close so far.  

    China played catch-up with a 1.6% gain but the Nikkei finished down 0.4% and India up 0.5% with Shanghai still closed, so another catch-up day ahead if we hold on.  

    Hong Kong stocks jump as trading resumes after the Lunar New Year, while China's exchange will remain closed until next week and India's market is shut for Republic Day. Hang Seng +1.5%, Nikkei-0.4%, Seoul +0.25%.

    Dollar smacked down to 79.27 with the super-strong Euro at $1.316 and the Pound flying to $1.57.  Yen at 77.50 despite NEX announcing 10,000 job cuts and a 100Bn Yen loss for the year as AAPL claims another phone-making victim.  

    NEC Corp. (NIPNF.PK) will cut 10,000 jobs after saying it expects to post a ¥100B loss for the year ending in March, a sharp divergence from earlier estimates of a ¥15B full-year profit. NEC also suspended its year-end dividend. 

    Nintendo (NTDOY.PK) swung to a loss during the first nine months of the year on sluggish Wii sales, costs associated with its new 3DS game system and the impact of currency fluctuations. The damage: net loss of ¥48.35B ($622M), revenue of ¥556.2B (-31%) and on an operating basis a loss of ¥16.4B. (PR)

    More on Nintendo (NTDOY.PK): Forecasts a ¥45B ($580M) operating loss for the year to March, the first since the company started announcing earnings in its current form in 1981. Wii annual sales forecast cut to 10M units from 12M. 3DS gaming device cut to 14M from 16M. (Nintendo's earnings)

    Logitech (LOGI) shares -9.2% in French trading after reporting a fall in its FQ3 net profit and sales along with a cut to its full year outlook.

    Oil is $100.18 and (/CL) is still a short under $100,watching the 79.25 line on the Dollar.  Gold is $1,715, silver $33.36, copper $3.897 – all tempting shorts.  Nat gas is $2.79, now up 27% since CHK cut 8% of production (why doesn't OPEC think of this?) and gasoline is $2.833 because one of the problems the Fed is trying to fix is sub-$4 gas at the pump!

    Gold Surges to Six-Week High on Fed's Forecast for Low Borrowing Costs. Gold futures surged to a six-week high after the Federal Reserve said it expects “exceptionally low” interest rates through at least late 2014. Silver, platinum and palladium also advanced

    Thursday's economic calendar:

    8:30 Durable Goods

    8:30 Initial Jobless Claims

    8:30 Chicago Fed National Activity Index

    10:00 New Home Sales

    10:00 Leading Indicators

    11:00 Kansas City Fed Mfg Survey

    10:30 EIA Natural Gas Inventory

    1:00 PM Results of $29B, 7-Year Note Auction

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    As I predicted yesterday:  4:32 AM Alan Greenspan puts up a spirited defense of free-market capitalism in an FT op-ed, noting that whatever "imperfections" capitalism may have, no other economic system "has succeeded in meeting the needs of its people."

    Market Now Pricing In $770 Billion Increase In Fed Balance Sheet.

    Fed Signals That a Full Recovery Is Years Away.

    Gfk's survey of German consumer sentiment shows an unexpectedly strong rise in morale going into February, with the indicator hitting a ten-month high of 5.9. It's the fifth month in a row that confidence has improved. Negotiations over how to save stricken euro zone member Greece from a messy default are still at an impasse, and worries about the solvency of some weaker periphery states remain a concern for investors. But German consumers remain upbeat regardless, and surveys consistently point to private consumption as a bright spot that could weather any bad news, thanks to the solid job market.  With work the main concern for consumers, there is little to overshadow the mood; unemployment fell more than expected in December, putting the jobless rate at its lowest level since the Germany re-unification two decades ago.   - That would be last April when the market topped out at 1,370 on the S&P and then fell back to 1,260 in May.  Historically, confident Germans have not usually been good for the rest of the World…

    The Troika Are Just Keeping Markets From Panicking And Buying Governments Time.

    Angela Merkel Defiant as IMF Leads Attack on GermanyGerman Chancellor Angela Merkel has defied calls for a radical shift in strategy to lift Europe out of crisis but is increasingly isolated as the International Monetary Fund and key global bodies join ranks to force her hand.

    Angela Merkel Casts Doubt On Saving Greece From Financial MeltdownGerman chancellor speaks candidly to the Guardian and five other leading European newspapers as part of a unique collaboration to explore the EU's predicament. Angela Merkel has cast doubt for the first time on Europe's chances of saving Greece from financial meltdown and sovereign default, conceding that Europe's first ever multibillion euro bailout coupled with savage austerity was not working after a two-year crisis that has brought the single currency to the brink of unravelling.

    Larry McDonald Calls Portugal CDS a Bear SignalAction in Portugal’s credit-default swaps might be a telling bear signal, economic expert and author Larry McDonald said Wednesday. While Greece has “backup” private-sector involvement that could buoy its economy, the Portugal CDS 5-Year [PTCD5 1453.03 7.37 (+0.51%) ] was at record levels, McDonald said on “Fast Money.” “It’s decoupling from the rest of the group,” he said. McDonald likened the situation with Portugal and Greece to a financial event horizon in 2008. “The political will to save Lehman Brothers — and I talk about this in my book — was really taken away from Bear Stearns,” he said. McDonald called it a bearish signal in the intermediate term.

    UK Heading For First Double-Dip Recession Since 1975. Britain is heading for its first double-dip recession in 37 years after the economy slumped in the final quarter of 2011 and officials warned of a new threat to jobs.

    As Soros Says, Things Could Be Worse For The UK: We Could Be In The Euro.

    CBOE Put-Call Ratio Hits Eight-Month Low on Stock Rally: Options.. The ratio of bearish versus bullish options changing hands on the CBOE slipped to the lowest level since May as traders piled into the S&P 500 Index's rally amid the measure's best start to a year since 1997. The CBOE Equity Put/Call Ratio's average over the past 20 days has dropped to .61 and on Jan. 19 the level fell to .47, according to data from the exchange compiled by Bloomberg.

    Taxpayers are still on the hook for $133B in outstanding TARP funds, according to SIGTARP's just-released quarterly report (.pdf) to Congress. The slow economic recovery is impeding Treasury’s progress in winding down the program, and exiting investments in firms like AIG and GM could prove "challenging" in the near term. - Slow economic recovery?  In the middle of one of the greatest rallies in history this seems like a flimsy excuse, doesn't it?  AIG is up 25% in 2 months and GM is up 31% in one month – how convenient or this report would have looked much worse…

    Check out this new spin:  U.S. Banks Face Pressure on Margins From Fed Policy on Rates. Bank of America Corp. and Citigroup Inc. are among lenders that may find it more difficult to boost profits and capital after the Federal Reserve pledged to keep its benchmark interest rate low until at least late 2014.  The policy may hurt lenders’ profits as they struggle to find loans or securities with yields high enough to support their net interest margins, a gauge of profitability that measures the difference between the cost of funds and what they earn on assets.

    Government Trying to 'Cripple' Banks: Dick BoveBetween the Federal Reserve’s announcement that it will not raise interest rates until at least 2014 and President Obama’s mortgage refinancing plan, the government is trying to cripple the banking system, noted bank analyst Dick Bove told “The Kudlow Report” Wednesday. “What this government is doing is its attempting to restrict or cripple the banking system so it cannot perform the way it wants in terms of assisting the economy,” the Rochdale Securities analyst said.

    This always ends well:  Public Pensions Increase Private-Equity InvestmentsLarge public pension plans are pouring more money into private-equity funds, deepening ties between government workers and an industry currently under the harsh glare of U.S. presidential politics. Big public-employee pensions had about $220 billion invested in private equity in September, or 11% of their assets, according to Wilshire Trust Universe Comparison Service, which tracks the holdings of pensions, foundations and endowments.

    Greek Debt Talks to Resume in Athens as Policy Makers Squabble Over CostTalks on a debt swap to avert a Greek default resume today as international policy makers squabble over the mounting cost of the rescue

    With EU Embargo on Iran Oil, Chinese Traders Poised to Profit. Europe’s decision to embargo Iranian oil exports is strategically sound, since a nuclear-armed Iran is in no one’s interest. Yet, policymakers are overlooking how an embargo may strategically reshape the global oil trade in China’s favor. Major Chinese oil traders are building businesses that are world class in terms of volumes traded. The latest oil embargo will help them further their ambitions.

    The US Has Already Lost These Eight Industries To China.

    China Police Open Fire on TibetansPolice in southwestern China opened fire on protesters in a Tibetan enclave during a clash Jan. 24, the second straight day of deadly protests in the area, the official Xinhua News Agency reported.

    South Korea's Economy Grows at Slowest Pace in Years. South Korea’s economy grew the least in two years in the fourth quarter as exports sank because of Europe’s sovereign debt crisis and a faltering global expansion- Thank goodness we're not on THAT planet!  

    Lam Research(LRCX) 2Q Profit Slumps 85% On Sharp Sales Drop. Lam Research Corp.'s (LRCX) fiscal second-quarter earnings slumped 85% as the semiconductor-equipment maker's revenue dropped sharply. The company anticipated near-term declines in spending on wafer-fabrication equipment amid an industry slowdown in the second half of last year.

    Indiana House Has Dealt A Huge Blow To Unions In The Rust Belt.  Indiana is poised to become the first right-to-work state in more than a decade after the Republican-controlled House passed legislation on Wednesday banning unions from collecting mandatory fees from workers.

  361. Phil – I'm short Oil off the 100.25 lines.  Looks like a good resistance line.  Dumb?

  362. If anyone is bored shorting oii this morning, the Nadal / Federer match is on!

  363. Phil……..if i am reading this correctly then the crux of the FED deal yesterday (no QE today but QE forever) is that although the economy may continue to improve the current FED (all doves) now considers it appropriate to continue to provide stimulus to an improving economy as it it also found it appropriate to provide stimulus to an imploding economy.
    the market gets off on the realization that there has been a major policy shift at the current FED as in the punch bowl will not only not be taken away but will be refilled whenever the market needs a refill.
    then the justification for 'forever' stimulus looks to be low inflation but that is an artificial metric and as B Krasting has pointed out has already been distorted by omission of current and relevant data to more or less render the calculation meaningless but useful as a PR tool to manipulate public opinion
    all of this just explains the reason for the odd price actions and the march higher since jan 3………the FED's twist of policy on QE must have been telegraphed to the parties concerned long before it was announced officially at yesterday's FOMC. the FED is a private enterprise and is owned by the Primary Dealers among other private interests in business for profit. i think one of the disconnects here is maybe not that many people know that as in most still think the FED is part of govt.
    at least we know we really are reading Alice In Wonderland.
    these people should be taken out and __________ (fill in the blank)
    i'd be leary of shorting anything here, OIL included, and maybe especially oil. the FED gamble looks to be that the PhDs have convinced themselves they can convince the public that inflation is not really inflation.
    politically, it looks a lot like walking a tightrope act……… QE, but QE forever and the market continues to rise so the policies must be working. wow!

  364. The FED…………the greatest puppet show in town!
    the headline for this circus should read;
    come see! come one come all!……….come see the greatest puppet show in town!

  365. Sign of strength/Angel – Yes, we definitely have to stop reading the news to get bullish next week.  We do have a lot of data coming up but maybe we'll have to ignore that too.  It's all technical now and we can play that game – until it ends. 

    Speaking of games, oil (/CL) never crossed $100 for us and now zooming up to $100.50 so best to wait until nat gas inventories to play it down unless the Dollar pops 79.50.  

    Fed/Roro – They have to justify their insanely loose money stance.  I don't think people understand that all this money the Fed is giving away is OUR money!  These are all future deficits that will hit the books when the Fed is eventually forced to balance theirs (by billing us for their service).  It won't be soon though, the Fed says they won't sell the $2Tn of assets they bought from banks at face value until 2015 so mark to fantasy continues – at our eventual expense.  

    CPCE/Roro – You know why, because it doesn't actually measure inflation. 

    XRT/Burr – Ah, well that's where I get confused.  We had a bearish call spread in the $25KP and that's what I thought you were talking about.  So here, it was net $1.10 and you can yank the $55 puts for .80 and just roll them out to the March $54 puts ($1.16) for .36 to buy another month.  Once the short $53 puts expire, you can sell another March put and roll to another vertical.  For instance, if you rolled the $53 put today (.36) to the March $55 put ($1.50) for $1.14, that's your .36 back + .78 and you can roll your $1.16 $55 puts up to the $57 puts ($2.40) for $1.24, which puts you in the March $57/55 bear put spread for .54 + your original $1.10 or $1.64 and still a 22% upside potential at the higher strikes.  If you always manage your verticals like that, you can give yourself about 2 months and 4 strikes of cushion off your original bet and still be able to salvage a break-even if you finally catch a break.  

    This is very important for all – when you reposition your vertical BEFORE you have a 50% loss – you have tremendous flexibility, once you go below 50%, you tend to just have a dead trade – which do you prefer?  

    Oil/Burr – Yes, well easy to say dumb now but, as I said yesterday, they will be very bounce on each $1 line now so it's just not worth shorting them until/unless they cross below those lines and all we can expect is .25-.50 moves.  We're too early in the March contract cycle to expect there to be any selling pressure ESPECIALLY in the thinly traded futures.  As a rule of thumb, you should NEVER play .25 lines, .50 lines yes, but .25 lines are essentially meaningless (in oil specifically, each Future has it's own quirks).  

    Fed/Roro – All sound logic EXCEPT that we've already had ZIRP for 3 years and it hasn't stopped us from having several very serious corrections before.  Japan has had even lower rates for 20 years and the Nikkei is down over 20% since last year.  That's why I picked EWJ last week as a great upside play (but apparently no one filled it) – because it's ridiculous to say our Dow is at 13,000 and the Nikkei is at 8,500 – historically, the two indexes are usually neck and neck.  EWJ is still a good buy if they can crack the 200 dma around 9,000 as they still have about 40% to catch up if industrials are really in a Global recovery:  

  366. thx for the replies, Phil……….and pointing out the EWJ and yesterday i think it was DMND………learning a LOT by being here.

    low cost no cost money until late 2014! BTW zero interest rates does not apply to you and me…  the banks get…to promote the (very old) charade…where the banks borrow from the Fed at 0 and then lend back to treas.. by buying bonds at 2% for ten years – will continue through late 2014….. how messed up are the banks that they need another 2 -3 years of free money!!! on top of the 2 years they've already had, in order to clean up their books?..and ATTENTION K MART SHOPPERS savers will continue to get 0.10% on their accounts….I could go on and on… but…( lets take a flying fuck at a rolling breakfast donut instead!) nevermind….in summary … the Fed has reiterated its desire to monetize the mess….stocks are awash in giddyness.(.they found PAHRMS LAB!.)… bears have been properly trussed whipped…. ..bulls are everywhere…of course the heat index is rising..and along with it a growing panic to get in….this is usually just about the time things turn fugly….stocks are going to gap this morning…. I dont think we hold….too many technical indicators hitting extreme overbought conditions at the moment…..we are due for a healthy 5% smackdown….as you know i am short from 1307 i am adding on th eopen and i am shorting more nflx..i will be surprised if it doesnt start today or tomorrow…(wait i am already  suprised!!)


  368. Phil/AAPL messaging
    Thinking about what you said about your kids just wanting to message. Maybe AAPL buys out RIMM and uses its messaging system for  a wi-fi non-contract device that drives kids wild. Remember that the London riots of a few months ago were said to be largely coordinated via Blackberry Messenger.