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Wrong-Way Wednesday – No QE3 For You!

Yesterday, we talked about the BS that is Fox News.  

Ironically, some of the "news" outlets that generally carry my articles (who's names shall be protected because they are wimps) decided it was too controversial for their readers so we know that's not a topic we're allowed to discuss in America, for fear of being black-listed.  Today we'll see if we can make it a two-fer in the Bracket of Evil, as I have a juicy resignation letter from Greg Smith of Goldman Sachs (thanks Rev Todd), who is no small player, but the head of the firm's US Equity Derivative Business in Europe, the Middle East and Africa.  Just a couple of excerpts:

I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it. To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym. 

I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail.

So we established yesterday that you can't trust the MSM and clearly you can't trust your Investment Banker and we KNOW we can't trust the Government (I don't even need to do a post on that, do I?) yet – based on the information THEY are giving you, the stock market is back near it's all-time highs and the VIX (fear index) is back near it's 10-year lows – as if you don't have a thing to worry about – just give them your money and all will be well… 

Are you really that dumb?  Clearly they think you are.  Despite being exposed by Matt Taibbi in Rolling Stone and despite Senator Carl Levin exposing internal GS Emails in which GS division heads called Timberwolf Securities a "shitty deal" at the same time as management made pushing the Timberwolf deal to clients the firm's "top priority."  GS declined from $170 a share at the time of this investigation (April 2010) to $85 a share last Fall but now they are rocketing back over $125 as – hey, it's been almost 2 years – all is forgotten and forgiven, right?  

This isn't about Goldman Sachs per se but about the overall investing climate in which the Corporations and the media they control, along with the puppet Government they fund through their lobbyists, have devised a massive wealth extraction machine that lurches this country from crisis to crisis (real and imagined) in order to justify first excess prices for goods and services, then excess fees for banking and insurance and then, when you begin to run out of money, exorbitant prices for food and energy (which you NEED to live) until you go broke and then they turn around and demand a bail-out to relieve them of whatever jacked up assets they are stuck with when the bubble they created finally bursts.  

WE JUST SAW THIS HAPPEN PEOPLE – yet here we are, getting right back on that horse as if we are none the wiser just 3 years almost to the day after the great bottom of 2009.  Markets don't crash because they were priced correctly – markets crash because the people who are buying the assets do not correctly identify the risk factors that may affect prices down the road.  That's what the Big Business/Government/MSM triumvirate is all about these days – getting the masses to once again believe all is well so the can get you to run back into the markets – AT THE SAME PRICES YOU OVERPAID FOR LAST TIME! 

Again, I have to ask, are you really that dumb?  Just yesterday the market began to sell off after the FOMC minutes (see my comments to Members here) failed to give an indication that additional Quantitative Easing would be coming and the market began to sell off and then, by "accident" JPM (every bit as bad as GS), revealed they had passed the stress test a day ahead of schedule by announcing buybacks and dividends that couldn't occur if they hadn't.  That started the rumor mill and a buying frenzy in Financials (up 3.5% in an hour) that took the market to new closing highs and then the Government backed up Big Business and fed the Media frenzy with an early release of the stress tests.  

This would be truly amazing – if it weren't the exact same spike move up, in the exact same percentage – also making new highs, as we had on January 25th – the day of the last Fed meeting, when they also failed to come through with QE3.  I think the real difference between investors and muppets is that the muppet knows it's being manipulated…

Anyway, we shall see how this all plays out today and into option expirations on Friday.  Less than two weeks ago, we had 10 long-term bullish trade ideas – one per day to add for each day the S&P was over 1,360 – just 50 points higher than the line at 1,310 we drew in January so not too much to ask for a "bull market."  We failed on the 6th and the 7th (back to 1,340) but have been up since and our 10 bullish trades still have a couple that can be played over 1,390 and we'll just keep pushing the line higher until the market does finally break.  Our 10 trade ideas were:  

  • SKX Oct $10/14 bull call spread at $2.20, selling $12 puts for $1.55 for net .65, now .90 – up 38%
  • SU 2014 $25/37 bull call spread at $6, selling XOM 2014 $65 puts for $5 for net $1, now net .70 – up 30% – still playable
  • USO June $40/46 bull call spread at $2, selling SCO Oct $26 puts for $3 for net $1 credit, now .24 credit – up 76%. I like this one because you are long and short oil at the same time.
  • AA 2014 $10 puts sold for $2, still $2 – even – still playable
  • X Jan $25/2014 $20 buy write at $17.04/18.52, now $17.84 – up 5% – still playable
  • PEG Sept $30 buy/write at $27.07/28.53, now $27.20 – up 1% – still playable
  • HOV 2014 $2 puts sold for .90, now .85 – up 5%
  • BAC 2014 $3/7 bull call spread at $2.75, selling $10 puts for $3.30 for net .55 credit, now 0 credit – up 100%. 100% seems like a lot but it's just .20 out of $5.10 (927%) of potential gains so still very playable.
  • HCBK Jan $7 buy/write at $5.14/6.07, now $5.55 – up 8%
  • FTR 2014 $5 buy/write at $2.43/3.71, now $2.37 – down 3% – still playable.

Not too bad, right?  You didn't miss much if you held back as they are well-hedged positions where we really only care if they are "on track" or not.  This Friday will be trading day 10 and I promise to have 10 new trade ideas for the next two weeks if we're still in this technical (certainly not fundamental) rally.  Meanwhile, please be careful out there – this rally seems as fake as any I've ever seen and, while I don't mind playing along – I think it's prudent to always have one hand on the exit and to make sure we're one of the first ones out the door when this party begins to wind down.  

Be careful out there.

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  1. Go Santorum!
    25% of Mississippians believe interracial marriage should be illegal…
    Interesting when you consider that these days marriage is intrinsically a conservative option. Never mind small government and personal liberty, then.

  2. Small government / Jmm – With these guys it's small government only when it relates to money… Otherwise, the government can take control of your body or your bedroom! And they don't see a conflict there.

  3. Oil Lines (paid for by Goldman Sachs)

    R3 – 109.22
    R2 – 108.28
    R1 – 107.54
    PP – 106.60
    S1 – 105.86
    S2 – 104.92
    S3 – 104.18

    On the dollar side I have R1 at 81.01 and PP at 80.36 in play now.

  4. The AAPL portfolio is all in cash now so I can post the update now:

  5. @Felipe
    The last of the great Investigative Journalists… should get a Pulitzer for finding that letter.

  6. The volatility spreadsheet is up to date with some stocks outside the volatility bands for the week!

  7. 266567a04f84012f2fd300163e41dd5b?width=750

  8. Goldman resignation letter
    Interesting but nothing new in that. In my first job out of college circa 1972, I was employed on commission to sell life insurance policies to students. The sales pitch was that if you bought into a whole-of-life policy at a very young age, you would get a very cheap rate and that you could later convert this into a with-profits policy that could be used as security for a mortgage and enable you to buy a home and pay it off early. It only cost about a dollar a week to start. However after a month or two, I realized that this sales strategy was aimed purely at maximizing the commissions paid to the agency, because the commission paid by the insurance company over the long term was based on a multiple of the sum assured--and the younger the participant, the greater the sum assured per premium. I quit after a couple of months and spent most of the rest of my life in public service of various kinds. For a while I had a part time job as a tax preparer for H&R Block but soon discovered that their main source of profit was selling instant "tax refunds" to poor people who don't get tax refunds, but get Earned Income Credit from the government.
    That is just how business is. Either you  hold your nose and get on with it, or you find something else to do. The argument has always never been that capitalism is an honorable calling, but that it does a better job of delivering the goods to more people than does centralized planning. A moot point to be sure, but one can point to some successes for capitalism.
    Here's an example. Here in the Dominican Republic double beds tend to be rather narrow. In the US, you can buy Queen, King, or even California King size beds. Bed manufacturers can offer different size beds, and they will succeed or fail depending on whether people  want to buy them. Excellent when it comes to choosing a bed, but whether the same applies when it comes to health care or education or law enforcement is more debatable. When corporations write the laws or pay off legislators and judges to rule in their favor, then less  so.

  9. Phil- Although I spent 35 years in the brokerage business and had planned on another 10- this is exactly why I am no longer in the industry. Fortunately I was raised by a Mother who taught me right from wrong and I could not, nor did I wish to, be a part of it any longer. I was just not smart enough to resign- instead I tried to fight it- thus I was no longer needed even though I was the number one broker in my office some 25 of 35 years and had the number one office in my region after 4 1/2 years. I was very proud of the fact that during a period my firm had some 1200 plus complaints from customers- my office had zero and during my 35 years in the business- I had zero. Not really difficult if you put the client's interest first!!!!!

  10. Phil – TLT butterfly -
    I put the following on yesterday -
    All April puts 
    Bought 1x 116s for $2.78
    Sold 2x 112s for 1
    Bought 1 x 108s for .32
    Total cost $1.10 
    Never imagined TLT was going to move that much that fast – Any adjustment recommended or just be patient. Thanks
    Also sold the 1/2 April 118 calls for .82 – reducing cost basis to .69

  11. Phil – you asked me to remind you about bullish puts to offset very bearish portfolio. You said HPQ off top of your head.
    It must be a market top bc I am posting about 10x normal for this usual lurker.

  12. Phil / Iflan—-would you sell weekly apple calls at open and if so what strike—-or am I crazy

  13. Phil
    Isn’t there a 30 yr bond auction today? What are the implications with TLT continuing its downward spiral? Seems rediculous, but perhaps they had buyers secured before they sell-off occurred? I just don’t see why anyone would belly up to buy after this drop?

  14. Phil,
    Do you still think a bullish play on BAC is a good idea, or another bank perhaps (JPM, MS)?

  15. Forget May; March Is A Good Time To Sell And Go Away
    Among the biggest lies in the human language are (A)"I am from the government and I am here to help you", (B)"I will respect you in the morning" and (C) "It's different this time".

  16. Interesting article.

    Sounds a lot like where they want to take us nationally.

  17. Anyone have a pdf of the GS article. It looks like the NY Time took it down.

  18. Good morning,


    IWM      81.41,  81.61,  81.96,  82.12,  82.34,  82.68,  82.94,  83.18,  83.33  and  83.74

  19. Never mind. I can't access NY Times at all.

  20. GS rats leaving/all – Don't know if any of you premium types have posted this yet, but in case,, Greg Smith is not the only guy who's had enough:,-by-darth-vader-201203145007/

  21. PP for today:

  22. Phil – For the DIA puts we had an average cost basis of $0.90 for the previous 10 and we spend $0.41 to roll to the Mar5 128 so our cost basis is now $1.31.

  23. Phil/Resignation
    WOW !! Things never change.  In the late 70's I was hired by Shearson… as a "special consultant" to work with the brokers to capture insurance portfolios and pension assets…… I worked for them 18 months and resigned to start my own firm.  The environment was anti client and I thought my manager was a "crook"…… had a tendency to lie and make sure the "top producers" were fed all the new call in clients…. the big thing then was managed commodity funds with private Shearson managers which produced BIG GROSS….. the culture is all about GROSS, GROSS and MORE GROSS….

  24. Cost basis for TZA – $3.05 and for USO puts – $1.99 (1/2 off)

  25. FU MARKET!!!

  26. I guess they decided that AAPL was worth $600 today!

  27. Lflan – what say you?  Will AAPL get to $600 by Friday?

  28. Taleb – seems a day for shocking news. Here Taleb stumps for Ron Paul. I can't believe CNBC ran this.

  29. FU TLT!!!

  30. Pharm – great call on ECYT! not helping my heavy TLT call options today and continuing to get destroyed but the 2 call options I had on ECYT is helping soften the blow… Thx again.

  31. I thought we were trying to get bullish Pharm!

  32. Someone picked up the GS guy resignation letter and turned it into a parody:,-by-darth-vader-201203145007/

    The Empire is one of the galaxy's largest and most important oppressive regimes and it is too integral to galactic murder to continue to act this way. The firm has veered so far from the place I joined right out of Yoda College that I can no longer in good conscience point menacingly and say that I identify with what it stands for.

  33. FAS do not see the play Apr12 Bull call 94/99 have set a stop on the 94 call highly ITM !!!!

  34. And as usual, good article from Matt Taibbi on JP Morgan Chase:


    Linda subsequently found an enormous range of errors. Some judgments, she told me, were not judgments at all. In some cases, she said, Chase actually owed the customer money.

    When she brought these concerns to her superiors, what do you think their response was? They told her and others to shut up and just sell the stuff anyway. Her boss, Jason Lazinbat, allegedly told her "she had better go along with the plan to sell the misrepresented asset."

    Think of the consequences of this: because Chase was so anxious to make money off this debt sale, countless credit card borrowers would now have collection agents chasing them for money they did not owe. The debt-buyer, too, was victimized by being sold accounts it could not collect on. It is almost impossible to estimate how many man-hours of pointless court proceedings would be lost because of this decision.

  35. Joe Kernen and Cramer were defending GS like it was Mama.  Joe was making up facts and dismissing the letter saying things like: "Well he didn't seem to mind when he made his 100 million over the last 12 years"
    Steve Lesman -  Do you know he made that much?
    Joe Kernen – No (but what the hell let's say it anyway and make up a big figure)

  36. Phil / AAPL 10K trade.
    Sorry man, you know I'm a big fan and everything, but this trade is just nuts.  It's the trading analogy of stepping in front of a train, Mr Bear…  :)
    How about the AAPL March $575/565 bearput spread at $5.60, selling the $570 calls for $4.70 for net $1 to make $9? 10 of those is $9K profit if it hits and an interesting way to put your foot down on AAPL – as long as you don't mind ending up short 1,000 shares at net $566, of course!  

  37. GS resignation letter – Wow indeed! At the end of the letter, i have to wonder, does he have a terminal cancer or something? Does he already know his life is as good as over?

  38. FAS / Yodi – Yup, that 94 call is now almost a double! On the other hand, naked shorts calls seem risky now…

  39. stjeanluc
    I agree any naked short is risky but if the call is triggered buy the caller !!

  40. Hello Phil, Is it the time to finally go long TBT/ short TLT? Thanks. Also, would you recommend some shorts? Now I am shorting only DMND with April 25 P. I beleive that the restatement of their financial results will be quite dramatic. Also, their yesterday announcement confirmed various articles about deep troubles in their relationship with nut farmers that defect to their US competitors ( such as JBSS) and
    Chinese resellers that set shops in California. But what about some stocks with OK business that just went up too much too fast? IBM? PCLN? REGN? GRMN?

  41. I can't get execution on anything, even after I chased things some. This is turning into a total rout.

  42. ECYT/jro – yeah, little wins.  I am going to be in these types a lot, as my bearish bias gets me into big trouble.

    Bullish/StJ – with all the money everyone is making in the market, realestate should pick up.  I am betting on that since my 'other' strategy is not working…although the biotech plays are doing just fine….Go SGEN and PLX.

  43. Play with the abortion law, ya old Republican, and no Viagra for escorts when you visit Washington:


  44. As a follow up to that GS guy resignation letter:


    In some jurisdictions, intra-group affiliations in respect of authorised participants (APs) also can lead to conflicts of interest; especially when there is a small number of APs.

    The affiliated AP, if it has the ability to exercise power over the ETF provider through the group parent, has the ability to channel business through in-house trading desks, in order to gain an order flow benefit. Moreover, the group parent may also have the ability to instruct the ETF provider to authorize and de-authorize competitor APs.

    This conflict may have consequences for the fair pricing of the ETF shares on the secondary market and the ability for investors to redeem ETF shares. This conflict may grow stronger in the scenario outlined by the FSB 37 where the group parent gains a funding and liquidity benefit from ETFs.

    Synthetic ETFs also may raise potential conflicts of interests where affiliates are involved, for example as the swap counterparty. 38 The conflict of interest risks would be further enhanced by the suspected incentives for banks and financial intermediaries to use ETF assets as a source of funding and/or to reduce their cost of capital under the new Basel III rules 39 . However, these incentives have yet to be confirmed and further work would be required (see Chapter 5).

    All crooks…

  45. SGEN just jumped from 18.78 to 19 like that…..hummm…..

  46. GS resignation letter.
    I understand very well what he is saying, but of course, manly fellow that he is,  he has stuck it out long enough to make enough money that he surely never needs to work again. Everyone who works for a large organization gets fed up with the BS eventually, but not everyone has the opportunity to say "take this job and shove it" like this guy, because they have financial dependents who rely on them to support a life style or some kind of ambition, like a college degree. Look behind the story here, and you probably most likely find this guy's kids are out of college, he has split with his old wife too, and is engaged in a voyage of self discovery to "find out who he really is", which probably involves attractive young women (or boys) as his travel companions on said voyage of discovery.
    See my remarks from yesterday, or before, about Alex Trebek.

  47.  PHIL/ BUYBUY the easy money/debt gouging model our smart ivy league leaders have followed over the last 15 years has worked so well though…why shouldn't they?


    Good morning!  

    I'm just waiting for the Euro to collapse now.  It's back at $1.306 and I'll take $5Tn worth of Forex trading over $150Bn worth of market trading any day!  Something is very rotten in the state of Denmark – as well as Spain, Italy, Ireland, Portugal, Greece and probably France as well…

    Still, look at that Big Chart!  It's majestic.  It's like a rocket to the moon – we don't bet against rockets once they launch.  It's a very long way down and it will be very clear when they run out of gas (or explode) and then we have plenty of time to bet on the Universal Truth of gravity.  But, for now, we're flying on easy money and apparently no one realizes Bernanke is shooting blanks now.  

    I have heard nothing on Bernanke's comments today but I've seen several sources that expected a speech so that's interesting.  Let's keep in mind we had a big, 3% move up after the Fed's last minutes and then gave it all back an 2% move the next week and – if that happens and we hold it (1,330 on S&P as we touch 1,400 here) – THEN I will feel much more bullish.  It's this up and up and up on no volume that's driving me crazy.  

    Nonetheless – 10 great bullish plays for the long-term bull in the post above and now, thanks to the low VIX you can play S&P not to hold 1,400 by taking the Sept $144/134 bear put spread for $4 – that pays 250% back if the S&P simply fails to be above 1,400 so let's say you put $100,000 into the 10 trade ideas above and you want to protect 1/2 of a potential 20% drop ($20,000) so you need $10,000 of upside.  That means you just need to drop $6,000 into the bear put spread and UNLESS the S&P at least goes up to 1,400 and holds it through Sept expiration – you MAKE $9,000.  That's a very simple hedge.  

    You can combine that with the short sale of the Jan $150 calls for $3.90 and now you don't lose any money at all (well $100) until the S&P is over 1,500 into Jan expirations and, by then, $100K invested in those 10 trades should be well over 20% returns ($20,000) so you are good to S&P 1,700 even without rolling or stopping out.  

    So we don't have to overthink things.  At the moment, it's actually so cheap to buy puts that I'm thinking of going back to some Long Put Hedges, like we did in October.  Some of them worked great and some not – here is the list updated today of stocks I felt would give good returns if the market blew up.  The first price is the 2008-2009 low and the now price is, of course, now.  Please note that almost all of these puts (mostly jans at the time) went up 20% or more at some point but then, obviously, most of them went horribly wrong for people who were too greedy.  


    Long Put List:


    • AXP (was $12, now $56) July $49 puts are $1
    • BIDU (was $11, now $139) June $100 puts are $1.05
    • CAT (was $24, now $113) May $95 puts are .95
    • CMG (was $40, now $401) June $300 puts are $2
    • FAS (was $8, now $103) July $60 puts are $2
    • GE (was $6, now $20) Sept $19 puts are $1
    • GOOG (was $250, now $620) Jun $500 puts are $2.80
    • HD (was $18, now $50) Aug $43 puts are $1
    • IBM (was $70, now $205) Jul $155 puts are $1.05
    • ISRG (was $80, now $531) July $375 puts are $3
    • IWM (was $35, now $70) Aug $65 puts are $1.25
    • KO (was $40, now $70) Aug $65 puts are $1
    • LVS (was $2, now $55) June $50 puts are $1.85 
    • MA (was $120, now $425) July $320 puts are $3
    • MMM (was $42, now $89) July $77.50 puts are $1.10
    • PCLN (was $150, then $30, now $650) July $450 puts are $5
    • QQQ (was $26, now $66) July $61 puts are $1
    • V (was $42, now $117) Sept $95 puts are $2
    • XRT (was $15, now $61) June $59 puts are $1.90. 


    The idea is to always look for fresh horses.  Take the winning profits off the table (scale out) and look for ones that are cheaper than when we picket them so this is mainly a watch list but pick a few favorites as "just in case" bets and then we can see what happens.  We have a big and diverse list to pick from – keep in mind these are DISASTER INSURANCE for a break below the 10% line – these are not inherently weak companies – we picked them because they are generally SLOW to drop so, WHEN the market stops dropping, we always have time to go to this list and grab a couple of cheap ones before they build up downside steam.  

    By the way, NFLX is off the list. NFLX was $211 when I picked it to short on that list, now $104.  All it takes is one big one!  

    On the whole, I'm for being in CASH and I like these speculative downside bets better than the 10 upside bets but we should never be more than 70/30 one way or the other so there is room for both.  

    I don't believe in this rally and I probably won't until oil prices calm down and homes begin selling and people go back to work and wages begin to rise.  Has ANY of that happened yet?  

  49. FAS 94 triggered and I closed the 99 as well 50% in a few days

  50. Hi Phil — I got assign  6 XRT march 53 short call yesterday eod, what should I do buy more call to cover at this point…. what strike and month do you recommend. thx

  51. FAS 88 P as well closed for 55% in 2 days

  52. 80.93 on the Dollar before being rejected!  Yen at 83.67 and they are going for 85 to be sure.  Euro $1.3047 and of course $1.30 will be a tough nut to crack but they said that about $1.31 last week, didn't they.  Keep losing that battle every week and by May we're at $1.20!  Pound can't hold $1.57, now $1.5688 and Euro is so weak that EUR/CHF went to $1.21 so we expect some Swintervention to boost the Euro around here and that might knock down the Dollar and goose the markets  but, then again – it may not and if the Euro does fail to hold $1.30, they are really in trouble.  

    Oil inventories up 1.8Mb but gasoline down 1.4Mb and distillates down 4.7Mb and we won't know what that story is until 1pm but that should push oil over $107 and to a nice high we can short off at some point.  

  53. call option volume was huge in jpm BEFORE the announcement….i think it was leaked…and they announced early because too many people knew and were trading on it.

  54. Phil--in your spy example--don't you need the SPY to drop to 134 to make the $$$???

  55. TrimTabs Phil echoed that last comment on housing and jobs.  P/E should be 10-12 based upon the earnings growth of the US worker, as right now earnings growth is 0.1% from last time I checked.    It is not sustainable.  Housing may have found some bottom, as here in So. Cal., Asians are buying realestate in Orange Co. and other coastal areas (hey, didn't someone else do that in the 80's).  My Bet is realestate, and I have some good farmland in KS to sell all for growing food!

  56. Buying long puts

    They are certainly very cheap and as well as using them for disaster hedges, you can ride the volatility train on down days. Last week I was able to pick up a nice parcel of  ANR $10 2013 puts for 85 cents, and sell them a few days later for a dollar five.

  57. Dear Phil,
    I am learning not to panic when a short call I wrote goes in the money against me.  I am short Goldman Sachs Apr 2012 $125 calls.  Would you roll the call higher in strike and further out in time now, or wait?  What are the parameters for deciding?
    Thank you! 

  58. Phil/Rocket

    Is very simple……turn off brain….play this in background….hit the BUY BUY BUY key on keyboard.

  59. Jmm/Jthoma:  "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."  Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations: B.I, Ch.10, Of Wages and Profit in the Different Employments of Labour and Stock in paragraph I.10.82)

  60. Pharm:  How about foreign buying?  Is there enough of it to sustain or move U.S. real estate?  I have anecdotal evidence that there's quite a bit.

  61. $25K portfolio looks like mine!

  62. Taleb was bashing RP only a few years ago.

  63. zero – Asian yes.  Canadians, maybe – they have been buying AZ, NV and So, Cal.  EU, no.  I think if the EU goes hard, there could be more RE in Florida up for sale.  I don't think they buy in CA b'c of the distance.

  64. GLL – turned my April BCS into a butterfly yesterday.. Just rolled for credit the rest of the longs over to convert to a credit spread. I believe gold will be higher than $1650 again between now and April close.

  65. Phil yesterday you suggested setting stops on Bull calls Here one example ABX bought 2/15/12 Bull call Jan13 43/52.5  for 8.45/3.92  today showing a loss 5.02/1.77  sell the call and leave the caller naked. Might get a lot of Gold dust in your eyes. Even sold Jan 13 43p for 3.90 now up on me 4.82 but not to worry about that one. Your thoughts thks

  66. Huge move in the 10 yr notes….0.11 basis.  That is big.  Someone is getting their arses handed to them…..

  67. Put List/ Phil – Thanks for this.  I am already uber bear (and suffering) but I cant resist a put on CMG!  MoMo stocks will die die die .. eventually.
    I would also like to ask you to have a look at Amazon.  It was this article that Iflan and me read the other day that paints a bleak picture for AMZN.  Whats your POV? Cheers.

  68. Congrats to Santorum (and consolations to women) by the way!  

    Very amazingly nice Lflan – congrats!  

    Pulitzer/Flips – It was the NYTimes, the guy who should get a prize is Greg Smith, for having the balls to say something.  

    LOL StJ!  

    True JMM but the real flaw in Capitalism is that companies like HRB will lobby to reduce the size of the IRS so that they are not able to rapidly process refunds (or EICs) and that creates a "need" for their usurious "rapid refund" system.  It's not efficient at all, HRB collects $4Bn in revenues, enough money to add 80,000 IRS agents (one for every 1,500 taxpayers) and then refunds (and audits!) would fly out the door in very short order.  The problem with Capitalism, that was not really foreseen by Marx, is the rise of the middle-man, who should be squeezed out by more efficient systems but they bribe and lobby and regulate themselves into positions to the point where there are more middlemen in this country than actual providers of goods and services and that sucks the life out of Capitalism.  Unfortunately, most of the top 1% are middle-men, so it's not likely to improve.  

    Clients first/Jthom – Yes but the fact that you were forced out (and the resignation above) shows just how horribly broken the system really is.  

    QQQ hitting 66.6 – Congrats to Lloyd and Co for making their mark!  

    TLT/Samz – TLT is at $112, not $108, you are worrying over premium that will expire.  I'd take the money and run on the $116 puts ($5) as that's $1 more than your max pay-off on the spread and that leaves you with $4.50 (2 x $2.40) of short putters and your pretty pointless .90 $108 put, which I'd also pull and spend $2.10 on the June $112/107 bear put spread and that gives you another $5 of downside protection with $3.80 in your pocket against the two short putters so then you are good to $109.50 before this really begins to hurt you so we can look at another adjustment if TLT fails $110.  

    Offsetting bullish puts/Samz – The low VIX is a problem but:

    • HPQ Jan $23 puts can be sold for $2.40 for net $20.60 on the entry.  
    • WFR is at $3.87 and you can sell 2014 $3 puts for .70 to knock the net entry down to $2.30.  
    • MCD just pulled back a bit and you can sell 2014 $75 puts for $4.40.  
    • WMT 2014 $55 puts can be sold for $4.60.  
    • X Jan $22.50 puts can be sold for $2.60.  
    • CHK 2014 $20 puts can be sold for $3.10

    30-year/DC – Yes at 1pm.  TLT at $112 is really strange, makes for a bad auction that could freak out the markets but just $13Bn so maybe it's in the bag already.   

    BAC/Ging – Sure, I like them to $12 long-term.  Not pleased with paying $8.70 but you can sell the Jan $7.50s for 79 and buy the Jan $7.50 /10 bull call spread for $1.23 for net .44 on the $2.50 spread and worst case is you own them for net $7.94.

  69. Nuts that AAPL 580 calls were 32 cents yesterday morning.
    Already at 15M shares (versus 14M average) so heavy volume today

  70. GS already gave back all of yesterday's afternoon gains… I wonder why   ;-)

  71. any oil plays today?
    Seems to keep the rally in the index going… maybe they let oil drop?  It'll make uncle Ben look like a genius.

  72. Oil never made it over $107 – not at all good for oil bulls as that was a huge draw in distillates.  

    Watch that RUT, testing 820 again.  

    Cali/Exec – An amazing thing that we are ignoring.  

    Goldman article/Jrod – Nope, still there.  Maybe you need to subscribe (and please do, it's one of the last real newspapers left in this country!).  

    LOL Snow – that was quick!  

    Shearson/Acobra – Yeah, they were terrible before terrible was the norm!  That's Capitalism at work though.  

    By the way, this was great – if you want to know why Santorum won the South:  

  73. Clients/Jthom – I understand you quite a bit acutally.  As someone in the industry, I have seen first hand what some of these(if not most) are all about.  The clients never come first for the companies although there are brokers/advisors/reps that do put their clients first. 

  74. IRA Portfolio update,  

    ACI has fallen from $13.69 down to $11.58 and out short APR 14 CALL are now $0.10.  After premium selling our cost basis is down to $12.80.  What I hope is that we get down to $11.20 where we will double down on our shares which put us in at net $12.00 and then we will sell the $12.00 calls.  Until then we just wait.

  75. Phil—i think you need the SPY to drop for your ex below;
    you can play S&P not to hold 1,400 by taking the Sept $144/134 bear put spread for $4 – that pays 250% back if the S&P simply fails to be above 1,400

  76. Good Morning!    And AAPL up another 14 bucks already.  Well, I'm not buying it.   Literally.  I'm not buying it.  Not yet.  Too far, too fast.  I want some retracement here and I refuse to buy until I get it!   I'm even considering selling a few calls, but no trade made yet.  

  77. What's up with this?
    US$ – Market correlation is no more?

  78. $106 already!  Will we bounce?  Dollar 80.94.  Gold $1,644 – I wonder if this will slow down or increase the volume of hate mail I've been getting for daring to say I thought gold was overpriced at $1,750?  

    Talib/Scott – Not a bright guy if he doesn't "grasp" that Ron Paul is totally out of it.  

    TrimTab/Pharm – That's not very encouraging.  

    Also good, StJ:


    CNBC about to initiate character assassination protocols on Greg Smith (Goldman guy) – this should be fun!  

  79. I know we're all bullish now…
    but if this is no longer an inflation play, why exactly is the market going to keep surging higher?
    Just want to be certain I understand.  If Ben doesn't launch QE at 1380, why would he at 1450?
    And I WANT to be bullish.  I really do.  I'm so jealous of bulls!!! 

  80. these usually go nowhere, but CMG 380's at 0.15, or 0.10 if you can get it, might catch a 20 dollar pullback on them…

  81. Phil
    What are your current thoughts on TLT?

  82. Cali – I know a a few people that have considered moving next door to Nevada(myself included) and if they do manage to raise the State tax to 12%+, I am sure the problem will only get worse.  As my office in near downtown LA, I see protests near the LAUSD HQ offices on a weekly basis as the LAUSD is cutting adult ed and early childhood ed soon.  What struck me as odd was when I was recently in a very affluent part of LA and couldn't help but notice quite a few "For Sale" signs in front of homes.  I think I saw more driving down one of those roads than I have in the poorer parts of LA.  I have been told lately by realtors I know that a lot of Asians are buying homes in LA and quite a few are cash buyers.  There are also people i know that "flip" homes they buy at foreclosures.  What is interesting is that the epople that they are flipping these homes to are lower income people that are getting govt back Fannie and Freddie loans.  Some interesting things going on in CA…

  83. Making $ today on AMZN shorts.

  84. most of you are probably too young to have been trading futures in the 80's ..the dream trade was long stocks and the dollar at 100 with bonds also over things have changed i think ben is trying to squeeze things back into that positively correlated niche

  85. Phil—wasn't the Bernanke supposed to speak this morning?

  86. INFI….well, they filled that gap

  87. ROFL


    It always warms the heart to see a failed executive give something back.

    Not to shareholders, obviously. Shareholders are bitter types who won’t invite you to champagne receptions in White Cube. Better, instead, to aim your largesse at people largely unaffected by your failure.


    To that end:

    John Pluthero, Chairman of Cable & Wireless Worldwide and Philanthropist/Co Founder of not-for-profit organisation Abstract Critical, is funding a major new national art prize for abstract art.

    Our own effort below, titled A Demerger, Three Profit Warnings and 70 Per Cent Value Destruction, will not feature.

    C&W Worldwide is also a not-for-profit organisation.


  88. lnk – that is a correct assumption on CA realestate.  I would like to break from this democracy, as we send more money back east than most all other states….why not keep it in house?

    Looks like they are slamming the ex-exec already.  They even have a comment form for this article. 

  90. Yes- when I first entered the business I thought what an honorable business- a client can call and buy a million dollars of stock and as long as I thought he would pay for it- I bought it and he had 7 days to bring the money. I thought the last vestige of trust and honesty in the world. My how things change- and not for the better- I watched my industry become a joke chasing the all mighty dollar at ALL cost- nothing matter except revenue through the door at the expense of the public. VERY SAD but a commentary and reflection of what our society has become. I realized I had lived to long.

  91. AAPL at $2000 in 2016 – no problem!

    Android tablets predicted to overtake iPad by 2015

    The 2016 numbers would mean that they predict Apple to sell 100 millions iPads in 2016. At $500 a pop, that would mean $50 billions in revenue just for the tablets and somewhere around $20 billions in profits! And iPad is only about 25% of Apple's revenues. That would mean doubling revenues between now and then! 

  92. Apparently a low VIX should not be worrisome:


    The S&P 500 VIX Volatility index traded below 15 yesterday for the first time since early 2011.  A number of financial players have commented that a drop below 15 for the VIX is a warning sign for the market.  A look at the historical trading patterns of the VIX and the S&P 500, however, show that this is simply not the case.

    Below is a chart of the S&P 500 since 1990.  The green shading represents any time that the VIX was below 15.  As shown, the VIX was basically below 15 from mid-1992 through early 1996 as well as mid-2004 through early 2007.  During these time periods, the S&P 500 experienced huge gains. 

    A VIX at 15 really isn't that low based on historical standards either.  Since 1990, the median daily close of the VIX has been 19, and during the two periods mentioned above, the median was 13. 

    Maybe this time it will be different!

  93. Who's drowning TLT in the tub today?  Has there been another catalyst for today?

  94. Here come the AAPL $1 Trillion articles again. Maybe time to pick up a put or 2 (with tight stops though, this thing is a freight train)

  95. Tiabbi/StJ – Now that guy deserves a Pulitzer!  

    AAPL/Burr – Well I did not think you'd do that one.  Right now, I would go for a short and SPY below $140 is a good play as you have an easy stop line and a good chance to do well, perhaps risk losing 2K on 100 SPY March $140/139 bear put spreads at .50 ($5,000) with a stop at $3,000 and maybe you make $5K if all goes well?  Obviously a gamble but what do you expect with a get rich quick request.  The other one I like would be a FAS $103/101 bear put spread at $1.10, selling JPM April $44 calls for $1.05 for net .05 on the spread that's 100% in the money with XLF at $15.30 so a pin to $15 and you have a very nice 1,900% gain on whatever you are willing to end up short JPM at net $44.05 (now $43.27 after a big pop yesterday so I figure the news is in).  

    Life/Scott – Sometimes a clean conscience is a new life to people.  He'll have a hard time getting another job with a firm but he should be able to set up a fund of his own or maybe he's got $10M and, being European, thinks that's enough already and it's time to enjoy life again.   

    TBT/Alik – It's been such a widow-maker I don't even trade it anymore (but now back to $20.50 as was our premise all along).  Shorting TLT has been much more profitable but I'm not too keen on shorting here as last time we shorted was $125.  I think this may be a blow-off bottom on TLT – not the best time to get sucked into "momentum".  I don't agree with the DMND short – I think all that is baked in at this point but we'll see.  As to up too fast – that's my put list above.  

    XRT/Gucci – So down $8.16 less what you sold them for.  I'd just roll the loss out to whatever appropriate April short call fits and wait again.  The guy who assigned you had bad timing as he essentially went long at yesterday's high but I think XRT breaks sooner rather than later so I'm for just going month to month.  

    Kool-Aid/ZZ – One can only wish people will begin to wake up.

    FAS/Yodi – Very nice.  

    SPY/Jabob – Damn, that was stupid.  What I meant is it doesn't lose if the S&P is below 1,400 and it makes up to 150% if the S&P falls 5% to $134.  

    GS/Ron – They are only at $125 so your "losses" are just paper.  I know they were worse before but still paper.  As a rule of thumb, when the price of the short call or put is about 2/3 to 3/4 intrinsic (in the money), that's usually the time you want to execute a roll to something with more premium.  

  96. Here are Barchart support levels for TLT:

  97. FU TLT!!!
    I guess the auctions were meaningless this time??

  98. stjeanluc /5KP – How many DIA puts?
    I'm confused.  
    Yesterday morning at 9:58 Phil wrote:
    "…for this morning – we are assuming it's a head-fake up and, of course, we follow through with our DD on the DIA $129 puts (.35) into the morning excitement from yesterday."

    I was unclear on whether this DD was ever actually done.

    Later, at 11:32 Phil wrote:
    "$5KP – We're going to spend .40 to roll the 20 DIA March $129 puts to the 20 of the 3/31 $128 puts (.65).  That makes our basis on 20 at $1.03 if my math is right and, of course, 1/2 out at $1.03 is our goal."

    This morning, you show the 5KP holding 10 DIA 3/31 $128 puts (not 20, as Phil had mentioned).  
    Also, Phil gives a different cost basis? 
    I am in a slightly different deal…just curious…thanks. 

  99. 5KP / Laddoo – I might be confused as well… Let me go back and check!

  100. the ease with which the largest company in the world tacks on 2-3% is a thing to behold…trades like 600 imminent

  101. Sold AAPL Mar 595c for 2.72 Covered by lower Jan 13 c !!!!

  102. Portfolios / Laddoo – OK, I checked and you are right… I missed the DD at 9:58. I'll adjust the positions now.

  103. 10 & 30 yrs continue to be routed.  30 yr future below the 200d MA.  10 yr on it.  Lord help this market if the bond guys start to really take it on the chin.  The increase in rates will NOT help small businesses or housing…at all.

  104. ABX/Yodi – The Jan $43s are still $4.75, which is about your net so the tick, if you intend to stay in long-term, is to take the opportunity to improve your position, like adding $4 and rolling to the 2014 $40s ($8.55), so you add $3 in strike and a year in time for $4 but now you go from all premium to about 60% premium with slower theta decay.  Eventually, the $52.50 caller will expire and you will be able to sell something like 2014 $55s (now $3) or $50s (now $4.50) and then you are in a better spread for about the same money – not a bad way to retreat when a position goes against you…  

    AMZN/Dpast – Kindle fire sells well, they are the best at cloud computing, a retail juggernaut in a rapidly-growing on-line space and they are now offering warehouse and distribution outsourcing to other companies, which is perfect for a recovering economy where new businesses will once again begin to spring up.  That's why they're not on my short list.  

    Oil/Peedle – Just the usual shorting the (/CL) crosses under the .50 lines with tight stops.  They have one week to dump 129Mb so about 25Mbd to be rolled is tricky but not undoable.  However, they are going to be over 600Mb in the front 3 months and that often gets them into trouble BUT – we have the start of Summer driving season as the end of May and Iraq is off the front burner but not settled so hope may spring into the Spring on the NYMEX.  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Apr'12 106.69 107.02 105.65 106.15 12:07
    Mar 14


    -0.56 138318 106.71 122913 Call Put
    May'12 107.24 107.55 106.17 106.69 12:07
    Mar 14


    -0.55 52555 107.24 257742 Call Put
    Jun'12 107.81 108.04 106.72 107.26 12:07
    Mar 14


    -0.52 37756 107.78 158887 Call Put
    Jul'12 108.23 108.50 107.28 107.70 12:07
    Mar 14


    -0.56 18234 108.26 94808 Call Put


    Dec'14 98.49 99.33 98.40 98.80 12:09
    Mar 14


    -0.19 1996 98.99 54183 Call Put


    Dec'15 95.94 95.94 95.68 95.68 12:01
    Mar 14


    -0.05 858 95.73 28715 Call Put

    Dollar/Yshen – Yep, biggest breakdown we've had in a very long time.  

    Why/Peedle – I'm still thinking it's just a game of running the markets up in the morning, then selling to retailers all day long until the retailers are full and ready to be fleeced again with a drop that "no one saw coming."  

    CMB/BDC – Certainly a fun play to take a stab at.  

    TLT/DC – Seems like the Banksters dumped Treasuries as soon as they got their stress test results. We'll have to see how the 30-year auction goes today but, as I say over and over again – I would not give the US government my money to hold for 10 years at 2%, or 3% or 4% – that's just nuts.  

    LA/Ink – Yep, a ticking time bomb over there.  

    Bernanke/Jabob - Ben Bernanke tells a group of community bankers the Fed will try and pick up the heavy lifting on figuring whether rules inspired by Dodd-Frank apply to them. "We hope it will help banks avoid allocating precious resources to poring over supervisory guidance that does not apply to them." - Not much to it.  

    GS Guy/DMor – Sure, they are circling the wagons big time.  If you ever wondered whether CNBC was in the pocket of GS or not, this is clearly your answer.  

    VIX/StJ – Yes but look how much better we did in periods when the VIX was above it!  That is a pretty silly tail wagging the dog sort of logic on that one.  

    AAPL/BDC – Up 2.5% on the day – that is just stunning.  $13.5Bn in market cap added but, at least this time, they traded $11.6Bn worth of the stock so there's some semblance of reality.  MS did an upgrade to $720 and said $960 was possible so not surprising they are pinning the needle on a 2.5% move.  

    Yay, I'm caught up!  

  105. Portfolios – The goal for 1/2 out on the DIA puts is indeed at $1.03 as stated by Phil. My mistake as I missed the DD at 9:58!

  106. AAPL/Phil
    Morning.  Another student caught in a AAPL Bear Trap.  Have read your direction to Hoss & Maya.  Think I'm getting it.  But, still want to ask.  I'm stuck in this:
    +10 Jan 13 300 Call (paid ~$100 when aapl ~$400)
    -10 Apr 485 Calls  (have been rolling up and out as fast as possible, but the aapl train got away from me)
    Can add more capital if I can use it to re-start writing weekly/monthly calls for income.  I do believe in a pull back, thus staying somewhat high delta on the short is my continued risk, but still a big time bull long term.  Thanks.

  107. Phil / help rolling hedges – I am long April 13 calls on DXD.  down about 50%.  roll to July for 0.55?   I am long SQQQ april 13/17 bull call spread.  down about 50%.   roll to…?  Thx. 

  108. Good morning VIX!

  109. VIX / Phil – I don't know – between '03 and '07, the VIX stayed below 20 most of the time (even going below 10 at some points) and the market ramped up dramatically. Almost an image of what is happening now. Of course, we know how that ended but it took 3 years to demolish the sand castles!

    We might be bound to repeat the same mistakes as it happens so often in history.

  110. This looks promising and it's in our backyard (actually almost in mine):

    NREL has demonstrated that a typical silicon solar cell treated with its black silicon process has a solar conversion efficiency of almost 17 percent, compared to the 11 to 15 percent commonly seen in standard polysilicon solar panels.

  111. Is it time to not be greedy and try to dump the GLL MAR 17 puts for a dime in the 25KP?

  112. So, what's going on?  

    Oil is bouncing off $106 to $106.50 and the Dollar is, of course, rejected at 81 for it's first attempt (now 80.97).  The Euro bottomed out at $1.301 and is now $1.3026 and the EUR/CHF hit 1.2145 so they must be PISSED!  Japan is loving it, with 83.75 Yen to the Dollar.  Silver down to $32.20, copper $3.84, nat gas $2.28, gasoline $3.36 and gold $1,646. 

    Indexes kind of flat and that's extra-terrible for the Nas with AAPL up 2.5%.

    WFR up another 2% today, that's nice.  HOV over $3 for a minute but back to $2.87.  

    FAS Money ($102.15) – With XLF at $15.40, good to remember the actual value of the 10 long spreads is $5K, not $3,160 so another $1,840 if we hold up here puts the $866 paper loss on the short calls into perspective.  Good time to sell 2 March $102 calls for $2.10 and, if XLF keeps going higher, then we'll sell puts in April to cover the loss (if any) on these but how can we resist collecting $360 in premium with 2 days left?  

    IWM Money ($61.63 TNA) – Close enough.  

    $5KP – TLT killing us but I don't want to roll it, we'll just find something else to trade if they end up dead.   $112 calls are still .75 so someone thinks they can bounce back.  

    $25KP – Did we really drop $10K in one day?  That's crazy!  

    • GLL not worth the risk so let's buy back the $17 puts for .10
    • XRT is a tragedy but let's wait to roll.
    • SCO I believe in 
    • FAS OUCH!  Just going to have to roll the short $88 calls along ($14.60) to 10 short April $100 calls at $7.80 and buy 10 Oct $105/115 bull call spreads at $4, selling 5 July $72 puts at $4 so we net $2 on the spread and have $8 of upside protection to the short puts.  
    • TZA Not far enough out of the money to be worth spending more on yet and we're bearish enough.  
    • SQQQ – case in point.  
    • USO – Fine. 
    • FAS only showing $3 of $5 and the correct play is to cash the April $94s for $11.20 and let's do that and make it 20 (total) of the Oct $105/115 bull call spreads and 10 short July $72 puts so we have all our coverage on both our short FAS calls in the same place.  
    • TLT – WTF?  This is why the correct move yesterday was the April roll.  The $5KP got wiped out but we only got 1/2 wiped out here – big improvement!  Now the Apr $112s are back to $1.99 so a quick DD would have been a quick winner.  Too late now and we'll just see what happens but THAT is why you always want to roll out before your premium gets put to the wall, no matter how confident you are/were.  
    • DIA – I think we have more.  
    • VXX ($21.68)  - The South shall rise again!  Nothing to do here but wait for silliness to end.  

    You know, for a down $10,000 day, I'm pretty happy with the positions.  This would be a great time to enter them from scratch, I would think!  

  113. Pharm – do you like selling ECYT here or do you think it has a lot further to run? Im probably just going to follow Phil's rule about selling half but was curious just how bullish you were on them now that they are up huge today? Also, didnt get in AVEO, has anything changed your opinion of them since you wrote about them in Jan?

  114. Oil inventories are at historical levels…

    And we use less of it… Hard to justify oil prices at this level – except maybe for political reasons.

  115. this is a bloomberg headline… when you read the story, it's just quotes from people interpreting the FOMC statement.  Garbage.

    Bernanke Keeps Easing Option While Signaling Economy Improving

    By Caroline Salas Gage and Steve Matthews - Mar 14, 2012 12:00 AM ET

  116. but OIL is bouncy around 1…what up?  reload short?

  117. TLT—WTF????

  118. FAS Money – Selling 2 FAS Mar 102 calls (now 2.65)

  119. StJ: I find your Portfolio spreadsheets very useful. Allows me to find the trades that I missed the previous day and enter before too late.
    It would be super helpful if you could put the Income Portfolio as well on a spread sheet. We don't make moves on it often, but what that means is that when a move is made in the middle of the day, I miss it, until I see Phil talking about it in his monthly report. It will also be very useful if you can add the link to these spreadsheets in the Portfolio Tab/Wiki.

  120. jro – ECYT – sell 1/2.  AVEO – I am still in a small position on them.  I am playing VRTX and SGEN like a fiddle.  PLX spread is also still good if you want.  CRIS selling the April $5 Ps for an entry is also good.

  121. Phil,
    Initial entry into ABX Jan2014 $35Put for 3.9/4.05. Your recommendation always appreciated

  122. AAPL going for 600 today…

  123. AAPL - hmmm, should I buy some here and spoil the party, or let you guys keep minting cash?  Decisions, decisions…

  124. Phil/TZA,
    How does the TZA April 17/21 BCS for 1.23 look? It is 1.06 in the money to start with. Please comment and suggest other good spreads.

  125. 12:40 PM European shares hold onto some of their gains after gapping higher on the open thanks to yesterday's late-afternoon charge in the States. Stoxx 50 +0.7%, Germany +1.3%, France+0.4%, Italy +0.4%, Spain +0.2%, U.K. -0.2%. Euro -0.5% at $1.3020.

    1:00 PM On the hour: Dow +0.16%. 10-yr -0.83%. Euro -0.36% vs. dollar. Crude flat at $106.7. Gold -2.66% to $1649.15.

    The Treasury sells $13B in 30-year bonds (.pdf), priced to yield 3.383%. Bid-to-cover ratio of 2.69, vs. a recent 2.60; indirect bidders take 29.0%, vs. a recent 31.9%. Direct bidders take 14.7%, vs. a recent 7.2%.  - Not a terrible auction but TLT getting murdered (again)

    Roger Lowenstein pens an epic love letter to Ben Bernanke in The Atlantic. "The left hates him. The right hates him even more. But Ben Bernanke saved the economy – and has navigated masterfully through the most trying of times." Whatever one's opinion of the man thankfully not yet being called "The Maestro," stuff like this tends to come a lot closer to market tops than bottoms.

    Swiss parliament rejects calls for stricter oversight of the SNB following massive currency market interventions and the recent scandal that caused the departure of its President. The franc dives as this seemingly gives a green light for the bank to continue its policy of weakening the currency. FXF -0.7%. – Oh, I had that backwards, I forget they WANT EUR/CHF to be higher – it's just usually they fail to get there.  So $1.2117 is good from Swiss perspective (this is why I don't trade currencies, I get the pairs backwards sometimes)

    Remarks from China Premier Wen take a weight off the country's banks, as he promises Beijing will step in should local governments struggle with debt repayment. Wen also says asset sales – roads, railways, ports – are an option to help pay down debt. (also)

    Capital One (COF +3.8%) says delinquencies and charge-offs at its U.S. credit-card business fell in February. The company saw 30-day delinquencies decline to 3.62% last month from 3.78% in January, while charge-offs decreased to 3.84% in February from 4.08% a month earlier. Separately, Capital One passed the Fed's stress tests and did not ask for a dividend increase or share buyback.

    On the other hand:  It's a tough row to hoe when your target demographic finds it hard to land jobs and is saddled with student loan debt, warns researcher WSL Strategic Retail. While Gap (GPS -0.7%) is the poster child for gearing corporate strategy around hip young adults – Urban Outfitters (URBN), Aeropostale (ARO), and other names in the sector are also afflicted with same consumer malaise. The problem in a nutshell: Almost 25% of 18- to 34-year olds don't make enough money to cover basic expenses.

    Citigroup's (C -3.2%stress test failure may not be such a big fail as headlines suggest, some analysts say. DealBreaker's Matt Levine says it isn’t a failure of Citi’s current balance sheet, it’s a failure of the capital plans submitted to the Fed. Nomura notes Citi’s minimum stressed T1C ratio was a healthy 5.9% before proposed capital actions, vs. 5.7% for BAC and 6.3% for JPM.

    Nomura defends Citigroup (C -3.3%) in the wake of itsstress test failure. The firm thinks the results only serve to push back Citi's capital returns "until later this year or next," and notes a planned $2B stock buyback would have only boosted this year's EPS by $0.04. It still likes Citi on account of its low valuation, international position, margin stability, and limited mortgage-related risk. (JPMorgan downgrade)

    A big day yesterday for bank stocks isn't the end, says Dick Bove, calling for another 25% gain in the sector before year's end. The test "forced people to start looking at (positive) fundamentals and recognize that this industry for the last year has been doing extraordinarily well."

    Petrobas (PBR) expects further losses from gasoline this year as a domestic refining shortfall means the country has to import fuel at the world price and sell it at the lower, government-mandated local price. Of particular interest, the company says the growth in Brazilian fuel consumption now outpaces economic growth. Lower-than-market prices tends to cause these things. 

    Now that ex-Goldman exec Greg Smith has had his Jerry Maguire moment, the real question is will his letter to the masses have any effect on Goldman Sachs' (GS -3.1%) business? Part of the problem for Goldman is that the advent of social media keeps breathing fresh life into a story that a few years ago would have been all but forgotten in hours. (online parodies

    General Electric (GE +1.2%) shares climb as the Fed’s bank stress tests boost confidence that its finance unit can resume a payout this year. Some banks are increasing buybacks and dividends to 70% or more of 2012 profit forecasts, so GE's plan to resume taking a payment of 40%-50% of GE Capital's earnings isn’t “an aggressive bar to clear."

    India's aviation ministry asks Boeing (BA) to pay nearly $1B to Air India to compensate for delays in delivering the 787 Dreamliner aircraft. The ministry says Boeing had agreed to pay $500M but is seeking more, while the plane maker disputes the claim. "We're not writing anybody a check for $500M," BA's commercial airliner unit chief says.

    Green Mountain Coffee (GMCR +1.6%) rises after Starbucks (SBUX +0.5%states at a UBS conference (webcast) it will sell Green Mountain's Keurig brewer and K-Cups in stores later this year, in spite of its release of the Verismo. Starbucks also reiterates its goal of having 1,500 stores in China by 2015, and says it sees coffee costs, which have pressured margins, dropping in 2H. (slides - .pdf)

    Though broadband subscription growth is leveling off in many nations, online video demand (much of it for non-PC devices) should nonetheless drive a 12x increase in wireline and mobile broadband traffic between 2010 and 2015, says IDC. Cisco's Visual Networking Index also projects strong traffic growth, which telecom equipment makers are counting on to make their recent woes a mere hiccup.

    Gartner says it now expects chip sales to rise 4% in 2012to $316B. That's above a prior forecast for 2.2% growth, and is the result of growing optimism that demand will begin rebounding in Q2 following a tough inventory correction. DRAM sales are expected to rise slightly after falling 25% last year, while NAND flash memory sales are expected to rise 18%

  126. More on 
    Gartner's chip forecast: Though the firm expects a 78% increase in tablet shipments to result in $9.5B worth of chips being used in tablet production, the figure amounts to less than 1/6 of the $57.8B in chips expected to be used in PC production, even though the ratio of tablet to PC sales is expected to be near 1:3. Thus, the chip industry needs 2 tablet sales to make up for every PC sale lost to tablet cannibalization

    Verizon Wireless (VZVOD), which already has a solid lead on AT&T (T) with regards to 4G LTE coverage, says its 4G network will cover 260M Americans by year's end, slightly above a prior target and well above AT&T's year-end target of 150M. The carrier also reiterates its claim it will only roll out LTE-capable smartphones from now on – one more hint that the next iPhone (AAPL) will support LTE.

    U.S. companies are sitting on a massive $1.2T cash pile, Moody’s says in a new report, and more than half of it is stashed overseas. The tax code is to blame and it will get worse without “permanent tax reform that lowers taxes on overseas profits,” Moody’s says. Apple (AAPL) is a major factor: In 2011, overall corporate cash would actually have decreased by $6B if not for Apple’s $46B increase.

    A 15-inch MacBook Air (AAPL) will be arriving next month, claims a source at a Mac accessory maker, who adds the oft-rumoredproduct could "disrupt" the 15-inch MacBook Pro. Adding a 15-inch model to the hot-selling Air line would benefit flash memory makers by accelerating solid-state drive adoption, but would be a headache for PC makers who have thrown their weight behind Intel's (INTC)ultrabook initiative.

    Three lunchtime reads:

    1) Why I left Google

    2) China's holy grail: A leading indicator

    3) Wireless war without end?

  127. DCM/Phil:  Just wanted to get your opinion on NTT Docomo, the largest wireless provider in Japan with 60 million subscribers.  Looks like they are getting Bick-Smatched because of  lack of iPhone, iPad.  16 was a hard floor during the Tsunami. 4% Div yield, and I thunk if they (hopefully) give in and make a deal to sell iPhones they take off.  Also looks like some decent accumulation during the latest drop.

  128. Am I crazy?  Oil looks super toppy here with record inventories.

  129. OK, AAPL is officially ridiculous.  They are the market….heaven help them if they miss earnings.

  130. kinki – I like it.  Not that I am the voice of reason….they were on a top 10 list for ones to buy low.

  131. Classic Michele Cabrera:
    She's reading tweets about the op ed piece on GS and one tweet was written from @illorente which Michele pronounced at illiterate.  Now I already knew most of the CNBC staff were illiterate already, this just proves it.

  132. AAPL is up 50% since Jan 1.

  133. Income Portfolio / Etrad – That would be Phil's decision if he wanted the Income Portfolio on a spreadsheet as well. No big sweat of my back to track it as there are few changes anyway. 

    As for the link, I need to speak to the admin guys.

  134. PHI/TLT – I'm having a hard time understanding what the move in TLT yesterday and today means going forward.  On one hand, you have the fed who is going to need to sell $1 Trillion worth of bonds in the next 10 months, so every tiny difference in yield is a big problem.  On the other hand, there is the fact that it is a terrible deal to be lending the US government money at 3%-5%.  You also have the very real issue of Europe debt crisis triggering a stampede into the relative safety of US treasuries.  Lastly, you have a very over-extended equity market, which could also trigger a stampede into the safety of US bonds if we finally see a real correction.
    I've been making good money shorting puts at $116 on TLT, but that trade blew up today.  I'm eyeing an April TLT $110/116 spread, shorting the $110 puts, for about 0.20 net on the $6 spread, but I'm unsure.  

  135. Portfolio / Phil – With FAS over $100 now, it's becoming margin expensive to short many options. As I mentioned before, TOS doesn't calculate the margin correctly in the Paper Money app. On a Reg-T account, each contract is close to $10K of margin. If I have all the correct moves from earlier, after we are done with the adjustments, we will have 10 Apr 100 calls, 10 Apr 99 calls (from the BCS where we sold the 94) and 10 Jul 72 Puts short. And the 20 Oct 105/115 BCS. In a Reg-T account, that's close to $190K of margin. Even in a PM account (depending on your broker on these 3x ETF -IB for example uses some complex formula) you are looking at close to $60K of margin. If you add the short SQQQ, SCO, VXX and XRT options, that adds another $40K of margin to a Reg-T account and about $12K to a PM account. Something to keep in mind I guess. I had the margin calculation in the old spreadsheet and I will add them to the new one, but I can't display them in the comment as it's becoming too crowded.

  136. TLT….into the fire!

    I am nibbling in April…

  137. Phil I read stories like this everyday, coming from Govs and CBs around the world, how is this bullish and isn't it a sign that they've lost complete control? Is this not a misallocation of money/resources? Bank bailouts to Sov debt bailouts, now we have companies spending billions on BB and dividends while markets are @ multi year highs. Arent these classic mistakes and usually signal market tops?

    "Remarks from China Premier Wen take a weight off the country's banks, as he promises"

  138. AAPL – is it time to get puts or sell calls?

  139. AMRN – look at that.  They get a Patent application delay, and 7 days later, someone 'hears' something.  Manipulation at its best.  Buying back April $7 puts.  Will resell later. 

  140. AAPL/CCs – I'm not clear on the whole stuck thing when you paid $100 and have a $185 spread.  You won – deal with it!  What you are saying is you wish you didn't cover but that's water under the bridge now.  Since you have Jan $300s (now $290) and you sold Apr $485s (now $104), you have a net $186 – this is not a crisis!  You can, if you want, roll the Apr $485s to the Jan $525s for even and roll your calls up to the 2014 $400s ($220) and put $90 in your pocket and you're still in a net $125 spread with a whole year to roll the short caller.  Since you paid $100 and collected whatever on the short calls, you essentially end up with a free $125 spread on the deal.  

    DXD/Terra – When there's a big move against you like this and you are going to stick with it then you ALWAYS press your bet into the initial excitement.  DXD is at $12.90 so you are on the money and I assume at net .80ish with the calls currently .40 but what do you accomplish going to July?  You can spend .55 to roll down to the $12s and they are .90 in the money so, for .55 more, you are buying .90 of intrinsic value, not more premium.  You up your delta from .48 to .95 so it's a no-brainer if you believe the Dow is topping here (and it would have been a dime cheaper this morning but c'est la vie).  Now, any time you are going to commit more capital – you'd better have a plan for what happens if it moves against you (and in your favor of course your goal is to get back to even on your original commitment).  So, at .95 on the April $12s, the roll to the July $12s is .45 but you can sell the July $12s for $1 (now $1.40) and then roll (PROBABLY) to the July $10s for the same $1.40 and then you would be in the July $10/12 bull call spread at net .80 + .55 + .40 = $1.75 with that spread at about $1 and THEN you may want to consider doubling down at $1 for a $1.38 average on the $2 spread.  So, unless you WANT to be in the July $10/12 bull call spread at $1.38 (300% more than you currently have in the trade) – it's probably not a good idea to throw another .55 in now.  This is always the chain of logic you should pursue when deciding whether or not to DD or roll as you are committing more cash and you'd damned well better know when it's going to end.  

    On the SQQQ spread, short answer is the $13s are .35 and the $11s are .95 so .60 to pick up $2 and .45 of that is intrinsic so good deal there but, since the $17s are just .10, may as well take them out and cross your fingers.   If SQQQ goes lower, then you can sell the $11s to some other sucker and roll down to the $9s (now $2.45) for hopefully not much more and that would put you in the $9/11 spread.  

    VIX/StJ – Yes but we thought there was nothing to worry about and Greenspan was dropping rates to zero from 5% and Bush was cutting taxes and dropping stimulus – a lot of artificial crap going on then and we SHOULD have been more afraid.  That's my point this morning – are we just stupid again?  Do we really never learn?  That's like saying AAPL was $85 and it was low then so if it goes back to $85 that's where it should be because that's the way it was and all the things we've learned since 2003 don't matter – just whatever we see on the chart.  The market is simply much more volatile than VIX 15 would suggest – those put prices this morning were incredible – they'll be huge winners if the VIX just goes up, regardless of what the stocks actually do – you just have to take advantage of opportunities like that.  

    There goes $106 on oil!  Gold $1,637, silver failed $32.  

    NREL/StJ – I was unaware that people did not know this.  Maybe I should write more journal papers…  ;)  

    GLL/Hemas – Good instincts, not worth the risk since we know it is possible (although not probable) that it can hurt us a lot more than .10.  

  141. Die oil!

  142. kustomz
    I am sticking with my statement yesterday afternoon, this is the top.

  143. Well, I'm back from my young son's 'graduation' from a NASA training program.  Great thing put on for grade school kids by the Air National Guard.   And, I see that AAPL has been to 594 and back.  Honestly, i'm  the greatest AAPL fan on the board, but this stock can't go up 15 to 20 points a day forever.  Seems like some 'dumb money' has started to buy.  And they may have the rug pulled from under them when it decides to correct to 550 or so so.  Anyway, I remain in AAPL cash for the moment.  I'm going to make money on something else for the time being.  

  144. Shadow/kust…top for today, or the year, or several years?  I pray to global warming that that statement is correct…..but all the chartists say more up side ahead.  Maybe 'they' are messing with them…..

  145. could we go one day without mr stick?

  146. Here sticky stick….

  147. BOT buying yesterday worked, today it has not. Computer only market.

  148. Pharmboy….Unlikely AAPL will miss earnings…..but….It's already being 'priced in' and they could drop anyway.  I can't say where I'll be with AAPL on earnings day but if this keeps up I'll likely be an observer of that event.  

  149. VIX / Phil – Well, I don't disagree that the VIX at 15 does not match the market volatility and actually it's one of the reason why I have been staying away from the condors I was selling last fall. At the time Peter and I had a discussion that the prices were not taking into account the upside risks and that turned out right. Obviously in 2007 with a VIX around 12, downside risks were not being rewarded either! But the facts are that we plowed along toward that cliff for 3 years between '04 and '07! It might turn out that we are stupid again! In the meantime cash and some hit and run sound good!

  150. Phil – Thanks for the FAS July put/October bull call spread!  
    Looking shorter term … do you see any April FAS bull call spreads that you would be comfortable with?

  151. pharmboy
    Lots of idle chainsaws without logging!

  152. The AAPL gyrations have been unreal today – up $15, down $15! I guess no volatility in this market!

  153. AAPL just spiked down to 575 and back in a few minutes.  You boys had better be careful with this stock today!

  154. If we have a market selloff, for any reason, I could see AAPL taken to the woodshed!

  155. Can anyone explain why AAPL would change $6 in less than 30 minutes?

  156. Phil, i'm in faz bcs april 26/28 @.66 now .23
    and in faz bcs april 25/28@.91 now .40
    what could i do to adjust? how can i decide when i'ts convenient to roll down in strike rather than in time?what should i look for?thanks

  157. Make that $8?

  158. Shadowfax….Either a BOT trade or a (smart) seller of a large bloc

  159. iflanthreman
    Thanks, it moved ove $2 in less than a minute. A sign of thin trading, whatever that is for Apple?

  160. Shadow / Top

    My model has the top next week, fwiw !!

  161. CCJ- anyone see news to account for the sell off today?

  162. JRW III
    I don't have a model, I have red flags that I take note of. Have you noticed that the last couple days changes have happened at the confuence lines after some time making no sense? Thanks

  163. Bradley turn is Friday +/- a few days FWIW.

  164. Inventories/StJ – Insanity!  

    Easy story on the Petroleum inventories, we exported 9Mb of petroleum products last week and that's AFTER producing 4.2Mb LESS gasoline and 2.1Mb LESS Distillates than they did last year so net shorting Americans 15Mb in a week and we end up with a net draw of 4.3Mb which means, on the whole, we used 11.7Mb less fuel than last year (but the price went up 3 cents a gallon for the week).  

    Bloomberg/Peedle – Someone games the headline system there since most people only see those headlines go by on the crawler and that then becomes their "belief" of what the story says.  

    ABX/Jasu – I think it's a good put to sell but it may get cheaper if gold falls apart so you have to want it enough to roll and DD.  

    AAPL/Mr M – If you do, please document it so we can write up the story of your power over the markets.  ;)  

    TZA/Pat – What's not to love?  That and SQQQ would be my favorites.  If AAPL does pull back the Nas could crumple like a house of cards but just the QQQ puts above would do quite well.  Don't forget that bull call spreads are great hedges that you keep to expiration but are not good bets because a 2% move in your favor will do pretty much nothing for you as your caller benefits as well.  With the VIX this low, it's a good time to take advantage of puts.  

    DCM/Kinki – Hard to get excited about betting on Japan but they do pay a 3.5% dividend so you could pick up the stock for $16.91 and sell the Oct $15s for $2.20 and the Oct $15 puts for .50 and that's net $14.21/14.61, which is nice for an initial entry and it makes that .60 dividend 4.2%. 

    Oil/Peedle – Completely ridiculous.  Only the belief that Iran will cut off supply or economy will suddenly kick into high gear and spur demand are keeping prices up – even manipulative speculators need to believe they have an out down the road…

    Michelle/Rustle – When they hired her, it wasn't for her speaking ability.  

    Income Portfolio/StJ – If you want to, you can do it, my objection is I really did not intend for it to be followed strictly but to TEACH the general concept of managing a portfolio to generate a monthly income – the specific trades should matter not even 1/10th as much as learning the concepts that can be applied to the other 9,000 stocks in the market.  

    TLT/Palotay – When you trade a range and the range breaks – the best thing to do is don't trade the stock/ETF again until it CLEARLY establishes a new trading range that makes sense to you.  With TLT, they are out of whack and sure, there are some reasons for people to move to US TBills but Europe is "fixed" and the markets are going up so you are now counting on both of those things to fail for you to get your TLT pay-off.  Wouldn't you be better off with the SPY spread?  

    Trades work until they don't and the most damaging thing people do is to keep making trades that are no longer working.  Look at GMCR – we walked away.  They dropped more but we walked away – it's over.  FSLR – over.  NFLX – over – you have to play for a run and then run away and find something new to play with and – damn, lost my train of thought as all I see is a can of beer and some boobs over where I'm typing…

    FAS/StJ – Well then the answer would be to take the $4K profits off the table, shut it down and find something else to trade. I'm just doing the correct rolls for the position but, if someone runs out of margin (aside from the fact they should have started with 1/2 the position in the first place) then stops should have been set and profits taken off the table.  Playing margin constrained and playing with a lot of margin are not even similar strategies – it affects every decision you make along the way.  We ran into this last year and no way should FAS Money have ever been considered for people with limited margins (or the $25KP, for that matter).  We're playing the $5KP with no margin but, if you want to open a no margin portfolio – then please make sure we start out that way – perhaps you should label each portfolio with the parameters of the trade and the total account margin and the account value etc – that's up to you, just make sure I know what we're signing up for BEFORE we begin to trade.  Actually, we had a low-margin portfolio – the AA money and it was super dull and no one liked it.  People who don't have a lot of margin should be playing longer-term more sensible trades UNTIL they have so much money that they can afford a high-margin account – THEN you can mess around with aggressive short-term trading.  

    Classic mistakes/Kustomz – Yep, circa 2007-8 at the moment.  But who can remember ancient history like that?  It's a new paradigm now – this time it's different – you have to understand the new economy….

    104M on the Dow at 3pm – Busiest day in a week!  

    FAS/Diamond – No because I think it's more likely they correct short-term back to $14.50 on XLF and that's 6.5%, which is 20% down on FAS back to the low $80s so a bit dangerous to play them bullish here.  

    AAPL/Shadow – Really, you need a reason?  

    FAZ/TraderM – So your calls are around .70 and it' costs $1 to roll down to the $22s and be .35 in the money – that's not bad.  Now, what else can you do with $1 – you can roll to July $28.  That, by comparison, sucks.  That makes for an easy decision and then keep your eye on the July $23s (now $2.85) as you can then roll there for another $1 and sell something for  $1 or so to offset it so that would then be your next fall-back position.  

    CCJ/Pstas – Just selling off with commodity basket.  Nice opportunity to get in but maybe $22ish (200 dma).  Long-term, I like these guys.  

  165. Shadow / Sense

    Not really, I noticed a big change on 2/3 and since, some say it started in late December, but today for example, text book !!  (82.95 to 83.18 to 82.34 etc)

  166. FWIW my timeframe is very soon. Yesterday and mre so today IWM has price changes with 100 to 300 shares. Maybe my vote will decide the next president?

  167. Hi Lflan, when you feel that it would be time to enter another bcs on aapl, what would be your thinking on strike price. Forninstance wold you typically buy ATM and sell 50 or so higher, or do you have a way of deciding where to put the spread based on other factors?

  168. Phil – Thanks!

  169. Is today just a bit of profit taking or is it the shape of things to come?

  170. Hey!  A short went my way with WTI.

  171. O.K.  ,  so I couldn't go a day without making an AAPL trade.  I sold 20  this weekly 620 calls for 1.225 each.  Will roll if needed.  

  172. JRW
    Thanks for the confirm! Too many things don't make sense for too long.

  173. Shadow,

    FWIW, trend line and R/S support at 82.00; R at 82.34, if either break, go that way !!

    Downside targets at 81.81, 81.58 and 81.41-44

    Upside at 82.69

  174. AAPL, I did buy a few weekly 595/600 bcs @ 591 when I posted, in case the bots are coded for 600.  So I missed the top this time by more than $2, I guess I'm losing my mojo.  Will keep overnight just for giggles.  Sorry I didn't post it, Phil.

  175. Phil
    Apple action = 1 of my red flags.

  176. Thanks JRW/Shadow/Phil
    Shadow we had a boost in volume yest, maybe your right. I was thinking Thur Friday this week. The $ is also performing well and the chart pattern is very similar to 04/05 and looks to be on a bullish run, but with this guy in charge of the money supply, one can never be too sure.

    July 2005
    INTERVIEWER: Tell me, what is the worst-case scenario? Sir, we have so many economists coming on our air and saying, "Oh, this is a bubble, and it's going to burst, and this is going to be a real issue for the economy." Some say it could even cause a recession at some point. What is the worst-case scenario, if in fact we were to see prices come down substantially across the country?
    BERNANKE: Well, I guess I don't buy your premise. It's a pretty unlikely possibility. We've never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don't think it's going to drive the economy too far from its full employment path, though.

    BERNANKE: You can see some types of speculation: investors turning over condos quickly. Those sorts of things you see in some local areas. I'm hopeful — I'm confident, in fact, that the bank regulators will pay close attention to the kinds of loans that are being made, and make sure that underwriting is done right. But I do think this is mostly a localized problem, and not something that's going to affect the national economy.

  177. DCM/Phil:  Thanks.  Not exciting at all. As long as they hold those 2009 lows :)

  178. kustomz
    But everything is different this time, Ben fixed it!

  179. TLT under 111—wow…
    FU TLT!!!

  180. Ugh, not another stick ending.  Like the market needs it after yesterday's nonsense rocket.

  181. Michelle/Phil
    Well it's not for her looks anymore either and she always has a scowl or condescending look on her face.

  182. Phil,
    Any thoughts on whether SVU will be reincarnated anytime soon? Any news/reason for steady decline?

  183. Portfolio Margin / Phil – I have no objections to the high margin. My point was that people should be aware of the costs. The $5KP was started as a no margin portfolio so that's understood and not an issue. There was no such restrictions on the $25KP (or FAS Money and IWM Money for that matter) so we are free to manage the trades as we need to. But the total margin used for the current positions has to be taken into account for people to understand the risk/reward ratio of the trades.

  184. Beafleurs…..I  like to buy spreads for the months of Jan,Apr,July and Oct.  I try to estimate where I think AAPL will be that month and use that number for the cover.  Example:   If I think AAPL will be at 700 next October  then I might get a 650/700 spread.  I also use a computerized spreadfinder to give me more information about probability and percent gain (www.

  185. 2:00 PM On the hour: Dow flat. 10-yr -0.9%. Euro -0.5% vs. dollar. Crude -0.58% to $106.09. Gold -3.43% to $1636.15. 

    3:00 PM On the hour: Dow +0.01%. 10-yr -0.95%. Euro -0.46% vs. dollar. Crude -1.01% to $105.63. Gold -3.42% to $1636.25.

    The ever-helpful San Francisco Fed says that its barometer of the tech industry – the Tech Pulse Index - fell back 2.6% M/M and -0.1% Y/Y in February. The index uses a variety of IT production and consumption measures to help it gauge the health of the tech sector.

    Supervisors directed banks’ mortgage misconduct, HUD report says (Washington Post)

    Stress Tests Show How Fed Pushed Banks to Bolster Balance Sheets (Bloomberg)

    More on the Lowenstein paean to Ben Bernanke: The Atlantic's loud cover to go along with the fawning essay. Any fans of the magazine cover indicator can start running for the hills now.

    Signs of hope are seen in two of the most distressed U.S. housing markets. Las Vegas, where prices have plunged 62% from the peak, reports solid gains in home sales and prices, and inventory is down 46% Y/Y. The SoCal market posted the highest number of February home sales in five years.

    The average price of gasoline ($3.80) hasn't broken the all-time record yet … or has it. The nominal record of $4.11 was set in July 2008 – a time of peak demand, so it may not be fair to compare today's price with then. Looking at just the week of March 12 though, prices at the pump have soared nearly 10% over anything seen previously.

    Prudential (PRU -2.4%) shares slide alongside MetLife (MET -5.8%), even though PRU wasn't part of the Fed's stress test. But insurance industry experts think both insurers may be named"systemically important financial institutions" when the category is finalized by the Financial Stability Oversight Council. If so, both would be subject to some level of Fed scrutiny.

    The SEC formally charges SharesPost with engaging in security transactions without registering as a broker-dealer after the company created a splash by offering a medium to trade shares of companies like Facebook, Twitter, and Zynga before they went public. Separately, the agency alleges that two money managers at private investment funds misled investors and pocketed undisclosed fees and commissions in transactions related to pre-IPO stock. (complaint)

    Another day, another new high for Apple (AAPL +3%); the world's biggest fruit company is now worth $545B, nearly twice as much as Microsoft. In addition to Morgan Stanley's note, shares are getting a boost from Canaccord's Mike Walkley, who reports shipping wait times for the new iPad have risen to 2-3 weeks. Walkley now expects Apple to sell 65.6M iPads this year, and 90.6M next year. 

    Apple confirms that pre-order stock of new iPad sold out, says demand is ‘off the charts’ (The Next Web)

    Saying Apple (AAPL) has reached the "trading toy stage,"Robert Sinn reminds of the track record of other stocks that have recently garnered the public imagination – it's not good. "Volume and volatility create action, excitement, and opportunity. However, the action we are currently witnessing in Apple is not healthy."

    J.P. Morgan Chase’s Ugly Family Secrets Revealed (Rolling Stone)

  186. the shift is in, people have caught the bug. Money is coming out of bonds and going into stocks (I mean, AAPL). I could last awhile… it could die tomorrow … you never know.
    Straddles are a good way to go: premiums are low.

  187. Pharmboy – Bradley turn date …
    Beware the Ides of March (+1?) ;-)

  188. $5KP – The DMND Mar 22.5 are back down to $2.85 which is still above what we bought them for. But they were 3.10 yesterday morning (I did put a note on that) and $3.21 this morning. Worth riding them until tomorrow?

  189. I got into a MA 415 put. If anyone goes to the woodshed soon, I hope it's them (along with AAPL for that matter).

  190. another new all-time high for CMG today also..

  191. BDC – ur on…..

  192. Classic Bernanke Kustomz – I love it when they tell you how things can't possibly happen, as if we're not smart enough to understand how things really work – and then it blows up in their face…

    Michelle/Rustle – That's an interesting thing about news girls.   For some reason, the ones they hire for looks they tend to keep many, many years after that's no longer a factor.  Of course CNBC does rotate in a few new hotties like the Indian girl and the Australian girl – maybe that's why Michelle is scowling….  

    SVU/8800 – I'm pretty sure they should come back around before the Cubs win the World Series.

    PM/StJ – I'm fine with tracking it, just don't want to suddenly change how we're trading something mid-stream so let's make sure future portfolios are set up with whatever rules at the outset.  

    DMND/$5KP, StJ – They still look cheap to me but we may as well take them off at $2.90 as we have no time to fix if they go bad.  

    CMG/Jabob – As long as they don't hold $400, then we can still hope.  

  193. IWM stuck on JRWs R line…..JR – can you use a vacuum and suck the market down a bit.  1365 would be good by Friday for me.  Thx.

  194. I couldn't daytrade AAPL today but if I could have I might  have killed it.  It was a perfect setup.   As low as 575 and as high as 595.  Unfortunately , I will not be able to daytrade it tomorrow either.  So I'll sit with cash and my puny 620 short calls  and watch for another day.  

  195. lflantheman,
    I love that your "correction" target on apple will bring it back to where it was on monday!  HA!  All I know is i wish i'd been trading with you longer, so whatever you say!!!

  196. Not much of a close but we pretty much held yesterday's run so a positive move tomorrow would make this not look like a blow-off top.  

    China is very flip-floppy so we'll have to see how their markets react in the morning. 

    Dow volume finished at 159M, double last 2 days.  3 decliners to one advance in the broad market – that's just not good.  

    So hard to get bullish..

  197. Lflan – you've gotta daytrade tomorrow.  Got nervous today and missed out on all the action.  Oh dear!!! What am i going to do without you guys??  Wouldn't even probably know how to tie my shoelace without you guys. 

  198. confused:
    SharePost: none of the team listed here is in that complaint, which is against different entities. Elsewhere I found an article that suggested SharePost already settled with the SEC in unrelated activity.

  199. When huge blocks sell below bid after hours it is usually not good for the next open. It happened!

  200. AAPL/lflan – do you think they are going to crack $600 tomorrow? 

  201. Rotten to the core. Supermarket chain sells cheap apples, ferments controversy.

    iPad 3's were on sale today for about $80 at Tesco, 5% of which was snapped up by Warren Buffett after they announced poor Christmas sales figures. No wonder. After this publicity stunt Tesco claimed it was a mistake and that they would not be delivering the iPads to online purchasers who had bought the device, some of them possibly using older versions of the iPad for the transaction.
    Company information: iPads are made by the Apple Corporation, which is currently involved in a number of patent disputes with Samsung and other corporations, made a half billion dollar payment last year to Nokia Corp for use of patents. Apple Corporation  has vigorously pursued infringements of its own patents. Apple Corporation copied its name from British company Apple Corps, founded by a group of musicians from Liverpool. Apple Corps settled various lawsuits with Apple Corporation in 2007.

  202. The dashboard below is 90% red… most over .5%…. and yet the market is flat.  Is that AAPL?  This seems like a scam where money managers can beat the benchmark by holding just 1 stock.

  203. Levels / Peedle – As you can see from the charts above, the broader indices (RUT and NYSE) are actually down today. The DOW is a joke and NASDAQ might as well just be AAPL now!

  204. Phil, any ideas to roll weekly TLT 114 put?  TIA.

  205. Volume / Phil – For the level charts I pick up the volume numbers from Google Finance (they update automatically) and for the Dow I have 130 M share today just like yesterday. I had 100 M on Monday. There are just too many different numbers out there, but I use the same source for all the charts to be consistent (and for the fact that it saves me work!).

  206. Dow Transports down fairly hard today -1.41%.  It still hasn't made that higher high that the other indices have.  The Dow Theory bearish signal is still intact.

  207. A pretty staggering chart….

    That parabolic move of the last 3 months or so cannot be sustained….

  208. stj…..You must be correct.  This type of movement cannot be sustained.  If it can, and if it is, then I will have to miss the move, because I can't justify further long plays without some kind of a correction.  

  209. AAPL / lflan – But there are still some hit-and-run play to be had on a daily basis!

  210. Did y'all see Doug Kass's interesting chart comparison of GOOG 2004-2007 and AAPL 2009-2012?

    But then again, all parabolic moves look kind of similar…

  211. stj…having said that, it does not mean I won't play AAPL.  There are many ways to make money on this stock, as well as others.  It does not have to go continually up for us to profit.   That's one of the things I try to teach people on this site.  I don't really care which way a stock moves, or even if it moves at all.  If you set up trades correctly you can make $.   Or, for a twist on the old political saying:   "It's the methodology, stupid!"

  212. Article above:   Yes, noted.   I listen to Doug Kass….I think he is an astute individual.

  213. lolobear…I don't know whether AAPL cracks 600 tomorrow.  I just hope they don't crack 620 (that's where I shorted it on the weeklies)   :)     Say, did you buy those 575 weeklies you were talking about a day or two ago?   I hope so, although I wouldn't have suggested it at the time.

  214. stj…..Yes, there is huge money to be made in AAPL when it is moving like this, just by day trading.  Unfortunately I have another job that keeps me tied up some.  Hopefully some members have gained enough expertise in daytrading AAPL that they can take advantage.  

  215. Phil,
    Do you have an opinion on GLW? 
    Cool video on the future of crystal displays:

  216. Google article very interesting.  All those tracking functions on the net creep me out.  I looked at a particular kind of exercise equipment one day.  The next few days, the ad kept popping up.  I'm a little slow, but I finally figured out what was happening.  I'm so allergic to Facebook that, while I have an account and 8 friends, I have a false name, 100% false personal data, zero pictures of humans and very few pics at all, and it is sterilized in every way I can imagine short of wiping out the account completely.  Which may not actually be possible. Google should have tried the opposite:  a service for people who would like to be guaranteed privacy and zero tracking.  I would pay for it – if it could be trusted.  
     Will there ever be a "FB backlash?"  It doesn't seem so.  But worms do turn, at some point, and I wouldn't assume that the human desire to be ever more "interconnected" is limitless.  There is no evidence of this to date.

  217. At the close: Dow +0.12% to 13193. S&P -0.14% to 1394. Nasdaq -0.04% to 3039.

    Treasurys: 30-year -1.76%. 10-yr -1%. 5-yr -0.59%.

    Commodities: Crude -0.96% to $105.69. Gold -3.03% to $1642.95.

    Currencies: Euro -0.45% vs. dollar. Yen +0.99%. Pound +0.15%.

    Market recap: Stocks limped along near the flatline in another tight trading day. Financials finished mostly higher a day after the Fed's stress tests; BofA and AmEx led the Dow. Tech stocks were led by the big red Apple machine, now closing in on $600. Treasurys sold off; commodities were broadly lower as the dollar rose. NYSE decliners topped advancers two to one.

    Treasury prices continued to tumble today, pushing yields on the benchmark 10-year note to their highest levels since October andbreaking above their 200-day MA. The Fed's latest policy statement showed more optimism and seems to have opened the floodgates to higher yields, and traders and investors had taken a lot of short positions. TLT -2.5%, Ultra-Short ETF TBT +5.1%.

    An interesting model of asset bubbles (Noahpinion)

    Fed stress tests: too harsh, not harsh enough, just right – oran exercise in confusion? One banker says the Fed's numbers made no sense; when his bank ran the stress test on its own, it came up with a higher capital ratio than the Fed reported. Citi and Sun Trust may have been burned because they "thought they had a mile of room” for dividend and share buybacks. 

    Scorecard for New Bank Stress Tests

    Fitch affirms the U.K.'s credit rating at AAA, but revises its outlook to negative from stable. The agency has mostly positive things to say about the country's attempts at budget reform, but says there is "very limited fiscal space to absorb further adverse economic shocks."

    Five years after Meredith Whitney made a name for herself when she said Citigroup (C) was plagued with toxic subprime mortgages, she still hates the stock: "They don't have any earnings power… They're investing in a lot of regulatory processes, but it's like the old broken-down house. You have to put so much money in to get to a modern equivalent of a new house." (earlier

    Employees at major banks who churned out fraudulent foreclosure documents, forged signatures, made up fake job titles and falsely notarized paperwork often did so at the behest of their superiors, a federal investigation says. "How could so many people have participated in this misconduct?” HUD inspector general David Montoya posits. “The answer: simple greed.”

    Chevron CEO John Watson warns high oil prices are destroying demand. As evidence, he points out current U.S. oil consumption of 19M barrels/day is well below the 21M barrels/day peak reached 3 years ago. Watson also warns OPEC has limited ability to ramp production. (earlier)

    In-line not good enough for this market: Guess? (GES): Q4 EPS of $1.05 in-line. Revenue of $776M (+2.5% Y/Y) in-line. Shares -12.7% AH. (PR)

    One of our stocks getting cheap!  Suncor Energy (SU -4.1%) finished sharply lower a day after reporting one of two upgraders at its oil sands facility will be taken offline for three to five weeks for unplanned maintenance.

    Old favorite:  More on Eagle Bulk Shipping (EGLE): Q4 beats estimatesas the shipper reported fewer-than-anticipated losses, despite a continued decline in net revenue. The company also issues cautious comments on the current quarter, noting that new-building deliveries flooded the market in January, and while demand is steady, it is insufficient at this point to meet unfavorable supply dynamics. Shares-4.8% AH. 

    PayPal (EBAY) will reportedly take on rapidly-growingSquare by offering a rival credit-card swiping device that will charge a slightly lower fee (2.7% vs. Square's 2.75%). The move is another example of PayPal's aggressive push into mobile and offlinepayments, leveraging a variety of solutions. However, in this instance, the fact that Square has already signed up over 1M merchants will make things difficult. (previously)

    Google Offers (GOOG), which is attempting to take on Groupon (GRPN) and LivingSocial by partnering with rival daily deals providers, now has 30 partners offering deals in 40 cities. The latest partner additions include both startups such as Signpost, and bigger corporate names such as AT&T Interactive. But it still remains to be seen just how effective the platform will at eating into Groupon's dominant mindshare.

    Om Malik sees a common thread between Greg Smith'sattack on Goldman Sachs (GS) and James Whittaker's critique of Google's (GOOGchanges: each is going after his ex-employer for no longer putting its customers first. In Google's case, Malik sees a company straying from its core identity as an information provider in the name of a misguided attempt to become more "social."

    Doug Kass plots the run-up in Apple (AAPL) from 2009 to today against the move in Google (GOOG) from 2004, and notes the similarities, especially the steepening ascent of the last 3 months. Of course, Google had an epic bear market to bring it down. What's to cut the legs out from under Apple? (via)

    WOW!!!  Just how heated has trading in Apple (AAPL +3.8%) become? With 50.6M shares changing hands today, Apple's dollar volume was roughly $30B. For perspective, the entire NYSE has seen an average daily dollar volume of $36.6B in March. Powershares QQQ (QQQ), the ticker with today's second-highest dollar volume, only saw $4B worth of trades. (earlier)

    WTF! Apple Eyeing $960, May Settle For Six-Handle (For Today, At Least)

     US Federal Tax Receipts (Dr. Ed’s Blog)

  218. Zeroxzero/Facebook
    Will there ever be a "FB backlash?"  It doesn't seem so.
    I don't know. I got pissed off with it and deleted my account, or at least as close as you can go to deleting it. However, if you sign back in your account is reactivated. I don't like how some third party Web sites insist on you signing in with a Facebook ID. F*** them, I say. But them I am a person who doesn't see why you should pay a cable TV company to deliver advertising to your home. As far as I am concerned the TV companies should pay the cable companies to distribute their signal to consumers and the consumers should just pay a small amount for the installation and the decoding box. Instead of which they play all kinds of games. A cable TV company called me last year with a special offer for cable TV, Internet, and phone line combined and I was quite interested. I asked how much it would cost for a package that included certain TV stations that I wanted, and the sales guy said he didn't know. I said "Well find out and call me back." He said it was impossible to do that. I never heard back from him. How can they run a business this way?

  219. Sharepost/BDC – They seem to have been charged with failing to register as a broker/dealer in their handling of Facebook stock and that does seem to be settled.   That's a BIG no-no as the SEC will always make sure they defend GS's turf!  There's another issue against various Frank Mazzola operations (and that guy is a pisser to see all his excuses) for misleading investors in promoting Facebook and self-dealing and all kinds of nasty stuff that I would think will push back Facebook's IPO for a while.  Maybe that's why so much money is going into AAPL – money that was sidelined for Facebook finding a home. 

    Blocks/Shadow – That's those "market on close" orders we talked about last month.  The big boys stuff massive orders in at the close so they don't affect the prices (much) which is why the trick is to run the market up into the close, so they get the best price for their volume dump.  It's a total scam and it's the retail traders who suffer.  

    AAPL/JMM – It's just a typo in an ad.  I don't see what the big deal is.  

    AAPL/Peedle – See news item above.  It's ALL AAPL all the time. 

    Big Chart – So NYSE and RUT did what we thought all indexes would do the day after the Fed, pulling back and looking toppy.  But not the big 3 so very inconclusive but AAPL huge part of S&P and even huger part of Nas makes it impossible to make rational determinations based on chart action.  The fact that the NYSE can't take out 8,259 when that is the broadest measure of market activity is very, very disturbing.  

    TLT/Bob – I'd just roll out to April $112 puts at $3, which is about even.  If you do that every month, eventually you should get a break and, if not, in 56 more months you'll be at zero anyway!  

    Volume/StJ – Sure, as long as you pick something internally consistent.  That's why I like my little Dow number, it's right in front of me on my Etrade screen and, for me, I have an easier time getting my head around 10M, 25M, 116M, than numbers in the Billions.  It changes just enough from hour to hour to give me a good idea of what's happening during the day.  

    Transport action very similar to late April-early May of last year.  Dow dropped like a rock on June 1st.  The decline was about 4 weeks total before the cliff and 12,850 was the top on 5/2 after a huge run from 11,600 on 3/15 (1,250 points in 6 weeks).  This run started at 11,800 on 12/16 and, 3 months later, we're at 13,200 (1,400 points).  Very similar.  That would seem to make this week the end of the run if we're in that pattern….

    GLW/IZega – Yes, I love them.  They are certainly good for my next 10 bull picks.  There's no need to own the stock but you can sell the 2014 $12 puts for $1.90 and buy the $12/17 bull call spread for $2.10 for net .20 on the $5 spread that's $2.05 in the money to start and worst case is you own them for $2.20.  

    So let's say your alternative is a buy/write where you buy the stock for $14.05 and sell the 2014 $15 puts and calls for $5.60 for net $8.45/11.72.  If you put in $8,450 you can make up to $6,550 at $15 – not bad either.  If you put instead $300 cash into 15 of the spreads instead, TOS says the margin on the short puts is $1,650 and, at $15, you make $4,500 but, at $17 you make $7,500 so you are shooting for a little higher strike to make the same money but you commit WAY less cash.  On the downside, you can have 1,500 shares put to you at net $12.20 on the spread while the buy/write puts you into 2,000 shares at net $11.72 so a lower total commitment at a slightly higher price.  

    For me the key is flexibility and the spread is more flexible as you have tons of cash on the side to make adjustments with and GLW is a volatile stock.  

    Facebook/ZZ – I can't relate to it.  I do have 160 friends but I never talk to them and I'm not all that interested in what their puppy did today.  I think it's mainly because, coming off the generally high-quality chat we have here every day – Facebook just seems so damned mundane.  Also the ads drive me nuts but that's what it's all about, right?  If you want to beat Facebook – just do something that's ad-free with a nicer format where no one asks you to help them with their farm or whatever and I bet it would do great but then you'd have to add all that crap to "monetize" it and get your Billion anyway.  I mean seriously, who wants to spend all day on pages where 1/3 of the page is commercials?  Even that wouldn't be so bad if they kept them on the sidelines but they don't – the dumbest stuff pops up in the middle of your "news".  I keep saying ignore all but then new stuff comes along based on, I suppose, my "habits" – just like GOOG.  

    Look at this, this is just ridiculous:  


    Adrienne Sugerman-Bandiero and 4 other friends recently played games.
    7 hours ago via Apps and Games

    That's just one entry on my Facebook wall or whatever it's called.  She didn't make it but, because she's a friend, Facebook feels they can annoy me with their silly game commercials.  Also, Scott should be ashamed of himself playing that Cityville when he owes me a phone call! 

    On the other hand my friend Mike is having Creme Brule' in Paris and took a picture – that's kind of cool! 

    That's what Facebook should be (to me), a nice way to just share your day or family events with friends.  If they stuck to that, I'd enjoy it a lot more. 

    One day I'd like to see a study on how much time people in this country waste on Facebook, Twitter, YouTube etc.  My daughter showed me a video of a dancing banana that went on for 3 minutes and I was crawling out of my skin in the first 15 seconds but it had 74M views and that gave me time to contemplate that that worked out to 1,779 people working for an entire year spent instead watching a dancing banana.  Figure we pay them $30,000 and that video cost America $53M of productivity lost.  

    We could wipe out poverty, build homes for all the homeless, rebuild our bridges and dams and highways and put up high-speed rails from coast to coast – if we just ban Youtube, Facebook and Twitter!!!

  220. What a day. This collection of guitar riffs from 60s and 70s helps.

  221. scottmi/riffs,
    sounds like the playlist in my car!!

  222. Phil - Interesting
    From Seeking Alpha (watch video):
    The sleeper story today is China, says Art Cashin. The Shanghai Stock Market was clobbered overnight on comments by Premier Wen, raising questions about the need for reform to avoid slipping back into the "Cultural Revolution." The issue gets its legs from the fact that the leader of the communist party right now is going around the country touting a revival of Mao, and at present, no market in the world has yet priced in a potential power struggle in China. (video)

  223.  A discussion of "Europe" — what it is and isn't — the heterogeneity of the the countries, and cultures, now united in currency union.  Quite good.

  224. Phil/Dancing Banana  Phil, sometimes you just need to lighten up and NOT act your age!  :)

  225. I'd like to think that none of the wealthy PSW folks were part of THIS study….

    Unfortunately, while IQ's may be high, many of the wealthy score a low Emotional Intellengence…..

  226. Anyone check out the Feds twitter page? Its funny but not surprising that 99.9% of the tweets are negative. They've exposed themselves a bit too much and its just a matter of time before more jump on the end the fed bandwagon.

  227. @federalreserve/kustomz:  Oh god, some of the tweets are hilarious.  Best waste of time I've done in a while. 
    Heres a good one by ZeroHedge:
    "Thanks to the @FederalReserve arrival, the value of all tweets will collapse by 98% in a few years"

    The link to the real-time Twitter feed:!/search/realtime/%40federalreserve

  228. Fed Tweets/Kinki- Thanks for the link…lots of laughs trawling through the Tweets against the Feds!!/search/%40federalreserve

    Worth a browse…

  229. @fedres… How many shills are there to incite the others to say things that may get them in hot water.

    I've been wondering who will buy treasuries now that the markets are in bull mode, just a matter of time till Bernank losses control of yields …

    And not only that, but since it is suddenly fashionable to sell US Treasurys, just who will step in to buy (not China) considering there is about $6 trillion in net new issuance over the next 4 years? Because if US GDP was at least rising faster than US debt one just may have made the case that there will be retained cash by various entities who can buy up US paper domestically. Alas, that is no longer feasible, and the only option is, you guessed it, for the buyer of last resort to step in – the @FederalReserve

  230. Phil – It appears that Chinese Premier Wen Jiabao already fixed his Communist party problem …
    China's Bo Xilai Is Out, Replaced By Zhang Dejang

  231. Good morning!  

    Shanghai down 0.7%, India down 1.25%, Hong Kong flat but Nikkei happy up 0.6% and why not because they slammed the Yen down to 84.17 to the Dollar for a while.  Didn't last, now 83.70 but it did it's job into the Nikkei close at 3am, of course.  

    Europe opening flat and our Futures are flat with the Dollar at 80.89, down from 81.16 so not impressive futures.  It worked on oil as it's back to $105.75 and gold is back at $1,648 but still both weak.  Silver $32.25, copper very weak at $3.84 (and $3.85 is our long-standing danger line on copper for global weakness), nat gas super-lame at $2.25 and gasoline all the way back to $3.34 from $3.38 at yesterday's inventory report which means they are getting a lot of resistance to prices over $3.33.

    Euro $1.3042 after bouncing off $1.3003 – SO CLOSE to breaking down!  Pound $1.566 and EUR/CHF at $1.211 despite Euro weakness so $1.3042 is WITH the Swiss propping the Euro up like crazy (to the point where they have diminished their own currency more than the Euro has fallen – so far). 

    Woops, SNB holding rates steady.  That sent EUR/CHF down (Franc stronger) and knocked the Euro and Pound back down (they were rising).  Snapping back already so they may not be lowering rates but they sure are buying a lot of Euro.  

    Thursday's economic calendar:

    8:30 Producer Price Index

    8:30 Initial Jobless Claims

    8:30 Empire State Mfg Survey

    9:00 Treasury International Capital

    10:00 Philly Fed Business Outlook

    10:30 EIA Natural Gas Inventory

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet 

    The NY and Philly Fed have been nothing but positive lately and jobs have generally been good for us so very toppy sign if we can't make positive progress today.  

    China is already in a hard landing, says JPMorgan analyst Adrian Mowat. "If you look at the Chinese data, you should stop debating about a hard landing… Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact."

    China's Foreign Direct Investment Falls for Fourth MonthForeign direct investment in China fell for a fourth straight month in February as companies reined in spending amid a slowdown in the world’s second-biggest economy and the prolonged European debt crisis. Investment declined 0.9 percent to $7.73 billion last month from a year earlier, the Ministry of Commerce said in a statement today, following a 0.3 percent drop in January. Overseas spending in the first two months decreased 0.6 percent to $17.7 billion. The outlook for foreign investment in China is “grim,” ministry spokesman Shen Danyang said last month, citing “slack” external demand, rising operating costs and funding difficulties faced by some companies.

    The sleeper story today is China, says Art Cashin. The Shanghai Stock Market was clobbered overnight on comments by Premier Wen, raising questions about the need for reform to avoid slipping back into the "Cultural Revolution." The issue gets its legs from the fact that the leader of the communist party right now is going around the country touting a revival of Mao, and at present, no market in the world has yet priced in a potential power struggle in China. (video

    Chinese Airlines' 1Q Profit May Drop 50% on Year. Airfares for domestic flights have dropped on year for the first time in three years. Airlines may post core operating losses in Feb. because of lower passenger and cargo volumes and high fuel prices, citing Zhu Feng, an analyst at Industrial Securities Co. - NOW can we short PCLN?

    China is easing lending curbs at three of the nation's four biggest banks, insiders say, letting the banks use more of their deposits to make loans after data showed new loan growth at a four-year low.

    The Reserve Bank of India keeps its repurchase rate at 8.5%, as expected, after inflation accelerated. RBI reiterates that future actions will be toward lowering rates, though remaining inflation risks "will influence both the timing and magnitude of future rate actions.”

    U.S. May Sanction India Over Level of Iran-Oil ImportsObama administration officials say they are worried India may run afoul of a new U.S. law restricting payments for Iranian oil, forcing the White House to impose sanctions on one of its most important allies in Asia.

    Rice Prices 10-30% Higher in Many Asian Nations. A number of countries in the Asia Pacific region have come close to their limit for agricultural expansion, Jose Graziano da Silva, director general of the Food and Agriculture Organization, said in prepared statement to be delivered at a conference in Hanoi today. High food prices and volatility remain a threat to nations, with retail rice prices in many Asian countries 10 percent to 30 percent higher than in 2011, according to the remarks.

    Fitch Puts U.K. Debt on Negative Outlook Days Away From Budget. Fitch Ratings said Britain risks losing its top investment grade because of its limited ability to deal with shocks, days before Chancellor of the Exchequer George Osborne will present his annual budget. Fitch changed the outlook on Britain to “negative” from “stable,” indicating a “slightly greater” than 50 percent chance that the AAA rating will be reduced within two years, the company said in a statement in London late yesterday, citing the weak economic recovery, high debt levels and threats from Europe’s debt crisis

    Britain's Inflationary Route to Default. George Osborne’s idea of refinancing the national debt with 100-year gilts, or even gilts issued in perpetuity, is a bit too clever by half.

    Spanish Stocks Left Out of Rally on Rajoy Budget Gap SkepticismSpanish stocks are the only developed market suffering losses this year as Prime Minister Mariano Rajoy fails to rein in the budget deficit fast enough to assure investors. The IBEX 35 Index (IBEX) has dropped 2.1 percent in 2012, the only decline among 24 developed markets tracked by Bloomberg. That compares with an 11 percent rally in the Stoxx Europe 600 Index (SXXP), the best start to a year since 1998

    Euro-Zone Firms Find Loans Hard to Get

    Watch Bernanke's 'Little' Inflation Capsize U.S.: Amity ShlaesThe thing about inflation is that it comes out of nowhere and hits you. Monetary policy is like sailing. You’re gliding along, passing the peninsula, and you come about. Nothing. Then the wind fills the sail so fast it knocks you into the sea. Right now, the U.S. is a sailboat that has just made open water, and has already come about. That wind is coming. The sailor just doesn’t know it.

    Goldman (GS) clients know they're being played, claims CNBC's David Faber in response to today's New York Times op-ed written by a former Goldman Sachs executive criticizing the firm. In his private conversations with many Goldman clients, Faber says they know they don't "come first" and that they're "fully aware" they're being "played." but are stuck because they still have to do business with the firm. (video)

    Wise Up on Goldman Sachs(GS). In his extraordinarily public resignation letter, Greg Smith, who had spent time recruiting the best and the brightest to Goldman Sachs, wrote, “I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.” The proper functioning of Wall Street is too vital to the economy to tolerate the duplicitous practices of Goldman Sachs and firms like it, especially after what the American people did to rescue these businesses in their darkest hours. The country’s political class appears to lack the power or will to hold large financial institutions to account. There is a massive leadership vacuum at the top of Wall Street today; and it’s quite possible that only continued, relentless public shaming will force the leaders of these firms to make the kinds of cultural changes necessary to bring their actions in line with normative behavior.

    Meredith Whitney: Invest In Citi(C)? Not In My Lifetime.

    Bank of Communications Co., China’s fifth-largest lender, plans to raise about 57B yuan ($9B) in the world’s biggest share salesince May, sources say. China’s Ministry of Finance and HSBC (HBC), the Shanghai-based bank’s two largest shareholders, will reportedly take part in the private placement.

    New iPad: a Million More Pixels Than HDTV. Apple's(AAPL) iPad could be described as a personal display through which you see and manipulate text, graphics, photos and videos often delivered via the Internet. So, how has the company chosen to improve its wildly popular tablet? By making that display dramatically better and making the delivery of content dramatically faster.

  232. Phil – question:  I have 5 March 17 FAS $82/86 bull call spreads, up about 25% at the moment.  Do I understand correctly that upon expiration this Friday the brokerage will just plop 5 x the $400 spread = $2000 into my account (that is, exercise the long and short calls) or do they actually sell the long and buy back the short and give me the difference?  Is there anything I should be doing in this case? 

  233. Advertising/JMM – Here is my idea for TIVO – they pay you to watch commercials!  I think they should let you work off your monthly subscription fee by paying people (through the sponsors, of course) to watch commercials.  They already know what kind of things you like and they can let you select from categories of ads and pay you, for example, .15 per commercial with maybe 2 or 3 questions at the end of each one.  That would give the sponsors great feedback and let them test commercials and people who watch 100 commercials a month would have a free Tivo subscription so they could skip all the other commercials – totally worth it for everyone.  A similar thing could be done on the web or with interactive cable boxes – at some point, there should be a consumer revolution when they finally wise up and realize that they are GIVING AWAY their attention –  which is something the advertisers value highly…  

    Riffs/Scott – I like that!  

    China/Diamond – Wow, that's just a great excuse to chop off a few heads (and already got one last night).  Art has it backwards anyway, it was Bo Xilai, now gone, who was making pro-Mao noises, not Wen – who kicked him out the door.  Don't forget "cultural revolution" in China is code for murdering rich people and intellectuals – warnings like this are more like Wen putting the squeeze on the top 1%, who, like our top 1%, have gotten a bit too greedy for the good of the country.  No one in China considers the Cultural Revolution to be "the good old days."  Here's context on Wen:  


    "Without a successful political reform … such historical tragedies as the Cultural Revolution may happen again," said Wen, referring to a decade of social upheaval sparked by Mao Zedong in 1966.

    That event turned China's society in on itself as Mao urged a nationwide movement to, among other things, seek out counter-revolutionary elements. Millions of people were displaced, beaten or killed.

    For many leaders of Wen's generation, it's a piece of history that reminds them of the chaos they're obsessed with avoiding. The summoning of the words "Cultural Revolution" lent a particularly stark tone to Wen's remarks as he said the need for change has reached "a critical stage."

    Stratfor/ZZ – Can those guys be any stiffer?  

    Lightening up/1020 – Here you go, enjoy.  There's 417 of these videos, you can subscribe to his channel and I'll see you at Christmas…  8)  

    Study/1020 –  Perhaps the thing is that, for the unexceptional, you need to be kind of a jerk to get rich.  This is a big topic, of course but it does occur to me the the reason it seems like a rat race to most people is because most people are as ordinary as rats so you just have to be the meanest, least moral, most obnoxious rat to claw your way to the top of the pile.  Then there are people who are simply talented and they cut through the crowd like a knife through butter and they will be successful in almost whatever they do and they can ascend very far up the ladder, without it having to be at the expense of others.  

    Those people are few and far between by comparison.  I guess an example of the two types would be people like Sting and Trudie, who are literally working their asses off for the Rainforest Concert at the moment vs the people who buy tables to take their clients to the event.  Not that all people who buy tables are jerks, of course, but for most of them, it's just a business thing and they come to the reception with stacks of business cards trying to network – that's the majority of the people there, unfortunately.   

    Why do we have to have an event in the first place?  Because, sadly, without the tax deductions and business expenses and the big concert with lots of celebrities – we'd be lucky to save 5 trees.  Charity is a funny business, you really have to twist arms to get money – watch Celebrity Apprentice if you think otherwise and see what they have to go through to raise money – and that's from their closest friends!  Unfortunately, the people who are genuinely generous – with time or money are tapped over and over again until they are exhausted.  They are the "low hanging fruit" in the charity circuit so everyone goes after them for so many things and then we have to deal with the "jerks" again – the vast majority who need a reason to give and usually want to know what's in it for them in some way or another.  

    That's the odd thing, I think.  The really exceptional people, for the most part, consider themselves lucky.  They don't have any illusion that they "deserve" to be better off than other people.  Maybe it's because they didn't have to claw their way to the top – which is not to say they don't work hard, just that when they work hard, it's generally more effective – so they advance further and faster.  I don't know – it's a very complex issue but worth exploring…

    Fed Twits – Well you guys got me to look at twitter for the first time in many months!  I even tweeted (I have 6,000 followers, I guess I SHOULD say something) how it puts things into perspective that only 12,000 people are following the Fed – we are actually a very small community of people who care about such things…

    Now, Lady Gaga has 20M people following her.  It would be an interesting experiment to set up a twitter account and simply copy every single tweet of someone super-popular and see if anyone cares about the exact same tweets coming from someone who is not a brand name.  

    Speaking of time-wasters.  20M people, even if they only take 2 seconds to read the tweet, is 11,000 hours per tweet.  So each utterance by Lady Gaga, at $8.50 an hour, costs America $93,500 in lost productivity.  I'm telling you there's at least a good magazine article in this premise….

    $36Tn/Kustomz – Let's see, that's AAPL $5,000 for sure.  You heard it here first folks….

    Fixed/Diamond – That was easy.  

  234. FAS/Jerconn – Call your broker, they all have their own rules and they vary by your account type and size within the broker sometimes.  

  235. Phil/typo
    Ah, yes, the rogue trader defense, but this kind of thing seems to be rather common and annoys consumers, many of whom are first excited, and then disappointed, and then accuse companies of false advertising. With $7 airline flights now a regular feature, consumers will convince themselves of anything.
    It might be a sign that companies employ undereducated computer clerks under a lot of time pressure to crank out hundreds of online ads and that no one in the company has time to look at them.



    An employee error caused incorrect prices to appear, wrote Tony Hsieh, CEO, in a blog post. “We have a pricing engine that runs and sets prices according to the rules it is given by business owners,” wrote Hsieh. “Unfortunately, the way to input new rules into the current version of our pricing engine requires near-programmer skills to manipulate, and a few symbols were missed in the coding of a new rule, which resulted in items that were sold exclusively on to have a maximum price of $49.95.”
    Interestingly the Zappos error was one that capped everything on the site at $49.99, so not a typo, but some kind of programing error. Even more interesting that the Tesco error also involved the number 49.99.
    Probably just coincidental that the CEO of Tesco's UK operations was fir…, um, resigned the same day. Last year Tesco was also involved in a less egregious online pricing error on a smaller scale over a Nintendo game player, but refused to honor its advertised price.

  236. Good Morning
    Phil—I have to roll my Appl march short 550—bought at $ 5 now  $40 and only going higher—I have margin but how does one decide on the strike etc--the parameters?--

  237. Phil/GIVING AWAY their attention
    Absolutely. I would like to strike a deal with Aeropostale that I will wear a T-shirt with the name of their company free of charge if they supply me with the T-shirts. I will also make deals with major league sports teams that I will wear baseball caps with their insignia on game days for a small consideration to help them promote their business.

  238. Phil – No bananas for me. I'll stick with unicorns…. :)