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Thursday, December 1, 2022


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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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

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.

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.


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


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.

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


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

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?

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.http://www.bespokeinvest.com/thinkbig/2012/3/20/baltic-dry-index-up-19-days-in-a-row-but-still-down-49-ytd.html

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


He came up with the levels.

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…


How are you coming up with that 82 TL support?

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?

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.”


3/9 top and 3/14 and 15 lows

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”.

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

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.  

Man, what's with VXX nosediving?!

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.

WTF is PCLN up another 10 and rising??

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     

Shorting GDX.  Chart from SHJ.

Could this be the VXX finally rebounding?

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.  

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!

Dead cat bounce on VXX?

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. 

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. 

thelerner—-the two are never separate

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.

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?  🙂

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

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

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).

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.

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.

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.

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

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  🙂

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. 

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

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