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Which Way Wednesday – $3.5Tn Not Enough to Prop up Markets?


Wasn't it just 2 days ago that the EU was all set to pop the ESM to $1.25Tn and the IMF was going to add another Trillion and the Fed was talking about more QE in the $1.25Tn range, which plunged the Dollar to multi-week lows?  Shouldn't adding 6% of the entire planet's GDP in additional stimulus give us more than a one-day pop in the markets? 

As I pointed out in Monday's Morning Alert to Members – these are all just RUMORS and my conclusion in the Alert was: 

Despite the bullish turn of events (which we anticipated last week) we're more inclined to cash out our bullish trades into the excitement and press our bear bets and TOMORROW, if we're still over our levels – THEN we will scramble to add some aggressive bullish trades to our virtual portfolios.  Again, I cannot stress enough that CASH is my preferred position because this market is tough to call and you need to be very flexible and very nimble to trade it.

SPY 5 MINUTEWe proceeded as planned and, so far, we haven't had any reason to capitulate and get more bullish and that is both surprising and disappointing as this is the end of the first quarter of 2012 – if not now – when?  As David Fry notes

Monday’s rally was typical as we head toward the end of the quarter. Hedge fund performance fees are on the line and any way to boost these profits is job one. Top holdings for hedge funds include the usual suspects: AAPL, IBM, INTC, BAC, DIS, HD etc.

With little volume it’s easy for algos and hedge funds to prop stocks on little hard news. Tuesday we briefly saw more of this. Just as markets were weakening a story appeared using the Fed’s favorite oracle, the WSJ, as Fed governor Rosengren stated, “more stimulus is on the table”. Immediately HFT algos jumped and markets rose if only briefly. 

It's very exciting for us as PLCN (see Thursday's notes) went all the way up to $736 on Monday and sold off on some pretty heavy trading yesterday.  Slowly but surely, our negative premise is beginning to take shape as Piper Jaffray is finally catching up with us and noting "a sharp decline in unique visitors to Priceline's" from growth of 61 percent during the fourth quarter to growth of just 40 percent during the first quarter through last month. 

Could it really be possible that PCLN (with a $36Bn market cap) is NOT worth more than AYR ($650M), ALK ($2.5Bn), ALGT ($1Bn), CPA ($1.2Bn), DAL ($8.3Bn), HA ($267M), JBLU ($1.4Bn), PNCL ($24.7M), RJET ($238M), SKYW ($565M), LUV ($6.4Bn), SAVE ($1.4Bn), UAL ($7Bn) and LCC ($1.2Bn) combined?  I didn't leave anyone out, that's the ENTIRE Airline sector

Not only is PCLN (and several other stocks on our Long Put List) RIDICULOUSLY overpriced to any rational valuation, but now EXPE is making use of their cash to acquire VIA Travel to beef up their operations in a shrinking European market.  PCLN, with $4.5Bn in revenues and $1Bn in income is the classic middle-man to cut out as that $4.5Bn is bottom-line profits for Airlines and Hotels, who pay PCLN a fee to fill their seats and rooms.  So PCLN is subject to both pressure from their customers as well as a weakening Global economy – a tough act to keep up when your p/e ratio is 35:1. 

FXI WEEKLYI'm not going to lecture you on value investing because Gerald Burstyn of Advisor One did such a good job of it this morning.  It's been a rough year for value players – as there are few values to be found but, unlike most value investors, we also like to play the short side when we see egregiously OVER-valued stocks like our friends at PCLN, CMG, or our old favorites at GMCR.  When an air market pops – there are great fortunes to be made getting on the right side of these stocks when they begin to lose their Momo Mojo. 

Note on Dave Fry's China chart, that we're dangerously close to rolling over and that was before last night's 2.66% drop in the Shanghai Composite, dropping that index back below the 50 dma, which was already 6% below the 200 dma and that will drop FXI below it's own critical $37.25 line this morning and all the window dressing in the World is not going to hold up the markets if those Chinese walls come crumbling down

Can AAPL possibly go up high enough to make us forget China falling apart?  They barely managed to make us forget the Nasdaq yesterday as AAPL put up another $8 day (1.3%) but, this time, it was barely enough to hold up the Nasdaq, which had a horrific close after a nice start following AAPL to $616.  We are clearly starting to get less bang from our AAPL bucks on the Nasdaq as the overall weakness in the tech sector can no longer be masked by AAPL's success as we once again head into the earnings confessional: 

We discussed AAPL's outsided influence on the Nasdaq in yesterday's post and yes, we did take a gamble on the AAPL May $470 puts on Friday, which were $2.15 at the time and now $1.45 for a quick 33% loss.  Those can now be rolled up to the May $495 puts at $2.45 for $1 for a net $3.15 entry and it's not that we think AAPL will drop 20% but we do expect a pullback ahead of earnings as concerns about margins begin to surface as wages are rising fast in China and the Baltic Dry Index came off the bottom since January earnings – and who do you think is filling those ships with parts going into China and IPhones, IPods and IPads coming back out?  We love AAPL and most of our AAPL bets are bullish – this is a "just in case" play into earnings – that's all….

One thing we're almost always bearish on is oil and in yesterday's morning Alert to Members (10:16) I reminded our Members that $107.50 is our shorting line for oil (/CL in the Futures) and we even added USO April $40 puts at .65 to our virtual $5,000 Portfolio.  The oil futures were good for an intraday $1,000 per contract gain as oil pulled back to the $106.50 line where my 11:16 comment to Members is also noted on the chart.  We had a nice bounce back to $107.50 and, since then – it's been one nice drop, which has been perfect for our longer-term USO puts and SCO calls

Hopefully oil will stay down here but we do have inventories at 10:30 and we usually get a run-up into those and a net build of about 2M barrels is already expected so we'll need a pretty good amount to spook oil lower.  What's really bothering oil this morning is renewed talk about coordinated International releases of oil reserves to put a damper on runaway gasoline prices as we head into the Spring/Summer driving season.  This isn't NEWs – we talked about it last week and CNBC denied it was true but THEY LIED TO YOU!  We keep telling you they are crooks and liars and that you should pretty much do the opposite of whatever they say but, sadly, people still like to "stick with Cramer."

That is, of course, ironic as Cramer isn't sticking with anybody as his web-site, TST, annouces "sweeping layoffs," cutting all of it's Main Street staff as well as some in Boston.  As noted by Business Insider "We'd go over the names of people we've been told who are laid off, but it's easier to say who is staying."  As you can see from the image on the right – Cramer is giving the same quality advice he was giving back in 2007 – I just can't imagine what's going wrong at The Street…. 

What's going on in America is Durable Goods up just 2.2% vs 3% expected in February (with the extra day) and Mortgage Applications down 2.7% after already falling 7.4% last week so that's down 10.1% in two weeks from levels that already SUCKED as rates ticked up from 4.19% to 4.23%.  Wow, if consumers are that sensitive to any kind of rate increase, what happens if the Fed DOESN'T keep dropping Trillions on the market - OR – what happens when all those Trillions the Fed is dropping on the market begin to CAUSE rates to increase due to Dollar deflation?  

Mr. Rock, meet Mr. Hard Place. 

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  1. PCLN
    Yes, it seems ludicrously overpriced, but American Airlines did cut Expedia out of the game for the reasons you suggested--they want to make direct sales and cut out the middleman. However in the case of PCLN it might be different as PCLN plays the role of what used to be known as a bucket shop, selling fares to the public below advertised prices without the airlines actually having to publicly quote lower prices, and hence helping airlines to fill the unsold seats at the back of the plane next to the toilets. Maybe this is why the airlines play along.

  2. Good Morning!

  3. Cook vacations in China, discovers big wall, apple dumplings.

  4. Thanks Phil…  I was all ready to be bullish…. all excited for some new action….  ready to put some capital to work….
    But you keep on writing stuff that makes sense!  Can't you just swallow the blue pill, highlight all the news in blue, and give us 10 bullish trades that are guarnteed to make money!  

  5. PCLN also "grosses-up" their sales in their revenue accounting.  E.g.  they book the entire price of the sale as revenue, not just their share of the commission.   Just something to think about when you make valuations via Price-to-Sales etc…

  6. Good Morning all!

  7. kinki—i would think that is another negative as far as their "real" value??? Right?

  8. GM

  9. I am 60% in cash and hedged but I am still feeling tenuous.  When considering your portfolio balance, is it wise to included the numerous long buy-writes in place, or should I be strictly considering relative short-term longs?  I am trying to develop a comfort level so I can be flexible but have no intention of pulling out of long-term longs.  Any advice for a semi-newbie would be appreciated.  Thanks.

  10. Good morning,


    IWM    81.94,  82.12,  82.34,  82.67,  82.94,  83.18,  83.33,  83.55,  83.74,  83.97,  84.20,  84.36  and 84.64

  11. Kinki/PCLN
    Can they actually include taxes collected as part of their sales? Taxes and fees may be more than 50% of airfares, depending on the route.

  12. AMLN…..50%

  13. rperi / hedges  -  One thing I learned from PSW is to have your hedges match up with your trade timeframes.  A long dated hedge won't necessarily protect against a short term correction.  So all my Jan13 positions have Jan13 hedges.  My short term longs (which are few), have hedges that match up.  I got burned a while back having a overall portfolio hedge that wasn't in the right timeframe, and was also not correlated to the market move, ie EDZ.  That's my 1c….
    PS:  3xETF's I found aren't great hedges as they decay over a long time period.   So I don't use them anymore when I'm over 6mo out…

  14. Phil/AAPL
    Good morning!
    And thanks for that overnight explanation and your thought process.
    Message I got was: don’t be greedy, allow the short calls to expire at 550 in Jan.
    BTW, they say sleep is good for your health! (Lol!)

  15. FU PCLN!!!!

  16. Good morning! 

    Let's not get too excited about a pullback.   We're still in technical bullish territory and they could still jam us higher into the weekend.  There's not much volume on this sell-off, so far, and that means it's exactly as meaningless as the run-up has been. 

    StJeanLuc posted the updated virtual portfolios at the end of yesterday's post so check those out but there won't be any changes other than our planned taking the money and running at $1.55 on 1/2 the USO April $41s in the $25KP and, in the $5KP, the April $40 puts hit $1 and that's a nice one-day profit (53%) so no sense in risking that into inventories when we're behind. 

    As I mentioned in the above post, Durable Goods were disappointing and Mortgage Applications were downright scary (don't forget how good the weather is) and tomorrow we get the third estimate of Q4 GDP and I don't see it going up, that's for sure.  We have Personal Income and Spending on Friday with the Chicago PMI and Michigan Sentiment but none of that should matter as they slam us up to close the quarter – it's next week we need to be ready for – just in case the rug is pulled out – especially if the EU meeting this weekend doesn't produce any concrete solutions. 

    At the open: Dow +0.1% to 13212. S&P -0.03% to 1412. Nasdaq +0.08% to 3123.
    Treasurys: 30-year -0.22%. 10-yr -0.11%. 5-yr -0.06%.
    Commodities: Crude -1.8% to $105.39. Gold -0.65% to $1676.75.
    Currencies: Euro +0.05% vs. dollar. Yen -0.13%. Pound +0.33%.

    10:00 AM On the hour: Dow -0.01%. 10-yr -0.03%. Euro +0.01% vs. dollar. Crude -1.81% to $105.39. Gold -0.54% to $1678.65.

    Market preview: U.S. futures turn negative after disappointing Durable Goods data, with the S&P benchmark -0.1%. Oil is -1.1% following a report that more strategic reserves may be released. Pentair is +18.6% on its merger with Tyco's (+2.5%) flow-control business. Later: Geithner, MF Global hearings

    Ben Bernanke yesterday defended the Fed's response to the 2008 financial crisis, saying it prevented "total meltdown" at a time when there were "very real" fears of a second Great Depression. Speaking at his lecture series, Bernanke explained that the bailout for AIG was due to its inter-connectedness. "The failure of AIG…would've been basically the end."

    MBA Mortgage Applications: -2.7% vs. -7.4% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) increased to 4.23% from 4.19%.

    Here's the fine print from the $25B foreclosure settlement the five big mortgage banks signed last month: Of the $17B banks must earmark for "assistance to borrowers," more than half can be used in ways that won't stop foreclosures, including some activities that are already standard bank practices, such as demolishing abandoned houses. [

    Feb. Durable Goods: +2.2% vs. +3% expected, -3.6% (revised) prior. Ex-transport +1.6% vs. +1.7% expected, -3.0% prior

    A slowdown in growth hits profits at the world's busiest container port, Shanghai International Port Group reporting a 12.8% Y/Y decline in profit for 2011. Container throughput grew "only" 9.2% last year and is expected to grow just 3.9% in 2012.

    Profit estimates for Chinese firms remain "far too optimistic," says SocGen, seizing on the report that Y/Y industrial profits shrank in the year's first 2 months. Among the losers in Shanghai's 2.7% plunge last night: Alum. Corp. of China (ACH) -5.8% and Jiangxi Copper JIXAY.PK) -5.5%. FXI -0.3% premarket.

    Rising gas prices have knocked the starch out of a fairly robust economic recovery says Jack Welch. "I'm a little shaken about not knowing where this is going ... you can't have this jump and not think that it affects the pocketbook."

    Stocks are overvalued by 50%, writes Andrew Smithers, kept afloat for the moment by corporate buybacks. Smithers - who sat out the 90s bull market, but had the fortunate timing of putting his bearish ideas in permanent print in March 2000 - says cash on corporate balance sheets is the mirror of the fiscal deficit. When the deficit gets reined in (2013?), so will corporate cash, and so will stock prices. [

    U.K. Q4 GDP comes in at -0.3% Q/Q and +0.5% Y/Y vs. preliminary readings of -0.2% Q/Q and +0.7% Y/Y. Full-year GDP was +0.7%, down from a previous estimate of +0.8%. (PR)

    The U.K.'s recovery from the recession has fallen below the pace seen during the Great Depression and is far worse than Japan's "lost decade," writes Mike Riddell. What's more, the vaunted austerity program has yet to really kick in as government spending rose in 2011. Sterling -0.4% to $1.5889. (earlier data)

    The risk of a Spanish debt restructuring is higher now than it has been since the beginning of the crisis, says Citigroup chief economist William Buiter. "Spain looks likely to enter some form of a troika program this year, as a condition for further [ECB] support for the Spanish sovereign and/or Spanish banks."

    The numbers so far show EU banks are using near-free cash from the ECB to play the carry trade with sovereign debt rather than increase lending to businesses. ECB data shows loans to non-financial firms have fallen in the first two months of the year, while bank purchases of government paper have risen.

    As European politicians and central bankers wear out their arms patting themselves on the back, firms and consumers continue to pull their money out of Greece, private sector bank deposits falling 2.7% in February. At €170B, the level is the lowest since 2006 and 30% below the December 2009 peak.

    Ahead of elections expected (but not yet scheduled) in about a month, fringe parties in Greece – ranging from Communists to neo-Nazis – are registering 50% in polls. The political establishment – New Democracy and Pasok – are at just 35-40% vs. the combined 75% of the vote won in 2009. "A recipe for chaos," says a political consultant. (see also)

    Goldman is bullish on gold, noting last year's breakdown of the correlation between real interest rates and the metal's price is about to reassert itself (when real rates fall, gold rises). Seeing a weak economy prompting more easing by the Fed and a drop in real rates, gold should return to above $1,800. Gold -0.5% to $1,678.

    Goldman was also bullish on oil:  Crude oil trades lower this morning, taking a tumble and not yet recovering on a published French report that the U.S., U.K., and France are considering a release of strategic reserves. WTI crude -1% to $106.30, Brent crude -1% to $124.33. It's election season in France too, you know.

    France, the U.K. and the U.S. are in talks about a possible release of strategic oil reserves "in a matter of weeks" in order to push fuel prices down, Le Monde reports. The speculation comes as Iran says that talks with World Powers about its nuclear program will take place on April 13.

    The House voted 380-41 yesterday in favor of legislation that would ease a variety of business regulations, especially for IPOs. It's the first major easing of securities law since the Dodd-Frank reforms were passed, and is a significant rollback from Sarbanes-Oxley. Pres. Obama has signaled he will sign the bill.

    Asian policymakers are preparing to double a $120B reserve pool for defending the region against shocks. The move is meant to reduce their reliance on traditional backstops such as the IMF, which expects the eurozone to take up ~80% of its total credit in 2014.

  17. AAPL – why are all April puts up several hundred %… ??

  18. Low volatility AAPL trade
    Just out of interest, I mentioned a couple weeks ago a small trade I put on for experimental purposes selling the AAPL 2013 $500/$490 bull put spread for $330 credit (per spread). At today's prices the mid price is $248 and the offer price $285,so even at the offer price a gain of $45 on an outlay of $670 is not too bad considering the low delta. Probably some of this related to falling volatility in AAPL options. I will be looking closely at the price of this spread as we move towards earnings.

  19. PCLN/JMM – I know I intend to present an alternative to the airlines and chances are I'm not the only one thinking about it.  It's not hard to be a bucket shop, the airlines WANT to dump those seats and if I'm willing to do the same job PCLN does for $4.5Bn for $1Bn – I think I'll get their interest. 

    Bullish/Burr – The last 10 bullish trades are still playable.  The next 10 require us to be over 10,300 for more than 5 minutes. 

    79.40 on the Dollar – Go Bucky Go! 

    Grossing up/Kinki – I don't see how that's possible as they drop over 20% of sales to the bottom line.  Are you saying the airlines and hotels give them extra-ordinary commissions?  Even better to go after them! 

    Oil touching $105 with 15 mins to inventory – this is going to be exciting! 

  20. @Felipe
    More than any one specific trade, I'd like to thank you for providing the impetus for me to deal in Options trading as a powerful tool in the casino of the Stock Market. 
    Your emphasis on, 'Selling Premium", particularly  has been berry berry good to me and I have to believe many others.
    Today as I look at one account, all 6 trades  ( they are not closed yet, so I don't want to jinx it) are in the green for the first time in two years.  Little by little they have moved from red to mixed to green. That is a very satisfying result, thus far.
    Again, thanks.

  21. AAPL is only up $4.7B today. Something must be wrong…

  22. Phil, i'm thinking about shorting italy. what's the difference between buying a May 13 ewi put instead of a 14 put? what would you look at to chose between the two? would you rather buy a bear put spread?thanks

  23. BDC – It must be the weather. 

  24. I spent some time analyzing Case Shiller data and can practically guarantee that next month is lower (about 128.9 in Seattle) and this is the lowest month going forward (based on the slope of the YoY change). For Seattle the index is currently at 130.03, here is my prediction for the next 11 data points:

    February 2012

    March 2012

    April 2012

    May 2012

    June 2012

    July 2012

    August 2012

    September 2012

    October 2012

    November 2012

    December 2012

  25. buh-bye PCLN

  26. Balance/Rperi – I tend to keep a long-term and short-term portfolio and, like our Income Portfolio, I pretty much ignore the long-term as they are all positions that we WANT to buy more of if they go lower so why should we care if they go lower?  As long as we don't think the market is fallign below our 20% cushion, then those long plays are self-hedged and so, long-term balanced.   It's the short-term stuff (6 months or less) that needs to be kept on course.  Generally, like our $25KP, when you are long-term bullish, then you want to tend to be a bit short-term bearish for balance.  That's why, with our Income Portfolio doing ridiculously well, our $25KP is doing ridiculously badly but, as long as the long-term gains can comfortably absorb the potential short-term loss – then that short-term portfolio is essentially acting as a flexible hedge to your long-term positions. 

    Good point on time-frames Burr. 

    AAPL/Maya – Yep, that's the general message.  Don't forget, if you get more bullish, cashing one block of $600 AAPL shares can pay for 10 $100 bull call spreads and, unless you think AAPL is going to do more than double, the spreads can be better for you than the stock so there are many ways to get more bullish AFTER we see earnings and AFTER we get past this potential danger zone in the broad markets. 

    AAPL/Lolo – My guess is they just confirmed earnings inside the April expiration. 

    AAPL/JMM – I wouldn't hold it through earnings.  After you get the facts, you can always re-establish as you're mainly playing for premium decay more so than the target strike. 

    Thanks Flips, that's great! 

    EWI/TraderM – At $13.47 I'd sell the May $13s for $1 and buy the June $15/13 bear put spread for $1.10 so you're in for net .10 and no danger as long as they are under $14.  If you don't have the margin for the short call – I'd just go for the bear spread.  I don't like May because it's too thinly traded and we may, on Friday, get that new ECB funding and then you'll want more time anyway. 

    Oh no – oil inventores were a pretty good 600K net draw and it's not helping!!! 

    EIA Petroleum Inventories: Crude -1.2 vs. consensus of +2.3M. Gasoline -1.2M vs. consensus of -1.7M. Distillates +1.8M vs. consensus of -0.3M.

    Still, I'd take money and run at $105 on short-term bets and use that line as our new stop line for the next round of bets. 

  27. Phil / PCLN – i have a few July 450 puts.  down about 50% since 3/15.  what's the best roll?   Thx. 

  28. Phil….Forex showed a 7.1 build in crude.

  29. Pharm/PLX
    Thanks for that trade. It is going perfectly as planned and the April put sales have almost paid for the May bull call spread already. Good way to play PDUFA dates.

  30. Phil/Healthcare
    Thanks for the link to the Obamacare site. Actually I see that they ARE planning to make the insurance companies behave more like regulated utilities. Surprising that this aspect does not get more attention.

  31. Rumor is getting much stronger about US releasing reserves and last time that resulted that sent oil down $15 in 3 days, $20 for the week and almost $40 within a month so if you have SCO, don't be quick on the trigger to sell or keep a tight level to buy back in if it starts moving up.

  32. Speaking of cash, Mega Millions @ $476M for Friday's drawing.
    to put how small that is in perspective, it's the same amount in market cap to AAPL moving up or down by 51 cents.

  33. Lottery/Bio
    That's 200 million after taxes in a lump sum.  Hello .01%.

  34. Home builders going crazy…even after the mortgage apps….unreal.

  35. Jmm – ur welcome.

  36. Sounds right to me BDC. 

    PCLN/Terra – You always want to be realistic about your prospects.  Obviously, we're not expecting $450 and the Delta on your puts is just .03 so you need about a $100 drop to make $3 off the July $450 puts (now $2.35).  You are down $2.35 off the entry but that can't drive your decision.  The question is, what position on PCLN has a good chance of making $2.35 if PCLN pulls back a realistic 10%?  10% is $70 and the $520 puts are $4.90 so the COULD get you even, but it's close. 

    If, however, you spend $2.55 to roll up to the $520 puts, then the puts $70 above those are the $590 puts and those are $11.50 so you can gain $6.60 from the same $70 move from that position vs. staying where you are and MAYBE getting even if you get a $70 move down.  Even if you DD on the $450s, you won't get the same bang for your buck as you do from the roll. 

    So that's the decision process, keep yourself in a realistic position to get even and – don't forget that your goal when you DD is to get 1/2 out even and, from the $520 puts, you'll only need a small correction to be able to lighten up. 

    Forex/Wilsons – Wow, you are right, SA had it wrong and now corrected

    EIA Petroleum Inventories: Crude +7.1M barrels vs. consensus of +2.3M. Gasoline -3.5M vs. consensus of -1.7M. Distillates -0.7M vs. consensus of -0.3M.

    Still, that $105 line is bouncy but now, with a net 2.9Mb build – we're a little more excited to play them short again if we get an opportunity at a .50 line (which includes the wholes at $105 or $106).  Keep in mind though, $105 is VERY CHOPPY and you can't really enter it with nickel stops as you'll get flushed out over and over.  If you are not a big futures player, it's bets to give it a little time but I do like a small gamble that we head lower from here $105.15, with a stop at $105.30 (and a DD at $105.25 is fine if it fails). 

  37. DMND coming off the bottom for ye of little faith! 

    Obamacare/JMM – I know, it's crazy how bad the Dems have gotten at delivering their messages. 

    Speaking of messages – here's a good one: 

  38. VIX up over 4% and the July calls are down--I don't understand…

  39. Phil, i see that XLB is relatively weaker sector so i suppose it will fall harder thann the stronger ones. would you go for a bear spread or a straight put (say june)? i think playing Mon or Pot would be higher risk than xlb, don't you think?
    In your previous reply to me you said ewi may  was too thinly traded. what should i check on Tos to be sure there is enough volume? i see that Volume is O for both the May and the June 15 put. thanks

  40. PCLN 20-day at 665. Something to consider after they jam the EOQ stick.

  41. Morning! Surprised there wasn't more discussion about water fluoridation. I personally would rather have a choice than have it forced on me but fluoride is no longer the greatest concern about our water supplies (think plastics and pharmaceuticals).
    Medical Insurance — Ugh, $650/month for me and my wife for catastrophic with the max deductible (blue cross). Basically one preventative visit a year and coverage if admitted to a hospital  (no eye, dental, prescriptions, etc). Anyone have suggestions on where to find better alternatives? Anyone ever used an insurance broker for health? After hours…

  42. Mega

    That's a serious pot.  I'm going for the cash option.

  43. On second thought……if I win……I'm going to give the money away and keep my job.

  44. exec / give away — I'll get in line now.

  45. FCX down over 4%.
    I think they broke their support line too.  But the day is young

  46. Rainman – I can some thoughts for you….AH

  47. PCLN/Phil, everybody:
    This Seeking Alpha writeup explains the process by which PCLN records "Name Your Own Price" Merchant Revenue where PCLN themselves acts as a "merchant reseller".  In these sales, they record the gross amount of the sale (e.g. the entire price of the ticket) as revenue.  Of course, this also comes with increased Costs of Goods Sold, so the bottom-line remains the same, but it does inflate the revenues.  It would be like if eBay accounted the total value of all transactions on its site as revenue, the number would be incredible. 
    'The revenues from "Name Your Own Price" bidding system are classified as "Merchant Revenues" by Priceline. Merchant Revenues are reported as the gross amount of the transaction (ie. The total hotel / air ticket price); this includes the cost of goods paid to the airline / hotel supplier. This can make revenues appear inflated.'
    Also this tidbit:
    'Generally speaking, the merchant model pricing system has better margins but the agency model pricing system has a better return on invested capital. In terms of scalability, it is much harder to scale the merchant model. Therefore as the company grows, we are certain to see more revenue coming in through the agency model.'
    So the "Name Your Own Price" system is simply much harder to scale compared to the standard "Travel Agent" business model, which explains why they are trying to wind down the "Name Your Own Price" model and associated Price Negotiator marketing theme.
    And of course, what was it that set PCLN apart from everyone else in the first place?

  48. FCX starting to look interesting again. Just increased their dividend by 25%. If I didn't have a position already, I'd be watching for a bottom and a turn.

  49. Rainman/insurance

    Maybe you should try Priceline. Or move to the Dominican Republic where I pay $69 per month for 2 adults and one child. The savings on the health insurance alone will pay your rent. I predict mass emigration from the US over this, especially of people who work over the Internet, etc.

  50. rainman,
    what levels are you watching on FCX?  Are you looking at any technical indicators?  If the market expects to keep heading up, I don't think it can do it without FCX… so I'm inclined to like your thinking.

  51. SLB on the radar too. Pattern highly correlated to FCX

  52. Mega Millions/BDC – Well I guesss my $5 ticket didn't win last night…  I always play when it's over $200M as the odds are 175M to one so I figure it's a good bet!  What I'd love to do is figure out how to fill in all 175M combos and play them for $175M because you guarantee the jackpot and, even if it splits 3 ways (highly unlikely) you still do OK and then you also collect tons of secondary prizes.  If you are the sole winner – it's probably 3x on the $175M less the cost of processing all the entries (it would be no problem filling out the forms but the logistics of giving $100,000 to 1,750 people and trusting them all to process 100% of their tickets without a mistake is where you run into trouble).  Maybe the state has some kind of on-line entry we could exploit?  I think it's a worthwhile endeavor for a medium hedge-fund looking to get recognition because the risk is not that great (if you execute it properly) of losing money while the potential reward is +$300M in short order and the story would be epic – fantastic publicity that would make the fund super-famous for taking advantage of a statistical opportunity. 

    VIX/Oak – I think, on the whole, we should all recognize that it's a broken system at this point. 

    XLB/TraderM – I fear stimulus there on the bear side.  I think IYR is a better short at $61.50 as they were good to us last year and include the REITs, who have been way up on the premise that rents will go up and up forever but consumers can't afford the rents either.  With IYR, the June $58 puts are .95 and that's very possible if we have a break like we had last August but, keep in mind it did stay up until August so you have to be ready to pay up and buy more time if June doesn't hit (Sept is next roll).  

    EWI/TraderM - I look at those open int numbers on TOS and it's not that no one is trading the $15s in June so much as no one is trading ANYTHING in May – you don't want to be the first guy to make a market.  Just offer your price and you get it or you don't but don't let them pressure you into overpaying – you are the customer (and the only one) offer your price and they either fill you or you trade something else. 

    Floride/Rain – All the kids here in NJ have cavities.  I grew up in Rockland, NY and we had floride and hardly anyone had cavities – I didn't even know it was still debated in the 21st Century.  As to better alternatives to health care – your fate lies with the most Conservative Supreme Court in history – good luck! 

    PCLN/Kinki – Thanks, very interesting.  I tend to think of it all as one business but it's not at all with that model but that's still my point, the margins they currently show cannot be grown at the prior pace and are likely unsustainable as they get blowback from the airlines and competitors (same problem as NFLX has). 

    FCX/Rain – If China fails, that bottom can be very, very far down.

    DR/JMM – Yes, let me know when you get running water and I'll stop by.  ;)  

  53. Phil – at this point, what is your long put suggestion for PCLN?  I know they were listed last week but I thought with recent stock movements (i.e. higher volatility) something more in the money might be advisable?

  54. peedlew / FCX — I'd watch $36 for a failure and $35 for suppor and watch /HG for failure of 3.75. My current position is at a cost of $28.62 (up 29%)  from a purchase price of $50.79 (opened Feb 2011). I currently have a May 37 short straddle against it which still has $4 of premium being ATM. This is one of my long term holds.

  55. My monitors are acting up….I see red.

  56. Megamillions/Phil
    It doesn't pay to play all combinations because if it's split 3 ways you will lose money at that point even with secondary prizes (jackpot split would be in lump sum 116 million).  Assuming there would be no taxes because you offset your losses on tickets bought, still would result in a 60 million dollar loss, that's heavy and you basically break even if you just split with one person.   With 4 people you are killed.

  57. Phil / lotto — Sounds like what Lazlo did in the movie Real Genius. He filled out all the winnning combinations. He wins the lotto and is stumped why he won more secondary prizes than expected.  Loved that movie. Couldn't find a good clip of the scene with Lazlo driving away in a new RV. Anyway, your plan is good but against your ethics since it's just another way to move the .1% away from the 99%  (need to be the .1% to execute the plan).

  58. Jabobeast- look quick- they are both down!!~!!

  59. jthoma—please tell me that at 4pm..and I will smile

  60. Wheeee! 

    PCLN/Jerconn – See above comment on PCLN – that's why I highlighted it. 

    10:00 AM On the hour: Dow -0.01%. 10-yr -0.03%. Euro +0.01% vs. dollar. Crude -1.81% to $105.39. Gold -0.54% to $1678.65.

    11:00 AM On the hour: Dow -0.25%. 10-yr +0.03%. Euro -0.18% vs. dollar. Crude -1.9% to $105.3. Gold -0.71% to $1675.75.

    12:00 PM On the hour: Dow -0.69%. 10-yr +0.08%. Euro -0.12% vs. dollar. Crude -2.23% to $104.94. Gold -0.77% to $1674.65.

    The Fed's bond purchases are masking a fall in demand for U.S. debt, writes Lawrence Goodman in the WSJ. Foreign purchases of Treasurys plunged to 1.9% of GDP in 2011 from nearly 6% in 2009, while those of the U.S. private sector fell even more. The upshot of the Fed funding the budget deficit could be a "sharp correction."

    Great metaphor:  "Just like the 'Tower of Babel,' the 'Wall of Money' will never reach heaven," says Bundesbank chief Jens Weidmann, sounding like a good German central banker as he warns the ECB's easing actions only create new problems. He brushes off claims austerity will hurt growth as exaggerated, and says "there is little alternative" in any case.

    Spain leads the way lower in Europe again, -1.7% as the finmin calls a Citi report suggesting the need for debt restructuring "completely out of place." It's a disturbing divergence as Spanish shares (EWP) have very much not participated in the big European 2012 stock rally.

    The takeover of Spain's Banca Civica by CaixaBank only fuels belief the sector has yet to begin accounting for property-related losses. Civica's book value, €2.8B at 2011's end, is being written down to zero by Caixa, even though the lender was deemed to be one of the country's better-provisioned savings banks. "Far from turning corners, Spanish banks may still be cutting them," writes Simon Nixon.

    Canadian housing prices continue to gain, +6.5% Y/Y in January (6.8% previously) according to the Teranet-National Bank index. Toronto took over as top gainer, +9.9% against 7% in Vancouver. A National Bank economist thinks the government may respond to such gains with stricter mortgage rules.

    This is double-plus ungood:  An Indian court orders Fitch to not to publish a credit rating downgrade of SREI Finance, one of the country's largest non-bank lenders. It's the most extreme reaction in memory to an unwelcome ratings move. Neither Fitch nor the company will elaborate, citing continued legal proceedings. [

    Yields on Portugal's 2-year paper fall for a 10th consecutive day, the longest winning streak in 3 years as optimism returns (even as it leaves Spain and Greece). The yield on the 2-year note of 9.37% is the lowest since last April, and sharply below 20%+ hit earlier this year.

    Last year's natural disasters, from the earthquake in Japan to the storms in the U.S., cost the global economy a record $370B, Swiss Re says. The insurance industry took a hit of $116B, more than double 2010 and the second-largest ever. Had the Japanese had better insurance, the figure would have been much higher.

    Shares of U.S. coal companies (KOL -2.7%) sink after yesterday's announcement of stricter carbon emissions regulations proposed for coal-fired power plants. But Sterne Agee thinks the EPA proposals will have a "minimal" effect on coal-fired generation, affirming Buy ratings on ANR, BTU, CNX and JRCC despite "a much more onerous pricing and volume environment" expected in 2012-14.

    Transocean (RIG -1.8%), the deepwater rig owner that’s trailed competitors in the stock market since the 2010 Gulf of Mexico oil spill, should benefit the most this year from a surge in demand, Morgan Stanley believes. Rental rates for ultra-deepwater rigs should climb 28% to a record $714,000/day by Q3 from the current $560,000.

    Annaly (NLY -3.5%) shareholders receive a nice present in the form of stock dilution as the company announces the conversion of 772K shares of preferred stock into 2.4M shares of common. It's ex-dividend day and the shares are off a bit more than the $0.55 payout. (PR)

    Amylin (AMLN +47.6%) soars to $22.71 after Bloomberg reports the diabetes drugmaker turned down a $22/share bid from Bristol-Myers Squibb (BMY) earlier this year. It's added Bristol-Myers hasn't approached Amylin since the rejection, and the latter company is focused on finding an international marketing partner for its products.

    UBS reiterates a Neutral rating on shares of Best Buy (BBY -0.9%) while hiking its price target to $27 from $25, writing the retailer must get more aggressive in its restructuring efforts to boost profit. BBY plans to cut its big-box square footage by 10%, but it should double that amount and boost store rep counts to 3.6/1,000 sq. ft. from a current 3.1, which would lift annual EPS $1.

    Yelp (YELP +11.1%) just won't take a breather. Shares are following up on yesterday's rally with another big move higher in the absence of major news. For those curious, Yelp is now up 40% from its post-IPO opening price, and is trading at 23x its 2011 revenue.

    Google (GOOG +1.2%) edges higher after Citi's Mark Mahaney lifts his PT to $750. Like Benchmark, Mahaney believes Google's Q1 was a mixed bag, with healthy demand for search ads and growing social media ad spending offset by continued cost-per-click weakness. However, he's confident Google can post "strong double-digit revenue growth" going forward, thanks to surging mobile and display ad sales.

    The top 100 publications on Apple's (AAPL) iPad Newsstand currently generate $70K/day in revenue, according to a report from Distimo. That figure, which translates into an annual rate of $25.6M, sounds underwhelming given publisher hopes that tablet subscriptions will offset declining print sales. Distimo also claims China now generates more free iPad app downloads than the U.S., and that iOS still has a huge edge over Android in terms of tablet app selection. (also)

  61. SVU -4% < $6

  62. TOT,
    Sold May 47.50 puts for .95. Pays 6% dividend in June and at 200 SMA is just above 50

  63. TOT, I should say they yield 6% and dividend is due in June

  64. Phil, 
    What are you thoughts on TLT at ~113.50? 

  65. TOT, reason for drop is a gas leak in a platform in the North sea.

  66. Megamillions/Rustle – I'll bet you I can spend $10M for $100M insurance against 3 or more people picking a 1/175M combo in one week!  Tax is a non-issue as I have a business expense buying and processing the tickets and, as I said, risk of $60M to make $300M is not atypical for a fund with a couple of Billion to play. 

    Lazlo/Rain – Wow, I do remember him in the RV, didn't remember why.  I think I only saw that movie the one time.  As to against my ethics – making money is not against my ethics – I may object to the lottery as a matter of principle (and it's really not so bad as people, historically, have played numbers with mobsters so this is safer and a percentage goes towards education at least - what I really object to is the promotion of it, which entices people to play), but that doesn't mean I'm unwilling to exploit it if there's an opportunity. 

    Meanwhile, volume just 47M at noon – not much of a sell-off so far.  Europe ended down about 1.15% at day's lows.  Dollar 79.39, Euro $1.33, Pound $1.586, 82.76 Yen to the Buck, no change EUR/CHF. 

    CNBC pumping gold and GS all morning – can oil be far behind? 

    SVU/Rain – From Motley Fool

    We've gone well beyond looking at a negative P/E ratio, and we see much more attractive EV/FCF ratios. Its five-year EV/FCF is quite low at 8.9. To buy SUPERVALU, you have to believe in its ability to continue to turn around operations. Based on the numbers, I think it's well worth digging into if you enjoy ferreting out turnaround opportunities.

    TOT/Jomp – Nice long-term stock. 

    TLT/Enni- This is where we bailed yesterday on our $5KP longs.  I think people have lost their taste for treasuries and this run reflects a stutter in the markets panicking people back to TBills, not a long-term improvement.  However, I think we're seeing a new range shape up that we'll be able to play, between $110 and $114 so now we wait for the next dip to go long again.

    KO and SBUX making new highs again – caffine is in! 

  67. why is PCLN sinking?

  68. Trying again for CRIS Sept $5 Ps (STO) at 85c.

  69. phil – what's your thoughts on a pullback by JPM.  Thinking about a Put spread

  70. INFI up 4% on no news

  71. PCLN
    Phil,  Whats your take on this?
    SELL PCLN July $910 Calls $6.30
    BUY PCLN July $535 Put $6.30
    = $0.00 entry for a drop payout.

  72. Phil
    What would be a good trade on CHK  ?  good time or wait  ?

  73. PCLN/Jabob – I finally wrote a few negative comments about them and you cursed them for the 1,000th time – I think that was a big help. 

    JPM/JJ – Patience I think.   This is TERRIBLE performance for the end of quarter.  Think of how many fund managers must be freaking out that their BS run-up may be falling apart ahead of schedule.  I love JPM but they're up 20% in 3 weeks so I don't think I'd be running in just because they pulled back 1%. 

    PCLN/Itrade – Sure, I like that combo. 

    CHK/QC – They could go much lower but then I'd only like them more so, at $23, I like selling the 2014 $18 puts for $2.70 for a net $15.30 entry.  TOS says net margin on that is $1.80 so there's not really a reason to do anyting else, is there?  If they drop more, even to $15 (super doubtful), THEN I'd love to buy some long calls or maybe a bull spread but, I think committing $7,650 (50% margin) towards owning 1,000 shares (10 short contracts) and collecting $2,700 today (35% of the max commitment) is a nice way to get started – even if the entry is a little early.  In fact, let's add 20 to the Income Portfolio

  74. Phil--that is what I was thinking too ;-)

  75. jabo – you'll have to go from FU!! to TY!! on PCLN soon, no?

  76. Phil/Running water

    Third world is not so different, it is just like first world a few decades ago, so anyone who is over 50 has already lived in the third world. And what is the point of having drinking water piped to every home, because 99.9% of it is not drunk, so you might just as well have cheap washing water for washing, and then buy cheap drinking water instead of paying for expensive drinking water and using it to flush the toilet.
    Anyway, since numerous Americans live overseas, they will have to be allowed to buy insurance overseas, so it is only a short step for those who live in the US, but don't want to (or can't) pay $699 per month or tax penalties, to just buy their insurance offshore and tell the IRS to take a hike.

  77. Megamillions/Phil
    Ok the insurance is a very good idea but now you're putting up 185 million for at most .350 million with still a potential drop if more people do win than you are insured for but the real question is how long and how many people would it take to fill out tickets in 175 million combinations and they would have to coordinate so none are repeated.  You have only 3 days or 4 days depending which drawing.

  78. bio--way too much time left today and this year before I say TY… but I hope you will be correct

  79. Phil/CHK – is there an alternative to the above trade in an IRA? In the IRA, it wud tie up $2000 To make $270 in 19 months.

  80. Rumors floating is keeping biotechs up IMHO.  INFI is one of them. 

  81. TLT has regained the 200d MA, but still looks sick.  For the market being down 1%, and TLT up only .2%, tells me this is forced to get the premium off all those calls that were sold on Monday.


    VRTX – selling May $35 Ps 80c

  82. Does anyone else on this site get cold called by boiler room brokers telling you they spoke to you before and told you to watch ABC stock?  Best way to have fun and get rid of them is what I just did, say "Miss, I'm having problems hearing you" and as they talk louder saying "Ma'am,  you are going to have to speak slower, Ma'am"  They quickly hang up at that point.

  83. LOL rustle…..I will identify myself next time!

  84. ERY showing signs of life, although it needs to break up from here.

  85. for all of those who've spent their respective lives trying to get a start-up to "make it":
    the bid/ask spread on AAPL (10 cents) has a market cap of $93M

  86. Phil: "turning"
    In the past I have diligently worked short call positions to eventual payoffs, good return on margin but not so great when "psychic cost" is counted.  On occasion you have suggested getting more aggressive with puts when I see a turn.  What would you consider I use to help make that decision?  5 day MA or something else beside my gut.  ie.LULU looks like it's turned, CMG, PCLN not yet. I have learned one down day does not a correction make.  TIA

  87. Phil – Hello.  Do you have any updated SCO plays?  Thank you in advance.

  88. Do you expect a stick from here?  Looks like an ugly setup…

  89. Phil
    Perhaps a stop on your VXX longs, or do you think it's worth waiting on?

  90. Lflan, are you around?

  91. FTR – why so weak?

  92. For anyone interested, the folks at Nanex did a little forensic analysis on the recent BATS IPO debacle and it was written-up here on ZH:
    SkyNet Wars: How A Nasdaq Algo Destroyed BATS

    Their conclusion is that as soon as trading in BATS shares started, an algo from the Nasdaq exchange staged what could only be interpreted as an intentional and coordinated attack on the stock in order to send it down to $0.00.   This attack not only crashed the BATS stock, but it also inundated the entire BATS exchange.   All this occurred within the span of 1.5 seconds.   The logarithmic chart of the BATS IPO trades form a perfect 45 degree angle which suggests that this was a programmed attack.
    Always interesting to catch a glimpse at the inner workings of the Matrix.    One thing to think about is that if it was this easy to send a stock a down to zero within a couple of secs, how easy must it be to turn the minus signs into plus signs and bid select stocks to infinity.

  93. kinki / BATS — " bid select stocks to infinity" — FU infinity! :)

  94. MegaMillions/Rustle – Oh you need to get out of the box more.  Since this happens once or twice a year, I can fill out these tickets any time and there are many Chinese companies that will do the job for a penny or less per card or I'm sure someone can write a computer program to do it but, as I said, the difficulty is putting in the transactions without missing one of 35M cards – as it would really suck to miss the one with the winning ticket.  So, this would be bettet to do if we had some kind of on-line system for putting in the numbers.  You're also missing the secondary pay-offs – the odds table on MegaMillions is $250,000 for each time you have 5 without the Mega number, so 45 of those = $11.25M, then there is a $10,000 payoff for getting 4 out of 5 with the Mega and there's 255 of those = $2.5M and then 4 of 5 without is $150 x 15,312 = $2.3M, etc – working out to another $40M or so overall and, of course, your assumption that 3 people will win means another $525M is played and that, in turn, boosts the jackpot even further.   I'm pretty comfortable with the odds (and we'll see how it works out this week) – it's the execution of 175M consecutive orders without a glitch that worries me. 

    CHK with lower margin/Nicha – You could buy the Jan $15 puts for .65, which puts you in at net $2.05 credit after selling the 2014 $18 puts for $2.70 and then you have $3 in margin (net .95 after cash) and, if all goes well, you should eat up about 1/2 the premium on the short puts by Jan so $950 in margin tied up through Jan has an excellent chance of making you more than $270. 

    TLT/Pharm – the 5-year sale did not go well: 

    The Treasury sells $35B in five-year notes at 1.04%. Bid-to-cover ratio of 2.85, vs. a recent average of 3.02; indirect bidders take 41.9%, vs. a recent 42.6%. Direct bidders take 11.4%, vs. a recent 14%.

    Treasurys take a tiny turn for the worse after five-year auction bidders weren't wowed by generally higher yields than before. The 10-year yield reverses, now +0.01 to 2.185%; five-year +0.01 to 1.02%, two-year still +0.01 to 0.34%. Tomorrow: seven-year notes for sale.

    Cold callers/Rustle – Oh I love wasting their time.  I always tell them I'm excited to speak with them but I have to get off my other call, then put them on hold for 15 minutes or so.  If that doesn't get rid of them, I am more than happy to waste another 15 minutes of their time asking very stupid questions that just happen to hit on things that make them super-uncomfortable.  Unfortunately, they don't call me anymore – I think I've been black-listed…

    $93M/BDC – Yes but you need a Billion to play it that way, which is why the funds love 'em. 

    Turns/Lincoln – As with the above PCLN example, you have to, at some point, take a stand.  We shorted PCLN July $450 puts at $5 on the 15th and they dropped to $3.70 on the 20th and we spent $2.40 to roll them up to the $500 puts at $6.10  and those are now $4.50 and we just decided to move to the $520s this morning, which were $4.90 at the time, so a $1 roll on our $500 puts (11:05) and the $520 puts are already $5.50 so a good roll and our basis is $3.70 + $2.40 + $1 – $7.10 and we're down $1.60 despite the fact that PCLN has moved $70 against us since 3/15. 

    We might have gotten lucky earlier on but we didn't BUT – if we have the CONVICTION to stick with this short play and roll it up another $70 for another $1.60 and another $70 for another $1.60, then don't you WANT to be in the $660 puts for net $10.30 (now $29)?  That's our trading plan and there are two ways to play long puts – one is to stick with it, as in this example and the other is to stop out with a 20% loss and wait for the next time it looks toppy and do it again.  Always keep in mind these are highly speculative plays but, if you want to "put your foot down" – it's a way to do so without over-committing to a position that can bury you – as long as you PLAN AHEAD! 

    SCO/Ink – The main one is in the $25KP.  As of last night, the April 31 calls were $2.60, offset by the $34 short puts at $2.38 for net .22.  Now the $31s are $3.40 and the short $34s are $1.60 so net $1.80 – up 718% in a day is not bad.  I was playing for a bigger sell-off than this and you can still play but I'd go with the May $30/35 bull call spread at $2.80 and sell the May $33 puts for $2.20 for net .60 on the $5 spread.  We began the other play with a bull call spread but took advantage of the move against us to buy out the caller and ride it out on the other side.  Essentially, you are playing for oil to be below $105 into the holiday weekend so it's a little iffy but that doesn't mean you can't take advantage of a quick gain and get out in between and, if not, then rolling is in your future. 

    Stick/Jordan – Dow volume now 62M at 2pm so easy to stick but the weakness is everywhere – even AAPL is red!  So I would not count on a stick today but I certainly expect one by Friday. 

    VXX/DC – No, too much fun if we keep falling.  VXX May $17s (we have 20 in $25KP) are now $3.10, which is great and almost a double and we don't need 20 but I'm willing to risk $2,000 ($2.10) against the chance that we could hit $20+ again and make $4,000 more.  A more sensible and conservative play would be to take 1/2 off with a stop at $3.

    Bot wars/Kinki – We are like ants on a football field trying to follow the game.  Every once in a while Giants rumble past and we can only be lucky enough to guess the direction and catch a ride once in a while but the odds of being trampled are very high…

  95. Phil – What are your thoughts on BHI continuing downward?

  96. I have often wondered where all of the displaced workers from the manufacturing sector would find work. According to this article their future is grim.
    "We live in undeniably better times than those Luddites who first smashed the looms, but we also operate in an economic system that rewards production and marginalizes those unable to find work. Combine that reality with exponentially improving technology, and you have all you need to put capital on top of labor for good. When protests erupt over income disparity and studies reveal that the top 1% accounted for 93% of all income growth in 2010, the root cause isn't that the rich are greedy or that the poor don't work hard enough. In many cases, it's simply that those with capital can and will make use of labor-saving technology, and those whose labor is "saved" lose out."

  97. Phil, on the Friday deadline for reporting, because of settlement, the purchases have to be done by Tuesday so t+3, settled on Friday, no?  or does it not matter when settlement happens, you have it and can report it as a holding even if you buy it on Friday?  Not sure how the reporting works.  If trade settlement is necessary step before a holding can be reported, then the buying may be done for the week.  Does anyone know if I am right on the settlement question?

  98. Down triple digits on te Dow was fun while it lasted. 

  99. $40 is a tough nut to crack on USO.

  100. WTF PCLN… Mofo can't stay down!
    FU CMG and PCLN!!!!

  101. Jabob – Here come PCLN and CMG.

  102. Phil – I think I like my odds in the Mega Millions lottery more than I do in this casino of a market!
    What numbers do you suggest that I play? ;-)

  103. XCO – buy April $6/7 BCS, sell the $7 puts for net 0.  Betting that they finish up at 7……..I already have stock, but am selling the puts.

  104. Phil,
    DDM May 70/75 C – back to 1.90. What do you think?

  105. Jamie Dimon said the risk of recession is behind us so we're good.  Always trust a banker, they're never wrong.

  106. BHI/JJ – They are now very out of favor having admitted that the economy isn't that great.  You certainly don't want to play them for the short term as a lot of their business is renting and servicing nat gas rigs – which are about to be shut down this summer as the storage network tops out and there's nowhere to put the gas anymore.  Obviously, over time, nat gas can't stay at $2 with oil over $60 as it pays to convert autos and trucks at that ratio.   This is just about accumulating a stock that bottomed out at $25 in the crash (and went right back to $40) at around $40 on an initial entry – you have to be comfortable with a DD at $30 and another at $20 for a net $30 entry on 3x for a long-term hold but then I really like them at this price (selling puts, of course). 

    Labor/DC – I agree to some extent but the people who do work are having their labor under-valued as well.  Capitalism is supposed to be a partnership that includes labor and clearly the bottom 90% do not get anything like a fair share of the profits.  If they made more money, then there would be more work for people in the bottom 90% because the bottom 90% would have more discretionary income to spend locally, rather than funneling it all up to multi-nationals who give them as little as possible of value for as much of their money as it is possible to charge (hence the popularity of necessary commodites, where you can force the bottom 90% to spend more and more for the same product, despite the actual cost of production).   We don't grow our middle class and so we don't grow our economy because growing the bottom 99% means creating potential competitors – Capitalists learned that lesson in the 90s and they'll never let that happen again – that was the major turning point where they decided it was better to wreck the country than to allow this land of opportunity thing to get out of hand again and allow upstarts to threaten their position.  So the jobs were shipped out and the tax system was overhauled and benefits slashed and commodities driven up in order to make sure the lower classes were too busy struggling to survive than to possibly have time and resoruces to create more disruptive technology in their garages.  It's all intentional – not some economic accident…

    Reporting/Jordan – Not all funds are the same as far as I know.  They can end their reporting periods whenever they want.  Generally, it's the people who already own $1Bn worth of AAPL that will throw $100M more at it trying to jack it up 2 or 3% to make their numbers look better.  While they do this, they will often sell pumped up May calls to take them through earnings and allow them to be able to sell in May and screw their callers.  

    Oil came right back to $105.50 at the NYMEX close but that's not terribly impressive.  Little stick at 2:30 and volume at 3:10 is 74M so meaningless. 

    USO/Pharm – That's because it's the $105 line. 

    PCLN/Jabob – If you are going to be upset by a move up, you'd better stay away for the next two days.  The chances of them NOT getting  us back to highs by Friday are very slim. 

    Mega Millions/Diamond – Well if I tell you the winning number then 100 people might hit it and then Rustle will think he was right and we can't have that, can we?  I always let the machine pick randomly as I'd hate to have a "favorite" number and one day see it come in when I don't play (which is 99% of the time).  Of course I never look either so it probably wouldn't happen but I know how I feel in Vegas when I make have a big football parlay that I didn't bet (I always go through the exercise of picking them but only bet when I'm "sure") that comes in so I can't imagine what it would feel like to see your lucky numbers come up in the lottery when you didn't play. 

    XCO/Pharm – The only issue with the energy stocks is that, if we do crash, they can be right back at the crash lows with $60 oil again.  Nat gas is already below 2008/9 levels so be careful in that sector. 

    DDM/Pat – As a quick play into the weekend – sure.  Also as a hedge against a bullish portfolio I like it but I don't believe we'll end up there. 

    Diamon/Rustle – Maybe never wrong but his stock went from $50 to $15 in 6 months not too long ago so, no matter how right he may be – he's a risky guy to back! 

  107. Megamillions/Phil
    Okay, one last time to try and debunk the fantasy of playing every combination.  There's no way an insurance policy can be done in 3 or 4 days so the insurance would be out the window and also, you would have to have many people go to many different machines because even 10 machines couldn't pump that many tickets out in 3 days and you would have less than that because you would be extremely lucky to even get all the tickets out in 3 days considering they have to be manually done.  And the trust factor has to be huge on every employee buying the tickets and not losing some of them or making sure all of them have been bought.

  108. Ten more AAPL April 575/625 calls were purchased today for the portfolio:      48.17/15.17  =  33.00

  109. Jamie – Okay, they've paraded all the "economorons", Goldman and now Jamie himself saying the good times are coming.  Should we be scared?  I mean who else above Jamie do they parade around next?  Just funny…

  110. Dimon/Phil
    LIke I said, always trust a banker.  I mean it's a different story if they were working against clients or predicted things wrong in the past like an entire housing sector or leveraged their assets up to the hilt till they would wipe out over a hundred and fifty years of being in business in two months or less unless they got a government handout, but that would never happen.  Bankers are earnest, empathetic, honest, hard working people who deserve their tax payer bonuses for doing God's work.

  111. This aftenoon's market pop was brought to you by our friends at Pimpco:

    PIMCO founder and co-CIO Bill Gross spoke with Bloomberg Television's Margaret Brennan today, telling Bloomberg TV that the Fed will likely shift focus to mortgage securities to keep borrowing rates low when Operation Twist ends in June.





    Video for viewing and embedding here:


    On Gross’s view that we may see a sign from Bernanke in April that QE3 will be rolled out:

    "I think [Chairman Bernanke] is very satisfied…I think the Fed is outcomes-oriented.  They want an  outcome in terms of a higher stock market, in terms of housing starts and lower unemployment. What [Bernanke] said on Monday, in terms of the employment, he suggested that up until now, we've done very well in terms of reducing unemployment but it’ll be tougher going forward if only because of structural impediments that he outlined. Going forward, he's looking at jobs, at unemployment and the housing markets. You know, future QEs will the outcome-oriented type of strategy which seeks to provide jobs and provide higher housing prices and housing starts to continue on."


    On the tool that Gross thinks the Fed might deploy in April:

    "I have a sense  that they'll continue with the Operation Twist, but not necessarily in terms of buying longer-term bonds and selling shorter dated Treasuries. I think that's basically been played out and the pension market itself in terms of liability structure has been damaged to some extent by lower 30-year yields. I think [Bernanke] will try to do is Twist in the mortgage market. Basically, buy current coupon mortgages in agency spaces and then basically Twist by repo-ing out the Treasuries that they currently own in short-term space. So, you know, a twist on another Twist I suppose, going forward."

    On the ticker change for PIMCO’s new ETF (to BOND): 

    "It is easy to recognize. I told my wife about it last night and in the middle of the night she started saying something about James. I hope she was referring to the ETF but you get the point… It's more easily recognizable. In this business you want to go with a ticker and a sticker that people can recognize and pass on to their neighbors."

    On Gross’s warnings to investors about management fees:

    "We've noted that for a long time. This is simply a cautionary element that suggests that when interest rates come down close to zero and when the discounting of those interest rates and equity prices and other financial assets produce a perspective of 4-5% total return for the combined asset class is in our view, then it's incumbent upon a manager to keep expenses low and to alert investors as to the importance of expenses relative to lower returns in this new financial world that we speak to."

    On investor appetite for PIMCO’s new ETF:

    "We wanted to be able to give investors a choice. We recognized the tremendous importance of the retail distribution network for PIMCO and for the Total Return Fund, which is now $253 billion. Thank you very much, we don't to discourage that. But there are investors in the $10,000-$20,000 category, who find it difficult to buy PIMCO Total Return. We thought this would be a good way to do this in the actively managed ETF space. By the way, we're outperforming the market in the first month or so by a good 200 basis points."

    On PIMCO's appetite for Treasuries:

    "We have an average appetite in terms of duration space. And to the extent that five-year Treasuries, which are being issued today and seven-year Treasuries tomorrow – they reflect a relatively firm commitment on the part of PIMCO, which reflects a relatively firm commitment on the part of the Fed that they'll keep interest rates firm until late 2014. Bernanke mentioned yesterday that that wasn't a commitment in total but it's subject to a relatively slow economy and contained inflation, which is what we see now. A five-year security at slightly above 1%, to our way of thinking, as it rolls down the yield curve and becomes a four-year, produces close to a 2% return and is that a super, deeper attractive type of return? Well it's up to history. No, it's not….but it's certainly better than nothing."

    "We have reduced our Treasury commitment slightly. From the standpoint of duration, we have average duration of an average maturity across the board but we have been reducing Treasuries and investing in shorter duration corporates and rather heavily in the agency mortgage market. You can get, with a Fanny or a Freddie coupon that is a 4% coupon, you can realize 3% as opposed to the 2% or 1% – I mentioned in terms of five-year space. We're really focusing on spread and the lack of volatility going forward for the next two to three years which is really the domain of 30-year and 15-year mortgages."

    On finding investing opportunities in developing countries: 

    "Where is that attractive growth? Countries like Brazil, countries in Asia, China-related of course. These countries don't come without risk. They don't come without a rather volatile situation in terms of inflation or potential currency disorder. If an equity investor is looking for growth, you want to go developing as opposed to developed. Even a bond investor, if you are looking for higher real rates such as in Brazil, you want to go to developing as opposed to developed."

    On whether PIMCO will buy Russian five-year notes: 

    "We're looking at the five-year, not the 10-year or the 30- year. At 230 basis points over the U.S. five-year, that's an attractive situation. That doesn't come without risks. It is a triple B+ type of security in terms of sovereign space and has a history of default going 10, 11, 12 years back. At these spreads and with situation currently, this is an attractive situation compared to U.S. Treasuries."

    On buying hedges against fat tail possibilities:

    "What we're suggesting now is not an extremely negative possibility. That would be the fat left tail. But also the fat right tail, we've had a fat right tail in equity markets for the past 3-6 months…On the left-hand side, you know, the bi-model possibility in terms of a downturn are simply a reflection of the high degree of leverage, the high degree of debt and the policy coordination which may or may not be helpful in terms of producing this smooth, rather bell-shaped mode or median we're all used to."

  112. LOL look at VXX dying again!

  113. Sounds like Gross has real information, doesn't it?  Isn't that called insider trading?

  114. With GDP and jobless claims early tomorrow morning is anyone buying into the close betting for an opening pop?

  115. ABC's dopey tips for picking mega millions numbers:
    Here are his tips for buying tickets:
    Pick your own numbers.  Don't leave it up to the machine. Lustig advises against playing Quick Picks, the phrase describing the number the computer picks for you when you don't use your own. (there is no difference if you or the machine picks the numbers since they all have the same chance of being drawn)
    Do your homework.  Go online and make sure the set or sets of numbers you play have never come up before. (that's an easy task and again, the same numbers have as much a shot of coming up again as any other number)
    Stick with your strategy. You have to learn what number to play and how often to play. Commit to your numbers and stick to your strategy. (again, it's random and doesn't matter)
    Avoid lottery fever.  When jackpots get this high , Lustig says, people tend to get lottery fever and spend a lot more than they normally would or can afford. Don't go crazy; the odds are still the same no matter how much you spend.(only sensible advice except how many times do  you get a chance to play for over 350 million in a lump sum, might be worth a couple more bucks)

  116. Phil,
    What's your prognosis on the markets?  Are we seeing all the drops already and time to go BUYBUYBUY?

  117. Now they flushed the puts.  How convenient….

  118. XCO – don't disagree on that one, but I think wave 5 up is coming b'f the 'great crash'. 

  119. Prediction: tomorrow we gap down at the open…

  120. "Will the Republicans "own" the health care problem if struck down by the Supreme Court?"
    -Martin Bashir
    Single Pay Anyone?

  121. the vxx rallied from a negative 9% to 0 – I don't doubt we are gonna have a green day tomorrow – or at least in open

  122. MegaMillions/Rustle – Wow, I'm NOT talking about actually doing this by Friday.  I am discussing the abstract concept of taking advantage of an opportunity like this and I already estimated at least 1,750 people putting in 20,000 tickets each over the course of the 3 days (each handing the clerk at 7-11 $20 and 4, 5-number ticket forms 1,000 times in 72 hours or once every 4 minutes doesn't seem like much of a stretch) between the lotteries and I already said that I don't think that's practical and the whole thing would only be worth the risk if there was some way we could enter our picks on-line so we could quickly verify that we have correctly completed the sequence.  This was all discussed above – let's try and solve those problems rather than blowing off an opportunity for a 3-day triple because you don't have a "can-do" attitude!  8) 

    Good times/Ink – You know they are worried when Birinyi and Abbey Joseph Cohen get wheeled out.  Then Jim Rogers comes on to tell you how you just can't possibly understand how big China will be and how they will consume all of the World's resources, no matter how expensive they become, and then they will invade other plantes and consume those too! 

    Poor VXX – it was fun while it lasted. 

    GDP/Dpast – I have certainly not seen improving data since the last estimate. 

    Prognosis/Cwan – Up by Friday, then I have no idea. 

    Nice save but certainly not enough to scare the bears back into their caves!

  123. Sorry VIX and positive 9%

  124. PharmboyFCX

  125. Re. Gross.  Maybe this is obvious, but Bernanke seems to massively distrust any kind of market signal.  And if the signal flashes something that he doesn't like he will up his interventions until he has conquered it.  I get the impression that he doesn't believe that our financial system could possibly explode under it's own weight.  Trying to dictate outcomes in an economy as complex is ours insane.  He keeps applying to much formal thinking logic in a world that can't really be formalized

  126. Diamond – thx.  I am in the chat almost every day!

  127. it's getting to the point where any day that the value of my holdings (TZA) doesn't go DOWN is considered a freakish yet good day.  There just might be some hope yet.

  128. Phil/ IWM close
    It seems scandalous how they gun the IWM from 83.15 to 83.30, two minutes before the close with volume!
    This may possibly mean a gap up tomorrow on the Russell.

  129. It's all intentional – not some economic accident…
    I rented Tinker Tailor Soldier Spy over the weekend. It occurs to me you must have internalized all of LeCarre's novels to come up with this stuff. Quite fertile.
    how bad the Dems have gotten at delivering their messages.

    Not really, I have been involved in marketing and sales in a variety of capacities over many years and I disagree with your assessment. The Dems have done about as well as possible given the lousy product they have to peddle. They emphasized the "bennies" and ignored or downplayed the cost. It is just hard to sell value when it is just not there.
    People don't buy in to the free lunch paradigm as easily anymore. Hopefully, if the Supremes strike the mandate, and that will provide President Obama with an appropriate segue to admit "mistakes were made" and go back and do something better.

  130. 3X Index Based ETF's
    I wrote a piece about this at the very end of Tuesday's Chat thread, for those who might be interested.

  131. reporting / Jordan
    Are you talking about 13F filings?  In general reporting regimes are based on beneficial ownership, which occurs on trade date, not settlement date.

  132. Health Care Bill Now and Then….all politicians have a double standard….

    Spare me the Repub's way, and in addition Repub's comparing themselves to Reagan…..Reagan would be a socialist in their eyes now.  Hell, Cantor won't admit Reagan raised taxes and Reagan is his hero.

    Major Provisions Senate Bill 2009  Sen. Chafee (R) Bill 1993 Rep. Boehner (R) Bill 2009 
    Require Individuals To Purchase Health Insurance
    (Includes Religious and/or Hardship Exemption)


     No (individuals without
    coverage would be taxed)

    Requires Employers To Offer Health Insurance To Employees

     Yes (above 50 employees, must help pay for insurance costs to workers receiving tax credits
    for insurance)

     Yes (but no requirement to contribute to premium cost)


    Standard Benefits Package 




    Bans Denying Medical Coverage For Pre-existing Conditions 



     No (establishes high risk pools)

    Establish State-based Exchanges/Purchasing Groups




    Offers Subsidies For Low-Income People To Buy Insurance 




    Long Term Care Insurance

     Yes (sets up a voluntary insurance plan)

     Yes (sets standards for insurance)


    Makes Efforts To Create More Efficient Health Care System 




    Medicaid Expansion 




    Reduces Growth In Medicare Spending




    Medical Malpractice Reform 




    Controls High Cost Health Plans

     Yes (taxes on plans over $8,500 for single coverage to $23,000 for family plan)

     Yes (caps tax exemption for employer-sponsored plans) 


    Prohibits Insurance Company From Cancelling Coverage 




    Prohibits Insurers From Setting Lifetime Spending Caps




    Equalize Tax Treatment For Insurance Of Self-Employed 




    Extends Coverage To Dependents

     Yes (up to age 26)


     Yes (up to age 25)


     $871 billion over 10 years

     No CBO estimate

     $8 billion over 10 years

    Impact On Deficit

     Reduces by $132 billion over 10 years

     No CBO estimate

     Reduces by $68 billion over 10 years

    Percentage Of Americans Covered 

     94% by 2019

     92-94% by 2005

     82% by 2019

  133. hi newbie
    someone thinks this train is going to derail by July opx
    chk out TZA July 56C  — open interest for over 5800 contracts!
    Maybe you want to DD — we're not even @ 18 yet :)
    Thanks for all the time you take to post on these 3x etf's. Hope it pays off for you big time.

  134. Rainman / Medical Insurance — Is it a High Deductible Health Plan(this is just a PPO plan with a $4k-$5k ded.) with an HSA?  If you already have the highest deductible, then you should consider an HDHP with an HSA if you don't have that already.  You should also check to make sure that(if these are individual policies), that you do not have a maternity rider/feature on the policy(unless you and and your wife are planning on having kids).  I have seen this time and time again.  I personally have a HDHP with HealthNet w/ a prescription plan.  I don't really recommend BC/BS because they tend to be on the more expensive side and they raise their rates in the teens every year it seems.  I am my own broker but brokers aren't do not necessarily add to your costs.  You just have to find a good broker that will really try and get you the right plan.  You can also try ehealthinsurance dot com.  Let me know if you have any other questions. 

  135. Well, interesting day at the courthouse today – get regularly picked for jury duty but had never been selected for a jury pool. But got selected twice in the same day today! I was actually quite entertaining as both judges tried to make the jury selection less tedious. Got picked as a juror in one a the pools for a civil case but the plaintiff attorney didn't seem to like my questions to the judge about TORT Reform. Seems to be a big no-no to mention frivolous lawsuits apparently. But I did also mention that limits on awards seemed arbitrary in some cases as well so it did cut both ways. I guess the guy didn't want to take any chances and it's a shame as I was looking forward to seeing a case in real life. 

    Back to the market – did I miss anything? 

    I'll post the new lines and portfolio updates in a bit.

  136. Fertility/Pstas – Why am I not surprised that you see a movie and decide you can make sweeping generalizations about complex topics?  Do you think class warfare is a myth?  Did the slave owners not conspire to keep their slaves?  Did they not pass laws to restrain their rights?  Did they not pass laws to keep their workers in line?  Didn't this country have a revolution to get away from the UK for treating us like an underclass?  In the early 1900s, weren't union workers and rail strikers considered terrorists and dealt with as such in violent management/labor confrontations?  The LA times building was blown up in 1910 because it was an anti-union propaganda rag.  The proletariat were assassinating businessmen and politicians because the corruption was so rank they didn't see another way out.  Do you ever actually study history or are you just an expert?

    This country was founded on the confiscation of land and assets from the Tory Lords, which were redistributed to the people.  Our founding fathers banned primogeniture (firstborn wealth inheritance) to make sure wealth did not accumulate into too few hands and they created homesteading, which made it easy for peasants to claim unused land from the wealthy.   Today, 400 families own 50% of the wealth in this country and they all go to the same fundraisers and parties and events (many will be gathering at the Rainforest Concert next week) and they vacation in the same place and they intermarry – it's brilliant how we've recreated the aristocracy in just 250 years.  

    They own the media and whatever tripe is spat out on Fox News at 6 is repeated verbatim on dozens of other outlets and thousands of blogs and becomes the "talking points" for the GOP the next day and then are repeated by you to "prove" your points – the Daily Show points it out all the time and I see it here regularly but I'm sure you don't watch any of that crap so, therefore, there can't be a conspiracy if you don't see it, right?  

    The problem with the Dems is they don't go for the throat and you can't bring a knife to a gunfight.  Clearly the Reps are not going to step up their game and fight fair anymore so the Dems will either have to learn to fight just as dirty or they will eventually be marginalized by a liberal version of the Tea Party. 

  137. Remind me why we need to keep drilling… we don't know what to do with the oil we have!

    And besides, we drill more today than we have in the past 10 years and we consume less. 

  138. The most heavily shorted stocks:

    Some familiar names in that list!

  139. At the close: Dow -0.53% to 13128. S&P -0.49% to 1406. Nasdaq -0.48% to 3105.

    Treasurys: 30-year -0.12%. 10-yr -0.09%. 5-yr -0.08%.

    Commodities: Crude -1.65% to $105.56. Gold -1.35% to $1664.95.

    Currencies: Euro +0.05% vs. dollar. Yen -0.4%. Pound +0.34%.

    Market recap: Stocks posted their fifth decline in seven days, weighed by a downbeat durable goods report and weakness in overseas markets. Materials and energy stocks topped losers as commodity prices fell sharply; Nymex crude slid 1.8% on a surge in inventories and talk of a release of strategic oil reserves. Treasurysfell slightly after a tepid auction. NYSE decliners led advancers two to one.

    The number of S&P 500 stocks setting new 52-week highs has shrunk as the rally has advanced, Brown Brothers observes, "a bearish sign of selectivity that tends to occur when strength by big-cap stocks masks weakness in the broader market.” Net new 52-week highs peaked at 280 companies on Feb.3; the number has since dwindled to a net 38.

    Trumpeting "significant change" in U.S. labor markets, JPMorgan's top economists tell clients to get ready for broad improvement "across the macroeconomic landscape over the coming year." They see the unemployment rate falling to 7.7% by year's end even as a "large shadow pool" of workers reenter the labor force.

    "The economy is getting stronger all the time," Jamie Dimon tells CNBC, "I believe the threat of a double dip recession is behind us." Of China, he says the country will see a soft landing, disagreeing with his own analyst who last week said it's not a debate anymore, the country is already experiencing a hard landing. Shares reflexively move a bit off session lows, S&P -0.8%.

    As China's economy cools down, the "old trick" of having state-run banks finance massive investments is no longer working, says China expert Patrick Chovaneck. Meanwhile, a bursting of China's housing bubble will take a toll on overleveraged property developers, and export growth isn't what it used to be. A major shift in GDP composition from investment to consumption might be needed to stave off a "hard landing."

    The Jefferson County (Alabama) Commission unanimously votes to default on its General Obligation debt, and will skip a scheduled $15M April 2 payment. GO bonds are backed by a "full faith and credit" pledge, supposedly making it a particularly safe muni investment. (previous)

    Channeling Meredith Whitney: A former state judge in Rhode Island warns that bankruptcy is nearly unavoidable for the city of Providence – despite efforts by the mayor to pressure non-profits including Brown University to chip in with payments. Legal experts warn that the move could become more popular with municipalities if the protection of the court is viewed as "useful" – instead of something to avoid at all costs.

    German companies' sentiment towards the euro "returned unambiguously into negative territory" in March, according to a Commerzbank survey. Euro bears rose 10 points to 36%, says the bank, which notes the exporters it surveys have – in the past – had good predictive abilities going out 90 days.

    "It is the perceived shortage … not the reality on the ground," keeping oil prices high, says Ali Naimi, the Saudi oil minister. His country's claim of production capacity far beyond current levels "is not empty rhetoric … There is no rational reason why oil prices are continuing to remain at these high levels." Oil falls further, -2.2% at $104.95.

    Shares of Fortuna Silver Mines (FSM -19.9%) take a beating today after CIBC cut its rating to Sector Outperformer early this morning.

    Gold closed with another sharp drop, as April futures dipped 1.6% to $1,657.90/oz. Goldman's bullish call notwithstanding, others wonder if gold prices have peaked. CPM Group sees increasing supply plus a bigger global pool of gold investors setting a floor under the market but without parabolic rallies. Matthew Lynn counters that gold could take another leg higher if big central banks start buying again.

    Verizon (VZ -1%) and AT&T (T -1.1%) shares slip after RBC Capital cuts growth targets for both wireless carriers, seeing "few sustainable catalysts given a flatter postpaid growth trajectory and a weaker starting point for 2012 wireline margins." The firm cuts estimates for net post-paid wireless subscriber growth for both VZ and T by 30%-plus. (earlier)

    Amylin (AMLN +48.6%) investors cheer the rumor it rejected a $3.5B offer from Bristol-Myers Squibb, and analysts expect higher bids. Deutsche Bank says AMLN could be worth up to $31/share given an "acquirer with diabetes sales force can cut SG&A by 80% and R&D by 40%." Piper Jaffray names BMYMRK and TKPYY.PKas potential sutiors; Leerink Swann suggests AZN.

    Corning (GLW -1.6%) is following the market lower in spite of analyst commentary (III) arguing Foxconn's (HNHAF.PK)investments in Sharp (SHCAY.PK) are a positive for the glassmaker, which handles over 60% of Sharp's display glass needs. In particular, Sharp's cutting-edge Sakai City LCD panel plant, which receives all of its glass from Corning, is expected to see higher utilization rates thanks to the deal.

    Diamond Foods (DMND) has the highest short interest as a percentage of float among S&P 500 companies, Bespoke reports, with more than half of its free floating shares sold short, followed by Barnes & Noble (BKS) and KB Home (KBH), both near 50%. Other notable names on the list include First Solar (FSLR), Sears (SHLD) and JC Penney (JCP). 

  140. Finally we can short them!
      Fossil (FOSL) will be added to the S&P 500. The company will replace Medco Health (MHS), which will soon be acquired by Express Scripts (ESRX), provided regulators don't get in the way.FOSL +2.3% AH.

    Mosaic (MOS): FQ3 EPS of $0.64 may not compare to $0.75 estimate. Revenue of $2.2B (unch Y/Y) misses by $354MShares -2.5% AH. (PR

    More on Mosaic (MOS): Net potash sales off 27% Y/Y. Gross margins on potash 49% vs. 54%. Phosphate sales +13% Y/Y, gross margins 16% vs. 31%, reflecting higher raw material costs. FQ4 potash sales expected 1.7-2.2M tons (FQ3=1.1M), phosphate sales 2.3-2.7M tons (FQ3=2.6M). Annual dividend is increased 150% to $0.50/share. Shares -2.5% AH. (PR

    Facebook (FB) will halt trading of its shares on secondary exchanges this week, reports Bloomberg, as the social networking giant gets ready for its IPO. The halt could drive some investors desperate to get a pre-IPO fix to take a look at GSV Capital (GSVC) or the Firsthand Technology Value Fund (SVVC - previously). 

    Facebook (FB) plans to have its IPO in May, the WSJreports. It's added the company plans to release another amended S-1 filing prior to its offering (perhaps to include Q1 results?), afterreleasing one on Tuesday. The news comes as Facebook halts the trading of its shares on secondary exchanges.

    Argus reiterates a Buy rating on Intel (INTC -0.9%) andraises its price target to $34 from $29, as “investors have not yet fully grasped the importance” of Intel’s big push for ultrabook laptops. The PC may not be dead after all, the firm says, thanks to an ultrabook move that's "concerted, technologically well-supported, and driven by motives ranging from profits (Intel) to desperation (H-P)."

    Brean Murray says Seagate (STX -0.5%) could gain 25% – 30% by July and that sharess are undervalued at current levels. The firm raises estimates, citing meaningful COGs savings, lower operating expenses and higher ASPs. Shares are rated a Buy with a $35 price target. 

    The Street's beatdown of Research In Motion (RIMM -1.7%) continues, as Charter Equity repeats its Underperform rating, noting that “with channel checks suggesting weak sell-through of Blackberry 7 models, and the release date for Blackberry 10 unclear, further share loss seems all but inevitable." RIMM will report Feb. quarter results after the close tomorrow.

    AMOLED displays could be used in 90M smartphones this year, says Digitimes, as demand for Samsung's Galaxy smartphones (III) give the technology a lift. In addition, more phones are shipping with high-resolution AMOLED displays – that could result in higher sales for technology/materials provider Universal Display (PANL). Apple is reportedly eying the technology, but has supply concerns.

    An Apple (AAPL) TV set is arriving, says CLSA, but not until 2013, in spite of plenty of speculation to the contrary. Foxconn'sinvestments in Sharp lend credence to iTV rumors, CLSA argues, viewing the deals as "an effort to improve Sharp's financial position before becoming a more meaningful supplier to Apple." As do reports Apple is investing $1.3B to upgrade Sharp's facilities. 

    Three lunchtime reads:

    1) Strategist: Stock market should double again

    2) How risky are long Treasury bonds?

    3) Treasury: Now is the key time to invest in infrastructure

  141. "The proletariat were assassinating businessmen and politicians because the corruption was so rank they didn't see another way out."
    You wouldn't happen to know how I can get in touch with these guys, would you?  I have another job for them, maybe 535.

  142. Phil: how do you think — or, if you prefer, why was it possible — for the U.S. aristocracy you describe re-create itself.  The U.S. Constitution is supposed to have checks and balances that would, in theory, prevent this.  It's an interesting political point.  I won't quibble about the definition of aristocracy, although the concentration you describe doesn't meet the definition, because aristocracy is, and has always been, inheritance-based.
    But 80% of the top 1% didn't inherit their wealth.  Something else has taken place that has permitted wealth concentration in the 1% that cannot be explained by inheritance – a tax policy for which the majority voted. How, or why, did we transition from a more wealth-leveling tax systems to one that permits the concentration we see. supported by the popular vote?  That's the interesting bit.    It began with Reagan — but what was the catalyst that drove the 51% to vote for a wealth distribution scheme that overwhelmingly benefits the 1%? I have some ideas, but I'd rather hear your take on it.

  143. Since people were talking about Megamillions, here are some stats:

    Good luck….

  144. All the portfolio spreadsheets are up to date now.

    BTW, Phil, the Mar 13 IWM options in the IWM Money portfolio are really illiquid right now with little OI at the strikes we have. The Jan 14 strikes are much more liquid. Not sure why but something to keep in mind if we want to add BCS.

  145. Some interesting thoughts on the Supreme Court talk:


    Adding to what Blumenthal, et al. are saying: I think they understate the case a bit, or at least it could be stated more forcefully and clearly, that SCOTUS would do itself and the country serious damage if it overturned the mandate.

    The thing is, as of the time the law was passed, *everyone* across the political spectrum thought this thing was constitutional. The Heritage Foundation started it, the D’s finished it, and the whole way down no one thought it ran afoul of the Constitution (save for people considered fringe at the time).

    What this says is that Congress and the entire country were relying on the precedents SCOTUS set to pass the law—and they spent almost two years and untold legislative resources doing it. That’s the whole point of stare decisis, allowing for predictability with respect to what the law allows. Stare decisis is what makes sure the courts don’t act arbitrarily by constraining them to fit within precedent.

    Acting in ignorance or with disregard for precedent (and precedent’s practical attendants, like reasonable beliefs in the public about what the law is) undermines rule of law, makes it impossible to pass laws confident of their legality, etc. It is, in a word, arbitrary. It’s the kind of thing they do in developing countries.

    If SCOTUS ditches stare decisis here, sure their credibility will take a hit, but more importantly: we, as a polity and individuals, would have no reason to think we could pass any major regulatory legislation (unless, of course, we took the political commitments of the justices as our guide). SCOTUS would be potentially freezing the statutory law in place. What is Congress supposed to do with its time if everything it thought it knew about the law gets chucked out the window? How does it pass legislation? How does it change *existing* legislation? Are only Republican Congresses allowed to pass laws?

    Stare decisis and all the reasons we follow precedent command that the mandate passes. I’ve already gotten overly maudlin, but if the mandate is overturned, we’re ruled by men, not laws.

  146. That was "humorous" for Romney:

    At the outset of the call, Romney said he has some connections to Wisconsin.
    “One of most humorous I think relates to my father. You may remember my father, George Romney, was president of an automobile company called American Motors …  They had a factory in Michigan, and they had a factory in Kenosha, Wisconsin, and another one in Milwaukee, Wisconsin,” said Romney. “And as the president of the company he decided to close the factory in Michigan and move all the production to Wisconsin. Now later he decided to run for governor of Michigan and so you can imagine that having closed the factory and moved all the production to Wisconsin was a very sensitive issue to him, for his campaign.”
    Romney said he recalled a parade in which the school band marching with his father’s campaign only knew the Wisconsin fight song, not the Michigan song.
    “So every time they would start playing ‘On Wisconsin, on Wisconsin,’ my dad’s political people would jump up and down and try to get them to stop, because they didn’t want people in Michigan to be reminded that my dad had moved production to Wisconsin,” said Romney, laughing.

    I don't find it that funny and I am sure the ex-AMC workers probably are missing the funny part!

  147. And killing the individual mandate opens more cans of worms:

    The argument is that the government has broad powers to tax to address national problems but not the power to mandate individual participation in regulated private sector approaches. (I don't doubt that there will now be arguments on the right that Social Security and Medicare are in fact unconstitutional. But for the moment the proponents have avoided that interpretation for obvious political if not necessarily constitutional reasons.) David Frum points out that killing the mandate also disallows the Chilean model of privatized, individual retirement accounts Social Security, which has been catnip for free market conservatives for a generation.

    But since these privatized retirement accounts would presumably be passed by a Republican congress it would be OK then since it seems to be the requirement.

  148. stjeanluc—just wanted you to know, coming back from a long trip your portfolio spreadsheets are invaluable—merci

  149. You are welcome Savi… and welcome back, I always enjoy your comments!

  150. Romney-- Yes, not very funny but this one will have you on the floor —
    At the White House Correspondents' Dinner Saturday night, President Obama noted that in the audience were the Jonas brothers.
    "Sasha and Malia are huge fans," he said, "but boys, don't get any ideas. Two words for you: predator drones. You will never see it coming.”
    Unless of course you were a member of one of the families—
    But writing in Foreign Policy, Peter Bergen and Katherine Tiedemann have estimated that their data shows that from 2008 until December 2009, drone strikes have killed between 384 and 578 individuals, with most of them militants but between 35 and 40 percent of them innocent civilians. Senior administration officials contend that the number of civilian casualties is far fewer than that.

  151. StJeanluc-the Frum link does not provide any more info  That notion regarding retirement accounts is one I have never heard before. Do you have a reference?

  152. Pstas – I think that a lot of the jokes that these politicians make eventually fall flat (or worse) when you try to put them in context. Recall the video that Bush made of himself looking for WMDs in his office while 3000 soldiers were dying in Iraq! 

    As far as the Chilean pension funds are concerned I think that it's easy to make a comparison:

    For all citizens who are legally defined as workers, employers must pay a proportion of the earnings to a pension fund. Workers who had already paid in the old system, got an option to continue to pay into the old system. But the statutory minimum contribution to the new private pension funds was set 11% lower than the contributions to the old pension system, therefore most workers changed to the new pension system.

    The state is basically forcing workers to make contributions to funds run by private enterprises in order to plan for retirement. You don't have the option to "not" plan for retirement. In essence the state is also trying to eliminate free riders. What happens if a portion of the population were to decide that they would rather spend that money on other stuff and bet that the system would not let them die destitute once they reach retirement age? Looks to me like an individual mandate to me, basically forcing people to buy retirement insurance from private businesses.

    And here is more from Frum on that topic:

  153. And Romney was for the mandate before he was against. He actually does a better job of explaining it than the Dems… From a debate in January:


    ROMNEY: For the 8 percent of people who didn't have insurance, we said to them, if you can afford insurance, buy it yourself, any one of the plans out there, you can choose any plan. There's no government plan.

    And if you don't want to buy insurance, then you have to help pay for the cost of the state picking up your bill, because under federal law if someone doesn't have insurance, then we have to care for them in the hospitals, give them free care. So we said, no more, no more free riders. We are insisting on personal responsibility. Either get the insurance or help pay for your care. And that was the conclusion that we reached.

    SANTORUM: Does everybody in Massachusetts have a requirement to buy health care?

    ROMNEY: Everyone has a requirement to either buy it or pay the state for the cost of providing them free care. Because the idea of people getting something for free when they could afford to care for themselves is something that we decided in our state was not a good idea.

  154. hi,
    Anyone using the option max pain calculator? I have heard it here before but don't know what is used for that. There is one website which I came across . Has anyone used this?

    Does this help to identify approximately what strike price will an option be pinned at expiration in order to cause max pain to the option buyers? appreciate your time.

  155. Isn't social security a mandate?  I don't have a choice to put money into it…. 


    I don't get the argument about not having insurance.  I paid in grad school $10/mo for insurance.  15% of the 20-24 are unemployed, and without the new law, would be on their own – hoping that nothing happens.  How is this not a good thing being able to be on the parents plans until age 26?  I hope the Supreme Court strikes it down.  Repub's will cry for the next 20 yrs, as they will be thrown out of the system.  Open Pandora's box….

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  158. ban2 – TZA
    I have a reply but not sure when I'l post it
    Thanks for pointing out that weird July 56 C

  159. peedle: Still working on the "Growth Sniffer" fund idea.  I've been given a few ideas, but I'll report when I have a more complete idea of what's available along those lines.  It could take a week or two, but I won't drop the idea because I am in the process of reallocating some of my longer-term stuff away from Europe and Asia — which is not to say all of Europe or all of Asia, just that I'm drilling down to target potential growth areas against what I expect to be a fairly anemic five years or so.

  160. And while we are on mandating things, Virginia just mandated….never mind.  The GOP have lost their mind. 


    Oh, and those undergoing the ultrasound…..must pay for it themselves, since the gov't is forcing them to do it.

  161. Zero
    Don't put much in that 80%, it is number playing, very few made it all, and just because in the last few decades they got very rich most of them had something to start with. That is why the bottom stay there.

  162. pharmboy
    Don't forget all those alternative ideas for almost everything aren't covered. The latest that I found out was oxycodene with tylenol is covered, without not on formulary and that implanted nerve stimulator for pain, no way, not proved effective. If you want to kill pain you kill your liver and die from that or what I did pay full price out of pocket.

  163. Has Phil overslept today?

  164. Holy cow, 7am already?  It's my birthday so I was out having fun last night!  

    When I went to bed, the Futures were green, not so much now – down about .25%.  Dollar 79.39, Euro $1.328, Pound $1.587, 82.14 Yen to the Dollar but no change on EUR/CHF (1.205). 

    Oil $104.83 after testing $105.75, gold $1,658, silver $31.85 (losing $32 is bad), copper $3.76 (losing $3.80 is bad), nat gas $2.26 (losing $2.25 will be bad) and gasoline, of all things, is still over the $3.33 support at $3.363.  

    6:00 AM Overseas: Japan -0.7%. Hong Kong -1.3%. China -1.4%. India -0.4%. London -0.8%. Paris -0.7%. Frankfurt -1.1%.

    U.K. house prices fell 1% in March, according to the Nationwide survey. The fall is blamed on the ending of the stamp duty holiday which had buyers moving forward purchases to take advantage (when will governments learn). With the tax back in effect and the generally weak economy, Nationwide expects prices to continue their negative trajectory. (PR

    Foreclosure Deal Credits Banks for Routine Efforts (NYT)

    Japan’s retail sales rose 3.5% on year in February, the largest gain since August 2010, boosted by a 21.4% jump in automobile sales. "Today’s report adds to evidence that Japan’s economy will return to growth this quarter," BNP Paribas economist Azusa Kato says.

    After falling sharply during the recession, U.S. vehicle exports have nearly reached their 2007 peak, notes Fed economist Thomas Klier in a report. 55% of exports still go to Canada and Mexico, but the Middle East (13%) and East Asia (10%) have also turned into major export markets. At the same time, the share of U.S. vehicle sales claimed by imports is falling. (previously)

    Japan's government will draft a stop-gap budget for the first time in 14 years as lawmakers struggle to pass a spending bill before the new fiscal year starts on Sunday; a proposed sales tax increase is one of the main points of contention. The stop-gap measure will total ¥3.6T ($43.4B) to pay for spending and government costs for the first six days of April.

    TEPCO (TKECF.PKteeters on the edge of insolvencyunless a ¥1T ($12.2B) injection from the government is approved. The company says that its capital has fallen to ¥620B, after standing at close to ¥2T before the Fukushima disaster.

    German unemployment falls to 6.7% in March, the lowest since comparable records began in 1998, from from 6.8% in Feb. The decline comes despite the eurozone debt crisis and indicates that the Germany economy may be recovering from its dip. New orders fell 16% in Feb. Y/Y, but industry group VDMA expects output to pick up again in H2. 

    general strike is underway in Spain today to protest austerity measures, with major demonstrations due to take place across the country.

    As China's economy cools down, the "old trick" of having state-run banks finance massive investments is no longer working, says China expert Patrick Chovaneck. Meanwhile, a bursting of China's housing bubble will take a toll on overleveraged property developers, and export growth isn't what it used to be. A major shift in GDP composition from investment to consumption might be needed to stave off a "hard landing."

    Bill Gross on The Great Escape: Delivering in a Delevering World (Pimco)

    Global M&A fell for the third quarter in a row in Q1, as companies used their cash for stock buybacks and product development, but bankers are expecting the trend to reverse itself in the coming months as a sense of economic recovery takes hold.

    Ernst & Young says global IPO activity in Q1 slumped to its lowest level on record since the second quarter of 2009, falling 69% to $14.3B in terms of raised capital compared to the same period last year. Uncertainty due to the euro-zone sovereign debt crisis, combined with a smaller number of large listings from state-owned firms is blamed for creating unfavorable conditions for new offerings.

    Are Millionaires Pulling Out of Stocks? (WSJ)

    More US drilling didn’t drop gas price (Minnesota Public Radio)

    The SEC is reportedly looking into the implosion of TVIX, which lost 60% of its value in the past week in volatile trading. ETNs might seem plain-vanilla but "it's an issue of financial innovation opening up these esoteric markets and allowing individual investors pile into them faster than the regulators can keep up," says Morningstar analyst Samuel Lee. 

    Banking Regulator Calls for End of ‘Too Big to Fail’ (DealBook)

    Nudge nudge, think think (Economist)

    How The Rich Spend Their Money (Barrons)

  165. Lflantheman,
    I did quick calculations and it seems that you have more than 50% of AAPL portfolio at risk with current positions.   Is the high risk because you are extremely sure that AAPL will finish above $625 before expiration? Are you planning to hedge?
    If you could explain your thinking  at spare moment I would greatly appreciate it.

  166. Happy Birthday, Phil! That explains it. :)

  167. No time for comments but great chart Pharm!  

    We have critical 2.5% lines on the S&P and the Nas to watch today and they really MUST HOLD or we'll likely get another ugly day – that will be 1,400 and 3,075 – as long as AAPL doesn't go down, we're not going to lose 3,075 so 1,400 should be a good spot to play for a bounce (SPY $140) as a bullish play.  No Dow move up will be impressive until they retake 13,200, of course.

    Drilling/StJ – Yep, see news item above too. 

    Good question ZZ – no time though. 

    Ok, gotta work!  

  168. Pharm – I agree….with everything… :)

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  171. msf65….not possible.   AAPL account is 100% cash as of last Thursday.