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Will We Hold It Wednesday – Weak Bounces and Beige Books

Are you buying the dips?

We're not yet.  Notice that we've now blown 4 of our 5 Must Hold lines (the Dow never did make theirs, which kept us bearish in the first place) and, technically, the S&P failed to hold 1,360 as well but close enough to avoid panic so far.  

Falling from 1,420 to 1,360 is 60 points so we'll be looking for a weak bounce (20% retracement) to 1,372 and a strong bounce (40%) past 1,384 would get us back in a buying mood but let's not count those chickens before they're hatched. 

France and Germany are bouncing 1.5% this morning as the Euro stages a recovery back to that critical $1.31 line and the UK is up 0.77% (7:40) with the Pound back at $1.59.  We noted in Member Chat that this seems like SNB buying to support that 1.20 line on EUR/CHF as we;re certainly not getting a move back up in copper ($3.65), Natural gas ($2.04) or gasoline ($3.24) that we'd expect if we had any additional stimulus or some sort of positive economic data.  Even gold is down this morning ($1,659) so I do not have a lot of faith in this early-morning market movement so far.  

Clearly we're not going to get excited about anything until our indexes can at least take back those 50 dma's (red lines) and the Dollar holding it's line at 79.60 is also bad news for the bulls.  To keep that 1.5% gain in perspective, it's 88 points – back to 6,695 and we're down from 7,150 so "only" 5 more 1.5% up days to go and Germany is back on top.  

SPY DAILYThis is always the tricky part about retracements – it's not so much what you get on the bounce (not even 20% on the DAX), but is the bounce going to be sustainable to get you to 6,850, which is the 20 dma (3% higher than we are now) and then to 7,000, which is the falling 50 dma – 5% over the current mark?  

Keep in mind that the longer it takes to retake the 50 dma, the more it curves down and then you are running into a declining 50 dma, which has a much better chance of rejecting you – especially as you are running out of gas after having to climb 5% just to get there.  

With the S&P, we're now down 4.5% in 5 sessions so a 0.9% bounce is WEAK and won't even get us to that 50 dma at 1,370 or our 1,372 bounce target on our 5% Rule Big Chart.  Anyway, enough of that TA BS – the real question is – do we have any FUNDAMENTAL REASON to get more bullish?  

No, we do not.  

Let's start with Poppa Germany, who just held a FAILED bond auction this morning.  That's right, this morning Germany offered $6.54Bn worth of 10-year notes at 1.75% and only sold $5.07Bn as investors said "Nein!" to letting Germany hang on to their money for 10 years at below inflation interest rates.  Italy, meanwhile, sold $14.4Bn in notes and got slammed – with the 3-month notes fetching 1.25% (up 150% from the last auction) and 2.84% on the 12-month notes (up 100% from the last auction).  

The Italian T-bill auction came against a backdrop of mounting fears in the periphery, sparked in by questions over Spain's ability to reduce its budget deficit to the level of 5.3% of gross domestic product the Spanish government agreed with the European Union. As a result, Spanish yields have risen to levels unseen since early December last year, pulling along Italian yields, as the impact of the European Central Bank's liquidity injection is fading

Now you WISH that was the worst news out of Europe but our friends at the Financial Times got their hands on minutes from Friday's meeting of the Eurozone Finance Ministers and item #3 on their agenda was a 4-page report titled "Budgetary Situation in Italy" and, guess what – DISASTER!!!  The report warns that any slippage in growth or a rise in borrowing rates could force the technocratic government of Mario Monti to start cutting again – something he has vowed not to do.  The report states:  

Still, Italy’s efforts to meet the headline budgetary targets may be hampered by the depressed growth outlook and relatively high interest rates. The government should stand ready to avoid any slippage in budgetary execution and take further action if needed. Also, any reduction in interest expenditure as well as proceeds from privatisations and real estate sales should be used to accelerate debt reduction.

Italy is, however, a cake-walk compared to Spain.  "Spain's economy is broken," says Jonathan Carmel, of Carmel Assett Management – after spending the past year combing through the numbers.  At the peak of the housing bubble, 1 in 22 of the U.S. workforce was employed in the construction industry.  In Spain, that number WAS 1 in 7.  

This is another one of those cases where I was way too far ahead of the curve as it was way back in April of 2010 when I wrote "The Pain in Spain will Hardly be Contained" – we are simply now finally starting to pay attention to the numbers.  

Spain is , in fact, turning so toxic that Japanese investors are turning their nose up at Spain's debt.  Overall, Japanese investors sold a net €43.8B in euro-denominated debt in the year ended Feb 29th and show little intention of buying it back, as of now. "Our positions are quite limited," says a fund manager, "There's a 30% chance Spain becomes like Greece."  That's kind of funny coming from Japan – who make Greece look like Norway by comparison:  

If the BOJ is ever forced to pay a realistic rate of interest on their debt, that big red balloon will swell and explode and the shrapnel from that explosion will pop all those other debt bubbles one by one and there will be blood in the streets – and not just Wall Street as we're looking at a potential Global catastrophe of biblical proportions.  

Also in Asia – much of China's recent growth has been an illusion, argues Satyajit Das, driven by staggering levels of loan growth, 20-25% of which may end up being written off. Commodity producers, machinery manufacturers, and Western governments – all dependent on money flowing from China – are going to be disappointed.  Chinese vehicle sales fell 3.4% Y/Y in Q1, with passenger car sales off 1.3%. 

Yesterday the IMF said the outlook for global commodities is looking "pretty grim." It warns that the price of oil and other commodities are expected to decline this year and next on the back of weak global economic underpinnings, and that “sizable” threats to world growth could force a further fall.

Still feel like buying that dip?  

Sorry, not trying to be depressing – just conveying the news…  We'll get the results of our own 10-year note auction at 1pm this afternoon and then a look at the Fed's Beige Book, which is a gathering of anecdotal data from each of the Fed regions.  That comes out a 2pm and I'm expecting a report that's worse than the last one – which wasn't so great.  

We also have Fed speak from Lockhart (8:30), George (9:30), Rosengren (10:30), Bullard (4:00) and Yellen (7:30) so these people are just not going to leave us alone today.  Our original plan was to go bullish after the BBook – on the assumption we'd still be selling off and the news would be so bad it would be good (giving the Fed the excuse to add more QE) and because Yellen is a dove and vice-chair of the Fed so she carries a lot of weight.  

But the Futures are ahead of us and that's going to make it more of a "watch and wait" kind of day.  We already have 3 bullish trade ideas from this morning's Member Chat, pending the Dollar failing to hold 79.75 and we also identified 6 Dow components we'll be looking to sell puts against (bullish) – taking advantage of the higher VIX before it goes away.  

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  1. beige book this afternoon

  2. Oil Lines

    R3 – 104.85
    R2 – 103.90
    R1 – 102.57
    PP – 101.62
    S1 – 100.29
    S2 – 99.34
    S3 – 98.01

    PP has pretty much held all night so far!

  3. No earnings of interest today. Interestingly enough, both SVU and AA beat yesterday. I wonder if there are any stats on what the earning season looks like when AA beats!

  4. Good morning, 


    IWM    77.66,  77.95,  78.59,  79.10,  79.29,  79.52,  79.84,  80.05,  80.33,  80.56,  80.81,  81.04,  81.41  and  81.64


    I also have trend line resistance at IWM 79.73 !!    Good hunting !!

  5. Hello Phil, what do you think about buying TZOO at the opening on the idea of a short squeeze?
    The same question about SVU, AA? Thanks

  6. @JRW III
    Just got a good used copy of the Vonnegut play/book/tv show, "…Timbuktu…"  
    Bob and Ray —-now there's a great team of comedians. 
    It's off to good start and a quick read.

  7. Oh my….all AH hoopla!

  8. @Felipe
    I'm guessing that this 80 pt runup in the DOW is one of those instances you have pointed to repeatedly, that the GS and their ilk are pushing it up pre-open to suck in the  lemmings and we will close for the day down about the same as the runup or more.
    I'm selling a dow contract on that premise.


    How are you coming up with that trend line?

  10. Wednesday – 4-11-2012
    Dr. John L. Faessel
    Commentary and Insights
    Quote of the Day
    “Apparently the only people who are supposed to be responsible are the taxpayers – and they are increasingly made responsible for other people's irresponsibility.”
    Thomas Sowell
    It’s a Turnaround  – BUY!
    McClellan is near record OVERSOLDNESS at minus 314
    Yesterday, the market broke hard again. Volume increased appreciably and was well above average. Yesterdays low TICK was a negative 1480 and it stayed below a minus 1000 much of the day indicating exceptional ultra-short-term oversoldness.
    The McClellan Oscillator, my favorite overbought / oversold indicator, is enormously OVERSOLD at minus 314. That’s the second lowest probe in the last 12-months, only to be exceeded in the 12-month period by the ALL-TIME lows in oversoldness that was established in July 2011 at a minus 438.
    This should be a substantial low. Of the top ten lowest readings, all came at major bottoms. This low post alone suggests that we should be buying today. Futures are up 10 S&P points. We obviously could go lower but ovesoldness below a minus 300 occurs only rarely.
    Also the stochastic is in oversold territory (SlowK is at a deep 7.08 off the lows the prior day of 3.62); this indicates a possible market rise is coming. The Bollinger Bands are also indicating an oversold condition.
    EuroLand Bond Yields are advancing smartly again
    Greek 10-year yields 21.24%
    Italy 10-year (gross) bond yield – 5.51% – off from highs of 7.26% on 11-24.
    Spanish 10-year (generic) bond yield – 5.83% – off from highs of 6.7% on 11/24.
    Yesterday the S&P 500 (SPX) closed at 1358.59
    Key Trendline support (Channel Lows) is 1350
    50-day moving average support is at 1372.
    The 200-day moving average support is at (SPX) 1270
    Short term ‘price’ support in the (SPX) is at 1357.
    Slightly longer out it’s at 1378 / 1379.
    Short term ‘price’ resistance is at yesterday’s high of (SPX) 1364 / 1365.
    Stiffer resistance is at the neck-line of 1375.
    Monday’s key indicators and metrics:
    ·           McClellan Oscillator is OVERSOLD at minus 314
    ·           The Treasury 10-year yield 1.99%
    ·           Natural Gas (Globex) 2.107
    ·           VIX – 20.39

  11. Phil/Market Manipulation

    Something occurred to me this morning. 
    It seems that every time the market is on the verge of coming apart, you get one of these bullshit futures pop that puts the bears back on their heals.  Then they typically go with one of those slow steady unexplainable Bot controlled melt ups that get the bears bailing on their short positions.
    Is it possible that this is a strategy that they have to prevent the market from tanking?  They have to know that the bears have been punished so thoroughly over the course of the last couple of years that any pop will have them running for the hills.
    In any case, I bought TNA before the close yesterday and bailed in premarket this morning.  I don't trust this pop.

  12. From Doug Kass:

    Has the 2012 Earnings Bar Been Set Too Low?

    Apr 11, 2012 | 8:43 AM EDT

    Stock quotes in this article:

    • Investors' expectations have been dramatically reduced.

    "The Sherwin-Williams Company is updating its sales and earnings expectations for the first quarter ended March 31, 2012, previously given on January 26, 2012. Based on stronger-than-anticipated preliminary sales and earnings results, diluted net income per common share for the first quarter is expected to be in the range of $0.92 to $0.95 per share compared to the January guidance of $0.56 to $0.74 per share. The company reported diluted net income per common share of $0.63 per share in the first quarter 2011."
    -- Sherwin-Williams (SHW) release (April 9, 2012)
    Normally, I don't think that Alcoa's (AA) earnings are meaningful to the markets. But consider Jim "El Capitan" Cramer's reflection upon Alcoa CEO Klaus's upbeat earnings commentary below:
    1. Aerospace is going to exceed growth plans with eight years of plane orders from Boeing (BA) and Airbus on the horizon. That's 8,400 aircraft on backlog with the likes of the A320 and B737 being all aluminum. We are now talking about a 13% to 14% increase in that aluminum business, which includes the dominant fastener biz (screws). Plus the business jet business, hurt so badly by President Obama's critical, some would say reckless, comments, seems to be coming back.
    2. Autos and 7% growth goes to 12% in North America, which offsets the European decline of 8.3% and is augmented by China's single-digit growth. With oil prices so high, Klaus says, "light-weighting is the name of the game."
    3. Trucks are up 65% even as there is some recent slowing and a reduction in backlog. Worth watching but definitely robust, even in China. European down single digit again.
    4. Beverage cans up 2-3% slightly better than the industry itself.
    5. Industrial turbines up 1-2% but getting much stronger of light.
    6. Consumer electronics remains strong, which is, wink wink, Apple (AAPL). That's part of what Klaus calls the "aluminizing" of a whole sector in part because of green desires — remember 75% of all aluminum is still in use because of recycling.
    -- Jim Cramer, "Alcoa Against the World" (April 10, 2012)
    As Jimmy so eloquently points out above and as Sherwin Williams' commentary on Monday showed when the company substantially raised its first-quarter profit forecast, the 2012 profits outlook may be better than is expected by the consensus.
    Yesterday, I suggested that investors' expectations have been dramatically reduced, creating a low bar for the markets.
    And so might the case that the profits bar for the first half of 2012 might have been set too low.

    Position: None

  13. Phil, as you recall we could not enter in the USO trade yesterday as it we would have been chasing. 

  14. AAPL portfolio:   Will likely hold cash the over next 48 hours.  I would like a retracement , which would allow us to  set up for what I expect to be a pre-earnings runup the 7 days or so prior.    As before, I will not be in AAPL at earnings itself  in any big way, except perhaps just a few bucks on some type of  fun play.  

  15. Phil, how could this Mcclellan oscillator be at the lowest since last July on this relatively tame pullback compared to July? Is this a case of a couple stocks moving us forward while the rest are dropping?

  16. Good morning!  

    Not much to add to what I said this morning.  Make sure you read the commentary at the end of yesterday's post as the Dollar tests 79.75 again and, if it breaks – we'll just have to see how high they can push things.  

    On the bullish bandwagon – we were looking at the following Dow components (with yesterday's close):  BA ($71.79), CSCO ($19.70), HPQ ($23.48), VZ ($36.87), WMT ($59.61) and XOM ($82.83)

    • BA Jan $50 puts can be sold for $1.20 and that's free money for PM players.  Selling the $60 puts for $2.65 is a very nice net $57.35 entry and raises some nice cash to offset some short plays.  
    • CSCO Jan $17.50 puts can be sold for $1.10.  
    • HPQ Jan $20 puts can be sold for $1.30 
    • VZ 2014 $35 puts can be sold for $4.25. 
    • WMT Jan $55 puts can be sold for $2.05 but an interesting spread is buying the June $55 puts for .34 and selling the Sept $55 puts for $1.10 on the assumption that the Sept puts (163 days) decay at more than 1/3 the rate of the June puts (65 days) and, of course, if the VIX drops – it should be in your favor as the longer puts lose premium.  If not – you are just short the Sept $55 puts at net .76 – which isn't terrible but this is a fun arb play as it stands.  
    • XOM 2014 $60 puts are $3.80 – also free money for PM players.  

    The most important bounce line is S&P 1,372 and then 1,384 but that's a pipe dream and I'll be surprised if they hold the weak bounce.  .  Oil inventories are at 10:30 and hopefully we get a nice run-up to sell into as we missed our chance to DD on USO puts yesterday ($1.20 for the April $40 puts was our goal).  

    Overall, the fundamentals are overwhelmingly against a proper recovery here without new stimulus or some really positive news/earnings reports.  That means I am inclined to ignore the morning nonsense and wait, PATIENTLY, for Europe to close and the 10-years to be sold and the BBook to be published.  

    Meanwhile, here's a nice EIA short-term energy outlook to amuse ourselves with.  I'll catch up on news later.  

  17. Burrito Trading Commission?
    you guys crack me up

  18. gasoline price in Minneapolis today = $3.67

  19. BMRN options at the July $40 are moving…..buying a few for gambling.  Remember, this sector (PLX, BMRN) with SGEN are the takeover area.

  20. Phil,
    I have some VXX Apr $18 calls as a hedge.  I got to this position thru a series of rolls started eons ago.  As a hedge, do you think I should leave it alone?  Or roll again now?
    My concern is that it's expiring soon.

  21. PCLN short strangle:    Sold  April 13 short strangles  700/790 for 1.80, believing that PCLN will not exceed 790 or drop below 700 within 2 days. 

  22. Gas price in San Francisco is about $1 higher

  23. NYC gas prices are over $4.50

  24. I'm glad I played for the bounce today but I'm still shocked with yield in Italy, the news of Italy and Spain, gas prices still high, nothing adds up to higher market.

  25. Earnings/StJ:

    Q1 earnings growth could wind up being the slowest in over three years. Forecasts are for S&P 500 companies to come in at +3.2%, ex-Apple, just +1.8%. Industrial, consumer staples and technology companies are anticipated to be the top performers. (video)

    Stop the presses – PCLN did not jump $20 at the open today (just $7).  

    TZOO/Alik – Buying?  They have a p/e of 133.  They make PCLN look like a blue-chip and they just popped 30% on sales rumors but they don't even make commissions from travel – they are an ad-supported site that throws up links to travel sites – they don't even get paid by them.  Other than the eyeballs they've attracted (about 40M), we could sit down with a programmer and have the same exact site up and running by the weekend.   As to SVU and AA – you're chasing both in a bad market – how about the Dow plays above instead of chasing whatever already moved?

    Dow/Flips – I like the shorting idea but it's hard to say where this bounce will end so be careful.  With all the Fed speak anchored by Yellen – it's a tough day to pile on the shorts. 

    McClellen/Rustle – Will be interesting to see how fast it shoots back to overbought now:


    More realistic indicators: 



    Manipulation/Exec – Of course that's what they do.  Haven't you ever heard of the Plunge Protection Team, otherwise know as the President's Working Group on Financial Markets?  That's a real thing – it's their actual job to stop the market from falling.  

    RUT over our 790 bullish entry (TF) and Dollar still at 79.77 and 79.75 is hanging tough so far.  Copper (/HG) right at $3.65 and gasoline (/RB) at $3.24 but tricky with oil inventory coming up on gasoline. 

    McClellan/Rpme – As I noted yesterday, short-term indicators like that can be fooled into thinking a fake, sustained rally is "normal," which then causes the indicator to overreact to a sell-off.  

    VXX/Cwan – I'd sure take advantage of the move up to roll out or cash out.  The $18s are $1.88 and you can roll them to the May $15s at $3.90 and sell the $20s for $1.95 for net .07 to move into a $5 spread that's almost entirely in the money.  

    PCLN/Lflan – I like that one. 

  26. lflan – I saw your note about a MoMo portfolio which I took as a joke, but I see that you are dipping into the MoMo pool this morning. So, how about doing another "fun" portfolio with something else than AAPL. I have seen you make trades with AMZN for example. But something small that 90% of the members could start ($10K or so). I am game…

    AAPL- Any thoughts on the Antitrust suit against Apple (WSJ)? Does not seem to be affecting the stock.

  28. It's already starting to look like the low volume Bot controlled melt up.  Probably close near Phil's 1372/1384 number, then they bust through in after/premarket. 
    It's what they do.

  29. Jabo, i used to follow TZOO and bought at $57, I was so smart, the stock went to 90 in a couple weeks, feeling proud. Then the stock went back to 56, in a day! Not feeling so good. Some stocks are crazy, this one definitely qualifies for therapy.

  30. FAS Money – Seems silly not to sell 2 Friday $100 calls for $1.10.  

    IWM Money – Let's buy those two callers back for .45 and sell 1 $55 call for $2.10 

    $5KP – No change 

    $25KP – All good.  

  31. symbol                              qty            bid          ask              cost
    skx july 2012 $11 call         5             2.25       2.60              3.21
    skx july 2012 $13 call        -5             1.20       1.25               1.92
    six july 2012 $11 put         -5                .50        .55                 .69
    Hi Phil, When you have this BCS, how do you do the math to see if it is better to exercise it or create a closing order? I know it's simple, but I just want to understand the math. I tried to exercise it, and TDA told me I am better off closing the call because the bid is $2.25 which is higher than the current SKX price of $12.92 minus the $11 strike price of the call. ( $1.92). TOS in " create a closing order" gives me a net credit of $1.22.

  32. Net draw on oil and that's going to be rally time.  Hopefully we'll get back to our buy point of $1.20 on the USO April $40 puts (5 in $5KP and 10 in $25KP). 

     EIA Petroleum Inventories: Crude +2.8M barrels vs. consensus of +1.7M. Gasoline -4.3M vs. consensus of -1.9M. Distillates -4.0M vs. consensus of -0.6M. 

  33. FAS Money / Phil – The 100 Calls are $1.45 while the 101 are at $1.08! I assume you looked at the 101. But which ones should we sell? 

  34. IWM Money Update:

  35. SKX/Turning – They're at $12.81 so "on track" for a $2 return so what's the interest in getting $1.22?  If you must close it, then why would you even consider exercising it as that's even more margin and fees and if you've just lost faith in SKX, you can just sell the $11 calls for $2.60 and leave the short strangle and you'll have to buy SKX to cover if they go over $13 but then you'd be in for net $10.40 with the $13 caller the short $11 puts.  

    FAS Money/StJ – Wow, definitely sell the $100s for that price – still all premium.  

  36. FAS Money Update

  37. Lflan, Larry -


    Can you please respond to one of my e-mails…I also have a couple of questions about Apple Portfolio to e-mail you.

  38. Phil,
    Interesting $ rising, Euro Falling, but /CL rising…..Care to explain this conundrum? Thanks

  39. Phil,
    Interesting $ rising, Euro Falling, but /CL rising…..Care to explain this conundrum? Thanks

  40. So in this case you would create a closing order when you see a net credit of $2.00 and this will happen when SKX is at $13 or above?
    Now if I close the long call, I will be losing the difference of my cost of $3.21 and the bid of $2.25, so not good, right?
    When would you ever exercise vs create a closing order?
    I know these questions seem dumb, but just trying to understand more of the basis so I won't have to ask as many questions.

  41. Something we have noticed:

    During March, average daily volume in equity shares was at their lowest level since December 2007, according to new data from Credit Suisse. This is the same month that marked the three-year anniversary of the bull market that caused the Standard & Poor's 500 to double from its March 2009 credit-crisis low.

  42. JR,

    Are you trading today?

  43. wild video.. pretty long but I started watching it--seems unbelievable?

  44. GMG (Put list) / Phil – Quite a rhetorical question: i bought some 300$ puts of CMG as per your put list.  CMG so far is holding up so the position is in under.  I am stil willing to invest some more cash.  
    Which is preferable do you thinl: double down at same contracts (300$ Jun), or use the cash to roll contracts to higher strike same month i.e. 335$ Jun puts?
    What i see from my very very little experience is that if a trade goes away, every time i tried doubling down, it;s just throwing money down the hole. i would be more inclined to roll to a higher strike.  Looking forward to your POV! Cheers

  45. Phil – I got my first day off in this sh!tty country in the 3 1/2 months Ive been here. Counting on you to make my day better with some great daytrades :)

  46. Conundrum/Jasu – We just had a bullish oil inventory so oil is rising.  That's pretty simple.  Euro over $1.31 and Pound over $1.59 is a big improvement anyway if they hold it. 

    Dollar bounced good off 79.95 and now 79.93 – over 80 and the market probably turns ugly again – such a fragile thing….

    Dollar strong because POTUS wants to balance the budget realistically – by raising taxes.  

    SKX/Turning – It's a July play and it's not July yet.  You have 50% more to gain potentially so, unless you no longer feel SKX will be at $13 in July, stop looking at the day to day fluctuations in price.  If you lose the long call, you put $2.60 in your pocket and, if the other positions expire worthless, you have $2.60 in your pocket vs the net .60 you started with so it's a $2 profit less whatever you may or may not end up paying your short $13 caller in July or the short $11 putter.  I never exercise, the cost of exercising isn't worth it vs just buying back the options or, even better – letting them expire worthless.  

    Solar flares, etc./Jabob – Those are perfectly normal although maybe the World is ending in December, which is as good a reason as any to go to Vegas in November.  

    CMG/Dpast – The idea is to take advantage of moves up to roll tighter (and longer if we have to).  June $300 puts are $1.05 now, we last had them at $1.10 and spent $1.15 to roll them to the $330s (now $2.25) so you didn't miss anything although, at the moment, I'd spend the whole $2.15 to roll them up to the $345 puts at $3.20.  Keep in mind that our goal is just to stay in a position where a 10% move down ($40) will get us even and CMG $385 puts are $8.50 so we're in very good shape if they ever do finally take a dive.  We don't double down until we're in a position where our net cost is double where we're rolling and USUALLY, we don't want to do that unless we're buying time as well (and assuming we still like the short play, of course).  

    Day off/Jrom – What?  Don't you want to go clubbing?  I like the Dow short below the 12,750 line with tight stops (/YM) as long as the Dollar is holding 79.90.  If we get over 80, that play is golden and, of course oil (/CL) below the $102 line.  

  47. Phil TZA Apr19 c long bought for 2.55 now 1.37 Now ITM what to do roll up to Oct 20 C at a cost of 2.81 thanks

  48. @Felipe
    Decided instead to short the DAX. 2 hours later, closed it and that pays for this quarter's PSW fee.

  49. Jabo,
    Doom and Gloom baby…..gotta love it.  Sell…Sell..Sell

  50. WFR up 15% on high volume. Credit Suisse says the break up value of the company is worth more than their target of $5.50 That's 43% higher from here.

  51. Phil,
    During the lull, one question re your short DOW line of 12750 cmt to Jrom above – is this derived  from (a) approx 50% retrace of today's range (12,844 – 12716), (b) approx .375 line on Big Chart (12,800) or (c) something else?

  52. Phil – Dont make me start crying! Im looking at some friends FB pics who got hit with 'deployments' to Honduras. Its their 2nd week and they already have pics in bars and scuba diving!

  53. NEW YORK (TheStreet) -- Priceline(PCLN), which hit a new 52-week high on Tuesday, traded up before market open on Wednesday as investors continued their interest in the online travel specialist.


    More on PCLN

    Market Activity

    Benchmark raised its price target on Priceline shares to $840 from $692 before the open, saying it expects the company's operating leverage to improve in the second half of the year.
    "We believe Priceline could benefit from increasing scale in emerging markets and favorable trends in the hotel industry, including lengthening booking windows, modestly improving demand, and growth in domestic and emerging market ADRs [average daily rates]," said the firm, which has a buy rating on the stock.
    Shares of Priceline ticked up 1.09% to reach $749.33

  54. Vegas?  Phil, is it time to start planning the next meeting?  
    And Jabo, will you be using PCLN to book your ticket?

  55. Check out that S&P rejection – on the button!  Gotta love that 5% Rule…

    At the open: Dow +0.85% to 12825. S&P +0.98% to 1372. Nasdaq +0.93% to 3018.

    Treasurys: 30-year -0.56%. 10-yr -0.25%. 5-yr -0.12%.

    Commodities: Crude +0.55% to $101.58. Gold -0.05% to $1659.85.

    Currencies: Euro +0.44% vs. dollar. Yen +0.24%. Pound -0.37%.

    Wednesday's economic calendar:

    7:00 MBA Mortgage Applications

    8:20 Fed's Lockhart: 'Financial Reforms'

    8:30 Import/Export Prices

    9:30 Fed's George: ‘Debt, Deficits and Financial Instability'

    10:30 EIA Petroleum Inventories

    10:30 Fed's Rosengren: ‘Money Market Mutual Funds'

    1:00 PM Results of $21B, 10-Year Note Auction

    2:00 PM Fed's Beige Book

    2:00 PM Treasury Budget

    4:00 PM Fed's Bullard : ‘Economic Outlook’

    7:30 PM Fed's Yellen: ‘The Economic Outlook and Monetary Policy’

    10:00 AM On the hour: Dow +0.7%. 10-yr -0.29%. Euro +0.39% vs. dollar. Crude +0.49% to $101.52. Gold -0.17% to $1657.95.

    11:00 AM On the hour: Dow +0.81%. 10-yr -0.26%. Euro +0.30%vs. dollar. Crude +1.27% to $102.31. Gold +0.05% to $1661.45.

    11:39 AM Europe closes higher, but gives up a nice chunk of its gains in the final hour. One curiosity is Spain, which actually shot higher in the final minutes of trade, possibly on some positive comments from its finmin. Stoxx 50 +0.7%, Germany +0.9%, France +0.5%, Italy+1.5%, Spain +1.9%, U.K. +0.7%. Euro +0.2% to $1.3110.

    Market preview: U.S. shares are set to follow much of Europe higher following five days of losses, with S&P Benchmark futures +0.7%. "Verbal pixie dust" from the ECB's Benoit Coeure has sent Spanish and Italian debt yields sharply lower, and stocks higher. Alcoa's (+5.2%) unexpected profit is also helping, although Nokia (-15.5%) is getting slaughtered after a profit warning. Later: Import/Export Prices, lots of Fed speak, Fed's Beige Book

    Atlanta Fed President Lockhart tells reporters he's "reticent" to consider another round of QE at this time. He called Friday's weak jobs report disappointing, but not enough to signal a recovery gone off track. Lockhart is a decent bellweather for the FOMC – dovish, but not dogmatic about it. 

    MBA Mortgage Applications: -2.4% vs. +4.8% last week. Thirty-year fixed mortgage rate with conforming loan balances ($417,500 or less) decreased to 4.10% from 4.16%.

    Commercial and multifamily loan origination volumes rose 55% in 2011 to $184.3B, with Fannie, Freddie, and the FHA combining to account for 31% of the action, slightly more than life insurers and pension funds. Multifamily loans totaled $77.4B, followed by office properties with $34.4B.

    Mar. Import/Export Prices: Import prices +1.3% vs. consensus of +1.0% vs. +0.4% in Feb. Ex-petroleum prices were +0.5%. Export prices were +0.8% vs. consensus of +0.3%, vs. +0.4% in Feb.

    Spanish industrial production in February further highlights the terrible state of its economy, falling a monthly 3% vs. -2.5% in January. Every sector except energy suffered monthly falls, with output falling in all 12 autonomous communities. 

    Here's how Consumer Credit has been pumped up:  Credit card lenders issued 1.1M new cards to borrowers with damaged credit in December, up 12.3% Y/Y, and part of a trend of banks tiptoeing back into subprime lending. The banks – needing to make up for billions in lost fee and other income from recent regulatory overhaul – insist they are distinguishing between chronic deadbeats and "fallen angels." 

    Bankruptcy costs and America’s household debt crisis (VOX)

    The consensus forecast for Q1 earnings growth is 3%, the slowest gain since the 2009 recovery, writes LPL's Jeff Kleintop. Earnings are now pretty much inline with revenue growth (4%) as the profit margin expansion is over. In fact, he writes, nearly 25% of S&P 500 firms are expected to post earnings declines despite revenue gains

    Comparable retail sales in the U.K. +1.3% in March vs. -0.3% drop in February and forecasts of stagnant sales, helped by unusually sunny weather. However, "it will take more than a week of sunshine to transform retailers' fortunes," says Stephen Robertson of the British Retail Consortium. Still, sterling is +0.4% vs. the dollar.

    News so bad it's GOOD!  Australia's index of consumer sentiment falls to 94.5 in April from 96.1 previously. The read puts sentiment nearly as low as during the 2008-09 financial crisis. "The results of this survey should be sending a very clear message to the RBA that Australia needs lower rates," says Westpac chief economist Bill Evans. The aussie, however, is solidly higher as risk assets go green today. FXA +0.7%.

  56. The IMF warns fiscal concerns are 
    cutting the supply of "safe" government debt just at the time when demand for such assets are rising. Such scarcity risks raising  the price of safe assets to worrisome levels (witness Germany yesterday).

    European Bank Shares Take a Nosedive (Dealbook)

    The Age of the Shadow Bank Run (NYT)

    Add oil as another reason for the performance divergence of EU economies. A sharp increase in the price of crude subtracts twice as much from GDP growth in Ireland and Italy as it does in Germany, estimates Moodys. For Greece, it does 3X the damage.

    What if the U.K. simply cancelled the €300B+ of gilts held by the Bank of England, asks Jim Leaviss. Overnight, the U.K. debt load becomes more sustainable, and the economy no longer has worries of the QE exit process hanging over it. "Who would be unhappy?" Here's a better idea: Pass a law mandating the FTSE be at 56K instead of 5600. 

    "What is the EU going to do," writes a Spanish professor, "Send in the army?" Calling German-imposed austerity on a crumbled economy a "recipe for disaster," he urges PM Rajoy to follow the lead of the U.K.'s Cameron and walk. The "smothering conformity of past years has been obliterated," says Ambrose Evans-Pritchard, noting the quick change in Spanish attitudes towards EMU.

    ECB member Benoit Coeure suggests the bank could reviveits recently mothballed bond purchase program – the SMP – to assist Spain, where he insists the negative market reaction towards the country is not justified by the fundamentals. Madrid +2%, Spanish 10-years off10 bps to 5.88%.

    Greece's cabinet approves state guarantees to back the value of newly swapped bonds on its banks' balance sheets. This bit of fancy footwork allows the banks to book the paper at par, sharply reducing their capital holethus meaning they wouldn't have to go to the state for fresh funds. Fun and games.

    Greece narrowly passes a controversial bill to dish out €29M to the top 5 political parties ahead of next month's elections. Brussels – which conceivably could have nixed the bill – stood down, possibly worried parties less friendly to the bailout regime could come to power.

    Chinese iron-ore demand remains strong, says VALE CEO Ferreira, unworried about slowing future growth there as it's now coming from a higher base. His firm expects average China GDP growth of 7% over the next decade. His remarks stand in contrast to those of a (now-departed) BHP exec who last month mused about flattening Chinese demand.

    China considers making it easier for companies to borrow yuan offshore and bring the money back to the mainland, according to sources. Right now, just a quota-based system is being discussed because of fears of further tightening offshore yuan liquidity. Far from booming, the market  has slowed of late as yuan appreciation is no longer a one-way bet.

    An exec with California State Teachers Retirements System says the $152B fund only has 69% of what it needs to meet future obligations, leaving it with a potential shortfall of $64.5B over the next few decades. Typically, a funding program such as CapSTRS should hold at least 80% of what it needs for future obligations.

    Johnson & Johnson (JNJ) could face a massive fine after an Arkansas jury yesterday found the company and its Janssen unit guilty of engaging in "false or deceptive acts" about the risks of the antipsychotic drug Risperdal, and of breaking consumer laws. It's not the first case J&J has lost over Risperdal. Arkansas is seeking $1.25B in fines. (previous

    Bank of America (BAC+2.8% premarket after Guggenheim raises its stock rating to Buy from Neutral in the wake of the pullback in BofA shares after doubling between December and March. The firm forecasts as much as $0.20 in Q1 EPS, the high mark among analysts with consensus EPS at $0.12; mortgage banking will benefit from refinancing activity and dropping net charge-offs.

    ???  Home builders rally sharply after Wells Fargo's survey of sales managers says sales rates are at their strongest levels since the firm began its survey in 2001. The survey says March pricing improved from February, and 2012 may mark the recovery year for the sector after several false starts. PHM +9.2%LEN +5.4%DHI +5.9%,TOL +4.3%.

    UBS rates the U.S. department store sector with a Neutral view, saying easy early-cycle money has already been made, but it starts upscale chain Nordstrom (JWN +1.6%) at Buy with a $63 target price. JWN rivals Macy's (M +1.8%) and Saks (SKS +1%) are started at Neutral, as are mid-priced operators J.C. Penney (JCP +2.5%) and Kohl's (KSS +0.4%).

    "What's wrong with Exxon Mobil?" While ConocoPhillips and Chevron shares have surged in the past three years, XOM shares have gained just 23%, barely more than BP. It's sheer size may be working against it, James Brumley writes: "Where else can it go to win new customers as well as efficiently develop new production? The answer: not enough places."

    Alpha Natural Resources (ANR +5.1%names its chief commercial officer Paul Vining as president, taking the place of 31-year company veteran Kurt Kost, who is retiring. Vining will continue to have responsibility for sales and marketing, as well as taking responsibility for ANR's mining operations.

    And WFR up 14%!  Solar stocks (KWT +4.3%) rally on frenzied momentum buying with Trina Solar (TSL +6.1%), Suntech Power (STP +9.1%), and First Solar (FSLR +9.6%) leading the charge after reports tip off that DoE funds appear to be flowing into the sector. Was SA author Shareholders Unite correct by calling out a multi-year bottom yesterday with their belief that demand is set to improve?

    Also in Income Portfolio:  Titan Machinery (TITN +13.6%) shares soar at the open after reporting its FQ4 earnings jumped a higher-than-expected 72% on strong agricultural equipment sales and an improving construction market. TITN also issued upside FY 2013 guidance with EPS of $2.55-$2.75 vs. $2.02 consensus and revenues of $1.95B-$2.1B vs. $1.68B consensus.

    Another of our favorites:  Genworth Financial (GNW +4.5%) is started with a Buy rating at BTIG, which says the stock price reflects excessive pessimism given GNW's ample liquidity, solid capital position, moderate leverage, adequate reserves and the improving trajectory of its operations. Despite challenges posed by its mortgage insurance unit, the firm believes GNW is on track to return to profitability in 2013.

    Join the party!  Benchmark takes up its price target on Priceline (PCLN) by 21% to $840 to go along with a Buy rating. Analyst Daniel Kurnos sees the firm benefiting from improving market trends and growth in emerging markets as he lifts EPS estimates for FY12 and FY13 to $32.31 and $39.30, respectively. Shares +1.5% premarket.

  57. Yes, it is a July play, but if you see the stock above $13 before July, isn't it better to realized that profit ahead and create a closing order, just in case something happens later on with Skx going below $13? Or is the $2 profit potential only evident in July and not before on the BCS?
    How can I have $2.60 in my pocket by closing the long $11 call? I bought it for $3.21 and the bid to sell it to close is $2.25. The ask is $2.60. Would I not be losing $3.21 minus $2.25?
    Again, thank you for your help.

  58. F5 (
    FFIV -4%) sells off after William Blair says its checks indicate the company's sales force "was aggressive in attempting to close deals in North America" at quarter's end, in contrast to the last 2 quarters. The firm still expects F5 to beat FQ2 estimates when it reports next Wednesday, but thinks results will disappoint the high expectations of investors. Nomura recently aired concerns about F5's competition and pricing policies, though Merrill and Sterne Agee are more positive.

    Beating low expectations:  Adtran (ADTN +2.7%reports a 62% Y/Y drop in profit for its Q1, hurt by higher expenses and a decline in sales, but non-GAAP earnings of $0.25/share and revenues of $134.7M beat analyst expectations. The networking and communications equipment provider also announces a cash dividend for the quarter. 

    In response to Nokia's (NOK -14.9%Q1 warning, marked by an expected 51% Y/Y drop in smartphone shipments, Horace Deidu observes: "Nokia's smartphone market share will drop to about 8% in Q1. It was 12% last quarter, 24% a year ago and 40% three years ago." The damage done to Nokia's brand, mindshare, and carrier partnerships by its Symbian collapse will make it harder for the company to stage a low-end comeback via Windows Phone.As expected, the DOJ is filing suit against Apple (AAPL) over allegedly colluding with publishers to fix e-book prices. The outcome of the suit is likely a bigger deal for Amazon (AMZN) than for Apple, given its interest in regaining control over Kindle e-book prices.

    More on Nokia's warning: Q1 Devices & Services revenue isexpected to be just €4.2B, down 41% Y/Y (year-ago data). Feature phone shipments are expected to fall 16% Y/Y to 71M units, and smartphone shipments 51% to a mere 12M (easily less than half of Samsung or Apple's expected shipments), in spite of over 2M Lumia sales. Net cash & liquid assets are expected to fall to €4.9B, in spite of positive cash flow from troubled Nokia Siemens. NOK -17.1%.

    Visual Candy: The Rise of Instagram (New Yorker)

    Another day, another PT hike from a long-time Apple (AAPL+0.6%) supporter. This time the source is Sterne Agee, which is nudging its target up to $750 just 3 weeks after its last hike. The firm says its checks indicate demand for the new iPad remains very healthy, in spite of fears to the contrary, and that the discounted iPad 2 is also selling well. Apple reports FQ2 earnings on April 24.

    The U.S. Has a Low Corporate Tax (Citizen for Tax Justice)

  59. Phil/Rejection

    You called that one. 

  60. got a partial fill on USO. forgot to check all or nothing box

  61. USO filled at 1.20

  62. jromeha/Hondoras 
    I'd find a new travel agent….. ;)

  63. 1020 – lol!  Phil – long dollar going into the beige book?

  64. stjeanluc….Absolutely a great idea.   We can do a 10k MOMO portfolio.   Let's set it up over the next couple of days and be prepared to make our first trade Friday afternoon.   We could do it so that no margin would be required for trades and that way anyone with 10k can get involved.   How would we decide upon trades?  Reason I ask is that there will certainly be disagreement on the board about how to play these puppies.  Some want to short them no matter what.  Some want to just take a ride up (or down) on them.  Some might want to sell premium only on them.   Worthy of more discussion I guess before we launch.   Fortunately we do have some contrarian indicators on the board that tell us which way they are going to move.    Thx.

  65. David R….  I promise to respond to your email(s) this evening.  

  66. TZA/Yodi – Was $2.15 yesterday, would have been a good idea to roll or cover then.  Now you are behind and you play to get even, not to win.  At $1.40 now the May $15s are $5 and the $20s can be sold for $1.87 for net $4.29 on the $5 spread and that's only worth it if you think the RUT won't recover by May expiration.  If they drop below your break-even at $19.29, the $17 puts (now .52) should be sellable for $1 and then your break-even drops to $18.29 and you'll just have to roll again if $18.50 doesn't hold (50 dma is $18.71).   Please stop being the sucker who buys premium – it will make it easier for me to help you in the future… 

    Speaking of buying premium (you are forced to when you have small portfolios, unfortunately) – The USO April $40 puts hit out $1.20 goal so that's game on in the $5KP (5) and $25KP (10).  

    DAX/Flips – Great call!  

    WFR/Button – Gee, that's what I keep saying, isn't it?  

    Dow/8,800 – It's derived from me eyeballing the Futures and the currencies and seeing the best support/resistance lines to play at that exact moment were the Dow and oil.  What we want in the Futures is a good line to enter and exit on.  Oil went the wrong way but coming back now but the Dow dipped to 12,730, for a quick win and now back to 12,750 for a re-load. Playing Futures is very different than playing index options, you're just looking to make $100 or $200 and get out – anything more than that is luck but you can make those gains over and over and over again. 

    Honduras/Jrom – This could have been you:  

    Red Stripe beer makes an appearance in the first Bond movie, Dr. No, in 1962.

    Vegas/Esco – Yes, Savi is talking to LV, I believe and hopefully they will work something out.  The first weekend of November goes into election day but that's not much of a holiday.  The second weekend is Veteran's Day, which is not a market holiday but probably a good weekend for people to get away.  

    SKX/Turning – When you do a vertical or a buy/write, you're not going to realize your full gains until you are close to expiration unless the stock is way over your target. These are plays for people who intend to be long-term owners and not for flipping in and out of.  Also, you REALLY need to work on your broker skills as the Bid on the July $11s is $2.25 and the ask is $2.60 and if you take the bid, you are simply throwing $45 per contract out the window.  Again, you paid net .60 for the entire trade so 60 (sixty) cents left your pocket, correct?  If you sell the $11 calls for $2.60 then two Dollars AND sixty (60) cents go back in your pocket.  That's the 60 cents you laid out PLUS another $2 you never had before.  Who cares what you paid for the calls?  What you are left with is an OBLIGATION against your $2 profit to sell SKX for $13 to your caller or to buy SKX for $11 from your putter – if the stock goes either $2 over $13 or $2 under $11, you lose your profits (and maybe more) if SKX stays between $11 and $13 – you win both sides and keep the $2 profit. If you are worried SKX will go higher – why would you get out of the trade in the first place?  If you think SKX will go lower than $11 and you don't want to own it for net $9, then it's pretty silly not to get the Hell out at $13, isn't it?  

    Still a lot of May barrels to roll:  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    May'12 100.94 102.75 100.84 102.60 12:30
    Apr 11


    1.58 164701 101.02 193547 Call Put
    Jun'12 101.45 103.27 101.40 103.12 12:30
    Apr 11


    1.56 53028 101.56 215722 Call Put
    Jul'12 102.14 103.75 101.94 103.68 12:30
    Apr 11


    1.57 21203 102.11 123054 Call Put
    Aug'12 102.68 104.10 102.50 104.02 12:30
    Apr 11


    1.44 10990 102.58 91783 Call Put

    Whenever they have more than 500M in the front 3 months, it's a problem and May contracts close is on the 20th so they do have time but we want to start keeping track of the barrels to see if they are getting rid of them or just rolling them forward, which could push June, July and Aug up near 600M.  On the whole, they don't have a huge amount of pressure so we'll want to take quick profits on our USO puts.  

    Also, keep in mind this is actually trading TODAY:


    Dec'15 95.83 95.83 95.83 95.83 12:34
    Apr 11


    1.04 362 94.79 30500 Call Put

    If oil is so scarce, why can I buy it 3.5 years from now for 7% less?  

    Dollar/Jrom – I wouldn't because if BBook is very bad, then QE rumors can knock Dollar lower.  Our plan was to go long after BBook – which would be short Dollar but now the Futures took our action and I'm not as enthusiastic.  

    PCLN RED!!!!! 

  67. Thank you Phil. I will study those comments.

  68. jromeha – Don't feel bad – mine sent us to Waikiki for spring break…sigh…..

  69. 1020 – lol, youre funny! It's all good, Ill get my vacay soon enough.  another 2 months and I get my 2 week mid-tour break.  Ill most likely be taking my soon to be 4 y/o daughter to disneyland.
    Alrighty Phil, I cashed out for a $50 profit (paid for the shipping of those boxes), now it's time for you to make me some afghan hooka bar money! lol

  70. jromeha – happy to give you a smile. Thanks for your service!  :)

  71. . Market up, AAPL going down; an indication of things to come?

  72. CMG selling off also. Note insider selling.

  73. NEM at a 52 wk low, good place to start scaling into an LT position?

  74. MoMo Portfolio / lflan – If we are going to limit it to $10K with no margin, then naked sales are out. And besides, these MoMo are so expensive that selling one contract might use up $10K of Reg-T margin… If we want to short something we  buy puts! I know we push premium selling on the board, but the goal would be to go for momentum trades. We should also pick a basket of stocks that we are going to limit ourselves to – highly liquid ones with tight spreads, penny increment and weeklies would be nice. There is no way to track accurately more than 20 different stocks. And limit the day trading to a minimum. Swing trades over 2 days or more would be ideal. What do you think?

  75. Auction was so-so:

    1:04 PM The Treasury sells $21B in reopened 10-year notes at 2.043%. Bid-to-cover ratio of 3.08, vs. a recent average of 3.23; indirect bidders take 38.5%, vs. a recent 43.5%. Direct bidders take 11%, vs. a recent 12.9%.

    1:16 PM Already down for their first day in six, Treasurys slip a little further after the 10-year note reopening. The 30-year yield +0.07 to 3.195%; 10-year +0.06 to 2.04%.

    12:00 PM On the hour: Dow +0.63%. 10-yr -0.24%. Euro +0.16%vs. dollar. Crude +1.14% to $102.17. Gold -0.11% to $1658.85.

    1:00 PM On the hour: Dow +0.92%. 10-yr -0.31%. Euro +0.27% vs. dollar. Crude +1.88% to $102.92. Gold -0.03% to $1660.15.

    S&P 500 Put Demand Exceeds Europe by Most Since 2008: Options. Demand to protect U.S. stocks from losses is exceeding levels seen in Europe by the most since 2008 on renewed concern that slowing global economic growth will undo the recent US stock rally. The ratio of puts to sell the S&P 500 Index versus calls to buy climbed to 1.97-to-1 on March 28. That was 73% higher than the 1.14-to-1 open-interest ratio for the Euro Stoxx 50 Index, the biggest difference in more than three years, according to data compiled by Bloomberg.

    Profit Drop at U.S. Banks Imperils Rally as Loans Lag Behind GDPThe six largest U.S. lenders, including JPMorgan Chase & Co. and Wells Fargo & Co., may post an 11 percent drop in first-quarter profit, threatening a rally that has pushed bank stocks 19 percent higher this year

    George Soros slams the Bundesbank for clinging to an outdated doctrine, blaming a belief in sound money at least partly for the deteriorating eurozone situation. The crisis is far from over, he says, arguing the fiscal compact "cannot possibly work," and is "potentially catastrophic."

    Top Forecasters See Euro Weakness Returning on SpainThe most-accurate foreign-exchange forecasters say the euro will slide as austerity-driven spending cuts from Spain to Italy reignite debt turmoil and drag the region into recession. Nick Bennenbroek, head of currency strategy at Wells Fargo & Co., who topped the list for the fourth time out of the past six quarters according to data compiled by Bloomberg, expects the euro to drop more than 5 percent to $1.24 at the end of 2012. Westpac Banking Corp., which had the second-lowest margin of error, predicts $1.26.

    "Europe 2012 is NOT Europe 2011," writes Macro Man, not discounting the economic difficulties of Spain, but arguing the LTRO has removed systemic risk from the equation. "Disillusionment with LTRO is misguided," says Genevieve Signoret. "It showed (the) ECB won't let (the) banking system collapse. Period. (It's) designed to contain crisis, not cure." - That's the bull case?

    The Real Threat is Spain, Not Greece: SullivanHere’s the fear: Banco Santander, BBVA and the third largest bank in Spain, La Caixa, have combined assets of about $2.7 trillion. Spain’s GDP is just about $1.4 trillion. In other words: Spain’s three biggest banks are nearly twice as big as the entire Spanish economy.

    Rajoy Says Spain Future at Stake as Debt Crisis PersistsPrime Minister Mariano Rajoy said Spain’s future is at stake in its battle to tame surging bond yields, as the head of the nation’s second-largest region proposed handing back powers to the government to cut costs. With Spanish bonds trading closer to levels that prompted Greece, Ireland and Portugal to seek European bailouts, Rajoy will address lawmakers of his People’s Party today to explain the deepest budget cuts in three decades. The prime minister will speak at 1 p.m. in Madrid. “Without a doubt, a good part of Spain’s future is at stake,” Rajoy told senators yesterday, as he urged regional governments to contribute to spending cuts. “The problem is that the markets can lend or decide not to lend.” Rajoy has stepped up his rhetoric in the past week as he seeks to persuade Spaniards to accept spending reductions and tax increases as a less painful alternative to a bailout. His three-month-old government is struggling to convince investors it can reduce the deficit by a third this year and crack down on overspending by regional administrations.

    Spain's 'Lose-Lose' Struggle Reignites Euro CrisisThe eurozone crisis has returned with a vengeance after Spain’s mounting woes pushed 10-year bonds yields back to the danger line of 6pc and the Madrid bourse crashed to its lowest level since the 2009. Mr de Guindos said Madrid faces a "lose-lose situation" since markets will punish excessive austerity as harshly as too little austerity. Tightening too fast risks pushing the economy into the sort of self-defeating spiral already seen in Greece, where the tax base shrivels. Central bank governor Miguel Ángel Fernández Ordóñez denied that Spain would become the fourth EMU state to need a rescue, but warned that Spanish banks are not yet in the clear. "If the Spanish economy deteriorates more than expected, they’ll have to keep boosting capital," he said.

    Credit-Default Swaps in U.S. Jump as Spain Borrowing Costs Rise.

    The exuberance over a seemingly new Fed-like attitude at the BOJ fades as the yen restrengthens, the Nikkei hits a 7-day slide, and traders wonder if anything has really changed at the central bank. Monetary policy may not be a cure-all, but, says HSBC's Frederic Neumann, "the BOJ needs to follow its words with action."

    Australians Fret on Finances, Shun Home Loans

    Chinese Exports to Major Trading Partners Showing Signs of Slowing.

    The State-Owned Assets Supervision and Administration Commission "in principle" banned central government-owned companies from investing in non-core businesses abroad, citing rules from the agency that will take effect on May 1.

    China plans to limit its population to under 1.39B during the five years through 2015, the State Council said in a statement posted on the central government website yesterday.

    Alcoa(AA) Trims Its Aluminum Demand Outlook For ChinaAlcoa Inc. said on Tuesday it lowered by 1 percentage point its outlook for China's aluminum consumption growth in 2012.

    IMF Said Ready to Cut Forecast for China Current-Account SurplusThe International Monetary Fund is set to lower its forecasts for China’s medium-term current- account surplus, according to two officials who have seen the draft report. The Washington-based IMF in September estimated surpluses of more than 7 percent of gross domestic product for 2015 and 2016. The new forecasts for the broadest measure of trade will be published April 17 in the IMF’s World Economic Outlook, according to the officials, who spoke on condition they wouldn’t be named because the figures haven’t been made public.

    Why The Bo Xilai Corruption And Murder Scandal Is A Big Deal For China.

    Refinery Closures Risk Northeast Gas Price Spike.

    Alcoa (AA +7.6%) shares are soaring following the company’s Q1 earnings beat, and at least three analysts raise earnings estimates for Q2 or FY 2012. But caution persists: Dahlman Rose notes the earnings upside was almost exclusively driven by lower than expected costs, and BMO notes upstream alumina and aluminum segments continue to face energy and input cost pressures.

    Rosecliff Capital's Mike Murphy makes the bullish case for Caterpillar (CAT +1.5%) as he calls fears of a China slowdown "overdone." He assigns an earnings multiple of 13 to CAT and calls for a run to $130. It's a take that the Reformed Broker isn't on boardwith as he says enough money hasn't come out of the space yet.

    On the other hand:  The SEC charges AutoChina International (AUTCF.OB-17.1%) and 11 investors with conducting a market manipulation scheme attempting to create a “false appearance of a liquid and active market” for AUTCF stock. The charge includes a senior executive and director at the China-based firm.

    Oh no!!!!  Delta (DAL) will rely on JPMorgan's (JPM) commodities team to handle the entire refining process - from purchasing crude in Nigeria, to shipping it, to the conversion to fuel product – should it go through with a purchase of Conoco's Philadelphia refinery. Delta would then buy jet fuel from JPMorgan at wholesale, with the bank selling the other products on the open market. - That's like Popeye putting Wimpy in charge of hamburger production at his restaurant!

    Argentina will announce its takeover of YPF on Thursday reports a local paper, citing a provincial governor. Rumblings to this effect from the Kirchner administration have been ongoing for weeks, and provinces have recently revoked concessions on a number of the company's most productive oil fields. Shares -4.1%.

    Shares of Barnes & Noble (BKS -5.2%) fall off after the DoJ settles with publishers Simon & Schuster, HarperCollins, and Hachette amid its suit against Apple over inflated e-book prices. Analysts don't see the government intervention resulting in higher margins for Barnes & Noble on physical book sales.

    Stung by its $200B boondoggle John Carter, Disney (DIS) is mounting a superhero-style marketing campaign to ensure The Avengers is a blockbuster. Expectations are high, as analysts say the Marvel Comics-inspired movie may generate U.S. ticket sales of $155M in its opening weekend, which would surpass last month's huge start by The Hunger Games.

    GameStop (GME -1%) slips on a downgrade to Hold at Needham. The firm cites a lack of near-term catalysts, and notes that slower retail sales due to the industry's shift to non-retail distribution will continue to put pressure on the company's margins.

  76. Does Microsoft (
    MSFT -0.3%) want a piece of Research In Motion (RIMM +0.8%)? That's the question a headline from Financial Post asks as rumors on a MSFT-RIMM deal recirculate. Though deteriorating Blackberry sales has soured Microsoft from pulling the trigger in the past, the two companies remain relatively cozy with integration of Bing and Microsoft's mapping tech on Blackberry devices.

    Three lunchtime reads:
    1) Less is more in dividend growth investing
    2) Only modest correction ahead
    3) Hedge funds lag the market, again

  77. If nat gas gets lower, will this stop companies from digging for it since it's soon to be a worthless commodity?  Would love to see them stop fracking and destroying even more areas around the country.

  78. Hooka Money/Jrom – Now that's a worthy cause!  Now we have the $103 line on oil (/CL) shaping up for a possible short and I do like that as the Dollar is near 80 and we don't expect the BBook to show any real demand.  

    Market up, AAPL down/Nicha – Yes, very unusual and I think all these idiotic Momo upgrades are being used to mask fund managers heading for the exits on AAPL.  

    NEM/CaF – I think it's too early to go after miners.  Even my beloved ABX having a hard time holding $40.  

    13 minutes to BBook – If we get a quick reaction to the release – it's fake.  It's a big document and even reading the summary enough to get the gist of it takes 3-5 minutes for the best readers and then it's not likely the best reader is also the fund manager with his finger on the trigger so lot's of head fakes on this report.   I'll give my quick impression and then do a detailed highlight but I am expecting signs of slowing and margin squeezes.  

  79. Gasoline was a good long from this morning – shot up to $3.294 already.  I doubt they make $3.30 so a good time to take money and run if you are in it.  Copper still $3.64 but had a few moves up to $3.66 – not as exciting as gasoline, though…

  80. Last BBook was 2/29 and we dove the next week!  

    Dow volume, 60M coming into 2pm, slower than yesterday by quite a bit.  

  81. LVS May $65 calls can be sold for $1.60 and the $65/60 bear put spread is $3.10 for net $1.50 on the $5 spread.  

  82. BBook – Still Autos driving growth.  Still no sign of inflation to the Fed.  

    Overall, better than I thought which means not bad enough for more QE – so bearish!  

  83. AAPL / Nicha – I again posted yesterday that AAPL was getting to be a very crowded trade. And you can bet that at the smallest doubt, there will be a crowd at the exit and that never, never ends well – in the market or in a burning theater!

  84. $198B budget deficit for March?!  Not the highest on record but still amazing.

  85. AAPL/stj – I saw that overcrowded chart. But remember earnings in about 2 weeks. I am sure we see a runup. Who knows what happens after?

  86. And the word cloud for the Beige Book (only the main section – not the district overview)

    Try to remove most of the common words this time!

  87. No big reaction in the market so far! Speed reading in progress….

  88. Phil, got any thoughts on FCX? The current crop of analysts seems pretty bearish on the commodity sector, but I'm long the stock thinking it's undervalued, and noticed you mentioned selling the puts the other day as a bullish offset. I'm long 500shrs, and not too happy with the action recently, but I like the company as a long term holding. Thoughts?

  89. Phil, do you still like BBY over $25 by June?

  90. Nice, PCLN drops $50 from yesterday's high for a change, I hope CMG can do the same.

  91. I hope Jacob happy :)

  92. lflantheman/PCLN, your April 13 short strangles 700/790 is about $2.80 now, worth to get in?  Are you taking loss or stay on?  TIA.

  93. Nice Phil! Definitely paid for some hooka money with my 103.1 short on /QM! Thx!

  94. thanks Gucci but it isn't 4pm yet and mr stick always scares me ;-(

  95. AA/Phil – I just wanted to say thanks for the very good advice on AA earlier this week.  I bought the calls i sold back for a very nice profit and waited on the puts as suggested.  They got a little scary yesterday, but, i was able to buy them back this morning into the excitement for a nice (smaller than the calls) gain on the puts….both sides a winner this month :D .
    I am up almost $200 on the year now on AA, despite the long positions being down significantly from what they were purchased for.  Thanks again for all you do :)

  96. Been in meetings all day, missed some fun!  Going right back to meetings so bot some AAPL puts and closed my PCLN longs just in case we slide more, which should mark the low of the day for you folks, buy buy buy.. Ciao

  97. Jabo/Stick
    They've been running the dollar up all day with very little impact on the market.  It'd be just like them to pull it back into the close to stick it.

  98. Beige Book (Green = good for market, Red = bad for market, Purple = Fed BS):


    Summary of Commentary on Current Economic Conditions by Federal Reserve District

    Prepared by the Federal Reserve Bank of Cleveland based on information collected on or before April 2, 2012. This document summarizes comments received from business and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

    Reports from the twelve Federal Reserve Districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March. Activity in the Boston, Atlanta, Chicago, Dallas, and San Francisco Districts grew at a moderate pace, while Cleveland and St. Louis cited modest growth. New York reported that economic growth picked up somewhat. Philadelphia and Richmond cited improving business conditions. The economy in Minneapolis grew at a solid pace and Kansas City's economy expanded at a faster pace.

    Manufacturing continued to expand in most Districts, with gains noted in automotive and high-technology industries. Manufacturers in many Districts expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices. Demand for professional business services showed modest to strong growth and freight volume was mainly higher. Reports on retail spending were positive, with the unusually warm weather being credited for boosting sales in several Districts. While the near-term outlook for household spending was encouraging, contacts in several Districts expressed concerns that rising gas prices could limit discretionary spending in the months to come. New-vehicle sales were reported as strong or strengthening across much of the United States. Tourism increased in most reporting Districts. Residential real estate showed some improvement, with many contacts citing expansion in the construction of multi-family housing. Activity in nonresidential real estate increased or held steady in most Districts. Agricultural conditions were generally favorable. Mining activity expanded and oil extraction rose, while natural gas drilling slowed. Banking conditions were largely stable, with some improvement seen in loan demand. Several Districts reported increased credit quality.

    Hiring was steady or showed a modest increase across many Districts. Difficulty finding qualified workers, especially for high-skilled positions, was frequently reported. Upward pressure on wages was constrained. Overall price inflation was modest. However, contacts in many Districts commented on rising transportation costs due to higher fuel prices.


    Not much of a rah-rah kind of report, is it.  The absence of things actually getting worse is the surprise to me but nothing is getting better either.  We're treading water off the last report and there's really nothing here to get excited about that we didn't already know.  Gains in high-tech are the only new note and that's likely due to the frenzy with Facebook, Groupon, et al causing the SF and Boston guys to point out tech hiring as a bright spot and the various manufacturers to be happier.  


    Manufacturing continued to expand in most Districts, although respondents in the Boston and St. Louis Districts reported that manufacturing was mixed and Chicago reported that growth in manufacturing production leveled off after a strong start to the year. Contacts in automotive industries reported gains in Cleveland, Atlanta, and Chicago. The Kansas City, Dallas and San Francisco Districts reported increased sales for high-technology manufacturers, with Dallas noting key demand drivers continue to be mobile applications, cloud computing, and automobiles. The Philadelphia and Dallas Districts indicated improvement in demand for manufacturing with ties to residential housing and construction. Cleveland steel producers and service centers reported that volume was trending slightly higher, while Chicago steel producers said that capacity utilization was steady. For refiners in San Francisco, capacity utilization rates continued to hold largely stable, as weak domestic gasoline demand was offset by strong foreign demand for distillate products. In Dallas, Gulf Coast refiners noted steady margins overall.

    Manufacturers in Boston, Cleveland, and Chicago are expanding payrolls but finding it difficult to find highly-skilled workers. Comments from the Cleveland, Atlanta, Chicago, and Kansas City Districts indicated a rise in capital spending. Manufacturers in over half the Districts commented on increasing input costs, focusing, in particular, on rising petroleum prices. Contacts in Boston, Philadelphia, Chicago, Kansas City, and San Francisco remained optimistic that activity will increase in the near term. However, several respondents in Cleveland and Dallas noted that their outlooks have become more cautious. Manufacturers in Boston and Cleveland expressed concern about the European economy. Expectations were mixed in St. Louis.

    Mixed bag and we really don't want to see anyone slowing – no one should be slowing if we're in a recovery – especially at this early stage.   Lack of skilled workers means we're hitting productivity limits too – right when input costs are climbing – not a good combo.  

    Nonfinancial Services

    Demand for professional business services was characterized as modest to strong in the Boston, Philadelphia, Richmond, Kansas City, and Dallas Districts. St. Louis, Minneapolis, and San Francisco reported that demand was mixed. Boston and Richmond cited rising demand for advertising, marketing, and consulting services, while accounting services saw a modest pickup in Minneapolis and Dallas. Growth in technology-related services to the energy sector was noted in the Minneapolis and Kansas City Districts. St. Louis and San Francisco reported that activity in the healthcare sector was flat to down. Both Richmond and San Francisco noted increased sales for restaurants and food-related service providers. Freight transportation services were higher in the Cleveland, Richmond, and Kansas City Districts. Reports from Atlanta and Dallas were mixed due to declining air cargo volumes and railroad shipments. St. Louis reported that plans have been announced to close certain freight transport and distribution facilities. Contacts in Cleveland, Richmond, and Kansas City noted a shortage of qualified truck drivers.

    Lower shipments?  Closing terminals?  Markets up 25% since October?  One of these things is not like the other – one of these things just doesn't belong...

    Consumer Spending and Tourism
    Retail spending continued to improve in almost all Districts. Contacts in the Boston, New York, and St. Louis Districts characterized retail activity as strong. Reports from Chicago and Richmond indicated a significant strengthening in retail spending. Sales expanded at a modest or moderate pace in Philadelphia, Minneapolis, Kansas City, and Dallas. Unseasonably warm weather boosted sales in the Boston, Philadelphia, Cleveland, Richmond, and Chicago Districts. Grocers in Cleveland and San Francisco reported sales as unchanged. Apparel sales were strong in Boston and New York. Purchases at home improvement stores were up in Richmond and Chicago. Reports from Boston, Atlanta, St. Louis, and Kansas City indicate a positive near-term outlook for retail spending; however, contacts in Philadelphia, Cleveland, Atlanta, Chicago, and Kansas City expressed concerns that rising gas prices could limit discretionary spending in the months to come.

    Automobile sales were reported as stronger or strengthening during late February and early March in most Districts. Mild winter weather boosted sales in Cleveland but depressed motor vehicle service spending in New York and Minneapolis. Rising gas prices lead to increased purchases of fuel-efficient vehicles in Kansas City, Dallas, and San Francisco. Contacts in Philadelphia and Kansas City expect continued sales strength. Reports from Cleveland showed a mixed outlook, with some respondents expecting solid sales and others seeing the current pace of sales as unsustainable. Used-vehicle sales were reported as strong or robust in Cleveland and San Francisco.

    Tourism was characterized as strong by respondents in the Boston, New York, Richmond, and Atlanta Districts. Minneapolis indicated a slowdown in activity due to a general lack of snow this winter. Conversely, warm weather boosted tourism in Richmond. Bookings were strong in New York, and occupancy rates improved in the Boston, New York, Atlanta, and San Francisco Districts. In Boston and Kansas City, business travel continues to be the main driver of tourism activity. Contacts in Boston and Atlanta expressed concern over high fuel prices as a possible drag on leisure spending.

    Tourism – the last hope of third-World economies…

    Real Estate and Construction
    Residential real estate activity improved in most Districts, though Cleveland and San Francisco noted that activity remained lackluster or at low levels. The St. Louis and Minneapolis Districts reported increases in building permits. The construction of multi-family housing units, including apartments and senior housing, expanded in many Districts. Home prices continued to decline in Boston, New York, and Minneapolis, but were largely flat in San Francisco. Contacts in Boston, Philadelphia, and Kansas City indicated that mild weather had boosted real estate activity.

    Non-residential construction activity improved in the Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis Districts, though many of these contacts characterized the improvement as slow. Boston, New York, and San Francisco characterized non-residential real estate activity as unchanged or steady. The energy and high-tech sectors were driving much of the demand in the Dallas District. San Francisco noted a rise in the demand for office space from the technology sector. Cleveland and Chicago saw a boost in healthcare-related construction. Projects related to the education sector are showing growth in Boston, Cleveland, Philadelphia, and Richmond. The outlook of builders is described as positive or slowly improving in the Philadelphia, Cleveland, Atlanta, and Kansas City Districts, and as cautiously optimistic in Boston.

    We may be at the bottom but we're sure not getting much of a bounce. 

    Banking and Finance
    For most Districts reporting on financial services, banking conditions remained stable, with modest improvements in demand for lending. Loan demand was reported as improved in New York, Philadelphia, Cleveland, Richmond, Chicago, Kansas City, Dallas, and San Francisco, while lending activity was unchanged in St Louis. The Dallas District reported improved sentiment by national and regional banks due to improved middle-market and large corporate lending. Contacts in Cleveland, Richmond, and San Francisco reported that increased competition among lenders has been driving more aggressive loan pricing. In general, the demand for commercial and industrial loans remained steady, while several Districts reported an increase in commercial real estate lending activity. The Philadelphia and Cleveland Districts reported increased lending for multifamily housing and health care, and contacts in Richmond cited increased lending to small business to finance inventory and capital expenditures. Consumer lending has remained stable or risen modestly across a few Districts. The Cleveland and Richmond Districts reported increased home equity and auto lending, while bankers in Chicago noted improved credit availability for auto loans and credit cards. Several Districts reported that credit standards remain stable, but Richmond bankers reported that they were offering easier terms to attract new commercial borrowers. Several Districts reported increased credit quality, as delinquencies have continued to decline and few problem loans have been reported.

    I'd be more bullish if these "increases" didn't need to support a 25% run in the market.  This report is very much like when the hospital changes your chart from "critical" to "stable" – Stable is not "good" – it just means you aren't getting worse at the moment.   People in comas for 20 years are "stable."

    Agriculture and Natural Resources
    Recent rain and snowfall has helped alleviate dry agricultural conditions from earlier in the year. Nonetheless, the Atlanta, Minneapolis, Kansas City, and Dallas Districts have all reported certain areas where drought conditions continue to persist. Due to unseasonably warm weather, contacts in several Districts reported that the planting of some crops is beginning earlier than normal, including corn in Chicago and wheat in Minneapolis. San Francisco commented that there has been an increase in certain input costs, such as fertilizer, while Chicago reported tight supplies of some agricultural chemicals and corn seed. Atlanta and Chicago reported an increase in the prices paid to farmers for soybeans; Chicago noted that the increase was due to lower-than-expected harvests in South America. Livestock prices rose in the Chicago, Minneapolis, and Kansas City Districts, while orders for livestock were robust in San Francisco. Farmland values in Kansas City continue to rise and are at record highs.

    Activity in natural resources remained strong. The Kansas City, Dallas, and San Francisco Districts reported a shift from natural gas to oil exploration and production due to low natural gas prices and growing demand for oil. In the Cleveland District, leasing activity in the Utica shale is expanding. Cleveland and St. Louis noted that the production of coal has slowed over the past few months. The mining sector is expanding in San Francisco due to high prices for a variety of precious metals, and iron ore mines in the Minneapolis District continued to operate near capacity. Contacts in Kansas City reported a shortage of engineers and experienced technical support for oil and gas drilling.

    Sounds like inflation coming down the pike to me.  

    Employment, Wages, and Prices
    Hiring was steady or showed a modest increase in the Boston, New York, Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Dallas, and San Francisco Districts. Industries reporting some employment growth included manufacturing, freight transport, professional business services, and information technology. A preference for part-time and temporary workers was seen in the Richmond and Atlanta Districts. Atlanta noted that temporary workers were being utilized in order to contain costs and retain flexibility, while some employers in Richmond prefer temporary workers due to uncertainty about future demand. Some employers in the Boston, Cleveland, Atlanta, Chicago, Kansas City, and Dallas Districts reported having difficulty finding qualified workers, especially for certain high-skilled positions. Contacts in Philadelphia and Cleveland noted that new federal regulations are exacerbating a truck-driver shortage. New York commented that employers are planning to step up hiring activity in the months ahead. Boston, Richmond, and Atlanta said that employers in their Districts are cautious and need to see more robust growth before they expand their permanent payrolls further.

    Wage pressures were characterized as contained or modest among reporting Districts. Contacts in Chicago, Dallas, and San Francisco noted some upward pressure on wages for skilled jobs, especially in manufacturing and information technology. In the Minneapolis District, strong oil-drilling and production activity continued to bid up pay. Transportation contacts in Cleveland noted some wage pressure due to a tightening of the driver pool. And medical benefits continue to put pressure on labor costs in Philadelphia.

    Overall price inflation was modest in most Districts. However, contacts in the Cleveland, Richmond, Atlanta, Chicago, Kansas City, and Dallas Districts cited rising transportation costs due to higher fuel prices. Minneapolis and Dallas noted that airlines have raised their fares to offset higher fuel costs. Richmond reported that rising fuel costs were a serious problem for both land and ocean shippers, while intermodal transportation firms in Dallas said that they had increased prices in response to higher fuel costs. In Atlanta, higher transportation costs were passed through to consumers without much difficulty. In contrast, contacts in Cleveland, Chicago, and San Francisco said it was difficult to pass through higher costs to consumers. Input costs for manufacturers in Boston, Cleveland, and Kansas City rose somewhat, but with little pass-through. Price pressures have eased somewhat for manufacturing firms in Philadelphia. Higher prices for construction materials narrowed profit margins for contractors in Kansas City.

    Wow, what a finish!  As we expected, rising input costs that can't be passed onto consumers.  Wage pressures despite anemic hiring numbers and clearly commodity inflation – in both mining and agriculture – is coming down the pike.  BUT the economy itself is not weak and we are gaining jobs so the Fed's conditions for QE3, higher unemployment and a slowing economy – are not even remotely close to being met.  

    That means no QE3 for you!  

    NOT supportive of this rally.  

  99. Wheeee on oil! If Dollar doesn't hold 80, then I lose interest in the Futures shorts (now $102.60).  Tight stop anyway.  

  100. Phil what do you make of pouind losing 1.59 and euro blowing 1.31?

  101. Phil

    Nice review of the Beige

  102. thanks Phil!

  103. PCLN broke through it's 3 month support line with heavy volume.  I am betting on more downside to come!

  104. Nat gas/Rustle – Interesting dynamic as they get leases from Government but then, if they don't have wells in production by a certain date, they lose the lease so a lot of companies are forced to drill and produce – regardless of current prices.  A mature company, like CHK, ends up shutting down production to try to stop the glut but it's getting out of control.  It won't stop fracking or anything else as these are multi-year projects and no one thinks nat gas will stay below $2 – but it may be at zero over the summer.  What the nat gas companies should be doing is working with the administration and kicking in a few Billion dollars to kick-start conversions in this country – once they do that, they insure a whole new demand sector for themselves.  

    CNBC must be desperate to pump – Cramer has been on non-stop since the morning. 

    $198Bn/Ink – WOW!  That's a nice $2.4Tn annual deficit rate.  

    Great word-cloud StJ.  Looks like a pretty positive report from the cloud but that's bad if it takes QE3 away.  I love the way those things work, gives you a nice, quick view of improving activity and demand with costs and prices becoming more of a concern.  

    FCX/Gmarts – I picked them as a bullish offset to a short QQQ trade the other day as I do start to like them down here but only for a put sale to get in cheaper.  I like them long-term but I think you're nuts to hold any stock position unhedged in this market.  Why should you not get paid for all this heartache?  

    BBY/Jrod – I'm assuming we'll have to roll to Jan but not too worried on the longer-term.  Only stimulus or a big market rally is likely to actually hit $25 by June now.  

    Just 72M on the Dow at 3 so 12M in the last hour.  

    Oil/Jrom – Congrats!  We lost the Dollar now so done for the day – go have some fun…  Hey, that's a pretty good way to send money overseas – I pick a trade here and you make it over there. 

    AA/Scott – Very nice.  That kind of thing works great when you are in stocks you REALLY believe in so you can ride out those moves against you.  It's always a roller-coaster and you just have to learn how the tracks are laid out – that's why you'll notice a lot of our pro traders stick to just a few positions or sectors they concentrate in.  

    PCLN/Mr M – Nooooooooooooo!  Come on, I'm sure we can chip in and pay you to stay long on them….  ;)  

    Pound and Euro/Sage – Look at EUR/CHF – they flew back to $1.2033 so it's just SNB manipulation – not worth paying attention to and they are both hanging tough on those lines anyway.  

    Thanks Exec. 

    PCLN/Button – It's about time! 

  105. stjeanluc…..agreed on all points you've made.  Will look to list appropriate equities.
    bobhu….I just rolled the put side of the PCLN trade to next week's 670s.  I'll just roll till they come in.  Shouldn't take long.   The call side looks to be fully in Friday but could be bought back for 80% profit right now.
    nicha/AAPL  ….   A runup is probable next week, but not assured.   Fund managers (most) smart and know they should be very cautious around AAPL earnings, and could be slowly exiting, as Phil suggests.  I remain "AAPL cash" and fiddling around this week with MOMO trades.  If AAPL should drop significantly though you'll see me get back in. 

  106. Oil/Phil – are you expecting this may spike higher now that the beige book is done?  also, to trade oil via futures, what is the difference between and do you have a preference between /QM and /CL? thank you

  107. Bourbon – boom times for kentucky moonshine

  108. Oh noooooooooooo!  Natural gas failed $2!  

    Oil/Scott – No, I don't see oil going higher really but we had a nice .40 run on the shorts so no point pressing our luck.  We should get a nice sell-off after nat gas inventories tomorrow – they usually hold out hope until then.  I always use /CL because it obeys the .50 lines more closely and also, it seems a bit more liquid.  

    PCLN/Jabob – Wow, that would be nice, wouldn't it?  

    I like this White House guy who calls Maria on her crap questions.  Reminds me of this great article I read on Erin Burnett:  


    Obviously Erin Burnett is not an objective journalist, just as some say much of what CNN reports is not objective news. Erin Burnett is an alum of Citigroup, one of America’s four largest banks, and a major beneficiary of the taxpayer-funded TARP “Too Big To Fail” Bailout. Erin Burnett is also an alum of Goldman Sachs, the Wall Street giant whose corrupt practices are considered a key causative factor in the global financial meltdown of 2008, and who willingly and easily paid $500 million to settle SEC charges of defrauding investors with their subprime mortgage scams. And Erin Burnett is a current member of the Council on Foreign Relations (CFR), considered by many to be America’s more powerful foreign policy think-tank, and denounced by some as a proponent of “one world government” and instrument of the “new world order.”

    Erin Burnett is a One Percenter. Should we be surprised that delivering their message is her mission?

  109. Phil / KORS – which speculative puts would you buy?  I'm eyeing the Aug. 40 at $3.40. 

  110. GRPN making new lows – down to $13 now.  

    2:00 PM On the hour: Dow +0.95%. 10-yr -0.25%. Euro +0.19% vs. dollar. Crude +2.01% to $103.06. Gold -0.08% to $1659.35.

    3:00 PM On the hour: Dow +0.79%. 10-yr -0.24%. Euro +0.13% vs. dollar. Crude +1.59% to $102.63. Gold -0.17% to $1657.95.

    The SNB may be set to fry the Swiss franc bulls and take the euro/franc floor up to CHF 1.25 from 1.20, suggests Goldman's Jim O'Neill. He notes key Swiss politicians have said the cross should be around 1.35-1.40, and if markets don't relent, the central bank may have to act. FXF +2.3% YTD.

    Recent market volatility hitting Europe is a good thing, says the Chairman of Intesa Sanpaolo, Italy's largest bank – it keeps up pressure on politicians and citizens "to work on the necessary reforms at the right pace … We should consider short-run volatility as a fact of life and as a useful indicator, not as hard truth." Wise words.

    Natural gas futures drop below $2 for the first time since Jan. 2002, as weak demand and robust production have sent prices sliding 33% YTD. While the number of working U.S. gas rigs has fallen 27% Y/Y, gas output remains high because most wells produce a mix of oil and gas regardless of classification; high oil prices thus often effectively subsidize the cost of continued gas production.

    Canadian lenders are doing their part to slow the glut of natural gas by pulling in loans to producers. "Anybody that's at 50% gas-weighted is in some jeopardy here," says an analyst. Compton Petroleum (CMZPF.PK) plummeted 40% this week after its lenders reduced a facility by $30M to $110M.

    Advantage Oil & Gas (AAV -3.4%) continues to languish after BMO Capital cut its rating to Underperform earlier today, saying that natural gas oversupply will cause the company, without yield support, to lag the rest of the E&P market. 

    Shares of Clean Energy (CLNE +5.1%) trade higher and threaten the $20 barrier – but that could just be the start of a possible run to $200, according to SA author Philip Mause. He cites the "unprecedented" gap between oil and natural gas prices and growing demand for Clean Energy's products as forces that could bring the company profits of $13.80 a share.

    American Express (AXP +1.3%) shares are higher as Barclays boosts its target price by $10 to $70, ~23% above current levels. The firm thinks AXP will earn $1.03/share when it reports Q1 earnings next week, $0.03 above consensus, and says the market its underestimating AXP’s expense leverage and the feasibility of its 8% long-term revenue growth target. 

    Boeing (BA +0.5%institutes a number of measures aimed at making its 737 jets more fuel efficient and attractive to buyers weighing the jet versus the Airbus A320neo. According to the company, 737 improvements include extending the tail cone, updating flight controls, and strengthening landing gear, wings and the fuselage.

    Caterpillar (CAT +1.5%adds Jon Huntsman to its Board of Directors in a move that is primarily notable due to the former GOP Presidential hopeful's stint as the U.S. Ambassador to China. The linkbetween Caterpillar's fortunes and China have become increasingly intertwined. 

    Shares of Jaguar Mining (JAG -23.1%) plunge on heavy trading volume after DealReporter breaks out a story that Shandong Gold has lost interest in snapping up the company.

    Heavily-shorted Cree (CREE +5.4%) is rallying for the second day in a row after announcing a low-cost LED streetlight solution. Today's move comes in spite of bearish commentary from Raymond James: while the firm expects Cree to post FQ3 results on April 17 that are roughly in-line with guidance, it thinks investors are too optimistic about the company's operating leverage, and doubts its gross margin, which stood at 35.3% in FQ2, will ever return to the mid-40s.

    Possibly contributing to today's rally in solar stocks (KWT+4.8%) is news of a draft decree from the Italian government that seeks to merely cap solar subsidy increases at €500M/year. This subsidy "cut" is milder than many feared, particularly after the German government announced major solar feed-in tariff reductions.

    Supervalu (SVU +6.1%) extends a two-day rally on the back of its solid earnings beat yesterday, and further fueled by what Cantor considers to be a short squeeze. The firm notes that underlying improvement in the company's customer count and volume trends are encouraging, and ultimately should help alleviate some of the damage the stock has suffered this year. 

    Shippers are seeing strong upside in today's trade, as reports suggest many carriers are dropping anchor until rates increase further and Alcoa's earnings surprise may indicate a more accelerated global shipping recovery. DRYS +8.2%FRO +3.1%,NEWL +72%FREE +12.1%EGLE +5.6%DSX +2%TNK +3%.

    Shares of Manitex International (MNTX +16.9%) shoot higher after the company announces a record backlog of $133M for its products as of the end of Q1. Demand for the firm's boom truck cranes led the charge in orders.

    Greek shipper Costamare (CMRE +5.5%) jumps on positive comments out of Morgan Stanley this morning. The firm says large container vessel rates are on the verge of recovering, and CMRE - relatively immune to short-term rate fluctuations as the majority of its vessels are tied to long-term contracts – should move higher.

  111. Arena Pharmaceuticals (
    ARNA +6.6%) trades higher amid a bit of overwrought Internet drama. A group of shareholders filed a Cease-and-Desist Letter (.pdf) to TheStreet's Adam Feuerstein after he wrote that the firm's weight-loss drug Lorcaserin "isn't much more than a placebo" and causes tumors in rats.

    BioTime (BTX -9.3%) shares sink after a Seeking Alpha article by Martin Shkreli says the biotech smallcap is worth ~$20M vs. its current ~$221M market cap. "With only $22M in cash and limited operations… BioTime has a need for raising cash in the future… I predict BTX shares will drop at least 50% in the next 12 months."

    Goldman says M&A is poised to see an uptick in activity. Companies with the highest probability for a takeout in small-caps are: Ariba (ARBA +0.9%), Onyx Pharmaceuticals (ONXX +2.4%), and Synchronoss (SNSS +3.1%).

    As Nokia (NOK -14.4%) falls to levels last seen in the late '90s thanks to its Q1/Q2 warning (IIIIII), analysts caution the worst is yet to come. Nomura fears Q2 could be even worse than guidance suggests, and Q3 weaker still. Bernstein, meanwhile, warns the "feature phone" market is disappearing thanks to the adoption of low-cost Android phones. CEO Stephen Elop says he'll consider "asset sales" and other options; could Nokia's patent portfolio be in play?

    Going into Baidu's (BIDU +1.3%) April 24 Q1 report, SA's Jiang Zhang thinks investors should pay attention to its mobile search business. Unlike PC search, where Baidu dominates the local market, it only has a 35% share of Chinese mobile search, and faces stiff competition from Tencent (TCEHY.PK) and Easou. With China now claiming over 356M mobile Web users, mobile success could be crucial to justifying Baidu's lofty valuation.

    Steven Vaughan-Nichols takes a close look at the patents Microsoft (MSFTbought from AOL, and discovers IP critical to Web technologies such as SSL encryption, embedded browser apps, IP communication, and cookies. Observers are hoping the purchases were made merely to protect Microsoft from the kind of assault Facebook is witnessing. But $1.08B is a lot to pay for mere protection, and Microsoft has recently become aggressive in trying tomonetize its IP

    The DOJ's e-book settlement with Simon & Schuster (CBS), Hachette, and HarperCollins (NWSNWSArequires deals with Apple (AAPL) to be terminated and renegotiated, along with other contracts that restrict an e-book retailer's ability to set final prices (e.g. their deals with AMZN and BKS). However, the settlement doesn't mandate publishers adopt a wholesale distribution model, such as the one Amazon originally used to discount e-book prices

    Jokes about Apple (AAPL) having enough cash to bail out the eurozone are easy to find, but they might soon pack an additional punch: Apple's market cap is set to overtake that of the nearly 500 public companies found in Spain, Portugal, and Greece. There's a bit of method to this madness: Apple's $33B in net income over the last 12 months surpasses the $32B earned by all of the firms with a main listing in one of the 3 countries, per Bloomberg. 

  112. KORS/Terra – The Aug $36 puts at $2.10 have a .23 delta and the $39 puts are $3.10 so a $3 drop makes you 30% while the $33 puts are $1.25 so risk is .75 against a $1 gain on a $3 move and you have two earnings between here and there so even if you blow this one, you can always adjust.  

    Bourbon/Scott – My favorite!  

  113. Well that wasn't very bouncy!  

  114. Global Change - MIchio Kaku discusses how this generation is participating in a global change from a Level 0 civilization to Level 1.  Some consideration of the implications should offer some LT investing premises.

  115. EDZ- Phil,  you posted a play as a hedge the other day (May 14/16 CALLS); Is your premise on that as disaster protection or valid as a "short the world" play on its own?

  116. Pharm- PLX sold off a bit today- on some volume. Just a bit of risk off or something else? I see no news?

  117. BTW, for those who care, almost perfect Harami patterns in the NASDAQ, NYSE and RUT – this usually signals a contraction in volatility. 

    From -


    The bullish harami is made up of two candlesticks. The first has a large body and the second a small body that is totally encompassed by the first. There are four possible combinations: white/white, white/black, black/white and black/black. Whether they are bullish reversal or bearish reversal patterns, all harami look the same. Their bullish or bearish nature depends on the preceding trend. Harami are considered potential bullish reversals after a decline and potential bearish reversals after an advance. No matter what the color of the first candlestick, the smaller the body of the second candlestick is, the more likely the reversal. If the small candlestick is a doji, the chances of a reversal increase.

    Harami Candlestick example from

    In his book Beyond Candlesticks, Steve Nison asserts that any combination of colors can form a harami, but that the most bullish are those that form with a white/black or white/white combination. Because the first candlestick has a large body, it implies that the bullish reversal pattern would be stronger if this body were white. The long white candlestick shows a sudden and sustained resurgence of buying pressure. The small candlestick afterwards indicates consolidation. White/white and white/black bullish harami are likely to occur less often than black/black or black/white.

    After a decline, a black/black or black/white combination can still be regarded as a bullish harami. The first long black candlestick signals that significant selling pressure remains and could indicate capitulation. The small candlestick immediately following forms with a gap up on the open, indicating a sudden increase in buying pressure and potential reversal.

  118. Maybe good news… more people are quitting than being laid off:

  119. A European bank sent out a graphic showing that analyst's 12 month projection for Apple — $643 Billion capitalization — will at that point exceed the combined market cap of Greece, Portugal and Spain combined.  

  120. PLX/pstas – yes, but it is my belief that the stock is very closely held.  One big seller in the morning at 9:30 PST, some towards the end but it was mixed. I think they are pushing it around b'f OpEx.  Volume in May is picking up, and the 5/7.5 strikes are all over it.  I remain long, and the stock is not hedged….yet.

  121. MoMo List / lflan – My proposal for the list would be the following to get started:


    PCLN and CMG don't have penny increments but there is plenty of interest. The other ones have weeklies and penny increment and enough liquidity. Spreads are not always great, but let's face it, they are not AAPL or the QQQ! And all of them are volatile enough to make it interesting.

    I am not sure we can start on Friday – I would want to settle on a list first and study some charts on my side. Let me know what you think.

  122. The Four Trillion Dollar Man — WSJ, on Bernanke's fight against dollar strength.  Lotta firepower.

  123. From Phil's 3:50 pm post:
    Arena Pharmaceuticals (ARNA +6.6%) trades higher amid a bit of overwrought Internet drama. A group of shareholders filed a Cease-and-Desist Letter to TheStreet's Adam Feuerstein after he wrote that the firm's weight-loss drug Lorcaserin "isn't much more than a placebo" and causes tumors in rats.
    Handicapping The Obesity Race – Seeking Alpha

  124. MoMo List
    I do not think AMZN, LVS, SHLD and WYNN are as MoMo-ish as CMG, LULU and PCLN.   Is your objective to come up with a list of "pure' MoMo or "mixed" MoMo?   : )

  125. Momo's, do they have to be big companies…BC, SCSS, MFRM up 100%.

  126. MoMo List,
    Can I suggest CRM.

  127. MoMo / Ron, Rpme and Lotter – Pure Momo would restrict us to just a few names I think. We need to have some stocks that are volatile enough to create good momentum plays and have options liquid enough so that 10 (or more) of us don't distort the market. Not a problem with BIDU, but it became an issue with AA in AA Money for example. My list was just suggestion for now. It's true that AMZN, LVS, SHLD and WYNN are not true Momo, but they look interesting to trade for fun. I looked at CRM but I liquidity might be a problem. To be checked. That also means that BC, SCSS and MFRM might be out!

  128. Momos - I've been keeping a list of 'things to short big in a crash' and adding periodically, here's what it grew into:

  129. This market is ugly in all the wrong places (things I am long) and absurd in all the wrong places – ridiculous momo stocks that are at or near all time highs or 52 week highs. Frustraing.

  130. Momos/Stjean & lfan – what about CREE? it may be just periodically momo, though…..

  131. Momos – Looking forward to learning from your trading knowledge!

  132. Hi everybody.  As I'm going back to voyeur silence, wanted to take this opportunity and thank everyone – Phil first, of course – for all their insights that proved very educational for me.
    I started trading in 2007, following Cramer (how did you guess?). Promptly lost 70 grand in about a year and a half, and stopped for a while.  Then started reading Phil on SA around 2010, and then on this site with delays. Then last summer I assembled about 30K cash and started playing again. Started losing about 1.5K a month with decent regularity.  Then bought voyeur membership, and something strange happened. Lost only 500 bucks my first month, and then the second one – made a thousand.  So decided to convert the opportunity gain (I guess that's what you call it when you lose the opportunity to lose money) into basic membership.  The result? Lost 1.5K again. Why? I think it's simply because Phil is too good. Last Fed meeting, March 12, about 15 minutes after the statement was released, Phil said "there's nothing here".  He was right, but it took the market about a month to agree. Only last Friday did we get to those pre-meeting numbers.  With my lack of patience (some of it might be due to trading 70K S&P futures in 15K portfolio - but you can't day-trade with less than 25K) I capitulated long time ago, naturally.  And this happens all the time. Market just takes enormous amounts of time to agree with Phil, but most of the time it eventually does.  On top of my other problems, I can't trade individual stocks (restriction imposed by my job). Just ETFs and indexes.
    So I figure voyeur is the right thing for me. And as I won't be able to post, I'd like to again thank Phil and everyone else posting on this board. Stl, lflan, Jabob, JRW, Pharmboy, anglecurr and others – you guys are a great croud, a lot of fun to read, and extremely educational and insightful.  Thanks again, everyone. I'll keep reading! And I'm sure one day I'll learn…
    One suggestion for site improvement – I was never able to find a write-up on how exactly you trade futures.  What are these mistery lines?  Well, I'll just try to figure it out, I guess.
    Best to all of you,

  133. stjeanluc et al…..We need to establish a definition of MOMO as the first step.  It's late and I'm tired, so i won't attempt to put this down tonight, but we need a less than 3 sentence definition, so we all know what we are talking about.  Something else that would be useful, and that is for a single participant to become extremely knowledgeable about ONE stock on the list.   That's how I've been so successful with AAPL, knowing it inside and out.  I don't really know about AAPL, I feel AAPL, and that's something that would be very useful in trading the MOMOs.  To be able to go to a single member and ask :  "What are you feeling on PCLN right now?"   Now a word of caution here.  You cannot trade these stocks successfully if you are biased in any way.  If you feel any sort of emotion when you are trading a stock, then you should not be trading it.  Want to know how I feel about AAPL?  I'm totally indifferent.  I don't care if it goes up or down.  I really don't care if the stock goes to 1,000 in a year, or back to 350.  I swear I don't.  I just want to figure it out and play it right.  So future MOMO players, if you are an EMO (ask a teenager what that is, if you don't know),…..if you are and EMO, you can't play the MOMO!     So, I'm going to bed.  And no hurry setting this all up…..better to get it right than to get it tonight.    :) 

  134. Momo Mocha:  Nice list, thanks.  I'll keep it pinned to my refrigerator.  You never know; if I had to guess, I'd bet that a soaring dollar would take 'em down.  It's going to be a long, hot summer in Europe.

  135. Iflan – great idea, one person to really get to know each stock and trade it viscerally (but objectively), but I suspect that's a fairly rare ability.  Probably not too many people, even after getting to know a stock very well, can trade it as well as you trade AAPL.  But, it would be a great idea for you to outline the steps that you took to get to that point…was it reading everything you could find, watching AAPL for two hours every day, doing your 10,000 hours…whatever, if you describe the process may be some of us could replicate it, or at least try…

  136. Good morning! 

    Once again they are attempting to win in the Futures what they could not win during trading hours.  S&P back to 1,372 – oil $103.26 but gold is flat with the Dollar at 79.83.  

    Shanghai popped 1.8%, the rest of Asia up about 1% on a big finish as BOJ says they will rain down QE like you've never seen before:  

    The BOJ will pursue powerful easing” to help overcome deflation and put the economy on a sustainable growth path, Shirakawa said at a branch manager meeting in Tokyo today, reaffirming the stance. Stimulus measures announced Feb. 14 drove down the yen, aiding exporters. 

    That sent the Yen back to 81 (weaker) and raise the Euro and Pound back over $1.31 and $1.59 but the Dollar is still holding 79.75 so far and no major moves in commodities other than oil.  Gold is $1,656, silver $31.61, copper $3.67, nat gas $1.98 and gasoline back to $3.30.

    Like yesterday, someone is buying up Francs to force EUR/CHF back to $1.20 and trigger a buying frenzy from the SNB so that means we have the BOJ and the SNB pulling out all the stops to support the Euro and, so far – not too impressive in the results department. 

    Yellen was easy last night but nothing new.  

  137. $103 breaking down on oil in case anyone's up for shorting /CL.  

  138. EDZ/Pstas – That was a bear flyer (just in case) with a bullish offset (FCX or any of this morning's short puts).  

    Quitters/StJ – I think that is good as people find jobs that pay better.  No question things are improving – just very slowly.  

    Bernanke/ZZ – That's like that cartoon the other day, if this is all we get for $4Tn, what happens when they stop?  

    Feuerstein/Diamond – That guy is Cramer's little attack dog.  I wouldn't trust a word he says.  I remember when he did a hatchet job on DNDN back when we were buying them back when they were $2 (and before they went to $40) – same kind of crap that all turned out to be flat-out lies by this bozo.  He even went after CELG at one point years ago, gave us a great entry on them too!  

    Frustrating/Cap – It has been but I think the bears are due for some fun now.  

    Futures/Nervous – We did a seminar in Vegas on them and will do another this year, perhaps we'll record it somehow. Clearly, if you don't have a lot of money and you are losing $70,000 following Cramer, you are simply trading over your head (and following an idiot).   I would urge you to read out Education Archives – all of them and follow our $5KP and our Income Portfolio and get into the longer-term trades.  Imagine how much better you would have been taking that money and making 10% a year, rather than "going for it" and losing money.  While our short-term trading gets most of the attention – it's only what we do for fun while our sensible, long-term positions do their very boring thing and make 10-20% a year.  The best investing advice I ever heard came from Charles Dow, who founded the WSJ and who has the Average named after him:

    "The man who begins to speculate in stocks with the intention to make a fortune, usually goes broke, whereas the man who trades with a view of getting good interest on his money sometimes get rich." 

    I can teach a lot of things to people but the hardest thing for you to learn is patience.  

  139. Thursday's economic calendar:

    8:30 International Trade

    8:30 Jobless Claims

    8:30 Producer Price Index

    10:30 EIA Natural Gas Inventory

    1:00 PM Results of $13B, 30-Year Note Auction

    4:30 PM Fed Balance Sheet

    4:30 PM Money Supply

    Notable earnings before Thursday's open: CBSHFAST,RAD 

    Notable earnings after Thursday's close: GOOGJBHT

    6:00 AM Overseas: Japan +0.7%. Hong Kong +0.9%. China +1.8%. India +0.8%. London -0.2%. Paris -0.7%. Frankfurt +0.3%.

    Gloomy Gary Shilling expects operating earnings of S&P 500 firms to drop to $80 this year, ensuring a major bear market with a P/E ratio low of ~10, which implies an S&P index at ~800 – a 43% drop from its recent level. Meanwhile, Shilling is sticking with his "quartet" – long Treasurys, short stocks, short commodities, long the dollar.

    “You can’t expect bank stocks to go straight to the moon,” but could they come crashing back to earth and take this year's rally with it? The six biggest U.S. banks will post $15.3B in adjusted net income this Q1, down 11% Y/Y from $17.3B, according to a Bloomberg survey of analysts. "There is a little too much optimism going into this quarter," one analyst sums up.

    New foreclosures fell 16% in March from a year earlier, according to RealtyTrac, reaching the the lowest quarterly total since 2007. RealtyTrac expects foreclosure activity to remain elevated, though "the faster we can move some of these old foreclosures through the pipeline, the faster the market can be in a place to recover."

    The average size of a mortgage purchase application increased 9% from December to March, up to $233,300 from $214,500. This points to an improved appetite in borrowers for mortgage credit, notes Capital Economics' Paul Diggle. So logically, as higher-end buyers return to the market, volume should begin shifting to the higher price ranges, which in turn may give a much needed boost to the median price range as well.

    A fund to support homeowners in some of the hardest-hit communities has disbursed just 3% of its funds and helped only 30,640 homeowners, according to the latest SIGTARP report. The watchdog blames a "lack of comprehensive planning" by Treasury and limited participation by Fannie, Freddie and the large mortgage servicers. 

    Teen Financial Confidence PlungesTalk about teen angst. The latest concerns of the 18-and-under set go way beyond pimples and prom dates: Their level of financial confidence has taken a dramatic slide. Just 56% of kids 14 to 18 think they will be as financially well-off, or better off, than their parents, according to a new survey from Junior Achievement and The Allstate Foundation. That's a huge plunge from 89% in 2011.

    Wow, what a sensible guy!  One month does not make a trend, St. Louis Fed's James Bullard tells Bloomberg, and the Fed should wait for more economic reports before deciding whether more easing or potential tightening is needed. Bullard, who sees U.S. unemployment at 7.8% by year's end, says March employment was just one “mediocre” report and not an immediate concern.

    Inflation Lurks as Stealth Tax on Top of Form 1040 by Caroline Baum. It distorts price signals and leads to a misallocation of capital. It’s a silent way for the government and central bank to devalue the currency, raise prices, help borrowers and punish savers. And it’s exactly the wrong prescription for the U.S. The official push for higher inflation as a cure for a sluggish U.S. recovery began about two years ago with a paper by International Monetary Fund economists, including Chief Economist Olivier Blanchard, titled “Rethinking Macroeconomic Policy.”

    "Dumb money" reacts to recent stock market declines by pulling $4.3B from domestic equity funds in the week ending April 4, the biggest one-week outflow of 2012, ICI reports. Taxable bonds added $9.1B, one of the year's biggest weekly inflows.

    "U.S. high yield investors are 'full overweight,'" says Morgan Stanley, noting the net level of CDS protection bought by clients has plummeted

    Eurozone industrial production +0.5% M/M vs. flat in January and -0.2% forecast, and -1.8% Y/Y vs. -1.7% forecast. (PR)

    GEORGE SOROS: The Euro Crisis Just Entered A 'Less Volatile But More Lethal Phase'.

    Global Systemic Risk Is Rising Rapidly Again. (graph)

    Europe's Debt Crisis Worsening, Fuels Instability, El-Erian Says. Europe's fiscal crisis is getting worse and will keeping fueling market instability, according to Pacific Investment Management Co.'s Mohamed A. El-Erian. "The problems in Europe are getting bigger," El-Erian, co-chief investment officer at the world's biggest bond fund, said on Bloomberg Radio's "The Hays Advantage" with Kathleen Hays as he prepared to speak before the Federal Reserve Bank of St. Louis. "Europe has a debt issue and Europe has a growth issue, and until Europe deals with both, we are going to have these reoccurring periods of nervousness in the market."

    Europe's Banks Beached as ECB Stimulus Runs Dry. The European Central Bank's €1 trillion (£824bn) lending spree over the winter has stored up a host of fresh problems, leaving parts of the banking system more vulnerable than before as the short-term "sugar rush" nears exhaustionCredit experts say the Spanish and Italian banks are trapped with large losses on sovereign bonds bought with ECB funds under the three-year lending programme, or Long-Term Refinancing Operation (LTRO). 

    Spain Yields Trouble Guindos as Rajoy Rallies PartySpanish Economy Minister Luis de Guindos said the surge in borrowing costs will be a “problem” if it persists, as the government used the threat of a European bailout to rally support behind austerity measures. Spanish 10-year bond yields surged as high as 6 percent yesterday, approaching the levels that pushed Greece, Ireland and Portugal into bailouts, and the extra yield over German bunds held above 400 basis points. In a test of appetite for bonds from the euro region’s periphery, Italy sells as much as 5 billion euros ($6.6 billion) of bonds today. “A spread of more than 400 basis points is obviously a problem” if it persists over the medium term, de Guindos said in Barcelona yesterday. “The government needs to put the house in order because the alternative is much worse.” Prime Minister Mariano Rajoy and his government, in power since Dec. 21, are signaling to Spaniards they risk losing access to financing if they fail to convince investors they can reorder public finances and steer the economy back to growth. Rajoy is trying to persuade voters to accept budget cuts, tax increases and fewer subsidies as the economy suffers its second recession in three years and half of young people are unemployed.

    Italy 3-Yr Yields Seen Jumping At Auction On Spain, Reform FearsItalian three-year borrowing costs are set to jump by a full percentage point from a month ago at a bond auction on Thursday, the latest sign investors' concerns about Spain are spreading to other euro zone countries hit by recession.

    This Might Have Something To Do With The Sudden Carnage In Italy.

    Greek Crisis Leaves Cyprus Mired in Debt. Banks in Europe must demonstrate to the European Banking Authority by the end of June that they have enough capital to be viable. Banks that cannot provide that evidence will face pressure to accept government bailouts or, in extreme cases, be shut down. The failure of its biggest bank would have grave consequences for Cyprus, where the economy revolves around financial services — a result of the island’s appeal as a low-tax gateway to the Middle East and Africa for companies from Russia and elsewhere in Europe.

    "The BOJ will pursue powerful easing" in order to reverse deflation and ensure sustainable growth, Governor Masaaki Shirakawa pledges. Shirakawa faces pressure from politicians for further stimulus, with one saying it would weaken the yen more effectively than currency intervention.

    The World Bank cuts its forecast for China's growth to 8.2% this year, down from a January projection of 8.4%. That would be a 13-year low for China, as domestic consumption growth slows and the tepid global recovery eats into export demand

    Fearful Final Hours for Briton in ChinaThe day before his death in the fog-shrouded Chinese city of Chongqing, Neil Heywood sensed that something was amissThe British businessman had been summoned on short notice to a meeting in Chongqing in early November with representatives of the family of Bo Xilai, the local Communist Party chief, according to an account by a friend whom Mr. Heywood contacted at the time. Mr. Heywood told the friend he was "in trouble."

    Chinese Take to Web to Debate Bo's DownfallChina’s web censors laboured in vain on Wednesday as the country’s citizens messaged each other about the one topic on everyone’s mind: the fate of Bo Xilai, the purged party official, and his wife.

    India's industrial production grew a slower-than-expected 4.1% in February as consumer durables and consumer goods contracted. January's figure was revised down sharply, to 1.14% from 6.8%, because of an apparent error in sugar production data.  - So the bullish 6.8% figure was a lie and it was really a very bearish 1.14% – how amazing is that?  BSE jumped 20% in Jan and Feb on that fake data.    

    Australian payrolls rose a larger-than-expected 44K in March. The jobless rate stayed at 5.2% compared with expectations for a rise to 5.3%. Aussie dollar +0.7% vs. USD. 

    Asian developers are taking advantage of tight financing conditions in Australia by bringing in capital from their own countries to finance a condo and apartment building spree there. The rolled-over property market is spurring demand for apartments, and condos – for the moment – are holding onto their value better than single-family homes.

  140. Shippers are 
    seeing strong upside in today's trade, as reports suggest many carriers are dropping anchor until rates increase further and Alcoa's earnings surprise may indicate a more accelerated global shipping recovery. DRYS +8.2%FRO +3.1%,NEWL +72%FREE +12.1%EGLE +5.6%DSX +2%TNK +3%.

    World oil inventories may have risen by 1.2M barrels in Q1 as sluggish demand and increased OPEC output offset a fall in Iranian production, the IEA says. "The cycle of repeatedly tightening fundamentals evident since 2009 has been broken for now," the IEA says. Notwithstanding, Crude +0.4%. (PR)

    Iran is attempting to skirt Western sanctions by offering buyers easy credit terms – 180 days to pay instead of the typical 30-90 days. The extension amounts to a discount of $1.20-1.50/barrel. Even with this generosity, Iran is still having trouble finding customers.Key talks between Iran and Western powers are set for this weekend.

    Are speculators behind high oil and gasoline prices? (McClatchy)

    The nominal price of natural gas dipped below $2 to the lowest price in 10 years, but adjusted for inflation, the price has fallenbelow its 1994 level. It might be the lowest price ever, suggests Mark Perry, but the EIA's price series only goes back to 1994.

    Natural gas prices are about as low as they're going to get, observes oil and gas mogul T. Boone Pickens. A key marker to watch is rig counts, Pickens says, because as they go down it causes supply to shorten up. Ten rigs closed just last week, and more will be shuttered this week as well. It may take a little while for prices to shore up, but it's going to happen.

    Concerned about the potential for leaks, the Labor Department is changing security rules regarding the release of the monthly non-farm payroll report, reports Eamon Javers. Reporters will no longer be allowed personal gear; even pen and paper will be supplied by Labor. Officials say they are not reacting to any event, just being "prudent."

    Goldman says M&A is poised to see an uptick in activity. Companies with the highest probability for a takeout in small-caps are: Ariba (ARBA +0.9%), Onyx Pharmaceuticals (ONXX +2.4%), and Synchronoss (SNSS +3.1%).

    Oaktree Capital Management sold fewer shares than expected in an IPO that priced at the bottom of its expected range yesterday. The tepid response suggests investors may have become wary of private equity flotationsbad news for Carlyle which could start its roadshow as soon as next week.

    9 High-Growth Biotech Stocks Being Bought Up By Hedge Funds.

    BrightSource Energy said late yesterday it's withdrawing its IPO because of "adverse market conditions." (background)

    A federal appeals court overturns the conviction of Sergey Aleynikov, the former Goldman Sachs programmer accused of stealing Goldman's proprietary trading code. While Aleynikov's actions were "dishonest," the three-judge panel found his actions fell short of criminal conduct. 

    The SEC is reportedly close to announcing that Goldman Sachs (GS) will pay $22M to settle allegations it didn't have adequate safeguards in place to prevent research from being passed inappropriately to preferred clients. An announcement could come today.

    Legal contortion of the day: Bank of America (BAC) appears to be suing itself over a number of faulty foreclosures in Florida, with the bank serving as both the loan servicer and the second-lien holder of defaulted mortgage debt on several condominiums. 

    BlackRock (BLK) is planning to launch a trading platform this year that would let money managers, including sovereign wealth funds and insurance companies, trade bonds directly with one another, completely bypassing Wall Street's big banks. The move could be a major blow to a lucrative revenue stream for investment banks.

     ‘Fortune 500′ of 1812 Shows U.S. Banks’ Early Influence (Bloomberg)

    As fast-food chains look to run a tighter ship, they're increasingly relying on refranchising, or unloading company-owned outlets to franchisees. Burger King is the latest example, though McDonald's (MCD) has been on a similar push, reducing its share of company-run restaurants to 19% from 23% over the last five years.

    Worldwide PC shipments rose 1.9% in Q1 to 89M units, according to new data from Gartner, ahead of the firm’s previous projection of a 1.2% decline. Hewlett-Packard (HPQ) was the top vendor, with 15.3M units, up 3.5% Y/Y, as H-P "was able to secure HDD inventory" and restore lost business as internal management issues become resolved.

    More on Gartner's PC data: The numbers back up recent positive datapoints (III) about PC demand. U.S. shipments fell 3.5% Y/Y, but beat Gartner's forecast for a 6.1% drop. Impressively (given Europe's woes), EMEA sales rose 6.7% on the back of strong business orders. Dell's (DELL) global share fell 40 bps Y/Y and 160 bps Q/Q. Apple's (AAPL) U.S. share was 10.6%, up 80 bps Y/Y but down 100 bps Q/Q (likely affected by seasonality). (PR)

    Google(GOOG), Amazon(AMZN) Are Potential Buyers for Deal Site Travelzoo(TZOO)Travelzoo’s stock soared by nearly 30 percent today on news that the 14-year-old deals site is planning to sell itself.

    Google (GOOG) reports earnings after the close today, and many investors are urging the company to follow Apple's lead indeclaring a dividend. Google's cash has almost doubled since 2009 to $44.6B, and Google is the only U.S. tech firm with a market value over $125B that doesn’t offer a regular shareholder payout.

    Comscore reports Google (GOOG) sites led the U.S. explicit core search market in March with 66.4% market share, followed by Microsoft (MSFT) at 15.3% and Yahoo (YHOO) at 13.7%. Ask Network accounted for 3%, followed by AOL with 1.6%. Overall, U.S. search queries were up 4% M/M and 7% Y/Y.

    Research In Motion (RIMM) plans to open stores across the Middle East to offset falling sales in the U.S., and is in the final stages of negotiating a lease on a flagship store in Dubai. The Middle East expansion will likely be followed by a push into Africa.

    Barclays' Ben Reitzes thinks Apple (AAPL -0.4%) sold a healthy 33M iPhones in FQ2 on the back of international demand, and thinks there's upside to his estimate of 9.5M iPad sales. However, he thinks Mac sales could be relatively soft due to iPad cannibalization and an upcoming refresh. Moreover, he suspects consumer expectations regarding upcoming Mac and iPhone launches could lead Apple to issue conservative guidance for FQ3. (earlier)

    Jokes about Apple (AAPL<

  141. Jokes about Apple (
    AAPL) having enough cash to bail out the eurozone are easy to find, but they might soon pack an additional punch: Apple's market cap is set to overtake that of the nearly 500 public companies found in Spain, Portugal, and Greece. There's a bit of method to this madness: Apple's $33B in net income over the last 12 months surpasses the $32B earned by all of the firms with a main listing in one of the 3 countries, per Bloomberg. 

    Demolishing Paul Ryan. On current course, House GOP Budget Chairman Paul Ryan himself may exhaust their entire thermonuclear arsenal before November. Once again, the Campaigner in Chief threw the switch himself, calling the Ryan House budget "social Darwinism," "a Trojan horse" and "antithetical to our entire history." Rev. Samuel Rodriquez of the Hispanic Evangelical Association said the poor would be "budget-war collateral damage."

  142. nervouswreck
    "opportunity gain (I guess that's what you call it when you lose the opportunity to lose money)"
    great line.  very best of good fortune to you.

  143. Good one from Barry


    So I get this email from a colleague today offering me “proof” that global warming is a scam. His “overwhelming evidence”?

    letter from 49 former NASA Scientists. NASA is in open revolt over climate change!

    Wow, 49 Scientists? That’s really impressive (at first glance!) Let’s see if it holds up to scrutiny.

    Whenever I see a single number out of context, it makes my Spidey sense twitch. What is the significance of subset 49? What is the parent set –  50? 100? 1000? 18,000? 50,000?

    To put this into some context, let’s look at the data. NASA currently employs 18,000 people. In the 1970s,half of their employees had professional degrees. Let’s ballpark it down to about a third of these folks today are scientists or engineers. Since NASA began in 1958 with 8,000 workers, they have many tens of thousands of employees. I can’t guess how many — 40,000, 50,000 people? And many of those were scientists and engineers.

    Of all these people, living and dead, 49 got together and wrote a letter.

    Now that we have some context, that strength of the initial participation looks rather silly. These 49 people — only one of whom is an actual meteorologist — are an extremely tiny percentage of current (or former) NASA Employees.

    I am always suspicious when I see as single number out of context. It often serves as a tool for deception.

    Just another example of confirmation bias at work.



    Statistics: Scientific Consensus on Climate Change? (December 31st, 2009)

    49 Former NASA Scientists Send A Letter Disputing Climate Change
    Gus Lubin
    Business Insider, Apr. 11, 2012