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Sunday, November 27, 2022

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Whipsaw Wednesday – You’re Lucky They Don’t Charge You to Take Your Money!

Germany sold $6Bn worth of 2-year notes at 0% this morning

That's right, if you give Germany $6Bn for 2 years, they promise to give it back – AND THERE WAS STRONG DEMAND!  How low can we go?  Well, the yield in Swiss 2-year paper is actually -0.10%.  That's right, you pay them 0.1% to hold your money for two years.  Don't like it?  Shut up – you're lucky they don't take it all!  

Of course the markets are crashing this week – the G8 has bonds to sell!  If the markets are flying you're not likely to be so anxious to give your government free money to hold for a couple of years, are you?  So this is a great week to take the markets down and the US sold $35Bn worth of 2-year notes at Depression-level lows (1.78%) yesterday and today we sell $35Bn worth of 5-year notes and Thursday we sell $29Bn worth of 7-year notes and THEN we have most of what we need to borrow to take us through the end of May.

People have to be terrified to take the money out of a bank that pays them 2% or out of a dividend-paying stock that pays them 4% to give it to a Government that pays them 0%.  While the World Governments make a big showing of hunting for terrorists, it is actually they who are terrorizing their own people – causing them to endure lives of non-stop fear and desperation as their Government plunges them further and further into debt in order to make sure that the BONDHOLDERS (hallowed be their names) take no losses.   

To do that, YOU (the not rich enough to have a lot of money in bonds) must be made to suffer the slings and arrows of outrageous misfortune – to be alarmed by Global seas of troubles, to worry, perchance to panic – and in your panic, perchance to hand your money over at zero percent interest rates where you money will be or not to be returned – depending on whether the EU or the rest of the Global economy survives 24 more months

Come on folks, wise up to the game!  You are lending money at 0% so your Government can make whole the people who lent them money for 30 years at 15% back in 1982.  You are buying low to subsidize your Government that sold high to the top 1% of the Reagan Revolution, who took full advantage of the insane Government policies of the time (to borrow record amounts of money at record-high rates in order to subsidize tax breaks for the rich) to stick it to future generations, who would have to then subsidize their outrageous coupon rates.  

It's a cycle people – do you think the top 1% is lending the Government money at 0%?  No, they are buying the dividend-paying stocks you are panicking out of at decade-low prices and they are buying up those homes you were foreclosed out of for CASH and they are putting their money into credit card companies and pay-day lenders and by jacking up commodity prices that the poor are forced to pay – even water is now being positioned as the next resource the top 1% can take control of as California, for example, who are desperate for cash, allow Billionaire Stewart Resnick to privatize the Kern Water Bank!  

Private water folks – it's the next thing you'll be bending over for when they jack up the prices and create artificial shortages.  One of the main reasons the oil Barons love fracking so much is that they are essentially the same guys that are buying up the water supply and fracking has the great side-effect of destroying their competition by poisoning the non-private water tables.  Don't believe it?  I challenge you to find any fracking operation anywhere in America that is going on near privately-held water banks.  These guys are just one big "oops" away from holding a very scarce commodity – fresh water!

How did we get on this topic?  Oh yes, all the ways the top 1% are Fracking you over!  

House Republicans have killed the previously agreed upon debt ceiling deal they struck with Democrats last August, when President Obama signed the Budget Control Act.  White House officials have been adamant that the administration’s not going to countenance a repeat of last August.

"We’re not going to recreate the debt ceiling debacle of last August,” White House Press Secretary Jay Carney insisted from the podium last week. “It is simply not acceptable to hold the American and global economy hostage to one party’s political ideology. It is the responsibility of Congress to ensure that the United States of America pays its bills, that it maintains its creditworthiness, that it fulfills its obligation and maintains the full faith and credit that it has long enjoyed.”

For those of you with short memories – at the end of last July, the S&P was at 1,350 when Boehner first pulled this crap and, just 3 weeks later, we were down to 1,100 – an 18.5% drop while these wankers huffed and puffed in front of the cameras, driving this country to the brink.  Last summer was a test run to see how much damage they can do to the economy into the current election season and, apparently, it went to well that Boehner and company can't wait to do it to us again in 2012.  Maybe this time they won't back down at all and the entire country can do a Thelma and Louise off that fiscal cliff we've been warned about.  

SPY DAILYHere we are, a year later, with the S&P barely hanging on to 1,300, after being rejected – along with our other indices – at the bounce levels I laid out in yesterday's post.  

  • The Dow tapped it's weak bounce (12,540) and was rejected there, dropping all the way back to our "Must Hold" line in the Futures (/YM) at 12,400.
  • The S&P tested our 1,320 line 3 times after breaking over it in the morning and the 3rd time was not charming as they failed and dropped back to our Must Hold line in the Futures at (1,300), where we went bullish in Member Chat this morning as it's low enough (goes for all our Futures index lines).  
  • The Nasdaq similarly held 2,850 for two of three tests but you only have to fail once to be a loser.  This morning we hit 2,500 in the Futures (/NQ – different scale!) where we're holding so far.  
  • The NYSE also tested their weak bounce level at 7,560 3 times before failing on the third and they bottomed out at 7,500 in the afternoon drop which lines up with our 750 Must Hold on the Russell but no NYSE Futures to check there.  
  • The Russell gave us an early weakness signal, failing 765 (weak bounce) at noon and never really taking it back.  In the Futures (/TF), they failed all the way back to 750, but we do like them to bounce there.  

I missed all the fun as I had to be on TV in the afternoon (where we discussed some of my bullish picks) but we were already prepared for failure as my morning Alert to Members suggested the short SQQQ June $56 puts at $5.80 to play the failure of 2,850 on the Nasdaq and those should be in great shape this morning if the weakness we're seeing in the Futures (down 0.75%) holds up.  

If not, then they've done their job as overnight protection and we won't be needing them after all.  My comment on the trade was looking for a 0.7% drop to make 10% on the trade so we're exactly on target if we open here – but now we've also had an opportunity to go long in the Futures, knowing we have coverage if they drop further as well – isn't hedging fun?  

We didn't get sucked into removing our bearish hedges yesterday but TODAY, if we hold our lines and get back over our weak bounce levels – I'll be excited about getting a bit more bullish as Boehner is hopefully the last Bogey Man that was left hiding in our economic closet and NOW all of the bad news is finally baked in and the US is STILL the best place to park your money – which is more of a sad commentary on how screwed up the rest of the World is than an actual endorsement of this three-ring circus of a country.  

As they mentioned yesterday in my interview, I called for a 10% correction to Russell 750 etc. back in March and that was based on factoring in all the stuff that is finally being factored in by the MSM.  I have always said, all through the rally, what bothered me was the unrealistic LACK OF FEAR that was causing great mispricings of equities but NOW we are into a market I can love, where we can go long on BBY ($50Bn in sales, $1.2Bn in profits, market cap $6Bn) and short on AMZN ($50Bn in sales $600M in profits, market cap $97Bn) along with dozens of other trades that will make us great money no matter which way the market breaks.  

We're not BUYBUYBUYing everything but we have identified enough stocks in our "Twice in a Lifetime" list that are too cheap to ignore that we really don't care what the broader indexes do or don't do – we're going to be in very good shape just accumulating these positions for the next few years or until we do get a proper turn-around to play with.  

At the moment – it's still $1.5 Trillion or bust for the the Global economy as that's about how much stimulus we'll need to get over the current hump.  Whether it comes from the BOJ, the PBOC, the IMF, the ECB or the Fed doesn't matter but SOMEBODY, SOMEWHERE better come up with some money because there's a Trillion Dollar hole in the Global economy and we're taking on water very fast!  

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Iflan,Could you please repeat the October AAPL spread. I just came on and cannot find it. Thanks in advance.

This may be the NEWS!
3:18 PM Taking questions after a speech, the usually hawkish Minneapolis Fed chief Kocherlakota says a fall off the so-called fiscal cliff would argue for additional QE. The "fiscal cliff" refers to the 2013 expiration of tax cuts and other benefits that some argue could throw the U.S. into recession. [U.S. Econom

News was rumors of Euro Bonds.
 
http://www.cnbc.com/id/47534210

Phil
Was that our blow off top? Fake fake fake whatever definately not investors but maybe for investors. Come on in the water is fine!

 one beeg  turnaround for the market today… have to look at this as bullish….but with the european fuktard dummit going on… no way to know what goofy ideas will come out of it – or how the market will react to such  gallic goofiness…going to trim back some long position picked up during the decline this morning.

After tomorrow's Treasury auction, we should be safely over the $1T deficit mark for FY2012 with over four months to go.  Nothing to see here folks…look, FB is up 3%…

chasw…..for the MoMo we got into the  5 October 550 calls at an average of about 51.00 on May 21, then covered with 5 October 650s for 20.25 yesterday.   stjeanluc has the exact figures in the spreadsheet above.

kocherlakota…US fiscal cliff could prompt more qe…hahaha! yeah! that will really help!
 

jthoma/
Great move.
I was just betting a rebound on s2 intraday using StJean lines.
Always a pleasure to buy futures off you 🙂

What fun day! Have a great night people!!

I can't take the credit directly as I was simply long USO puts – maybe indirectly the market maker worked it out with a hedge- congrats to you! 🙂

Phil – great call earlier that S&P 1300 would hold.  I took off some hedges and added XLF spread, TLT puts and a few more longs. 

All,

  Does anyone have a link to the wiki page? I'd like more info on setting up that LLC that we were talking about yesterday and a list of those books.
  Also, I use TD Ameritrade. Am on the phone now trying to get a flat $0.75 per contract on options trades and $6 on stock trades. What kind of commission are you guys paying?

Thanks Phil/ Nice play on HPQ!! Let s see how it wrks out tomorrow

Fun day indeed.  See you all tomorrow. 

HP/ 27,000 layoffs….That is really a big number. A real tragedy for those made redundant.

Holy crap – NTAP down 24% on outlook.

DOW closed down 6.66!!

Entered smallish USO long position, to get a little turbo boost from a potential Euro retrace, in the event Merkel decides that good manners requires some sympathetic noise in Hollande's direction after this week's currency debacle.

Close the market goes down because the buck goes up, funny how it happened @ 4PM!

Good save at the end, but we need to see how long the euphoria will last in Europe. Color me sceptical…

I can’t get too crazy about these HP numbers:

http://www.engadget.com/2012/05/23/hp-cuts-27-000-jobs-profit-tumbles-31-percent-in-q2/

Looks like rumors of major cost-cutting measures at HP are true: the company along with its fiscal Q2 results has just outlined plans to slash 27,000 jobs by the end of its fiscal 2014. The drop, or about eight percent of its workforce, is being offered an "early retirement" if it doesn't want to wait to be let go involuntarily. The move is intended to streamline HP's operations and save between $3 billion to $3.5 billion a year by the time the cuts are done. As for the results themselves, they explain all too clearly why the cuts are inbound: HP 's profit dropped a massive 31 percent to $1.6 billion, and its revenue dropped three points to $30.7 billion. CEO Meg Whitman touted the results as exceeding an earlier glum outlook, but with the enterprise, printer and services groups all dragging the company down, it's clear that HP is in the same boat as a struggling Dell.

So the big news is that they will save $3 Bn by cutting 27,000 jobs. Other than, revenues are down, profits are down! Not sure Hewlett or Packard would be thrilled!

Sorry, forgot to update the oil inventories…

http://www.bespokeinvest.com/thinkbig/2012/5/23/oil-inventories-still-rising.html

Just in case people would worry we could run out of that stuff!

stjeanluc- I know I have done it before but we can not do it enough- thank you for all the time and effort you put into your postings and keeping things in a readily available form for us to find. I know it takes much time and effort and you go above and beyond the call of duty. Please let me know if there is ever anything I can do to help you- I am usually available unless traveling. We often forget to say thanks but you are very much appreciated!

I know I've written this before… but who in the market is not expecting more QE?  We've known it, and will continue to know it.  Does it ever get priced in?  

Hello All – So, after summit number 10,000, they are saying they want Greece to stay, are discussing Eurobonds, depositor's insurance, etc.  At what point does a responsible adult stand up and just say "enough is enough and we can't keep up this endless bond scheme"?  It is just ridiculous to me to be honest.

Future Technology – K@W article on life After Broadband

Anybody know who is arranging Vegas and when?
Phil says, ‘yes, Vegas, baby- someone is working on it’.
I missed it last year as they had me studying for some exam in early Nov…but would love to meet some of the smart people on this site in person

I'll be heading down Chile and Argentina for Oct and some of Nov.  Let's have the meetup in Mendoza!  Lots of great wine!

401k rollovers – another lesser known opportunity you may have if your 401k includes company stock is the NUA Tax Break.  Worth asking about/looking up.

401k and NUA – a fair bit more on Net Unrealized Appreciation from Investopedia.

You are welcome Jthoma! This is actually fun for me… I'll be in touch if I need help!

For those on the board that like to crunch numbers, I find this data set fascinating regarding oil, especially the SPR data.
 
http://www.eia.gov/dnav/pet/PET_STOC_WSTK_DCU_NUS_W.htm

Volume/Phil – I know the "auction action" is something i need to better understand. what do you look for/key on when observing volume?

SVU trivia – hasn't seen this low price since january 1988, one split back and shortly before dividends, when SVU combined it's affiliated stores into the 2nd largest food retailer in the US with more than 3,100 stores in 32 states.  Peaked in june/july 2007 after acquiring Albertson's (that was my local, with the olde cash registers when i was younger) in 2006. Now has 140,000 employees operating 2,394 and supplying 2,700 independent locations across the US (except for Nebraska and Hawaii). In 2010 launched a " holistic business transformation effort that focuses on creating a company that drives sales and efficiencies while positioning the company to become America’s Neighborhood Grocer."  This appears to be still underway. 

Burrben/ Chile…what a great idea!
Aruba is also quite nice and internet is fast on the island.

QE/peedle:  I think QE is probably priced-in considering the S&P is hovering around 1300 while the entire world enters a slow-growth/recession period.    The Bernanke Put doing its job?

I don't know if China's landing is going to be "soft" or "hard" but one way or another, its landing.  It also sounds like their is a credit crunch happening:
China's Young, Burly Shipyards Sinking Fast

'The China Shipbuilding Industry Association said new orders fell 40 percent nationwide in January and February from the same period last year. Sixteen key companies monitored by the association lost money, and 37 saw their profits decline.
Essence Securities said eight of China's 10 largest shipyards received no new orders between January and April. The exceptions were Shanghai Waigaoqiao Shipping Co. and Guangzhou Shipyard International Co.'
 
Ore, coal demand falls

'Some Chinese steel mills may have deferred shipments agreed to under long-term contracts with foreign traders, but not those under short-time contracts, said Zhang Lin, senior researcher at the Lange Steel Information Research Center.


Shougang Group, one of the largest steelmakers in China, said the company didn't defer any iron ore or coking coal cargos, but it added that steel prices are "really weak".
The majority of steel mills in Shanxi, Hebei and Shandong provinces have halted production, said Dai Bing, senior analyst at coal.com.cn, a coal-trading website.'


Weak property developers challenged

'"Property developers in China face tough choices in 2012. Those companies with large maturing debts and refinancing risks on their offshore debt and trust loans are likely to push property sales by cutting prices aggressively or selling assets," Lu said.'

Just thought this was an interesting chart. Its the monthly S&P500.  Notice how during the past two summers we broke under the 10-month MA and broke back up.  This month the 10 and 20-month MA have converged at 1290, we've already tested it once and bounced off.
 
Y'all think thats an important level?  😉

I dont see any Phil comments, is it me, or is he sleeping in this morning?

Well, as Roseanna roseanna danna used to say…Nevermind.

Phil – why did we switch from QLD that we have played in the past to TQQQ?  At the time, I played QLD successfully, this time TQQQ less so…

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