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Which Way Wednesday – Republicans and Democrats Both Want to Kill You!

What is happening to this country?  

Robert Reich points out that, in announcing the Republicans’ new budget and tax plan Tuesday, House Budget Committee Chairman Paul Ryan said “We are sharpening the contrast between the path that we’re proposing and the path of debt and decline the president has placed us upon.”  But the plan doesn’t do much to reduce the debt. Even by its own estimate the deficit would drop to $166 billion in 2018 and then begin growing again.

The real contrast is over what the plan does for the rich and what it does to everyone else. It reduces the top individual and corporate tax rates to 25 percent. This would give the wealthiest Americans an average tax cut of at least $150,000 a year.  The money would come out of programs for the elderly, lower-middle families, and the poor.  "So what’s the guiding principle here?" asks Reich.  "Pure social Darwinism. Reward the rich and cut off the help to anyone who needs it.

Most Americans who do have jobs continue to lose ground. New research by professors Emmanual Saez and Thomas Pikkety show that the average adjusted gross income of the bottom 90 percent was $29,840 in 2010 — down $127 from 2009, down $4,842 from 2000, and just slightly more than $29,448 in 1966 (all figures adjusted for inflation).  Ryan says too many Americans rely on government benefits. “We don’t want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency.”

Well, I have new for Paul Ryan, says Robert Reich:  Almost 23 million able-bodied people still can’t find work. They’re not being lulled into dependency. They and their families need help. Even if the economy continues to generate new jobs at the rate it’s been going the last three months, we wouldn’t see normal rates of unemployment until 2017.  

I wish I could tell you that Ryan's Republicans made the most disturbing statement I've heard from Government officials recently – but they didn't.  That honor goes to Obama's Attorney General, Eric Holder, who gave a lecture at Northwestern University outlining his three-part test for determining when it's "OK" to execute a US citizen without a trial.  Steve Colbert explains it nicely:  

Do you see a theme here?  We are being de-humanized by both parties in our Government.  They already took away your right to Liberty under the Patriot Act and Paul Ryan and his cronies are making the Pursuit of Happiness a game for the top 1% only and now we have Eric Holder saying that the right to Life is not so much a guarantee under the constitution as it is a sort of conditional privilege – as long as you don't piss off anyone in power.  

At the moment, the people in power seem to be on our side so Yay!, I guess.  The NSDAP rose to power in Germany with a popular "war" against Communism in which they too lobbied to change the rules of due process to "expedite" the necessary pursuit of their enemies, who could be anyone – anywhere.  As they morphed into the Nazi Party, they took advantage of those "minor changes" to consolidate their power. 

Soon the definition of who constituted a threat expanded to Gypsies, Jews, Black People, Homosexuals and anyone else who happened to disagree with them – BUT IT WAS ALL LEGAL!  When did "never again" turn back into "maybe later"?

Again, we're not "one of those people" so we have nothing to worry about, right?  Actually, we are right back to where we were in 2007, when I first began warning people that the ever-expanding wealth gap in this nation only served to make the top 10% (those of us who can afford to invest in the markets) THINK that things were going well – even as they were falling apart.  Even now, the infrastructure of this country is coming apart at the seams and Paul Ryan wants to cut 80% of the Government's discretionary budget over 8 years.  It's not even a fantasy – it's a nightmare!

Obama has already cut Government spending more than any President since Bill Clinton and 600,000 Government employees have lost their jobs (making Obama's net job creation numbers seem much worse than they are) but no amount of cutting and gutting will ever satisfy the Republicans until our entire Government is outsourced to Corporate Interests.  

You are probably thinking "Great – which ones so I can buy stock in them" but this is not a recipe for growth – this nothing more than a wealth extraction – draining America dry the same way business people drain the cash out of a near-bankrupt company by refusing to spend money and draining all of the cash flow until it dwindles away to nothing – at which point they default on the debts, lay off all the remaining employees (reneging on their pensions) while the top dogs parachute out and head off for the next fatted calf to slaughter (see SHLD).

15 Greek Billionaires rank among the World's richest men (an outsized number as their economy is 1/50th the size of ours) and they and the poorer 99% of the top 1% drained that country dry over the past few decades but they all get to walk away and leave the other 20M Greek citizens and their children and their grandchildren to clean up the mess they made.  You can see it in Greece because there was no interruption of the program between the Reagan/Thatcher/Kohl revolution of the 80s and today, while the US had 8 years of Clinton pushing some of the wealth back to the middle class – which bought us a little more time but, with a debt to GDP ratio now over 100% and rising fast – we're not very far behind.  


As you can see from the chart above, since the 70's and especially since the early 80's this country has done nothing but go massively into debt – JUST LIKE GREECE – and our wealth is being extracted by the top 1% – JUST LIKE GREECE – and they will throw the bottom 99% to the wolves when the bill comes due while the top 1% skate out of this country and leave it an ungovernable wasteland with no future – JUST LIKE GREECE but, unlike Greece – there will be no EU to bail us out.  

The EU bailout is merely and "extend and pretend" move by the wealth extractors to make the bottom 99% of the nations that haven't been destroyed yet think that business as usual is still OK and, meanwhile, let's borrow more money and lower those pesky taxes and eliminate those annoying regulations because "that will fix everything."  It's like the plot to a dystopian fantasy only we're not only living in it but we're playing the part of the unwitting masses whose lives are being sacrificed on the alter of profits for the puppet-masters.  

I know you don't want to hear this stuff but THIS is why I am concerned about the "rally."  I was right in 2007 but it took an entire year for the market to collapse – I don't think we have as long this time because our second assault on the Middle Class and the poor is akin to kicking them when they are already down.  On the left we have a chart of gas sales in California – the bottom 99% simply don't have anything left to give us and if people like Paul Ryan are going to insist on bleeding them until they die (or revolt) – he's likely to get that wish a lot sooner than we all think.  

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  1. Oil Lines

    R3 – 110.35
    R2 – 109.23
    R1 – 107.94
    PP – 106.82
    S1 – 105.53
    S2 – 104.41
    S3 – 103.12

    Yesterday's high and low – 108.11 / 105.70

  2. Phil, here are the levels based on our discussion last night. I also recalculated the 2.5% lines to be in between the other lines. Let me know if this matches what you want. I blew up the charts so that they are clearer for this post.

  3. The 5% line in the Dow chart moved when I rescaled the chart (I worked with a smaller chart for the daily update and I could not position it properly)  - I re-positioned it on the 12800 line in my charts. Annotating charts in Stockcharts is not that flexible as compared to what I use, but they look OK with some work.

  4. PP

  5. maybe we are at a top if Goldman is saying to dump bonds and buy equities???
    FU Goldman!!!

  6. Phil/Politics

    Your title today…….."Republicans and Democrats Both want to Kill You"
    I think you finally got it right.  Regardless of what many like to think, neither the Repubs or the Dems truly care about what is best for the people, or what is best for the country.  What they really care about is themselves, expanding their power base, and getting reelected.
    What is interesting is that they both have the same interest at heart, only they use a different approach and base to achieve their objective.  At the end of the day, they've created a system where we the people have to choose from the better of two evils, and depending on where you fall in the economic food chain determines which evil you vote for.
    I have to laugh at the Republicans with all their repeal Obamacare rhetoric.  I listened to one political expert who I believe hit the nail right on the head.  He said despite the Republicans call for repeal, it will never happen because just like the Democrats, they understand that Obamacare will dramatically increase the amount of government workers, government control, and government influence over an enormous industry.  This reality translates into more power for the politicians which is what deep down they all cherish.
    At the end of the day, while the Republicans will pretend they want to repeal Obamacare, they will never actually let it happen but instead use it as a political football to beat down the Democrats for years to come.  Very similar to the "tax cuts for the rich" football that the Democrats use so effectively.  It won't be long that the cost of our current health care system will force everyone into the public system.  Shortly after that, the average Joe will have forgotten how much he used to pay for the old system and instead be focused on how much the new system sucks, and how much it is costing.  Any honest person would have to concede that it will cost way way more than advertised, which will be a burden on the US economy for years to come, and would also have to concede that coverage, care, and efficiency will suffer just like it does in every other government run program. 
    So while the Republicans go on and on and on about how we need to repeal it for this reason and that reason, what they will really be doing is enjoying the power base that it will create while blaming the Democrats over and over and over again for all of its problems.
    Ok….enough politics……back to back red days are a rarity any more.  Odds are the Bots will keep it green today.

  7. Good morning,


    IWM      81.41,  81.61,  81.94,  82.12,  82.34,  82.67,  82.94,  83.18,  83.33,  83.55,  83.74,  83.96 and 84.36


    Also, I have P-bars to 82.82 and 82.34 and trend line support at 82.58 and 82.00

  8. StJean

    Nice post.  I'm confused why the DOW must hold is 13,600?
    How were these numbers established?

  9. And a follow up article on profit margins and their source:




    See the big source of profits? Yep, it was the government's monster negative savings. Or to put it another way, it was the huge deficit equalling 7.6% of GDP that really boosted corporate profits.

    Now what you have here is the justification for huge government deficits. Following the crisis, the private sector balance sheets were badly damaged, and government deficits have done wonders towards boosting GDP and corporations. 

    The title of Montier's piece is: What Goes Up Must Come Down!

    If you think that the deficit will inevitably shrink, then to maintain profits, something else has to change. Can consumers afford to save less? Can we shrink our trade deficit? Will there be a reason for investment to jump?

  10. The Baltic Dry Index is generally considered the benchmark for the price of moving major raw materials by sea.  With today's gain of 0.4%, the index is currently riding a 19-day winning streak where it has gained 25%.  Yet, even after accounting for this winning streak the index is still down 49% YTD.

  11. Levels / Exec – See Phil's post this weekend:

    He came up with the levels.

  12. Massive inflation may be right on Phil, one cannot deny it, but we can print until the cows come home, so unlike Greece, we cannot and will not default on our debts…

  13. JR

    How are you coming up with that 82 TL support?

  14. JRW
    good morning…just curious if you buy IWN at the open or you wait? or in other words, how do you decide when to take your first position?

  15. Rosie's take on the bullish (not) premise:

    “We realize that the widespread consensus is one of economic acceleration in the US.  To be sure, the data on retail sales, employment and housing have supported that view.  Unfortunately, weather impacts have massively distorted the early year data, with both January-February temperatures coming in five degrees above normal (exactly a two and a half standard deviation event).

    Meanwhile, we know that the European recessionis ongoing and the slowdown in Asia is intensifying – and there are other more arcane economic statistics suggesting that the overall pace of industrial activity is slowing much more than is evident to the naked eye.

    The growth in machine tool orders – a highly cyclical barometer – has plunged to its weakest trend since December 2009, before the era of “green shoots”.  The transportation services index in January fell 2.5% on a sequential basis, which actually only typically happens in a recessionary phase and the YoY trend has visibly peaked and rolled over.  Truck tonnage also collapsed 4% MoM in the latest month, which last happened at the depth of the great recession in March 2009.”

  16. exec,

    3/9 top and 3/14 and 15 lows

  17. More on my first take, insolvency etc. here.  A snapshot from C. Roche:

    Modern Monetary Realism

    Modern Monetary Realism (MMR) is a description of the monetary system applicable to nations who are autonomous issuers of their currency. Modern Monetary Realism describes how a government creates, destroys and utilizes its monetary unit and also how the private sector utilizes the state’s monetary unit for its own benefit.

    Modern Monetary Realism is based on the following principles of an autonomous currency issuer:

    • The Federal government is the issuer of net new financial assets to the monetary system. Households, businesses and state governments are users of the currency. While banks can create credit they cannot create net new financial assets (all bank loans result in the creation of an asset and a liability).
    • As the issuer of the currency, there is no solvency constraint as there might be for a household, state or business. In this regard, one must be careful comparing the federal government to a household because the federal government has no solvency constraint (ie, there’s no such thing as the federal government “running out of money” that it can create at will). Households, on the other hand, have a very real solvency constraint.
    • As the issuer of the currency, the federal government’s true constraint is never solvency, but inflation. The government must manage the money supply so as to avoid imposing undue harm on the populace via mismanagement of the money supply.
    • The modern floating exchange rate system helps to maintain equilibrium and flexibility in the global economy.
    • The currency unit created by the state via deficit spending can only be extinguished by payment of taxes. Therefore, a modern monetary system can best be thought of as a system of debits and credits where government deficit spending credits the private sector and payment of taxes debits the private sector.  One might think of deficits as “printing money” and taxes as “unprinting money”.

  18. Biderman's Take – share buybacks are boosting earnings… is doing this or returning to shareholders, not to expanding the business…..

  19. Phil, I agree completely with your comment last night, they do have to SHOW US THE EARNINGS…..I'm just suggesting that we could go higher because there's an ocean of cash and equity markets are a small lake for it to land in.  Not a pretty situation at all, and definitely setting us up for a crash….hence my comment about asymmetric risk being to the downside.
    Obamacare will only drive healthcare costs up.  It's a simple, Econ 101 concept.  Obamacare increases demand, shifting the demand curve up.  However, it does NOTHING for the supply side of the equation, in fact going so far as to shift supply DOWN by cutting Medicare doctor subsidies, fewer doctors = less supply.  
    Rising demand curve without an increase in supply = higher prices.  Rising demand curve with a declining supply curve = EXPLODING prices.  Great business if you're a hospital or insurance company, awful if you are a consumer.  And Republicans won't repeal it, no way.  
    System is broke from both sides.  Phil's dead on in today's comment.  

  20. Man, what's with VXX nosediving?!

  21. FAS and VXX not helping this morning.

    Average cost for the USO Puts is $1.99 and for the DIA puts $1.64 if my calculations are right. Average cost for TZA is 3.05.

  22. WTF is PCLN up another 10 and rising??

  23. Look at NFLX take off… Apparently a lot of people are into horror shows (figuratively and in reality)!


    Only on Netflix: Premier Horror Suspense Director Eli Roth Reanimates the Gothic Novel With "Hemlock Grove"

    From the critically-acclaimed novel by Brian McGreevy, "Hemlock Grove" updates classic monster archetypes for a post-industrial America in a tale of alienation, adolescence and murder

    Episodes begin exclusively on Netflix in early 2013     

  24. Charts look great StJ! 

    Looks like the lines are holding up very well (confirming our premise) on the Dow and S&P and it's not like we need daily confirmation anyway as these are long-term charts.  As I mentioned yesterday, we are HOLDING our levels well so far and that means – despite my voiced concerns – that we need to stay a bit bullish.  

    If the Dow pops 13,200, it has miles to go so I'm liking the pretty cheap DDM May $70/75 bull call spread at $2.10 (IF we get over that line), selling something like MCD Sept $90 puts for $2.10 or XOM Jan $70 puts for $2.15 or OIH Jan $35.67 puts for $2.45 (yes two oil plays!).  That's a good way to take a bullish poke for the next 60 days as a Dow breakout will take us way over that line.  

    I put up a lot of charts and stuff last night and I am still gravely concerned that we're topping here so let's just watch our levels and be ready to act.  I listed some of the Long Put List that are still playable into yesterday's close but let's not forget the TZA, SQQQ and DXD plays – it's good to have something that pays 500% in a market drop – just so you don't get caught with your pants down.

    Oil (/CL – May) is up at $106.50 this morning so we like that line for a short of course and gold (/YG) can be played short below the $1,650 line as Bernanke just made a very good case against gold ever being used as money (obvious to some but a shocker to the gold bugs).  Remember, oil usually holds up through inventories and then we get a good dip (sometimes after a head fake) after the 10:30 announcement (as long as there's a build).  Today they are expecting a small net decline so figure any net draw over 2M will be bearish for oil.  

    Were back to low volume and that may give us support and, of course, there's end of quarter window-dressing ahead so IF we break down now, then things are pretty bad.  More likely we drift through April 1st and then, if ever, we might get that big pullback but I like a 500% play like DDM and I like 500% plays on the short side.  Who knows – the way this market moves we may collect on both ends!  

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    9:30 Hearing: 'Europe's Sovereign Debt Crisis' (Bernanke & Geithner)

    10:00 Existing Home Sales

    10:30 EIA Petroleum Inventories

    At the open: Dow +0.08% to 13181. S&P +0.07% to 1407. Nasdaq +0.14% to 3079.

    Treasurys: 30-year +0.23%. 10-yr +0.22%. 5-yr +0.14%.

    Commodities: Crude +0.41% to $106.5. Gold +0.38% to $1653.25.

    Currencies: Euro +0.05% vs. dollar. Yen +0.26%. Pound +0.13%.

    Market preview: Stock futures are mixed as corporate news dominates the agenda, with the S&P benchmark +0.5% but Nasdaq -0.1%. Oracle is +2.1% following its FQ3 results but Baker Hughes dives 4.2% in the wake of a profit warning. Hartford climbs 6.6% after it bows to John Paulson to shed assets, but H-P (+0.7%) is so far little-moved on confirmation of its reorganization. Later: Bernanke and Geithner hearing, Existing Home Sales. 

    MBA Mortgage Applications: -7.4% vs. -2.4% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) increased to 4.19% from 4.06%.

    The AIA Architecture Billings Index prints 51.0 in February (50.9 previous). It's the 4th consecutive month in positive territory, with the new projects inquiry index hitting 63.4, the highest level since July 2007.

    "The idea that inflation is gone forever … (and) these artificially low rates can last, is silly," says Wilbur Ross, calling long-term Treasurys the greatest bubble. Turning to natural gas, where his big investment in XCO is sucking wind, he says he's buying more. "We like very much to invest in companies during time-limited problems." 

    Sign of a top?  Goldman Sachs is out with a report recommending an asset allocation trade out of bonds into equities. "Given current valuations, we think it's time to say a 'long good bye' to bonds, and embrace the 'long good buy' for equities as we expect them to embark on an upward trend over the next few years." (via)

    Sure to draw discussion today is Goldman's epic long call on equities coming out alongside GMO's caution. One interesting slide from the Goldman report – it expects global growth from 2010-19 to be the fastest of any decade between 1980 and 2050. (more of the Goldman report) 

    Buying is more affordable than renting in 98 out of 100 largest U.S. metro areas – even in NYC, LA and Boston, according to real estate company Trulia's latest rent vs. buy index. Homeowners are choosing, or being forced, to rent rather than buy, and the influx of demand squeezes the rental supply, pushing monthly rents higher.

    Government plans to begin bulk sales of foreclosed homes is firing up Wall Street's latest gold rush, with bankers refashioning themselves into landlords to take advantage of cheap prices. Funds are promising investors returns of 8-15% on rental properties, sure to draw interest in a 2% 10-year Treasury environment.

    The March Zillow Home Price Expectations Survey finds economists expecting prices to fall 0.7% in 2012, worse than the -0.2% forecast 90 days ago. Prices are expected to begin rising in 2013, but at a more muted pace than previously hoped.

    Sure to put a chill up the spines of gold bulls is U.K. Chancellor Osborne's announcement (during his budget address) of his decision to build up the country's gold reserves, currently worth £11B. The U.K. famously sold much of its gold for about $250/oz. near the start of the century, now it's buying at $1,650?

    Among the proposals in U.K. Chancellor Osborne's budget is a cut in the corporate tax rate to 24% in 2012-13 and 22% in 2014. This would make the U.K.'s corporate rate the lowest in the eurozone, save Ireland. Also to be lowered is the top personal tax rate from 50% to 45%. "Winner: Art Laffer; Loser: Art funding," chides the FT's John McDermott.

    Spain is at greater risk of default than ever before, Citi's Chief Economist Willem Buiter tells Bloomberg Radio. His remarks may be having an effect on the euro, which is pulling back even more from big early gains, now flat at $1.3224. Spain also red now, -0.3%. (listen live here)

    The U.S. exempts Japan and 10 other countries from financial sanctions because this "initial group" of countries has "significantly reduced" its Iranian oil purchases ahead of a June 28 deadline. Not included were China, South Korea and India, all heavy buyers of Iranian oil. 

    Hong Kong is the world's best place to do business, edging out the Netherlands, the U.S., the U.K. and Australia, in that order. The Bloomberg ranking evaluated 160 markets on six factors, including the cost of setting up business, the degree of economic integration and the readiness of the local consumer base. Brazil, India and Russia were the bottom of the list. 

    Exactly why SHLD is my example in the above post:  filing with the SEC tips off that although Sears Holdings (SHLD) is slashing costs and closing stores, top execs are still traveling in style. The embattled retailer spent over $793K on private jet service for CEO Louis D'Ambrosio alone.

    China's biggest banks are expected to post solid profits when they report Q4 income later this month, but will also higher non-performing loans for the first time in 3 years. "It's the beginning of a worrisome trend," says an analyst urging investors to cash in profits following a 42% rise in bank shares over the last 5 months.

    Argentina's YPF +10.9% premarket following reports the government will not nationalize the country's biggest energy company, and that it only wants YPF to boost production. Argentina's president had criticized YPF for not investing enough money in the country, and nationalization concerns grew.

    Coming back fast!  Investors of Green Mountain Coffee (GMCR) breathe a sigh of relief, as the company and Starbucks (SBUX) announce anexpansion of their strategic relationship for the manufacturing, marketing, distribution and sale of Starbucks-branded Vue packs for use in GMCR's recently introduced Keurig Vue Brewer. GMCR+7.8%, SBUX +0.3% premarket.

    Jefferies raises its earnings estimates for fashion accessories maker Fossil (FOSL) and ups its price target for the stock to $160 from $125, citing benefits from FOSL's upcomingacquisition of Skagen. The market for watches is "very robust" now, the firm says, calling FOSL is a "near monopoly" in the category. FOSL +1.1% premarket.

  25. H-P (HPQ 
    +0.75%) confirms reports that it's merging its printer and PC divisions to create the Printing & Personal Systems Group, to be led by PC chief Todd Bradley. The head of the printer ops, Vyomesh Joshi, is retiring after 31 years at H-P. (PR

    Apple (AAPL) is taking on Nokia (NOK), Motorola (MMI), and RIM (RIMM) in the battle of the "nano-Sim" cards. Backed by EU operators, Apple is lobbying for its tech to be recognized as the standard that would have to be adopted industry wide. The others are pushing an alternative design and fear a new front in the patent war if Apple wins out.

    Users of the new iPad (AAPL) are finding a big drawback to the device's blazing fast 4G connection: They burn through their data limits in as little as a day. "All the advantages of the iPad are completely neutralized by the two gigabyte data limit," says one user. Either consumers will have to get used to paying more or wireless carriers will come under pressure to change their pricing models.

  26. Shorting GDX.  Chart from SHJ.

  27. Could this be the VXX finally rebounding?

  28. I wish Phil would split his site in two.  One for his social commentary, the other on investment.  I'd  subscribe to the investment one.  I realize the two are not always separate, but I didn't join here for the social and political comment and my daily dose of apocalypse light.  

  29. iPad Data Limits / Phil – I think that it's one of the reasons that 90% of iPad users connect only to WiFi. Streaming only 1 HD movie on Netflix will consume easily 1/2 your data allowance. Using the webcam to make Skype calls will also use up a lot of data. Nowadays 2 GB is almost nothing in a world where you have connections at 20 Mbps!

    In the long run either people will not use their 4G connections or data plan will have to change dramatically but I am not sure that the networks are ready for this explosion of data usage. Maybe the best bets are still in the telco and routing hardware business and wireless tower businesses!

  30. Dead cat bounce on VXX?

  31. socialcommentary-apococalypse/thelerner  You need to know what's going on in the world around you and what other people think, whether you like it or not. 

  32. I've sold a few of the this weekly AAPL 620 calls (not for the AAPL port)….just because I don't think it gets there by Friday. 

  33. thelerner—-the two are never separate

  34. GDX / Pharm – The P&F chart shows a double bottom breakdown with a price objective of $40.00. Looking on a chart going back to last year, I see support around $47 and then $40 looks like the nice line! The chart is decidedly bearish, but we could still bounce off $50 on the way there.

  35. Fire and brimstone Phil, fire and brimstone…..
    You should consider taking your message to the "interwebs" to indoctrinate the masses!
    Can I Get An Amen?  :)

  36. Anyone else having problems refreshing today? Firefox keeps "waiting for" to load. Have to keep going back to the home page to view the latest comments.

  37. Goldman/Jabob – I think the blow-up over the resignation last week delayed this move but the timing is right for them to goose the top of the rally with a bunch of big announcements and herd the sheeple in at the top.  Notice they and the rest of the Gang of 12 are upgrading everything as well.  OPEN, LNKD, ORCL, FOSL, DIS and WSM all caught upgrades today with FOSL already outpacing AAPL this year so far!  

    GMCR is up nicely and for no good reason as the announcement is that they will keep selling SBUX coffee on their new machines.  I can see why SBUX would like that but GMCR kind of misses the whole point of the razor/blade sales model…  Hopefully they get back to $60 and we can short them again.  

    Politcs/Exec – Getting worse every week, isn't it?  Had to get that off my chest this morning because it's really sickening as well as detrimental to the economy.  

    Corporate profits/StJ – And he's not even looking at the possible negative impact of an event, like a melt-down in China or war with Iran or another EU Nation biting the dust or a US State defaulting – all very real possibilities between now and September. 

    BDI/Pstas – China was doing a lot of stockpiling and port activity in the US was up.  Generally, tanker rates hit unsustainable lows and are now bouncing but, like housing, in the long haul, they are down from 3,000 to 650 and now bouncing to 1,000 is really not a good reason to throw a party.  

    Default/Pharm – Maybe we can't/won't technically default but, by that logic, you'd say Zimbabwe did not default.  After all, they did pay everyone back!  If I lend you $1,000 and that $1,000 buys 400 Big Macs and you pay me back $1,300 in 10 years with the interest but that $1,300 buys 13 Big Macs because you trashed your currency – you can tell me you didn't default until you are blue in the face but good luck getting me to lend you another $1,000, much less the $30,000 you now need to keep up with the inflation/devaluation.  So then you just print more, right?  Then we're Zimbabwe…

    Rosie/Pharm – Ow, those are depressing numbers!  I like that Realism post!  

    FAS Money – I'm only tempted to sell more calls.  

    IWM Money – That one looks good. 

    $5KP – TLT coming back strong, up to $111.19! 

    $25KP – WTF?  How did we dip that much in one day?  FAS is most of the losses and that's going to be a long work-out if we don't get a pullback.  More DDs are off the table and if this period doesn't improve, we'll end up just trying to roll part of our losses to premium but we haven't had bank earnings yet and a 3% drop in XLF (48 cents) takes FAS down $10 so it's only a crisis if you don't think about the math.  

    • Let's buy back the VXX April $23 calls at .55
    • Let's spend .60 to roll the DIA 3/31 $128 puts to the $131 puts – still looking to stop out 1/2 at $1.05 (the new net). 
    • TLT March $112s can be bought back for .30 so let's do that as we look to sell new calls to cover on a move up. 
    • TZA April $18 calls can be rolled down to the $17 calls for .46 and then we can DD at $1.73 for new net $2.15 where we want to get 1/2 out.  

  38. thelerner – you're new around these parts…..
    Allow me to be of some help… l-e-a-r-n-e-r.  ;)

  39. stjeanluc / portfolio,
    How do you get the traded now price on the options? Is it a live feed in your sheet or do you type it while taking the snapshot?
    Just trying to use the same layout to track my positions (mostly 5K Portfolio).

  40. thelerner
    It's too easy to turn off the noise if you don't want to hear it (or in this case, see it). I don't always agree with Phil, but I find no harm in hearing Phil's perspective. Regardless of your own perspective it makes you think and that is a critical element to being a successful trader/investor. By the way, if you haven't noticed, there are some incredible "thinkers" here.
    Lighten up. There are plenty of trade ideas and investment discourse throughout the day to take your mind off political thoughts that don't match yours.

  41. stjean
    Industry has lost sight of limits and there is a point were no more data can be sent without more spectrum which has been limited. The next step will be to distribute data by area as in the internet but eventually real time is anything but real.We are pushing to the absolute speed limit now with max spectrum alocation. Everything could double if we give up transmition like no interation radio and TV, but that is a limit also.

  42. Algo activity – Maybe you already know about this, but i came upon the below site.  It is supposed to track the algo activity in the S&P.  I'm still not very clear on what i should be looking. Maybe one of the more experienced members can have a look and let us know if it is of any use.

  43. Stj / USO – didn't we DD at 1.30 to bring the cost down to about $1.60?

  44. Spectrum / Shadow – I agree and I guess it's the reason these guys are fighting so much over the available spectrum. I predict that many iPad 4G users will end up getting frustrated as the networks get stretched to the limit. I guess it will allow their new iPad to cool down then  :-)

  45. Prices / Pat – I wanted to link, but there are too many prices to make it practical (Craig does it on his IRA sheet) and I am worried about corrupting the spreadsheet… I just grab the Mark price from TOS when I do the update. 

  46. Correct Yshenhar, our cost is actually $1.67 as we DD at $1.35 from an average cost of $1.99. Thanks.

  47. No politics ? How about the weather? Forecast  for record high near 85 today in Chicago (eat your heart out SD)
    I have not mothballed my snow blower yet, however.

  48. Interesting chart that shows the volume levels at each price level. A pretty good indication of the support and resistance levels. For example on the Dow, lots of volume around the 12,000 level (our down 10% line) which seems to confirm that line. The grey is up volume and the red is down volume:

  49. dtpastramas
    I set up my own system to do the same with buying and selling. I have it up now and will see how it does, wish they revieled more of how they do it, first thought is not worth $278 per month. 

  50. shadowfax / spectrum — I believe the next step will be to convert to higher density shorter range protocols (a la WiFi). And it very well may be a major blow to the data providers. We already have Kinkos, Starbucks, Barnes and Noble(?), public libraries, airporrts, and some fast food chains providing free WiFi and I know of at least one town within 30 miles of here that provides free wifi for the entire town.

  51. There goes oil!!!………..I think?

  52. Again, I am not saying that we will or will not experience inflation or some sort of hyperinflation, but I don' think Zimba had the people (#s), infrastructure (not doing well here though), or resources we have in the US, so not really a fair comparison….

  53. Obamacare/Hoss – At first, costs will go up but the experience of EVERY OTHER COUNTRY ON EARTH is that the Government has been able to drive costs significantly lower over time – we're just 40 years behind most civilized countries.  

    VXX/JRod – They are only down .52 out of 18.75 while the VIX is down .50 out of 15.07 so I'd say it's holding up well by comparison.  

    HCBK caught an upgrade – there's one a lot of people got tired of waiting for last Fall.  

    PCLN/Jabob – Either they are trying to blow out the shorts or they are the single greatest company on Earth.  

    Here's a good buy list if we're heading to the moon – Most of these guys are bound to catch up if all are rising (VOD I really like and GOOG is good for a ride as well).  

    I saw that chart when I went to check on PCLN, as they are outperforming AAPL with a now 50% gain on the year so far (the day is young!).   NFLX is even better with a 70% gain and FOSL now over 66%.  No wonder the Nas is at 3,000…

    NFLX/StJ – So funny that they are jumping to a 50 p/e because they are getting into the studio business, which routinely has a p/e of 10.  Meanwhile, imagine if AAPL had listened to me and bought TWX – if one show drives NFLX up 3.3% in a day, what would owning all of HBO, Cinemax, Warner Brothers, TBS and New Line do for AAPL?  

    GDX/Pharm – Does he also think gold is going down?  Can't see one without the other.  

    Split site/Thelerner – I could do that but then what if I spent all day on the other site talking politics, which are often more interesting than the markets.  If you want me to be here all day then you're going to see what I'm thinking all day.  There are thousands of financial sites who will pretend they don't have political opinions (or pretend they do have yours) in order to get your money – this isn't one of them. Maybe you would prefer if I told you how great everything is so you could follow the Goldman zombies and dump all your cash into equities this morning with the rest of the suckers – you don't need me for that – you can watch CNBC and Fox and they'll lie to you all day long – enjoy…

    AAPL/StJ – That's why I love CSCO.  One way or another, the telcos must give people more bandwidth over time.  People will demand it and some provider will give it to them and start a price war.  What I want to know is what happened to WiMax – that was supposed to leap-frog the telcos and give you WiFi anywhere.  Someone either buried that tech or it was fatally flawed, I'm not sure which.  

    Interweb/1020 – Actually they want me to do market commentary on some kind of podcast.  No one has asked me to preach the liberal gospel yet.  

    Pragcap problem/Doro – Maybe StJ or Pharm can identify the offending item and remove it?  

    HFT Alert/Dpast – I don't know that one but it sure looks interesting!  

    USO/Yshen – I know we did one DD, then sold when we got even but 40 is the right number at the moment (and we're looking to get 1/2 out at $1.69, which is our net on this 40.

    Speaking of which, we had a net draw of about 600K so not very impressive and not supportive of $106.50 (or $106 for that matter) so game on, of course, with the /CL shorts off that $106.50 line.  

    EIA Petroleum Inventories: Crude -1.2M vs. consensus of +1.9M. Gasoline -1.2M vs. consensus of -2.1M. Distillates +1.8Mvs. consensus of -1.6M


  54. sold SFD puts on the 200 MA violation and some MT puts as well.

  55. PragCap link works find for me.  Otherwise go to pragcap dot com.  Click on Tools and Resources….understanding modern monetary theory.

  56. i have said for a long time: both our governing parties suck..two guys are in a basement up to their knees with gasoline one is cantor and the other guy has one match the other two either of them have an edge..the electorate has been good and snookered for a  successful person..i can say that neither party has my interest at heart ..its all self interest all day long..all of them should be kneeling in fornt of madame lafarge..i listen to axelrod and idiots form th eright and i am just amazed at their shallow lack of any coneptual breadth..i miss clinton
    (depsite his killing duet of nafta and glass steagall repeal)

  57. And the same volume chart for SPX – seems to confirm a line around 1350 (we have 1360)

  58. GDX/shj charts – he does  not always post gold, but IF we are in a recovery, an inflation is tamed and treasuries are going to go down, there is no reason for gold to go up.  Money should come out of that asset and into the market….unless we have a war of course….

  59. often when a video is posted my refresh always goes back to the video and i have to cntrl – end to pick up where i left off. If i post from my iphone all my refreshes after that go back to my post.

  60. Phil / Health care costs — Perhaps, but I think you're mixing up governments that care with ours that "want to kill us" (or at least allow the corp/government revolving door).  We'll see when the the lobbyists to get a foot hold.

  61. thelerner/site – separate politics and money? rolling on the floor laughing my ass off!!!!!

  62. Doro – I removed the post that mentioned (no realtime link though so not sure what the problem was). Was not giving me any problems though, but better safe than sorry!

  63. Phil/Liberal Gospel   I just did….  and I'll drive… :)
    Seriously – I think a podcast would be great.

  64. Gold / Pharm – That chart is also bearish and the P&F chart points to $1580 as a support point which also happens to be a 78% Fib retracement line 

  65. pstas
    I used my snow plow yesterday, 1 foot in the Teton foothills coming your way!

  66. Looks like another use for Nat Gas:

    No, not the sensation you get when you have gulped your ice cream too fast. SUGAR Freeze is the a new propulsion concept developed by Boeing that aims to revolutionize air travel. Standing for Subsonic Ultra Green Aircraft Research, the NASA-commissioned project (codenamed "N+4") looks at immature technologies in the hope of kickstarting research for the future. It's reportedly 60 percent more efficient than the equivalent Boeing 737-800, thanks to a very experimental propulsion system. Cryogenically stored liquified natural gas (hence "Freeze") is burned in a pair of unducted fan engines while also powering a solid-oxide fuel cell as an aft-thruster. With LNG projected to remain abundant, more environmentally friendly and cheap well into the century, it makes an ideal substitute to current aviation fuel, which is none of those things. Currently it's far too unsafe a design to contemplate building, and there are concerns about methane in the natural gas production process, but hopes remain that the kinks will be ironed out well before the 2045 deadline.

    Not sure how I feel being strapped 30,000 ft in the air on top of a LNG tank though….

  67. I heard Bozeman Montana has a low cost wifi for some areas, extremely fast for under $20 PER MONTH!!!!

  68. Phil, I have 2k shares of HCBK with $2980 loss(sold $10 puts and got assigned), I am  thinking I should just take the loss and "selling something like MCD Sept $90 puts for $2.10 or XOM Jan $70 puts for $2.15 or OIH Jan $35.67 puts for $2.45" to get my loss back, what do you think?  TIA. 

  69. FU CMG!!!

  70. Stocks that never go down:

    Currently, there are several stocks in the S&P 500 that have traded at overbought levels for eight weeks in a row or more.  Seemingly nothing has been able to stop these 'teflon' stocks.  The list below highlights the seventeen names that have closed more than one standard deviation above their 50-day moving averages for at least the last 40 trading days.  It is no surprise that names like Apple (AAPL), Nike (NKE), Chipotle (CMG), and (PCLN) are on this list, as they garner most of the headlines.  Other names, however, are a bit more of a surprise.

    Not a surprise to Jabo, CMG and PCLN are on the list….

    FU Overbought!

  71. stjean
    30,000 ft. isn't the problem, everyone would die in every crash and some on the ground. Crashes will no longer be on the local news, everyone will have heard that!

  72. From Forexlive, blame options for the quick slide in EUR.. If this is fact and one large trade moved every market as a consequence then we are skating on very thin ice… Here's a what if, what If this coincided with a large seller in equities? Cascading effect..
    1.3180 expires may be the culprit behind the swift slide below 1.3210 support and ultimately as low as 1.3187.
    You don’t often see a move that sharp tied to a strike that far away. I can only guess someone was long a EUR call struck at 1.3180 and wanted to book a quick profit. A large UK clearing bank led the sales, trades say.
    1.3110/15 should provide some resistance on rebounds near-term.
    Stops at 1.3180 are noted, traders say.


  73. That's what worries me Shadow…

  74. Hello All – Does anyone know where I can find Phil's SQQQ, TZA and DXD plays?  Thank you.

  75. 85 in Chicago/Pstas – That Global warming myth sure does have a lot of hot air!  

    Zimbabwe/Pharm – I don't think that stuff is a major factor when it all hits the fan.  After WWI, Germany was a very advanced, industrialized nation with all of the advantages we have today and, like us, they had just spent massive amounts of money on a pointless war but, unlike us, they didn't pretend they won.  The bottom line is that debt led to money printing, which led to other countries refusing to accept their paper, which led to more money printing and then hyperinflation where white people in business suites, rather than small black children, had to cart wheelbarrows full of money around to buy things.  

    I'm sure that guy never expected this would happen in his country either…

    I remember one Summer when I was in Italy and the menus had no prices because they would change them almost daily as the currency dropped.  In the last 25 years we've had hyperinflation in Boliva, Nicaragua, Poland, Brazil, Peru, Zaire, Mexico, Russia, Romania, Ukraine, Georgia, Yugoslavia, Argentina and Angola – it's not about the people or the infrastructure – it's about the inability of the country to continue to fund it's debts and, if interest rates go up to 6% and we have to find $900Bn a year just to pay interest – we're going to be one of them, but we sure won't be alone.  

    Speaking of Deflation – Dollar just popped to 80.03 with Euro diving to $1.3187 and Pound $1.5835.  Oil going up past $107 though and gold flat.  

  76. Never seen spring ever arrive this early in Chicago.  Truly weird

  77. VXX selling off again…

  78. Oil flying now – $107.50!  I don't see any reason for it so just have to short the .50 lines with tight stops and hope we get a winner eventually.  

  79. stardawg / 1st position

    Please read this;   just wait to hit a line and buy the direction from that line.

  80. ARIA / Pharm – Nice run! And i though the news were negative yesterday. They dont get a reco from the panel and yet the stock rallies. Go figure..

  81. We had snow here in SW WA this morning. Usually we are past our last frost by this time.

  82. dpastrama
    I know have HFT Alert split with Algo Futures WOW index to compare. Last year the WOW helped with day trading, the BOTS algoed around that so now it is either too late or a contra indicator. HFT is looking like a recent history oppinion.

  83. rainman/MT – what put strikes r u selling?

  84. Algo / Shadowfax – so this HT alert is more like a lagging indicator? 

  85. Modern Monetary Realism/lending gov money:
    Actually, MMR points out that countries like USA don't need a bond market, anymore than a scorekeeper updating an electronic scoreboard has to "borrow" points to put up on the board when a team scores. I don't borrow from anyone when I increase the number in a spreadsheet cell.
    A better analogy, to me, for what the USA is doing is a company that runs the printing press printing stock certificates versus issuing debt. Equity raised doesn't need to be paid back, but you can still trash the company.
    Hyperinflation comparisons to Zimbabwe, etc. are a bit of a stretch. Hyperinflation historically is almost always coincident with a wholesale societal rejection of the current monetary regime.
    But the USA could be setting itself up for much more inflation than would be healthy.

  86. SHLD puts sure are expensive
    NFLX calls are cheap though. Go NFLX.

  87. nicha — Sold the SFD Apr 22p @ .65 and MT Apr 20p @ .79  Have to play short term with the vix this low. Looking to match those with the SFD 24c's and MT 22c's on strength.

  88. Another look at P/E ratios:

    The difference between the two: The current P/E ratio of 15.4 looks historically cheap –a bout 28% undervalued; However, using Earnings Yield , the market appears fairly valued. The current yield is 6.5%, the average 6.6% making SPX 0.1%  overvalued. (P/E lower is cheaper; Earnings Yield higher is cheaper)

    Interesting for the 2 people left (including Phil) who still rely on fundamentals to value the market!  :-)

  89. PETM….check it out.   I'm long

  90. Lflan,
    I have not entered the April 575/600 spread?  In your opinion, is it still a good entry point at the current price of $15.48?

  91. dpastramas/ HFT Alert
    My understanding of HFT alert is that it's supposed to accurately measure how much algorithm activity is occurring versus actual buyers. This should also give insight as to what direction and levels the algorithm's are "gunning" certain stocks or indexes to, which for the most part is only useful if the info is in "real time"

  92. Iflan:
    What are you playing on PETM? thx

  93. Interesting comparison between the AAPL and AMZN models:


    "In the rush to match the pieces," he writes, "most of Apple's rivals have missed the critical connections that draw the entire ecosystem together into a coherent whole."

    Amazon's business model, of course, is the mirror image of Apple's, as Adner notes:

    Amazon is differentiating itself from Apple in terms of both its footprint and its profit model. Apple captures the bulk of its profits the moment an iPad is sold, while its partners capture value over time as users consume services. In contrast, Amazon's profits accrue over the lifetime of the customer with every on-platform purchase In this regard, Amazon's incentives seem more aligned with those of its media partners ("we win together over time") than Apple's with its partners ("I win first; you later…maybe").

  94. ongba….That goes up by $9.50 or about 60% if AAPL above $600 a month from now.  Seems reasonable to me.

  95. Lflan,
    thanks for your thoughts.  Are you planning to hold that spread in the virtual AAPL portfolio till expiration?

  96. phil actually the guy in the picture is a wheelbarrow manufacturer…he's advertising :
    'die brieftasche auf radern"
    the wallet with wheels

  97. I bought some April 55 calls on PETM.   Premium on those is about .38 at the moment.  A further out bull call spread might be a good way to go as well, say July 55/60 or 60/65. 

  98. All suck/Angel – Well we either have to run or find someone worth voting for although Jefferson was right when he said:

    The tree of liberty must be refreshed from time to time with the blood of patriots & tyrants. It is it's natural manure.

    He also said, in the same letter:

    God forbid we should ever be 20 years without such a rebellion (Shay's). The people cannot be all, & always, well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty. We have had 13. states independent 11. years. There has been one rebellion. That comes to one rebellion in a century & a half for each state. What country before ever existed a century & half without a rebellion? & what country can preserve it's liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms

    $107.25 and falling – that was quick!  See, it's OK to lose a few nickels as the winners are often quarters…

    Video/Morx – What browser is that? 

    Health care/Rain – The problem is you need a STRONG Government to deal with strong Corporations – we don't have that and, of course, the Reps goal in life is to make sure that never happens.  How is it possible that the President of the United States isn't seen as MILES more important than the President of XOM or GE or IBM?  Yet who gets more respect?  The United States is a $16Tn Corporation – we should start acting like it and not letting our divisions run the company.  

    LNG planes/StJ – You know I won't be on those for the first few years!  

    HCBK/Bob – So you are down about $1.50 a share at $7.37?  I'd sell 20 Jan $7 puts for .70 ($1,400) and buy 20 Jan $7 calls for .90 ($1,800) and that pulls $14,340 off the table and then you can sell 10 OIH Jan $35.67 puts for $2.35 but do be aware that if OIH drops 20% (to $34ish) that your margin requirement will go up considerably so make sure you REALLY want to own them if you are going to do something like that.  That gives you the short put revenue ($2,450) and all of the upside on HCBK and the worst case is you own 2,000 shares of HCBK again at net $7.15 and you own 1,000 shares of OIH at net $33,220 (21% off).  

    $111.61 on TLT! 

    Great list of Teflon stocks StJ – Probably good Long Put candidates as the premium on the put side should be worn down considerably.  

    Euro/Kustomz – Was a very strange move but what a gift on the oil spike.  

    LOL 1020, great quote:  "Then Barton Biggs goes full-retard long."

    Disaster hedges/Ink – TZA was the top of yesterday's morning post.  

    • SQQQ June $10 puts can be sold for .60 and the June $10/14 bull cal spread is $1.05 for net .55 on the $4 spread.  
    • DXD May $12 calls are $1.20 and those can be offset with one of this morning's bullish short puts.  

    Meanwhile, Dollar failed to hold 80 so not the best time to add shorts.  Watch that S&P 1,405 to confirm a bullish recovery as well as 835 on the RUT.  

    At the moment, the DDM play above is a better way to go as we had a nice sell-off on the Dow.  

  99. ongba……Not necessarily.   If I squeeze it for another 5 or 6 bucks I may close it out.  Also depends on when April earnings are going to be announced.  I've not sought that date yet.  I may want to be in a totally different set of plays throught earnings.

  100. Early Spring/Jame – Enjoy:  

  101. dpastramas 14 real
    The delay is what bothers me. It is worthless in day trading or buying or selling at any actual time. What I am interested in still is if it could be usefull in short tem trends. If its about algo vs actual buyers it will never be as god as Tick data which shows bid and ask wars in real time BOTS or not.

  102. PETM looks surprising like CMG! Do a 3 year comparison. Jabo, another short for you! :)

  103. rainman…and they both sell food!

  104. AAPL BPS/iflan and Phil – iflan: remind me when you opened the current Mar4 aapl bull put spread.  I also do these – but only on weeklies – and I only use my margin to be outside of the money and "drop zone" and then some.  ie – using the margin to trade significantly more contracts, but with much smaller premium.

  105. FU Rainman

  106. Phil / strong government — Correct. We don't have a strong government. Nothing will change that until the incentives change. Until then, the lobbyists will pay the politicians to build profits for the health care industry. Just another way to squeeze the people… and what better way than fear of death?

  107. Hyperinflation/Chaps – Depends how you define it.  I'm really just saying we will probably inflate 5-10x over a pretty short period (decade) and suddenly we'll all have multi-million Dollar homes with less than $1M mortgages and we'll cash them in and retire and tell our kids what amazing investing geniuses we are when all we did was get leverage early in an inflation cycle.  

    CNBC saying $110 oil and the fact that we spiked to $107.50 means "somebody knows something."  Don't you just love their logic?  

    Yield/StJ – Yeah, I have to stop reading Barry – he's way too logical for this market.  Good point on AAPL. 

    LOL Angel!  

  108. lflan / food — Oh, I didn't make that connection.  I like food stocks and the industries that provide them. I looked at the technicals of PETM awhile back but decided against playing them because around here, in the rural environment, pets are the first to suffer in economic downturns. Of course, I'm talking about a larger range of pets including hoofed animals.

  109. BCS – doing the same with bull call spreads – almost always looking at DITMs – I do much better calling where a stock is NOT going to go in a short time period – than trying to pick it long(er).  From many things learned here – more on that later if any newbies care – in my margin account, I target a "mere" weekly gain of 1.5%-2.0% – in absolute terms.  I then prefer to be in cash at the end of the week – and try not to get in again until Monday has played out.  Again, I use my margin to allow me to buy (bull call spreads) or sell (bear call spreads and bull put spreads) in volume albeit with a smaller premium. Naturally, the txn costs are greater, but I'm looking at absolute gains here.  Still learning, but if I hit my mark early – I'm out. Tho now I'm layering in the semi-rule that if I want to be a bit riskier (fatter premium, less drop or rise zone – or uncap part of a bull call spread) I only do it to the extent that I'm still able to stay on track (stop limits, etc.) with my weekly gain average.  I only trade weeklies and I only have 1-2 stocks open at a time.  Any after hour thoughts for a basic student?

  110. N**FX    That's the way I like to do it.   Sell the bull put spread on Friday for the next weekly.  Then you have premium deterioration into Monday.   Make sure you are far out-of-the-money with the spread.  And do this with a stock definately headed upward.    Don't try to make a lot on the play.   Even if you only make 3%, that's a lot for a one week play. 

  111. Bull Put Spread / Iflan – Can you please give an example on AAPL? I am only used to buy spreads and not sell them (Phil got me scared)

  112. rainman…..My pets seem to eat the best food available.  When I go to meetings (2 or more evenings a week) I generally order a good steak, eat about 1/3 of it and bring the rest home to my 8 pound Yorkie 'halfpipe'.    So he eats pretty high on the hog, as they say.  Or in this case, high on the steer.  Not unusual for him to have filet mignon 3 or 4 evenings a week.  He turns his nose up at the stuff they sell at PetSmart. 

  113. rainman
    Around here all shelters are full, they don't take horses so they turn up all over looking bad.

  114. I don't see a correlation in that chart:

    Certainly not one to justify another tax cut!

  115. dpastramas…There is an example in the AAPL portfolio.  Last friday I sold 30 AAPL 560 weekly puts for $4.10 and bought 30 535 weeklies for 1.00, thus collecting 3.10 for the spread.   Right now they are at .43 and .05, or .38 for the spread.  So that play alone has earned  88% on the play or over $8,000 for the 250k account in less than a week, which is a rate of return of return of 3% on the accunt per week just on that one play.  And note I chose the weekly price of 560…..highly unlikely that AAPL drops to that level in a few days.  Not impossible, but highly unlikely for this particular stock at this particular time. 

  116. And some explanation for the chart:


    Does this prove that capital gains taxes are unrelated to economic growth? Of course not. Many other things have changed at the same time as gains rates and many other factors affect  economic growth. But the graph should dispel the silver bullet theory of capital gains taxes.  Cutting capital gains taxes will not turbocharge the economy and raising them would not usher in a depression.

    Low capital gains tax rates do accomplish one thing: they create lots of work for lawyers, accountants, and financial geniuses because there is a huge reward to making ordinary income (taxed at rates up to 35%) look like capital gains (top rate of 15%).  The tax shelters that these geniuses invent are economically inefficient, and the geniuses themselves might do productive work were the tax shelter racket not so profitable.  And the revenue lost to the capital gains tax loophole adds to the deficit, which also hurts the economy.

    Thus, it’s no surprise that there’s no obvious relationship between capital gains tax rates and economic growth. Indeed, the low rates on gains might do more harm than good.

  117. dpast…I quoted those numbers incorrectly.   That spread is now at .18/.07,…..only worth 11 cents when sold last Friday for 3.10.  

  118. HFT ALGO
    Interesting show, HTF showing fake up move and algo now a sell signal during a buy program. BOT program?

  119. Money is flowing out and a large blok sold below bid!

  120. Rainman, here in Miami we have a shortage of horses from people eating them ; )

  121. Sorry for the multi posts

  122. Spreads / Lflan – I think the trick is to look for strong support level. For example the 50 day MA for AAPL is around 555 right now. This would seem like a safe place to start. This has been breached before, but not with such a bullish trend underneath!

  123. Iflan – Thanks, will have a look.I assume this requires quite some margin.
    Actually i was doing the opposite, buying DITM Bull Call Spreads in big quantity, e.g. last Tuesday I bought a weekly 550/555  for $4.6 when AAPL was trading at 575.  I made a decent return (~10%) and didnt lose my sleep over it. God bless AAPL :-)

  124. Alpha Indices – looks like a tool that can be used to buy under-performers, when they introduce indices alpha indices (like Dow – SPY). Any thoughts on utilizing this tool?

  125. Not market news, but can't believe the Jets wanted and got Tim Tebow.

  126. yield/stjean:  Actually according to the Fed stats, the historical average yield for 20 Year U.S. Treasuries since 1953 have been 6.2% and for seasoned  Aaa rated corporate bonds from 1953 have been 7.05%.  They both now stand at 2.75% and 3.85% respectively. 
    Which is why the equity risk premium was so high at the beginning of this year at around 6%.  The Fed's ZIRP and QE policies are forcing people to grasp for yield in riskier assets.  So equities could be considered "cheap" on a relative basis compared to fixed income.

  127. Money changed direction which indicates the BOTS have both HFT and Algo beat at their own game. Algo is hung up Lines are crossing so I expect a double fake to ??????? Useing JRW's line up or down from here!

  128. Money changed direction which indicates the BOTS have both HFT and Algo beat at their own game. Algo is hung up Lines are crossing so I expect a double fake to ??????? Using JRW's line up or down from here! One thing is for sure neither program is worth a dime, what you see is what you get!

  129. iflantheman / pets
    My girlfriend's cat eats like your dog does (leftovers of salmon, chicken, filet mignon).  How do we get these furs to appreciate how good they have it?  : )

  130. pets/ronresnick:  You know pets used to have to work for their food.  Cats had to catch pests and dogs had to stand watch, pull sleds, and hunt pheasants.  Now they are just big ol' welfare queens living off the Human's dole.   Put them back to work, I say!

  131. yes, ONE income type, no differentiation into "ordinary" and "capital". that would be so easy but no one listens to easy.

  132. pets/kinki
    This pet works for his food:

  133. Yield / Kinki – Isn't it part of the plan?

  134. ronresnick / appreciate — My 130# Central Asian appreciates any treats she gets. When I give her a bone, she will slink up to me with her head low and nudge me a few times with her snout before going to work on the bone. Even when I put the bone on her "place" (bed) while she is occupying it, she makes it a point to come over to me to "thank" me before eating it.

  135. stjean: yep. another bubble where things like "historical averages" become temporarily…meaningless.

  136. russel
    Loved that, my cats do tricks without the treats. What I liked was the treats were dry cat food. The problem with feeding pet human food is it mostly gets them sick and or fat which causes the same things in fat people. Best pet food is more expensive than Wall Mart but it is balanced for pets. 

  137. Fox News / StJ – You gonna love this! Click on the link below.  Fox news reporting the Toulouse tragedy.

  138. Funny Dpas – but good Photoshop work….

  139. rainman
    Fact!!!! Cats love to chew on a bone also, mine like pork ribs the most.

  140. We got clients long on $CRM at 154.41 as the stock looks very solid. CCI trending higher and broke key price channel today. Target 157.50.

  141. CRM is a bit pricey David – forward P/E is 532! But momentum is on your side no doubt… And besides, everything is going up now, it's a risk-less market … until it's not anymore.

  142. There is absolutely no reason to sell off :-) but, today feels like one of those days. I'll go back and sit in the corner now.

  143. Most manipulative and inaccurate article of the week:


  144. Tebow/Rustle – That's really strange because they just extended Sanchez for 3 years, can't see Tebow being happy as a bench-warmer and I really can't see the NY Jets doing a prayer circle!   On the other hand, he'll make special teams an adventure as you'll never know when Jets will run a stunt play…

    12:00 PM On the hour: Dow -0.24%. 10-yr +0.35%. Euro -0.23% vs. dollar. Crude +1.17% to $107.31. Gold +0.39% to $1653.45.

    12:39 PM European shares close mostly lower, unable to make up any ground from yesterday's steeper losses. Stoxx 50 -0.3%, Germany +0.2%, France -0.1%, Italy -1.2%, Spain -0.9%, U.K. +0.1%. Euro -0.2% to $1.3201

    1:00 PM On the hour: Dow -0.08%. 10-yr +0.33%. Euro -0.16% vs. dollar. Crude +0.92% to $107.05. Gold +0.17% to $1649.85.

    2:00 PM On the hour: Dow -0.16%. 10-yr +0.43%. Euro -0.18% vs. dollar. Crude +0.87% to $107. Gold +0.25% to $1651.15

    This is WITH great weather and an extra day:  Feb. Existing Home Sales: -0.9% to 4.59M vs. 4.6M expected, 4.63M prior (revised from 4.57M). Inventory of unsold homes +4.3% to 2.438M; months supply 6.4. Median sales price -3.5% Y/Y to $156,600. “The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers confidence,” NAR's Lawrence Yun says. - ROFL on that spin from NAR!

    Vital Signs: Home Construction (WSJ)

    The fake housing recovery (Money CNN)

    look at the ratio over time between the QQEW (equal-weighted Nasdaq 100) vs. the QQQ tells the story of a tech index advance held aloft by fewer and fewer issues.

    In a busy day for analysts taking strong views (IIIIII), Bob "the Bear" Janjuah chimes in with the most extreme stands of all: The market is totally rigged, it's a bubble, he still likes only gold and high-quality non-financial corporate debt, and Bernanke and Draghi are running roughshod over democracy and the rule of law.

    Six ‘Investment Potholes’ That May Hinder the Stock Rally (WSJ)

    He's no Muppet: Ameriprise Financial's David Joy thinks that Goldman's long call is timed too late with the market up 30% from October lows. Though he likes equities, he thinks it's time to trim some profits and stand sector neutral. (video)

    Of Muppets and Manhattan (City Journal)

    A look at worldwide equity performance thus far in 2012 shows last year's most beaten-down markets leading the way. Of particular interest is the move in Japan – way ahead in local currency terms, but not so hot in dollars. It may be best to stay hedged

    Greece on the breadline: cashless currency takes off (Guardian)

    Greece’s Disgraceful Debt Default Amidst Calls to “Euthanize” Bondholders (Forbes)

    Leveraged ETFs are overwhelmingly a playground occupied by the small investor, finds Deutsche's ETF research chief Shan Lan, who pegs the number at 85%. Inverse ETFs are a bit less lopsided, garnering 27% institutional use. The broad ETF market? It's about evenly split between small and institutional holdings.

    Warren Buffett has taken the lead in a $1M bet with Protege Partners that funds that invest in hedge funds couldn’t beat the stock market over 10 years. Four years after the bet was made, Admiral shares in a Vanguard mutual fund that tracks the S&P 500 have returned 2.2%, while five Protege funds created for the bet are -4.5%.

    Despite new laws aimed at reforming the financial system, the largest U.S. banks remain a threat to stability and should be broken up, Dallas Fed's Richard Fisher says. The big banks "significantly hamper the Federal Reserve's ability to properly conduct monetary policy… their presence continues to play an important role in prolonging our economic malaise." (pdf

    NOW the move makes more senses (yesterday they went up for no reason):  Chinese solar stocks sink as NYT notes the impact of smaller-than-expected tariffs on the market "could be limited" but tariffs could be added in May when the Commerce Department will consider whether China is dumping solar panels in the U.S. YGE-12.5%TSL -7.8%STP -9.8%JASO -6.3%. U.S. solar shares also are lower: FSLR -5.9%SPWR -6.2%.

    The U.K. Treasury clarifies George Osborne's comments on gold, saying that they weren't "gold-specific" and that the U.K. has no plans to increase its reserves, tweets Reuters' Jamie McGeever. "Except for the mention of 'gold' holdings. Specifically," replies former U.S. government official Tony Fratto.

    Transocean (RIG -0.2%was excluded from a government investigation of the Chevron oil spill in Brazil last year, according to Bloomberg. Sources say that regulators are pinning the blame on a miscalculation by Chevron on the pressure it should have used to drill the offshore well.

    Global Hunter Securities cuts Baker Hughes (BHI -4.6% to $45.60) to Neutral from Accumulate and slashes its price target to $40 from $60 following the firm's profit warning. Global Hunter is also unhappy about "the lack of visibility as to when international will rebound and how BHI-specific NAM issues will be resolved."

    "The new Middle East," says Citi of North America in regards to oil production, where strides in resource extraction could have the continent producing more oil than Russia and Saudi Arabia by 2020, with profound positive consequences for the U.S. "The coming generation of Americans … may be privileged to witness a remarkable resurgence … (a) minor industrial revolution."

    The construction of a large rare earth metal refinery in Malaysia may be delayed further, as controversy continues to surround the project. Opposition parties in Malaysia are refusing to cooperate with a probe into the safety of the proposed plant, which is owned by Lynas of Australia and is one of two giant projects designed to break China’s near-monopoly on the production of rare earths.

  145. HFT And buy program
    At about 2:35 I detected a small IWM buy programHFT isn't to 2:30 yet, Algo is 30 minutes behind. What I want to see by 2:30 is IWM holding over JRW's 83.33 line or at least R1, 3 strikes and down again without math.

  146. Burger Wars: As hamburger chains such as Five Guys, Smashburger, and In-N-Out Burger continue to raise the ante on the "premium" burger market to challenge McDonald's (
    MCD -0.7%) dominance, new players emerge on the scene to test the waters in the +$10 hamburger market. While Mickey D's has unbeatable market penetration and affordability on its side, industry watchers warn franchises could lose sales to tastier offerings.

    More on the Burger Wars (previous): While fast-food burger joints saw a respectable 3% increase in sales to $67B last year, the premium burger segment grew at 18% to reach close to $2B – fueled in part by interest stirred u2p by cooking shows on TV. Not sitting still, execs at MCDWENSONC, and JACK are offering up their own "premium" burgers in an attempt to break up the momentum of the niche market.

    12%, Seriously?  Ruby Tuesday (RT +12%) pops on a Raymond James upgrade to Outperform ahead of its April 4 report, citing recent cost reduction efforts and an improving comp outlook.

    Shares of China-based seed producer Origin Agritech (SEED +44.8%) soar after investment firm Monness Crespi Hardt says the company seems to be the closest to securing approval of the Chinese government for the first genetically modified seed in that country. The firm views potential approval as a positive but notes there is no exact time frame and that approval could be delayed.

    Nomura continues to express concern (previously) over Amazon's (AMZN -0.2%low margins, and notes the company's inventory turnover has "fallen to new historical troughs." Moreover, the firm expects Amazon's growing dependence on Electronics & General Merchandise (EGM) sales, which it expects to account for 83% of revenue in 2016 (up from 62% in 2011), to lead to continuing margin pressure. Can Kiva's robots help prove skeptics wrong

    Notebooks vendors and component suppliers expect shipments to grow 10% in Q2, according to Digitimes, thanks to new model releases, back-to-school demand, and the arrival of Intel's (INTCIvy Bridge CPUs. However, there a risk PC forecasts are once more getting ahead of themselves, given the negative revisions (III) that have occurred over the last 12 months

    StatCounter claims on March 18, Google Chrome (GOOGpassed Internet Explorer (MSFT) to become the world's most popular browser, with a usage share of 32.7% to IE's 32.5%. Though the lead didn't hold (IE claims a 340 bps edge for the last 7 days), it still represents a watershed moment for the browser market, given IE's dominance for much of the last decade. And given Chrome's ongoingshare gains, it may not be long before it takes the lead for good.

    Goldman recommends traders buy an April 2012 options straddle on Google (GOOG) at a $635 strike price ahead of next month's Q2 report. The firm notes Google shares have moved an average of 7.9% post-earnings over the last 8 quarters, and its analysts "have found unusually high profitability patterns from buying GOOG straddles ahead of earnings."

    Microsoft (MSFT) talks a bullish game on the mobile prospects for Windows in China, saying it aims to surpass the iPhone and eventually Android, which has a 70% share. Microsoft says its partners will "definitely" offer Windows devices for around 1,000 yuan ($158), although it didn't mention any names. (previously

    Those excited about Apple's (AAPL) dividend might want tocast their minds back to what happened to Microsoft (MSFT) when it bowed to pressure and started payouts in early 2003. "Microsoft within two years quickly moved from a growth company to a boring, fuddy-duddy, income-producing company," says Villere partner George Young. 

    Three lunchtime reads:

    1) Seven global hot spots for investors

    2) The Japan debt disaster and China's (non)rebalancing

    3) On jobs, is Bernanke aggressive enough? 

  147. Wow, oil just popped .50 off $106.75 and back to $107.28 already.  Obviously a dangerous short into the NYMEX close (2:35) and it does seem like someone is betting on some event happening today – they thought it would be at 11:30 and now they are going for it again into 2:30 but always scarier to short the second time.   Again we have no confirmation from gold or the Dollar on the move so we're kind of obligated to waste a nickel shorting at the $107.50 line at least – just in case it all falls apart again.  

  148. Tebow/Phil
    They plan on using him for wildcat formations and some third downs especially near the goal line.

  149. F#CKING OIL!!!

  150. Those excited about Apple's (AAPL) dividend might want tocast their minds back to what happened to Microsoft (MSFT) when it bowed to pressure and started payouts in early 2003. "Microsoft within two years quickly moved from a growth company to a boring, fuddy-duddy, income-producing company," says Villere partner George Young. 
    ……but like I used to tell my girlfriend(s)….."hey, I'm not like those other guys."      :)     

  151. Sorry I should not think eastern time but I did say without math! Maybe a problem there?

  152. Volume at 2:15 is 67M on the Dow so back to light trading and very stickable.  Yesterday we topped out at 2:05 so anything up at this point means we have more buying action than yesterday.  1,405 hanging tough on S&P. 

    $111.73 on TLT.  

    LOL on oil – Looks like they don't actually want to buy for $107.50 – beating a very quick retreat as soon as we actually offer to sell them barrels for that price – what a scam!  Congrats to the shorts, quick dime already – beats losing a nickel!  Trick is to take 1/2 off and now basis is $107.05 on the remaining 1/2 and that's a stop out even and then we can re-enter on the next cross without damage.    

    And oops, while I was typing that it shot back up to $107.55 – too funny!  

  153. I wish these pricks could get prosecuted for f#cking the american public like this… I dont understand how they even allow these pricks to just jack the price around like this… I hate these speculators more than I dislike the taliban….

  154. David/CRM     Now there is a very unusual stock.   P/E sky high, 96.5 % owned by institutions.  Short interest 11%.  I would have no clue how to play this stock.  Good luck David.  I'll watch to see how this one does. 

  155. Good job Jrom – oil is $0.25 down…

  156. Manipulation/Rustle – And the girl who wrote it is one of Rupert's hatchet-people at the Journal.  At least now we know what all the oil buying was about – they were counting on this article to give them a pop.  I think people have BS fatigue now with $200 Oil – there's only so many times you can cry wolf….  Notice the total absence of facts (other than prices) and that all her "sources" are anonymous. 

    Tebow/Rustle – Sure, let him run the sneaks — don't want to risk Sanchez!  

    $107.21 – Second time's a charm on that one!  

    Speculators/Jrom – I wonder if we can set up a sortie at the NYMEX?  I think, based on the new laws, that they present a clear and present danger to the American people and that we cannot expect to be able to take them into custody (they always get away with it) and we're obviously at war over oil – all three of Holder's criteria are met for executing the speculators (but I prefer to just take their money).  

  157. This is cool and useful on the road : 

    'Air Display' to Let You Use the New iPad as Display for Your Mac

  158. CRM/iflan:  Insiders play it by selling nonstop since 2007 ;)

  159. Boy was I wrong buying VXX 21 calls!  Apparently there will soon be absolutely "no" risk at all…

  160. SEC Requests Details Of Priceline Activities In Iran, Syria

    Mar 21, 2012 13:52:54 (ET)

    --Regulator asks about business activities with Iran, Syria, Sudan and Cuba
    --Priceline says it has no ties to governments of Syria, Sudan and Iran nor entities controlled by them
    --Company facilitates travel for residents of those countries, in accordance with U.S. law
    --It has no business or agreements with or in Cuba

  161. Air display/Burr – Cool, I wonder if you can run 2?  That would be a nice road set up.   There's also Display Pad, which is similar or maybe better as I'm not sure Air Display lets you type and click onto your Mac.

    Fun chart from Barry:  

    ALASKA LAWMAKER: WOMEN SHOULD OBTAIN PERMISSION FROM MEN BEFORE UNDERGOING AN ABORTION | Like several conservative states across the country, Alaska is considering anti-abortion bills that would mandate ultrasounds for women seeking abortions and prohibit state agencies or employees from referring women to “abortion counseling, or another abortion-related service.” 

    RUT not looking too healthy into 3pm, they must hold 830 or a bad close is in the cards.  S&P barely holding 1,405.  

    PCLN/Jabob – That explains why they are going up another 2% today.  ;)  

  162. Notice how kooky we are on that military chart above – 10x the next largest country (China) and we spend as much as the ENTIRE rest of the World.  Also, look at how China et al must view the threat of the US AND NATO – about 66% of Global spending as a group!  Those US numbers do not include mandatory spending on Veterans Benefits, which add another $200Bn to our Military budget.  Try to find Russia in that "Other top 10 countries" bar and then tell me we need a $1Tn military!  

  163. Stjeanluc, how did you get that chart from 11:03am.  Is that something anyone can reproduce at will?  TIA.

  164. Yawn, good morning!  Wow, Phil goes full freak on the destruction of America, not a stock symbol to be seen in it.  The Zimbabwe part was a bit hyperbolic, but I agree that there is a distinct "Road to Serfdom" cast  to U.S. political evolution right now, since it does appear that this year's selection of a president can have very little impact on the trajectory of U.S. economic evolution – the point that exec made.
    As to the PSW "bearish thesis", the articles cited today can be decocted to reveal it's flaw, to wit: "As the issuer of the currency, the federal government’s true constraint is never solvency, but inflation."   James Montier's conclusion in respect of his corporate profits algorithm: "…the big source of profits? Yep, it was the government's monster negative savings. Or to put it another way, it was the huge deficit equalling 7.6% of GDP that really boosted corporate profits" doesn't seem to have a natural limit other than fear of inflation, a point he also makes.  
    Frankly, I don't see that as a restraint in the current economic environment — I see it as a goal!!   And that implies that there is no apparent upper limit on stock prices, and would explain the current "irrational exuberance" of stock prices in an otherwise subdued economy with limited income and consumption potential.  Not on an inflation-adjusted basis, to be sure, but who's counting?  Not bondholders, obviously.  
    So Phil:  if the U.S. government is willing to tolerate 8-10% inflation to reduce the deficit while employers give out 4-5% wage increases to employees — a thesis you advanced recently as being quite probably, not to say inevitable, in the coming years — how does this logic lead you to general bearishness?  Shouldn't we be running to the supermarket and laying in a five year supply of Kool-Aid?

  165. Amazed that day after day, low at 7:30-8…then grind up.  I need to stop thinking and start drinking.

  166. Phil – It takes a big army to be the world's police officer….. And they pay us decently…Well, not compared to contractors who all start out at 6 figures over here and many make 200-370K a year….  I dont have an exact number on contractors out here but there are at least 20-40K…. And as we draw troops down in Afghanistan we are increasing the number of contractors…. A nice shell game that is doing nothing to help our deficit.

  167. Zero
    Consumer driven economy won't survive on less buying power.

  168. CRIS popping higher.  you still like selling the Sept $5 puts Pharm?  I may do another round.

  169. Phil – i forgot what your take on LULU was.  They are reporting in the morning tomorrow.

  170. CRIS – yes.  I will focus on those almost exclusively.

  171. PLX is at $6….can it move through and then to 6.65? 

  172. Phil / VXX:  This trade is in bad shape with VXX getting absolutely obliterated over the last 3 days.  What adjustments would you consider here?  Roll the calls down to 17s or 18s?  Quit - VXX is going to the opposite place of PCLN?
    There are massive open interests on the April puts compared to March puts or April calls - was there something in those tea leaves to have read?

  173. Chart / Robert – The indicator Volume on Price is a standard overlay in

  174. VXX – and dropping again…

  175. Buying Merck on baldness protein announcement with ATLN [CHF].  Big profits if it's real.  Stock not moving.  We'll see.

  176. zero – propecia….proscar….testosterone….makes you grow hair there and everywhere….just sayin'

  177. Pharm, dont forget the juggernaugt that is ARNA!

  178. baldness/zero
    Any drug from that announcement can be 5-10 years away and there will be plenty of pressure for them not to solve baldness because it's a multi billion dollar industry each year if they do nothing.

  179. Oh, and I forgot the juggernaut that is ARNA…. 

  180. Zero – How long will people tolerate 4-5% wage increases on 8-10% inflation?  Can they really devalue the dollar at an 8-10%/year pace without pissing someone off?  Can 8-10% inflation be done while at the same time keeping interest rates this low long term?  It just seems that the boys in DC have too many corss-currents to deal with.  JMHO

  181. Is the Euro a sample of what a gold standard would be:


    Europe is a close analogue to a gold standard.

    • Remember, each European country lacks the ability to print their own money.
    • All the European countries have a fixed 1-to-1 exchange rate, with no ability to devalue their currencies to correct trade imbalances.
    • The currency is designed to keep governments accountable, acting as a check on uncontrollable spending.
    • Countries have to raise through taxation or the bond market a certain amount of Euros each year to spend.

  182. How about CLDX…or ARRY or IMGN or CERS for goodness sake.  I have had CERS on my SWW sheet, and it is up up up.  Forget all these Apples and Pricelines…let's buy overvalued, risky biotechs…. :)

  183. StJ – if that is the case (yes, we have known it for a long time), WTF is the Euro doing at 1.32?  I am sorry, but it ain't worth enough to wipe my rear with.

  184. Pharm / ARNA – but note how it cleverly became a juggeraut right after all of our MAR 2 calls expired worthless!

  185. A fun way to play earnings on $LULU is with the 75/77.50 bull call spread and 72.50/70 bear put spread, making a reverse iron condor with weekly options. 50% gain if LULU goes to 77.50 or 70 by Friday's close.

  186. Pharm – I bought ARRY at 1.80 ish based on your reco, are you out of ARRY now? I still hold it and was wondering what your position is now….

  187. Pharm… Dutasteride which is taken off presc. for MPB.  GSK

  188. mrm – Tell me about it….SGEN was the same since I had the $20 calls.  And look at the volume on Friday at 3:59 pm EST.  Someone loaded up on them and wiped out the shorts….I am really, really, really barking mad!

  189. whoa, what's driving DMND up?

  190. DMND popping….

  191. How/ZZ – I have always said that WHEN we get wage inflation, THEN I will be bullish but we are still getting wage deflation and all this deficit spending is doing is making us rich, while the bottom 99% get shoved closer and closer to the edge of a cliff.  Until we grow up and realize that we still depend on the serfs to have a kingdom, our kingdom remains in peril – from within and without.  When wage inflation does kick off an inflationary cycle, you won't have missed much as we're talking Dow 20,000+ so, if you are dying to buy, the DIA 2014 $160 calls are $1.80 and you can offset 100 of those ($18,000) with the sale of 30 $80 puts at $2.90 ($8,700) for net $9,300 and a $25K margin commitment.  That way, if the Dow pops up to 20,000 as suddenly as you fear, you'll collect $400,000 for your troubles.  Worst case is the Dow crashes and you are long 3,000 DIA at net $89.30 and if you aren't willing to be long at Dow 8,930 (32% down from here) – you'd better re-check that bullish premise of yours….  8)  

    Contractors/Jrom – Well, that's a whole other joke of a crime.  So what would happen to the World over there if we just weren't there?  I imagine if there were real danger and we didn't foot the bill, then other countries would be forced to step up – there's just no logic to us policing the World anymore – it sure doesn't make us more loved, does it?  

    LULU/Lolo – Priced too high but very dangerous to short.  I guess if I were going to play it, I'd sell the April $75 calls for $3.30 and buy the Sept $72.50/82.50 bull call spread for $4.40 and just milk the premium.  

    VXX/Chuck – We just bought back the April $23 calls for .55 this morning.  They are still .48 and I think that's enough to spend for one day.   There are 30 days left until April expiration, you can't make an adjustment every day something moves against you and certainly not twice a day – sometimes you need to give a trade more than 72 hours to work out.  

    Speaking of working out – DMND flying!  

  192. jro – I am out, unfortunately.  I got out and posted a month or so ago when they hit $3ish.  Data is coming up though, so I would buy a few puts at $2.5 on them in Sept to protect your profit.  I need to find the date, but I believe it is May or June for data…could be the ASCO meeting June 1-5.  IF the data are good, then it will fly and those puts will be piece of mind.

  193. New tag line going around is "To Win The Super Bowl, the Broncos sacrificed a virgin"

  194. Gold Standard
    The gold standard is a ridiculous  policy failure. It was proven during the great depression that the countries that left the gold standard first, were the first ones to recover. The countries that were the last to leave the gold standard  U.S., Germany, and France experienced longer and more severe depressions. When a country is presented with an economic shock like an oil shortage, financial collapse, weather related catastrophe or war. They must have the power to increase their money supply or they will be beaten down into a recession or depression. Must we never learn from what history has taught us

  195. Big selling into the close, me likey

  196. That's a ugly closing.

  197. What a bot race right to the close and the sell bots win!

  198. Decent volume sell off into the close in /ES…have a great evening.

  199. Well, they definitely hate us and I wont justify what that maniac from my home state of WA did but most troops here dont like them either. It's just a bad situation.
    Depending on what you factor in we are responsible for 30-50% of Afghanistan's GDP.  Right now we are working on economic strategies to mitigate the effects of us pulling out so they feel a minor recession instead of going into a great depression. This whole country is jacked though. At least in Iraq we were dealing with EDUCATED people, in Afghanistan we are lucky if the person we are talking to has a 3rd grade level education. 

  200. I LIKE the "political" discussion. Very few places you can read about the relationships between the market movement, the world macro, U.S. government policies, all in one place.

  201. DMND – Buyout rumors it seems, not sure that will stick – just noise to squeeze the shorts.  

    Oil finishing at $106.85 – why would we want to kill the speculators when they are willing to buy from us at $107.50?  

    Dow volume finishing at 124M – lame.  

    LOL Rustle!  Not for long in NYC – many a choirboy has turned in this town.  

    Gold standard/Danny, StJ – Good point about oil shortage.  If we had a gold standard, then all someone has to do is make oil worth more than gold and suddenly we're broke.  If OPEC got together and cut global production 50%, then we'd have our 5 Barrels and ounce pricing in no time and the US imports 3.6Bn barrels of oil a year but we only have 260M ounces of gold – how long before we have no gold and no oil?  

    Good old 824 on the RUT Futures at the close.  Now the RUT is 6 points higher than the Futures (was 4).  Dow is also way ahead (13,124) of the Futures (13,057) 

    Afghanistan/Jrom – Yeah but they are scrappy little fighters.  Maybe we pull completely out and just hire all of them as contractors.  Their whole GDP is $30Bn, we spend more than that every month!  

  202. At the close: Dow -0.3% to 13131. S&P -0.15% to 1403. Nasdaq +0.29% to 3083.

    Treasurys: 30-year +0.71%. 10-yr +0.45%. 5-yr +0.23%.

    Commodities: Crude +0.75% to $106.87. Gold +0.16% to $1649.65.

    Currencies: Euro -0.12% vs. dollar. Yen -0.36%. Pound -0.01%.

    Market recap: Stocks ended mixed in another lackluster session, with sentiment dampened by a weaker-than-expected existing home sales report and rising sovereign debt yields in Spain and Italy. Energy shares were hit by Baker Hughes' weak forecast. Crude prices bounced back above $107; gold rallied above $1,650/oz. NYSE gainers and losers finished nearly even.

    Support our troops – until they come home, then screw them:  Unemployment Rises for Post-9/11 VetsThe unemployment rate for U.S. veterans who’ve served during the wars in Iraq and Afghanistan increased last year, while the rate for non-veterans declined, the Labor Department reported today. The jobless rate for veterans who were in service following the Sept. 11, 2001, attacks was 12.1 percent last year, up from 11.5 percent in 2010, the department’s data show.

    The Simple Problems of Too Much US Debt.

    Up to 40% of High Street Shops Could Close Over Next 5 YearsFour out of 10 shops will have to shut in the next five years as consumers turn their backs on traditional stores in favour of online shopping, according to a report which casts more doubt on the future of the beleaguered British high street.

    Ireland's central bank chief is set to ask ECB permission to delay a €3.1B payment due this month on a promissory note. The money is to go to Anglo Irish Bank, which can then buy Irish debt which it can then present to the ECB as collateral for funding with which it can then reduce its borrowings from the Irish central bank. We're getting dizzy.

    Portugal's Tragic Cost of "Remarkable" Troika Compliance.

    Italy's Monti Says Labour Reform Ready, Union Vows ProtestsItalian Prime Minister Mario Monti set a collision course with the country's biggest trade union after talks on a historic reform to employment protection law failed to produce a deal. The left-wing CGIL union, which has six million members, will meet on Wednesday to decide how to protest against a reform which its leader called an attack on workers and an attempt to solve Italy's labour problems by "easy firing".

    Profits at Chinese Banks Marred by Bad LoansChina’s biggest banks, set to post record profits for a fifth year, may report 2011 results marred by an increase in bad loans as an economic slowdown and faltering property market trigger defaults by borrowers. Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its four biggest local rivals may post a 15 percent increase in combined fourth-quarter net income when they report this month, according to analyst estimates compiled by Bloomberg. Their non-performing loans rose for the first time since the third quarter of 2008, the banking regulator said last month.

    The Cleveland Fed announces the launch of its Financial Stress Index which has been designed to take into account the importance of financial conditions to overall economic health. The index is currently rated a low Grade 3 – Moderate Stress, but closing in on a Grade 2 – Normal Stress. 

    The 14 largest EU banks would have had enough capital to pass the Fed's stress tests, according to Barclays, which ran the numbers. The finding illustrates the capital improvement of lenders across the pond, says Barclays.

    Deutsche Bank (DB) follows Barclays (BCS), shielding itselffrom Dodd-Frank regulations by making a technical change to the legal structure of its U.S. subsidiary. The move allows the bank to avoid as much as a $20B capital injection into its American arm.

    Halliburton (HAL -2.1%) and Schlumberger (SLB -1.9%) join oilfield services competitor Baker Hughes (BHI -5.9%) in the red after the BHI profit warning. Morgan Stanley chips in, cutting HAL to  equalweight as the battle for market share threatens margins. OIH-2.1%

    General Motors (GM +1.4%expects to save a cool $2B over the next five years as it implements cost cutting measures across its marketing and advertising operations. An announcement is expected within days from the automaker saying that it will eliminate dozens of smaller ad firms that do work for it and streamline work across a few bigger agencies.

    Netflix (NFLX +5%) says it will stream a new, original series,Hemlock Grove, with 13 episodes beginning in 2013, as it continues to expand its repertoire of original content and differentiate itself from the competition. By the middle of 2013, NFLX will have five original series for streaming, according to its chief content officer. (previously)

    More news from the Starbucks (SBUX +0.3%) shareholder meeting: SBUX will enter the $8B energy drink market with a beverage that combines fruit juice and green coffee extract, expects to have more than 1,500 stores in China by 2015 and will open its 1,000th store in Japan next year, and confirms plans for a fifth U.S. plant to be located in Georgia. (earlier)

    Oppenheimer agrees with Jefferies analysis of Ariad Pharmaceuticals (ARIA +2.4%), saying the stock should be bought on any Taltorvic-related weakness. The firm notes the drug accounts for just $1 of its price target, and Ponatinib is the main value driver for the stock. Additionally, Lazard, Cowen and Rodman & Renshaw reiterate buys as well. 

    The SEC requested information from Priceline (PCLN+1.8%) on its activities in Iran, Syria, Sudan, and Cuba, according to a filing with the agency. A company response states that it wasn't aware of any Cuban business, while activity with residents of Iran, Syria and Sudan is limited and doesn't violate U.S. law or regulations.

    Yelp (YELP +2.2%) rallies after the company makes note of the improved Siri integration provided for Yelp's content with Apple's recently-released iOS 5.1. Unlike the initial implementation of Yelp on Siri, the iOS 5.1 release allows users to access Yelp's review pages by tapping on the business listings turned up by Siri.

  203. From Barry:  


    Société Générale’s Andrew Lapthorne lays out the danger of relying on P/E ratios.

    “The essential message is that although one is of course simply the inverse of the other, using P/E ratio instead of earnings yields can give dramatically different results when making historical valuation comparisons.

    This disparity between average P/E and average E/P is greatest where profits have a tendency to head towards zero. This has the effect of sending the P/E ratio out towards infinity, before ultimately profits turn into loss and then P/E becomes negative and hard to work with. In 2009 for example the P/E on the S&P 500 hit 146x, and as anyone who has tried to build a market valuation model for Japan will attest, the P/E ratio is not much use.

    For example, taking the same price and earnings history from Robert Shiller, the average S&P 500 P/E can be either 16.5x when calculated using the average P/E, or 14x when the average is calculated more correctly by using earnings yield. This represents a massive 17% difference – see below. In the same vein therefore a dividend yield versus a history model will always produce a more pessimistic outcome than a P/E model.”

    Another way to think about Earnings Yield – it allows a better reflection of companies with no earnings, and further allows a market analyst to incorporate periods when earnings are negative.

    The difference between the two: The current P/E ratio of 15.4 looks historically cheap –a bout 28% undervalued; However, using Earnings Yield , the market appears fairly valued. The current yield is 6.5%, the average 6.6% making SPX 0.1%  overvalued. (P/E lower is cheaper; Earnings Yield higher is cheaper)


    Click to enlarge:

     Societe Generale Research

  204. Stjeanluc, i am referring to the horizontal volume bars on price levels.  That is really good information – i am just not sure how to do that in Stockcharts.  Any guidance would be appreciated. 


    Diamond Foods Inc. DMND +2.44% is talking to private-equity firms about a possible minority investment, as the troubled snack-food company searches for capital to bolster its balance sheet, people familiar with the matter said.

    Dean Bradley Osborne Partners LLC, a boutique investment bank recently hired by Diamond Foods, has approached several buyout firms including KKR KKR +1.06% & Co. and TPG to gauge their interest in becoming a minority shareholder of the San Francisco-based company, these people said.

    Diamond Foods said on March 13 it had retained the bank, formed this year by ex-Morgan Stanley MS -1.71% bankers, to help the company "in assessing our capital structure and evaluating ways to strengthen the balance sheet."

    "They will look at all options," one person familiar with the matter said.

  206. Volume bars / Robert – Here are some instructions:

    1. Draw a SharpChart for whatever symbol you want. It's the standard chart in StockCharts.

    2. In the Overlays section below the chart, pick Volume by Price in one of the drop-down list. There are no parameters to specify.

    3. Update the chart

    For more clarity I removed the other Overlays. By default Stockcharts displays moving averages but the clutter the chart in this specific case. But it's up to you.

    Let me know if you have any other questions.

  207. Diamond Foods (DMND) reaches a forebearance agreement with lenders to allow continued access to its credit facility. The deal requires the company to suspend dividend payments and face a rate hike of 75 bps on the facility. Diamond must also pay a one-time forebearance fee of 25 bps to the lenders. Shares halted AH. (earlier) (PR)

  208. Another example of the volume by price chart:

    It's interesting that there is no volume at all around the $560 area, looks like an air pocket. Might guess is that we could go through that in a correction but the $540/$520 level looks stronger. I think it's just another piece of information in the toolbox!

  209. Phil:  I accept your price vs. wage inflation answer as a reasonable rejoinder.  Do not fall into the trap of believing that because someone raises a question, that you can infer their opinion.  I am not bullish.  Even if I were, the run-up has been so linear that I would be stupid to infer that always-paranoid investors — and if they're not paranoid, they don't read much — won't be stampeded into selling at the first serious blip downward, and I have no intention of getting run over by their panic.  Actually, I reduced my long-term fund positions [which I cannot do by pushing buttons, only by persuading others] very substantially in mid-Feb., giving considerable weight to your opinion, and reallocated others from Asia to Latam.  
    Having said that, at what point will we see wage inflation, would you think?  Not much incentive to give raises at current levels of unemployment.  Government at various levels are still laying off people.  It looks more like a "wage deflationary" spiral – less income, less consumption, less hiring.  Unless they bring back the WPA [which I would support, given the condition of U.S. infrastructure and the hardships of the unemployed], it's hard to see how the currently modest increase in job growth can gain much traction.  Even hard-bitten 1% oligarchs are not so torpid as not to notice that an impoverished consumer cannot be in their long-term interest.  Nor should you blindly assume that they love the case of Chateau D'Yquem in their wine cellar more than they love their country.  That is caricature – "a portrait that exaggerates or distorts the essence of a person, animal or object" – and, if mistaken for truth, will lead to error.  
    I don't even demonize politicians, although I'd like to.  I've argued on PSW for almost a year now that it is the large, faceless, nation-less multinational corporations, who are neither patriotic nor are their managers paid to be so, that have been converted into "citizens" for purposes of influencing politicians and elections and are the true political scourge we face. I will flip bullish when I see movement to change that, and I don't see a hint of it at this time.

  210. Oil
    Obama to visit Cushing Thursday

    "With his Republican opponents hammering away at the president over high gasoline prices, Obama will visit Cushing, Oklahoma on Thursday to promote his energy policies, which include support for the southern leg of the pipeline."
    -MSNBC News Site

  211. Just thought this was one of the most awe-inspiring/horrifying things I have ever seen.

    Behold! The AAPL Quarterly Chart!

  212. STJ, thanks i got it now.  The detailed instructions were spot on.

  213. DMND – Crazy crazy moves. stock was halted, opened -4.5% at 17:15 and now is -1% and heading back to the closing price.  Zerohedge didnt like the forbearance news

  214. I read a Ben Stein comment, that I cannot find, to the effect that the same guys that buried Enron and caused the California energy crisis are now running the Oil futures. Evidently, Ben met these guys and said they were laughing their asses off about all the money they were making.

  215. Expedia – $4.5Bn market cap:


    View: Annual Data | Quarterly Data All numbers in thousands
    Period Ending Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
    Total Revenue 3,449,009   3,033,645   2,743,051  
    Cost of Revenue 761,272   685,487   602,682  
    Gross Profit 2,687,737   2,348,158   2,140,369  
    Operating Expenses
    Research Development -   -   -  
    Selling General and Administrative 2,165,348   1,802,165   1,616,584  
    Non Recurring 20,855   22,692   102,167  
    Others 21,925   22,514   23,875  
    Total Operating Expenses -   -   -  
    Operating Income or Loss 479,609   500,787   397,743  
    Income from Continuing Operations
    Total Other Income/Expenses Net 13,181   (8,520) (28,515)
    Earnings Before Interest And Taxes 492,790   492,267   369,228  
    Interest Expense 90,718   66,428   49,452  
    Income Before Tax 402,072   425,839   319,776  
    Income Tax Expense 75,731   120,342   101,502  
    Minority Interest (2,309) (4,060) (4,097)
    Net Income From Continuing Ops 326,341   305,497   218,274  
    Non-recurring Events
    Discontinued Operations 148,262   120,063   85,349  
    Extraordinary Items -   -   -  
    Effect Of Accounting Changes -   -   -  
    Other Items -   -   -  
    Net Income 472,294   421,500   299,526  
    Preferred Stock And Other Adjustments -   -   -  
    Net Income Applicable To Common Shares 472,294   421,500   299,526  

    Currency in USD.


    PCLN – $35Bn market cap:


    View: Annual Data | Quarterly Data All numbers in thousands
    Period Ending Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
    Total Revenue 4,355,610   3,084,905   2,338,212  
    Cost of Revenue 1,275,730   1,175,934   1,077,449  
    Gross Profit 3,079,880   1,908,971   1,260,763  
    Operating Expenses
    Research Development -   -   -  
    Selling General and Administrative 1,627,134   1,076,411   750,735  
    Non Recurring -   -   -  
    Others 53,824   45,763   39,193  
    Total Operating Expenses -   -   -  
    Operating Income or Loss 1,398,922   786,797   470,835  
    Income from Continuing Operations
    Total Other Income/Expenses Net 593   (10,570) (4,449)
    Earnings Before Interest And Taxes 1,399,515   776,227   466,386  
    Interest Expense 31,721   29,944   24,084  
    Income Before Tax 1,367,794   746,283   442,302  
    Income Tax Expense 308,663   218,141   (47,168)
    Minority Interest (2,760) (601) -  
    Net Income From Continuing Ops 1,056,371   527,541   489,472  
    Non-recurring Events
    Discontinued Operations -   -   -  
    Extraordinary Items -   -   -  
    Effect Of Accounting Changes -   -   -  
    Other Items -   -   -  
    Net Income 1,056,371   527,541   489,472  
    Preferred Stock And Other Adjustments -   -   -  
    Net Income Applicable To Common Shares 1,056,371   527,541   489,472  

  216. Expedia / Phil – Since when do stock prices relate to fundamentals… It's so 70's!

  217. Test

  218. Holy Smoley Batman.  I didn't even think to do the Expedia comparison.  That is just unreal!  SG&A is a lot higher at Expedia, but man, that is just too much. 

  219. Wow diamond…. along with the Patriot Act, GPS being used by law inforcment without consent, and on and on…..just peachy.

  220. EXPE-PCLN/Phil: Wow, great heads up play!  Also interesting to note the big difference in Price/Free-Cash-Flow between PCLN and EXPE of 27 to 6.
    Also a huge difference in stock based compensation between the two companies.  PCLN has $800 mil of stock-based compensation as opposed to $12.9 mil for EXPE.

  221. Put this way, it does make sense:

    Taken together, Ryan would cut spending…by $5.3 trillion, much of which currently goes to the have-nots. He would then give that money to America’s haves: some $4.3 trillion in tax cuts, compared with current policies, according to Citizens for Tax Justice.
    Ryan’s justification was straight out of Dickens. He wants to improve the moral fiber of the poor. There is, he told the audience at the conservative American Enterprise Institute later Tuesday, an “insidious moral tipping point, and I think the president is accelerating this.” Too many Americans, he said, are receiving more from the government than they pay in taxes.
    After recalling his family’s immigration from Ireland generations ago, and his belief in the virtue of people who “pull themselves up by the bootstraps,” Ryan warned that a generous safety net “lulls able-bodied people into lives of complacency and dependency, which drains them of their very will and incentive to make the most of their lives. It’s demeaning.”
    How very kind: To protect poor Americans from being demeaned, Ryan is cutting their anti-poverty programs and using the proceeds to give the wealthiest Americans a six-figure tax cut.

    And Ed's conclusion:

    Yeah, Ryan’s tough love for the poor is pretty impressive. The “complacency” of the unwashed and unemployed has been especially evident of late. Fat and happy, they whistle on April 15 while hard-working job-creators at the top of the wealth ladder have to trudge to their accountants’ offices and sign over an unconscionable percentage of the assets that both God and nature—operating together, as they do of course, through markets—have assigned to them.
    I know that some conservatives with the best will in the world have concluded that smaller government, lower and more regressive taxation, and in general a world where private forces exert more power produce a better society for everybody. I don’t agree, but I can respect their position. But when they befoul it with this sanctimonious claptrap about concern for the “moral fiber” of lesser breeds, it makes me crazy. When the housing market and the financial system collapsed and jobs disappeared—in 2008 or 2009, or for that matter in 1929—did millions of people suddenly lose their “moral fiber?” Does the ability via public assistance of one sort of another to feed their children or provide them with medical care when they are sick truly darken their souls and destroy their motivation to better themselves?
    You know, much as I dislike the viral adolescent-intoxicating legacy of Ayn Rand—you know, the author of Atlas Shrugged, the book Paul Ryan used to (or for all I know, still does) require his staff to read—at least she had the honesty to disclaim any pity for the poor. Indeed, she called altruism the one great moral abomination, as bad as “looting.” I’d have a lot more respect for Paul Ryan if he loudly and proudly embraced the “virtue of selfishness” himself, and didn’t pretend he wanted to cut food stamps in order to improve the lives of the working poor through some character-building hunger.

  222. Expedia-PCLN / Phil – One factor that has to play in the valuation is that Expedia grew revenues 13% and income 12% as opposed to PCLN who grew revenues by 61% and income by 100%. I am not saying that they will repeat this performance year after year but over these 3 years, growth has been much greater at PCLN. Another reason why I also like the PEG ratio over the P/E ratio as it does take into account growth.

    EXPE has a PEG ratio of 1.31
    PCLN has a PEG ratio of 1.09

    The lower number, the better – Using this figure, PCLN is actually cheaper than EXPE.

    EXPE  has a Price/Sales ratio of  1.2
    PCLN has a Price/Sales ratio of 7.96

    The lower number, the better – In this case, EXPE is a better value. Looking at the industry average of 2.4, EXPE is clearly undervalued there which might cover up some issues as a low price/sales can sometimes be a value trap!

    In essence, the disparity in market cap is probably not justified based on sales and other factors but looking at past growth and potential (a big if of course) it might also not as bad as it looks. In addition PCLN is just riding a momentum wave that is regenerating itself as major price point are passed. In any case, I would stay far away from either of these 2 companies!

  223. Ryan's excess

    I have no particular position on food stamps, but you would think politicians would research how other large countries address the problem of feeding the indigent. Maybe there is a better way, or maybe not. One  thing is for sure, that a lot of businesses do profit from food stamps.

  224. Austerity has never worked and probably never will…

    Since 2010 Britain has been a laboratory for an important experiment in economic policy. The question: When economies slump and public borrowing soars, can fiscal restraint speed the recovery? Preliminary findings: No, and whatever made you think it could? [...]



    In opposition, the Conservatives called this reckless. When they came to power in 2010, they announced a sharp break. To help restore financial confidence, the government would tighten fiscal policy at once. The idea was that austerity, done correctly, would promote growth. It would remove the threat of fiscal collapse. With public borrowing in check and confidence improved, the private sector would take up the slack.

    It didn’t happen. Britain’s households aren’t spending, and its businesses, despite running big financial surpluses, aren’t investing. For the past 18 months output has been essentially flat, still well below its level when the recession began. Official forecasters think output won’t regain its 2008 level until 2014 — a slower pace of recovery than Britain experienced after the Great Depression.

    In one way, the figures flatter the Tories’ fiscal experiment, because the Bank of England has been more forceful than the Federal Reserve in supporting the economy with quantitative easing (where the central bank buys debt to increase the money supply). The Bank of England persisted in this approach despite high inflation, which peaked at more than 5 percent last year, against the Bank’s official target of 2 percent. Without such aggressive loosening of monetary policy, the economy would be in even worse trouble.

  225. EXPE/stjean:  EXPE is actually has decent Free Cash Flows.  Ran a quick DCF analysis assuming a modest 6% growth (I've actually got a median Cash Return of Invested Capital of 9.6% for them) over ten years at current interest rates, I am getting a fair value of around $100 per share
    Unless my calculations are completely wack (very possible), they might actually be a value stock :O
    Of course, this does not take into account any qualitative business analysis, but then again, not much of a moat in this business…

  226. China PMI 48.1

  227. Just to offset that bad China news, here is some good Japan news:

    Looks like Yentervention doing its job!
    Japan posts surprise trade surplus of $328 million – first time in 5 months.
    Not surprisingly, this is helping out there economy:
    Japan govt: economic recovery looks more certain

    Heres a cool bit of news:
    Japanese Auto Makers Raid the Vaults (subscriber only)

    "Japanese auto makers are reaching back—way back—to add a patina of past glory to some of their newest products, reviving long-dormant names to tap nostalgia and hold down marketing costs.
    Take Nissan Motor Co. When Japan's No. 2 auto producer on Tuesday announced a new line of vehicles targeting fast-growing emerging markets, it didn't tout a neologism born of an army of consultants, focus groups and intellectual-property lawyers. Instead, Nissan reached into its corporate history and resuscitated the Datsun brand, which had been mothballed in the early 1980s."
    Bring back the old Nissan Z!

  228. EXPE / Kinki – Man, you did your research on them! It is quite possible that there is some value there, but what jumped at me was the growth rate as there is such a disparity. I would never pay the same for a company growing income by 13% than for a company growing it at 100%.

    Like you say though, not much of a moat there. Looks like Google could be getting in the action and there goes your predicted growth rate!

  229. PCLN-EXPE/stjean:  Yeah, my baby fell asleep early tonight so I had some free time to fool around with the old spreadsheets. 
    I agree — on paper PCLN looks amazing.  Great balance sheet, revenue growth, rapidly expanding cash hoard — all this happening while Europe is going through financial turmoil, the China engine slowing down, and a U.S. still suffering through the worst economic downturn in almost a century — It almost looks too good to be true.  Its not like they invented the iPad or anything. 
    Other than Shatner, I don't know what gives them such a huge competitive advantage over anyone else.  Their site looks and works the same as any other travel site and I don't always necessarily get the best deals on PCLN.  They decided to kill off the Shatner "Negotiator" character and move away from the "Name Your Own Price" model (which set them apart) and go toward a standard fixed price model, so obviously its not satisfactory to them.    I don't understand what is giving them this utter dominance in a moat-less industry. Its just… fishy…  what the heck do I know.
    Anyway, wouldn't be a bad pair trade to go LONG EXPE and SHORT PCLN as a market-neutral strategy.

  230. Good morning!

    Most shocking news today is Kraft changing their name to Mondelez – I kid you not!  

    That's causing Europe to sell off (well, maybe not that) after Asia was flat.  As noted by Kinki, we had mixed data in Asia – Japan manufacturing was good but China – not so much:  

    China Factory Activity Shrinks for Fifth Month: HSBC Flash PMIChina's manufacturing sector activity shrank in March for a fifth successive month, with the overall rate of contraction accelerating and new orders sinking to a four-month low, the HSBC flash purchasing managers index showed on Thursday. The PMI, the earliest indicator of China's industrial activity, fell back from February's four month high, slipping to 48.1, within a whisker of the level that economists at HSBC consider a crucial level dividing decline from growth. Slowing activity could mean a further relaxation of monetary policy to help underpin growth in the world's second biggest economy, but lingering inflation risks uncovered by the survey highlight the dilemma facing China's policy makers who are determined to keep a lid on prices. The PMI reading, down from February's 49.6, is likely to reinforce the more bearish views on China's economic trajectory. The fall in the new orders sub-index to 46.2 had a particularly bearish effect on the overall index, as it is the single biggest of the five component items comprising the PMI.

    Banks, Trusts Tighten Credit in China's Dalian. Trust firms were ordered by banking regulator to "immediately" report on business status of Dalian-based companies who do business with them, citing people. Trust firms halted some projects in Dalian after regulators ordered them to. Banks are getting cautious on lending in Dalian and banks' headquarters are watching their Dalian branches closely.

    Chinese State Researcher Yu Bin: There is no room for the PBOC to relax monetary policy.

    China Reins In Chatter as Rumors Run Wild. Bo Xilai Searches Are Blocked as Talk of a Coup, Party Intrigue Overwhelms Censors, Ending Initial Hands-Off Approach. China's social-media services, which had allowed wide discussion of controversial politician Bo Xilai since his ouster last week, are now cracking down on searches for his name, as his downfall seems to have put much of the country on edge and given rise to fevered rumors of political infighting.

    Europe has their own problems:  

    German Bond Prices Decline, Unsettling Confidence in a Safe Haven.

    Portugal Faces General Strike in Test of Austerity. Portugal faces a general strike by workers angered by austerity measures imposed as a condition of a 78-billion euro bailout last year but doubts remain as to whether Thursday's stoppage will receive widespread support. Portugal's largest union, the CGTP, hopes to mobilise mass support but the Portuguese have shown little interest in imitating the kind of protests seen in Greece, despite record unemployment and the worst recession in decades. Some economists fear Portugal may be pushed into seeking a second bailout from its European partners, but the centre-right government is betting that relative public apathy will help it impose painful spending cuts and policy reforms in order to drag the country out of its debt crisis.

    Portugal to Follow Greece: Roubini's Das

    Geithner to EU: Increase your bailout fund – Financial Times

    That's knocked the Euro back to yesterday's lows ($1.32) but holding the line so far.  The Pound is once again glad the UK isn't in that mess at $1.587 but we haven't had a problem in Ireland lately and they're due.  The Yen touched 84 but fell all the way back to 83 .14 as they once again backed the wrong horse (Euro) and are burned as the Dollar rises. 

    Dollar is at 79.85, oil $106.30 (no more April), gold $1,643 so we finally got our break below $1,650, silver $31.95, copper took a big dive at $3.79, nat gas $2.33 and gasoline finally selling off at $3.33.  Still waiting to see if Dollar can get back over 80 and, if they do – THEN we can get back to being bearish.  

    There's a coup in Mali, in case anyone cares.  

    Thursday's economic calendar:

    8:30 Jobless Claims

    10:00 FHFA House Price Index

    10:00 Leading Indicators

    10:30 EIA Natural Gas Inventory

    4:30 PM Fed Balance Sheet

    4:30 PM Money Supply 

    Notable earnings before Thursday's open: CAGDGFDX,GMEIHSLULUSIGUTIW

    Notable earnings after Thursday's close: ACNMUNKE,SLW 

  231. Oh sorry, to be clear, I do expect the Dollar to pop 80 and for today to be a down day.  

    Best Futures shorts at the moment are oil (/CL) below the $106 line and the RUT (/TF) failing 820.  

  232. Phil- we do pay the Taliban and supposed Taliban now through the afghanistan peace and reintegration program (aprp) and the afghan reintegration program (arp). We make sure they are properly vetted and then we give them jobs and pay them 100-150 a month. The problem with just hiring all afghan contract guards is corruption and a lack of general education. Further, many of these suicide bombers come from Pakistan so hiring afghans won’t really stop anything. America’s purpose here now is to continue to disrupt terrorist activities (and make sure the violence happens here instead of america) and to hurry up and get Afghanistan on its feet so the govt doesn’t immediately crumble when we leave. We are succeeding in the first, I don’t know if the second is attenable.


    Nasty Nasty Nasty. China going to take a dump at the end of the month. I just am not sure which month. Could an exedus of foreign capital from China be good for US stocks?

  234. I really have to stay in these Short Oil trades longer.  I was short at 107.40ish but had to close out since I couldn't watch the computer.  I should just set my stops and walk away….  Missed that $1 drop about 20times now……

  235. Mondelez?
    O-kay. Monde is French for "world",but what does "lez"mean?

  236. MDLZ/jmm:  Holy mother of crap you should've seen the ones they rejected:  "Tfark" and "Snax".   Tfark?!
    Apparently the new name was coined by a corporate lawyer.  Did he also have pointy-hair?

  237. This would be awesome!
    The Fusion in your Future

  238. jmm – delez = Delicious.  "Mondelez International is a mix of suggestions from two employees — one in Europe and one in North America." Sounds like a line out of an Onion article to me!

  239. EXPE – Let's not forget that Expedia was launched by MSFT and had massive backing, promotion etc. and my real point is that this is what a mature travel company on planet Earth looks like.  It's kind of like fish.  There are many, many varieties of fish and some have certain advantages over others and survive under different conditions.  So we have a species, that is web-based travel – and it's a one-trick pony so we're not comparing sharks to minnows here – we're comparing very similar fish here.  We put them in the tank and the tank is only the size of the Earth and there is only so much possible revenue food on the whole planet to be had.  While one fish may grow bigger and faster than the rest, they eventually hit a maximum size for the tank and they stop growing.  The real difference between PCLN and EXPE is that PCLN is expanding more recently and EXPE is mature.  EXPE offers more of a full-service model than PCLN but, as you can see, PCLN has run into a wall with their blind luck, no-frills system and is now moving Expedia's way (ie more staff, more services) and, even if they double from here (super-doubtful), they still can't grow into their current valuation.  The current assumption is they double from here in about 3 years and of course that means profit margins have to stay as they compete for more travel Dollars and, of course, that no competitor comes along and kicks their ass.   

    Kick-ass Bowie video Pharm!  

    Volatility/Psats – Well despite the whining from people about our VXX bet, the low VIX is also priced for market perfection – as if nothing could possibly go wrong.  It's a ridiculous assumption and extremely likely to blow up in someone's face.  

    PCLN/Kinki – But notice EXPE bought $259M of their own stock and paid a $76M dividend.  Without that, their cash flow is back to $404M on a $4.5Bn valuation while PCLN bought back $171M of stock with no dividends so $445M on their $35Bn is the way I look at it.  So I approve of EXPE spending $259M to buy back 5% of their own undervalued stock while PCLN throws $171M out the window buying back 0.7% of their bloated stock.  

    Paul Ryan/StJ – Don't get me started but here's all you need to know about this jackass:  

    Born and raised in Janesville, Wisconsin (1970), Ryan graduated from Miami University in Ohio and reportedly worked as a marketing consultant to Ryan Incorporated Central, which is run by a branch of his family.

    Ryan is a fifth-generation Wisconsin and Janesville native and a great-grandson of Patrick William Ryan, who founded the Ryan Incorporated Central construction business in 1884.

    Ryan was 16 years old when he found his father in bed, dead from a heart attack at age 55.  Ryan began collecting his Social Security survivor's benefits until age eighteen, which he saved for college tuition and expenses.

    Out of fear that Ryan "…was destined to become a ski bum", Betty Ryan reportedly nudged her son to accept another congressional position as a staff economist attached to the office of U.S. Senator Bob Kasten.[12][16]

    So, after being raised under the Social Safety Net, Ryan works pretty much his whole life for the Government, where he works to this day as probably one of the biggest hypocritical assholes that ever walked the face of the Earth.  On the whole, I think he wishes he could have just been a ski bum and he hates everyone who were able to choose their own path in life, rather than being whipped into working like he was.  

    Food stamps/JMM – JPM makes $5Bn a year on their participation in the program (food stamp credit cards).  Eliminate the middle-men and you can cut 10% off the cost of the program right there.  Also, the Government could cut a deal with WMT or COST or someone for a 10% discount on purchases – all sorts of things that can be done if you just stop treating Government aid as evil or shameful and start treating it like a business that provides a vital service to people.  

    Austerity/StJ – But the UK also has the most QE/GDP of any country.  That means QE and austerity both don't work.  Wouldn't it be funny if some Government "experimented" with giving money/stimulus to the bottom 99% instead?  LOL – sorry, I cracked myself up – what a silly idea….

    Taliban/Jrom – We should just train them all to be our mercenary army, the way the Romans used the Germans.  At the end of the Roman Empire, only 1% of their armies were actual Romans, who simply commanded mercenary armies.  Of course that didn't end very well for Rome but they got a good 200 years out of the practice so what the Hell?  

    China/Knight – If their trade surplus doesn't come back, they are also going to run out of money at some point.  $2Tn doesn't go very far these days (if they even have that left after all the stimulus) – just ask Obama…

    Oil/Burr – That's why I like to have the USO/SCO for the bigger drops and play the quick game on the futures while we wait.  

    Lez/JMM – Let's start a think that it means "lesbian" and watch the Conservatives boycott it!  

    Fusion/Burr – Been waiting my whole life, I think we're still 20 years away but one breakthrough and it's a whole new World.  

  240. good lord phil i don't think ryan makes the top 100000 of 'biggest whatever' to walk the earth..really i just don't see him as an overacheiver of any type sort of in the biden mold with his own hair and teeth