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TGIF – Sell in March and Go Away?

Thanks Mr. Market – it's been a great year

We're up from 1,275 to 1,363 on the S&P and that's 7% and, for those playing the upside since October's 1,074 low – it's been a fantastic 27% run in 4 months so we have nothing to complain about in 2012, do we?  Of course the US markets gained $10Tn in value in 120 days – that kind of stuff happens all the time and is nothing to be concerned about.  I'm sure the net $20Bn that flowed into the markets during that time period had many, many babies to fill up the empty space – or at least that's how Rick Santorum explained it to me.  

Fortunately, with over 80% of the trading in the market being conducted by HFT Bots that bring the average hold time for ALL positions (including your long-term retirement fund) down to an average of 22 seconds – we don't need any actual money – or even human participation to have a nice-looking market rally.  While "Drill Baby, Drill" may be the rallying cry of the GOP, their Super Pac contributors in the Financial Sector prefer "Churn Baby, Churn" as Billions of shares are traded in the stock market every day that are held for less time than it takes you to read the word "held".   

This post is a bookend, in a way, to my September 30th's "TGIF – Closing a 12% Down Quarter," which followed our bullish prediction the previous day's "Thrill-Ride Thursday – Finding Bottom" where my comment on why we were taking bullish positions in the middle of a catastrophic collapse was:  

We only fear missing a rally as we may never get another chance at these lows.  While it’s possible that we get that 25% decline, we don’t fear that either as we will simply scale an and take net entries that are 40% lower than we are now and, if the markets fall that far and never recover – we’ll be a lot more concerned about stocking the shelter up with ammo than we will be about whether or not our XLF trade is performing well! 

At the time, we had been moving into our September's Dozen Portfolio on each dip since the August crash (S&P 1,100) and we did bottom out on October 3rd at 1,074.  Just like our bullish February trade ideas – the plan was to add another trade each day we held our lines and we were quite full in time for the October rally, which took us up to 1,292 at the end of that month.

On October 29th, we closed our out short-term bullish positions as well as our very successful $25,000 Portfolio (all portfolios are virtual) and began an aggressively bullish White Christmas Portfolio that ended up tripling $15,000 by Christmas.  

When we began the New Year, we felt 1,275 was a bit toppy for the S&P (up 16% from 1,100) and our new $25,000 Portfolio was aggressively bearish instead.  This did not change our long-term bullish stance at all – we still think inflation is an unstoppable force that will drive the market to all-time highs this decade BUT (and it's a big but) that doesn't mean we don't expect a correction or two along the way!  

Currently, our $25,000 portfolio is down 40%, to $15,000(ish) as the market has gone up and up and up and up some more for the first two months of the year.  While a pessimist may say that's a bad thing, an optimist (a bearish one) would say that we have A LOT of bearish positions we picked up very cheaply now and we are very well positioned to take full advantage of a market catastrophe.  If there is no catastrophe – in two more months, with a balance of $5,000 – imagine the size and scope of our bearish positions then!   

stock photo : Risk Analysis Concept Word Cloud as BackgroundOf course, if the market continues to roll higher at a pace of 27% every 4 months, our larger, longer-term plays, like our Income Portfolio will be doing ridiculously well and, like any insurance hedge, the cost of our short-term bearish positions should be washed away by the positive performance of our longer positions.  In addition to the $25KP, we also have IWM Money and FAS Money Portfolios as well as our $5KP and Lflan's AAPL Portfolio as short-term bullish virtual portfolios to follow but those are all doing fantastically well so there's no need to worry about them at the moment.  

While I do try to get more bullish – it's very hard.  On Wednesday I listed 10 more bullish trade ideas as we exhausted our first 20 bullish positions of February with the S&P holding 1,297 all month so we reset the bar at the 1,360 line as both the stop line for our first 20 trades as well as the start line for our next 10 but, so far, we haven't had a full day over the line.  That led us to aggressively roll our short-term $25KP bearish bets yesterday and now we will sit and see if this is FINALLY the weekend that reality hits the Global markets.  

SPY 5 MINUTEThis morning, as usual, we were able to make our Egg McMuffin money with quick shorts on the Futures in Member Chat (/TF and /CL this morning) but we have certainly learned to take the bearish money and run early and often as no good sell-off goes unpunished these days.  Yesterday's stunning reversal was a fine example of both how quickly you can make money betting bearish AND how quickly you can lose it – on the whole, it's a Day Trader's paradise – with a day being re-defined to mean about 30 minutes…

CNBC is now (9:06) having their usual morning oil pumping session with Cramer saying $147 is cheap because Maria says Israel is gearing up for war and, of course, Maria MUST know these things because she's in Israel and that makes her the World's foremost authority.  

At the same time, the markets are up as if they haven't got a care in the World.  Does it make sense to you?  Can oil go to $140 on a Gulf War between Israel and Iran with supply disruptions and general chaos and that's going to be GOOD for the Dow and the Russell and the Nasdaq and the S&P?  Corporate margins already suck – they are certainly not going to improve as oil climbs 15% this month and, according to Criminal Narrators Boosting Crude – another 25% next month.  

Yesterday, CNBC lied to our faces, commenting that refiners in the US were operating at capacity despite the fact that anyone could read the very first paragraph of yesterday's EIA report, where it says in plain English: "Refineries operated at 85.5 percent of their operable capacity last week."  So is CNBC lying and purposely misleading the viewing public, fooling people into buying oil on false premises – or are they just pathetically poor fact checkers with little or no editorial oversight as to the veracity of their content?  We report – you decide. 

Another extremely deceiving bit of data is the headline report itself, which showed a 1.6Mb build in crude oil inventories along with a 600Kb drawdown in gasoline and a 200Kb drawdown in distillates for a net 800,000 barrel build on the week.  While that sounds small, you may notice (if you read the report) that last year refineries supplied us with 19,350,000 barrels a day and this year, they cut that back to 18,054,000 per day.  That difference of 9.07Mb per week represents 1.14 days of imports, which have also been cut by 1.15Mbd (8Mb/week) to further create the illusion of tight supply in this country. But why stop at shorting the American people 17Mb a week?  The US energy cartel has also turned last year's imports of 482,000 barrels a day of Petroleum product to an EXPORT of 870,000 barrels a day for a net outflow of 9.5Mb per week.  

That's how the US can consume 19Mb less petroleum per week than we did last year (14%) but the US Energy Cartel can charge us 13% more than they did per gallon consumed.  At 18Mbd and 42 gallons per barrel – just that .41 per gallon increase in the price of oil over last year is costing US consumers $9.3Bn per month and you ain't seen nothing yet if Cramer and Company get their way.  

I don't want you to protest. I don't want you to riot. I don't want you to write to your Congressman, because I wouldn't know what to tell you to write. I don't know what to do about the depression and the inflation and the Russians and the crime in the street.

All I know is that first, you've got to get mad.

You've gotta say, "I'm a human being, goddammit! My life has value!"

And have a great weekend, 

- Phil

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  1. Unreal oil lines…

    R3 – 112.95
    R2 – 110.84
    R1 – 109.66
    PP – 107.55
    S1 – 106.37
    S2 – 104.26
    S3 – 103.08

    Yesterday's high and low – 108.74 / 105.45

  2. Fed Mandate — What does the fed do to meet its maximum employment mandate anyway? Lend out free money to the banks? Pffftttt. Doesn't seem to be working when the banks don't lend it out does it?

  3. Phil, I must have missed the earlier USO trade that you posted at 3:59 yesterday, what were we doing there?

  4. Phil,
    if you look at the channel that the S&P is in there is NOTHING in the look of it that indicative of a top forming, reagardless of fundamentals or earnings or excessive debts or shrinking gdp or technicals or whatever.
    the S&P cannot even below the 50 dma and hasn't broken below it since dec 20, 2011.
    price has respected both upper and lower bounds of the channel(now marked by the 50dma) and continues to stay its steady course higher.
    unless there is a sudden rush to the exits or a bot induced crash this is all just top guesswork, and top picking up against central banks that can turn on the money flows is as has been proven over the past few years a dangerous proposition.
    the only fundamentals here is that central banks trump all else……….1400 is certainly within the realm of possibility if not probability at this point. the only shorts worthwhile on the equity indexes have been Italy and Spains and there at least there is some depth to the selling when it occurs.

  5. True Roro,
    and the run-up is even more impressive if you adjust it by the dollar-index. the perfect trend-line run up started in August there:

  6. The FAS 84 calls expire today and will need to be closed or rolled!

  7. Hi Phil,
    What would be a good trade by using UCO to ride oil up to $125 a barrel and then ride it back down with SCO? 

  8. The TNA 63 calls also expire today. They are OK now but need to watched as they are only about $0.70 OTM.

  9. is it better to roll first or dd first?
    I have USO 39.50 puts at $1.30. I entered later than the official date so went higher, dd'd once and had a sewer back up yesterday that kept me away from the computer. Ready to roll to the Apr 40s.

  10. Yesterday, we rolled the TSL Mar 8 calls down to the Apr 7 calls.

  11. PP for today.

  12. Phil/PGH, What do you think of a B/W at 10, selling the July 10 p+c  for 1.58?

  13. WHY IS EDZ GETTING SLAMMED in this Flat market??
    Is PCLN in the EEM???
    I can't wait for the weekend ;-)

  14. Re USO: The roll up .50c will cost me .90c and the put sale this morning is abt .45c.

  15. Phil
    If you have the phone number for CNBC.  Post it and we should all call and complain about their refinery statement.

  16. A Bull Market in Complacency

    Feb 24, 2012 | 6:48 AM EST

    • Faith, hope and low interest rates were the watchwords as the world's stock markets continued their upward advance yesterday.

    Thursday's market was not materially different than what has occurred throughout all of 2012 — equities have consistently risen regardless of the news, good (the jobs market and low interest rates) or bad (the oil market and slowing worldwide economic growth).
    Skepticism hasn't paid off amid a backdrop of market optimism encouraged by global easing and dependent on the expansion of central bank balance sheets. My sense is that the short-sellers have effectively given up as sideline money has begun to pour in.
    We are in a bull market in complacency; doubt has been almost driven from Wall Street.

    Position: None


    Douglas A. Kass
    Seabreeze Partners Management Inc.

  17. Yesterday we had the following trades:

    Rolled the GLL Mar 16 Calls to Apr 15
    DD on the TZA Mar 18 Calls
    Rolled the SQQQ Mar 15 Puts to Jun 14
    Rolled the USO Mar 39 Puts to Mar 40
    Sold the USO Mar 39.5 Puts
    Added a FAS Mar 85/89 BCS
    Added a DIA Mar 128 Puts

    Let me know if I missed anything but the update was real work this morning….

  18. So is CNBC lying and purposely misleading the viewing public, fooling people into buying oil on false premises – or are they just pathetically poor fact checkers with little or no editorial oversight as to the veracity of their content?  We report – you decide?

    CNBC is not C-Span. It is just an attempt to turn a profit by making the stock market into entertainment by putting some pretty faces on the screen, or Cramer who reminds me of those guys who stand in the street waving boards saying "Pizza $5".  Evidently, just as they are under instructions to keep the board moving, Cramer is under instructions to shout and wave his arms at all times. It is just a business.

  19. Gas prices are elevated also because the crack spread is again reaching very high levels:

    This is a 5 year chart. We are way above for the past 5 years…

  20. hi Phil, i have edz bcs march 12/14 @.65 now .50
    tza march 19/21 @ .60 now .41
    and ery march 9/11 @.60 now .15
    what would you suggest?thanks

  21. Good morning, still nothing new,


    IWM     81.06,  81.41,  81.69,  82.00,  82.41,  82.85,  83.11,  83.38  and  83.72


    Good hunting !!

  22. Thanks Stjeanluc! Does the spreadsheet reflect the most recent USO positions?

  23. Phil,
      Thanks for the SCO play. How do I play it if I think that oil may continue to rise thru May and may start to drop in mid to late summer? Seems to be the pattern over the last couple of years. Thx.

  24. So what are they using to jam the dollar down today?

  25. St. Jean:
    If my memory is correct you said yesterday that you would adjust Phil’s USO trade back when he made comments at 11:22am. Here are his comments:
    USO – We have 40 March $39 puts at .8375 and they re now .58 (down $1,030) and they topped out at .65 on the dip to $105.50.  If we sell the $39.50 puts (.75) and roll to the April $40 puts ($1.75) it will cost us $680 to buy $1 of strike and a month of time.  We’re not there yet but we need to do it before it costs us $1,000 so we’ll keep tabs on that roll.  Also Phil confirmed later:
    February 23rd, 2012 at 3:59 pm | PermalinkIgnore this user
    USO/Jrod – Sold March $39.50 puts to help pay for roll to April $40 puts.  

    In the 25k you have the April 40′s written March 40′s. Did I miss something? Thank you.

  26. hi Phil why the dollar get hit last two day??/

  27. stjeanluc,    In the 5K, wasn't the 2/22 trade to roll into the TSL April 8 calls, not the March?   Therefore, would the trade yesterday, not have been the April 8's to the April 7's?  Or am I wrong?

  28. dclark,
    Phil never exactly said when to roll the USO puts yesterday, in the comment you quoted he said to watch it and not let the loss get to more than $1000, and then later he said that he wanted to watch USO to make sure it held $40. USO definitely held $40.

  29. Good morning!  

    Nice little dip in the Futures but it's all over now as the Dollar goes below 78.50 again.  Oil touched $108.99 on a spike up and is now back to $108.62 and still a short under $108.50 (/CL), especially if the Dollar holds 78.50.  

    Expectations this weekend is the G20 does another huge money dump and Geithner was on CNBC feeding that fire this morning.  

    Timothy Geithner says on Squawk Box that Europe hasmade a of progress to reduce the risk of catastrophic failure and credits the steps the ECB has taken. He also notes that if Europe falls in line by implementing the proper firewalls, the U.S. is prepared to see the IMF play a larger role in the region.

    We'll see if the S&P holds our 1,360 line today (still hasn't held it for any full day) but we still can't go bullish into the weekend – that's just crazy!  I do wish this were easier to play for the bears but it's very tough to call a top when the market is euphoric.  As always – "the market can remain irrational longer than you or I can remain solvent" is probably Keynes' best observation of them all.   Unfortunately, he learned that by going bankrupt in his own speculation!  

    What's worrying me now is that the Dollar has been knocked down 2% this week and we're going nowhere on our indexes.  That's a very, very toppy sign.  Even if all goes perfectly in Greece and no one is worried about Portugal or Spain and Ireland and Italy fly under the radar and the swell of Foreclosures magically lift US housing prices without damaging the sale of homes by consumers and oil price don't affect consumer spending habits or business margins – We're still going to be in trouble if the Dollar bounces.  

    So happy Friday to you!  Aside from our short Futures plays and yesterday's short DIA trade in the $25KP, I still like Wednesday's brilliant disaster hedges:  

    SQQQ April $13/17 bull call spread for .70.  This trade has a 471% upside potential by itself if SQQQ (currently $13.14) gains 30% by April expiration (58 days).  That's a lot but SQQQ is a 3x ultra-short to the Nasdaq so a 10% drop in the Nas, back to 2,650 would do the trick and that's where we were at the beginning of the year, just 50 days ago.  

    Moving along then, in addition to SQQQ, I think the Dow could join the Transports for a 10% drop and DXD is also cheap at $13.42 but it's only a 2x ETF so we don't want to be so ambitious with our target.  The April $13 calls are just .90 and we can sell the $15 calls for .35 for net .55 on the $2 spread.  Again, keep in mind that the bull call spread, by itself, has a 263% upside potential so everything else we do is just to mitigate the cost of the insurance.  

    Both of those spreads are within a nickel of the post and we discussed offsets there but now HPQ has gotten interesting again at $26.95 and you can sell April $27 puts for $1.15 or April $28 puts for $1.75.  I like these for weekend protection if you are bullish but a dangerous play as just a bet since we have no idea which way the G20 meeting will go.  If they promise another few Trillion in stimulus – the sky will have to be raised to accommodate the limit!  

    If the S&P does hold 1,360 today, then we do need to add one of Wednesday's bullish trades, FAS and other Financials still being my favorites as that sector is relatively dragging:  

    At the open: Dow +0.12% to 13001. S&P +0.23% to 1367. Nasdaq +0.20% to 2962.

    Treasurys: 30-year +0.22%. 10-yr +0.06%. 5-yr 0%.

    Commodities: Crude +0.69% to $108.58. Gold -0.47% to $1777.95.

    Currencies: Euro +0.35% vs. dollar. Yen +0.79%. Pound -0.57%.

    Market preview: Stock futures inch forward as gains in Europe and Asian bourses and encouraging corporate news help keep the market's upward trend on track. S&P benchmark +0.1%. Crude oil futures continue to rise, +0.4% to $108.28/barrel. Salesforce+12% after its Q4 report; AIG +7%, helped by a tax benefitStill ahead: consumer sentiment, new home sales.

    Jan. New Home Sales: -0.9% to 321K vs. 315K expected, 324K (revised) prior. Months' supply 5.6. Median price $217,100.

    Feb. Reuters/UofM Consumer Sentiment75.3 vs. 73 expected and 72.5 preliminary. Current conditions -4.6 to 79.6.

    If the combined assets/GDP of 5 key central banks – the Fed, ECB, BOJ, BOE, and SNB – were a stock index, it would be in a booming bull market. JPMorgan adds up the numbers, finding theratio of footings to GDP near 25% vs. about 10% for the years proceeding 2008.

    Mooooooooooo!  "I wouldn't take QE3 off the table ever," says the Fed's James Bullard, speaking on CNBC. On the other hand, he's optimistic about the economy, seeing 3% growth possible in 2012 with unemployment falling to 7.8% by year's end. 

    EU banks may tap the ECB for €470B at next week's LTRO according to a Bloomberg survey, a bit less than December's €489B. "There is a 'lose-lose' air around the ECB's auction next week," says  a broker. If the take-up is low, markets will be disappointed. If high, it points to banks becoming too reliant on central bank funding.

    Europe's Cash-For-Trash LTRO-'Scam' And The Indentured Servitude Of The Citizenry.

    It's 2011 all over again as the euro continues one of the more improbable rallies of 2012, hitting another new high of $1.3413. The rally in 2011, however, came amidst a stronger EU economy and an ECB that was set to tighten policy. Today's ECB, on the other hand, is pumping out euros, with maybe even easier policy on tap

    The Yen Has Been Tanking – Is This The Start Of Something Big? (graphs)

    Italian retail sales drop a sharp 1.1% (seasonally adjusted) in December and 3.7% from a year ago. It's the sharpest monthly decline in 7 years and about twice the expected fall. The surging euro should help things out.

    German finance minister Schauble gives German legislators a gift to take home to their constituents this weekend, telling them there's no guarantee the Greek bailout will be successful and he cannot rule out Greece will need further financial help before 2020.

    German Showdown With IMF Looms as Bundestag Blocks Rescue Funds. Germany's ruling parties are to introduce a resolution in parliament blocking any further boost to the EU’s bail-out machinery, vastly complicating Greece’s rescue package and risking a major clash with the International Monetary Fund.

    Greece needs to track down and secure a swap for nearly all of €206B in privately-held debt in order to begin receiving bailout funds. Much is held by Greek banks, but of concern is finding small retail investors who hold paper. Last night, Athens approved the insertion of a retroactive CAC, meaning bondholders have no choice but to accept the terms.

    A lobbying group representing the little guy holders of Greek debt petitions PM Papademos to exclude them from the bond swap at which they would see a 53% haircut. "We believe it is highly unfair to treat EU individuals the same way as institutional investors." Good luck with that.

    Greek business leaders optimistically launch ad campaigns – including the website - to trumpet the need for international support. The gist: "All we are saying is give Greece a chance." 

    There is no alternative, says ECB chief Draghi in a German print interview, to wage costs in Greece falling by at least one third. There is an alternative, however, and it's called devaluation. The issue is who benefits/loses from the two scenarios.

    Athens Told to Change Spending and TaxesEuropean creditor countries are demanding 38 specific changes in Greek tax, spending and wage policies by the end of this month and have laid out extra reforms that amount to micromanaging the country’s government for two years, according to documents obtained by the Financial Times.

    Europe Faces Pressure as G-20 Mulls IMF RoleThe U.S., Chinese and Japanese officials say they will press euro-area countries to do more to merit outside help when the world’s largest economies gather tomorrow for a meeting dominated by Europe’s sovereign-debt woes just days after Greece secured a second bailout. European officials will push other Group of 20 nations to commit fresh cash to the International Monetary Fund to help defuse the region’s fiscal crisis, while the Obama administration says Europe now must first strengthen its firewall to prevent debts of countries such as Italy and Portugal from becoming unsustainable. G-20 finance ministers and central bank governors meet in Mexico City four days after the European Union sanctioned a 130 billion-euro ($170 billion) rescue for Greece and amid warnings by the IMF that concerns about debt sustainability could drag the world into another recession.

    MF Global East? Japanese regulators swoop in and close down the operations of AIJ Investment after investigators confirm that the firm can't account for ¥183B ($2.3B) of pension fund assets managed for a number of companies. The seriousness of the issue prompts the Financial Services Authority to say it will now check all 263 investment management firms in Japan.

    The Economist removes Argentinian inflation statistics from its comprehensive economic statistics reporting, admitting numbers can be dodgy all over the world, but this particular figure is a special case of pure manipulation. "We see no prospect of a speedy return to credible numbers." ARGT +13.6% YTD.

    U.S. Automakers Face Tough Times in ChinaRecent developments suggest the bonanza promised by China becoming the world's largest auto market is in danger of shrinking dramatically — or ending altogether. This could be a big blow to General Motors (GM, Fortune 500), Ford (F, Fortune 500), and Chrysler. At issue is the inevitable cooling of China's overheated economy — but also complicated social and political problems that lie at the heart of the Chinese system. Here are just a few of the red flags:

    "The prices of constrained real assets tend to appreciate in times of ample liquidity," writes BAML's Francisco Blanch, simply explaining crude oil's recent rise (Brent priced in euros taking out its 2008 high). Predicting occasional spikes to $200, Blanch nevertheless sees the big gap between crude and gas prices triggering large-scale substitution. 

    The U.S. government reportedly has offered to help India get alternative supplies for Iranian crude, and Saudi Arabia is said to have already offered to replace Iranian oil if needed. The assurance follows Iran’s offer to sell extra crude to India, but India is going to be "hard-nosed" in dealing with it, potentially using it to get a better deal from Iran. 

    If the current spike in oil prices was to approach $140 a barrel and stay there, economists warn that a "mild" recession in Europe could turn into something far worse. "If we were to see a rapid, sudden escalation in the oil price, then for sure it would be a factor that would lead us to be revising down our projections for euro area growth," notes Barclay's Julian Callow. 

  30. Spark:
    note the times.

    February 23rd, 2012 at 3:55 pm | PermalinkIgnore this user
    Was there an official USO roll in the 25KP?
    February 23rd, 2012 at 3:59 pm | PermalinkIgnore this user USO/Jrod – Sold March $39.50 puts to help pay for roll to April $40 puts.

  31. dclark the comments were at 11:20 which is the one you referenced, and 2:38.

  32. Spark
    Not sure what you are saying? I am not disagreeing with what Phil wrote or your interpretation. I am just curious where the roll from March $39 puts to March $40 puts came from. St. Jean said in his comments that he would use his comments from 11:22 to update. Later, Phil confirmed the roll to April $40's at 3:59 pm.

  33. NFLX: Making $ shorting. Sold next weekly Mar 2 115 calls for 2.75. Prepared to roll until profitable, if necessary.

  34. YMI shares being offered at $2.  Selling July $2.5 puts.

  35. Portfolio / Dclark and Wave – Thanks for the correction dclark, I have updated the spreadsheet now.

    Wave, in the 5KP, it's a bit confusing because Phil mentioned the Apr 8 at $2.40, but the Mar 8 were trading at $2.40 so I read the wrong month. I'll correct that as well.

  36. dclark I don't think there ever was a clearly official roll yesterday. If you were paying attention to Phil it was clear that he wanted to roll the 39's to 40's and sell 39.50 puts to pay for it, but if you want to split hairs, StJ  confirmed a move that Phil never explicitly made.

  37. Fed/Rain – It's just an excuse for them to use to set policy whichever way they want.  Certainly there are many top 1%'ers who don't want inflation (Lenders) and I'm sure they want to lock the Fed down now before we hit a hyperinflationary cycle but too late anyway.  

    USO/Rpme – I don't know which one you mean but I like the $25KP position in the April $40 puts, now $1.35.  

    SPY DAILYNo top/Roro – I know, isn't TA great!  It doesn't matter if it's $18Tn or $180Tn market cap – as long as the chart looks pretty, people will keep putting money into it!  The wisdom of the investing community never ceases to amaze me.   Let me ask you something.  If I had 100 identical VW Beatles to sell and I sell one at $25,000 but then I have my mom buy one for $26,000 and make a big deal of it in the papers and then my brother buys one for $27,000 and then some guy off the street rushes in to buy one for $28,000 before the price goes up and then I sell 3 to my cousins for $29,000, $30,000 and $31,000 and that causes a frenzy that drives the next 4 sales to $35,000 from regular suckers off the street – how much are my other 90 cars worth?   On the chart – they'd look just like the S&P, wouldn't they?  But I still have 90 unsold cars on my lot and, if we've finally run out of idiots and someone in town realizes that a VW Beatle is only worth $25,000 – do I still get to book a $900,000 profit on my 90 remaining cars just because the last idiot paid $35,000 or will that chart turn very ugly very fast?  

    By the way, would it help if I told you there was a really interested buyer coming in from ***CHINA*** this weekend?  

    Or, as noted in Pentax's chart, the whole rally you see on the S&P chart is just an illusion – a trick of the devaluation of the Dollar against a market that topped out, as we had predicted, in January.  Keep in mind I am a Fundamental, value guy – value is in constant currency and not subject to random fluctuations.  This chart really does say it all: 

    SPY in world currency

    Virtual Portfolios – See yesterday's notes.  USO roll to April $40 puts should be executed (around .80).  Would have been smart to take out short puts on morning spike but, oh well.  

    Roll or DD/Morx – I'd roll first as then you can decide if you need to DD on the longer call, otherwise you are paying more commission to roll more contracts (and more spreads).  

    PGH/Jomp – I think it's fine but I also think oil will tank and you can do better.  I've been wrong so far so scaling in is a good compromise.  

    EDZ/Jabob – G20 stimulus.  Good for PCLN too, who love Asia.  

    USO/Morx – As I said, best to just roll to the April $40s and hopefully sell puts on a dip for better money. 

    CNBC/Willie – No idea what number for complaints but a good idea.  Probably better if we could document and send to other stations/Daily Show, etc….

    CNBC/JMM:  Do you see the word entertainment here?  I heard that was Goebbels defense at Nuremberg: "Just trying to be entertaining!"  And I guess you are right about absolving Cramer – he is only following orders…

    CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. 

    Viewers of CNBC business news programming are business executives and financial professionals that have significant purchasing power. According to a July 2004 survey by Mendelsohn Media Research, the median household net worth of CNBC Business Day viewer exceeds $1.2 million.

    The web site extends the CNBC mission to be first and accurate with the news, including presenting actionable information. It is the preeminent financial news source on the web, featuring an unprecedented amount of video, real-time market analysis, three to eight hours of web-exclusive live video programming daily, industry and topic-specific blogs, Live stream (long-form scheduled programming of events), charts and investing tools.

    EDZ/TraderM – The March $12s are still .80 and you can roll them to the April $11s for $1 so you buy $1 of position and a month of time for $1 – that's a fair trade.  This is, of course, assuming you want to extend your bearish hedges.  TZA March $19s are .95 and the April $18s are $2.23 so not as attractive a roll there but, with TZA at $18.45, you can buy $2 worth of March position by rolling down to the $17s for .95 and that's $1.44 in the money so a good roll for now.  ERY is nasty as it's so thinly traded you are screwed by making a move unless you get lucky.   At $8.50 the $9s are .25 and the $11s (.10) trap you in the spread so you can offer .30 to roll to the Apr $9s and stay naked (so you can finally exit on a move up) but, on the whole, SCO is better.  

    Nothing new/JRW – Great summary!  

    SCO/Japar – At this point we are defensive and just keep rolling to longer months at lower strikes.  Hopefully they run out of money before we do…

    Dollar/Gucci – Euro has been flying as BOJ buys them hand over fist.  One day the scam will end but not today.  

    TSL/$5KP, Wavecounter, StJ  - It was supposed to be spending $1.05 to roll to April $7s.  

    USO/$25KP – Yes, the APRIL $40 puts are where we want to be.  

  38. Portfolios – Keep in mind that it is almost impossible to track these portfolios perfectly… prices will vary from one minute to the other on he highly traded instruments. And unless you are glued in front of your PC 24/7 you will miss some setups…

  39. Spark
    There was no "splitting hairs" it is what he said. We can just move on.

  40. VW Beetle / Phil – I actually have a similar story with sardines that an old friend in the financial world told me. Someone buys a box of sardines, someone else needs the sardines urgently and pays a premium for that box. Another person wants that same box again and pays even more. On and on like that until someone wants to eat the sardines – but the sellers tells them that they are crazy because these are only "trading sardines"….

  41.  look at the alt energy companies….they are on the BRINK even with subsidies and $110 oil!!!! they are in HUGE trouble  they NEED $150 oil

  42. we are getting that skyrocket today for all the wrong reasons

  43. Phil
    Currently, there are alot of idiots! :)

  44. Phil/Lflan,
    in your opinion what effect on AAPL the Proview lawsuit will have? 

  45. Phil

    You still have a bearish bias to your comments.

    I thought you were going to give to ip and guzzle the Coolaid?

  46. St. Jean
    I agree with your most recent comment and very much appreciate what you do. I was just pointing out what was said. The USO move was a little confusing because it wasn't confirmed by Phil until late in the day. This is a great site loaded with great people and contributors. Thank you for your efforts.

  47. Earning strangles – For those keeping track, here are last night's results on my suggestions:

    CRM Weekly 115/150 – Sold for $1.00 now $0.04 (96% win)
    DECK Mar 75/105 – Sold for $1.90 now $1.37 (28% win)
    CROX Mar 18/23 – Sold for $0.77 now $0.50 (35% win)

    I didn't have much conviction in these plays but it's nice to see them work!

    Looks like CRM worked well for Sundevil also who had the 115/145 strikes!

  48. Msf….proview……none.

  49. Earning strangle update – If you played the SHLD weekly 45/60 strangle this week (the only loser from what I can tell), the 60 calls can be rolled to the Mar 65 for $0.20 (and we made $0.60 on the put sale) and just wait out for some sanity to sink in!

  50. Phil/CNBC
    The objective of any commercial  TV station is to deliver an audience to advertisers. There is a kind of regulated model, such as commercial TV in the UK where the objective might be to sell enough advertising to finance quality programing, but that is not CNBC's mission. The real message is the commercials. Obviously CNBC does have proper journalists and they are a useful source for major breaking stories in  the business world, but their primary mission, regardless of what they claim, is to deliver business news in an entertaining and lively way so they can deliver an audience to advertisers.
    Are the "business professionals and finance executives" the target audience for the advertising?
    Personally I don't watch it, as it has nothing to offer me, but I can see that it is useful for some professionals at least so they can see what is being said and for reporting on breaking stories on the politics of finance, earnings reports, etc., though one can get the same information on the Internet.

  51. BTW, on Monday AH we have earnings from PCLN and the options currently do not price in the average move 10% on earnings so unless volatility increases on Monday, it might be hard to find a great play on them!

  52. Phil,
    the TA was an illustration to make the point that you are shorting against the central banks' money pumps and obviously the cbs have figured out a way to keep the S&P running up a steady track until the cbs decide otherwise
    the money pump trumps tech, fundamentals and value, and until the money pump stops pumping (when the cbs decide) then the techs and fundamentals and value have meaning again……….until then TA is just a pretty picture and fundamentals are stories turned upside down.
    whatever the reason i prefer to trade on the right side of price long or short
    one of the reasons i came here in the first place is i remember how you often said the markets are rigged, but as long as you know that then trade with the house.

  53. Looking for scraps:  short GM/F, long TM/HMC.

  54. 13,000
    Evening News headling, thats the plan and weekend talk!

  55. Rob Rogers

  56. Fundamentals / Roro – I believe it is possible to mix technicals and fundamentals. I am a big TA guy myself, but I would not apply TA to stocks that I don't want to own so I use TA to find better entries and exits on fundamentally strong stock. Makes sense for me…

    On the other hand, on a move like the current one (and we have seen that previously in big moves) fundamentals lose some value as everything gets lifted anyway. Correlation is probably approaching 90% again when bad and good stocks move together. Sometimes you just need to ride the wave even if you don't like it.

  57. Someone is betting big….18.2K Mar52 P on XRT went through at 11c.

  58. And one more cartoon for today – I have not posted many this week:

    Ed Stein

  59. BREAKING NEWS:::UN has serious concerns about the military aspects of iran's nuclear program…ha!!!!!!

  60. XRT / Pharm – Sold or bought!

  61. StJ / Since its a boring day, can you tell us the story of Amatta? Someone yesterday mentioned him/her.,,

  62. oil is the real ointment fly because if economy continues to improve ironically it will likely move to economy crushing levels too soon before election.

  63. Amatta / Dpas – I would, but Phil would have to take some blood pressure medication to make it through the day… Remind me this weekend and I'll look for some sample conversation!

  64. Isn't there a section in the Wiki titled 'The Education of Amatta'?

  65. Phil / VIX — Any suggestions for a bullish VIX play? I'm already short oil, $, and IWM, might as well complete the picture :)

  66. XRT/StJ – no se…but my guess is they sold them.  Looks like the $52 Junes were lined up with them on a ~5:1 ratio.  Total cost was 1700 for the short.

    Amatta IMHO – I think it is best to let things lie.  If one wants to search, that is their business, but to make judgements/fun of/whatever, regardless of what they did/said/typed is in the past.

  67. Pharm / best — I agree. If someone want's to search on Ammata's posts, they should do it on their own.

  68. StJ – I'm thinking of changing my username/handle to Amatta.  Then I'll start asking Phil about rolls which happened 5 days ago and how I missed them, and how I can fix a totally out of whack position.  It would be pretty funny….

  69. Pharmboy,
    What's your view on DNDN which will report earning 2/27, Monday.

  70. So Phil, or anyone who might know…
    Apple is sitting on $100B in cash.  What do they do with it?  Can't be in their stock or then not cash.  Do they buy tbills, have it in a money market or what that still allows it to be called cash?

  71. Please don't Burrben…. I somewhat agree with Pharm on that except that there was actually some things to be learned from the conversations. But it did get tedious and I had to finally hit the Ignore button.

  72. Dpastra:
    Check out the entertaining Education of Amatta in Wiki..

  73. Phil
    Volume low? Big buy to kick up at 1:00, last kick 1/10 worked. What is your view?

  74. that big kick was @11:00

  75. DNDN/neet – well, as most will remember me here – I am not a fan.  Not at $5, not at $45, and not here.  Prostate cancer is #1 in research money spent by the biopharma area, and there are a ton of drugs in trials and now may make it to market (MDVN, JNJ, etc).  Their business model sucks, and I am just not a fan.  I realize that they have done wonders for the way cancer is treated, but I don't like the model.  So, a bull call spread would be fine, but it better be DITM and I would sell a far out put to pay for it.

  76. SPX 52 week high is 1370.58

  77. Phil, Yesterday I stirred things up which seems to be a talent of mine. The first thing I noticed about you is your honest, if you screw up you say so with no ego. Second your cognitive abilities are beyond most of us.
    As a person with less than 50 hours a day selling options it would be ridiculous for me to argue with you about a trade. In fact some times it  is hard to follow what you say. So when you throw ideas and numbers around about putting in a floor of $20K etc. I see your mind working like it does picking a good spread or salvaging a loss to break even.
    That is what fascinates me, what are  your seeing that I do not. Your knowledge and insights based on your experiences combined with your mental ability to put things together quicker than most people make me believe that there is something there to learn from. 
    When you talk about conservatives being ignoramuses (My paraphrase, not yours.)  I laugh because I hear them say the same things about liberals.
    Being passionate is a good thing but being angry to the point of hating conservatives or Obama or Bush does not help to bridge the gap. Buddha said anger is a hot coal that burns the hand of the person that holds it. The truth in that statement knocked me on my ass and  made me realize how much I was living an angry life.
    The name calling between ideologies keeps us from understanding and working together because it changes the argument from, we disagree but have to fix the problem together, to a defensive battle accomplishing nothing. I am just as guilty as any one else.
    Conservatives are people too and I tell my conservative friends that Liberals are  people too. At that level we have a chance to coexist and maybe work together.
    How to get there is beyond me but I want to yell stop the name calling and listen to each other.
    I appreciate everyone's  comments yesterday.
    Wish you all a kick ass weekend.

  78. XRT / Pharm – There was also a big block of Mar 57 puts. Maybe a BPV!

  79. XRT/StJ – yes, could be.  I have not computed the numbers.


    Dpstras noted the LTRO coming on Monday?  I think it is time to stop fooling ourselves (myself esp).  This market cannot fall that much, will not fall that much…but if/when it does, it will be catastrophic.  I have not done well keeping short, and am loosening up on them now.  But I am too afraid to go long.

  80. Mike Luckovich: Auto industry bailout :-)

  81. That tap was 1/2 the last!

  82. Remember that post I put up several months ago alluding to the study using PET scans to study the brains of liberals and conservatives? It showed that the brains of the 2 groups actually function quite differently. That’s why I don’t engage in such discussions much. I know that I can’t bring you around to my way of thinking, or visa versa, because our brains are different. Just as I cant change your height, I can’t change your brain. So why waste my time. I’d rather spend my time teaching my dog new tricks, or trading AAPL.

  83. lflantheman, well said.

  84. Well found my answer about apple cash as God intended… google search.  Not really much true cash at all.  Lots of investments.

  85. Phil, can you please go over the monetary logic that was able to devalue the Yen +6% while not impacting the USD?
    Many thanks in advance!

  86. should we expect mr stick to "magically" appear again today?

  87. jabo – consolidation here means more up, most likely.  Low was when today?  Right on time!

  88. Lflan
    Do you have a reference for the PET scan differences?

  89. Ripcar,
    I know your above comment is meant for Phil, but I hope you don't mind me weighing in here.  Correct me if I'm wrong, but I guess you're leaning to the liberal side?  How do I know that?  You are actually trying to understand the other side and you are making an effort to bridge the gap.  While I truly wish we could do things that way (and your comment on Buddha really resonates with me!), I think this kind of behavior has been the main flaw in the approach of the democrats in this country.
    Let's face it, the other side is playing 'Win-Lose' and anybody who is responding with a 'Win-Win' strategy will pay for it dearly – we're talking the basic prisoner's dilemma here.  Conservatives (what an inappropriate label, by the way, for people that are on a tear to destroy this planet) have been working for decades now to undermine key components of an advanced civilization (public education, caring for the weak, civil rights, science, freedom of/from religion, just too name a few) – their game is to maximize wealth for the chosen few and if we engage on their terms we will lose. 
    For example, there cannot be a rational discourse with someone who claims that 'evolution is just an alternative theory'.  Somebody who maintains such a stance is a religious lunatic and should be put on a remote island with his Muslim fundamentalist friends that claim that our solar system has 6 or so planets and refuse to acknowledge the existence of planets like Neptun and beyond.  Such people cannot be reasoned with, they need to be fought every step of the way. 
    I'd love to go on, but it's till the middle of the trading day – maybe we can exchange ideas over the weekend.  Good trading!  And by way, you're right, my hands are burning at this very moment! ;-)

  90. phil/lflan – hey guys, got DECK right. Any thoughts on PCLN and SODA next week as they report earnings?

  91. Maya……not at my fingertips, but I’ll look for it.. May be on my ‘favorites’ on my computer@ home.

  92. TLT at 118 now!

  93. Zero – I saw earlier that you were trying pair trades (kind of) with car companies. Have you looked that Volkswagen? They just announced profits of 15.4 billions euros for 2011. That's a company running on all cylinders (and quite under the radar I would say).

  94. TLT / StJ – Taking advantage of StJ reporting TLT at 118$, isn't usually the case that either stocks or bonds are rallying? Is really so much money out there that they can rally all asset classes?
     (TLT going up: i suppose means bond prices are going up and yields down right?)

  95. Yesterday around 2pm cnbc had a big gun on that i have never seen before for only about 3minutes. They said he was one of the founding partners of the company that owns cnbc. Oil was at 107.00 and he said it will be 108.50 by the end of the day and he was right. Does anyone know who this guy was?

  96. Lolo….give me an hour for research

  97. How long can we run….


    The S&P 500 is currently about five points above its prior bull market closing high of 1,363.61 reached last April 29th.  A bull market is defined as a rally of at least 20% that was preceded by a decline of at least 20%.  Since the S&P 500 never closed down more than 20% from its April 29th closing high, we've simply been in a correction for the last 301 days. 

    To re-confirm the bull market, the S&P needs to close above 1,363.61 today.  If it does, it will mean that the current bull market has surpassed the 1,000 day mark.  Below is a table of historical bull markets for the S&P 500 sorted from longest to shortest.  As shown, the current bull (if we close at a new high today) would be one of just nine that has lasted more than 1,000 days.

    Apparently forever…

  98. dpast – yes, something is brewing.  Although, 'they' could be buying TLT, while retail is coming in full force.

  99. Actually TLT was at 117.51 but still…. My enthusiasm got the best of me!

  100. TLT is not in healthy pattern though on a daily chart!

  101. StJ – neither is VIX, and they call it a bullish wedge……

  102. @Lflan,
    Maya may have asked the same question (can't see it), but would you mind reposting the link to the PET scans?  Thanks!

  103. Stj:  Thanks for VW, I'll take a look.  I certainly expect VW to have forex as a wind in its sails this year.

  104. Retesting,
    looks like they are pushing for both apple and S&P to retest year highs at $126 +  and 1370+, but after that, there is a lot of air below.

  105. Wedge / Pharm – That is true, but no breakout yet! And then there would be a good chance of seeing $126 again. So on a technical basis it is bullish, but many outside factors so I am not rushing in a trade!

  106. Oil again taking off…

  107. There goes USO…..

  108. VW / Zero – The problem is trading it in the US. Just an ADR with no options!

  109. USO just filled the gap back to May.  Now, can they get to $45?

  110. Hello All – Does anyone trade GDX?  If so, any thoughts on it would be greatly appreciated.  TIA

  111. Wappler
    Hope you feel better,chime in any time I will listen. There are plenty of burn scars on my hands. Could it be possible that some of the motives you are assigning to conservatives are not true. Do you really think they are out to destroy the planet?
    Never saw the argument between religion and evolution as they are not mutually exclusive to me. .
    May have some time this weekend.
    Have to get back to work.


  112. STJ  / CRM,DECK etc
    CRM did work out nicely…was sweating a little this AM when it opened but closed for a nice profit….DECK ok too…might hold a few days to see if more premium can bleed out….As for PCLN, I'll wait til Monday and see….

  113. PCLN and SODA: Earnings…comments brief ( on my iPad). PCLN…..probably goes up post earnings, but already at 52 week high. Would not play earnings but would buy on weakness. SODA….probably goes up post earnings but has a habit of sometimes getting post earnings thrashing. Would stay away here as well.

  114. Alt energy/Angel – There was such a glut of production that ran headlong into government cutbacks.  A great opportunity to pick up long-term plays cheaply.  

    Lot of idiots/DC – Yes and they just gave us an entry to short at $109 again (/CL)!  

    Bearish/Exec – Are you kidding, this is me painting a sunny picture!  Give me a few drinks and I'll tell you how off the rails the Global Economy is right now…  Do you know how much Kool Aid I have to consume not to scream short on every single stock I see.   CAT $116, CMG $386, DIA $130, GMCR we already did at $70, IBM $200, KO $70, MA $415, MCD $100, MMM $88, MO $30, MON $80, MOS $59, OIH $45, PCLN $593 (did them too), QQQ $64, SPY $137, TM $85, USO $41.50 (got 'em), UTX $84, V $117, WYNN $119, XOM $87, XRT $59 (got 'em) – and that's just off my watch list of stock I like to buy when they're cheap!  We are not just priced for perfection, we are priced for perfection plus a return to full employment a forgiveness of all debts without write-downs and inflation without rising interest – we are priced for Nirvana!  

    Sunday morning is everyday for all I care 

    And I'm not scared

    Light my candles, in a daze

    'Cause I've found god 

    Yeah yeah yeah yeah – Nirvana

    AAPL/Msf – Just noise, as you can see from the reaction of the stock.  

    Trading the house/Roro – Very true but, at a certain point, when you can hear the sirens and then the heavy boots coming up the stairs and then the pounding at the door – at a certain point, the jig is up and it's time to go.   We're at that point now and sticking it out while we see if someone can sweet-talk the authorities into letting the party continue until the next time someone complains – these are our breakout levels but, to me, this is one of those moments (this weekend) we are most likely to fall apart.  Next week – if we're still up, I'll be more willing to suspend my disbelief.  

    F/ZZ – Those are the only autos I like long.  TM I like in general but not at $85.  

    Great cartoons StJ.  

    VIX/Rain – Didn't we do that yesterday?  

    VXX/Weasle – $24 is nice and low for them and I certainly like selling the March $23 puts for $1.15 and buying the March $20/23 bull call spread for $2 for net .85 on the $3 spread that's 100% in the money so a bet that VIX finishes March over 17 doesn't seem so crazy.  

    It's even cheaper today!  

    Funny/Burr – No it wouldn't.  

    $100B/Tangle – What they should do is what I would do with $100Bn – wait for when it becomes valuable and then deploy it (also, it's not like it's cash anyway).  Right now, no one needs cash – it's pouring out of every CB in the World and into the markets so, like me, AAPL doesn't see anything cheap to buy, including their own stock.  That doesn't mean they should shred the money paying a dividend to greedy investors who aren't satisfied with their $520 stock price (and paying the dividend decreases the value of the stock anyway so why on earth would they?).  It's the Banksters who want them to spend it – that makes AAPL a potential future customer for the IBanks when they finally need to borrow some.  There's no reason at all for AAPL to spend that cash until one of their suppliers goes way below book value and they can take control of their distribution channel or maybe they'll want to buy NFLX when it goes to $40 or perhaps buy S (just $7.25Bn) or FTR ($4.5Bn) or ELNK ($700M) or even CMCSA ($80Bn) to extend their offerings and reach – all of which are better ideas than flushing the money into the pockets of shareholders, who made more than the entirety of the potential dividend ($100) this year already.  

    Volume/Shadow – 41M on the Dow at 1pm is closed. How can there be a big kick when the whole day wouldn't constitute a kick?  

    Stirring things up/Rip – Thanks, good to do after hours and weekends. 

    Yen/Izega – Yen is valued in a basked and the Dollar is part of it but they have been effectively buying up Euros and other minor currencies to goose the Yen, rather than just Dollars as they did in their previous, failed efforts.  I noted the shift in strategy a few weeks ago and it's been working brilliantly for them.  

    PCLN/Lol – GOOG will hit them eventually, probably when we get the first metrics from their new Travel initiative.  SODA is not a real company, you can short them under the 200 at $44 but over that they could do their Momo thing until they exhaust themselves and I wouldn't want to try to guess it.  

    TLT – Someone is nervous enough to give the US money to hold at 2%.  

    Big Gun/Tommy – Nope, I missed that.  

    Oh now, $109 popped on oil (/CL)!  $109.50 to short if you are brave but it's been easier to be long!   Easy to pick up .10-.25 on pullbacks but we're not getting any good runs down while we just saw two $1 moves up. 

  115. come on guys let's stop cutting on ammata its weird we crap on people when they aren't around…let's crap on each other instead!!

  116. We finally got to the point where the price of oil is so ridiculous that VLO is going down!  

  117. btw are we sure amatta was a he i thought a woman?

  118. or did i just crap on amatta again

  119. @Pharmboy,
    LOL, thank you so much, you've made my day!  Anger wearing off for now…

  120. i saw a kitchen retailer this past month soda machines were not moving at all..of course i am not a soda fan but seemed faddish?..

  121. I've got to say I actually liked Amatta. He/She was asking questions that I would shied away from asking. He/she was sort of taking one for the team by facing phil's wrath. The discussion that resulted really helped me.

  122. It's like the bots are fighting but oil bot is kickin everyones ASS

  123. Because someone who is not educated makes such a better fool on election day:

    On the president’s efforts to boost college attendance, Santorum said, “I understand why Barack Obama wants to send every kid to college, because of their indoctrination mills, absolutely … The indoctrination that is going on at the university level is a harm to our country.”

  124. Have any of you guys tried this?
    This sounds impressive. I have always wanted the ability to launch the full version of Interactive brokers TWS on the iPad. This could be a game changer for me, if they allow u to install custom applications.

  125. I have CNBC on the background and got suprised to hear they advertise a sperm bank.. When i turned to see the happy depositors, i just realised its Sberbank 

  126. Apparently there is not much a president can do about gas prices…


    Very little difference no matter where you live except for the taxes! I guess we all get ripped off by big oil.

  127. Heavy call action on next weekly NFLX 115 calls. Must be mostly members from here selling to suckers out there. Mine are alredy 20% profitable from this a.m.

  128. Gee lflan, front running your trades now….    :-)

  129. Phil

    Would it be better to wait until Monday after PCLN earnings or should I enter the bear put spread you mentioned I think yesterday?

  130. Hi Phil,
    Two things:
    Today in FAS Money — are we going to roll today's FAS 84 calls?
    Got assigned 1000 SCO shares last Friday — just like Burr — but seem to have missed your instructions to him about how to handle the situation. I still have the shares and was thinking of selling calls against them and a lower put — although I'm already short 10 March 34 puts.
    Thanks as always

  131. Hello Phil, what do you think about ANW? It experienced some kind of turnaround recently with growing earnings and earning projections but seems to be still very cheap in terms of P/B and P/E. Are you aware of some catch that I do not see?

  132. USO, nutter one!  Thru $42.

  133. i keep thinking it makes more sense (money) to sell the SCO puts than the USO. Are they too risky? trying to be bullish? want to stay in the same equity?
    thanks for helping me.

  134. From WSE Lee Adler:

    I missed this yesterday. The Treasury announced another surprise cash management bill (CMB), the second in 3 weeks. Like the first one, this one is for $20 billion. Tax receipts are not keeping up with the Treasury Borrowing Advisory Committee (TBAC) forecast just issued on February 2. The shortfall is now $43 billion over last 3 weeks.

    If my math is correct, a total of $87 billion in net new Treasury debt will be settling next Wednesday and Thursday. Won't that be interesting. Of course, the 29th is also the day of the next ECB Long Term Refinancing Operation. Next week could be "interesting times." Stay tuned.

  135. Phil
    I rolled the SCO mar 34 puts to the April 32 puts for even. 
    my question is what would i be looking for to decide to roll again.  oil seems to be on a sherman like march to atlanta destroying all shorts in its path.  right now sco 32's have about 3.00 in extrinsic value.  on the other hand I can roll to July 29's and pick up .20 in premium. 
    Just looking for a little more insight on how to play this if oil keeps falling fast.

  136. Hello all,
    I had asked a question regarding  Andy Zaky's bullishcross newsletter a couple nights ago during the off hours and Jerconn was kind enough to respond with his take on the service.  Does anyone else subscribe to the bullishcross and if so, would they recommend a membership to it?  He has raised prices recently and it is now a 6 month commitment so I wanted to ask before plunking down the money.

  137. FU PCLN!!!!!

  138. Lflan, may have been covered already, but what chart/website do you like to use to follow aapl closely?  Other  

  139. SCO / Morx – Keep in mind, SCO like many leveraged ETF is margin heavy. So yes, you get more premium, but as percentage of margin, it starts to even out quickly.

  140. Phil, I admit I am not sure what I am asking and just shooting to some sane explanation to all this. But, can it be that the stocks (oil) are priced for inflation? I mean if there is so much easing happening and some companies are swimming in cash, would it make sense for prices to go up?

  141. Pharm good interview but if you dont want to sit through the whole vid then FF to 7 min mark..says VVUS doubles then doubles again

  142. Phil / Oil – any long plays you like in case we hit $150 this summer before it comes crashing down? 

  143. Oil $109.80 – ridonkulous.   Finally starting to spook the markets as the over-reach.  

    GDX/Ink – Bad index because some miners are good and some suck.  ABX is the Blue Chip for me, HMY growth (up a lot since I last mentioned) and NAK long-term speculative (also way up since my last pick).  The rest of the sector can go to Hell.  

    Destroying the planet/Rip, Wappler – Good for weekend chat but no one thinks they are destroying the planet (except of course the ones who actually want to bring about Judgement Day but they think it's an improvement) and it is important to try to see their point of view, if possible.  I find reading a novel is always helpful and that would include Rand as (if you can do it without turning each page with increasing scorn) you can get into the mindset of the other side.  Autobiographies of people like JPM even Glenn Beck's "Common Sense" give you some great laughs and some good insights.  Karl Rove's "Courage and Consequence" or Chenney's self-serving monsterpiece are also good reads but just make sure you don't find yourself out hunting for the authors with guns when you are done.  Goldwater's "Conscience of a Conservative" is good but Goldwater would be considered a socialist these days and I do like Buckley "God and Man at Yale".  

    If you know the enemy and know yourself you need not fear the results of a hundred battles. – Sun Tzu

    Great study Rain!  

    Heading for $110!  

    47M at 2pm so 7M shares in last hour on Dow.  

    SODA/Angel – Have you tasted that stuff?  They like to compare the prices of their $100 machines and whatever cost supplies (CO2, syrup) to the cost of Coke, which in my supermarket is $3.33 per 12, so .27 per can but they say .50 or $1 to make things look better.  The problem is, their stuff doesn't taste like Coke – it tastes like that generic soda that we used to buy in the 70s that's all out of business now because you can buy Coke for .27 a can (and even cheaper by the bottle, which is kind of what SODA is).  So it's a completely pointless novelty item that solves no problem – more or less a fondue maker – everyone thinks it sounds good and a lot of people get them and then put them in the closet and never buy the stuff or make it once and decide never again.  That's not a business model.  

    Alaska/Angel – Thanks to Sarah Palin, I'm all in favor of just strip-mining that state and selling it back to the Ruskies when we're done!  

    Wrath/Etrad – Oh come on, I'm not that bad.  Like my teacher said: "There are no stupid questions but boy oh boy are there a lot of morons with their hands up."   

    Oil Bot/Bert – They have people terrified to short.  I'm scared to short the futures.  That makes it very cheap for them to buy them up a few shares at a time.  Even now they are trading with less than 10 open orders on each side – that's what we trade in the overnights!  If something doesn't blow up this weekend, I'd expect to see a nice drop.

    To that end, let's buy back the USO short $39.50 puts for .35 in the $25KP.  If we're lucky, we'll do well on Monday and, if not, we'll sell something else and roll again. 

    Also, let's buy back the SCO March $34 calls for .80 as that's a 50% gain already.  

  144. SPX running up against major resisitance of May 2011 high as well as 78.6 fib retracement of Oct07 to Mar08 drop.
    A couple trade setups to look at…
    Another attempt at CMG may be worth it – P/E of 58, weekly bars getting smaller, if breaks below 380 then down to to 340, first bearish daily bar in a week when rest of market is up (Puts currently called in 25kp)
    COH, possible short from 75 to 65, looking toppy.
    DECK still a good short down to 75?
    VXX burped up to 24.63, clearing 13H MA

  145. Strangles / Sundevil – Not a bad idea to try draining some premium from DECK if you have the extra margin. 

    The truth is I don't know why we don't take more advantage of this volatility expansion to establish position. When you think about it, the more risky (and more greedy) position on DECK was the 75/105 strangle sold last night. But you could have sold a 70/110 strangle for about $1.00 against the same $10 of margin with an excellent chance of success in 22 days for a return of 10%. You could actually kill the calls and hold the puts to expiration. And you still have over 10% downside protection even after the stock plunged 10%. What's wrong with 10% in 3 weeks!

    Something else to be studied!

  146. I printed 109.66 as R1 on oil this morning and that looked crazy… and yet, here we are! For those keeping scores at home, R2 is at 110.84 and (gasp) R3 at 112.95!

  147. Cmon bot, give me CL $110 so i can sell my USO call

  148. Bea…nthing fancy. I just surf the net looking for decent articles.

  149. ECA looks interesting.  Canadian nat gas company.  4% yield.  5 month basing pattern.  anybody know this one?

  150. Santorum/StJ – ROFL! 

    OnLive/Etrad – I have got to try that.  

    LOL Dpast.  

    NFLX/Lflan – The gift that keeps on giving.  GMCR doing a slow melt for us as well.  

    PCLN/Russell – I don't see them having earnings to justify $600 so I like the spread ahead but, of course, I could be wrong and they are a crazy stock so plan on big rolls if you are going to get in front.  

    FAS Money/Zip, StJ – Thanks for reminding me, of course we're going to roll the 2 short today $84 calls ($6.35), which are down $1 so I'm glad we waited, to the next week $85 calls at $6 as it's worth spending .35 to gain $1 in strike.  

  151. FAS Money / Zipla – Interestingly enough, the FAS 84 calls are profitable today… I guess we did sell in the excitement!

  152. VVUS/kust – well, one is either 100% right or 100% wrong on binary events.  It is a coin flip, and as a scientist I will try to find two unbranded drugs, combine them, and help someone lose weight by only lifting an arm.  Esp. with two drugs that are extremely dangerous when not used properly.

  153. Why are we going down?

  154. Flam I trust we will be sitting on the AAPL Apr.500 call over the week end

  155. PETM (PetSmart). Found this as a good long through earnings. Reports next week the 29th. Has not missed any of last 8 quarters.. Up one month later up 7/8. Now 54.67. I sold a few Apr 55 puts for 2.30, just to entertain myself.

  156. IF AMRN can get the patent situation sorted out, I think they have a much better chance than VVUS, hence my money in AMRN.

  157. Iflan – that is exactly why I want to start an animal health company.  IF we could just all pitch in and buy PFE's (which is for sale), we would be set….

  158. OnLive / Etrad – I have tried the basic version on my iPad and I have to say it does look pretty nice. Office runs nicely but I didn't try the Plus version with Explorer (which I don't use). If you could run your own apps on it (they are talking about an enterprise version for that) it would be great and would threaten the Windows 8 tablet. The only thing I don't like about the iPad is that most of the software I run during the day is Windows so a Windows tablet would be compelling. But if can run the software on my iPad, then who needs anything else.

  159. Yodi. Yes. What think? Should we cover?

  160. Flan NO

  161. iflan – cover sounds good – what level?

  162. Phil,
    Thanks for your reading list, your point on getting to know the other side is well taken – I think I'll start with Beck. 
    By the way, I probably should not have used the phrase "destroying the planet", which comes across as too strong.  What I had in mind was a complete disregard for limited resources and an "I, me, mine" attitude – an example being the quote of a nitwit senator a few years ago stating that "Americans don't like to drive in European cars that are the size of shoe boxes" regarding fuel consumption or the fact that the same morons who complained about high oil prices just 3 years ago used "cash for clunkers" to buy new F-350s and are now back to complaining about high oil prices and how it is all Obama's fault! 

  163. OIL up, Market down. Dollar up not helping, money flow is out and gaining speed. Flush before stick?

  164. Phil FAS Some how I landed with the Feb4 92c squeezing the last 5c out of it. What position do you suggest to take up for next week or better wait for Monday

  165. Pharm…people simply adore their animals and will spend a fortune on them. I come in at night and ask my wife about the well-being of Half-Pipe, my little Yorkshire terrier, the kids, and her, in that order….oops!

  166. Higher Oil ain't gonna help DD either.  Short.

  167. FAS Money – Rolling the FAS Feb4 84 calls (now 6.10) to the Mar1 85 calls (now 5.70)

  168. Flan The market is to my opinion in a very undiciding position could be going one or the other way but for today people are very conservative going in the weekend and I have my doughts the market will go higher. So I will sit back and relax.
    Feels a bit like May 2011

  169. FAS / Yodi – The Mar 100 are over $1.00…..  That might be safe for a week!    ;-)

  170. Pharm

    that is exactly why I want to start an animal health company.  IF we could just all pitch in and buy PFE's (which is for sale), we would be set….

    What body regulates it?

    AMRN I like Dr. Doogan's background

  171. SODA no i ve not tasted it it sounded hokie..and i can instantly remember those knock off colas..yuuuck!..,the only faddish stuff that seems to have legs are beanie babies power rangers and vibrators

  172. stjeanluc
    FAS thanks but I am looking at the Mar1 I think between 90 and 92 would be good ???

  173. Wappler / Phil,
    Feeling guilty about taking time when the markets open. Lets talk tomorrow Woppler, am in CA so about 10:30 am PST?
    Phil, A recommended reading list  would be thankful.

  174. Yodi….but what about AAPL….if we think it goes lower Monday, then we should cover.

  175. i think animal health food is ripe.

  176. Sorry Yodi, I was just pulling your chain…

    Phil is selling the 85 in FAS Money but we are rolling from the 84. Why don't you stick with the 92?

  177. AAPL going lower lflan – did you move to an alternate universe?

  178. Flan AAPL if it goes lower on Monday we buy more calls I feel it is to early to sell calls if the stk goes up we limit our nice up wind at the moment. Just my 2 cents

  179. Yodi….right answer !!!!!!!

  180. stjeanluc
    Hope it was my gold chain 1772 HA hA

  181. Flan Look at the market down 16 pts AAPL holding course at 520

  182. stjeanluc
    Fas 92 looks better than 85 possible for hibernating BEARS

  183. ANW/Alik – I know in 2008, the marine sector tanked as fuel got so ridiculous that even rich folks parked their boats.  ANW is mainly commercial but they fell from $45 that summer to $10 and now they are $7.38 with a $325M cap and just $18M in earnings.  The BDI shippers aren't getting paid so I worry about them paying ANW and the crazy moves in oil/gas can really burn them if they are hedging (or if they aren't).  So I'd say attractive to accumulate but not exciting and could go lower if the markets tank.  

    SCO/Morx – Selling SCO puts is bearish on oil, opposite of selling USO.  If you have conviction that oil can't hold $140, which is up 25% and down 50% on SCO to to $15, then selling the July $28 puts for $3, which can roll to the $26 puts ($3.20) and probably the Jan $22 puts when they come out means you can go 2x the Jan $15s probably and then you own 2x SCO (worst case) for net $13.50 with oil at $140.  If you like that idea (and if oil drops 20% to $120 then SCO jumps 40% back to $19) then selling the July $28 puts for $3 is an easy decision.  

    $87Bn/Pharm – Amazing what falls through the cracks these days…

    SCO/Willie – See above.  We just roll when they run out of 2/3 to 75% of the premium and do it again next time and hope oil doesn't go to $200.  I wouldn't spend any money to roll them, just keep even or collect a little as we can already see oil prices hurting the market.  Keep in mind it moved up so fast, we haven't even had time to measure the demand destruction yet.  They are betting on war and war soon.  

    Inflation/Dmor – Yes, I'm 100% behind the inflation thing and I think we'll get to $200 oil the hard way but the inflation isn't here yet and you can't justify this kind of run on something that simply hasn't happened yet.   Look at gold, oil is crushing it. 

    Oil/Terra – Sure, there was a long on oil in Wednesday's post.  

    VIX got sudden interest since our re-play.  

    Good ideas Kallen but I'd sit tight over weekend.  We have $1Tn coming from EU already, maybe US, China and Japan chip in $1Tn each and we have a big party…  S&P held the line today – we have to respect that.  

    ECA/Terra – Long-term I like them but short-term, too much nat gas.  Nothing wrong with an accumulate here as you can sell the 2014 $20 puts for $4.60 for a net $14.40 entry, which is 25% off and TOS says $4 in ordinary margin so why bother owning the stock or trying to be fancy?   This one is good enough to add 10 short contracts to the Income Portfolio.  

    Can't disagree with any of that, Wappler.

    FAS/Yodi – I'd wait for Monday, could be a wild move (most likely down) on Monday.  

    Faddish/Angel – Imagine if we could create a vibrating power-ranger beanie baby!  

    Here's a fun trade to watch.  Short 1 AAPL March $515 call ($16) and buy 2 $540 calls ($5.50) for a net $5 credit.  The deltas are .58 and 2x .28 so net neutral going up and both have $11 in premium so decay should be well matched.  If AAPL goes down, you make money and if AAPL pops up, you can cash one or both calls and wait for a pullback as the premium from the $515s will get chewed up.  Fun idea to watch as a way to play with it. 

  184. FDA regulates animal health, but there are drugs out there that will not be used in humans (but work for human diseases) that can be re-purposed for animals.  Just have to get the biopharmas to release them from their holdings.  That is very hard to do…i have been trying for several years.

  185. Phil,
    It all seems like Alice in Wonderland to me – none of it makes sense. Perhaps the ECB LTRO is already priced in? Hard to see how US Fed politically can pump more liquidity in with inflationary pressures (seen in oil right now) – unless there is a major slide in Europe. Go ask Alice….

  186. yodi, I think high of last week at $526.29 for AAPL will be a BIG R, should be flat next week. my 2 cents.

  187. Kallen,
    This is truly an Alice market, only it took both pills at the same time so I guess we can wait and see which one works.

  188. Iflan – when one thinks about phentermine (speed) with respect to blood pressure and losing weight…..would you put a patient on it?

  189. Free Trading Idea from The Oxen Group, possible 82% gain:



    Earnings Play: Dollar General (DG)

    Position: Apr20, 41/43 Bull Call Spread (Buy the 41, Sell the 43), 7 spreads

    Portfolio: Earnings Alpha

    Analysis: Dollar General is Buy-rated at The Oxen Group with a PT of $53 for 2012. We believe that this stock has a lot of upside for the rest of the year with limited downside. Dollar General and Dollar Tree (DLTR) are the best two positioned discount stores this year. They have the best profitability, continue to grow into new markets, and Dollar General has just redone layouts of many stores to improve their overall shopping experience. We continue to see the movement away from large, bulky Wal-Marts and Targets and more to smaller shops that offer convenience. Dollar General provides that type of discount convenience.

    We like the stock's ability to move higher into earnings. The company is slated to report an EPS of around 0.82 vs 0.65 from one year ago along with an 18% increase in revenue. Current annual EPS is 2.15 for the TTM. With this latest quarter, that number will jump to 2.32, bringing PE down to 18, which is pretty fair value. Yet, this is a company that has solid growth and offers risk aversion, which we think increases fair value to closer to 20 on PE. 20 x 2.32 brings the price to around $46. Therefore, we believe a move to the $42 – $46 area will occur pre-earnings to post-earnings. The bull call spread we designed takes advantage of that movement.

    Technicals are great as well. The company has not dipped below its 50-day MA for any considerable period in since August 2011. Movements to the 50-day MA mark buy points rather than sell points. Its amazing support for the company, and this is a stock that we like because it tends to not move with the market. That counter-trend may be good over the next two months.

    Entry: 1.10 or lower

    Exit: 1.35 for 50%, 2.00 for rest

    Stop Loss: 0.75

    Timeline: Mid-Term Trade

    Oxen Entry: 1.10

  190. Bobhu….I agree with that , and that would be my level to consider covering. I think it likely touches 525 sometime next week.

  191. Pharm….depends on the individual patient. We know that obesity kills, as does hypertension. I’d try to determine which was the greatest risk factor for that particular patient, and decide accordingly.

  192. Bohu You are looking at a 1000LBS gorilla hard to stop that train
    Phil AAPL trade nice for paper trade!!

  193. FU CMG!!!!!!!!

  194. lflan, 
    does it make sense to initiate small position in AAPL by the end of day or better to wait for Monday?

  195. The most challenging thing for us trading AAPL is to determine when the train has stopped, so that we can get off. Trust me, every day i study the stock and its movements, that is the foremost question in my mind…”Do I get off today?”. And today’s answer is….”Not yet.”

  196. Damn, not even any SODA shares to short! Not even 20!

  197. morx / animal health food — Already there. Visit a farm supply store and look at the animal feed. Been happening over the last few years. I changed my dog early to a more expensive food with less carbs to cure the skin yeast infections the carbs feed. She eats so much less of it that I save money too. Just like removing refined carbs from human diets…

  198. i was thinking like power bars for the dog, veggie cat food, lamb flavored greek yogurt, energy & vitamin drinks…

  199. Msf….If you need to start a position, I would scale in, starting today. Get perhaps 1/3 today of what you would like to hold, thn more later. You might get the second1/3 cheaper Monday…..or not.

  200. Understandably so, Iflan, but knowing that phentermine itself causes increases in BP, HR and is 'addictive' in its own right makes me a bit of a worry wort, I guess. 

  201. The law of large numbers might be hard for Apple to break…


    Also known as the golden theorem, with a proof attributed to the 17th-century Swiss mathematician Jacob Bernoulli, the law states that a variable will revert to a mean over a large sample of results. In the case of the largest companies, it suggests that high earnings growth and a rapid rise in share price will slow as those companies grow ever larger.

    If Apple’s share price grew even 20 percent a year for the next decade, which is far below its current blistering pace, its $500 billion market capitalization would be more than $3 trillion by 2022. That is bigger than the 2011 gross domestic product of France or Brazil.

    Put another way, to increase its revenue by 20 percent, Apple has to generate additional sales of more than $9 billion in its next fourth quarter. A company with only $1 billion in sales has to come up with just another $200 million. [...]

    “The valuation on Apple stock right now is unjustifiably low,” Mr. Cihra said. “If it weren’t so big, the P/E multiple would be a lot higher. They almost doubled their earnings in calendar year 2011 and yet the stock is trading currently at a P/E multiple of less than 11. It’s trading way below the market average, even though it’s growing way above the market average. The multiple is being compressed simply because investors are asking how it can get bigger.”

  202. msf65
    Not so good jumping on to a running train I would wait till Monday Plenty of time to lose money

  203. DOW -20 AAPL 521 !!!

  204. rain – i took my dog off processed food altogether because of his congestive heart failure. It totally cleared up his coughing and gave him way more energy. I couldnt find food on the internet or the stores that were without chemicals and salt. Maybe i didn't look hard enough but i think it is cheaper to prepare my own.

  205. Look at the fence sitters DOW -20 -10 -9 -11

  206. Pharm….I certainly agree. I consider obesity to be basic response to how our brains developed 100,000 years ago. Then humans were foraging, and probably found large quantities of food infrequently. When they did, they gorged themselves. The ability to do so was essential to survival. Now we find food every day, but the instinct to gorge ourselves remains.

  207. Phil,
    Could you expand upon the AAPl idea below  when you have a moment, AH?:
    1- If AApl drops the 515 would lose premium faster than the 540s producing a profit, i assume
    2- If APPl rises the opposite would be true but  wouldn't selling the 540 leave you vulnerable to a further increase in AAPL's price – if a pullback isn't forthcoming?
    Here's a fun trade to watch.  Short 1 AAPL March $515 call ($16) and buy 2 $540 calls ($5.50) for a net $5 credit.  The deltas are .58 and 2x .28 so net neutral going up and both have $11 in premium so decay should be well matched.  If AAPL goes down, you make money and if AAPL pops up, you can cash one or both calls and wait for a pullback as the premium from the $515s will get chewed up.  Fun idea to watch as a way to play with it.

  208. I have to admit this CMG stuff is starting to "chap ma butt" (said in a Texas drawl).  I mean I'm down to one teensy little call I need to roll and I get this nonsense.  New all-time high each and every day.  I'm sure it'll be $390 by EOD but I'm still waiting  dang it.  

  209. Morx…my Yorkie likes cooked hamburger, rice and carrots, all organic of course

  210. Phil, you feeling like there'll be a stick either way?

  211. Flan any cover on AAPl would have cost us already .80

  212. lflan / response — Not to mention our natural affinity for sweets which were prized for their high caloric density when foraging.

  213. Also, Phil and Pharm, what do you think about an IWM calendar diagonal with the short next weekly 82 calls/ long Apr 85 calls at about net 35c debit? With any luck on a hiccup next week we get the Aprils for almost free.  Otherwise just keep rolling…

  214. DG/David – Looks good!  

    Open air/StJ – Scary.  

    SODA/Jrom – Not very good prices on ITM puts either.  Apri $55 puts at $12.50 nets you short at $42.50 so about $2 premium and you can sell March puts for $2.25 to cancel that but you limit your downside a bit.  

    Dog food/Morx – I know Whole Foods has pet food.  I don't buy it but I assume they take all the fun out of that too.

    AAPL/8800 – I didn't say it was perfect!  Sure if AAPL goes way up, it's a problem but the point is that, over the weekend, we probably head up or down on Monday and down is a winner and up we should be able to wriggle out of without too much damage.  It's really a $5 short with a hedge – just in case.  

    CMG/Rdn – You realize that, in market cap, it's only 1/40th the size of AAPL.  

    Stick/Weasle – No way am I going to call this.  I was wrong last Friday when I thought no fund manager in his right mind would buy into the weekend but the Dow popped 50 points in the last 10 minutes to 12,950.  Now they need to complete the next 50 to 13,000 and I sure wouldn't bet against it.  

  215. Rain…fats have the highest caloric density per gram, and of course we crave that too.

  216. I like the IWM idea, RDN, just make sure you have plenty of firepower to DD and roll.  

  217. Fox News And The War On Facts © Rob Tornoe,Media Matters,Fox News, Wall Street, Dow, 13,000, corporate profits, corporate taxes. capitalism, free enterprise, socialism

  218. Ricpar/Wappler,
      Try reading anything by Dr. Thomas Sowell (The Vision of the Annointed: Self Cangratulations as a Basis for Social Policy; The Thomas Sowell Reader), the PIG (Politically Incorrect Guide)s to American History and to the Constitution, and Godless – The Church of Liberalism, or Slander – Liberal Lies about the American Right by Ann Coulter (although pretty sure Phil strongly disagrees/dislikes her). Walter Williams Liberty Versus the Tyranny of Socialism: Controversial Essays is also an interesting read. 

  219. rdn – I love calendars in times like these, but in times like these, if a shoe falls off, I am also not liking them too much.  That help?

  220. Great week if you were long oil and Apple, otherwise, not so good!

    I'll finally post on the portfolio this week as I skipped a couple of week.

    Have a good weekend all…

  221. Thanks Lflan and Yodi.

  222. Thanks StJ

  223. Thanks stj for keeping the records, and for all the good posts.

  224. Phil,
    Perhaps you didn't see second part of question:
    Got assigned 1000 SCO shares last Friday — just like Burr and some others — but seem to have missed your instructions to him about how to handle the situation. I still have the shares and was thinking of selling calls against them and a lower put — although I'm already short 10 March 34 puts.

  225. Do I see an other 1$ in AAPL

  226. lflan / fat — Yes, but foraged fats are sour which we do not crave :)

  227. Buyers moved in on aapl the last 2 minutes. It does not go unnoticed.

  228. IWM EOD
    In the last minute some really large bolcks sold at bid, at close big blocks sold at ask. ???????????????????????????

  229. Thanks Pharm, I'm just counting on 8 weeks to roll that sucker.

  230. Coulter/Kevin – I don't know if I consider the rantings and ravings of Ann to be literature.   We're trying to give people to emphasize with Conservatives, not to form lynch parties and go after them..

    "Liberals hate America, they hate flag-wavers, they hate abortion opponents, they hate all religions except Islam, post 9/11. Even Islamic terrorists don't hate America like liberals do. They don't have the energy. If they had that much energy, they'd have indoor plumbing by now."

    “Great liars are also great magicians.” 

    Liberals' only remaining big issue is abortion because of their beloved sexual revolution. That's their cause: Spreading anarchy and polymorphous perversity. Abortion permits that.

    “As a Christian I have no duty to allow myself to be cheated, but I have the duty to be a fighter for truth and justice.” 

    Most devastating for the left as a cohesive political movement was the collapse of their beloved Soviet Union. For decades the Great Issue uniting various forces on the left, from proclaimed communists to soft anti-communists, was the socialist "ideal." … Apart from global warming — coming in a thousand years to a planet near you! — the left's only remaining cause is abortion. For many Democrats, Roe v. Wade is the essence of politics.

    “Instruction in world history in the so-called high schools is even today in a very sorry condition. Few teachers understand that the study of history can never be to learn historical dates and events by heart and recite them by rote; that what matters is not whether the child knows exactly when this battle or that was fought, when a general was born, or even when a monarch (usually a very insignificant one) came into the crown of his forefathers. No, by the living God, this is very unimportant. To 'learn' history means to seek and find the forces which are the causes leading to those effects which we subsequently perceive as historical events.”

    “I am firmly convinced to-day that, generally speaking, it is in youth that men lay the essential groundwork of their creative thought, wherever that creative thought exists. I make a distinction between the wisdom of age- which can only arise from the greater profundity and foresight that are based on the experiences of a long life- and the creative genius of youth, which blossoms out in thoughts and ideas with inexhaustible fertility, without being able to put these into practice immediately, because of their very superabundance. These furnish the building materials and plans for the future; and it is from them that age takes the stones and builds the edifice, unless the so-called wisdom of the years may have smothered the creative genius of youth.” 

    Yeah, that's going to give someone insights all right…  I guess you can switch over to Mein Kampf for a little light reading in between chapters.   In fact, the 2nd, 4th, 6th and 7th quotes are actually Hitler, not Coulter – I know it's tricky because he comes across as a much nicer guy…

    SCO/Zip – The idea was to cover on Monday, a bit late now.  I'd wait and see where we are next week – it's a frenzy at the moment.  

    Well no big stick but no sell-off either.  Gotta get bullish as that's the S&Ps first full day over 1,360! 

    Have a nice weekend,

    - Phil

  231. Also, if we're going to get any kind of pullback at all, ever, the next two weeks seems like the best odds.  Forgetting all of the overbought and sentiment indicators, we've got the Fed pulling liquidity out of the markets next week, and if they don't announce a trillion in LTRO somebody might just have a tantrum.  

  232. morxlntway
    MY home cooked dog food.
    Carrots, spinage, squash, spagetti, patatoes, eggplant, pig liver and heart, bonless complete chicken, and chicken broth,
    add water to suit, All well cooked great tast, any Somalian would kill his mother for it. Checked it myself, Even my dogs love it.

  233. morxlntway
    Portion stew and freeze, I got five dogs so I have a great pot to cook in possible enough for your chiwawa for a year

  234. HI!!!!!!
    My name is AMMATA. I am new here.
    What is a "option"?
    Do they make money when you buy them?
    I have lots and lots of money and I want to get very very rich. My time line goal is by the end of next month.
    Somebody PLEASE help me get rich. PLEASE…………..

  235. and somebody make sure Phil has some Valium available to him  :)

  236. newbie
    Hope your jokes will not back fire on you

  237. How come nobody has told me how to get rich yet? I sent my letter more than 4 minutes ago!!

  238. Coulter/Hitler: Yes Phil, some of those quotes sounded way too reasonable to be Coulter!  
    Which brings up a question in regards to History for all of you readers out there (my public library let us check out something like 10 books at a time, which was perfect because I could stack about that many between my hands and my chin).  My son just told me he isn't planning on signing up for Honors/AP World History next year in 10th grade because his 9th grade world history just hasn't been that interesting.  WHAT??  How boring of a teacher do you have to be to make Spanish Grammar seem more attractive than world history?   He's as stubborn as I am so he's not interested in my opinion that it would be a great thing for him, or that he would end up really liking it (I know his strengths)/
    So I need you all's votes for the most interesting history book you've ever read.  Tyler loves to read so I just need one hook…

  239. they're not jokes!

  240. newbie
    First obviously the person male or female paid his her fees to ask advise. I could see the basic problem was in the understanding of the slang used on this website. Additional the person was in a learning process and the most difficult think to master for most of us is patience. So it is bad enough to have lost it's money, have we not all burned our fingers. So the first one not guilty can throw the first stone!!! 

  241. I only need the answer to ONE question. Who will be elected president in america in 2032. The reason i need to know—I'm going to Laas Vagas (that's a town in Nevada) tomorrow and they have a place where you can bet on that, and if I bet only $100,000, I will get back ONE MILLION DOLLARS in 2032. So somebody just tell me. I need to know tonight.

  242. Coulter / Phil – ROFL!

    I would actually suggest that conservatives read (or re-read) The Wealth of Nations by Adam Smith and see how far we have diverged from the original capitalism. 

    Santorum on the other hand could go back his Bible and look up the 9th commandment. Not easy when you are in politics I know. And while he is at it, maybe go check the Catholic Church dogma – they are indeed opposed to contraception and abortion. But Ricky, they also oppose the death penalty and support universal health care for example in a letter to Congress when it was debated:

    The USCCB looks forward to working with you to reform health care successfully in a manner that offers accessible, affordable and quality health care that protects and respects the life and dignity of all people from conception until natural death.

    They are also in favor of strong social safety nets and I would bet are opposed to solving the Iran crisis with bombing. So Ricky, why are you waging war against religion?

    I would also suggest that the China leaders and Kim Jong Un go back to their reading of Marx. They seem to have strayed as well. Good for Chavez and Castro as well.

  243. newbie
    Lay off the pot or you might land up in Petersburg just in time for the elections

  244. Stick to options Newbie… better returns!

  245. And from Bill Buckley Jr (no pinko commie):


    In a private letter from Bill Buckley, Jr. to William Loeb, almost exactly 50 years ago (March 5, 1962): "Why is it our side is afflicted with all the loonies?"

    One would think they would have sorted that out by now.

  246. Question, If a company announces a dividend, is there any impact to the options? I am thinking of buying some stock and then purchasing puts to protect myself if the stock drops after the dividend. Is that a good approach?

  247. nut watch officially on

  248. Dog food
    My little chihuahua La Princesa Diana has never eaten processed dog food. It was offered to her when she was tiny, but she just said: "Please don't bother with buying that crap. Just roast a whole breast of chicken, or some pork, cut it up and put it in the fridge, and then you can add a little of whatever you are eating, or bacon, eggs, or tuna whenever I want to order a meal. I will take an occasional puppy-size dog biscuit as a snack for the vitamins."

  249. Angelcur- MIL – anything new here today or just a bit of profit taking / noise?

  250. jmm1951
    Well there you are what a poor dog !!!

  251. no waiting fo the release of the resource figures on pea ridge on or before the 29..i am holding all of my shares..

  252. Phil/Nirvana

    I don’t disagree that it’s all going to come tumbling down. Nothing makes sense other than the cold reality that nothing makes sense.

    Plain and simple…’s all fixed….they have this spectacular gobal manipulation going that is damn near bulletproof.

    I don’t know how they do it but clearly they have some means of crash prevention in place that is working as designed.

    Like you like to say… will work until it stops working….in the meantime…no point in fighting it.

  253. yodi
    You have to laugh though. In Walmart there is an entire aisle for cat food and a separate aisle for dog food, and they have all these so-called "gourmet" meals for dogs that are not fit for human consumption. It is not really surprising that dogs turn their noses up at them. And these gourmet dog meals are more expensive on an ounce-per-ounce basis than the fresh meats that dogs prefer. Of course if you have a huge dog, then economy probably dictates that the brute gets Ol' Roy rather than Perdue.

  254. Thx, Looking to add . Maybe a bit more of a sell off next week.

  255. jmm1951
    Thanks we do have a Walmart in Cancun besides Costco and Sams and some others Yes they have some dog and cat  food besides croquests, but obviously not in the style you describe. I would not say the Mexicans do not like their dogs but many ot them do not care or do not have the money to feed them. Some Mexican told me he would like to be a dog at my place. But than I am a crazy dog lover.

  256. Exec, Nirvana,
    The demand destruction from $5 or even $4 gas will put a real headwind on fragile US growth, and higher oil will sink Europe deeper into recession. My rail stock is not following the rest of my equities up, which often happens before a correction. If the bond market bubble pops, the large sucking sound there may be the trumpet for a buying stampede into stocks, even as a wave of deflation from higher oil makes that counterintuitive. But if war does actually break out in the middle east (which I would not expect)  then oil will go to the moon, Pharm will be right about the 10 yr at 1.5% or below, and equities should tank. Did I just talk myself into being long and short everything? It's time for wine, or maybe vodka.

  257. All I will say is stay away from the Chineses Dog food. 

  258. History/rdn4evr – ok, I agree with your son – history as taught in public schools is a crashing bore. For starters, it's all rah-rah-USA crap, and most kids' BS detectors are good enough to a)  realize that b) be offended by the condescension. I would recommend some variety – start with Will & Ariel Durant, pick whichever volume is of interest. Second, Stephen Ambrose is a wonderful writer on specialized topics – his "Undaunted Courage" is wonderful. And for the opposite of the public school view, a good rebellious look at US history, Howard Zinn can't be beat.

  259. rdn4evr,
    I was put into (not like anybody asked ME) a college level world history class in about 11th grade and I absolutely hated it. I'm not sure if I completed the class, it was a long time ago. It was impossibly difficult and I was lost from the second day. I'm not sure I could even make it through the class now (decades later).
    It is hard to get a 10th grader interested in the Renaissance or Martin Luther or the Childrens' Crusades or Henry the 8th or Lewis and Clark.
    The one tack that I think might be worth taking would be to think about just the general "kinds of things" that he is interested in, and then see if there is way to work one or two biographies into the picture.
    Then, if he reads one or two biographies about people he is interested in, (sports players, explorers, etc) and if he enjoys it,  it's not hard to stretch the idea that biographies are the "stories of the life of a person", and that history is really the story of lots and lots of people all put together.
    For me I remember reading the biography of the Wright Brothers, and many others.
    But if he really really despises history, there is no way you'll be able to turn him on to it. The only hope is to find some ASPECT of history at any particular point in time, and then try to find a way to make that interesting. Reading a book doesn't have to be the only way. There are many good historical documentaries on video, museums to visit, etc. Any historical sites within driving distance of where you live? That can sometimes be an interesting way to find some small amount of real world "presence" of history, or it's ultimate implications.
    I believe in the  Montessori / Waldorf model of encouraging and supporting a young persons' natural interests as far as possible, while at the same time making sure there is a broad and thorough education. The good news is that earning a Master's Degree in History is not often something leading to a lucrative working career!   :)

  260. yeah, what snow said

  261. yodi/stluc/humor
    OK, point made, I'll lay off
    I read the historical posting that was referred to farther up on this page, where the original "subject" was mentioned. I just got a little carried away with what I found to be the hilarious/sad backstory  behind today's comments.
    I am actually planning to ask two of my own extremely ignorant questions here soon, so in the interests of avoiding being piled on by the experts, I'll try to exhibit better behavior.
    Now, where's that doobie I had around here a few minutes ago……..

  262. As Santyana said "those who don't remember history are condemned to repeat it". However, his most applicable quote to the present may be the one that Chuck Jones used to describe his cartoons (Wile E Coyete, and Roadrunner) "redoubling your effort after you have forgotten your aim".

  263. Santayana

  264. Rdn4ever- why do you want him to study history over Spanish? I happened to love history, but definitely think Spanish is/was more practical/useful.

  265. Jrom:  "Those who don't learn from history are doomed to repeat Spanish conjugations."  Bi-ligual Americans can almost always get a job.

  266. @Kevinb,
    Thanks for the reading list.  Between your list and Phil's recommendations I'll have enough to get me through my summer vacations!  I won't read Coulter though, my wife has already indicated she would go Savonarola on me.

  267. @Ricpar,
    Re 10:30 PST: Tomorrow may be tight, but I'll be back in CA on Tuesday and we'll have plenty of time to chat, since for us the markets close at 1 pm.  Looking forward to it!

  268. Phil:  I reviewed yesterdays posts, and came upon your lengthy phillippics in respect of Liberalism and Conservatism.  They exactly meet the definition of "stereotypes"  - "qualities assigned to groups of people" — which are useful touchstones for discussion but are convenient fictions rather than descriptions of real people, the majority of whom bear characteristics which fit in both categories.  Unfortunately, that is the essence of the problem — reality doesn't fit into neat categories, and people don't behave "like they should."  
    For example, I think your notion of letting a large minority, not to say a majority, of U.S. citizens "not work because we really don't need them to work and can support them adequately if they choose not to" is a fascinating and enlightened idea.  But it assumes that society has evolved the way it has as a kind of accident — that industrialization and technology crept up on us, and suddenly, it's "gee, how come all those people are working who really don't need to be?"  
    I doubt it was an accident.  We are, as monkeys go, fairly normal and non-outlying, behaviorally.  We live in groups.  We establish hierarchies.  We establish rank and exhibit dominance, and order both love and war around those hierarchies, both within and among groups.  We enslave; humans have been the mostly widely-traded commodity in human history, and certainly one of the original ones.  And you envision a system of ambitious, hard-working hunter-gatherers performing productive work through their natural inclination, while a majority engages in ……[and here's the hard part]….what?  
    I have had to manage two types of companies.  One type has its ranks filled with the Ambitious Type — educated, intelligent, hard-working, socially functional people with well above average skills.  Put a picture in their minds, facilities within their reach, coordinate their efforts effectively, and they will produce effortlessly — but these types can be very political, so it also takes firm management and clearly delineated lines of authority to keep them working for, rather than against, each other.  It's very productive when you get it right, but like any overpowered vehicle, takes a light and experienced touch to stay out of the weeds.
    The other type — the Zombie Workers [taken from the Zombie staff of Best Buy] — which one often sees in low margin, commoditized businesses  -  requires a manager to obtain above-average performances from average people.  There are managers with great skill in doing this, but it's a whole different discipline — it's essentially a motivational exercise, bordering on the evangelism when done well. 
    So how would your rather Utopian notion of setting most of the population free from work obligations — the Zombie worker group — while letting the Ambitious workers work — play out?  Not at all well, I'm pretty sure.  All those monkey dominance impulses would leap to the fore, and you would very quickly find yourself in a society composed of Alphas and Betas.  [You may argue that we already have that, but I think you would be surprised to see how much further it could go].
    The gravitational forces that come to bear on an elephant are such that, in order to be the size of an elephant, you pretty much need to look like one — four large columnar legs, large heat sink ears, etc.  I see a parallel in human societies — we have "advanced" over the last 6000 years — but, on a moral and behavioral basis, not very much.  [We wouldn't be using religious and moral guides written thousand of years ago if that were not true, would we?].  
    I think there is no way around needing good leadership.  That's why history has lionized great leaders — because they make a large difference, and because there are damned few of them.  Societies, economies and civilizations require the effective balancing of competing interests.  When you write, "It's really a black and white choice in the end – what's the World you want to live in?' I must respectfully submit that this is hopelessly untrue, and always has been.  Humans are complex creatures.  Mortality weighs heavily upon their consciousness and behavior [for good and bad, I would argue].  Resources are limited, and Hobbes was not far wrong in saying that "life is nasty, brutish and short."  
    Systematizers will disagree with this.  Install the right setup, and human society will be free, fair and enlightened.  A nice idea — but it's never worked.  Nations, societies and companies all crash and burn without effective leadership — surely history provides enough examples of this.   All the "isms" have gone by the board. I have studied every work by Karl Marx, and he was a brilliant socio-economic critic.  But his collected works reveal a major flaw — he never came with a coherent alternative.  His incisive and even prescient writings regard social evolution never included a prescription for change.  He wrote of the abolition of divisions of labor, but admitted that they must exist, but differentiated between "natural" divisions of labor, spontaneously generated and imposed by those caught up in it — the case throughout history — or alternatively "free", a product of deliberation and choice, of collective self-governance by those involved.  He thought the best form of government for this was a republic — and held the United States up as coming closest to his ideal!
    So much for the right form of government, the right Constitution, automatically ensuring a free and fair society.  Hence your statement "It's really a black and white choice in the end – what's the World you want to live in?" is the purest form of idealism.  I would submit there is nothing at all black and white about human choices – neither moral, social, economic or political.  Suggesting that Conservative philosophy is "black" and Liberal philosophy "white" vastly oversimplifies the problem, and, worse, suggests that there is an easy answer.
    There isn't.  You left out government.  Government is the mechanism by which income is redistributed, and modern conservatism enjoyed a resurgence when it was judged that too much income was being redistributed to too many government workers and non-working citizens because politicians could buy their votes with it.  So the pendulum swung back the other way, and too far, I would agree — Super Pacs created a countervailing mechanism by which the aforesaid votes could be nullified, shifting the advantage to large corporations  and wealthy individuals, who held taxes down while the populist part of the government continued giving away money to citizens.  Which is where we are — in need of a rebalancing of power in the U.S. away from its plutocracy.  
    A successful Republic is based on balance.  The best ones always had it — Rome did — the poor and middle class were amazing well-fed, as were Egyptian pyramid builders, according to recent skeletal examinations — and, when they lost it [the Roman abandonment of military service in favor of an underclass of mercenaries]  they invariably tanked.  We must restore fairness and balance to the political, social and economic environment in America, and there is nothing "black or white" about that.
      And you'd be wrong to think that the wealthy necessarily believe otherwise.  What are the chances that they are less well-read, less educated or were brought up in a different political tradition than their fellow citizens?  The fact is that the industrialization of the less developed countries of the world, which accelerated after the demise of the Soviet Empire, cut the legs out from under the hypertrophied, which American citizens came to regard as an American birthright. This triggered an unseemly scramble, in which the better-off gained the political upper hand, but it was not a premeditated conspiracy.   Adjusting to the new globalized economy will require a lot of intelligent choices going forward, and very few of them are as black and white as you suggest.

  269. AAPL
    Well, folks, for all the AAPL traders and devotees, what do you think of this thought process?
    Certainly some food for thought and the more bullish one is, the scarier is the reasoning in this article.

    So, blasphemy it may be, but strong argument for at least selling calls around here or very soon?

  270. Dog day today?
    Mine was happy to just get his insulin shot twice a day and loved to go up in the plane, looking very ‘copilot’ like in the right seat

  271. Political Literature – definitely not Coulter!  To add some real breadth and depth to your political philosophy, try "The Lysander Spooner Reader"  and Albert Nock's "Our Enemy, The State." Both authors: prescient.

  272. History RDN:  I got into history reading things like "The Decline and Fall of the Roman Empire" "Nicholas and Alexandria" "Shogun"…  The Daily Show's "America, the Book" is really good as history should never be taken too seriously.  Just show him this video, here's a short excerpt:

  273. 2032/Newbie – 10:1 would be crap odds for that guess but Chelsea will be of age by then.  That girl is way cool.  Joe's son Beau Biden is making a good name for himself and Pat Murphy (PA) is a good, young guy.  All Democrats as I don't follow young Republicans (but I do call Orkin if I see them in the neighborhood).  

    Dividends/Aug – Well the stock drops and the puts go in the money.  That's why big dividend-paying stocks tend to have cheap calls and expensive puts but there's a certain logic to buying a strong dividend-payer and using the dividend money to buy puts to lock in the price (on the hopes that the stock itself posts gains, of course). As you know, I'm not a fan as you're betting against yourself so I prefer to buy stocks that are cheap and buy more when they're cheaper – If you don't have enough faith in a stock to buy it without protective puts – maybe you should try to find a stock you really believe in.  

    Take MSFT, for example, they had a good run and pay a .80 dividend and you can buy the stock for $31.48 and buy the Jan $30 puts for $2.40, which would be offset by .80 of dividends so net $1.60, which means you now paid $33.08 for the stock and you are protected at $30.  What the f*ck kind of strategy is that?  If you do that for 10 years, you will have paid 100% of the stock's price in protection.  I think MSFT is too pricey at $31.48 but, if I were going to buy it, I'd sell the 2014 $30 calls for $4.40 and the $27 puts for $2.80 for a net $24.28/25.64 so now you collect your .80 dividend, which is 3.3% of your cash outlay.  You are protected to an 18.5% drop at which point you are pledged to double down.  This is not complicated, don't buy stocks you don't like enough to buy more of if they drop 20% and you'll be fine and, instead of SPENDING 10% a year to protect yourself, you are COLLECTING 10% a year in exchange for promising to buy more of the stock you liked at $31.48 for $27 if it drops there (but you still have the option to roll take a loss and cancel your obligation).  So you can see why I don't tend to put up trade ideas with protective puts…

    Chihuahua/JMM – You have a talking dog and you're wasting your time in the markets?  My Mom cooks for her dog but I can't argue the point – our old poodle ate whatever the family ate every night and she lived to about 130 in dog years.  That dog didn't even like leftovers, had to be whatever was being served at the table.  If we didn't have dinner at home, we used to have to eat some of whatever we made to "prove" to her it was good.  No vitamins or anything else but she ate her veggies.  

    No point/Exec – I agree with not fighting a trend but trends end – otherwise Green Bay would have won the Superbowl this year.  How could they lose?  Humans are hardwired to recognize patterns – it's how infants learn, it's how we develop smarter behaviors so there are many places in our brain that "feel good" when we recognize a pattern and then our instinct is to follow it.  That's why TA is so popular, it's monkey brain candy!  It's very easy to look at a pattern and extrapolate that it will simply continue forever because it's exponentially more complex to look at the underlying causes of the current action and determine how long the prevailing forces can sustain the movement.  

    In absence of money coming in, markets go to zero.  I would think that point would have been made quite strongly in 2008 but apparently it's already been forgotten by the monkey-boys.  Anyway, so markets need fuel just like a car needs fuel and fuel is money coming in faster than it goes out.  We have rising sentiment and cash coming off the sidelines and Central Banks pumping money into the IBanks who unleash their HFT Bots on the markets.  That's going to make them rise but not forever – at a certain point, the market gets bigger and needs more and more cash every day to sustain its prices at which point (this weekend) we either get more money or the balloon begins to deflate.  

    That's a simplification, of course, because you have the value of the Dollar and it's possible to game the indexes by pumping key stocks to ridiculous levels (not AAPL but AAPL is a good example of a key stock running the Nas and the S&P) but it all comes back to my VW example.  So what if I sold 10 cars out of 100 to ever more excited people who just had to buy a $25,000 Beatle for up to $35,000 – does that make the next 90 cars worth $35,000?  According to market bulls, it makes my next 90 cars worth $40,000, $45,000, $50,000 – doesn't matter does it because it went up before so it MUST continue to go up because, as we learned in science – "what goes up, must go up more."  

    Not only does that ignore the gravity of the situation but it ignores the FACT that the stock market hasn't gone anywhere for 12 years.  It also ignores the FACT, that in order to buy my next 90 cars for even just $35,000, people need to have $3.15M to spend.  I had planned originally on selling 90 cars for $2.25M ($25K each) but some idiot came in and gave me $35,000 for my last one so sure I will be tempted to wait a while to see if another guy wants to give me $35,000.  Who knows, the pattern has been to get another $1,000 each day so maybe the next guy gives me $36,000 and I can extrapolate getting another $89,000 on top of that $3.15M for my remaining cars – so, unless I have to pay my bills – I'm inclined not to sell for less.  

    That's where we are now in the market, the Greater Fool theory dictates that each buyer assumes the next buyer will pay more than he did and no one envisions taking a loss but what if my original market research was correct and 100 car-buying people only had $2.5M to spend on cars ($25K each).   Now I've fooled my self because, for whatever reason, 10% of my target audience had more money than I thought and were willing to spend more money than I thought on the cars but, after they spent their $300,000 for 10 cars, the other 90 people only have $2.2M and can only afford $24,444 per car – yet I'm pricing them at $35,000 just because the last guy bought it for that.  

    That's going to cause volume to dry up, right?  As I said, after a while, I may need to sell a car to pay some bills and then I will drop my price but, if I need to sell 10 cars (the same volume that took me up) in short order – I am likely to see a very rapid drop in price.  

    What's going to allow the price of my cars to continue to rise?  A) I have to have no reason to sell for a lower price B) I have to continue to find buyers at my new price level C) Even at $36,000, we reach a point (61 cars) where my population exhausts their $2.5M and I will have 29 cars left and no one will have money to buy.

    So there's our gap.  In order to keep selling cars for just the same $35,000 we got to now, we need to see a clear path to our buying public having more money.  Does it come in the form of lower rates, Free Money from the Fed, more employment or raises for current employment?  Do they take it out of their homes, did the price of other things come down or are people substituting one kind of purchase for another and favoring cars over, for example, vacations?  

    These are all the factors in determining whether or not the price of ANYTHING you are selling is sustainable and that's all stocks are – things that you sell.   It's a piece of people saying you own a piece of a company that, in theory, has some value.  If the stock doesn't pay a dividend, then it's all about the earning power of that company now and in the future and you are in competition with many other things people can put money into.  

    Speaking of which, it should be noted that the EU plans to hit the $1.5Tn mark on the EFSF this weekend but they have yet to sell any bonds to actually fund it.  When they do that, where will that $1.5Tn come from – it's almost as much as the US monthly $140Bn bond sales.  

    .sisyphusAnyway, lots of factor in REALITY that indicate things do not, in fact, go up forever.  First you run out of gas, then you lose your momentum and then you'd better hope you're not on a hill (or a wall of worry) or you're going to have a very, very hard time making that last mile (just ask Sisyphus).  

    Of course, with stocks, that boulder gets bigger and bigger as it goes up hill with more and more effort required to add each additional market point (now roughly $40Tn in US equities so each % is $400Bn vs $300Bn in Jan).  It can keep going – especially when your sampling (market volume) is so low – just like it was possible for ordinary homes to get to $1M – as long as most people didn't actually try to sell them…

    That's why I don't like this rally – it's the most dangerous kind – the kind with no underlying support.  Yes, I believe inflation will end up supporting these prices and much higher but we aren't there yet and the promise of money is not the same as actually having money.  It's kind of like if the firemen put one of those air bags under a building but don't fill it with air and tell you to go ahead and jump and you say "but it's empty" and they say "inflation is coming" – what's the smart move?  

  274. History/Snow – My kids love to do projects that counter-program their lessons.  Maddie did a report on the transmission of smallpox for her Thanksgiving project, something near and dear to my heart as my alma mater is named after the guy who came up with this plan (Lord Jeffrey Amherst) to "exitirpate this execrable race" by infecting them with disease.   In fact, here's a picture of China plates that were used at Amherst College with a pattern of soldiers hunting down Indians: 

    Close-up here.   Who says history is boring?  

    Coulter/Wappler – Also, in NYC, it's like reading porno if you walk around with the book.  People will shun you at the beach and will immediately make assumptions about you if they see you carrying it around…  

    Conservatism/ZZ – Well at least there are some philosophers left in this World!  You essentially prove my point – you have decided the World/People can't be better so you reject my view as "Utopian" as if aspiring to build a Utopia is some sign of weakness of mine that should be rejected out of hand so you can go back to your cave and bash a few skulls.  Even if I accept your premise that we have made little progress from monkeys – I would point out that monkeys spend the vast majority of their day relaxing and playing and DON'T force other monkeys to work to make things no one really needs just so they don't have to stare at their lazy asses.  

    I am mortified that you feel that enslaving other humans is "the norm" – again, where does this come from in the animal World?  It's a perversion of nature – when animals have plenty, they learn to relax, they play, they have fun, when times are hard they pull together and work.   You assume that once you allow people to relax and have fun they are somehow ruined for life (too much religion when you were young, perhaps?) and can never be productive.  Even worse, you assume that if the majority were not forced to work (whether needed or not) then they are immediately leading unproductive lives.  

    This is the problem with modern cultures.  What is wrong with free time?  What is wrong with people going to libraries and reading books or listening to music or playing music – in essence – what is wrong with hippies?  

  275. I guess you missed it but we had a period in this country where there were many, many young people who decided they didn't need to play ball with the establishment and they hung out and did drugs and sang songs and played music and created art and some of them even got jobs to pay the bills and almost all of those kids are now productive members of society today including Bill Clinton, John Kerry, Steve Jobs and Woz, pretty much every decent rock and roller, most good comedians, actors and artists, many of our best writers and poets – you know, the stuff that people will remember in 500 years rather than who came up with the new logo for Starwood Hotels or who figured out how to save 2% on labor costs by shifting production to Laos.  

  276. ZXZ: A thoughtful analysis. One question re: the following:
    "Government is the mechanism by which income is redistributed"
    Are you suggesting this is a valid role for government? Perhaps more precisely, should reallocation of wealth be the goal in and of itself rather than an effect of some larger role?

  277. I appreciate your anecdotal "evidence" but you need to realize it's just that.  I ran my company free-form and let people come in when they could and work when they could and my rule about sick days and personal days is I didn't care why you had to be out – just make sure someone covered for you and don't lie about it because we all have lives and there are certainly things that come up that are more important than work.  I find that if you respect your employees, they will respect you and then you don't need a bunch of middle-men cracking whips to squeeze labor our of Zombies so I guess you can say I have reached the exact opposite conclusion you did based on my own anecdotal evidence only I can tell you that my hippies destroyed a $5Bn corporations first, second and third waves of Zombies until they finally got tired of trying to beat us and bought us out.  

    You talk about monkey dominance but that's not a thing, you know.  Yes, there's an alpha male who gets the best chicks and the coolest branch in the tree but the rest of the tribe survives and thrives with him.  You need a guy to call the shots but you don't see Alpha chimps forcing all the other chimps to spend their day gathering 10,000 bananas to pile around him in order for them to get 3 to eat for themselves while he sits on a pile and lets it rot until they have deforested their spot and are forced to kill each other over what little remains.  If that's your version of Utopia – you can have it!  

    In order to be the size of an elephant you can be a Brontosaurus or a T-Rex or a Triceratops or a Stegasaurus or a Sarcosuchus or a Moschops or an Utahraptor or a Shantungosaurus or Quetzalcoatlus (which could fly!) or a Spinosaurus or even a Sauroposeidon – perhaps you need to re-consider your World view in light of the fact that you feel that there is only one possible way an animal can be the size of an elephant.  As to the fact that we have not morally or behaviorally advanced in the last 6,000 years – I'd say the simple fact that we are having this discussion without the bloodied jawbones of asses in our hands pretty much proves how wrong that notion is as well.  We are rational, thinking beings who have learned to help each other and work together to create a society in which it is clearly not necessary for everyone to work yet you seek to push us back into caves to fight for survival because it just doesn't feel right to you to let people enjoy the benefits of human civilization? 

    What if idle hands are not the devil's playthings?  Just because Hobbes was a dreary son of a bitch who made a quote that fits your outlook doesn't mean he was within a mile of being correct.  Hobbes himself was an absolutist who championed the Monarchy and it's complete dominance over the common man (ie, an ass-kisser) and he saw all societal interactions as nothing more than groups of individuals each acting in their own self-interest which, at times, happened to coincide.  

    Yes, he's the perfect Conservative.  He doesn't believe anyone could do anything for someone else without there being something in it for them.  He believes the average person is weak and needs to be led (probably from his own privileged sense of superiority or maybe simply because his Father was a Vicar and he was pretty much in the family business, except without the pointy hat.  

    In fact, as we were speaking about Conservative reading, Hobbes' Leviathan is a good one as the premise is that without Government, people would simply war with each other in some sort of steel cage death match over resources and that we accept Sovereign leadership AND THE ABUSES OF POWER THAT ARE INHERENT IN THAT SYSTEM as "necessary" for the sake of protecting us from ourselves.  That's conservatism in a nutshell – put your better in charge and shut up and work for as little as possible while they screw you over and take everything except what you need to survive based on the FEAR that you would be worse off without them.  It's total, utter bullshit from start to finish.  This one says it all about Hobbes – and Conservatives for that matter:  

    Laughter is nothing else but sudden glory arising from some sudden conception of some eminency in ourselves, by comparison with the infirmity of others, or with our own formerly. – Hobbes

    "I can only enjoy myself at the expense of others" – f'ing lovely!  I guess that explains why you can't feel comfortable with others not working.  If I could work 8 hours a day and provide for my town of 11,500 (assuming no one else could do the same) – I would be proud and happy to do so and I would not begrudge them their days in the same way that I don't kick my children because they are on the floor playing Monopoly as I trudge off to my desk to straighten you out.  Nor do I beat my wife when she has to run off to a PTA meeting and tells me to order a Pizza and I don't make my Mom come up and scrub my floors if she needs a little cash from my labor.  

    I love where you say "it's a nice idea – but it's never worked."  Thank goodness your name isn't Dr. Watson or I imagine you would have talked Edison out of attempt number 3,000 at getting an electric light bulb to work, right?  Hell, I bet you'd be the cave-man making fun of the other guy for rubbing sticks together too!  "Nations, societies and companies all crash and burn without effective leadership" – Eskimos, native americans, hundreds of indigenous tribes, Microsoft, America – all do just fine with little or no leadership.  Karl Marx did not have the answers, nor did he claim to have the answers, he merely offered a devastating and prescient critique of Capitalism – seeing the writing on the wall 150 years before it is now obvious to all (well, not all, unfortunately).  

    We do need balance and unfettered Capitalism is not giving it to us but Socialism is considered a gateway drug to Communism which is totally evil because it postulates that resources should be shared equally by the members of a society who collectively work for the common good – THOSE BASTARDS!   The wealthy DO believe otherwise – someone pointed out this week that money does indeed change people and the more wealthy people we create the more we shift towards a form of Fascist Capitalism in which the haves brutally repress the have-nots in order to maintain what is now 133x the wealth between the top 1% and the bottom 50%.  

    Does it even occur to you that our unwillingness to help the rest of the World industrialize (unless we could profit from it), our unwillingness to feed the starving while we became fat, our unwillingness to conserve fuel or keep the air and water clean while they struggled with diseases we have eradicated for ourselves decades ago – is THE REASON we now suffer from blowback as they begin to catch up on their own?  We never treated the rest of the World as our brothers and now you choose to frame it as a competition when it very easily COULD have been a collaboration and still COULD be in the future – but not if your mind-set wins out because it's much easier to fear and hate and attack than it is to reach out and sacrifice some of what we have to help our human brothers climb the stairs to levels we've already attained.  

    As I said, it's a fairly straightforward choice and there's only one that I can make.  

  278. rdn4evr/ How boring of a teacher do you have to be to make Spanish Grammar seem more attractive than world history?
    Don't know about that, but teaching of languages in US public schools seems to be utterly pathetic. I have a neighbor here in the Dominican Republic who hardly speaks a word of Spanish. He used to TEACH Spanish in high school in the US. He is not a dummy. He speaks English and Slovakian quite fluently. The way to teach a language is to teach the student to SPEAK the language first, not learn the grammar. Knowing the grammar is only important if you want to be a teacher. I  started learning Spanish when I was over 50 years of age and speak it sort of fluently, except that there are lots of nouns I don't know, and can read newspapers and magazines in the language. I never went to a class of any kind and have barely looked into a book except for an explanation of when to use "para" and when to use "por". Yesterday I learned a new word--"pudding pan", which is "bread pudding" so it is not very difficult to accumulate vocabulary. The same goes for English in US schools. As I did not attend school in the US, I have never had a lesson in English grammar, thank God.
    As regards books to interest a child in history, I can only mention a few books that I read around the age of 10 or a bit older. A Brief History of the World by HG Wells is worth a read and is probably in the public domain.

    A Short History of Nearly Everything by Bill Bryson is a very entertaining read, as are all of his books. Incredibly informative, but also very funny. I would also recommend his book about Australia which includes a lot of history. This is a fairly recent publication.
    The Naked Ape by Desmond Morris is a very readable, often humorous introduction to evolution.

    The novels of Rosemary Sutcliff are written for children and set in various historical times. A favorite of mine at age 10 was The Eagle of the Ninth which has just recently been made, to my huge surprise, into a film called The Eagle.

    When I read Animal Farm by George Orwell at the age of 11, I enjoyed it very much and intuitively understood the political message even though I knew absolutely nothing about the Russian  revolution. This is an excellent book about talking animals for children, but it has a lifelong influence. It is also very funny.


    BRK/A & B- annual letter- always a good read.

  280. A Brief History of the World by H.G. Wells.
    I love this book. It is a bit dated now at it was written 90 years ago in 1922, when book reading was at its height. With the introduction of universal schooling and literacy in the late nineteenth century came daily newspapers like the Daily Mail, founded in the 1890s and now the world's most visited news Web site. In 1922 radio and TV had not yet made inroads, and there was a reading public thirsty for knowledge. Wells was both a historian and a futurologist, so makes for interesting reading (see excerpt below for interesting prediction re US place in the world.) Orwell was a huge fan of Wells as a child and used to read his books in bed on summer mornings before the world was awake.However Wells was a conservative and Orwell a socialist, so their points of view conflicted. Orwell, now grown up, wrote a review that offended Wells, and when Orwell and Wells ultimately met, Wells' first words to Orwell were: "You little shit!"
    H.G. Wells on Abraham Lincoln

    "He saw the Union triumphant. He entered Richmond the day after its surrender, and heard of Lee’s capitulation. He returned to Washington, and on April 11th made his last public address. His theme was reconciliation and the reconstruction of loyal government in the defeated states. On the evening of April 14th he went to Ford’s theatre in Washington, and as he sat looking at the stage, he was shot in the back of the head and killed by an actor named Booth who had some sort of grievance against him, and who had crept into the box unobserved. But Lincoln’s work was done; the Union was saved."

     " At the beginning of the war there was no railway to the Pacific coast; after it the railways spread like a swiftly growing plant until now they have clutched and held and woven all the vast territory of the United States into one indissoluble mental and material unity—the greatest real community—until the common folk of China have learnt to read—in the world."

  281. What goes up must go up more? Well, maybe this time it IS different?
    Never before has there been organized tradebots to carry a significant percentage of the daily volume. I am beginning to fear that unless something actually goes way wrong in the world (a reasonable likelihood) the market will gradually go to the moon without much hesitation. This market, it would seem, has been immunized against a technical pullback, and when we are cashy, cautious and well hedged,  it is only because we expect something to actually blow up. I don't like it that this market has begun to make me HOPE FOR a disaster.

  282. Phil, on Friday DMND issued an 8-k announcing a 'key executive retention plan' four the four main executives.  What makes me think that these are golden parachutes is the time horizon of the vesting schedule (6-12 months) and also the multiple of the benifit which is 250% of base salary.  The structure is 50/50 restricted stock units and cash.
    To me, it appears that K is going to take out DMND very soon – which makes sense as DMND already had a Pringles integration plan; thus, DMND helps with the Pringles deal (to include anti-trust) and is good fit due to synergies on existing business model.
    My thoughts are a 1-1 stock swap plus assumption of debt (rougly 1.1B equity +500 million debt) for a price to sales of 1.6 (paid 1.8 for Pringles).  Deal is immediately accretive and puts some growth on margins.
    OR – the situation is much worse and sh*t is about to hit the fan . . . .

  283. The perfect outlook for life, "always view the bong as half full".

  284. Xerox/Marx
    Yes. Orwell's Animal Farm postulates the structure of an idealized revolutionary society (based on the Russian template),  but then shows it gradually falling apart and back into capitalistic exploitation, due, no doubt, to innate Keynsian animal spirits. Of course this is also the argument of the Christian fundamentalists, that Original sin dictates that humans are essentially selfish unless God is standing there with a big stick to ensure that they play nice.
    I think your management philosophy works well provided that you have creative and conscientious employees who are motivated by seeing the business succeed and are aligned with its mission statement and enjoy their work, but in larger organizations people tend to just assume that someone else will pick up the slack. If you have 20 cashiers in a supermarket and 10 call out sick the day after Superbowl, then you probably have long lines in the store and dissatisfied customers. Probably if you analyzed the situation five of the absentees will have called off because they knew others would do so and that there would be an extra workload.
    When I worked in hospital management all the employees were guaranteed 40 hours per week work and were assigned to about 20 different areas. If an area needed a minimum of 4 staff, but had 5 assigned on a certain day, then the extra person would often be pooled and sent to work in a different area. Since people could see the schedule ahead of time, it was not uncommon when 5 where scheduled for 2 to call out sick pre-emptively so they would not have to move. Now there would only be 3 out of 4 and most likely someone would have to be held over from the previous shift to make up the numbers, at additional cost to the organization in overtime payment.

  285. Phil/La  Princesa Diana speech
    At tea-time, when the dog, Jip, came in, the parrot said to the Doctor, "See, HE'S talking to you."
    "Looks to me as though he were scratching his ear," said the Doctor.
    "But animals don't always speak with their mouths," said the parrot in a high voice, raising her eyebrows. "They talk with their ears, with their feet, with their tails—with everything. Sometimes they don't WANT to make a noise. Do you see now the way he's twitching up one side of his nose?"
    "What's that mean?" asked the Doctor.
    "That means, 'Can't you see that it has stopped raining?'" Polynesia answered. "He is asking you a question. Dogs nearly always use their noses for asking questions."
    [Dr. Dolittle: Hugh Lofting]

  286. Barf-Moon- I 'm fine with that. At least for now as that is how I am positioned. If it changes, I will reposition and ride that horse. I'm even "finer" with that as I find I can make more faster in a down market.
    There are many , many fine aspects to this site but one of the negatives is my observation of it's seeming preoccupation with doom and gloom. Certainly some of it very justified. A lot of it not.
    There is plenty of evidence of economic improvement and the market is reacting as such. What is the mystery? I suppose the argument is that if HFT did not exist then the markets would be in free fall? I don't pretend to know but suspect otherwise. 
    I joined the  gloom crowd waiting for the fall but that did not happen. Once I got off that bus I have made up much more than  my losses trying to short the trend and fully expect to give back some of my gains once it turns. Lflan had it right on the money. There is no "bad stock, bad stock". My view is to  trade what you see not what you want or worse, what you think you should see.

  287. Maya- my dog is my co-pilot? All is right with that world.

  288. Planes laden with shipwreck treasure land in Spain
    why didn't they land back in South America?

  289. bring me the head and hands of thr man who wrote the phillipics(i need a ghose writer!!)..the wind it blew and the shit it flew and thus spake us all this saturday morning..did i miss the distribution of some wicked great drugs or is the moon waxing?

  290. I don't find the site too negative.  I do find it more balanced than most.   The vast majority of the trades are bullish while Phil urges caution and gives us short-term hedges, that's something we were all thankful for as recently as November yet now I see the bulls ganging up and bashing bears, which is probably not healthy behavior.  Phil makes a good point that the higher we go, the harder it is to go higher and even JRW has stopped putting up charts with lines up to the moon and I think we passed the moon a while ago.  I'm happy with the balance, please don't change it.  

  291. Pharm: LLY; JNJ; ELN; PFE- anything worth watching here?
    By the third quarter, scientists may have a better idea of whether two drugs can help any of the world's 26 million Alzheimer's victims.
    Lead story in Barrons:

  292. pstas
    Yes…it was that way.

  293. Berkshire Letter/pstas:
    Thanks for that link.  Great read as always.  I particularly liked page 7 discussing Buffett's thoughts on share buybacks in relation to stock price. 
    Its the same basic message: When it comes to owning investing in a good business, stock buybacks or otherwise, you want the price to go down
    'When Berkshire buys stock in a company that is repurchasing shares, we hope for two
    events: First, we have the normal hope that earnings of the business will increase at a good clip for a long time to
    come; and second, we also hope that the stock underperforms in the market for a long time as well. A corollary to
    this second point: “Talking our book” about a stock we own – were that to be effective – would actually be
    harmful to Berkshire, not helpful as commentators customarily assume.

    "The logic is simple: If you are going to be a net buyer of stocks in the future, either directly with your own
    money or indirectly (through your ownership of a company that is repurchasing shares), you are hurt when stocks
    rise. You benefit when stocks swoon. Emotions, however, too often complicate the matter: Most people, including
    those who will be net buyers in the future, take comfort in seeing stock prices advance. These shareholders resemble a commuter who rejoices after the price of gas increases, simply because his tank contains a day’s supply.
    Another great Buffett analogy to add to the collection. :)

  294. If you have not read Grantham yet this month – I strongly urge you to do so:
    Sounds much like Phil here:

    "However, Marx and Engels certainly got the part right about globalization and the supranational company increasing the power of capital at the expense of labor. To interfere with Marx’s apocalyptic vision, we need some enlightened governmental moderation of the new globalized Juggernaut (even slightly enlightened would be encouraging) before capitalism gets so cocky that we have some serious social reaction.

    But for me capitalism’s complete fixation on growth at all cost that Marx concentrated on is not as important as the other issues discussed here. Capitalism, by ignoring the finite nature of resources and by neglecting the long-term well-being of the planet and its potentially crucial biodiversity, threatens our existence." 

  295. And one more quote for those of you who do not follow the link:

    Damage to the “commons,” known as “externalities” has been discussed for decades, although the most threatening one – loss of our collective ability to feed ourselves, through erosion and fertilizer depletion – has received little or no attention. There have been no useful tricks proposed, however, for how we will collectively impose sensible, survivable, long-term policies over problems of the “commons.” To leave it to capitalism to get us out of this fix by maximizing its short-term profits is dangerously naïve and misses the point: capitalism and corporations have absolutely no mechanism for dealing with these problems, and seen through a corporate discount rate lens, our grandchildren really do have no value.

    To move from the problem of long time horizons to the short-term common good, it is quickly apparent that capitalism in general has no sense of ethics or conscience. Whatever the Supreme Court may think, it is not a person. 

  296. doom and gloom/Phil:  I think you're right in the sense that: this site, and Phil, is at its best when markets are crashing.   That seminal video of Phil of doing live trading with Timothy Sykes when the markets was crashing  into a capitulation bottom and Phil was calmly rattling off play after play after play (while Timothy was basically just standing around clueless) still gives me chills when I watch it.  Someone should splice in military band music like they do in those "Great Moments in NFL History" documentaries.
    So you see, net-net this site is actually not overly "doom and gloomy", because while Phil is bearish near the highs, he makes up for it by being super-bullish and optimistic at the lows.  Just like a certain other legendary investor mentioned above.

  297. that last post was directed at pstas

  298. kinki – if you have a link to the video, I'd like to see it, thanks

  299. video/deano: Blargh, looks like Sykes put it behind a paywall.  It was the Friday, March 6th, 2009 3-hour special of Livestock.

  300. ZXZ said, "Government is the mechanism by which income is redistributed".  For a less niggardly definition, I again suggest listening to Freud.  He said, simply, that the economic role of government is to assure an equitable distribution of the nation’s assets.  To me, this is self-evident and underscores how badly we have failed.  Also remarkable is the extent to which the right-wing would worsen the situation, as evidenced by the shared platform of the Republican presidential candidates: trash the environment, shred the safety net, keep healthcare unaffordable, bomb Iran, and aid the rich at any cost.

  301. Does Somalia have massive offshore oil reserves?

  302. Phil,

    president?, "Chelsea will be of age by then.  That girl is way cool.  Joe's son Beau Biden is making a good name for himself".
    you mean that as a joke right? …………..
    certainly not intending to single out democrats but what you described is neofeudalism and it enshrines a political class and its offspring in positions of power…………..
    do you really think the Clintons are wanting to re-up and return to sharing a similar lifestyle to the 99% after years of dutiful 'public service' that paid off in Jim and Tammy Faye spades and 100s of millions of dollars in foundation funds (Kazakstan uranium) and personal net worth
    in other words it must be more than painfully obvious to the unwashed that influence peddling and corruption and greed are not qualities exclusive to 1 political party
    i admire your sense of social responsibility but neofeudalism is all about selling out to and serving the 1% …….. then again when you read stories about 100 riot police called out to quel a mob at an Orlando mall over nike nba designer shoes then there probably is a valid argument for political royalty and a police state too.
    which way for the market?…………..i get your point about the VW analogy and agree, BUT the central banks trump technicals, fundamentals, earnings, gdp, employment/unemployment, reality and gravity and it is not like there is not a lot of evidence to support  that premise given the virtual dictionary of MBA acronyms that have been invented since the 2008 financial crisis to describe a plethora of artificial stimulus including QEs and LTROs among many others.
    barf…………when it serves the purposes of the PIGMEN to have a sell off that will be arranged too.
    Phil,……….you yourself have been saying for months that printing is a necessity and the alternative of austerity is an unthinkable which means the Fed will to have to devalue the dollar so then why are people surprised when the stock market goes up?
    in that context people still expect so-called rules (bond subordination is just one) to be applied and it all collapses?
    it is simple; if central banks print then nominal prices rise………real value will not.

    maybe i am wrong, but i think you have already answered about direction, VW prices or not……….
    "I'd sit tight over weekend.  We have $1Tn coming from EU already, maybe US, China and Japan chip in $1Tn each and we have a big party…  S&P held the line today – we have to respect that. "


    no doubt the FED looks at the same charts

  303. Bruce Krasting has an OIL post up;
    LLS $130……….WTI $110…………

  304. Great picture, Roro:

  305. Also, Chelsea and Beau Biden were in response to betting who will be President in 2032.  Since there are hundreds of possibilities and a historical inclination for families to repeat in politics, they were the two that came to mind with a slightly higher than average possibility of making the cut.  

    Berkshire I have to go through tomorrow, always like to read what Warren is thinking. 

    History by HG Wells is a great one I forgot about, the perspective of reading what one of the World's most intelligent and well-read man of 1922 thought about the World at the time is incredible:

    THE STORY of our world is a story that is still very imperfectly known. A couple of hundred years ago men possessed the history of little more than the last three thousand years. What happened before that time was a matter of legend and speculation. Over a large part of the civilized world it was believed and taught that the world had been created suddenly in 4004B.C., though authorities differed as to whether this had occurred in the spring or autumn of that year. This fantastically precise misconception was based upon a too literal interpretation of the Hebrew Bible, and upon rather arbitrary theological assumptions connected therewith. Such ideas have long since been abandoned by religious teachers, and it is universally recognized that the universe in which we live has to all appearances existed for an enormous period of time and possibly for endless time. Of course there may be deception in these appearances, as a room may be made to seem endless by putting mirrors facing each other at either end. But that the universe in which we live has existed only for six or seven thousand years may be regarded as an altogether exploded idea.


    … The United States have taken the railway, the river steamboat, the telegraph and so forth as though they were a natural part of their growth. They were not. These things happened to come along just in time to save American unity. The United States of to-day were made first by the river steamboat, and then by the railway. Without these things, the present United States, this vast continental nation, would have been altogether impossible. The westward flow of population would have been far more sluggish. It might never have crossed the great central plains. It took nearly two hundred years for effective settlement to reach from the coast to Missouri, much less than halfway across the continent. The first state established beyond the river was the steamboat state of Missouri in 1821. But the rest of the distance to the Pacific was done in a few decades.

    If we had the resources of the cinema it would be interesting to show a map of North America year by year from 1600 onward, with little dots to represent hundreds of people, each dot a hundred, and stars to represent cities of a hundred thousand people.

    For two hundred years the reader would see that stippling creeping slowly along the coastal districts and navigable waters, spreading still more gradually into Indiana, Kentucky and so forth. Then somewhere about 1810 would come a change. Things would get more lively along the river courses. The dots would be multiplying and spreading. That would be the steamboat. The pioneer dots would be spreading soon over Kansas and Nebraska from a number of jumping-off places along the great rivers….


    … Such were the overpowering expectations that President Wilson raised. How completely he disappointed them and how weak and futile was the League of Nations he made is too long and too distressful a story to tell here. He exaggerated in his person our common human tragedy, he was so very great in his dreams and so incapable in his performance. America dissented from the acts of its President and would not join the League Europe accepted from him. There was a slow realization on the part of the American people that it had been rushed into something for which it was totally unprepared. There was a corresponding realization on the part of Europe that America had nothing ready to give to the old world in its extremity. Born prematurely and crippled at its birth, that League has become indeed, with its elaborate and unpractical constitution and its manifest limitations of power, a serious obstacle in the way of any effective reorganization of international relationships. The problem would be a clearer one if the League did not yet exist. Yet that world-wide blaze of enthusiasm that first welcomed the project, that readiness of men everywhere round and about the earth, of men, that is, as distinguished from governments, for a world control of war, is a thing to be recorded with emphasis in any history. Behind the short-sighted governments that divide and mismanage human affairs, a real force for world unity and world order exists and grows.

    Wells wanted his headstone to read "I told you so, you damned fools" but he was cremated so I think I'll be using that one when I go…

  306. I'm off to bed but I'll give HG the final word for the Sunday sermon:

     But just as the personality of Gautama Buddha has been distorted and obscured by the stiff squatting figure, the gilded idol of later Buddhism, so one feels that the lean and strenuous personality of Jesus is much wronged by the unreality and conventionality that a mistaken reverence has imposed upon his figure in modern Christian art. Jesus was a penniless teacher, who wandered about the dusty sun-bit country of Judea, living upon casual gifts of food; yet he is always represented clean, combed and sleek, in spotless raiment, erect and with something motionless about him as though he was gliding through the air. This alone has made him unreal and incredible to many people who cannot distinguish the core of the story from the ornamental and unwise additions of the unintelligently devout.

    It was not merely a moral and a social revolution that Jesus proclaimed; it is clear from a score of indications that his teaching had a political bent of the plainest sort. It is true that he said his kingdom was not of this world, that it was in the hearts of men and not upon a throne; but it is equally clear that wherever and in what measure his kingdom was set up in the hearts of men, the outer world would be in that measure revolutionized and made new.

    Whatever else the deafness and blindness of his hearers may have missed in his utterances, it is plain they did not miss his resolve to revolutionize the world. The whole tenor of the opposition to him and the circumstances of his trial and execution show clearly that to his contemporaries he seemed to propose plainly, and did propose plainly, to change and fuse and enlarge all human life.

    In view of what he plainly said, is it any wonder that all who were rich and prosperous felt a horror of strange things, a swimming of their world at his teaching? He was dragging out all the little private reservations they had made from social service into the light of a universal religious life. He was like some terrible moral huntsman digging mankind out of the snug burrows in which they had lived hitherto. In the white blaze of this kingdom of his there was to be no property, no privilege, no pride and precedence; no motive indeed and no reward but love. Is it any wonder that men were dazzled and blinded and cried out against him? Even his disciples cried out when he would not spare them the light. Is it any wonder that the priests realized that between this man and themselves there was no choice but that he or priestcraft should perish? Is it any wonder that the Roman soldiers, confronted and amazed by something soaring over their comprehension and threatening all their disciplines, should take refuge in wild laughter, and crown him with thorns and robe him in purple and make a mock Cæsar of him? For to take him seriously was to enter upon a strange and alarming life, to abandon habits, to control instincts and impulses, to essay an incredible happiness.

  307. I'm the one who started the "who'll be president in 2032 thing". i hope you all realize I was joking, right?  it was in a context (for which I have been sternly and repeatedly taken to the woodshed) of making a couple posts (that I thought were funny, but upset a lot of people) about an apparently long gone infamous Member who is now Memorialized apparently for all time in the PSW Hall of Fame (in the Wiki thingy).
    That article was referenced here earlier, so I went looking for it. I found it hysterical. Maybe it was in poor taste to make a couple posts referencing it. It was my own attempt at fitting in with the "humor" vibe of today's daily thread.
    The aforementioned trader apparently caused Phil no end of frustration which increased over time…….actually reading the entire long series of exchanges was quite educational to ME. Helped me examine whether I will have what it takes to become a trader of some ability. That's probably why it is available there.
    One of the better aspects of each day's thread here (for me anyway) IS the humor.
    Observation: a lot of you know each other, a lot of the humor is "inside humor", and to somebody brand new it can be very dry wit, laden with irony and complex subtleties. So, easily misunderstood.
    So I'll try to  not make any more jokes about anybody. Except that yodi guy. He's kinda gettin' on my nerves.
    JUST KIDDING yodi !!!!!

  308. Phil / Monkey:  From your response you seem righteously offended by the essence of what I suggest — that we are, to a great extent, programmed to behave the way we do.  Nonetheless that has been my experience.  Our touchstones for religious and moral beliefs are books written at least a thousand years ago.  That we are a sort of advanced ape is indisputable.  But I admit that quantity has a quality all its own, and our intelligence and reasoning ability has created modern medicine, space travel and cybernetics, hence humans have intellects that operate orders of magnitude more effectively than most apes.
    But intellect invents the means, it does not determine the ends.  Emotionally and psychologically, we still harbor all of the instincts of the forest, as it were, overlaid with a a variety of moral constructs.  Maintaining stable societies has always been a challenge for mankind, and there is every evidence that we have undergone various extinction events and much war and famine.  I have no quarrel with your evident idealism — as long as you realize that it is "idealism" and don't get too angry or indignant when humans mostly continue to behave the way they traditionally have.  Good leadership have been very important to the various human civilizations, and that's been a hit or miss proposition up to now.
    I do have a positivist viewpoint — I think we will, as a race, survive for quite some time and possibly accomplish far more than we already have — but it will always be a near-run thing, as we've accelerated the rate of technological and social change in quite a non-linear way in the last few hundred years.  So you will perhaps forgive me for thinking that the most probable path global societies will take will prove a hard road for another few hundred years,  until mankind's social and psychological development catches up with its intellectual prowess — and that the outcome is far from preordained.
    As to  your question "I guess you missed it but we had a period in this country where there were many, many young people who decided they didn't need to play ball with the establishment and they hung out and did drugs and sang songs and played music and created art and some of them even got jobs to pay the bills", I can assure you that I didn't.  In fact I never really stopped doing most of those things, have had shoulder-length hair since I left a WS investment bank at 33, and have improved my musicianship continuously since I joined a band at 14.  Like I said, it's always a mistake to stuff everyone into preconceived categories, as it clouds your vision. 

  309. Phil,
    many thanks for the HG Wells, especially the lessons over false idols………and/or false and manipulated impressions
    on that note there is Clinton as a Republican and one last point in the context of you can never tell a book by its cover;
    there is a valid argument  that Clinton did more to serve the interests of the 1% than any Democrat or Republican ever did by enabling the demise of Glass Stegal under the Clinton/Rubin-Wall St partnership/financial architecture, and that Greenspan/Summers were equally  effective in the roles of muzzelers of Brooskley Born of the CFTC who was an adamant proponent of strict oversight as a necessity to serve/protect the public interest in the spirit of a 'Roosevelt', all of which really meant that the banks completely won the day and ended up having it all their way with the lucrative derivatives markets and being then allowed to operate in that arena virtually unchecked and unregulated by any form of government oversight whatsoever, and still that way to this very day regardless of recent Democrat majorities in the House, Senate and a Democrat as president.
    when it came to unfettered and unchecked capitalism Clinton did more for the 1% than any Republican ever did………and, all of it with a smile and a nice way with with people too.
    from that perspective Clinton is more Republican than most Republicans and perhaps more than the most loved Republican hero ever, maybe more the Gipper even, but that is a trojan horse story that will be told one day after the phoney political acrimony has faded away with time and it is realized in story books written for the 1% that the words Democrat and Republican are just words that served the purpose of an illusion and just happen to be convenient labels useful for a less than obvious interest that operated/s in the shadows more or less out of sight and unawares to the public conscious.
    so, a quick scan of the G-20 headlines late last night looks like the US, China and Japan are putting the pressure on Germany/Netherlands/Finnland to come up with 'more' of a contribution to the money printing business.
    i imagine the Germans are holding out for a better deal (for the Germans) so maybe there will be some volatility return to the market this week until Lagarde gets the official rubber stamp (which probably equates to a green light from the BUBA that the ECB may to proceed to the atomic LTRO) to take back to DC.
    i think the 'fix' is in, and probably a lot bigger than the last rounds……….sorting out the remaining details stage maybe?

  310. Good morning!

    Trillions/Jabob – Wow!  That's what I thought might happen from the G20 but, since it's on CNBC and not the WSJ yet, I don't know if we should believe it yet.

    Kidding/Newbie – Yes, humor is a difficult thing in a multi-cultural environment where no one can see you smile.  Let's certainly not make fun of other Members – for any reason – except Cap and Flips, of course.  

    Programming/Monkey Boy – I'm never offended but I may become indignant, which all goes back to my general proclivity to think more of the commoners than you seem to.  The ends are only limited by our vision and you can choose to have a narrow and dismal one or an expansive and positive one and you need to choose your leaders well because their vision will determine which path we take.  If you only believe our race is capable of low social achievements with a tendency to regress, then you can excuse all sorts of awful behavior towards the cowering masses who do nothing but hold you and the other "special" people back.  If on the other hand, you believe that anyone is capable of success if you give them the right motivation and opportunity, then you have an obligation to be a better person yourself – so sure, I forgive you for your view of our "most probable path" as you are just as weak as those you choose to look down on.  As the saying goes – "Whether you think you can or think you can't – you'll probably be right."  I'm glad you had a chance to express yourself in life (and the fact that you take it seriously when I say I guess you missed the 60s speaks volumes on it's own) and I guess you want me to be proud of how you have evolved to the point where you deny that opportunity to others because, obviously, they could never benefit from the opportunities you've had because YOU ARE SPECIAL!  

    Clinton/Roro – Oh give me a break on that one.  Do people EVER check the facts or do we just believe whatever crap they repeat on Fox 10 times?


    The bill that ultimately "repealed" the Act was brought up in the Senate by Phil Gramm (R-Texas) and in the House of Representatives by Jim Leach (R-Iowa) in 1999. The bills were passed by a Republican majority, basically following party lines by a 54–44 vote in the Senate[15] and by a bi-partisan 343–86 vote in the House of Representatives.[16] After passing both the Senate and House the bill was moved to a conference committee to work out the differences between the Senate and House versions. The final bill resolving the differences was passed in the Senate 90–8 (one not voting) and in the House: 362–57 (15 not voting). The legislation was signed into law by President Bill Clinton on November 12, 1999.[17]

    In reality, the repeal involved only one provision of the Act, the one preventing the same holding company from controlling both a commercial bank and an investment bank.[18] Proponents argue that repealing this provision had little impact on the financial system and even helped restore stability during the financial crisis.[18][19][20] Ten years later, detractors condemned the partial repeal for reestablishing conflict of interest within the financial industry and fostering "too big to fail" institutions that led to the housing market collapse and its associated financial crisis.[21]

    The banking industry had been seeking the repeal of Glass–Steagall since at least the 1980s. In 1987, the Congressional Research Service prepared a report which explored the cases for and against preserving the Glass–Steagall act.[14]

    What was Clinton supposed to do – veto it for show against an overwhelming majority vote?  This is the "smoking gun" on which the Conservatives seek to hang the blame for the entire Financial Crisis on Bill Clinton, even though "no one saw it coming" until 2008 – 7 years after he left office.


    Another potential problem is that profits have been an unusually large share of GDP – currently almost 13%. If profits revert to a historical norm of about 9.5% of GDP at the same time the 10-year Treasury yield is 5%, fair value would be 13,900 for the Dow and 1460 for the S&P 500. Just to be clear, that would be in a world where profits fall roughly 25% and interest rates more than double from their current levels. In other words, this doesn’t look like a dead cat bounce to us.
    Valuations are robust and with the economic recovery re-accelerating, the bull market that started in March 2009 has much further to run.

  312. Phil………..sorry to not make your day, but that did not come from FOX and just for the record i don't watch FOX or CNN or any of the other media bullshit which predominates the airwaves and really needs to be relabeled as propaganda for dummies …………aren't you the one who keeps talking about relocating offshore?
    and, who are you to assume or try to label me about what i choose to watch or listen to or read……….do you know me or know about me? have we ever met other than the 3 months i have spent as a paid subscriber here?
    i elect NOT to watch or listen to it as it has less than no value, and why revert to the the tactics of smear you always rail against when trying to dismiss a legitimate argument or point of view just because it is not yours.
    i get more FOX bullshit at PSW than i ever got from watching television and the truth is it still comes across as bullshit and i really don't get why you waste time rehashing what pablum the masses get fed/ told on a daily basis……….
    since you brought it up what part of the above about the demise of Glass Stegal is inaccurate exactly? the Clinton admin played a pivitol role in its demise.
    if you dispute the facts that is one thing but to diss it because maybe it does not fit with your personal political bias is another………….politics in the US has become so stupid and pretty much devolved into a kind of lowest common denominator reflexive schoolyard mentality of black versus white or i am different from you so that makes you 'bad'…………sounds like almost religion
    as for the smoking gun, i doubt Clinton gives a shit one way or the other given the scale of financial payoff from years of dedicated 'public service'.
    Clinton is the 1% whether you label it democrat or republican or by some other name.
    and, if you don't want to discuss politics that is fine too. just for the record my views can be described as 'liberal' or 'socially responsible' but  i have no affliliation or affinity for either party as in mho both serve the same interests and it is not the interest of 99%.
    if a legitimate point of view makes you indignant then too bad. i really don't care.

  313. My, my Roro – so you got the slanted news from another source.  You have my humblest apologies and it's totally legitimate for you to ignore the circumstances of Clinton's involvement and pin the blame for the Bush catastrophe on him as he did happen to be President 8 years earlier (during the greatest economic boom of our time) and we'll also ignore the fact that he last major Financial collapse occurred under Bush's Daddy.  I don't give a crap about your personal political leanings – I care about an even-handed discourse on this site so when you put up 4 or 5 paragraphs of anti-Clinton propaganda that USUALLY comes direct from the source at Fox, forgive me for not realizing it trickled down to whatever source you do rely on.  It's hard to tell as you don't use links to cite your sources but "muzzlers of Brooksley" has really made the rounds in Mirror On America, The Seattle Times, Economic Blog, BizJournals, Automatic Earth, etc.  

    What do you want me to do – defend Clinton?  That's kind of pointless as his achievements were spectacular and if you don't think he was a good President, especially in light of comparison to the one before and the two after him – then, no matter how "open" you are to a real discussion – I very much doubt there is anything I will be able to say to change your mind.  It's interesting that you feel I'm trying to "label" you when all I did was disagree with your premise and cite a fact about the repeal of Glass Steagall, which was the entire premise of your attack on Clinton and outrageous conclusion that he did "more to serve the interests of the top 1% than any Democrat or Republican ever did."  Sorry but this is my site and if you want to write things that are completely ridiculous then you can expect to have them challenged.  

  314. Respondents in a 2011 Gallup Poll on Presidents Day tapped Ronald Reagan as the nation's greatest chief executive, ahead of Abraham Lincoln.


    Here are the top 10 in the poll, which simply asked respondents: "Who do you regard as as the greatest United States president?' (There is an interesting tie for 10th place.)

    Ronald Reagan — 19%

    Abraham Lincoln — 14%

    Bill Clinton — 13%

    John F. Kennedy — 11%

    George Washington — 10%

    Franklin Roosevelt — 8%

    Barack Obama — 5%

    Theodore Roosevelt — 3%

    Harry Truman — 3%

    George W. Bush — 2%

    Thomas Jefferson — 2%

  315. 1999 NYTimes article on Glass Steagall:

    The measure, considered by many the most important banking legislation in 66 years, was approved in the Senate by a vote of 90 to 8 and in the House tonight by 362 to 57. The bill will now be sent to the president, who is expected to sign it, aides said. It would become one of the most significant achievements this year by the White House and the Republicans leading the 106th Congress.


    Administration officials and many Republicans and Democrats said the measure would save consumers billions of dollars and was necessary to keep up with trends in both domestic and international banking. Some institutions, like Citigroup, already have banking, insurance and securities arms but could have been forced to divest their insurance underwriting under existing law. Many foreign banks already enjoy the ability to enter the securities and insurance industries.

    ''The world changes, and we have to change with it,'' said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ''We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.''


    The opponents of the measure gloomily predicted that by unshackling banks and enabling them to move more freely into new kinds of financial activities, the new law could lead to an economic crisis down the road when the marketplace is no longer growing briskly.

    ''I think we will look back in 10 years' time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930's is true in 2010,'' said Senator Byron L. Dorgan, Democrat of North Dakota. ''I wasn't around during the 1930's or the debate over Glass-Steagall. But I was here in the early 1980's when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.''

    Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ''seemed determined to unlearn the lessons from our past mistakes.''

    ''Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,'' Mr. Wellstone said. ''Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.''

  316. Good article about the rising prices of gas, and how Oil affects price.
    Here's The REAL Reason Gasoline Prices Have Been Surging In The US

  317. Phil,
    i don't watch FOX or get my information from FOX. it is that simple no matter how hard you try to ascribe it to having shaped my point of view.  like i said i have had MORE of FOX here in the past 3 months than i can remember, and the effect it still the same; it dulls and deadens the brain.
    it is really boring.
    FOX is so effective at that it makes smart people stupid, and you can turn it off and not watch it for days or weeks or months or years and then one day turn it on again and it is the same story just a different day with a different talking head repeating the same mind numbing bullshit over and over and over and over and over again.
    kind of a simple formula………..which is why i don't watch it/listen to it/pay attention to it………you seem to feel it is a necessity day to day , but choose your own poison or kryptonite, however you choose to.
    it is your site and you're welcome to keep it.

  318. Phil,
    just one other thought on that Clinton idol thing; the links you posted…….i don't recognize any of them so maybe i got my views from some other undercover FOX affiliate. ……lol………or maybe i am not that well read!
    to be honest i formed my opinion and wrote the 'muzzel' reference from conclusions i drew from whatever 'informed' sources i was reading at the time and i think it was probably quite a while back and quite a while before the financial crisis hit so i think 2006 or 2007 and the trail probably starts at Martin Wolf when he was writing stories about the risks that derivatives posed to the US real estate markets and i was trying to put it all into a context that made sense before MBS etc became part of the public lexus………
    but, if you look at it from the banks' perspective it made perfect sense to muzzle any regulator, right? kind of hard to argue that point, especially in hindsight.
    you can relax about the FOX thing when it comes to me. i don't want to get you all upset that i might be under the influence you know.
    you're obviously quite a zealot when it comes to Clinton. that is fine, but i am not one or of the Bush's either so to give it balance.
    whether it is right or wrong or somewhere in between the point is that i have formed  the impression (not formed by FOX or you either) that politics is a LOT more about self service than public service and what is important is that is my impression.
    i didn't subscribe to your site to get involved in political rancor or get daily briefings as to what FOX is pitching to the already dumbed-down, but it has happened.
    i think politics has a place in trading and from my other point of view that place is understanding how/why policy is designed and implemented and how policy impacts the price of equities or commodities or currencies because that is primarily my interest for paying to read your work.

  319. Presidents/spin
    Obama sensation! In a presidential popularity poll Obama garnered more votes that George W. Bush and Thomas Jefferson combined. I guess Reagan's popularity must stem from his courageous stand in selling arms to Iran to fund the Contras in Nicaragua, both of which had specifically been forbidden by Congress, thus striking a blow for smaller government, or at least making government look small. He has also been much lauded for the invasion of Grenada in violation of international law.

  320. HG Wells--A Short History of the World
    The book is also available as a free download in Kindle format with or without illustrations from the link below, or if you are long AMZN you may prefer to get a copy there for $10.00

    Wells certainly provides a quick and opinionated viewpoint joining up the dots and showing how the human race got from primeval swamps to the American Civil War, or more important from his point of view, World War I. One of the interesting points is that the book was very much a bestseller at the time, but it is hard to imagine a similar volume succeeding in getting a mass readership today.

  321. Phil: Devalued Dollar and stock "prices"
    Phew, skipped of few days reading here and there is sure a lot of interesting/entertaining stuff to take in from all parties.  So anyway I'm trying to understand the relationship between the value of the dollar justifying a rise in the price for US equities.  Are not a companies dollar earnings also devalued?  I can see corporate earnings from exports to non dollar denominated markets adding value, but why would a lower dollar lead to a higher stock price for a 100% domestic company?  TIA

  322. jmm1951: thanks for the heads up on the gutenberg website

  323. Phil:
    That was an amazing (best Prez.) Gallup poll. How would you answer that question?
    Love the political banter between you and ZZ. I enjoy reading both of you. You both make great points. What did you say to roro!

  324. Phil/What goes up

    I’m hearing you….this rally has no support except the full support of the world printing presses, wall streets spin artist, Fed’s monitory policy, sideline money that thinks they’re missing the boat, and extremely low volume that allows the Bots to continually push us higher.

    So what’s one to do. I for one can’t see myself buying into these artificially high prices because as you so eloquently pointed out, the drop to reality could be rapid.

    I’m sitting here mostly in cash waiting for the inevitable. It sucks watching inflation eat away the dollar, but I happen to believe that sooner or later the lipstick is coming off the pig and fear will once again be the flavor of the day. Like Buffet, I’d prefer to buy when mos are selling.

    BTW……I’ve noticed over the last week that the tourist in Hawaii couAreciboare less about American politics, the market, the war, and least of all how much anything costs. It doesn’t matter if it’s $80 eggs, $30 valet, $400 snorkeling, or $1500 helicopter tour, just swipe the card and lets get on with it. Everyone has adopted the mindless spending mentality.

    The only true value is the $400 round of golf…. Swipe

  325. Oil/Burr – It's very interesting because they pick and choose which facts to focus on to excuse prices.  First of all, they ignore WTIC as what should be a mitigating factor on US prices out of hand.   According to this logic, gasoline in Saudi Arabia should be $4 per gallon, not $1 because they should pay the prevailing Brent rate – ignoring the fact that they have a strong local supply.  2nd of all, "Global Oil Demand Growth has Rebounded" shows nothing of the sort, we "grew" after a decline and that growth has dropped to near zero anyway.



    Then they use 3 troubled countries with declining production vs what is still 3Mbd of OPEC spare capacity.  I have no idea where the OECD Inventories chart comes from, we're certainly not seeing that in the US but, again, OCED inventories are about 7Bn barrels so down 75M, even if correct, is 1%. 


    Notice that the claims "demand is booming in Asia and the Former Soviet Union" have no charts, no figures, no statistics.  Why is that?  Inventories are low?  What???  That's obviously not true in the US and here's the best supply and demand charts I can find (they don't have an OECD inventory and I can't find one either, which is strange):    

    How about the fact that our US Energy Cartel has removed as much refinery capacity voluntarily as we lost in Katrina at this point?  


  326. US deficit 'accident waiting to happen,' says IIF head

    Sharks are looking a new target? But seriously US?  I think they are biting more than what they can chew

  327. Reagan/JMM – He has better PR people than Jefferson, who was the victim of a recent smear campaign to taint him as the father of illegitimate children.  That's because you can't have people revering Jefferson, who spent his life fighting against the very Kleptocracy this nation has become.  

    Dollar/Lincoln – Yes but you have to view it in it's own little vacuum.  KO makes $100 Euros overseas and reports $134 Dollars in earnings, up from $128 last quarter (4.6%) and their PE remains the same and the stock goes up 4.6% but now you have to buy the stock with your devalued Dollars in competition with people who are buying them in Euros and see their reported (in Dollar) earnings go up, even thought the price of the stock, from their perspective (priced in Euros), remained the same. You are, in essence, at a buying disadvantage to people in other countries with your weak and unwanted Dollars to be traded for stocks which are, in effect, commodity items themselves.  

    Roro/DC – I really don't know, I read it back and can't figure out what triggered it but I've lost interest already.  ZZ also taking it way too personally and I have work to do so done with politics for now.  

    Good point Exec but I do think we have to participate a little, even if we think it's an awful idea.  Overall, I'd rather be patient.  

    Will your kid be taught that climate change is a hoax?



    One revelation from the recent Heartland Institute document leak is that the group is crafting a K-12 curriculum to teach kids that global warming is “controversial.” Heartland officials have confirmed this. So is climate change set to join evolution as the next big classroom controversy?
    Things do seem to be trending that way. Joshua Rosenau spends most of his time defending the teaching of evolution in schools for the National Center for Science Education. But a few years ago, he noticed that the teachers he was doing workshops with were far more interested in learning how to talk about global warming. “They were getting pressure from their own communities, from parents,” Rosenau says. “And they were looking for help on how to deal with this issue.”
    At the moment, it’s still unclear how frequently spats over climate change actually break out in classrooms. There are some 17,000 school districts around the country, and there’s no set curriculum for climate science. In some states, students might first encounter the topic in middle school; in others, it might show up in high-school earth science, or biology. “The main things we’re looking at right now are state standards and textbooks,” says Rosenau, whose organization is only beginning to gather data on how climate science actually gets taught. But even that’s an imperfect metric — a state-approved textbook might lay out basic climate science clearly, but there’s no guarantee teachers will use it.
    Now, let’s say a skeptic group like the Heartland Institute wants to stir up doubts about mainstream climate science in the classroom. Could they actually succeed? Heartland’s president, Joseph Bast, recently told the Wall Street Journal’s editorial board that he wants to promote a curriculum that urges teachers to question climate science. “Many kids get to watchAn Inconvenient Truth by Al Gore over and over again and they pass that off as scientific construction,” Bast lamented. (The Heartland Institute did not respond to a request for comment.)



    Town near Fukushima:  

    A fallen bicycle lies on a Futaba pavement, abandoned after meltdowns at the Fukushima nuclear plant. AP

  328. OK, let's keep comments on the new post now – I can't keep going back and forth!