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Whipsaw Wednesday – Party Like it’s 1929!

PrintsYou can't fight the Fed.  

Whether this market is like 1929 or 1999 either way the bulls had a good run until it burst into flames – much as the people on the Hindenberg had a lovely trip across the Atlantic with a bit of a rough landing in New Jersey.  

So let's not spoil the party by worrying about the Future (or even the present for that matter) – let's just look at all the lovely things we can buy and make 500% this year if the S&P breaks 1,360 and heads higher on a sea of freshly printed Dollars, Yen, Euros, Francs, Pounds and, possibly even Drachmas (but ixnay on the Uanyay – no one wants to talk about that!).

GDX WEEKLYGold has got to be a good inflationary bet and ABX has lots of it.  Currently trading at $47.61, you can sell the Jan $40 puts for $3.05 and that obligates you to buy the stock at $40 and you can leverage that $3.05 by buying the Jan $43/52.50 bull call spread for $4.40 for a net cash outlay of $1.35 on the $9.50 spread.  That's a potential for 603% upside at $52.50 but, even if they flatline at $47.50, it's still a $4.50 win on the spread and the short puts would expire worthless for a $3.15 profit and that means you are starting out 233% ahead and all ABX has to do is not blow it.  

Now, I'm going to do this one time to make it clear on margin.  If you DON'T have a Portfolio Margin account, TOS says the margin on the above trade (for selling the Jan $40 puts) is $390 per contract.  3 ounces of gold are $5,190.  If you run this spread with 10 contracts, you'll have $1,350 cash out of pocket and $3,900 in margin so close enough to 3 ounces of gold but these 10 contracts make $3,150 if ABX is at the same price at the end of the year and $8,150 if ABX is higher.  

Of course we're assuming ABX is well-correlated to gold (and it is the World's largest gold miner so not too much of a stretch there) but clearly you are more likely to make $3,150 on this ABX spread than you are to see your $5,190, 3-ounce gold purchase gain $3,150 (60% – gold $2,768) and how can 3 ounces of gold possibly give you a $8,150 gain (157% – gold $4,446) without ABX gaining the 5% it needs to put this trade entirely in the money?  

SPY 5 MINUTELet's not forget to place our bets on the actual S&P as this balloon inflates away.  Here's a very simple idea – SPY tracks the S&P very closely with little decay at about 10% of the index so we can bet that SPY stays over $135 through January with the Jan $115/125 bull call spread at $7.25 and we can offset that by selling the $120 puts for $6.85 for net .40 on the $10 spread.  SPY is at $135.19 as of yesterday's close so we're 2,400% ahead on this trade to start if we simply hold $125 through January expirations (18th) –  that should keep us ahead of inflation!

This is how the rich folks do it to you – YOUR tax dollars are pledged to the markets with the Fed printing money it doesn't have that becomes a debt to you down the road.  I'm sure you have heard people say or you may have said yourself about the Greeks that they deserve the high taxes and low wages that are now being forced on them because they lived above their means by spending money they didn't really have.  Well – what the hell do you think we're doing?  

So the Rich shall bitch and moan about how "awful" it is to have to pay taxes again and then, once the cameras stop rolling, they will pick up the phone and put about $500,000 of cash and margin into a trade like this and collect $1,000,000 in 12 months ($960,000 profit, the margin only costs artificially low interest that you are also subsidizing with your tax dollars and future debt) and pay their taxes and still have over 1,000% gains on cash while you drown in 8% inflation with your flat salary and lowered benefits.  

Isn't it great to be rich?!?

Do you want another?  Keep in mind that I have ZERO faith in this rally and I wouldn't play any of these trades with the S&P under 1,360 and I would stop out the trades if it fails to hold it down the road – I just want to make sure that – IF "they" are determined to maintain this charade of a market, that the average person out there has the tools to make the same money as the big boys.  These are very simple trades with clearly defined goals and make nice inflation hedges regardless.

How about BAC?  You know we love BAC – it's our One Trade for 2012.  We had a nice pullback yesterday to $7.98 and, if you sell the Jan $7.50 puts for $1.20 – your worst outcome is you end up owning BAC for $7.50.  That's .48 less than it is now so not a terrible penalty and you can use that $1.20 to buy  the Jan $5/7.50 bull call spread at $1.75 for net .25 on the $2.50 spread that's 100% in the money as long as BAC holds $7.50.  It doesn't have to go up – just hold $7.50 and you make 900% on your cash.  According to TOS, the net margin on the short puts is just $1 so you are well over 100% returns on cash and margin – just like the big boys!

In the above example, if you are willing to own 1,000 shares of BAC at $7.50 ($7,500), you can enter 10 of these spreads and your worst downside case is owning the stock for $7,500 plus the $250 cash you need to cover the spread.   If BAC does hold $7.50 through Jan 18th, you will make $2,250 profit and no longer be obligated to buy the stock (but you'll probably wish you had as I expect they'll be at $10+).  Even if you have an IRA and have to put the whole $7,500 aside in margin, that's still a 30% gain in 12 months for a stock that flatlines for the year – not bad…  

OK, three this morning is good.  I think as long as we keep having this rally, I may as well put up a few of these each day so everyone in America can play along instead of just the rich folks.  Keep in mind we already have long plays on these stocks, and many others, so, as I said, this is late to the game but better late than never said the guy who bought Yahoo at $250 and rode it to $350 in 1999 (now $15) – the trick is knowing when to sell!  

At 2pm, we get the Fed minutes but it's the same QEvermore we talked about on January 26th, after the Wednesday meeting that these minutes are from – so what more do they think the minutes will say?   

Meanwhile – we are STILL dubious that Greece is really fixed so we are still bearish in our short-term, aggressive virtual portfolios and that is VERY frustrating at the moment.  Long-term, our Income Portfolio, which is meant to be conservative, is doing ridiculously well as we're about 70% bullish there.  In January, we had a ton of bullish bets – far too many to go over, that were reviewed in the first 10 days and then again after 20 days.  Generally, our premise remains long-term bullish, as we expect inflation to kick in and float everything to infinity and beyond but, short-term – every day we don't drop 300 points at the open is a Fundamental surprise to us

Anyway, I'm going to stop writing now because I intended this to be a bullish piece as we TRY to get on the bandwagon but, even as I write this I see negative newsflow so, rather than get back in that mode, I'm going to watch CNBC for a while and let them tell me how great everything is.  If that doesn't work, there's always one sure way to cheer people up – TOGA!  

(photo from The Artist Known as WilliamBanzai7)


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  1. SAN FRANCISCO, Feb. 15, 2012 (GLOBE NEWSWIRE) — Diamond Foods, Inc. (Nasdaq:DMND) ("Diamond") today announced that The Procter & Gamble Company ("P&G") and Diamond have mutually agreed to terminate Diamond's proposed acquisition of the Pringles business and have released each other from all liabilities related to the proposed acquisition. No "break-up" or other fees will be paid in connection with this termination.
    Diamond Foods drops bid to purchase Pringles brand; Kellogg steps in with $2.7B offer
    Will be interesting to see what happens in the next few weeks as they promised lenders to have the financials ready by March 1.  My feeling is DMND sees 40-45 by end of year and there proves to be no 'real' accounting scandal.


  2. Oil Lines

    R3 – 103.79
    R2 – 102.81
    R1 – 102.23
    PP – 101.25
    S1 – 100.67
    S2 – 99.69
    S3 – 99.11

    Yesterday's high and low – 101.84 / 100.28


  3. Who could have predicted that… austerity is not working!

    http://www.nytimes.com/2012/02/15/business/global/portugals-debt-efforts-may-be-a-warning-for-greece.html?_r=1

     

    Unlike Greece, Portugal is a debtor nation that has done everything that the European Union and the International Monetary Fund have asked it to, in exchange for the 78 billion euro (about $103 billion) bailout Lisbon received last May.

    And yet, by the broadest measure of a country’s ability to repay its debts, Portugal is going deeper into the hole.

    The ratio of Portugal’s debt to its overall economy, or gross domestic product, was 107 percent when it received the bailout. But the ratio has grown since then, and by next year is expected to reach 118 percent.

    That’s not necessarily because Portugal’s overall debt is growing, but because its economy is shrinking. And economists say the same vicious circle could be taking hold elsewhere in Europe.

    Two other closely watched countries on the debt list, Spain and Italy, also have rising debt-to-G.D.P. ratios — even though they, like Portugal, have adopted the budget-slashing and tax-raising measures that the European officials and the I.M.F. continue to prescribe.


  4. On a 1-year chart, ABX is up 1.4%, GLD up 28%. Not even close.
     


  5. EGLE up another 10% pre market. 


  6. S&P futures have moved more than 20 points since 3:30.  The first big move was on the back of a story that Greece really will commit to the whatever the EU demands.  The second move was after China re-pledged to invest in Europe.  IG17 is about 1.5 bps tighter than the wides of the day and is unchanged this morning.  In Europe, Main is unchanged while stocks are up about 1% across the board.  Even the 10 year bond which saw yields drop from 1.98% to a low of 1.92% are only back to 1.94%. Why? Sentiment seems overly bullish, overly complacent, and the credit markets are sending a warning sign to stocks about irrational exuberance.
    http://www.zerohedge.com/news/credit-vs-equity-logical-vs-illogical


  7. phil you sound like i feel!


  8. cryin over my abundant shorts but lovin EGLE. Lesson: never sell a put on something unless you are willing to own it and stick it out, etc…
    cant say i am willing to own SQQQ or EDZ. Decisions, decisions.


  9. @Felipe
    Best Gold summary/trade I've ever read. 


  10. irrational exuberance…remember that gave way to the 'new paradigm'


  11. Phil or someone PLS put my thinking straight with SHORTSELLING STOCK. To sell a stock which you do not hold ,hoping the stock will go down and you gain on your sale by repurchasing the stock on the down draft. I could sell as well a naked call however in both cases if the stock will go up you are going to lose. Only with the difference the sale  premium of the call is fixed for you and will not increase if the stock goes further down. Buying a put where your expence is fixed you gain on the going down of the stock but can not lose more if the stock goes against you. The put and the call play is obviously. I in principal do not sell stock I do not own.


  12. Samaras signs letter of commitment to bailout deal ………or, indicates intent to sign………….i really have seen it all.  
     
    where are my comic books, Phil?…..didn't i read in the fine print somewhere i get comic books with the subscription?


  13. 1600 GMT the time of the German announcement?…….


  14. Good morning,

     

    IWM     81.12,  81.41,  81.92,  82.42,  82.87,  83.07,  83.38  and 83.75

     

    Also, I have a descending trend line now at 83.25ish;  good hunting !!


  15. Phil /  Do you have a general stradegy for our DMND positions today?


  16. PP



  17. that's strategy.  I spell with a Texas drawl.



  18. dollar popped higher in last 20 mins.



  19. Phil, time to DD on USO?


  20. There is no stopping the AAPL freight train now…. Unreal!


  21. StJ – on the $5K i think you miss 5 DIA Feb puts 128, bought yesterday evening for 0.59.


  22. Phil/1999
     
    There are many very large differences between now and 1999:
     
    In 1999:
     
    The Unemployment rate was half what it is now.
    Oil was below $20 a gallon and then rose to a high $30, it was in late 2000 I believe it finally rose to $50
    Housing was low and was not moving up that quickly and construction on housing was growing quickly
    Millionaires were created weekly if not daily
    Wage inflation was rampant
    Optimism was very high
    Europe was doing well also
    There was no Euro
    George Michael was still "straight"
    Wealth disparity was not close to what it is now
     
    You had the perfect scenario for a market to go crazy.
     
    Again, oil will choke this economy as we are going on over 3 months soon with oil avg $100 a barrel and it didn't fail last year to start the crash and it will again this year as the vast majority will cut down on spending, vacations, going out to eat and driving since it has become too expensive.


  23. Yesterday we sold the IWM puts bought on Monday and added some CAT puts.


  24. spoke too soon on EGLE.


  25. You are right Dpas… Here is an updated position.


  26. Phil / Cwan / Pizza
     
    Now you guys know that I won't argue about Politics, Religion, or EU Policy because I just don't think it matters, and we have no control over what happens anyway…..BUT…I WILL ARGUE about PIZZA!  That is something VERY important in life, and I will argue Pizza until my last breath.  Pizza CAN change your life!!!
     
    Lombardi's Pizza was the 1st official NY Pizza in the USA.  It's COAL oven, which makes a massive difference in taste…   I've built at least 10 pizza ovens in my life and all the best ones are fired with Coal.  If you are looking for a "upscale" or "specialty" pizza that retains the qualities of NY Style, Lombardi's White is the best on the planet.  Just looking at this makes my mouth water.
    http://4.bp.blogspot.com/-O8HGDEd0FoQ/TaeO-WoYBNI/AAAAAAAAAPo/pjx9kv0krOw/s1600/20110409+Lombardi%2527s+%25283%2529.JPG

    As for a "regular" NY Slice…to me that means ordering a slice that you can fold in half, and walk on the streets or eat in minutes.  Walking down a NY street eating a slice is one of the best experiences in life!  For me, Bleecker Street Pizza is the best in this category.
     Ok, that's my Rant…. Back to the feed…


  27. Good morning!

    Speaking of Animal House – here's Shout – that can cheer anyone up.  

    Still hitting big-time resistance at S&P 1,359 and we've been waiting for 2,935 on the Nas (looks good), 8,110 on the NYSE (right there) and 835 (nope) on the RUT to confirm our breakouts but just the S&P is plenty for us to layer on those spreads in the above post as they won't likely do much damage stopping out if the S&P fails again so consider them upside insurance with very nice returns if the markets do break up and keep going. 

    I'll do more every day rather than a whole bunch in one day as it seems people always "miss" them anyway so, like our last bullish batch from two weeks ago (and we added 5 more in Friday's post and chat to give us two week's worth) - we look to add one more each day we are over our levels (that last batch is already working out fantastically, of course).  

    Speaking of which, our first FAS spread made 500% in 15 days (Feb $77/80 bull call spread selling $75 puts for $1.50) and our 2nd FAS spread is well ahead (March $75.80 bull call spread, selling $70 puts for $3 for net .05) so let's now look at FAS again and see if we can find a nice way to play them for March and April:

    • FAS March $75 puts can be sold for $2.60.  If you wish you caught the last FAS spread, well $75 was our short put there too!  $2.60 buys us the March $70/75 bull call spread for $4.20 at net $1.60 on the $5 spread so $3.40 of upside is 200% but with a cushion we can live with, with FAS currently at $88.  I'd rather have 2 of these than one more aggressive spread looking for 500% - Let's pick up 5 of these in the $25KP 
    • FAS March $80/85 bull call spread is $3.30 so same offsetting $75 put nets .30 on the $5 spread.  
    • FAS April $85/95 bull call spread at $5.10, selling $71 puts for $4.10 for net $1 on the $10 spread.  

    Other reasonable offsets to these spreads are:  GS Jan $80 puts at $5.10, GS  Apr $100 puts at $2.35, EDC March $125 calls (short, of course) at $3.20, XOM Jan $70 puts at $3.30, DMND March $22.50 puts at $2.30.  

    Meanwhile, this is the place where I must tell it like it is and I am telling you that this market is insanely overbought and I only see these bullish plays as defensive while we wait for our shorts to have a spectacular pay-off.  As we discussed in chat last night – these rallies are forced, low-volume affairs and all day long the markets sell off – this is just blatant manipulation as the people who run up the markets dump their shares on retailers because it's not just good enough for the rich to get rich – they feel even richer if they can make everyone else poor at the same time.  

    That's what they teach you at Wharton – it's not just about winning but about crushing your competition so they'll never be a threat to you again.  This doesn't teach you to always be excellent, it just teaches you to survive and that's why, ultimately, the US keeps falling down the achievement ladders we used to be on top of.  

    Anyway, I apologize in advance for the news if you are trying to get bullish – it is what it is:  

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    8:30 Empire State Mfg Survey

    9:00 International Capital Flow

    9:15 Industrial Production

    9:15 Fed's Fisher: 'Overview of Fed Operations and the Texas Economy'

    10:00 Hearing: President’s Budget for FY 2013 (Geithner)

    10:00 NAHB Housing Market Index

    10:30 EIA Petroleum Inventories

    2:00 PM FOMC minutes

    At the open: Dow +0.1% to 12891. S&P +0.3% to 1355. Nasdaq +0.4% to 2586.

    Treasurys: 30-year flat. 10-yr -0.01%. 5-yr -0.02%.

    Commodities: Crude +0.93% to $102.02. Gold +1.14% to $1737.35.

    Currencies: Euro -0.24% vs. dollar. Yen -0.15%. Pound -0.09%.

    Market preview: EU stocks and U.S. futures are rising for any number of reasons, including Greece doing its best to show that it can finally be like Germany, strong Empire State manufacturing data, and the EU's economic slump not being as bad as expected. S&P benchmark futures +0.4%. Kellogg a tasty +4.4% after it says it will buy Pringles. Later: Fed's Fisher, Geithner, FOMC minutes 

    Jan. Industrial Production: 0% vs. +0.7% expected, +1% (revised) prior. Capacity utilization 78.5% vs. 78.6% expected, 78.6% (revised) prior. 

    Feb. Empire State Survey: Manufacturing 19.53 vs. 15 expected, 13.48 prior. Employment 11.76 vs. 12.09 prior. New orders9.73 vs. 13.70 prior. Prices 25.88 vs. 26.37 prior

    MBA Mortgage Applications: -1%, vs. +7.5% last week.

    Losing faith?  Dec. International Capital Flow: Net foreign purchases of long-term securities were $17.9B, while U.S residents decreased their holdings of long-term foreign securities by $38.9B. Foreigners lowered their holdings of U.S. Treasury bills by $21B during the month.

    More on International Capital Flow: China decreases its holdings of Treasurys by $32B to $1.1T. It's the 3rd consecutive fall, but barely makes a dent in the country's massive holdings of U.S. paper. China's trade surplus has been declining – with fewer dollars in need of recycling, it's only natural the country will hold fewer Treasurys.

    Eurozone officials are considering a proposal to delay all or part of the Greek bailout, yet still avoid default, according to sources. The euro continues to slide, -0.4% to $1.3083. Shares are giving up some of their big gains, Stoxx 50 +0.6%.

    The euro takes a powder as German finmin Schauble hits the tape saying the necessary documents from Greece are not present. This despite Greece's Samaras' "tail between his legs"pledge to abide by the terms of the bailout agreement. Euro -0.3% to $1.3096.

    "There are many in the eurozone who don't want usanymore," says Greek finmin Venizelos, accusing the group of "playing with fire." Venizelos is hard at work finalizing details of Greece's plan ahead of a Eurogroup conference call at 11 AM ET that he hopes will pave the way for approval of the €130B bailout. 

    Antonis Samaras' pledge letter to ECB President Draghi: "If (New Democracy) wins the next election in Greece, we will remain committed to the Program's objectives, targets and key policies as described in the MoU/MEFP … Policy modifications might be required to guarantee the full Program's implementation."

    Potash (POT-1.3% premarket on some comments from Dahlman which note potash inventories were up another 500K MT in January to levels last seen during 2009's cratering in demand. The group says with China and India not taking deliveries and U.S. buyers sidelined, look for pressure to build on the fertilizer's price.

    Another downgrade for Bank of America (BAC), as Bernstein cuts shares to Market Perform citing their YTD surge and the likelihood BofA still has work to do on its earnings. BofA may look cheap to its book value, the firm says, but on an earnings valuation, the stock is comparable to other big banks like JPM and C, and BofA doesn’t look like it deserves that yet. (yesterday)

    Apple (AAPL) is slashing purchase requirements for its iAd mobile ad platform by 80%, as well as giving developers a larger revenue cut, in the hope of stemming share losses to Millenial Mediaand Google's (GOOGAdMob. Though iAd has won praise for its interface and polish, Apple's high prices and insistence on exerting some control over the ad campaign process has upset ad agencies. (previously)


  28. is there still POMO???



  29. $515!!!
      Apple (AAPL) passed Samsung (SSNLF.PK) to become the world’s biggest smartphone vendor in Q4 on surging iPhone sales, Gartner reports. Apple sold 35.5M units vs. Samsung's 34M; its market share rose to 23.8% from 15.8% a year ago. Android (GOOG) software ran on more than half of all smartphones sold. Worldwide sales soared to 149M, up 47% Y/Y.


  30. stj……confession!    I bought 10 more straight-up Aprill 490 Calls yesterday in the AAPL portfolio but didn't post the trade.  I got in a hurry, made the trade quickly,  and had to get back to my other job.   Then I couldn't escape again until after  4 pm.  Anyway, I'm happy to leave it out of the portfolio.  So, when does this train stop?   Don't know.  All I know is two things for sure.  One, you need to stay in the game in some fashion.  Two, don't short AAPL!  


  31. Morning Phil;
    I own a bunch of EGLE which i doubled down a while ago. i am in for $2.8 the stock.
    as you know they have poped a lot this last week and a half. im trying to see should i sell all of it or atleast half at this point ? some reports say that they have maxed out their 1.8 billion dollar credit line and shipping getting worse so these guys should turn down again.
    so what do you think, is EGLE a keeper in the long run or sell this heart ache of a stock.


  32. Lflan, since the trade was not posted, we'll leave it out. I think that the portfolio is OK as is!


  33. Stj, still short off 82.42 or now long off 81.92?


  34. Phil, I think your math is off on the BAC trade above.
    "if you sell the Jan $7.50 puts for $1.20 – your worst outcome is you end up owning BAC for $7.50.  That's .48 less than it is now so not a terrible penalty and you can use that $1.20 to buy  the Jan $5/7.50 bull call spread at $1.75 for net .25 on the $2.50 spread that's 100% in the money as long as BAC holds $7.50."
    Shouldn't your net be .55? (1.75-1.20)


  35. $25KP – Our premise is blown on Feb CAT puts, of course – we were hoping for a gap down.

    • CAT – Happy to get out even. 
    • GLL Feb $17 puts $1.30 should be able to be rolled to March $17 puts ($1.40/1.60) for .25.  If we keep making .25 a month while we wait, that's fine with me.  
    • DMND – still have faith and we have long time. 
    • XRT – At $58 but the June $58s are $3 and these have about $1 of premium in them so hard to get worked up about it.  
    • SCO – $36.42 but inventories at 10:30 are what we expected to get oil back under $100.  
    • FAS – $89.61, rollable and all premium anyway.  
    • TZA – Let's cash the 5 that were bought for $1.86, now $2.05 to reduce exposure.  I'll DD again if RUT hits 835 and is rejected. 
    • SQQQ – Oh this is just ridiculous.  
    • USO – Hopefully today is the day, plan was to roll up and DD if oil hits $102.50.  We got it pre-market but back to $101.50 as all you guys shorted the Futures and spooked them.  

    $5KP: 

    • I think TSL went down for bad reasons and will come back now.
    • DIA  - Blown premise, thrilled to get out at .52 now.  

    FAS Money  - Let's sell another March $79 puts for $3.15

    IWM Money – May as well sell 1 TNA March $51 put for $2 for a little balance – just in case we get another mega-stick today.  


  36. Check out the Vix = up 5% this morning in an "UP"  market.


  37. Pharmboy,
    BPAX is a good buy now?


  38. TLT $118 – someone is still nervous.  VIX over $20 too.  Dollar 79.63 is back to yesterday's highs (79.785 was top) but markets are miles above except the RUT, which is crashing back to yesterday's lows.  

    Greece/StJ – We just need to do the math.  If a debt to GDP of Greece is $500Bn and 135% of GDP and that causes this kind of crisis, then Portugal – ah wait, here's a nice graphic thingy:  

     

    GREECE

    GDP: €0.2 tnForeign debt: €0.4 tn
    €38,073Foreign debt per person
    252%Foreign debt to GDP
    166%Govt debt to GDP
    Risk Status:HIGH
    Greece is heavily indebted to eurozone countries and is one of three eurozone countries to have received a bail-out. Although the Greek economy is small and direct damage of it defaulting on its debts might be absorbed by the eurozone, the big fear is "contagion" – or that a Greek default could trigger a financial catastrophe for other, much bigger economies, such as Italy.

    PORTUGAL

    GDP: €0.2 tnForeign debt: €0.4 tn
    €38,081Foreign debt per person
    251%Foreign debt to GDP
    106%Govt debt to GDP

    Risk Status:HIGH
    Portugal, the third eurozone country to need a bail-out, is in deep recession. It is currently implementing a series of austerity measures as well as planning a series of privatisations to fix its shaky finances and reduce its debt burden. The country is highly indebted to Spain, and its banks are owed 7.5bn euros by Greece.

    IRELAND

    GDP: €0.2 tnForeign debt: €1.7 tn
    €390,969Foreign debt per person
    1,093%Foreign debt to GDP
    109%Govt debt to GDP

    Risk Status:HIGH
    One of three eurozone countries to so far receive a bail-out, Ireland has introduced a series of tough austerity budgets. Its economy is now showing a modest recovery. After the boom years leading up to 2008, the country fell into recession as a result of the global credit squeeze, which ended the supply of cheap credit that had fuelled the unsustainable growth in its housing market. It shows a very high level of gross foreign debt to GDP because, although it is a small country, it has a large financial sector – including a big overseas presence. The UK is Ireland's biggest creditor.

    ITALY

    GDP: €1.2 tnForeign debt: €2 tn
    €32,875Foreign debt per person
    163%Foreign debt to GDP
    121%Govt debt to GDP

    Risk Status:HIGH
    Italy has a large amount of debt, but it is a relatively wealthy country compared with Greece and Portugal. However, doubt about Italy's leadership and fears that its debt load could grow more quickly than the Italian economy's capacity to support it have left the markets jittery. France is most exposed to Italian debt

    SPAIN

    GDP: €0.7 tnForeign debt: €1.9 tn
    €41,366Foreign debt per person
    284%Foreign debt to GDP
    67%Govt debt to GDP

    Risk Status:MEDIUM
    Spain owes large amounts to Germany and France. However, its number one worry is bailed-out Portugal, which is indebted to it by billions of euros. As the country attempts to get its own debts under control, there are fears the country could be thrown back into recession after November's parliamentary elections. The bursting of a housing and construction boom in 2008 had plunged Spain's economy into a recession deeper than in many other European countries.

    FRANCE

    GDP: €1.8 tnForeign debt: €4.2 tn
    €66,508Foreign debt per person
    235%Foreign debt to GDP
    87%Govt debt to GDP

    Risk Status:MEDIUM
    Europe's second biggest economy owes the UK, the US and Germany the most money. However, like in Germany's case, these countries also owe France billions in return. France's problem is that it is greatly exposed to the eurozone's troubled debtors. Its banks hold large amounts of Greek, Italian and Spanish debt. This is causing market turbulence, especially against a backdrop of faltering French growth and low consumer spending.
    So, in short – if we have this much trouble "fixing" Greece – what next?  

  39. Phil, do you still want to get out of half the TZA calls in 25KP? Since your post, the RUT started dropping like a rock.


  40. Burrben – I've never seen whipped cream on a pizza before. Don't think I'll try it ;)


  41. Why would Warren Buffett sell all his shares in XOM and KO ( bloomberg news)


  42. Ok, out of 5 TZA calls in 25KP at 2.2


  43. Phil,
    I put a trade on you recommended back at the end of January. i bought TZA March 18 call for 4.05 (now 2.15) and sold TZA March 19 Put  for 1.06 (now 1.67) . I am underwater on both positions. What do you recommend I do to adjust this trade.
     
    Thanks


  44. BPAX – well, depends upon perspective…..we owned them up at > 2.5 WHEN the PDUFA date came and went…they cannot even regain that one.  Sorry, not interested.

    Short interest has collapsed (from Longwave):


  45. Yodi – Having trouble believing Buffet would cash out of KO and can't find the item on Bloomberg. Can you post the link?


  46. SQQQ will not recover until AAPL rolls…..and that stock is amazing….it is supporting the entire index and S&P….


  47. Yodi,
    If Buffet sold his 200 million shares of KO it would be down more than 28 cents.


  48. FAS Money – Sold another FAS Mar 79 puts (now 3.20)


  49. It's a bit after 7:30 PST…do you know where we are?  Is the LOD in?


  50. Wow, F CMG at $381! 

    ABX/Barf – Yes, that's why I like it.  

    Good summary Kramer.  

    Feelings/Angel – They get you every time.  I was just going through my now weekly exercise of trying to get bullish and reaffirming my bearishness after giving it my best shot.  I find that if I lay out the bullish trades and set hard strikes to execute them, it helps me focus on the reality of the bullish premise – which is very, very thin.  

    Owning SQQQ/Morx – If you think of SQQQ or EDZ as part of your bearish 30-40% in your long-term portfolio, at $13.23 for SQQQ, for example, you can sell June $12 calls for $2.40, which drops the net to $10.83 and better than 10% if called away.  Keep doing that and you eventually whittle them down to free protection you can sell calls against for a dividend.  EDZ is even better as you can sell Jan $11 calls for $4.50 so even if your net entry is $15, you can drop it to $10.50 and sell the $12 puts for $3 and have a new net of $7.50/9.75 and still have 33% downside protection through Jan.  If you drop your basis by 50% a year – who cares if you end up with 4x?  

    Thanks Flips.  

    Thinking/Yodi – Hmm, trying to figure out what you're asking.  Selling naked calls is VERY dangerous.  What you are doing is, of course, betting a stock will go lower and, if it doesn't, then you are short the stock with unlimited downside if the stock goes higher.  That strategy should be used sparingly but, just this morning I mentioned shorting EDC because I think $111 is stupid so selling the March $125 calls for $3.20 effectively is like shorting them at $128.20.  Selling short puts, on the other hand, is a no-brainer if you REALLY want to own the stock.  IBM, for example, is at $192 and I REALLY want to own 100 shares so, rather than pay $192 I can sell the 2014 $160 puts for $14 so I collect $1,400 cash (this makes more sense if you have ordinary margin of net $1,600 or PM of $600) and my net entry on IBM – IF PUT TO ME – is $146, a 24% discount to the current price.  So you either make $1,400 for doing nothing or you enter IBM for 24% off – that's the trade.  If you ONLY bought stocks for at least 20% off during your trading career – would you be better or worse off?  

    They finally got a draw in oil but it's not helping – oil flatlining at $101.38 (and congrats to this morning's Futures players!):  

    EIA Petroleum Inventories: Crude -0.2M. Gasoline+0.4M. Distillates -2.9M. Futures +0.89% to $101.97. 


  51. pakdog
    Buffett Sorry can not post the link as it was on Bloomberg TV just mentioned 15 minutes ago


  52. what next?……..fly me to the moon, and let me live among the stars!


  53. IWM Money – Selling 1 TNA Mar 51 put (now 2.00)


  54. KO / Yodi – Color me sceptical on that one.


  55. OIL – Iran has now loaded the first fuel rods in the Tehran nuclear reactor.


  56. Will there ever be a day where CMG isn't green? That Mofo goes up regardless of the market direction! I thought I might be OK being short the Feb 380s…
     
    FU me!!!


  57. Looks like we get a chance to DD on the USO puts in 25KP?


  58. pakdog
    KO I can only report what I hear and see Possible the man is getting old I hold KO myself so I pick it up!


  59. Warren Buffet's portfolio changes: http://www.cnbc.com/id/46386939


  60. Now here's an odd datum.  I bought 1000  shares of GREK, some funky Greek ETF, for $1,500 a few weeks ago, just to watch it.  It's now $1,745, close to 16%.  Should I be buying Italian shares?  Does the possibility of Italy falling by the wayside in some titanic struggle 6 months from now to keep the Eurozone together send Italian shares rocketing, just in case there is a return to a [depreciated] lira — while still price in Euros?  What am I missing here?  You wouldn't think Greek equities would be leading my portfolio year-to-date on straight-up equity appreciation.


  61. My price target on AAPL is $700 by Tuesday.


  62. Apparently they are taking the austerity measures with a sense of humor in Greece:

    GT_GREECEGERMANY_120214


  63. Morning Phil;
    I own a bunch of EGLE which i doubled down a while ago. i am in for $2.8 the stock.
    as you know they have poped a lot this last week and a half. im trying to see should i sell all of it or atleast half at this point ? some reports say that they have maxed out their 1.8 billion dollar credit line and shipping getting worse so these guys should turn down again.
    so what do you think, is EGLE a keeper in the long run or sell this heart ache of a stock.


  64. Stj, FAS spread went thru in 25KP.  70/75 call at 20.2/16. 75 put at 2.6
    GLL roll also went thru (1.47/1.22).
    Other trades: CAT out at .29
    DIA (5KP) out at .6
    Sold 5 TZA 18 calls at 2.2


  65. Does anyone think we'll get the mid-morning check mark leg up again today?


  66. Comics/Roro – Google Philstockworld as an image search and you'll get a fine mix of cartoons and pictures to build a comic with.  

    DMND/2Can – Why is something wrong with them?  Seriously, so they're not diluting the company to get chips.  Frankly, it's not that hard to make potato chips and they already have a well-known brand name so, if they are dying to be in the chip biz, I bet they can launch Diamond Chips for a very tiny fraction of $1.7Bn.  Of course it would have been nice to have Pringles but, one way or another, DMND made $100M in the last 3 years no matter where they move the profits to and that's $33M a year for a company with a $505M valuation, which is a p/e of 15 vs 21 for Kraft so not too expensive, even if you assume no growth.  I doubt they go much past $30 now but what's wrong with that?  

    USO/$25KP, Rpme – Oil should go up off that inventory and hopefully we get a cheap roll and DD.  The March $37.50s are now .70 and the $39 puts are on the money at $1.30 so spending .60 to roll up $1.50 is not a bad start – let's do that and we'll DD if they then hit $1 or less, which should happen if oil goes up to $103 as the $39 puts have a .50 delta.  

    1999 Rustle – Yes but our money supply was less than 1/3 of what it is now and the markets were at about the same value (Nas much higher).  I'm not saying we SHOULD be at those levels, of course, just that mania is mania and if sentiment goes that way again then best to just hang on for the ride but keep one hand on the exit door at all times – don't get sucked all the way into the party and you can have fun and get out before the cops get there.  

    Lombardis/Burr – What is that, whipped cream?  I'm pretty sure there must be some kind of law that TOMATOES and MOZZARELLA cheese have to be somewhere on a pizza.  I like Lombardi's but only the left side of the menu…  Of course, I have my own pizza blasphemy as I like to eat the toppings with a fork and then eat the pizza so, for me, it's all about the stuff on top, not the fold:


  67. That FAS spread for the 25Kp is >35K in margin…..no can do.


  68. Phil I am asking about the definition of SHORT SELLING STOCK  the option plays are no brainers
     
    Thinking/Yodi – Hmm, trying to figure out what you're asking


  69. Thanks mampcsA. I have entered the trades already but I'll double check the prices!


  70.  ecb overnight facility back to jan 17 record high..put call 1.46


  71. fixing the rest after the greece debacle c'mon phil don't be a party flatulator!! it will be a disaster…but that is WAYYYY to far in the future for investors to think about…like at least a few months.


  72. aapl is starting to suck the life out of the market…meaning….too much capital going to that one stock…its a dangerous situation short-term if aapl reverses.


  73. StJean/
    What would really be funny is if CDU wins the legislative elections in April by a landslide.


  74. MampcsA, curious how you got out of CAT at .29, have not seen that price since Phil posted?


  75. augrusot
    Buffett Well at least we have XOM right but still not a stock to snees on


  76. CDU / Lionel – It looks like Merkel might be the only OECD leader that could be re-elected despite the current crisis (which claimed scalps in the UK, Italy and Spain so far and France to come) but due to completely different factor. Yes, Germany has not been hit as hard, but it's her stance toward Greece that is helping her.  I made the point yesterday that if Hollande wins in France, it could be tough sledding for the euros. I think that Phil thought that it applied to Greece only, but the fact is that it could impact many of the financial agreement hammered between Merkel and Sarkozy that apply to not only Greece but the other countries in trouble now. April/May could be an interesting period in Europe! 


  77. Appears that 10s of millions of human beans are sitting at Chipotle Mexican Grill, (or on an Airplane to somewhere else), eating or going to, $15.00 burritos, while simultaneously using their IPAD 2s, on WiFi, to high frequency buy and sell and buy and sell, and buy and sell, AAPL, CMG, and PCLN stock and  options, Gold, and derivatives, and making fortunes (on paper) doing it.
    May the wind be at their backs.


  78. rpme, i got out before Phil posted. His comment yesterday was he was expecting a gap down for the CAT puts to pay off and since we did not get it, i got out first thing. Same with the DIA puts in 5KP (although those had another chance to get out even after Phil posted).


  79. Funny that people were concerned at one time what would happen to the stock price if Steve Jobs died.


  80. so the latest is a 'bridge loan' to remove risk of immediate default risk
     
    Euro rally coming…….


  81. Iran/Oil
    TEHRAN: Iran's foreign ministry said on Wednesday Tehran will not cut oil exports to six EU countries "at the moment" after state media reported it was looking at doing so, the Arabic broadcaster Al-Alam said.
    "Due to humanitarian reasons and the cold weather in the continent, it will not do so at the moment," Al-Alam reported.
    StJean/ Iranians have a great sense of humor too!


  82. POMO/Jabob – There will always be POMO…

    EGLE/Micro – I'd certainly stop out if they can't hold $2.  You can sell the Sept $2 puts and calls for .95 and drop your basis to $1.85 but I'd still stop out at $2 and re-enter if it heads back over (if you buy back with the $1 calls for $1.20 then you are in the $1 spread for net $1.05 and still better off than you are now).  No shipper is a keeper if the market crashes as you'll get a chance to get them for 50% discounts or more again.  As Greece goes down the tubes, we have no idea what chaos that will create on the shipping market.  The good news for EGLE (and why I like them) is their fleet is relatively new and they are based in NY and they did seem to be simply taking advantage of their competition's misfortunes to build a fleet – now we have to wait and see if their gamble paid off.  

    BAC/Doro – Well my math is off as it's net .55 on the $2.50 spread, not net .25.  Still a good trade, just not as cool an upside.  

    TZA/Mampcs – Oh yes, we learned to buy those F'ing dips finally!  

    Buffett/Yodi – IF TRUE, it might just mean he found something else that doesn't look as toppy.  Even Buffett needs to find fresh horses once in a while.  Hopefully he agrees with me and thinks this is it for this stage of the rally but, on the other hand, if Buffett divested KO – maybe he's the only reason they aren't over $70…  XOM I don't like because I think oil will fall ($101.81 now). 

    Nice exit Mampcs – you don't have to burn us 37 times before we learn, right?  8-)  

    TZA/Ging – Was there no cover to the March $18, that seems odd.  Well, the net of the trade was about $3 and, ideally, the short put will get rolled if you have to (30 days left) and the calls may come back.  You can sell the $19 calls for $1.57 and spend $2 to roll down to the $15s so you end up in a $4 spread that's almost 100% in the money for net $3.43 – it gives up the upside but gives you a better chance to get even, which is fine if you have long plays you made money on against the hedge you no longer need.  

    Scary chart Pharm. 

    By the way, AAPL portfolio is amazing Iflan!  

    Iran/Roro – LOL!  Does that mean we're now going to do a rod count, and then a countdown to the end of the World based on how fast a reactor can breed enough fuel for a bomb?  What if that deadline passes and it turns out they just wanted nuclear power – do we then begin to count all the potential bombs they could build?  Didn't we do this with Russia for a few decades?  


  83. StJean/ You are so right. French elections are tantamount to Greece future.
    But I am not sure about the impact on the markets.
    Regarding Greece, the portion of the Greek bail out earmarked for the Greek and Foreign banks will most likely be distributed before any political events. And Greece will be kept on IV drip for as long as one can see. Which I think is the best outcome for Greece.
    Regarding France, left or right win for the Presidential elections wont matter much as it would be short lived. Frenchies love conflicting Parliament & Government. So one can expect a political deadlock 1 month after their presidential election in May.
    Hollande election promises regarding France involvement in Europe are just… election promises!
    I doubt he will step too far from his party longstanding pro Europe – pro integration lines.
     


  84. Zero
     
    Thanks for the article you posted earlier (below).  One of my theses for Latam has been the demographic issue.  Also, the cost of labor and proximity to the USA.   They seem to be positioned to be the next cheap labor force.  I suspect a lot of boomers will retire down there as well.  Now if they could just get a handle on the corruption and crime. 
     
    http://www.washingtontimes.com/news/2012/feb/14/as-china-goes-geriatric-we-have-the-advantage/


  85. Bush used the scare/intimidation tactic a LOT with Iran and remember how that pushed Oil higher. Netanyahu has been out and vigorously pushing the terror line lately…….just saying……besides, people are stupid. that is not my fault if most get their news from CNN or Fox….or CBC for that matter. the news is not news. the anchors are actors not journalists or reporters……people are stupid. i am sorry, but c'est la vie.


  86. What Does Declining Gasoline Consumption Mean?

     
    "So, it comes as a surprise that these measures of broad-based economic activity (gasoline consumed and miles driven) are falling hard at a time when most economists are in agreement that the economy has been getting better in recent months.  If the economy is indeed getting better, it seems to be happening while we are driving less and consuming less gasoline.  For the American economy, this is really hard to do.  It has never happened before in the data shown above.  All other instances of declining miles and gasoline consumed occurred in or around a recession.
     
    We would not suggest that these economic indicators trump all others and the economy is actually worsening.  But it is disconcerting that these measures of critically economic activities are heading lower in a hurry."


  87. http://blog.kimblechartingsolutions.com/wp-content/uploads/2012/02/shanghaiwilshirepeaksfeb151.gif
     
    "The Shanghai & Wilshire 5000 index's have peaked together a couple of times in the past 5 years. Currently, both of them are facing falling resistance lines at the same time at (1) in the chart above.

    Positive Momentum is with the markets at this time.

     No doubt a breakout at (1) would be very postive for both of these markets. For momentum to remain in the drivers seat, these resistance lines need to be taken out!"


  88. I can usually stop any stock dead in its tracks.  Bot some AAPL calls at 526, let's see what happens…


  89. France / Lionel – You might be right, but recall 1981… There was enough impetus behind Mitterand to carry the left forward for a couple of years! So I don't see deadlock just yet. But of course, very few promises are kept so who knows what will happen. But that only increases the uncertainty.

    As far as Greece is concerned, there is no choice but to keep the IV drip on for as long as possible. But what happens when we have to hook up Portugal to the IV drip next. And then Spain. It's really scary.


  90. Did Syria's Assad just banned Tea Parties?
    BOSTON (MarketWatch) — Embattled Syrian President Bashar al-Assad announced his nation will hold a referendum on a draft of a new constitution that will allow for multi-party participation in government, CNN reported Wednesday. The new constitution will also reportedly ban parties or political gatherings based on religious, ethnic, or regional affiliation, CNN added.
    http://www.marketwatch.com/story/syria-to-hold-constitutional-referendum-vote-2012-02-15?link=MW_home_latest_news


  91. StJean/ Couple of years? You meant 14 years right :)


  92. First time I have seen a 261% Fib line being touched in a $500 stock… until AAPL.


  93. AAPL Feb 530 calls are up 700% from yesterday.  This is insane guys. 


  94. Lionel – There was some cohabitation with the right in these 14 years… But Mitterand played his hand very well in the end. Say what you want about the guy (I really don't care about him much anymore), but he was a very good politician!


  95. DMND / Phil,   I thought I read somewhere that trading had been stopped on DMND.  Maybe that is old news?


  96. AAPL – While I was shaving this morning I got to thinking of what a challenge they face going forward to keep putting out innovative products that people don't really need – people like them, they have some advantages over competing products, but you can do fairly well without them. Staring at the foam I'd just sprayed on my palm it occured to me what a perfect product that is – cheap, meets an ongoing need, easy to manufacture and distribute, endlessly repeating business. I'm not predicting AAPL's demise by any means, just a thought.


  97. World Bank President Zoellick to Step Down
     
    eek!:
    President Barack Obama may nominate Lawrence Summers, his former National Economic Council adviser, to replace Zoellick, two people familiar with the matter said last month. Secretary of State Hillary Clinton is also being considered, one of the people said.


  98. Lionel:  That's pretty funny.  So Syria will institute a democratic multi-party system, provided the voters don't coalesce around who they are, where they are, or what they believe.  I guess that's an improvement over "we kill on sight anyone who suggests any change at all."


  99. Pak:  I'm shaving with the new iCream.  Costs somewhat more, but it's voice-activated, doesn't require dragging a blade across your face, and has nose hair-sensing technology so you don't lose your sense of smell.   Plus I can drive to work with it on my face, saving those precious working minutes, and the next version will synch with your iHealth app and recommend nutritional changes based  on follicle analysis.  I wouldn't short Apple on the basis of them running out of product ideas.


  100. PIZZA/NYC,
     
    I knew I'd be starting something off by asking that question!!    Pizza, as a rule, must have tomato sauce, cheese and pepperoni, spicy sausage,…
     
    Concierge recommends KEENS Steakhouse – any comments?  Might as well take some of the money I was going to lose by shorting the S&P yesterday and buy a nice dinner.


  101. No one is paying their mortgage, so they can buy burritos and iPads….and fly on William Shattner's Planes…


  102. I sold those April 490 calls that I bought "off the record" in the AAPL port for +42% in 24 hours.  I hope you guys are playing AAPL.  You  rarely get a chance to make so much in so little time on one company.   And I don't think it's over yet.  But the higher we go the more caution must be exercised.  So the AAPL port just has the April 490/540,  10 bull call spreads, plus cash.  No change from yesterday.    


  103. Hi Phil,
    I took a leap with 5 of the CMG Feb 370 puts yesterday — and didn't get out this morning. Premise is blown short term but I'm wondering if this one is worth trying to save by rolling it out, doubling down or changing it to a spread?
    Thanks


  104. Zero – LOL . Not saying to short them, just they'll have to work a lot harder than P&G/Gillete to keep making their billions.


  105. zipla - I have been short CMG for six months (Jabo too for awhile, I think).  See my prior posts on how to play this -- the trick to shorting them is to buy long-dated puts, then sell front-month puts against them at 10:30 each day and close the puts at market close.  Use the profits to roll your long puts upwards, until someday they pay off.  CMG is now on Day 13 in a row of closing higher than its 10:30 AM price.


  106. MARKETS
     
    I am getting the feeling again of Nasdaq approaching 5,000  — just don't know if the current markets are like it was in Jan 2000 now or early March 2000…


  107. CMG/Jabob – Really way past the point where you should walk away, don't you think? 

    Thanks Aug.  

    GREK/ZZ – It's all nuts.  I hope you took it and ran though.  Country in Depression, not recession.  To some extent, this ETF was started at a good time, during Greece's intitial sell-off but now that they are "fixed", I'd say it's a classic sell on the news play. 

    AAPL $700 by Tuesday/Rustle – Why, do you think something bad is going to start dragging on them?  At this rate ($10 per hour), they should be at $800 or so….

    Gosh 2,600 seems like a logical place to short the Nas futures (/NQ)!  

    Thanks Mampcs!  I very much like that you are doing your own interpretation – it helps me learn to communicate trade ideas and plans better.  

    Leg up/Weasle – At this point, we have to assume they are going to do whatever it takes to push us over 1,360.  Where it gets interesting is if they fail.  

    FAS/Pharm – If you don't have $35K in spare margin, there is no way you should be playing such an aggressive portfolio with $25K – JMHO.  

    Definition/Yodi – Not sure what that means then.  How about just say what it is about short selling you find confusing.  With a stock, if you sell it short, you are simply obligated to buy it for the entry strike.  At whatever point you close it, if it's lower, you make the difference and if it's higher, you pay the difference.  Shares must be available for you to "borrow" as you are selling something you don't yourself own so you create a debt obligation in your account to pay for the borrowed shares.  I'm not a big shorter – only when it gets put to me accidentally and then I try to get out asap as it's simply confusing (to me) to have too many things aiming for too many different directions at one time. 

    Months/Angel – AAPL should be well over $2,000 by then!

    Hollande/StJ – Good point, I was only thinking of Greece impact but it would have a wider-ranging impact for sure.  

    CMG/Flips – Maybe we can all short them and then pay for a study that shows that the methane now being produced by Chipotle customers is increasing Global Warming by 20%.  

    Jobs/Rustle – Yeah, that dude was really holding AAPL back!  

    Nas futures (/NQ) hit 2,600 on the nose, now 2,598.25.  

    Bridge loan/Roro – I knew that would happen.  Would make no sense not to buy more time and keep up all this fun and excitement.  Now we can "fix" Greece another 20 times over the next 30 days and ignore the other PIIGS some more.  

    Demographics/Seer – Be careful using those as a premise – they take a LONG time to play out.  According to pure demographics – Japan should be 12 notches below Greece.  

    Netenyahu/Roro – Well Israeli politicians do favors for lobbyist too.  If you're able to drop $100,000 in a politician's offshore account, you'd be amazed at how many guys are willing to rattle the saber for you.  I don't think Netenyahu is very corrupt (but he is certainly a little corrupt as he once resigned over gifts that were given to him from government contractors), he's just a hard-core guy who left college in the US to enlist in the Israeli army and essentially became a SEAL over there.  He's just an uber hard-line conservative and it doesn't take much to get him to punch up the terror levels as he's lost family and friends a plenty fighting these jokers.  Israel also has a stunning wealth gap.  

    Gasoline/Kinki – New cars are getting way more fuel efficient.  This was part of my long-term premise to short oil from 5 years ago and this trend will not go away.  That's why peak oil is bogus – the only reason we have such inefficient cars was because oil was cheap, if oil is expensive, we will learn to use less of it and there is no way they can cut production back faster than we cut consumption without some serious offsetting economic growth which is not happening in this economic environment.   We consume 19M barrels a day, China 8.5Mbd – if we cut 5% (1Mbd) China has to grow 11.7% just to keep consumption level and they certainly aren't looking for ways to waste fuel either.  Europe is already way more efficient than we are but the whole World can improve and it doesn't take much improvement on 86Mbd consumed globally to create a pretty serious production glut (beyond the one we already have).  But, back to the main point – I'm not sure we can really say that lower fuel consumption = bad economy – just that oil has gotten to a price people aren't willing to pay at this level of consumption.  Tina even took the Volvo to the Atlantic City this summer instead of the Mustang because she was pissed at how much gas cost her the first trip (over $100 at 12 mpg).  I'm sure people are making similar choices even if they don't have new cars yet.  There's a psychological breaking point when people buy gas and it's over $50, which is about where we get with gas over $3.50 a gallon.  

    Nas pulling back nicely now – 2,594.50

    AAPL/MrM – LOL – you nailed the top!  That is incredible…  

    AAPL/StJ – That chart says it all.  

    DMND/2Can – It stopped on the news but then resumed.  Now up 5% as people prepare to move on without Pringles and with new management.  

    AAPL/Pak – People will always want something.  The question is will AAPL continue to have the vision to make those things before people even know they want it?  I had the same $500 MOT Razr phone for years – loved it.  Had no idea I could want a better phone.  Now it looks like an antique on my shelf.  I had a $500 Sony Disc Man when it first came out, Bose Boom Box was $1,000, etc – people will always buy cool stuff for big bucks but USUALLY the people who come up with them change each time.  AAPL has pulled off an unprecedented string of design and marketing victories but it's like betting on a hitting streak to continue day after day – eventually, they will strike out.  But, then again, I'm sure they said that for 14 games AFTER Joe Dimaggio hit 42 in a row (previous record) or for 4 years after Ripken passed Lou Gehrig for consecutive games played – it's way too soon to bet AAPL misses their next swing.  


  108. mrmocha…your 12:00 post…..thanks…..we needed something to get AAPL to pull back.   :)


  109. block sales apple pulling i pad two form amzn in china over patent worries hahahaha thats gonna stop those cheats ey?


  110. Yup, haven't played them in a week then BANG, put a bullet right to the brain.  Damn, I'm good…


  111. Mission accomplished MrMocha! Right at the high. "I can usually stop any stock dead in its tracks.  Bot some AAPL calls at 526, let's see what happens…" Can you harness this power for the good of all?


  112. The Dow made its high this morning at 07:30 this morning……….buy at 3:30, hold for the overnight market and sell between 6 and 8AM everyday
     
    200 MA on the 1 hr chart has been pretty decent support for the Dow all the way up and it is at that now. there have been a few breaches lower here and there but the 200 MA on the 2 hr has been SOLID and that would be at about 12,775 on the real Dow so 12,725 on the futures.
     
    the Dow has ridden above the 200 MA on a 2 hour chart since dec 20 and not looked back.


  113. And so goes Apple and so goes the markets


  114. took a short on NAS100 at very close to today's top………maybe the NASDAQs will lead a turn lower.


  115. doro165 – "harness the power" — I already have; if you've seen my January posts, Pharmboy and JRW were very dour on the markets in December and I caught that bug, and bought tons of VIX and EDZ and other downside hedges.  Would have turned 20K into 100K on a nice pullback, instead I nursed my wounds for the last six weeks waiting for the party to end.  So I take full credit for the January bull!


  116. Wow, I just made more money on a five minute hold of AAPL puts than I have in about 6 months on CMG!  We are just wasting time and attention on CMG.  I hereby quit.


  117. AAPL - so how many of you guys will send me $1,000 each to buy AAPL puts right now after you stock up on the FEB 510 calls 8) .


  118. Thx mrm.   Now, buy more please….


  119. Phil and everyone else;
    Is TOS becoming less attractive to use because it was bough out by TD ?
    did any ones trading costs go up ?
    what are the typical commissions you pay per trade ?
    is there a better option house to move to ?
     
    thanks


  120. Wow from +85 on DOW futures this morning to -58 now – perfect normal trading day.
    I still miss the 300-500 point swings from 6 month ago.


  121. I have noticed that thier mobile trading software is being messed with. they have introduced a lot of bugs trying to get their advertisementsin. they are also doing these little dirty tricks lick making the button for the close position blink so it catches your attention, i guess making more people sell or cause more transactions ? all in all i have TD.


  122. Dour, mrm?  I have never been dour!  I am full fledged sour!  Oh, the lemon tree is sweet, but the fruit of the poor lemon….


  123. CL/  Weeeeee!


  124. like to see a decisive break below 1345


  125. if only I was psychic, you would've made over 1100% on the 500 AAPL puts expiring this week.


  126. New Casino – Called AAPL


  127. Mr Mocha is Mr Magic!  But really, I know how you feel.


  128. Zero / AMX
     
    America Movil Dominates Latin American Landscape
    by Morningstar
     
    By Imari Love
    From an investment perspective, Brazil and Mexico continue to dominate the Latin America landscape, and the telecom sector is no exception. Within this sector, we believe America Movil (AMX) offers the most balanced and attractive investment profile because of its massive scale, considerable financial resources, and bundling capabilities. Over the past few years, the sector has been characterized by the acquisitions and integration of fixed-line networks with wireless infrastructure. We believe 2012 will be defined by how efficiently and effectively the carriers will monetize these moves. As we analyze the regulatory, competitive, and economic landscape, it's clear that America Movil is the best-positioned telecommunications company in the region. read more »


  129. Some new reading from Mohamed A. El-Erian, the Uber-salesman.
    T-bonds, it's toasted!
     
    From Argentina to Athens?
    http://www.project-syndicate.org/commentary/elerian15/English


  130. wow got out of CAT…a winner, albeit tiny, I'll take it!


  131. Okay, market correction's over for this week, hope you enjoyed it…


  132. CAT – Me too, thanks for that pick, Phil!


  133. So , I have a March Iron Condor on AAPL with
    the top half being -475/+480 calls. Watching this insanity has me
    thinking about buying back the sold 475 calls and converting
    a call spread. Any thoughts? I realize I’m about two weeks too late but getting tired of
    standing in the way of a runaway train…..


  134. Phil,
     
    what do you make of Fisher's comments to Wall St re QE 3 being a "fantasy"?


  135. Rumor: $AAPL size in Nasdaq might rebalance …


  136. Phil,
     
    i have never heard that about Israel having a stunning wealth gap………….made some quick money on shorts, and gone.
     
    i don't see a top forming yet. not a real top but that is not to say there cannot be a COLLAPSE which if happens and i am out would be a total drag! but after the bitch slap i had the other day i think i shall stand aside this afternoon and look for a higher entry again.


  137. JR,

     
    You still long?


  138. Keens/Canuck – No, don't do it!  You're a tourist in NYC, why sit in a box?  Easy to get a good steak in NY so if you aren't going to Luger's or Two Toms, how about Michael Jordan's inside Grand Central Station?  You can get a table overlooking the concourse "outside" the restaurant – a very cool New York meal and a good steak too!  

    And wheeee, by the way.  Sorry it's so tedious waiting for good confirmation at new levels but this is why we wait.  

    Wow, the AAPL giveth and the AAPL taketh away!  

    CMG/Zip – Nice reverse now but the point of that trade is the reward is more than the risk on what we felt was a 50/50 possibility (CMG going up or down $10) so it's the kind of bet that, if you take it often (for good reasons like we though $380 would not hold) then the one time you win will outpace even two losses BUT – the key is to manage your position sizes and doubling down or rolling into a bad coin flip is NOT the same thing.  Clearly this one is working out now but, IF you intended to stick with it, THEN you were obligated to DD or roll on the spike move against you – would have given you a much better pay-off now, where it may turn up again.  

    CMG/Mr M – Speaking of streaks that may be ending..

    TOS/Micro – They had some bugs but then they got the system back on track.  Rates vary tremendously based on the volume of your trades and the size of your account – essentially, you have to constantly negotiate with them and threaten to leave every 6 months to get lower rates (very effective if you have enough money where removing 1/3 of it freaks them out).   On the whole, I get the impression that IB treats people better but I care more about having a comfortable platform and good execution than anything else and, if anything, Ameritrade seems to have improved execution.  

    AMX/Rain – They would be my top pick in that part of the World. 

    Thanks for article Lionel. 

    CAT/Jbaker – Better to be lucky than good! 

    AAPL/Sundev – What did you actually pay for your legs?  

    Fisher/Roro – He doesn't have a vote and the bears at the Fed have gotten nasty about what's going on lately.  What Fisher says is almost the polar opposite to what Ben says and Ben is the Chairman and Fisher doesn't have a vote so the fantasy here may just be Fisher's unwillingness to accept what's already happening.  Also, he's in Dallas – they're having a great old time with oil rockin' and rollin' – his view of the economy (recovering, leave it alone) is not shared by most of the Fed. 

    Israel/Roro – Of course that can be backed up.  "As bad as the US" is the international term of condemnation for wealth disparity in a major economy.  Although Brazil at 50:1 is pretty shocking.  


  139. Phil………Thanks for confirming my Fisher suspicions……..and, for the links too!


  140. Had we been up, I would have been betting on the Fed Minutes to drop us but, since we're now down, maybe we're just setting up for the "good news" rally off the Fed minutes so be careful either way!  


  141. Rain:  Thanks.  I had just started to look at the problem of investment universe & liquidity of Latam companies.  Pretty small, and pretty low, compared to Asia, Europe and the U.S., unsurprisingly. I was surprised anyway.  I deconstructed a bunch of Latam ETFs to see what's what, and, once you get past mining and energy, there ain't much largish cap.  Certainly the consumer sector outside of Brazil is a midget — I guess that's what they're growing – high production, low consumption. I've got no conclusions.  
     
     I like a sort of  "North/South American Equities-Ex-U.S" setup which includes Canada.  How much to weight Brazil, which has run up considerably, is another question.  Mexico, on the other hand , seems pretty inexpensive relative to it's potential. It also gives you the ability to co-invest with Carlos Slim, up to a point.   It's low wage, lightly regulated proximity to a U.S. economy — one that will drag along the bottom for a few years but will eventually recover  - will be definitive.  AMX is one of the few good ways to gain exposure to a reasonable volume of Mexican consumers.  Otherwise you get stuck with Walmart Mexico or whatever.   I'm trying to stay away from simply having a basic mats portfolio.  I haven't gotten into the banking sector yet.
     
     Anyway, a work in progress, any comments always welcome.  Phil not that juiced by equities right now, so I'm relaxed and studying for now.


  142. Phil/Canuck
    The restaurant inside the Algonquin Hotel, located at 59 W 44th St, between Fith and Six avenues has a great menu, including a "REALLY" good steak too! They also have free classical and jazz musicians play while you dine as well!


  143. Well, i am betting long for the rest of the day. Everyday the Fed came out lately it has been xmas for the markets.  Lets see.


  144. l4real………..small world. i stayed at the Algonquin one time. nice place…..
     
    Phil……..i agree with your look at the 'bridge financing' for Greece too. why kill off a nice play that just keeps on giving.


  145. Iflantheman/AAPL -
    Just for fun what would you recommend for an AAPL play for the rest of this week? Thanks.


  146. Zero — Another you might want to look at is MELI. They provide ecomererce services to latin america (as well as a few other places). I haven't done DD on them and I'm not exactly sure how to form an opiniion on them but I've put them on my watch to see what turns up. The have a trailing PE of 61 so someone believes in them.


  147. i4real/canuck……the Royalton is at 44 West 44th very close to the Algonquin and very cool.


  148. Speaking of margin:  TOS has an article on margin in their magazine.

    Also, notice how they kept our markets looking pretty until Europe closed?  Who is this show being put on for?   

    Nothing very exciting in Fed minutes – same old crap – can't see how it would boost markets. 

    11:46 AM European shares close moderately higher, gaining on therecycling of news China will assist in the bailouts, and losing a bit as the EU's patience for can-kicking with Greece looks to be wearing thin. Stoxx 50 +0.2%, Germany +0.5%, France +0.5%, Italy +0.4%, Spain -0.4%, U.K. -0.1%. The euro -0.4% at $1.3079.

    12:00 PM On the hour: Dow -0.17%. 10-yr +0.14%. Euro -0.4% vs. dollar. Crude +0.92% to $102.01. Gold +0.97% to $1734.35.

    1:00 PM On the hour: Dow -0.71%. 10-yr +0.27%. Euro -0.54% vs. dollar. Crude +0.68% to $101.77. Gold +0.63% to $1728.45.

    2:00 PM On the hour: Dow -0.56%. 10-yr +0.23%. Euro -0.4% vs. dollar. Crude +0.93% to $102.02. Gold +0.67% to $1729.25.

    NAHB Housing Market Index: 29, highest level in more than 4 years, vs. 26 expected and 25 prior. "Builder confidence has doubled since September as measured by the HMI," notes NAHB Chairman Barry Rutenberg.

    "(QE3 is) a fantasy of Wall Street," says Dallas Fed chief Richard Fisher, responding to questions after a speech in Texas. The gas tank for monetary policy is "too full." Fisher is not a voter this year on the FOMC.

    Unemployment is falling, growth is picking up, inflation is modest, and most economists expect growth to continue. While these trends could be describing 2012 so far, they also apply to what was going on a year ago. Having been humbled by being too optimistic for 2011, though, economists are more cautious this time.

    Tadas Viskanta makes the case that "there has never been a better time to be an individual investor" – never easier, cheaper, richer, smarter or more social. It's not a market call; it's about the incredible array of choices and options available, and the cost savings and efficiency that the merging of finance and tech have wrought.

    U.S. small-business owners who aren't hiring – 85%, according to a Gallup survey - are most likely to cite not needing additional employees, not enough sales, worries about the weak economy, and cash flow concerns. Nearly half of small-business owners also point to potential healthcare costs and government regulations.

    Timothy Geithner a takes a spanking at the hands of the GOP's Dave Camp at a hearing on the Administration's budget, writes CNBC's Larry Kudlow. Of the plan to triple the tax on dividends to nearly 45%, Camp reckons the actual tariff would be 64%, due to the money being taxed at the corporate and shareholder levels. 

    Spain has lifted the short-selling ban on financial stocks. The restriction – put in place last summer in conjunction with other EU states – did little to halt the slide in bank shares. France let its banexpire last weekend. 

    The euro is structurally flawed and fated to fall apart, writes John Paulson in a letter to his investors. "Europe is saved," tweets ZH, no doubt thinking of Paulson's status switch from investing giant to contrary indicator. After riding BofA and Citi all the down in a disastrous 2011, Paulson exited the positions before their big 2012 rally. 

    More on the floated delay of the Greek bailout: Believing funds can be scrounged up for Greece to make good on its March 20 debt redemption, EU officials want to wait until after April elections before approving more funds. A direct threat to the voters, says Dan Alpert, not to put into power a government opposed to the Troika program. "Greece needs to call this off." 

    Leaked documents regarding the Greek debt restructuring make clear – by detailing the moving parts – why there is yet to be agreement. The biggest stumbling block is that EU parliaments may have to approve funds before knowing if Greece has fulfilled its conditions – hard to imagine the Germans, Dutch, or Finns doing so.

    "Stop repeating the claim that there is no 'Plan B," writes Mohamed El-Erian of the Troika and Greece. "Telling people that there is no alternative to a discredited policy," makes things worse, he writes, saying events in Greece today bear uncanny resemblance to Argentina in 2001 (default despite bailouts). 

    An expanding central bank balance sheet typically means a weaker currency, but not in the case of the euro, which is holding up despite the ECB's liquidity gusher, says Forex.com's Kathleen Brooks. Huh? The euro is off about 8 handles since chatter of the LTRO began in November, and off 4 big numbers since the actual exercise in early December.

    Fitch is poised to downgrade three of Japan's top electronic companies to junk status in the next year. The agency today cut its ratings for Sony (SNE) and Panasonic (PC) by one notch to BBB- and kept both on negative outlook, while it also lowered the outlook on Sharp's (SHCAY.PK) BBB- to negative. 

    Workers of the World —— ah, forget about it…  GM continues the national trend of phasing out defined-benefit programs, ending contributions into such plans for 19K workers and switching them to 401Ks, reports CNBC.

    This sums up the investing environment nicely:  Jefferies weighs in on Abercrombie & Fitch (ANF +12.5%), saying its 4Q was awful, but it really doesn't matter. What matters now is that 2012 expectations are low, the long term growth strategy is on track, its cash flow and balance sheet are robust, and the current risk/reward for this stock is extremely favorable. The company is well positioned for the new year with the right strategy, brand and ability to execute.

    Tesla (TSLA -1.9%lands $40M in orders for the Model X crossover without so much as a single advertisement, according to the company. Traffic to the firm's website increased 2800% on the night of the launch last week and Model X was the 3rd most searched term on Google for the day.

    Kellogg (K +5.2%) shares power higher after scooping up Pringles from Procter & Gamble (PG) and analysts line up to approve the deal. Deutsche Bank applauds Kellogg for expanding away from cereal, estimating snacks will now represent 46% of total sales vs. 40% previously: "This is important as almost all cultures embrace snacks while few globally embrace cereal."

    Though it sounds a bit like bad news, Diamond Foods (DMND) trades 3.9% higher after the official collapse of its plan to buy Pringles from P&G. Herb Greenberg isn't shy about speculating on the fallout – tweeting that he can't help but wonder whether Kellogg is now considering buying the rest of Diamond's snack business.


  149. Madison Square Garden (MSG +1.1%) jumps higher again as Linsanity hits new heights with a buzzer-beating winning shot from the NBA's ultimate rags-to-riches story. Arquitos Capital Management's Steven Kiel notes that the success of the Knicks not only adds to MSG's top-line result – it also pressures Time Warner Cable (TWC +2.1%) to settle a deal with MSG on more favorable terms to keep Knicks fans from jumping ship.

    Citigroup repeats its Buy rating on Sirius XM Radio (SIRI+1%) and boosts its target price on the shares to $2.50 from $2.20, contending that 2012 net subscriber additions could beat management guidance of 1.3M. Gross adds should rise to 9.5M from 8.7M, the firm says, as more trial customers convert and the number of retail installations rises. 

    MEMC (WFR +3%), which tumbled along with other solar names yesterday, is rebounding a bit after Collins Stewart (Buy) argues the company's SunEdison solar power plant division is seeing "positive business trends" in the U.S. and Canada, where the majority of its backlog exists. This, in its view, offsets the company's failure to sell several systems in Italy due to rising interest rates. 

    Apple (AAPL +2.6%) continues its march towards a $500B market cap after Tim Cook's remarks at a Goldman conference further boost hopes that a dividend and/or stock buyback will soon arrive. With surveys having shown Apple's investor base features a dearth of value investors, expectations are up that a dividend announcement will draw in a slew of first-time institutional buyers.

    Perhaps having something to do with the move in Apple (AAPL) is chatter the Nasdaq could be rebalanced to cut the stock's influence. When this occurred in April 2011, Apple sold off (beforetaking flight again). There's also word Amazon China has pulled the iPad2 from sale due to the Proview trademark suit

    Three lunchtime reads:

    1) It's time to sell

    2) Is the $25 billion foreclosure settlement a stealth bank bailout?

    3) The correction cometh – and everything you need to know about why

     


  150. Phil – nice call on CMG!


  151. Housing may be up on hope today, but timber is falling because of gravity.


  152. Since today is looking more and more like yesterday, I am just going to patiently wait until 3:30 to make my money on the violent stick in the last 30 minutes!


  153. roro/ Royalton
    Another good choice! 


  154. I cannot stress enough how cheap it is to hedge with the following:  

    • SQQQ March $12/14 bull call spread at $1, selling TZA March $18 puts for $1.03 for a .03 credit on the $2 spread.  
    • TZA March $19/23 bull call spread at $1.05, selling TZA March $18 puts for $1.03 for .02 on the $4 spread.  

  155. Oil / Guys where do you check the oil price real time? 


  156. @dpastramas
    /CL


  157. Pharm – There's that P-bar on the Vix again.  It seems to be a common theme now.


  158. Daily VIX chart…now that is a phat phinger.


  159. Phil/Waiting

     
    You got that right, 
     
    You just know that by the way they've been talking this market up the last few weeks that their getting ready to lower the boom on the Johnny come lately's.
     
    While your waiting check this Dude out. 


  160. exec / Long

    No, in cash looking at longing here IWM 81.50


  161. here we go up again!


  162. AAPL players/    Yay!    A bit of a pullback.   So what now?   We'll keep the April 490/540 spreads.  They should eventually come in.  Let's start scaling back in, but slowly, as AAPL may come down further.  So add 5 April 490s now. I just got them for 38.20   These are straightup calls


  163. Oil is well bid up off the 101.35 line (StJean's PP)
    The momentum has reversed – Quick on the way up and slow on the way down.


  164. dpast……..live quotes OIL?………optionsxpress…….FXCM UK (FXCM UK has a demo with live live quotes)


  165. Good graphic from Barry on Apple:

    http://www.ritholtz.com/blog/2012/02/the-big-apple-aapl/

    I have jokingly told people recently that there are 4 asset classes: Stocks, Bonds, Commodities & Apple. This article is more evidence supporting that . . .


  166. stjean luc…….i am definitely hoping fr a stick day as i closed my shorts so if this puppy goes south i will not be happy. i am so manic. one minute i want a lower price then i want a higher price………..trading is a bitch.


  167. To follow up on Phil's point earlier about gasoline consumption in the US:

    http://www.ritholtz.com/blog/2012/02/what-does-declining-gasoline-consumption-mean/

    That's one big drop….


  168. Roro – Seems like borderline manic-depressive now!   :-)


  169. stjeanluc…………i posted this earlier; the Dow has ridden above the 200 MA on a 2 hour chart since dec 20 and not looked back.
     
    it is bouncing off that 200 2hr MA and if it breaks it today this will be the first break since dec 20…..real Dow currently 12,790
     
    if it breaks i see 12,700 and then 12,625, but what makes today special other than Apple selling off $25?


  170. Did anyone catch the horsecrap Paulson was trying to feed CNBC viewers this morning?  They lauded him as the man that was responsible for saving the entire banking system and our economy.  Not the man that almost ruined it.  And worst of all, Andrew Sorkin is the one that interviewed him.


  171. Stjeanluc:  Need to do some graphs of SPX and COMPQ in world currencies and gold  AND ex. AAPL.  Pentaxon where are you?


  172. Today feels a bit like 2011, big runups over night, lots of volatility during the day, hard to get direction and here the last 2 months had been so relaxing.


  173. JR,

     
    Was it you that said they don't typically like to let IWM close on LOD?


  174. Markets going down! Astonishing!


  175. Speaking of Fed's Fisher, according to Zerohedge he's got over $1 million parked in a Gold ETF (and another 50k-250k in Platinum and Uranium respectively):
     
    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2012/01/Fisher%20GLD.jpg
     
    You'd think he would be all gung-ho for QEternity.


  176. Oops never mind I just noticed he has a few million in 10 year bonds.  Its just a hedge.


  177. Lflan, you're buying more calls?? I was totally thinking of buying puts.  Was just too scared to pull the trigger. 


  178. lolobear
    AAPL just about time to sell puts


  179. Wow, new format on Fed is nice but HUGE!  Here's the most important part (whole thing here):  

     

    All FOMC members voted to adopt this statement except Mr. Tarullo, who abstained because he questioned the ultimate usefulness of the statement in promoting better communication of the Committee's policy strategy.

    Developments in Financial Markets and the Federal Reserve's Balance Sheet
    The Manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign financial markets during the period since the Federal Open Market Committee (FOMC) met on December 13, 2011. He also reported on System open market operations, including the ongoing reinvestment into agency-guaranteed mortgage-backed securities (MBS) of principal payments received on SOMA holdings of agency debt and agency-guaranteed MBS as well as the operations related to the maturity extension program authorized at the September 20–21 FOMC meeting. By unanimous vote, the Committee ratified the Desk's domestic transactions over the intermeeting period. There were no intervention operations in foreign currencies for the System's account over the intermeeting period.

    Staff Review of the Economic Situation
    The information reviewed at the January 24-25 meeting indicated that U.S. economic activity continued to expand moderately, while global growth appeared to be slowing. Overall conditions in the labor market improved further, although the unemployment rate remained elevated. Consumer price inflation was subdued, and measures of long-run inflation expectations remained stable.

    The unemployment rate declined to 8.5 percent in December; however, both long-duration unemployment and the share of workers employed part time for economic reasons were still quite high. Private nonfarm employment continued to expand moderately, while state and local government employment decreased at a slower pace than earlier in 2011. Some indicators of firms' hiring plans improved. Initial claims for unemployment insurance edged lower, on balance, since the middle of December but remained at a level consistent with only modest employment growth.

    Industrial production expanded in November and December, on net, and the rate of manufacturing capacity utilization moved up. Motor vehicle assemblies were scheduled to increase, on balance, in the first quarter of 2012, and broader indicators of manufacturing activity, such as the diffusion indexes of new orders from the national and regional manufacturing surveys, were at levels that suggested moderate growth in production in the near term.

    Real personal consumption expenditures continued to rise moderately in November, boosted by spending for motor vehicles and other durables, although households' real disposable income edged down. In December, however, nominal retail sales excluding purchases at motor vehicle and parts outlets declined, and sales of motor vehicles also dropped slightly. Consumer sentiment improved further in early January but was still at a low level.

    Activity in the housing market improved a bit in recent months but continued to be held down by the large overhang of foreclosed and distressed properties, uncertainty about future home prices, and tight underwriting standards for mortgage loans. Starts and permits for new single-family homes rose in November and December but remained only a little above the depressed levels seen earlier in 2011. Sales of new and existing homes also firmed somewhat in recent months, but home prices continued to trend lower.

    Real business expenditures on equipment and software appeared to have decelerated in the fourth quarter. Nominal orders and shipments of nondefense capital goods excluding aircraft declined in November for a second month. Forward-looking indicators of firms' equipment spending were mixed: Some survey measures of business conditions and capital spending plans improved, but corporate bond spreads continued to be elevated and analysts' earnings expectations for producers of capital goods remained muted. Nominal business spending for nonresidential construction was unchanged in November and continued to be held back by high vacancy rates and tight credit conditions for construction loans. Inventories in most industries looked to be well aligned with sales, though motor vehicle stocks remained lean.

    Monthly data for federal government spending pointed to a significant decline in real defense purchases in the fourth quarter. Real state and local government purchases seemed to be decreasing at a slower rate than during earlier quarters, as the pace of reductions in payrolls eased and construction spending leveled off in recent months.

    The U.S. international trade deficit widened in November as exports fell and imports rose. Exports declined in most major categories, with the exception of consumer goods. Exports of industrial supplies and materials were especially weak, though the weakness was concentrated in a few particularly volatile categories and reflected, in part, declines in prices. The rise in imports largely reflected higher imports of petroleum products and automotive products, which more than offset decreases in most other broad categories of imports.

    Overall U.S. consumer prices as measured by the price index for personal consumption expenditures were unchanged in November; as measured by the consumer price index, they were flat in December as well. Consumer energy prices decreased in recent months, while increases in consumer food prices slowed. Consumer prices excluding food and energy rose modestly in the past two months. Near-term inflation expectations from the Thomson Reuters/University of Michigan Surveys of Consumers were essentially unchanged in early January, and longer-term inflation expectations remained stable.

    Available measures of labor compensation indicated that wage gains continued to be modest. Average hourly earnings for all employees posted a moderate gain in December, and their rate of increase from 12 months earlier remained slow.

    Recent indicators of foreign economic activity pointed to a substantial deceleration in the fourth quarter of 2011. In the euro area, retail sales and industrial production were below their third-quarter averages in both October and November. Economic activity in much of Asia was disrupted by the effects of severe flooding in Thailand, which affected supply chains in the region. Twelve-month inflation rates receded in several advanced and emerging market economies, and most central banks maintained policy rates or eased further while continuing to provide significant liquidity support.

    Frankly, I'm not in the mood for major commentary.  Looks to me like this news is so bad – it might be good and bring QE3 back to the conversation.  

    Staff Review of the Financial Situation
    Developments in Europe continued to be a central focus for investors over the intermeeting period as concerns persisted about the prospects for a durable solution to the European fiscal and financial difficulties. Nevertheless, market sentiment toward Europe appeared to brighten a bit, and U.S. economic data releases were somewhat better than investors expected, leading to some improvement in conditions in financial markets.

    On balance over the period, the expected path for the federal funds rate implied by money market futures quotes was essentially unchanged. Yields on nominal Treasury securities rose slightly at intermediate and longer maturities. Indicators of inflation compensation derived from nominal and inflation-protected Treasury securities edged up.

    U.S. financial institutions reportedly retained ready access to short-term funding markets; there were no significant dislocations in those markets over year-end. Dollar funding pressures for European banks eased slightly. While spreads of the London interbank offered rate (Libor) over overnight index swap (OIS) rates of the same maturity remained elevated, rates for unsecured overnight commercial paper (CP) issued by some entities with European parents declined substantially following the lowering of charges on the central bank liquidity swap lines with the Federal Reserve, the implementation by the European Central Bank (ECB) of its first three-year longer-term refinancing operation (LTRO), and the passage of year-end. In secured funding markets, spreads of overnight asset-backed CP rates over overnight unsecured CP rates also declined, and the general collateral repurchase agreement, or repo, market continued to function normally.

    Indicators of financial stress eased somewhat over the intermeeting period, although they generally continued to be elevated. Market-based measures of possible spillovers from troubles at particular financial firms to the broader financial system were below their levels in the fall but remained above their levels prior to the financial crisis. Initial fourth-quarter earnings reports for large bank holding companies were mixed relative to market expectations, with poor capital market revenues weighing on the profits of institutions with significant trading operations. Although credit default swap (CDS) spreads of most large domestic bank holding companies remained elevated, they moved lower over the intermeeting period, and some institutions took advantage of easing credit conditions by issuing significant quantities of new long-term debt. Equity prices of most large domestic financial institutions outperformed the broader market, on net, over the intermeeting period. Nonetheless, the ratio of the market value of bank equity to its book value remained low for some large financial firms. Responses to the December Senior Credit Officer Opinion Survey on Dealer Financing Terms indicate that, since August, securities dealers have devoted increased time and attention to the management of concentrated credit exposures to other financial intermediaries, pointing to increased concern over counterparty risk.

    Broad equity price indexes increased more than 6 percent, on net, over the intermeeting period, and option-implied equity volatility declined notably. Yields on investment-grade corporate bonds declined a bit relative to those on comparable-maturity Treasury securities, while spreads of speculative-grade corporate bond yields over yields on Treasury securities decreased noticeably. Indicators of the credit quality of nonfinancial corporations continued to be solid. Conditions in the secondary market for leveraged loans were stable, with median bid prices about unchanged. Financing conditions for large nonfinancial businesses generally remained favorable. Bond issuance by investment-grade nonfinancial corporations was robust, though below its elevated November pace, while issuance by lower-rated firms slowed, likely owing in part to seasonal factors. Issuance of leveraged loans was relatively modest in the fourth quarter compared with its rapid pace earlier in the year. Share repurchases and cash-financed mergers by nonfinancial firms maintained their recent strength in the third quarter, leaving net equity issuance deeply negative.

    There's a factor we fail to consider.  Massive stock buybacks have artificially boosted earnings.  

    Financing conditions for commercial real estate (CRE) remained strained, and issuance of commercial mortgage-backed securities was very light in the fourth quarter. Responses to the January Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) indicated that bank CRE lending standards continued to be extraordinarily tight, but some banks reported having reduced the spreads of loan rates over their cost of funds (compared with a year ago) for the first time since 2007. Delinquency rates on commercial mortgages remained elevated, and CRE price indexes continued to fluctuate around levels substantially lower than their 2007 peaks.

    Conditions in residential mortgage markets remained extremely tight. Although mortgage interest rates and yields on current-coupon agency MBS edged down to near their historical lows, mortgage refinancing activity continued to be subdued amid tight underwriting standards and low levels of home equity. Mortgage delinquency rates, while improving gradually, remained elevated relative to pre-crisis norms, and house prices continued to move lower. The price of subprime residential mortgage-backed securities (RMBS), as measured by the ABX index, rose over the intermeeting period, consistent with similar changes for other higher-risk fixed-income securities. RMBS prices were supported by reports of the sale of a significant portion of the RMBS held in the Maiden Lane II portfolio.

    On the whole, conditions in consumer credit markets showed signs of improvement. Consumer credit increased in November, while delinquency rates on credit card loans in securitized pools held steady in November at historically low levels. Data on credit card solicitations and from responses to the January SLOOS suggested that lending standards on consumer loans continued to ease modestly.

    Financing conditions for state and local governments were mixed. Gross long-term issuance of municipal bonds remained robust in December, with continued strength in new issuance for capital projects. CDS spreads for states inched down further over the intermeeting period, and yields on long-term general obligation municipal bonds fell notably. However, downgrades of municipal bonds continued to substantially outpace upgrades in the third quarter.

    In the fourth quarter, bank credit continued to increase as banks accumulated agency MBS and growth of total loans picked up. Core loans--the sum of commercial and industrial (C&I) loans, real estate loans, and consumer loans--expanded modestly. Growth of C&I loans at domestic banks was robust but was partly offset by weakness at U.S. branches and agencies of European banks. Noncore loans rose sharply, on net, reflecting in part a surge in such loans at the U.S. branches and agencies of European institutions. Responses to the January SLOOS indicated that, in the aggregate, loan demand strengthened slightly and lending standards eased a bit further in the fourth quarter.

    M2 increased at an annual rate of 5 1/4 percent in December, likely reflecting continued demand for safe and liquid assets given investor concerns over developments in Europe. In addition, demand deposits rose rapidly around year-end, reportedly because lenders in short-term funding markets chose to leave substantial balances with banks over the turn of the year. The monetary base increased in December, largely reflecting growth in currency. Reserve balances were roughly unchanged over the intermeeting period.

    That's 5% of $10Tn so $500Bn of new cash money and it hasn't his reserves yet, where it can get levered 10:1.  

     

    International financial markets seemed somewhat calmer over the intermeeting period than they had been in previous months, and the funding conditions faced by most European financial institutions and sovereigns eased somewhat in the wake of the ECB's first three-year LTRO. Short-term euro interest rates moved lower as euro-area institutions drew a substantial amount of three-year funds from the ECB, and dollar funding costs for European banks also appeared to decline. Spreads of yields on Italian and Spanish government debt over those on German bunds narrowed over the intermeeting period, with spreads on shorter-term debt falling particularly noticeably. The apparent improvement in market sentiment was not diminished by news late in the period that Standard & Poor's lowered its long-term sovereign bond ratings of nine euro-area countries and the European Financial Stability Facility or by news that negotiations over the terms of a voluntary private-sector debt exchange for Greece had not yet reached a conclusion.

    The staff's broad index of the foreign exchange value of the dollar declined slightly over the intermeeting period. While the dollar fell against most other currencies, it appreciated against the euro. Foreign stock markets generally ended the period higher, with headline equity indexes in Europe and the emerging market economies up substantially, although emerging market equity and bond funds continued to experience outflows on net during the period.

    Staff Economic Outlook
    In the economic forecast prepared for the January FOMC meeting, the staff's projection for the growth in real gross domestic product (GDP) in the near term was revised down a bit. The revision reflected the apparent decline in federal defense purchases and the somewhat shallower trajectory for consumer spending in recent months; the recent data on the labor market, production, and other spending categories were, on balance, roughly in line with the staff's expectations at the time of the previous forecast. The medium-term projection for real GDP growth in the January forecast was little changed from the one presented in December. Although the developments in Europe were expected to continue to weigh on the U.S. economy during the first half of this year, the staff still projected that real GDP growth would accelerate gradually in 2012 and 2013, supported by accommodative monetary policy, further improvements in credit availability, and rising consumer and business sentiment. The increase in real GDP was expected to be sufficient to reduce the slack in product and labor markets only slowly over the projection period, and the unemployment rate was anticipated to still be high at the end of 2013.

    The staff's forecast for inflation was essentially unchanged from the projection prepared for the December FOMC meeting. With stable long-run inflation expectations and substantial slack in labor and product markets anticipated to persist over the forecast period, the staff continued to project that inflation would remain subdued in 2012 and 2013.

    All conditions go for QEvermore!  

    Participants' Views on Current Conditions and the Economic Outlook
    In conjunction with this FOMC meeting, all participants--the five members of the Board of Governors and the presidents of the 12 Federal Reserve Banks--provided projections of output growth, the unemployment rate, and inflation for each year from 2011 through 2014 and over the longer run. Longer-run projections represent each participant's assessment of the rate to which each variable would be expected to converge, over time, under appropriate monetary policy and in the absence of further shocks to the economy. Starting with this meeting, participants also provided assessments of the path for the target federal funds rate that they view as appropriate and compatible with their individual economic projections. Participants' economic projections and policy assessments are described in more detail in the Summary of Economic Projections, which is attached as an addendum to these minutes.

    In their discussion of the economic situation and outlook, meeting participants agreed that the information received since the Committee met in December suggested that the economy had been expanding moderately, notwithstanding some slowing in growth abroad. In general, labor market indicators pointed to some further improvement in labor market conditions, but progress was gradual and the unemployment rate remained elevated. Household spending had continued to advance at a moderate pace despite still-sluggish growth in real disposable income, but growth in business fixed investment had slowed. The housing sector remained depressed, with very low levels of activity; there were, however, signs of improvement in some local housing markets. Many participants observed that some indicators bearing on the economy's recent performance had shown greater-than-expected improvement, but a number also noted less favorable data; one noted that growth in final sales appeared to have slowed in the fourth quarter of last year even as output growth picked up. Inflation had been subdued in recent months, there was little evidence of wage or cost pressures, and longer-term inflation expectations had remained stable.

    With respect to the economic outlook, participants generally anticipated that economic growth over coming quarters would be modest and, consequently, expected that the unemployment rate would decline only gradually. A number of factors were seen as likely to restrain the pace of economic expansion, including the slowdown in economic activity abroad, fiscal tightening in the United States, the weak housing market, further household deleveraging, high levels of uncertainty among households and businesses, and the possibility of increased volatility in financial markets until the fiscal and banking issues in the euro area are more fully addressed. Participants continued to expect these headwinds to ease over time and so anticipated that the recovery would gradually gain strength. However, participants agreed that strains in global financial markets continued to pose significant downside risks to the economic outlook. With unemployment expected to remain elevated, and with longer-term inflation expectations stable, almost all participants expected inflation to remain subdued in coming quarters--that is, to run at or below the 2 percent level that the Committee judges most consistent with its statutory mandate over the longer run.

    In discussing the household sector, meeting participants noted that consumer spending had grown moderately in recent months. Consumer sentiment had improved since last summer, though its level was still quite low. Business contacts in the retail sector reported generally satisfactory holiday sales, but high-end retailers saw strong gains while lower-end retailers saw mixed results. Contacts also reported widespread discounting. Major express delivery companies indicated very high volumes at year-end and into January. Several participants observed that consumer spending had outpaced growth in personal disposable income last year, and a few noted that households remained pessimistic about their income prospects and uncertain about the economic outlook. These observations suggested that growth of consumer spending might slow. However, a few other participants pointed to increasing job gains in recent months as contributing to an improving trend in real incomes and thus supporting continued moderate growth in consumer spending.

    Reports from business contacts indicated that activity in the manufacturing, energy, and agricultural sectors continued to advance in recent months. Businesses generally reported that they remained cautious regarding capital spending and hiring; some contacts cited uncertainty about the economic outlook and about fiscal and regulatory policy. Nonetheless, business contacts had become somewhat more optimistic, with more contacts reporting plans to expand capacity and payrolls. Some companies indicated that they planned to relocate some production from abroad to the United States. A few participants noted that national and District surveys of firms' capital spending plans suggested that the recent slowing in business fixed investment was partly temporary. The combination of high energy prices and availability of new drilling technologies was promoting strong growth in investment outlays in the energy sector.

    Participants generally saw the housing sector as still depressed. The level of activity remained quite weak, house prices were continuing to decline in most areas, and the overhang of foreclosed and distressed properties was still substantial. Nonetheless, there were some small signs of improvement. The inventory of unsold homes had declined, though in part because the foreclosure process had slowed, and issuance of permits for new single-family homes had risen from its lows. One participant again noted reports from some homebuilders suggesting that land prices were edging up and that financing was available from nonbank sources. Another participant cited reports from business contacts indicating that credit standards in mortgage lending were becoming somewhat less stringent. Yet another noted that recent changes to the Home Affordable Refinance Program, which were intended to streamline the refinancing of performing high-loan-to-value mortgages, were showing some success.

    Participants generally expected that growth of U.S. exports was likely to be held back in the coming year by slower global economic growth. In particular, fiscal austerity programs in Europe and stresses in the European banking system seemed likely to restrain economic growth there, perhaps with some spillover to growth in Asia. One participant noted that shipping rates had declined of late, suggesting that a slowdown in international trade might be under way.

    Participants agreed that recent indicators showed some further gradual improvement in overall labor market conditions: Payroll employment had increased somewhat more rapidly in recent months, new claims for unemployment insurance had trended lower, and the unemployment rate had declined. Some business contacts indicated that they planned to do more hiring this year than last. However, unemployment--including longer-term unemployment--remained elevated, and the numbers of discouraged workers and people working part time because they could not find full-time work were also still quite high. Participants expressed a range of views on the current extent of slack in the labor market. Very high long-duration unemployment might indicate a mismatch between unemployed workers' skills and employers' needs, suggesting that a substantial part of the increase in unemployment since the beginning of the recession reflected factors other than a shortfall in aggregate demand. In contrast, the quite modest increases in labor compensation of late, and the large number of workers reporting that they are working part time because their employers have cut their hours, suggested that underutilization of labor was still substantial. A few participants noted that the recent decline in the unemployment rate reflected declining labor force participation in large part, and judged that the decline in the participation rate was likely to be reversed, at least to some extent, as the recovery continues and labor demand picks up.

    This is simply not what you want to read when your stocks are trading at or near all-time highs, is it?  IS IT???  Wake up people – you don't pay high p/e's when you don't even know for a fact that we won't go tumbling into a global recession next quarter.  

    Meeting participants observed that financial conditions improved and financial market stresses eased somewhat during the intermeeting period: Equity prices rose, volatility declined, and bank lending conditions appeared to improve. Participants noted that the ECB's three-year refinancing operation had apparently contributed to improved conditions in European sovereign debt markets. Nonetheless, participants expected that global financial markets would remain focused on the evolving situation in Europe and anticipated that continued policy efforts would be necessary in Europe to fully address the area's fiscal and financial problems. U.S. banks reported increases in commercial lending as some European lenders pulled back, and some banking contacts indicated that creditworthy companies' demand for credit had increased. A number of participants noted further improvement in the availability of loans to businesses, with a couple of them indicating that small business contacts had reported increased availability of bank credit. However, a few other participants commented that small businesses in their Districts continued to face difficulty in obtaining bank loans.

    Participants observed that longer-run inflation expectations were still well anchored and also noted that inflation had been subdued in recent months, partly reflecting a decline in commodity prices and an easing of supply chain disruptions since mid-2011. In addition, labor compensation had risen only slowly and productivity continued to increase. One participant reported that a survey of business inflation expectations indicated firms were anticipating increases in unit costs on the order of 1 3/4 percent this year, just a bit higher than last year. Looking farther ahead, participants generally judged that the modest expansion in economic activity that they were projecting would be consistent with a gradual reduction in the current wide margins of slack in labor and product markets and with subdued inflation going forward. Some remained concerned that, with the persistence of considerable resource slack, inflation might continue to drift down and run below mandate-consistent levels for some time. However, a couple of participants were concerned that inflation could rise as the recovery continued and argued that providing additional monetary accommodation, or even maintaining the current highly accommodative stance of monetary policy over the medium run, would erode the stability of inflation expectations and risk higher inflation.

    Committee participants discussed possible changes to the forward guidance that has been included in the Committee's recent post-meeting statements. Many participants thought it important to explore means for better communicating policymakers' thinking about future monetary policy and its relationship to evolving economic conditions. A couple of participants expressed concern that some press reports had misinterpreted the Committee's use of a date in its forward guidance as a commitment about its future policy decisions. Several participants thought it would be helpful to provide more information about the economic conditions that would be likely to warrant maintaining the current target range for the federal funds rate, perhaps by providing numerical thresholds for the unemployment and inflation rates. Different opinions were expressed regarding the appropriate values of such thresholds, reflecting different assessments of the path for the federal funds rate that would likely be appropriate to foster the Committee's longer-run goals. However, some participants worried that such thresholds would not accurately or effectively convey the Committee's forward-looking approach to monetary policy and thus would pose difficult communications issues, or that movements in the unemployment rate, by themselves, would be an unreliable measure of progress toward maximum employment. Several participants proposed either dropping or greatly simplifying the forward guidance in the Committee's statement, arguing that information about participants' assessments of the appropriate future level of the federal funds rate, which would henceforth be contained in the Summary of Economic Projections (SEP), made it unnecessary to include forward guidance in the post-meeting statement. However, several other participants emphasized that the information regarding the federal funds rate in the SEP could not substitute for a formal decision of the members of the FOMC. Participants agreed to continue exploring approaches for providing the public with greater clarity about the linkages between the economic outlook and the Committee's monetary policy decisions.

    If they believe there's no inflation – that's an excuse for more QE so, bullish.  

    Committee Policy Action
    Members viewed the information on U.S. economic activity received over the intermeeting period as suggesting that the economy had been expanding moderately and generally agreed that the economic outlook had not changed greatly since they met in December. While overall labor market conditions had improved somewhat further and unemployment had declined in recent months, almost all members viewed the unemployment rate as still elevated relative to levels that they saw as consistent with the Committee's mandate over the longer run. Available data indicated some slowing in the pace of economic growth in Europe and in some emerging market economies, pointing to reduced growth of U.S. exports going forward. With the economy facing continuing headwinds from the recent financial crisis and with growth slowing in a number of U.S. export markets, members generally expected a modest pace of economic growth over coming quarters, with the unemployment rate declining only gradually. Strains in global financial markets continued to pose significant downside risks to economic activity. Inflation had been subdued in recent months, and longer-term inflation expectations remained stable. Members generally anticipated that inflation over coming quarters would run at or below the 2 percent level that the Committee judges most consistent with its mandate.

    In their discussion of monetary policy for the period ahead, members agreed that it would be appropriate to maintain the existing highly accommodative stance of monetary policy. In particular, they agreed to keep the target range for the federal funds rate at 0 to 1/4 percent, to continue the program of extending the average maturity of the Federal Reserve's holdings of securities as announced in September, and to retain the existing policies regarding the reinvestment of principal payments from Federal Reserve holdings of securities.

    With respect to the statement to be released following the meeting, members agreed that only relatively small modifications to the first two paragraphs were needed to reflect the incoming information and the modest changes to the economic outlook implied by the recent data. In light of the economic outlook, almost all members agreed to indicate that the Committee expects to maintain a highly accommodative stance for monetary policy 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, longer than had been indicated in recent FOMC statements. In particular, several members said they anticipated that unemployment would still be well above their estimates of its longer-term normal rate, and inflation would be at or below the Committee's longer-run objective, in late 2014. It was noted that extending the horizon of the Committee's forward guidance would help provide more accommodative financial conditions by shifting downward investors' expectations regarding the future path of the target federal funds rate. Some members underscored the conditional nature of the Committee's forward guidance and noted that it would be subject to revision in response to significant changes in the economic outlook.

    The Committee also stated that it is prepared to adjust the size and composition of its securities holdings as appropriate to promote a stronger economic recovery in a context of price stability. A few members observed that, in their judgment, current and prospective economic conditions--including elevated unemployment and inflation at or below the Committee's objective--could warrant the initiation of additional securities purchases before long. Other members indicated that such policy action could become necessary if the economy lost momentum or if inflation seemed likely to remain below its mandate-consistent rate of 2 percent over the medium run. In contrast, one member judged that maintaining the current degree of policy accommodation beyond the near term would likely be inappropriate; that member anticipated that a preemptive tightening of monetary policy would be necessary before the end of 2014 to keep inflation close to 2 percent.

    At the conclusion of the discussion, the Committee voted to authorize and direct the Federal Reserve Bank of New York, until it was instructed otherwise, to execute transactions in the System Account in accordance with the following domestic policy directive:

    "The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to 1/4 percent. The Committee directs the Desk to continue the maturity extension program it began in September to purchase, by the end of June 2012, Treasury securities with remaining maturities of approximately 6 years to 30 years with a total face value of $400 billion, and to sell Treasury securities with remaining maturities of 3 years or less with a total face value of $400 billion. The Committee also directs the Desk to maintain its existing policies of rolling over maturing Treasury securities into new issues and of reinvesting principal payments on all agency debt and agency mortgage-backed securities in the System Open Market Account in agency mortgage-backed securities in order to maintain the total face value of domestic securities at approximately $2.6 trillion. The Committee directs the Desk to engage in dollar roll transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System's balance sheet that could affect the attainment over time of the Committee's objectives of maximum employment and price stability."

    The vote encompassed approval of the statement below to be released at 12:30 p.m.:

    "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 this action: Ben Bernanke, William C. Dudley, Elizabeth Duke, Dennis P. Lockhart, Sandra Pianalto, Sarah Bloom Raskin, Daniel K. Tarullo, John C. Williams, and Janet L. Yellen.

    Voting against this action: Jeffrey M. Lacker.

    Mr. Lacker dissented because he preferred to omit the description of the time period over which economic conditions were likely to warrant exceptionally low levels of the federal funds rate. He expected that a preemptive tightening of monetary policy would be necessary to prevent an increase in inflation projections or inflation expectations prior to the end of 2014. More broadly, given the inclusion of FOMC participants' projections for the federal funds rate target in the Summary of Economic Projections, he saw no need to provide additional forward guidance in the Committee statement.

    It was agreed that the next meeting of the Committee would be held on Tuesday, March 13, 2012. The meeting adjourned at 11:30 a.m. on January 25, 2012.

    So, not a lot here but we rallied about 400 points on the Dow since that meeting and were rallying in anticipation of QE3 and, of course, Greece being fixed since October.  These minutes add nothing and now Greece is fixed – we'll see if this "news" gets sold on – in the very least, I would expect the Dow to correct to 12,500 – just to blow off a little excess and let the 50 dma catch up .  


  180. Phil,
    What's your intuitive sense today. come 3:30ish, TO STICK OR NOT TO STICK?
    Thanks.


  181. Oil touched $102 again but it's almost 3:30 and time to go long.  

    Let's see if life can really be this simple and buy 10 IWM Feb $80 calls for $1.50 (.28 premium) with a stop at $1.40 in the $25KP and see if we can get $2 out of them.  


  182. Phil – Do you still like SVU as a long term hold?


  183. roro: I feel your pain. I am playing for the stick.


  184. Still not buying any QE3 with oil this high.  Think this is more talk to make people believe there will be a QE3.  They also will not go into a QE3 with jobless claims numbers going down and jobs created going up right now.  There's no immediate urgency.


  185. Something doesn't add up.  The AAPL March 470 puts were at $6.50 when Apple was down $6.  Now they are at $6.05 and Apple is more than $10 down.  How does that work?  And is that an indication that this is just a head fake?


  186. Very close to the biggest down day of the year, and EDC is UP 0.4%. Time to short you say?


  187. Volume/ Phil – How does the volume look like today Phil? Feels like a decent vol day, maybe Mr Stick will not have much effect if many people are selling into the close


  188. Interesting information we found about election years at The Oxen Group. The chart shows two strategies about buying and selling based on election years. The first chart shows a strategy where you buy on Oct 1 of year 2 of a term and selling at end of fourth year. The second ones shows if you buy at the 1st of year one of a term and sell by sept. 20 in 2nd year.

    Pretty cool stuff..


  189. barfinger………..i did get bitch slpaaed already a few times on this thing so was playing safe on the shorts today.
     
    long the Dow for the stick with a tight (mental) stop under 12,740 (real Dow price)


  190. you can thank me for exiting most of my shorts earlier today. (maybe even send a few contributions)


  191. Phil / CMG – took the money and ran on those puts.  thanks for the play.   May reload if it breaks below 370. 


  192.  Wow, took off for a few hours, what happened?  I actually shorted AAPL for the first time ever today — and made money!  I know pure luck when I see it.


  193. Phil, the AAPL march 475′s were sold at 6.67
    and the 480′s bought at 5.12. Thx


  194. Phil good call on the TZA hedge


  195. A quick glance at the open interest in Feb AAPL options makes it look like 480-490 would be a "good" place for it to end up. Max pain is at 450, but that might be a stretch. 


  196. While we wait for the stick, any opinion on Smith & Wollensky, the steakhouse in NYC?  Warren Buffett seems to like it.


  197. AAPL port:   I've bought to close the 10 April 540s and bought to open another 10 April 490s.  I'll give you the prices later stj. 


  198. The Treasury Department said Thursday that overseas investors were net sellers of $16.6 billion of Treasurys in December, down from net purchasers of $54.0 billion in November

     

    “During the last five months of 2011, China sold a net $65.8 billion U.S. dollars,”  Michael Woolfolk, senior currency strategist at Bank of New York Mellonw.rote in a note. “Keep in mind that mainland China is responsible for nearly two-thirds of the monthly U.S. trade deficit.  The U.S. has a large bilateral current account deficit and [foreign direct investment] deficit with China, which is no longer being funded by Chinese purchase of U.S. Treasurys.  The implications for the dollar are dire if these trends continue.”


  199. JRW:  What do you think?  There's game theory involved — selling too many Treasuries would tend to lose China more money than they are likely to make on the other side, I imagine,


  200. I had sold the SPX March 1410s earlier today. In anticipation of the stick, I closed them for a 20% profit. I know, that's a chickenshit way to play the stick, but what can you do?


  201. Just for fun, word cloud on the FOMC remarks:


  202. Phil,
    Are we out at close on IWM calls today?


  203. Chart / Kinki – Let me see what I can do…


  204. thanks for the clarification barfinger………..i am on the options learning curve….at the bottom, but i intend to work my way up that ladder too.


  205. FU stick!


  206. Wow, did anyone see AAPL fat finger down to $60?  Shows how you should always have silly buy orders – just in case…

    Algonquin/L4 – I used to be really into hotels because you rarely got that kind of service in restaurants but now most restaurants in NYC are quite good and I find the hotels too stuffy as I'm usually in NY to have fun these days – even if it is a meeting.  When I travel though – so many excellent hotels to eat at.  Actually, Mint (my current favorite Indian) is in a hotel but I don't even know the name of it as they have their own entrance..

    CMG/Terra – Had to happen one day.  

    Oh no, AAPL failing $500?!?  Say it ain't so!  

    Consumption/StJ – Ah, notice miles driven not as far off as consumption (assumed consumption as it's really production and we are actually exporting much more gasoline now so I'd say consumption off much more than that).  That supports my mileage/economizing theory.  

    Sorkin/Rustle – What makes people sell out like that?  I'd like to get Sorkin, Colmes and Joe Lieberman in a room one day and find out what happened to them.  Oh yeah, and Dennis Miller!  

    A little late on the stick but here's something.  

    Fisher/Kinkid – That's a lot of money – what the hell do they pay these Fed guys?  Oh wait, thanks Wikipedia: 

    Moving to New York, Fisher joined the Wall Street investment bank Brown Brothers, Harriman and Company, where he was assistant to former Undersecretary of the Treasury Robert V Roosa,[2] specializing in fixed income and foreign exchange markets. 

    Leaving Brown Brothers in 1987, Fisher created Fisher Capital Management, and a separate funds-management firm, Fisher Ewing Partners, managing both firms until 1997. 

    From 1997 to 2001, Fisher served as Deputy U.S. Trade Representative, serving under U.S. Trade Representative Charlene Barshefsky, where he was responsible for the implementation of NAFTA, and negotiating a variety of trade agreements, including the bilateral accords admitting both the People's Republic of China and Taiwan to the World Trade Organization. From 2001 to 2005, he served as Vice Chairman of Kissinger McLarty Associates, a strategic advisory firm headed by former U.S. Secretary of State Henry Kissinger and former White House Chief of Staff Mack McLarty. He left the firm in April, 2005, when he was appointed as President of the Federal Reserve Bank of Dallas, succeeding Robert D. McTeer in that post.

    SVU/Ink – Yes, I like them long-term.  It's a boring business but it works.  

    AAPL/Rustle – It's a reflection of the slowing rate of decline and also the volatility of the fat-finger move is washing out.  This is why "ALWAYS sell into the initial excitement" is our Rule #1.  

    EDC/Barf – You don't have to – we need counterparties.  

    Volume/Dpast – Just 103M with 4 minutes to go is still pathetic and more so on such a violent day.  

    Out of those IWM longs if you're not already in $25KP, was just looking to catch a pop. 


  207. FWIW – China is buying Treasuries through alternate channels. I would not put too much in that information.  Treasuries tell you something, and it still is not a good thing.  If treasuries start to tank, we will have bigger fish to fry.


  208. Wow lflan, actually made money selling calls against AAPL today! I think it's a first in the portfolio!


  209. AAPL and its options wiped out a lot of cash from some traders today….


  210. Phil, I have been short EDC calls for two months and been beaten to a pulp. Why do you want to suck in other victims? I'd say look elsewhere.


  211. Cwan:  There's a Smith & Wollensky's in Miami / South Beach.  It has a great boardwalk/bar scene, and the whole restaurant seems to fill up quickly, but it's not noticeably better than your average steakhouse.  NYC may be another deal, though.


  212. P.S. — There's a steakhouse near S&W in Miami Beach, Brazlian, "Fogo de Chao" that is miles better for beef.


  213. You guys are too fixated on AAPL.  AMZN went down today, too!  I shorted a little more Jan 2013 $150 puts.


  214. For a good steak, The Capital Grille is the place. I assume NYC is as good as the one in CHI. 
     

     


  215. IWM hit over 1.60…after the bell. But, i think IWM is one of those you can trade 15 minutes after the bell.


  216. five more days like this and i will break even futres! YEAH! starting to think china trying to corner copper…inventories up another 5% today to another record high..up +656% ytd.


  217. i think its mainly to make their economy look stronger than it is…i really dont think its intentional either…copper imports down 20% in jan. m/m..  if oil and copper were to go down like they should…investors would be completely freaked out….that perception has to hold..massive up move in the market maybe its a prop job maybe we finish th eyear at all time highs sans the nq..let's avoid getting doctrinaire ..


  218. Election chart/David – Nice if we knew what the sample range was.  

    You're welcome Terra.  

    AAPL/Sundevils – So you risked $3.45 to make $1.55 and it's not working.  What a shocker!  I assume you are making $1.55 on the other side so not a tragedy.  First of all, the spread is now $3.40, not $5 so you are close to even if you don't let it run to expiration.   Your $480s are now $27.50 and were $51.30 this morning – think about how nice it would have been if you had used a stop…  If you have the margin for a naked call, you can roll the $27.50 call you own to the July $480/550 bull call spread at about $27.50 and that spread has two earnings in it so should hold up well.  If AAPL sells off, you owe the caller nothing and whatever you retain in the spread is profit.  If AAPL flatlines you should be good too as the March calls dwindle to less than $20 and you should hold up well on the spread (and you can roll the callers).  If AAPL goes up, you can roll the callers higher and hope for an eventual dip.  Next time – consider setting a stop when you get a 100% pop in your call at the open like that.  

    TZA/Yodi – When they get this low, they are much more fun to play.  

    Smith and Wollensky/Cwan – It's good but not great.  Kind of has a chain feel to it now but, as I said earlier, many good steakhouses in NYC – just a matter of atmosphere mainly.  For the kind of food S&W has, I like Old Homestead better but I wouldn't go to either one over stopping by the butcher and firing up my Viking at home.  If you like meat, try Oxley's Carvery (Mott Street) for lunch – all kinds of hand-cut meat sandwiches but not very good in the winter as it's just a take-out place and you are supposed to sit elsewhere (not a problem in the village) like the Bleeker Bar down the street, which doesn't mind at all as long as you order a drink.  

    Fed cloud/StJ – Funny how prominent inflation has become since it's not supposed to exist.  

    China/Pharm – Good point, we had an item about that a couple of days ago.  

    EDC/Barf – Law of large numbers.  The higher these markets go, the more cash inflows they need to sustain themselves so it does, in fact, become a better bet as time goes on.   I was for going long EDZ early on as that was a safer (though tragic) bet but now that EDC is SO HIGH, it becomes a good ETF to bet against on the short call side.  You'll notice I rarely get interested in short calls until we have a serious move up.  We did this with SKF in the big crash and made a killing and everyone thought we were nuts to bet against it as it was gapping up insanely for a while.  

    Capital Grille/Dmor – We have one in Paramus now so I'm dubious to say the least but I have been meaning to try it. 

    Copper/Angel – I don't know what they are doing.  Maybe planning massive home building projects to ease housing prices?  What else would they want all that copper for – surely they don't want to use if for cables as it's obsolete already.  I've been noting China has too much copper for years but they keep buying more – strange.  Maybe they are accumulating short positions and will flood the World with it on the next economic downturn and make another Trillion for their reserves….


  219. Spreadsheet is up to date except for some prices I need from lflan.


  220. Copper / China – Could simply be that there was a plan 10 years ago to buy 5% of the copper production every year and they are simply following that plan until someone updates it without concern for the stockpile! Who knows….


  221. China – Copper=wire/cable=rural electrification


  222. JeanLuc: Are we paying you enough?


  223. Signs of weakness… 

    http://www.bespokeinvest.com/thinkbig/2012/2/15/breadth-weakens.html

    Or maybe a dip to buy!


  224. Pay / Barf – Feel free to contribute….


  225. stj…..here are the option trades today for the port……..I bought back the 10 April 540s for 9.75 (yes I did make a profit on these !)    and then I purchased 15 April 490 calls at an average of 32.50.     So the port now has 25 long calls April 490.  10 of these were purchased at 25.60 and  15 at  32.50.   Thanks.   So now, here's what I see, and plan.   If AAPL ramps up significantly  we will take some profits.   If it retraces more we will continue to scale in.   Now what could be simpler than that?   


  226. I think Atrios summarized our world situation:

    http://www.eschatonblog.com/2012/02/other-people-need-to-suffer_15.html

    Repeating myself for the millionth time here, but I really wasn't being hyperbolic when I wrote that the people who run the world are sadists. They apparently truly believe that only through the mass suffering of people other than themselves can paradise be achieved. Then the question becomes, of course, whose paradise?

    And a good quote from Lord Acton:

    And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that.


  227. Thanks lflan – All up to date now.


  228. At the close: Dow -0.62% to 12798. S&P -0.37% to 1346. Nasdaq -0.63% to 2559.

    Treasurys: 30-year 0%. 10-yr +0.1%. 5-yr +0.11%.

    Commodities: Crude +1.28% to $102.37. Gold +0.72% to $1730.05.

    Currencies: Euro -0.49% vs. dollar. Yen -0.09%. Pound -0.07%.

    Market recap: Stocks sagged under renewed Greece concerns, as EU leaders reportedly may delay part or all of the bailout funds and tempers flare. Apple shares turned lower midday, perhaps on talk of rebalancing its weight in some indexes. Crude oil surged onfalling supplies and a report that Iran cut off shipments to six European countries. NYSE losers led winners three to two.

    I'll have what they're smoking:  The Fed issues a summary of economic projections along with its minutes from its Jan. meeting. Forecasts for GDP range from 2.2%-2.7% for 2012, 2.8%-3.2% for 2013, and 3.3%-4% in 2014 – without a single member projecting inflation of over 2% during the period. The summary falls in line with the "highly accommodative monetary policy" that the Fed maintains is likely to be needed to promote improved economic expansion in the context of price stability.

    Stocks slip further into the red after minutes from the FOMC's Jan. 24-25 meeting show only a few members favored another round of QE. Others indicated QE3 "could" become necessary if the economy lost momentum or if inflation seemed likely to remain below the 2% target for a long time. 

    Plosser Says More Easing May Put Fed on ‘Treacherous Path’ (Businessweek)

    Is QE working?, asks the Bank of England (FT.com)

    A fate worse than a hard landing for China (FT.com)

    Eurogroup chief Juncker says the Troika has finalized and presented the Greek debt report, and is confident of a decision on Greece being made on Feb. 20. This follows a teleconference with eurozone finance minsters. For some reason, the euro bounces, jumping more than 30 pips to $1.3080.

    The Troika will need a permanent presence in Greece with authority before the bailout can proceed, an EU source tells Dow Jones. Additionally, an escrow account will need to be set up to ensure rescue funds are used to pay debt. (previous) - Hey, isn't that what the Emperor said to the Senate?   "In order to insure the security and continuing stability – the Republic will be reorganized…."      

    The war of words gets uglier as Greek President Papoulias – who fought against the Nazis - responds to recent comments. "I don't accept insults to my country by Mr. Schaeuble … who is (he) to ridicule Greece." This follows finmin Venizelos accusing officials of "playing with fire," and asserting many in the EU want the Greeks out. 

    Market-linked CDs start to draw in more savers with interest rates that beat typical CDs and the comfort of FDIC-insurance to protect against downside market risks. Though banks love the trend because they earn fees as high as 8% and skirt rules that would make the CDs securities with a higher degree of oversight, critics warn that returns are being smoothed with derivatives and trade in a secondary market without accurate pricing. Why does this sound so familiar?

    Are We Already Planting the Seeds of the Next Financial Crisis? (Time)

    What’s bad for JP Morgan isn’t bad for America (Reuters)

    Occupy’s amazing Volcker Rule letter (Reuters)

    Soon to be a short near you!  Lions Gate (LGF +7.1%) is making new highs thanks to bullish comments from Jim Cramer, who expects shares to continue moving higher ahead of the March 23 release of The Hunger Games. Cramer notes the huge following that exists for Suzanne Collins' book series, and uses back-of-the-envelope math to suggest the franchise's films could be worth $400M to Lions Gate.

    Off sharply on Tuesday after filing to sell 7M shares, Alnylam Pharmaceuticals (ALNY +14.7%) is more than recouping its losses after pricing its offering (increased to 7.5M shares) at $10.75. A high short interest (11.2% of float shorted as of Jan. 31) could be contributing to recent volatility. 

    Though seen as a rival by many of them, eBay (EBAY) says it wants to partner with major retailers rather than compete with them. The company boasts it can provide retailers with tools and services to monetize referral traffic, expand internationally, and get a better read on customer demographics. eBay's PayPal and X.commerce units both have lofty ambitions for partnering with retailers large and small.

    Missed but so oversold doesn't matter:  MEMC Electronic Materials (WFR): Q4 EPS of -$0.21misses by $0.05. Revenue of $772.1M (-19% Y/Y) in-line. Shares+4.3% AH. (PR

    Morgan Stanley cuts estimates for Research in Motion's (RIMM +1.6%) FQ4 ending this month, citing sources saying BlackBerry production fell dramatically last month that could cause the company to miss its shipment target. Shipments are likely to come in at 9.6M, down from the firm's prior forecast of 11.5M and below RIM's own forecast of 11M-12M.

    Cisco (CSCO -1%) says it will challenge the European Commission's approval of Microsoft's $8.5B Skype acquisition, seeking to prevent MSFT from tightening its grip on web-based video calling. Cisco, who is making a big play on enterprise video, isn’t seeking to retroactively block the Skype deal, but it wants restrictions to ensure interoperability with systems from other vendors.

    57 Wall Street Analysts Cover Apple. Exactly 1 of them says “Sell”. Meet Ed Zabitsky(Bloomberg)

    What Jeremy Lin Teaches Us About Talent (Wiredsee also What Linsanity Says About New York (WSJ)


  229. Copper / Phil/Angel – I didn't know this until I looked it up. "The average car contains 1.5 kilometers (0.9 mile) of copper wire, and the total amount of copper ranges from 20 kilograms (44 pounds) in small cars to 45 kilograms (99 pounds) in luxury and hybrid vehicles" http://geology.com/usgs/uses-of-copper/ One of China's economic strategies is to imitate the success of the auto industry here and in Japan and Korea. The site mentions other uses such as pipes for appliances, heating and cooling systems, electrical wires, power plants, plumbing, etc., but the amount used in cars really stands out.


  230. Lord Acton / Stjean – Devasting quote.


  231. Oh God, they have T Boone Scammer talking about oil is going to go to $125 a barrel and no questions for him about it.  He's saying there's no way to avoid it.


  232. NYC Slice #1 report:
     
    Bella Vita Wood Fired Pizza Oven – 58th, across from my hotel on Central Park South (New York City Athletic Club) – recommended by concierge and chosen by me for convenience – one block from hotel, flew all night, no sleep this am… close.
    8/10 though I have not had anything to compare it to.  While I did not travel to NYC  to taste pizza, I cannot agree with what Phil and Rustles comments — I have never had pizza like that come out of my microwave, nor have I ever had one that good from any pizza place in Vancouver, even from my own oven, and I am pretty good in the kitchen.  That said, my search will continue over the next four days while I am here.


  233. Phil/Keens,
     
    thanks for the heads up — I ended up dropping in for a glass of wine this afternoon, and I must say, mu gut feel and your comments panned out.  Glad I went, don't need to eat there.
     
    Did like the sign in the bar, "No-one will be served at this bar while sitting on a horse"  or something to that effect.  Circa 1850, Tulsa OK.
     
    Thanks for all the Steak and Pizza suggestions


  234. stj 
    "Spreadsheet is up to date except for some prices I need from lflan"………..

    What is the link to see the spreadsheet? I do not see them updated under the Virtual Portfolio tab. 
    Thanks.


  235. Ha, I bought a quick AAPL 510 put at 1.53. Take THAT Mr Market. I might sell that one off tomorrow   ….  8)


  236. Phil/Hedges
    SDS, DXD, SPXU,  and as you point out, SQQQ, TZA — all of these are so cheap now it almost doesn't make sense to do a bcs, just buy the lower call and write a put against it…
    That being said, it didn't pan out for me last month on EDZ and SPXU, but it doesn't mean it won't pan out next month, or the month after… just watch position sizes.


  237. I have studied the 3x pairs for several months now, trying to find a strategy that takes advantage of the "decay" that is supposed to be inherent. I learned the following: If the strong side of a 3x pair (and yes, TQQQ and SQQQ are a good example) runs away and hides, there is no decay at all in the pair. In fact, since I began the study, that pair had NEGATIVE net decay. TQQQ has risen more than SQQQ has dropped. And need I say the same is true of EDC and EDZ. My conclusion is that decay of the 3x ETFs only applies if there is not much surge in one side or the other. Thus, back a while when we played TBT and got worried about the decay, it was really a result of the strength of its partner TLT (yes, I know its not a perfect parallel).


  238. rainman/AMX
    Yes,  I opened a position in  this stock last week. See my recent post about a visit to the barrio in the Dominican Republic and how I observed a home that had no glass in the windows (wooden shutters) and no running water (fetch from down the road) was connected to Claro Internet and had Skype enabled devices.
     
    In Spanish the word "Claro" means "clear" or "clearly", but it also has a very common slang or colloquial meaning of "Of course" (=clearly) , so it is a rather ingenious brand name. AMX also has brands in the US like Tracphone and Straight Talk at WMT with unlimited prepaid monthly calling, messages and Internet for $50.
     
    I like Phil's play on  Barrick (ABX). As I mentioned recently they are reopening a large gold mine in the Dominican Republic with state of the art technology and expect to get a million ounces a year out of it. Miners like politically stable jurisdictions. A recent tip from a hedge fund manager on Seeking Alpha is that ABX has a lot of support around $44 and can provide a good yield selling puts on the dips.
     
    http://seekingalpha.com/article/310364-barrick-gold-options-strategy-to-make-30-on-this-undervalued-stock


  239. ganyantPSW Portfolios (tabs to all on bottom)


  240. Phil/Latam demographics-that's for my other hedge (the job) rather than the portfolio.  The region is targetted for growth and most firms are having trouble retaining staff as they get poached by competitors.  That's a nice change from the US where jobs are still scarce.
     
    DMND up over 5%.  Getting out of that breakup fee was a boost (although it may get spent on lawsuits).


  241. For two days you guys are talking about NY junk food do they have any real food aswell?



  242. Yodi
     
    NYC has a good farmers market in Union Sq with a lot of healthy and locally grown produce, meats and dairy.  There's also a lot of organic restaurants in the E Village.


  243. seer
    Now you talking Good


  244. Phil, thanks for the AAPL suggestion….Are there any situations when you like Iron Condors or Credit spreads?  I'm guessing no, based on previous posts.


  245. Value traps or cash cows?
    I have been looking at two venerable old companies- RR Donnely-(RRD) & Pitney Bowes (PBI) They share some aspects of note, namely healthy yields of 8% with a long history of payment (since 1911 & 1934 respectively); relatively heavy debt loads and , in my opinion, not insignificant secular headwinds of changing technology. Buy / writes could be done on these with respectable profits (40% & 27% plus the dividend) so worth considering.
    Would be interested in anyone's comments..


  246. Canuck – Wolfgangs Steak House
     
    Just a note, that I had the BEST app in my life here.  They serve you two/three huge THICK strips of smoked bacon with fresh raw onion and tomato.  With a glass of red wine, it's just stunning.  
     
    The steak was great, but not Amazing great like some of the other unmarked door hole in the wall steak places I've been too in NYC.   


  247. RRD/PBI – pstas – With the covered calls you may do alright for awhile but I have reservations on their long-term value.
     
    RRD – Almost entirely print-based media so take a long hard look before committing. Great revenue numbers but very slim margins; there's little room to absorb a drop in sales and that cast a shadow over the high dividend payout ratio. $3.42 billion of debt comes to over $20/share and the share price is $12.59 so that's not good. With all they pay in interest, the dividends will get cut if sales fall off even a little. Book value of $1.8 billion is about $9.60/share but the goodwill account is $2.6 billion. Without that you have negative equity of just over -$8/share. I don't see any reason to look further into this one.
     
    PBI – Provides mail processing equipment, software and service so I'm concerned it could slowly bleed to death as Fedex and UPS suck their life out at one end while the internet sucks its out the other. Need to answer that question. Revenue is in decline – how much can be explained by the economy? Has decent operating and profit margins. High debt load of $4.2 billion or $21.26/share vesus $18.08 mkt price. Do you want to pay $18 for $21 of debt. Negative book value and goodwill account ($2.2 billion) leave a tangible equity value of -$12.71/share. The dividend is slightly less threatened than RRD's, but I'd stay away from this one, too.


  248. pstas – Should have added that the 8% dividends are probably doing a lot to hold the prices up on these stocks. If/when the dividends fall, the prices will take a big hit.


  249. Burrben:  Three huge thick strips of smoked bacon?  The red wine permits it to be stunning, but not quite heart-stopping, I imagine.  I would have to have a long chat with my aorta before trying it.


  250. TSLA – Tesla Motors
    http://ir.teslamotors.com/releasedetail.cfm?ReleaseID=649018

     
    Expecting Profit in 2013
    On the expectation of delivering 5,000 Model S sedans in addition to other ongoing Roadster and powertrain sales, the company anticipates that full year 2012 revenues will be in the range of $550 million – $600 million, split about 10%/90% between the first and second halves of 2012. Thirteen analysts have consensus revenue estimate of $521.46 million for fiscal 2012.
    Q4 Q&A
    - Model X Reservations: Best selling model in Tesla history (Roadster & Model S), "One day after the reveal, we received over 500 reservations…" 
    - Doing an entire power train for Mercedes Benz, significant deal! Goal of Tesla is to bring electric cars to market, if it cannibalizes the sales of their vehicles they will become a large power train producer.
    - Sounds like other electric power train deals is in the make
    - After Model X launch they will launch the "Blue Star" the Generation 3 car that should be in the $30,000 zone. Then the rebuild of the roadster will happen.
    - Model S looks increasingly optimistic that they will be 5-star crash testing on all sides of the car! 
    - Super Charger faster than Level 3, coming this summer… Should be able to charge 150miles in less than 30min.
    - approximately $200/kWh is the battery pack production level, the cell level production will be less than that in the near future, their 300-mile battery pack is 85kWh, would be approximately $17,000 production cost, without material changes the cost will be below $200, the material changes would really quickly drive this below… new chemistry implementation at the earliest every 3 years.
    - Model X has not cannibalize Model S reservations, they are selling more reservation of both vehicles.


  251. PHIL,
    An entertaining idea for the morning post tomorrow!
     
     Option Play on TSLA that will yield the base cost of a Model X in 2014, or a Model S in 2013.
     
      This would definitely catch PSW some good PR after the recent earnings report.
     
      


  252. pakdog/copper
    Traditional cars (excluding hybrids/electrics/etc) have always had starter motors and alternators, both of which use huge amounts of copper (relatively), in a dense package, and it is in "wire" format.  I've never "unwound" a starter or alternator, but they are both essentially motor armatures, and have many many windings.
    Separately, you'd be amazed at how much wiring is in a car. The vast majority is hidden behind and underneath nearly every trim piece in the car. Under the floor, inside all the body panel's, etc. The manufacturers minimize wire runs as much as possible, and they use custom made harnesses to cut every possible inch. They go too far though (in my opinion as somebody who has been working on cars extensively for 25 years), because the harnesses are so tight there is barely enough slack to plug the connector on to whatever it goes to.
    They minimize the wiring by using the body/chassis as a return ground path, so that's half of what it would take if they ran an actual ground side wire for every circuit, not to mention the weight.
    But yeah, car's do use a lot of wire and copper, and the up-scale cars use more, since they have so many more electric doo-dahs….
    Over the years there have also been a lot of radiators that used some copper, but I have no idea on what the current radiator technology is or how the usage rates for copper in them compare now.


  253. Very little overnight movement so far. 

    Asia does not seem very disturbed by our action – pretty much flat. 

    Copper/Pak – Yes but copper is not very rare (15M tons/year mined) and China has at least 2M tons (some say 4), that's enough to make 40M heavy cars. Homes are the big consumers, with 500-1,000 pounds per home.  Until global housing markets rebound, copper will be in a glut, no matter how many cars they make.  

    TBoone/Rustle – Ain't he a hoot?

    Pizza/Canuck – We didn't say all other pizza was bad, just some of the chains (and anything in Vancouver!).  The average NY Pizza place is better than most cities' best pizza place but finding the best in NY is an art form (and subject to great debate) – we were just listing our favorites but, like many things, there's no point in trying to change a New Yorker's mind once they decide which is best.  Glad you escaped from Keens with just the overpriced wine to pay for.  If you like wine, Vero (77th and 2nd) is near you and has flights and a cool atmosphere.  

    Hedges/Canuck – Well we still could be wrong and I'd rather lose less than more.  That way we can afford to hedge again next month.  

    Good point on decay Barf – it's a tricky thing.  When a 3x ETF has a string of consecutive moves one way or the other, their movement tends to get exaggerated as well.  

    LatAm/Seer – Yes, too bad it never occurred to American workers to learn Spanish or they could cross the boarder for jobs.  

    NY/Yodi – They have whatever you want, usually some of the best in the World in every category.  What is real food?  When I go out it's usually Italian, Indian, Chinese or Sushi – things I don't feel like making at home.  

    Big Chart – Oh no, looks like Dow might blow their line and S&P clearly rejected at theirs so far.  RUT came close to failing too.  Big air pockets under those lines!  

    Good food/Yodi, Seer – Oh is that good?  We eat that at home, that's not why we go out.   I do like Zen Palate – good vegetarian.  

    Uh-oh – They got Jeremy Lin an apartment in Trump Towers – there goes that streak (he was sleeping on his brother's couch in the village).  Why do they do this to young players?  I'm sure he would have been happy if they just bought him a bed for now…

    Condors/Sun – I'm not a big fan but, when the markets are stable and the VIX is low, then they are good tools but, in volatile markets, not worth the risk to me.  

    RRD/Pstas – I'd be happy to take a closer look if you remind me on weekend.  PBI very interesting as they seem to be adapting well considering – I would have written them off had I just not glanced them over.  Pak's concerns are very good ones.  

    TSLA/ITrade – I have spoken to a lot of people who want one.  They seem to have hit the right spot on the new models.  They already have the rep of being the Mercedes of Electric Cars – people ogle the sports car but will flock to buy the sedans and vans.  Fantastic trade idea – I hope I remember it in the morning! 

    Good facts Newbie, thanks! 


  254. Zero –  Just my 2c, but it's a myth that bacon alone is bad for you.  Yes it has fat, but eating a high protein, moderate fat, low carb diet will keep you 100 times healthier than a high carb, low protien, low fat diet.  The white carbs, white sugars, fast foods, processed foods are what fattens people.  Eat Paleo and life is good and satisfying….
     
    So bacon (good bacon, not store bought crap…good vermont thick cut bacon or it's kin) keeps me thin, and satisfied.  I haven't been in better shape, and I eat a moderate portion at least 4 days a week.  Again, just my 2c.  Here's a picture of Wolfgangs bacon, similar to the cuts we smoke in Nica:
    http://www.thegluttonousjd.com/wp-content/uploads/2011/06/IMG_0455.jpg


  255. SVU – i love my boring old SVU buy write having sold both sides at the $5 strike. To enter today, buying the stock and selling the Jan 2014 $5 puts and calls, you could be in for $3.35, with a .35 annual dividend. you are good for a 10% dividend on your outlay, TOS says $57 margin requirement on the put's only (though it also tells me i am carrying $117 per Jan 13 $5 put that i have on an existing position). Assume they take it away at $5 in 2014 for 49% LT capital gain. I like this so much it's hard to resist loading more up.. under 6.50 i may go another round…!


  256. Bacon/Burrben – amen! I'm salivating now and that app sounds like a MUST TRY!


  257. barfinger / 3x pairs / ETF's / TNA+TZA
    I have occasionally traded TZA/TNA for about the last 2.5 years. It is all I trade.
    I can't comment on any other 3x ETF's, my comments apply only to those two.
    I have studied the theoretical 3x yield/tracking quite thoroughly.
    I have written numerous Comments on SA under the handle "aspiring_beginner" if you care to read more of what I've found, in more detail, but the essence is this :
    1. They do a very good job of sticking close to the 3x theoretical over shorter time frames….say a few days to a few weeks.
    2. They do have some "decay", both theoretically and practically.
    3. The "decay" or "tracking error" is negligible under many situations, but can be measurable under others.
    4. Because of the "path dependency" which everybody here is probably familiar with, the "accuracy" of the shares can vary from less than 3x to more than 3x (what you refer to above as "negative decay") In other words, depending upon the time period over which the data points are chosen, I have found that the 3x ('ll call it 300% for simplicity) can actually run from around 275% to 325%. The longer the time period, the more chance of getting farther away from the 300%, in one direction or the other.
    5. Referring to item 4, there are actually 2 forms of "error". One is the decay itself, kind of like "slippage"; the other is due to the  "compounding" involved, which becomes a larger factor when the movement of the underlying is more "linear" and directional. The compounding CAN actually lead to a gain of more than 300%, IF the movement is mostly linear and in the same direction (like recent periods). I'm referring to compounding as an "amplification" of the theoretical 300%. In choppy day to day and week to week Index Moves, the decay is more pronounced and the compounding hurts the achievement of being right at 300%.  But if you own the right share, and hold it over the right time period, the compounding can actually HELP the value improve in the direction you want it to go.
    I have done about 4 different statistical studies of TNA/TZA, at various times in the last year or so, measuring the amount of "inaccuracy" or "slippage" that is present. When I say 4 different times, I'm not referring to 4 different time periods of data within the last year. What I mean, is that on 4 different occasions I have sat down with the spreadsheets and the charts and price history. The actual TIME PERIODS of data points over which I did  the studies ranged from a month or two to more than 6 months, and some of those studies included time segments that were back during say a year and a half or two years ago. And yes, the error introduced GENERALLY is greater over the longer time periods, but with the caveat above, that if you catch it right the "error" can play in your favor.
    For an example of this, I would recommend that one calculate the tracking from December 14 through January 26, and do those calculations on TNA.  I don't have the time right now to do it, but  just from glancing at the chart I would be surprised if the appreciation of TNA versus the RUT during that period is not larger than exactly 3.00.
    A different time period that would probably show somewhat similar results (although it is shorter so the magnitude might be smaller) would be from January 4 through January 26, for TNA. That period is a little more "pure" (linear) than the longer period.
    quoting from your post:
    "My conclusion is that decay of the 3x ETFs only applies if there is not much surge in one side or the other"………
    I would largely agree with that but I would put it in slightly different terms (for tza/tna only)……..it is the day to day RANGE of price change, combined with constant up/down up/down.  Larger ranges combined with staying in a narrow channel.  Think this:   TNA up 25 cents one day and down 25 cents the next. Do that cycle for a full month, and assume you end up at the same price you started. Not a lot of error introduced, probably. Now think this:  TNA up 2 dollars one day, down 2 dollars the next day, also ending up after a month at the same price you started at. The later will give significantly more error than the former, I am quite certain.
    When I started doing my trading, I looked at the leveraged shares based on the RUT available from Pro-Shares and the others, and my memory is that the Direxion products were more accurate and stable, but your mileage may vary. And of course there is infinite liquidity, and spreads of a penny (on the shares).
    I know that most of the people here at PSW tend to trade in very short time frames, but there HAVE been articles written on SA that show that some etf pairs like tza/tna BOTH tend to drift lower in value as a result of the decay, over significantly longer time frames. There are people who have postulated about essentially shorting both at the same time, and over a fairly long time, like say a year or two, and just banking on that fact. But I have not done calculations on that. I think it is probably true. But that is pretty irrelevant for the PSW types who typically use these things for a few days, at the most. In that kind of time frame, the errors and decay virtually don't exist.  And besides, if one uses tza and expects it to track at exactly 3.00 over a week, and it tracks at 2.99 or 3.01, big whoop.
    My own typical hold times for the shares are usually a couple days to a month. Within those short time frames, the variance from the perfect 3.00 is usually very, very small.
    I have never traded the options, but everybody else here knows a lot about those. It is not unusual, I think (others can comment much better than I can) to see a 100% move in these options over a couple days when the RUT really lurches. I know that for you option players, that's no biggie. But for me, being used to seeing "only" triple whatever the RUT does, that kind of potential using the options is both exhilarating and terrifying. But commenting on that is outside my circle of competence. I'll get there some day, thanks to Phil and the rest of you.


  258. quoting;
    "This entry was posted on Wednesday, February 15th, 2012 at 8:27 am"
    and
    "Phil
    February 15th, 2012 at 11:55 pm"
     
    -don't you ever sleep?


  259. AZN – payout came early i guess. i got assigned on my AZN buy/write positon (someone exercised my sold call) and took my shares away 2 days before the record date for their big annual dividend payout.  Still ahead and money back 11 months early, just without the extra $195. Will let the put ride…


  260. Copper/newbie/Phil – Thanks, I love that school is always in session here. I've done a lot of work on my own cars starting with a '67 bug I got when I was 18. Self-taught with the precursor to the "For Dummies" series, The Idiot's Guide to Volkswagen Repair and went from there up to swapping out the engine to my pickup truck some years ago.  In all that time never took in how much copper is in a car, but like you said newbie most of it's hidden. Hated dealing with a starter though because it's so heavy and my hand or a finger would almost always get pinched.


  261. Tesla Motors
    - Standard Model S or X reservation $5,000
    - Signature reservation for both $40,000
    - $7,500 tax credit for EVs
    - bases price $49,000 after credit
    - fully loaded $97,000

    Morning post trade idea!

    Take $50,000 for the base price tesla, have a TSLA trade idea that will pay for your upgrade to performance fully loaded or buy two cars for the price of one!

    That’s only a 100% trade…. Pale in comparison to your BA trade of 2012 at 500%. But nonetheless a catchy morning title/trade idea!

    0 to 60k in 4.4 months. (playing on Model S performance specs 0-60mph in 4.4sec)

    Personally I’ve been selling Puts at or near the money to pay for some call verticals. It’s been working out real nicely the last 2-3 months. Already up 20k depending on Fridays close price! I personally want to buy my cars from premium sold to suckers that try to sell me oil!


  262. Good morning!

    Dollar 80.10 is the big story.  Oil (/CL) just bounced off $101.50, gold (/YG) $1,720 – both good fro a bounce here with tight stops below the line or if the Dollar goes over 80.15.   Dow (/YM) also bouncy off 12,700 so if any of them break – game off.  


  263. Not inclined to jump on shorts into the European session……….the bridge loans for Greece look to be the interim deal and a wait and see posture over the elections so overall not a disaster
     
    wish I had held short trades into yesterday's close ………mais, c'est lavie.


  264. Well, so much for that, the Dollar popped right up – this does not bode well for the open!  


  265. Thursday's economic calendar:

    8:30 Producer Price Index

    8:30 Housing Starts

    8:30 Initial Jobless Claims

    10:00 Philly Fed Business Outlook

    10:30 EIA Natural Gas Inventory

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet 

    Notable earnings before Thursday's open: AAPABB,ABXAPADISCADTEDTVDUKGMGNCH

    HCNHUNMFA,OGEPCGPGNRSSJMSNHSPWTAPTRWUPLVFCWMXRAY

    Notable earnings after Thursday's close: AMATARUNBIDUBKDBMRNCLDDDRDVAEOGFTRJWNKEG,MDRX

    OISPRAAQLIKROVI (Angry Birds!)

    7:56 PM Japanese stocks open lower, tracking losses in U.S. markets overnight. The Nikkei Averagei is currently down -0.3% to 9,233. Car markers and Shipbuilders lead declines: Toyota (TM-1.2%), Mitsubishi Motors (MMTOY.PK -1%), Mitsui O.S.K. Lines (MSLOY.PK -1.9%) and Nippon Yusen (NPNYY.PK -2.4%).

    4:00 AM With the EU finding new obstacles to put in front of Greece before it authorizes a bailout, fueling suspicions that the bloc wants to force the country out the euro, European shares are trading lower early on. Euro STOXX 50 -1.3%, London -0.9%, Paris -0.9%, Frankfurt-1.3%, Milan -1.4%, Madrid -2.5%.

    Yields on 10-year Spanish and Italian govenment bonds shoot higher, although yields on Greek and Portuguese paper are barely moving. Spain +13 bps to 5.57%, Italy +11 bps to 5.85%, Belgium +9 bps to 3.64%. 

    Across The Western World Elections Could Set Off Crisis.



  266. France Joins Spain to Defy Moody's With 14.3 Billion-Euro Debt-Sale Plan
    France and Spain plan to sell as much as 14.3 billion euros ($18.7 billion) in bonds today, defying concern about a second bailout for Greece and after Moody’s Investors Service cut ratings for some European nations. 

    As Greece Crashes And Burns, Troika Arrives In Portugal With "Soothing Words Of Support".

    Europe Demands More Greek Budget Controls in Struggle to Forge Rescue PlanEurope’s creditor countries struggled to bridge divisions over a rescue of Greece, seeking more control over how future aid is spent as the clock ticked toward a possible default next month.

    Greece Debt to Fall Less Than Forecast, Economists Tell FTDEconomists at European banks expect Greece’s national debt to fall less than expected by the so- called troika as consolidation efforts sap economic growth, Financial Times Deutschland reported. “Even with the discussed creditor participation it is now hardly realistic that the state debt falls to a sustainable level,” Frank Hansen, head economist of Danske Bank, was cited as saying by the newspaper. 

    This Is Just Getting Ugly, As A Verbal War Is Breaking Out Between Germany And Greece.

    Evangelos Venizelos warns Germany is 'playing with fire' on GreeceGreek finance minister Evangelos Venizelos accused European leaders of "playing with fire" by trying to oust the beleaguered country from the eurozone amid fears they want to delay releasing the €130bn (£108bn) bail-out until after Greek elections in April.

    Single Currency's Struggle Takes Its Toll On EuropeThe diverse nature of the 17 countries brought together in monetary union has never been so apparent.

    Australia January employment jumps 46.3K against expectations for a rise of 10K. The unemployment rate slides to 5.1% vs. 5.3% expected. The aussie quickly pops 40 pips before giving back some of those gains, now buying $1.0712. With the U.S. weak overnight and a March RBA rate cut now likely off the table, shares in Sydney -1.4%

    Chinese Shift to Wealth Products Seen Undermining Bank StabilityIn January, depositors pulled 800 billion yuan from savings accounts, about 1 percent of the total, the central bank reported. It was the largest monthly decline in at least 12 years, according to data compiled by Bloomberg.

    GE's(GE) Rice Sees China Growth Slowing In 2012General Electric Co believes China's economy, a key source of revenue growth for the largest U.S. conglomerate, will slow this year but not substantially below 8 percent, said the executive who runs the company's international operations. "The growth rate in China is going to be a little bit lower than we thought a year ago. But still a very manageable, healthy if you will, 8 percent," Vice Chairman John Rice said on Wednesday. "If it does drop below 8 percent for a while, that's not the end of the world either."

    Copper Hits Two-Week Low as Greece Delay Sours Mood.

    American Express (AXP) says the rate its customers defaulted on their cards fell again in January, and late payments remained steady. AmEx continues to have the lowest charge-off rate in the industry, as its customer base is more affluent and it maintains tight control on problem accounts. Delinquency rates held steady at major U.S. banks.

    Moody's Investor Service warns of a possible downgrade to the credit ratings of 17 global banks and securities firms due to funding issues, regulatory burdens and a more difficult operating environment. U.S. banks under review include: Bank of America (BAC), Citigroup (C), Goldman Sachs (GS), JPMorgan Chase (JPM), Morgan Stanley (MS) and Royal Bank of Canada (RY).

    Moody's Downgrades Generali, Cuts Megainsurer Allianz Outlook To Negative. (graphs)

    Societe Generale (SCGLY.PK): Q4 net profit -89% Y/Y to €100M vs. consensus of €317M. Reduces exposure to GIIPS sovereign debt to €2.7B, cuts exposure to Greece to €307M, writes down €620M. Core Tier 1 ratio (Basel 2.5) 9.0%. Corporate & investment bank loss €482M. Omits dividend for 2011. Shares -3% in Paris. (PR .pdf)

    Fed Member: US Banks Must Be Broken Up For StabilityRichard Fisher, president of the Federal Reserve Bank of Dallas, said on Wednesday that the largest American banks still posed a major risk to the US and were "too dangerous to permit"

    Toxic? Says Who? Taste For 'Subprime' Returns. Investors' belief that the worst is over for the U.S. housing market is fueling renewed interest in once-toxic mortgage bonds that were at the heart of the financial crisis.

    The threat to the global oil supply — especially Iran's vow to close the Strait of Hormuz — has not been this great since the late 1970's/early 1980's, according to a recent report by Deutsche Bank. Although it considers Iran disrupting shipping in the Strait as a low probability, the mere threat itself is a grave concern considering the global strategic importance of the region.

    Oil Rise Imperils Budding RecoveryRising oil prices are emerging once again as a threat to the U.S. economic recovery just as it appears to be gaining momentum. Oil prices have climbed sharply in recent weeks as mounting tension with Iran has raised the threat of a disruption in global supplies. On Wednesday, oil futures on the New York Mercantile Exchange rose $1.06 to $101.80 a barrel on reports that Iran had cut off sales to six European countries in response to the European Union's newly stepped-up sanctions. Iran's oil ministry later denied the report.

    Brent Priced In EUR At Record Highs. (graph)

    And so it begins:  Intelligence Reports Suggest Iran And Al Qaeda Are Teaming Up To Attack The West.

    James Bianco is taken aback that two measures of broad-based economic activity – gasoline consumed and miles driven – are "falling hard" at a time when it's assumed the economy is getting better. Throughout history, the U.S. economy has never improved while its citizens drive less and use less gasoline. Perhaps these are false signals, he says, but they could be pointing to a faltering economy.

    Tesla Motors (TSLA): Q4 EPS of -$0.69 misses by $0.06. Revenue of $39.4M (+9% Y/Y) beats by $0.9M. 1,500 Model S reservations added, bringing total to 8K. Company expects 2012 revenue of $500M-$600M ($521.5M consensus), with 90% of sales coming in 2H thanks to Model S. Forecasts reaching profitability in 2013. TSLA +0.6% AH. (PR - .pdf) 

    Toyota (TM +3.2%) led automakers with the fewest problemsreported by owners of three-year-old cars, while Ford (F) and GMbrands ranked among the most improved, according to J.D. Power's dependability survey. Toyota’s Lexus brand topped the industry, and the automaker had the most models lead their respective segments for the seventh straight year. 

    Skechers U.(SKX): Q4 EPS of -$1.18 may not be comparable to consensus of $0.22. Revenue of $283.2M (-37.6% Y/Y)misses by $41M. Shares -1.9% AH. (PR)

    More on CBS' Q4: Like Disney, CBS' results were hurt by weakness in its broadcasting division – sales fell 12% Y/Y, worse than Q3's 3% drop. Cable Networks sales rose 7%, thanks to higher rates and subscriptions for Showtime and CBS Sports. The Entertainment (CBS shows and films) and Publishing divisions saw their sales fall 1%. $170M worth of shares were repurchased. CBS -2.8% AH. (PR)

    More on MEMC Electronics (WFR): Q4 comes in mixed, beating slightly on revenue but missing on a per share basis due to restructuring charges. Profit dropped 19% Y/Y due to lower semiconductor and solar wafer volume and pricing, however the stock is trading higher after hours as the company notes that it sees signs of improvement in H2 2012. Shares +1% AH.



  267. During its 
    FQ4 earnings call (webcast), Nvidia blames its soft Q1 guidance on the PC industry disruptions caused by Thai flooding. The company also forecasts its Tegra mobile processor business, which declined sharply in FQ4, will grow at least 50% this fiscal year, and claims its notebook graphics business is well-positioned to gain share (perhaps thanks to Apple?). Investors aren't satisfied. NVDA -5% AH.

    More on Nvidia's FQ4: Gross margin is expected to fall to 48.5%-50.5% in FQ1, from 52.5% in FQ4. In prepared comments (.pdf), Nvidia notes PC graphics chip sales fell 3.6% Q/Q, though that's better than AMD's 5% decline in Q4. More troubling is a 42.5% Q/Q drop in Consumer Products sales, evidence of the challengesNvidia's Tegra processors face in the smartphone and tablet markets.NVDA -4% AH. (PR)

    A Citigroup analyst is skeptical that the Nasdaq index could be rebalanced to blunt Apple's (AAPL) outsized influence. AAPL's market cap is still below the threshold limits to warrant any re-weighting: Its weight is now ~16.85%, less than the 24% limit, and the combined weight of stocks with individual weights above 4.5% is at 41.1%, below the 48% limit.

    Meet Edward Zabitsky, the lone remaining Apple (AAPL) heretic analyst who still rates the stock a Sell - and he's not backing off. iPhone prices may decline as Apple takes steps to compete with Android and Windows phones, he predicts, sending gross margins on the device down 25% from 50%-plus. “If a price war breaks out in Android phones, Samsung (SSNLF.PK) wins hands down." 

    More Chinese Cities Halt Apple(AAPL) iPad Orders – ReportsRetailers in more Chinese cities have been told by authorities to take the popular iPad tablet PCs off their shelves this week, media reports said on Thursday, due to a legal battle between a Chinese technology firm and Apple Inc over trademark issues.


  268. Now we're going in the right direction!  

    Dollar 80.09, oil $101.62, gold $1,720.40, Dow 12,737.  Let's watch out for the Dollar bounce off $80.  Nickels and dimes in the Futures is all we need….


  269. iPad in China – This story bears watching. I doubt the lawyers could move like this against such a siginificant trading partner without support very high up in the government. The timing suspiciously coincides with heightened awareness of the terrible conditions at Foxconn factories and the arrival of inspectors at the Shenzen and Chengdu factories.

    From the above article:

    "Amazon in China has also been reported to have stopped online iPad sales, but a company executive said it was due to a supply shortage and not related to the trademark lawsuit."

    Oh, really?

    "On Tuesday, lawyers representing Proview Technology (Shenzhen) said the company would seek a ban on exports of iPads from mainland China, and authorities in some Chinese cities had ordered retailers to stop selling Apple's iPad ."

    Wow. There is definitely more than meets the eye here. It appears that powerful people are taking steps to undermine and compromise the inspections for reasons I can only guess at. such as 1) pure economic incentive as improving conditions for the workers will reduce profits, 2) Foxconn is a glaring, high profile and specific example of treatment of millions of Chinese factory workers, so the economic impact of exposing and improving conditions there could ripple through the country, 3) such a change could have wide political consequences as the recognition of individual rights to humane treatment spreads, 4) fear of national disgrace if the world rises up to condemn the findings of the audits, and 5) China deeply resents foreigners meddling and dictating terms to them.
     
    There is no truly independent judiciary in China so this puts the threat of banning exports of iPads in the hands of the ruling government rather than a judge. At least if I was an executive with Apple, that would be my concern. At the same time, if I was someone who sought to influence Apple's thinking and behaviour, I would want to make that their concern, while I skillfully maintained a face-saving distance from the legal proceedings.


  270. Pakdog- valid points all. Thanks. Phil, I will remind you later.


  271. 13,000 pizza restaurants
     
    For less than 1 percent of Apple's market cap, you could buy both Domino's Pizza (DPZ) and Papa John's Pizza (PZZA). That would give you over 9,300 Domino's and over 3600 Papa John's restaurants. [Seeking Alpha article]


  272. lflan,
    a 500 pin for AAPL tomorrow? if so, buy a Feb  ITM 490 or 495 call and then sell the 500 call before close. Then buy the spread back tomorrow before close.


  273. JRW,
    Any chance you could document your entries/exits today (and possibly for yesterday)? I want to test my understanding of your method.


  274. Electric cars
    As long ago as the 1950s  milk was delivered daily to homes by electric milk floats, and some still in use. These electric powered vehicle replaced horses, though I still remember seeing some horses pulling milk floats when I was a child, and in fact the pictures below show a horse-drawn milk float as recently as the 70s. (Horses can be refueled overnight with hay and water, but have some reliability issues that can lead to milk going bad in hot weather. They usually have an output of 1 horsepower.)
    Does anyone have any idea what plans electric vehicle manufacturers have for commercial vehicles like for example taxis, mail delivery, garbage trucks, delivery vans, golf carts, buses, airport shuttles? It seems to me that electric vehicles might be rather pricey for the retail buyer, but more likely to succeed in commercial niche markets, especially those where the vehicle, like a milk delivery vehicle, is required to stop and start a lot and where high speeds are not essential. In modern milk  floats battery swapping is enabled, so batteries can be taken out and swapped for fully charged batteries, thus improving efficiency.
     
    The pictures below show a remarkable variety of designs of electric powered delivery vehicles from the 1950s onwards.
     
    https://www.google.com/search?q=electric+milk+floats&hl=en&prmd=imvns&tbm=isch&tbo=u&source=univ&sa=X&ei=tPY8T7LpBMzptgfYmem2BQ&sqi=2&ved=0CEkQsAQ&biw=1467&bih=706
     
    Also more from Wikipedia
    http://en.wikipedia.org/wiki/Milk_float


  275. Milk float / Jmm – Where do they use a Merc SLS gullwing to deliver milk (just scroll down on the first link)? Probably it has to be Chelsea or Knightsbridge..


  276. dpastramas/Electric Mercedes
     
    Did you read the rubric?
     
    Shock therapy: Merc’s electric SLS
    There's an episode of Father Ted called ‘Speed 3' which lampoons the Keanu Reeves action flick by stranding the idiot priest Dougal on a runaway milk-float. Milk-floats are intrinsically funny because they are the dullest form of transport known to man, noiseless, pitifully slow, emasculated. They're also electric, which is why the milk-float is the pejorative that haunts the notion of the all-electric car.
    Can we really learn to love the electric car? Internal combustion is explosive and exciting, a thrilling collision between fuel and air, and regulated by fast-moving pistons and cylinders. Electricity comes out of the wall when you flick a switch. Yes, I know it's more complicated than that, but still, electricity is the stuff that makes your fridge work.


  277. I could love a Tesla S….. :)


  278. Newbie: Very interesting discussion of the tracking accuracy of TNA/TZA. I read on SA that the ultra PAIRS do decay, some by a fabulous amount. I ran a spreadsheet on several of the pairs, going back as far as they existed – which surprised me in that many of the ultras are quite new and lack extensive history. It is almost impossible to go short (or stay short) on any of the 3x issues, even the ones with significant daily volume, even though that's what I modeled on the spreadsheet. And yes, the decay of the PAIR is stunning. Over a year or so, one side will be down 10%, while the other is down 50%.
     
    I decided to try playing both sides of pairs short by selling calls. Unfortunately, after a couple of months of nice success, I ran into this buzzsaw of a rally that took TQQQ and EDC to fantastic gains. Although the mates (SQQQ and EDZ) declined nicely, I began to notice the pair was no longer decaying. In the case of TQQQ and SQQQ, the pair actually has a net GAIN over the last 5 months. In the back test of this pair, TQQQ was up 44% while SQQQ was down 70%, quite a large net loss for the pair. And that was only about the average of the pairs I studied. Some were even more extreme.
     
    I never paid any attention to the tracking accuracy of the 3x ETF. I will post on this again after some additional experience unless I go broke in the meantime….