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Wednesday – Waiting for the Other Shoes to Drop

EWP WEEKLY What next?

$125Bn for Spain AND they are going to be given 5 years before having to pay back their loans and rumor has it that it will be a 10-year payment period at 3%.  Sure, why not?   At least that way we can pretend they are going to pay everyone back, rather than watch them default just a few months after we lend them the money, like Greece.

As we expected, Italy is the next crisis on deck as their 10-year bond yeilds climb over 6% as Italy's $2.4Tn debt (120% of GDP) running at 6% interest ($144Bn a year = 7.5% of GDP) is going to require a lot more than $100Bn to stop the bleeding.  At the same time, Mr. Monti's tax-heavy austerity measures have choked economic growth, causing Italy's economy to contract 0.8% in the first four months of the year.  

Mr. Monti lashed back at an Austrian minister on Tuesday for questioning whether Italy might need financial assistance to ride out the crisis.  "I find it completely inappropriate that representatives of other governments in the European Union are talking about the situations of other countries," Mr. Monti said during a news conference, adding that his government was "continuing to work to guarantee the financial stability of the euro zone."

Clearly the honeymoon is over for Monti with a poll last week finding that only half of Italians supported political parties that form Mr. Monti's parliamentary majority, down from 63% two months ago. Confidence in Mr. Monti among those surveyed fell to 34%, compared with 71% when Mr. Monti took office.  The steady erosion of public support for Mr. Monti's government is also prompting some politicians to question whether Mr. Monti can still push through the tough changes demanded by EU leaders.

You can see from the chart on the left what a tremendous drag the global markets (down 12.5% in a year) are becoming on the S&P (down 2.5%).  If nothing is going to happen to snap the Global markets up – well, you do the math…

SPY 5 MINUTEThat math is keeping us Cashy and Cautious in this horribly choppy market and it's a good thing as we've been flip-flopping like fish out of water trying to stay on top of these crazy daily moves.  Fortunately, the market is doing exactly what we expect it to do but, since what we expect it to do is gyrate wildly up and down 1-2% a day – there's really only either day-trades or long-term investments to be made, not much in between.  

As we expected, the S&P held that 1,310 line in the morning (see David Fry's chart) and the excuse for the morning move was the Fed's super-dove, Charlie Evans saying something doveish.  Wow, what a shocker!  Who could have ever guessed that would happen?   Really, it's amazing how stupid these markets are sometimes…

In yesterday's morning Alert to Members we added long put plays on MA ($417) and V ($116) as bearish hedges because, if things are going to fall apart – those guys have a long way to fall.  Our prior disaster hedge, from 5/18, was the AMZN Jan $225/200 bear put spread at $11, selling the 2014 $120 puts for $8.50 to net $2.50 on the $25 spread.  That one is already up to $4 (up 60%) so we needed to get some fresh horses for our hedges before we made any new bullish plays.  Our bullish play of the morning did very well as it was AONE at $1.16.  My comment to Members at 9:55 was:  

AONE has come up with some very good, new battery tech.  You can sell 2014 $1 puts for .60 for a net .40 entry on the $1.16 stock and I like that a lot and you can sell 10 of those and buy 20 of the Jan $1.50/$2.50 bull call spreads for .10 and then you have a still good net .60 entry on the stock and the possibility of making $2 more if AONE takes off into the end of the year.

We were officially out of the stock trade at 11:32 at $1.65 for a very nice 42% gain while the spread is well on its way with a quick 75% gain so far as the bull spreads gained a nickel and the short puts dropped a dime but that's only "on track" for the potential $2.40 gain if AONE hits our $2.50 Jan target and holds up through 2014.  

We love news plays at PSW, they are both fun and exciting and you can clearly see from the chart why Rule #1 as PSW is: "ALWAYS sell into the initial excitement."  Had we missed that run we likely would have shorted them at the same spot we exited the day trade as the initial reaction is very often an overreaction but now we "like" AONE too much to short them and we'd rather wait to see if they pull back and look for another good entry AFTER we do a proper evaluation of their worth with this new technology added to the mix.  

This morning we're liking gasoline Futures (/RB) if they can cross back over the $2.65 line ahead of the 10:30 Oil Inventory Report where the expectations are for continued weak demand.  OPEC is having a 2-day meeting that started this morning and the oil market is very weak ($82.27) indicating that there is no consensus to cut production because, the cheaper oil gets, the more each OPEC nation is motivated to produce to keep the cash flowing and this can keep up until we are all drowning in oil.  A lack of action from OPEC by tomorrow may break the back of the oil Bulls and send us below $80 so we ONLY have interest in being long on gasoline if they first break back over $2.65 and then tight stops on that line.  

The Dollar is still up around 83 and that's a bit strong for a rally and the Euro is down near $1.25 and that's very weak and still in danger of collapsing if the "leaders" can't come up with something concrete for Italy very soon.  The G20 gets together in Mexico and we all hope they can keep their heads long enough to come up with some sort of plan but, if not – El Loco is waiting

The US has it's own 10-year notes to peddle today and then a 30-year auction tomorrow so the Fed doesn't want to be too doveish while we've got our hands out for more cash.   It's really all about next week's meeting in Mexico and, if that doesn't give us something solid to hang our hats on – we'll be moving right back to bearish and waiting for the S&P to catch up with a 10% drop as European youth take to the streets and starving Arabs begin to revolt…

Can our leaders really be that stupid?  


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  1. Good Morning!


  2. Economic Numbers

    Japan Machine Orders (YoY) / 6.6% (4.9% expected)
    France CPI (YoY) / 2.0% (2.0% expected)
    France CPI (MoM) / -0.1% (0.0% expected)
    Germany CPI (EU Harmonized) (YoY) / 2.2% (2.1% expected)
    Germany CPI (YoY) / 1.9% (1.9% expected)
    Italy CPI (EU Harmonized) (YoY) / 3.5% (3.5% expected)
    Euro-Zone Industrial Production / -2.3% (-2.7% expected)
    US Advance Retail Sales / -0.2% (-0.2% expected)
    US PPI Ex Food & Energy (YoY) / 2.7% (2.8% expected)
    US PPI (YoY) / 0.7% (1.2% expected)
    US Retail Sales Less Autos / -0.4% (0.0% expected)

    Inflation clearly not yet a problem, but sales and industrial production numbers not really bullish.

    At 10:00 AM we have US Business Inventories. During the night we will have Japan Industrial Production and the SNB Rate Decision. The ECB will also publish its monthly report.



  3. OK folks….what does this tell you? 

    Swiss bond yields are now negative all the way out to 5 years on the curve, the country's 5-year paper falling to -0.01% this morning. The 2-year is at -0.34%, the 10-year still above water at 0.56%. Deflationary poster child Japan: 2-year at 0.10%, 5-year at 0.23%, 10-year at 0.86%.

    It tells me that all is not well in the world of stocks, and there is a bite to come out of somewhere and it will not be bonds in the near future…..




  4. May Retail Sales: -0.2% vs. -0.2% expected, -0.2% prior (revised from +0.1%). Ex-autos -0.4% vs. 0.0% expected. Last week, I noted that the auto loans (actually shorter term loans = not houses) was starting to fall off.  Let's see if this month, June, is worse in the Retail sales with Auto included….I cannot for the life of me remember which indicator it was…..but I will search for it.



  5. Looks like it is just U and I StJ…. :) , oh, and maybe Phil if he is not galavanting off somewhere!


  6. Oh, GM 1020, how's life at the beach?  On the east side, things are – swell!


  7. G'morning.  Oil looks stronger than it should be.  Someone wrote yesterday that oil either needs to go up or go down from here.  I guess one more European rescue package could spike the Euro and, with it, oil, but those guys look to be running out of bullets.  Any opinions?


  8. Pharm – i am here too.


  9. Probe of Chinese stocks menacing



    "Authorities in China have arrested, harassed or investigated researchers looking into possible fraud by Chinese companies traded on American stock exchanges, the Tribune-Review has learned.
    Two major American promoters of Chinese stock — New York Global Group and Global Hunter Securities — say the Chinese Ministry of State Security has arrested investigators that U.S. firms hired to verify information about companies in the People's Republic of China. The fate of those arrested is unknown."
     
    Sure, when the government has its sticky fingers in all businesses, of course you don't want prying western eyes looking over anything.



  10. Good morning! 

    Nat gas (/NG) already popping off $2.20 but gasoline (/RB) yet to cross back over $2.65.  '

    We had a bad open but put the brakes on quickly and buyers came in but very low volume in both directions so nothing to get excited about.  Europe has been heading south since the open and is down about 1% now so things are tepid at best.  Keep in mind it's all constructive consolidation as long as we SORT OF flatline at the top of the V on the Big Chart.  

    Also, in-line with my logic to short MA and V (see yesterday's alert):  

    U.S. credit card charge-offs rose 27 bps to 5.44% in April – the first increase in 2012 – reports Fitch, which says seasonal factors caused the deterioration, and the long-term improvement remains in place.

    TLT is jumping back to $125 but the VIX is still just 22.88 so no real panic so far.  

    Average asking prices on single-family homes rose 1.9% in May and 3.2% Y/Y to their highest level in 2.5 years, reports Realtor.com. Home listings increased just 2% from April – a very low number considering the typical spring season jump, and maybe confirming anecdotal reports of not enough inventory. 

    May Retail Sales: -0.2% vs. -0.2% expected, -0.2% prior (revised from +0.1%). Ex-autos -0.4% vs. 0.0% exepcted.

    May Producer Price Index: -1% vs. -0.6% expected and -0.2% prior. Core PPI +0.2% in-ine with expectation and +0.2% prior.

    Uh-oh, producer prices are falling and that's not good!  Deflation really scares the Fed so a nice push to QE there.   Also, I'm still expecting a bit of a relief rally after Diamon testifies this morning and JPM stock is already looking strong, up 1.4% against the grain the morning.  

    "She goes, squeeze me, come on and squeeze me" - Short interest in financial shares rose 9% in May's 2nd half, the largest increase since March 2009 (not a bad time to buy). A 75% jump in Bank of America (BAC) and 61% surge in Citigroup (C) shorts led the way, and the other TBTFs were touched as well. The triple-leveraged financial bear FAZ, +11% over the last month. 

    We'll have to wait and see if we can hold it together.  If we fail to move up after the 10-year, it will be time to flip a bit more bearish.  12,500 on the Dow, 7,500 on the NYSE, 750 on the RUT and, of course 1,310 need to hold but we also need to get 2,850 back on the Nas to get encouraged.  That pattern lately has been to be weaker in the mornings BUT – sometimes we continue to be weak in the afternoons too so be careful!   

    Oil needs to get back up or that sector will be a drag on the broader markets too:  

    The global oil market looks "better supplied" than earlier this year thanks to a ramp up in OPEC production, but not oversupplied given the potential impact of sanctions on Iranian oil that raise the risk of a tighter market from the summer onward, the IEA says. Iran could be forced in the next month or two to start shutting in 500K-700K bbl/day of its oil production, IEA's David Fyfe says.

    Greece may soon require a third bailout, Die Zeit reports, as the country's reform program is behind schedule. The Bundestag could discuss a new rescue this summer, although the bailout will only occur if the government that emerges after the election on Sunday – if one emerges – supports further reforms.

    U.S. healthcare spending will reach $4.8T in 2021, or almost 20% of GDP, from $3T in 2014, a government study (.pdf) projects. Last year, spending rose 3.9% and was equivalent to around 17.9% of GDP. The increases will be driven by an aging population, an improving economy and the health-care overhaul, if it comes into law.

    Supervalu (SVU +1.7%could attract a buyout after its share price fell to a 30-year low this week, according to Barclays. On the plus side, the company is expected to turn a profit for the first time in three years and boasts the industry’s highest free cash flow yield, but the downer is that its debt is 7X its market cap.


  11. Good profits on that PCLN strangle!


  12. Phil
    HGSI they have a buyout offer from GSK for 13
    I sold Jul 10 calls a while ago; I have the stock at 8
    I was thinking to roll to Jan 13 for 1.80 and sell Jan 12 puts for 1.00 net .80 on the 3 dollars move.
    What do you think /or just be call away?
    Thanks


  13. Going back to 2008, it seems that 108 has been the bullish/bearish line for TLT. I have tried to plot 2.5 and 5% lines from that base and it seems to produce some good support and resistance lines. 


  14. Phil,
    What is your opinion on ATI jan 14 25 puts for IRA acct?
    thanks


  15. Morning All – Just saw Farage's latest gem and he does seem to be getting more and more frustrated.He calls the politicians incompetent and makes the interesting point that Italy would have to borrow at 6-7% to lend $22B to Spain for their bailout at 3%.   


  16. JPM hearing question is the chairman of the comity speech impaired as he reads the script like a fifth grader???


  17. Sorry I do not want to insult any fifth graders


  18. NOTE !! remind phil about TWIL list look over NOTE !!
     
    how is that for a reminder :)


  19. TLT- I have been busy but did I miss an exit on the TLT Sept puts?


  20. Economic numbers/StJ – You know, day by day, these are not Global Collapse numbers.  They're weak but not a catastrophe and I'm thinking earnings/guidance will lift us as long as Europe doesn't spiral out of control.  Swiss thing tells me people are irrationally panicking.  The Swiss are totally screwed if Europe collapses – how do people not see that?  

    FAS Money – Let's buy back both calls just to clear the decks for our next sale on a good pop.  

    IWM Money – Just under $47 and looking good.

    $5KP – Need a hell of a move now, those positions are toast.  Let's take 10 FAS June (Friday) $77/78 bull call spreads at .64 with FAS at $78.50, XLF has to hold $14 and we can pick up a fast $350.  

    $25KP – Bullish enough at the moment.  

    Oil/ZZ – I think low $80s is the right place for Oil.  If Europe falls apart, then oil will go lower but be a buy.  If we have QE – it goes up and we'll short it again over $100.  If I had to guess (obviously from our Futures picks) – I'd go bullish at $82.50.  


  21. yodini who is the committee chair?


  22. Fas closed at .97 cents Thanks Phil


  23. Pharm / 9:44 — Your 9:44 post is breaking IE9.  Nothing on the forum shows past the header.


  24. angelcur
    the name of the chairman of the committee is Johnston just showing it at Bloomberg channel 


  25. Economic numbers / Phil – That is true, we are not facing the next depression! And inflation seems to be very much under control – at least in the OECD countries. At the same time, there is enough uncertainty in the air in Europe and China that it could engender enough panic to create a self-feeding death spiral. And how long can the Swiss prop up the euro. It seems to me that we are kicking a growing can down the road. So yes, some additional stimulus measures (other than tax cuts) could go a long way to alleviate some of the problems, but what are the chances of that. There was some hope on Monday when there was no "austerity" strings attached to the Spain bailout. We'll see how that plays out in the long run.

    In the meantime, lowered guidance in the last earning season could lead to better "beats" in the next one and that could help markets higher. But isn't a game we play on a regular basis.


  26. TLT / pstas – We got out Monday.


  27. $25KP – Actually I do want to roll the DMND July $12 calls to the Sept $15 calls at $4.10 for net $2.95 and DD on those and sell 20 Sept $19 calls for $2.   That puts us in 10 at net $3.65 and 10 at net $2.10 for an average of $2.89 on the $4 spread that's almost entirely in the money (and that's not including the .60 we're making off the Jun caller).   Oddly enough, on this portfolio, we're hoping TNA stays UNDER $47 this week – so I guess that's a firm target at roughly RUT 760 for Friday but let's put a stop on the June $47 calls at $1.25…  

    Farage/Angel – I love that guy!  All should watch.  

    TLT/StJ – I'd go with $110.  Makes more sense with $130 top and $90 bottom too.  

    ATI/Harip – I like those guys and they are pretty cheap at $28.87 and I like the net $19.10 entry by selling the 2014 $25 puts for $5.90.  Good call.  

    Farage/Ink – That's what I was saying yesterday – it's all madness.  Everyone is borrowing money from everyone else – including France and Germany in order to turn around and lend it to others who, in turn, lend it back to the big boys in a "flight to safety".  Total lunacy but who makes money with all these loans?  BANKSTERS!   Now you know why it's policy…

    WOO-HOO on gasoline – we got a nice draw in inventories.  Congrats on that one as we just hit $2.69 at $420 per penny! 

     EIA Petroleum Inventories: Crude -0.2M barrels vs. consensus of -1.8M. Gasoline -1.7M vs. consensus of +0.4M. Distillates -0.1M vs. consensus of +0.7M.


  28. Bucky being dropped.


  29. Stj:  Inflation is under control, agreed.  Now, how about deflation……?


  30. CNBC is really useless and generally misleading:

    http://blogs.reuters.com/felix-salmon/2012/06/11/cnbc-graphic-of-the-day-greek-bond-yield-edition/

    martin.tiff

     

    But CNBC is a place for heat rather than light, so instead of an interesting conversation between two smart journalists, we got shown the graphic above, twice. It purports to show a real-time quote for the Greek 2-year bond, which currently seems to be yielding 349.152%. (I love the idea that they know this number to three decimal places.) According to the chart, the yield on this instrument has been rising steadily until now: there’s no indication that there was even a dip after the bond restructuring in –

    Hang on a sec. Check out that x-axis! You can’t be expected to grok this in the amount of time that the chart appears on CNBC — just a couple of seconds. But the chart stops in March, when the restructuring took place and the Greek 2-year bond ceased to exist. No wonder the yield is “unch”!

    CNBC has more than its fair share of meaningless graphics, but this one is especially stupid: it’s a chart of an instrument which ceased to exist three months ago, showing what the yield on that instrument did in the run-up to its default.

    Of course, CNBC’s viewers can’t be expected to understand that. The one thing they will understand is the yield, which is shown at 350%. CNBC is sending a clear message, here, that Greek debt is about to default, and it’s using a made-up measure to do so. There’s no such thing as the Greek 2-year bond yield, but Bloomberg has done its best to come up with an approximation of what such a thing might be trading at — and their best estimation puts the Greek two-year benchmark at 8.98%. Which means that CNBC is only off by a factor of, oh, 340 percentage points. Well done that channel!


  31. Wow…..looky at these bought committee morons bowing to their Corporate master. Bloody farce…..


  32. Deflation / Zero – Now, that's the problem…


  33. jasu1: Not too upsetting if you own JPM and expected the kowtowing.  Didn't Phil say yesterday "that's where these guys [like Dimon] really earn their money?"


  34. Phil, confused on the DMND trade. We have the $19 (10) and $22.5 (-10) calls but this is saying roll the $12s.


  35. Did we close the June $47 TNAs? It says stop at $1.25 but unless I just have a delay it was already at $1.25 when the post came through.


  36. Good Morning.   Brief comment on the MoMo portfolio, and AAPL.   The weekly short strangle on PCLN is acting exactly as we want.  PCLN now in the midrange of our strikes and almost 50% of the premium has eroded.  The rest will erode more rapidly today, Thursday and Friday.  On Thursday or Friday we will look for another trade to set in place which will take advantage of this uncertain market, by selling premium on the weeklies in one of the MoMos.  My AAPL plays have been primarily selling bear put spreads on the weeklies, and doing it every week.  I'm not posting these for the MoMos but I have mentioned this from time to time.  This week I'm looking for the AAPL 560/555 bear put spreads which I sold last week to expire.  So in most accounts I'm pretty much selling premium.  It's more boring than daytrading but also works very well in this market.  You just have to know the stock you are trading and have a good sense of where it might be in a week, then choose your trade appropriately.  


  37. At Abnormal Returns they asked the following questions to a bunch of econ bloggers:

    Considering all the topics you have written about, which you you think is most underappreciated or overlooked by the majority of investors? 

    They got some very interesting answers:

    http://abnormalreturns.com/the-ultimate-blogger-quiz-overlooked-topics/

    Here is one for Pharm:

    Eric Swarts (Market Anthropology): The low interest rate environment & why it will last longer than almost everyone believes.


  38. MoMo / lflan – I guess the calls could have been closed at the open this morning when they were trading around $1.20 with a 75% profit. But so far, so good!


  39. This guy is trying to get Dimon to say that regulations don't work


  40. Phil/Farage

     
    What the hell are they doing letting someone with sense speak at one of these forums.  He better get with the program or he will be banished and removed from the club.



  41. DXY getting hit


  42. who is the guy speaking now, grovelling at Dimon's feet


  43. oh Senator Brown is on—-I love him


  44. Phil—got out early but had the same /RB and /NG trade as yesterday—-thx


  45. stjeanluc…..my preference on these trades is to let them play out rather than trying to massage them.  Most will expire worthless on both ends and not only yield 100% of the sold premium but also save you trading fees.   If we keep our reserve margin high we can easily roll one end on Friday afternoon, if necessary.   Someone asked yesterday about when to roll a trade.  For these short strangles I'm using the answer is….Friday afternoon, and generally not before.  Novice traders typically 'play with' a short strangle as the stock price moves back and forth, sometimes even crossing one of the strikes.  But that isn't the way to play them.  They should be left alone until they are very close to expiration, as only then will majority of the premium be gone.  And that's what you want……premium erosion.   I'll employ this technique on the MoMo account and expect it to grind upward at a consistent 2%+ per week.  


  46. Phil/DMND – I'd like to get in on this trade and am a little confused. Can you clarify the positions for someone just now entering. This looks pretty juicy. Thanks…


  47. 5th Graders/Yodi – Glad you said sorry as I was going to have to jump to their defense.  

    TWIL/Micro – Thanks, that will be my next comment.  

    TLT/Pstas – You not only missed the exit but you missed me chiding the people who didn't exit for being foolish and greedy.  

    You're welcome Yodi, very nice.    Here's a nice video of Johnston in action.

    PCLN/Jabob – I think this one says it all (and kudos to the author for being so well-balanced – although wrong):  

    As more and more companies become attracted to the lucrative travel industry, one with relatively low barriers to entry, Priceline will face increasing competition and potentially lower profit margins. Microsoft (MSFT) launched Bing Travel while Google (GOOG) has acquired ITA Software Inc., a major flight information software company along with HomeAway, a vacation home-rental service. Moreover, Priceline is facing increased domestic competition in terms of discounted hotel prices — Travelocity and Expedia are growing their opaque price-disclosed booking services, which also result in significant discounts for customers. These discounted services may result in more difficulty for Priceline to effectively differentiate its products and services to its domestic costumers.

    Can kicking/StJ – It's all can kicking and has been since 2009 but we're not going to sit out a 20% rally because it's based on bad economic decisions, are we?  I have to plot two courses – one for the LONG-TERM, where we do look at those factors and keep an eye out for the icebergs we know lie somewhere ahead – and the other is to navigate the short-term moves and, currently, I see a bullish turn coming up as QE/Stimulus MUST happen – the alternative is unthinkable.  Just because that alternative is put off by another round of stimulus doesn't mean it goes away, of course, but hopefully we don't fall asleep at the wheel when it is time to dodge those icebergs once they become too big to ignore.   

    82.50 holding on the Dollar so far.  $2.69 was the top in gasoline but that's plenty!  Nat gas  can't get over $2.22 and oil rejected at $84.  

    CNBC/StJ – Yet no one will be prosecuted…

    Farce/Jasu – And a half!  What a total joke – they are asking him for advice!!!  Can they possibly thank him more often?  

    DMND/$25KP, Jrod – Oops, I mean the $19 calls, of course.  Those roll to the Sept $15s and then we DD on the Sept $15s and cover all with the Sept $19s.  

    TNA/Jrod – I feel more comfortable being out of them.  We can always sell July later if 750 doesn't hold.  

    Farage/Exec – He's like the Ron Paul of the EU – he gets his 3 minutes once a month so they can pretend it's a Democracy  This one was a classic from last month.  


  48. lflantheman
    Thanks for the insight into the MoMos and AAPL.  Just out of curiosity, beside your day job, how many accounts do you manage?


  49. Food Industry — Rationalization 101:  "By the mid 1980s, corn syrup had replaced sugar in fizzy soft drinks. The move made financial sense from the soft drink companies' point of view, as corn syrup was a third cheaper than sugar.But it was also sweeter and, argue some scientists, more addictive. In the next two decades, the average American's consumption of fizzy drinks almost doubled – from 350 cans a year to 600."
     
    "But Susan Neely from the American Beverage Association says the increased consumption of fizzy drinks is not to blame for increased obesity in the West. "The evidence says that obesity is caused when people consume too many calories without the exercise to balance it out," she says."  No smoking gun here: a half-marathon per day and Americans would be able to burn off 600 cans of high-fructose corn syrup with ease.  Remember, that's an average — since, for example, I don't drink the stuff, someone out there drank my 600 cans along with their own!!



  50. Zero/ This is just sickening news. Let s work on a tax high fructose corn syrup and legalize canabis platform to balance the US budget. we will be surprised by how easy the exercise would be…


  51. lflan/AAPL – be careful, a lot of apple enthusiasts calling for a pull back here for the rest of the week and early next.


  52. Someone is squeezing EUR/USD shorts before the game….Ouchhh!!


  53. Very nice Savi!  We just play those lines with tight stops until they fail and then we wait until we see a new line – not so complicated.  I wouldn't play oil bullish now though as that little drawdown was probably caused by a lack of delivery as a few extra tankers circle the gulf in hopes the OPEC meeting will pop the barrels back over $85 (since they left 3 weeks ago at $92).  

    DMND/Aaron – As a new entry we're playing for them to finally put up earnings restated in July and that they won't be so terrible and that will close the worries and allow them to move up.  I like the Sep $16/21 bull call spread at $2.20, selling the $17 puts for $2.10 as a new play and you're at net .10 on the $5 spread that's $2.50 in the money to start with a break-even at $17.10 (rollable, of course), which is almost 10% down from here.  

    Good budget plan Lionel!   That's why the Netherlands has such a strong economy…


  54. Lionel:  And by how much cannabis reduces people's appetite for sugar!


  55. MoMo / lflan – I agree that you need to try to bleed the premium as much as you can, but I have a bad memory of a FAS Strangle play where we kept it open up until Friday afternoon (while we could have collected a profit earlier) and got burned on a $10 move that made the rolls very difficult. And I actually dropped FAS after that because it had become way too volatile then. My concerns were that it could go from $90 to $120 quickly with no place to run and it did exactly that… therefore, my willingness to catch profits when you can. It's always a risk when you sell a strangle.


  56. lflantheman
    Please correct me if I am wrong just above you are talking about a bear put spread on AAPL 560/555 meaning you hope the stock will go down by buying the higher put and selling the lower put. In my opinion you are buying this spread NOT SELLING IT.  TIA


  57. Thanks Phil!
     
    Do you have an opinion on WOOD?


  58. Zero: Are you implying that we should contemplate a double taxation treaty for coke addicted marijuana smokers?


  59. yodi…sorry,.typo….that's a bull put spread, selling the AAPL weekly 560s and buying the 555s.   
    lolobear…..yes, I'm aware
    cslanson2…….6 other accounts.  


  60. dimon – "we have to get rid of anything that is too big to fail", "big institutions have to be able to fail"…hahahahaha!


  61. Phil,
    On FAS Money: Do we buy bck the short options when we get nice pops in them (for instance the 75 short puts are up 66% since Monday) or do we practice the virtue of patience, sit on our hands, and wait it out until Friday?


  62. I'd like to nominate Farage for President of the United States.
    Or at least to head the much more powerful, Goldman Sucks. 
    His idea to disassemble the European union in its only unification, the Euro, is exactly right.
    Applying that same principle to the disUnited States, that would end THE FED in one swell foop.
    Along with that, would come dozen or more different countries on this part of North America, a profoundly progressive move that would allow Flipspiceland to emigrate to, a new nation, Tomorrowland, that would still be in  a temperate climate, with all the benefits of self-governance and not subject to the nonsense of the Idiots in the White House and CON gress, and the Supremes.
    And since that would make me extremely happy, god would never permit it.  


  63. After all this bull and a fantastic amount of wasted money JPM is up by .80. They should give all of these asses a shovel and let them do some good work. They just like to hear them self talk I think. 


  64. Diamon is very misleading (of course).  $350Bn invested at 2% to make $7Bn is nice and conservative but that's not the issue.  The issue is that he set aside $10Bn to gamble with and lost 20% of it (at least) and the real question should be whether he should have done that with Federally insured funds (he should not).  It's very simple but notice he keeps muddying the issue and none of the Senators are savvy enough to get past the BS (not in 5 minutes, anyway, even if they were inclined).   As I said yesterday – this is how a guy like Diamon earns his pay – if you had to pick him or one of these Senators to lead the country based on this testimony – who would you choose?

    11:00 AM On the hour: Dow +0.09%. 10-yr +0.11%. Euro +0.55%vs. dollar. Crude +0.37% to $83.63. Gold +0.48% to $1621.55.

    11:56 AM Europe closes mixed, with Spain – whose bailout deal looks like a sweet one - now higher by about 10% on the month. . Stoxx 50 flat, Germany -0.2%, France -0.5%, Italy -0.4%, Spain+1.5%, U.K. +0.2%. Euro +0.7% to $1.2594.

    12:00 PM On the hour: Dow -0.13%. 10-yr +0.21%. Euro +0.72%vs. dollar. Crude +0.03% to $83.34. Gold +0.41% to $1620.45.

    Apr Business Inventories: +0.4% to $1,575B vs. +0.3% expected and +0.3% last month. Sales +0.2% to $1,250B. Inventory/sales ratio was 1.25.

    Goldman's Jan Hatzius trims his U.S. Q2 GDP estimate to 1.6% from 1.8% following this morning's weak retail sales report. He notes core/control retail sales (strips out autos, gasoline, and building materials) were revised down for March and April and came in flat for May.

    Stock market is saying ‘Don’t fight the Fed’ (Market Watch)

    Forget What You’ve Heard About Stock Risk (Smart Money)

    An auction of €6.5B ($8.12B) in 1-year bonds does nothing to dispel fears that Italy might be next as yields jump to 3.97% from 2.34% last month while the bid-to-cover ratio falls to 1.73 from 1.79. The yield is the highest since December. Next up is an auction of €4.5B in longer-dated bonds tomorrow. 

    "(Tsipras) is not Che Guevara," says hedge funder Jason Manolopoulis, believing Syriza will play ball with the EU if it comes to power. The drachma has already essentially returned, with disposable income off about 50%. Next up for austerity is the public sector, where wage and pension spending is still on the rise. 

    Cyprus is close to securing a loan from Russia, the WSJreports, adding that Cyprus may also go to the EU for a bailout. Local newspaper Alitheia says the government has asked for €5B ($6.2B) from the Russians, who lent the country €2.5B last year. Cyprus is in dire need of money by the end of the month to recapitalize its Greek-hit banks.

    Bundesbank scuppers all talk of EU banking union (Telegraph)

    Hans-Werner Sinn: Why Berlin Is Balking on a Bailout (NYT)

    As world economic growth ebbs, talk of new stimulus surges (Washington Post)

    The Absolute Moron’s Guide to the Euro Crisis — Part II (New York Mag) See Part I here.

    JPMorgan Builds Vast Web of Staff, Financial Ties to Lawmakers (American Banker)

    "What am I going to do with the other 60 years of my life," says Goldman Sachs (GS) CEO Lloyd Blankfein, responding to a question about whether he has plans to step down. The government isn't going to come calling with an offer, he says, "so that leaves staying forever and dying at my desk."

    Ex-loan officer claims Wells Fargo targeted black communities for shoddy loans

    This Moody’s Man Is Giving Banks the Blues (WSJ)

    Record oil production by Saudi Arabia and the U.S. in 2011 helped ensure the world economy was supplied with enough crude, despite disruptions from events in Libya and Japan, according to BP's annual statistical review. Global oil consumption rose 0.7% to 88M bbl/day, while coal consumption jumped 5.4% to 3,724Mtoe. Amount U.S. reduced its coal use in 2011: 24.2Mtoe.

    U.S. oil production reached its highest level since 1998during Q1, providing fodder for arguing over which political party should get the credit in an election year. But neither Pres. Obama or Congress deserve credit for what price and technology have delivered, Tom Kloza says: “It would be akin to taking credit for the iPad.”

    Speaking of CEOs who will die in their chairs:  Aubrey McClendon may be losing his title of chairman, but he seems poised to keep his powers: Reuters reports the Chesapeake (CHK -2.5%) board has changed the bylaws to allow the CEO to keep powers he held as Chairman. McClendon and the still-unnamed chairman each will be able to call special meetings of shareholders and the board, leaving governance types scratching their heads.

    Good time to take a stab at NDAQ:  Kraft's transfer to Nasdaq (NDAQ -0.6%) from the NYSE "is a major sign of trust in Nasdaq's capabilities to handle trade," writes TheStreet contributor Trefis. "We expect other companies, which were doubtful about the exchange after the Facebook IPO disaster, to regain confidence."

    Fitch Ratings weighs in on Best Buy (BBY -0.9%) with areport centered on the leveraged buyout speculation that has risen up. The agency says it believes "significant challenges" stand in the way of a deal, headlined by value and risk factors.

    Execs with Whole Foods Market (WFM -3.1%) are on the mike at the William Blair Growth Stock Conference (webcast). Though the company says it has plans to open between 28 and 32 stores next year and maintains it has the potential to operate about a thousand eventually, investors may be disappointed with that growth trek as they sell off shares on larger-than-normal trading volume.

    Dell (DELL +4.3%) plans to make cost cuts of $2B by the end of FY 2015 through reducing spending in areas such as supply chain and services delivery, the company tells an analyst meeting.

    What short squeezes give to depressed stocks, they often quickly take away. A123 Systems (AONE -17.1%) and First Solar (FSLR -6%) are each returning a big chunk of yesterday's massive gains (III). Wunderlich's comments are contributing to A123's decline, while First Solar's drop is partly due to a cautious JPMorgan note thatargues yesterday's rally didn't feature "much, if any, structural long buying."

    Burger King continues to try to keep with rivals with a summer launch of its latest fast food item, a bacon-flavored ice cream sundae. The company hopes to mimic the gigantic success of Taco Bell's Doritos Locos and the kind of hype McDonald's generates with its periodic launches of McRib sandwiches. But with 510 calories and 61 grams of sugar, the dessert stands a chance of hitting obesity-gadfly Michael Bloomberg's radar.

    Apple (AAPL) news roundup: 1) Apple is killing off its music-oriented Ping social network, which has seen limited uptake, in favor of Facebook/Twitter integration. 2) Samsung (SSNLF.PK) andLPL are reportedly the suppliers for the next-gen MacBook Pro's retina display, which is said to cost over $150. 3) Shipping times for the notebook have risen to 3-4 weeks. 4) Apple confirms the Mac Pro will be overhauled next year – this week's limited Pro upgrade didn't go over well with many. 

    Jeb Bush’s heresy (Washington Post)


  65. flips—everything that happens is ALWAYS for the best ;-)


  66. Twice in a Lifetime List (barely a change from my 5/30 comments): 

    Remember – it's always about getting fresh horses.  If you're up 20%, look for something that isn't!  

    • AA (original entry $8.50) 2014 $8 puts can be sold for $1.50, now $1.53
    • ABX ($35.91) 2014 $30 puts can be sold for $4.50, now $3.90
    • ALU ($1.45) 2014 $2 puts can be sold for $1, now .85 
    • BAC ($6.97) 2014 $7 puts can be sold for $1.75, $1.63 
    • BTU ($25) 2014 $20 puts can be sold for $4.10, now $4.40 
    • CCJ ($19.37) 2014 $17 puts can be sold for $3.30, now $3.10 
    • CHK ($13.83) 2014 $13 puts can be sold for $5, now $3.50 
    • CSCO ($16.70) 2014 $15 puts can be sold for $2.05, still $2.05 
    • FTR ($3.20) 2014 $3.50 puts can be sold for $1.30, now $1
    • GLW 2014 $15 puts at $3.90, now $3.80
    • GNW ($5.02) 2014 $5 puts at $1.75, now $1.62
    • HMY ($8.88) 2014 $8 puts can be sold for $1.40, now $1 
    • HOV ($1.83) 2014 $2 puts can be sold for $1, now .85
    • HPQ ($22.04) 2014 $23 puts can be sold for $5, now $5.35
    • MT ($14.30) 2014 $15 puts can be sold for $5, now $4.70
    • JPM ($34.59) 2014 $30 puts can be sold for $5, now $4.90 
    • OIH ($35.90) 2014 $30 puts can be sold for $4, now $4.10 
    • SVU ($5.15) 2014 $5 puts can be sold for $1.85, now $2.20 
    • WFR ($2.05) 204 $3 puts can be sold for $1.40, now $1.60
    • X ($22.25) 2014 $20 puts can be sold for $5.10, now $6.50 

     

    Wow, how dull!  Not too many big winners yet and plenty still to choose from.  I'm not super-enthusiastic about adding more without good hedges as we still have a lot of chop ahead and the VIX is relatively low but if we have another drop like last week and hold it – then I'd want to BUYBUYBUY on these as they pop.  Of course, scaling into a few with a plan to DD at about 30% lower and then again at 30% lower let's us ride out a massive drop in the markets so no reason not to do that with a little bit of cash – I'll be writing more about that when I write up the Income Portfolio where our first entries on 6/4 were:  

     

    • 10 CHK July $17 puts sold for $2.10 ($2,100) 
    • 10 BBY July $18 puts sold for $1.12 ($1,200) 
    • 10 BA July $65 puts sold for $2.02 ($2,020)
    • 10 DMND July $19 puts sold for $2.15 ($2,150) 
    • 20 AA Oct $8 puts sold for .75 ($1,500)

    So, if you want to know which ones I liked best, these were them…

     

    The next day we added CSCO, EXC, NLY, RIG and SVU buy/writes with CSCO, SVU and OIH on the list above.  


  67. Phil one of my favorite MOMO stocks IOC sold a CC Jun 12 60c for 14.25 now trading still at .72 c premium The stock is trading this morning at 59.00 but could go up or down 2 to 3 $ overnight that is why we have high premiums I do not want to give them .72 cents but wish to sell already the Jul 60c for same 5.20 I am a bit confused about the setting of a stop loss here. At TOS you set the stop with the stock at Market and than it gives you a price of the relative call option. How do you adjust this to not be called on the stock. I know you say buy the premium but this is not to my liking. TIA Tried TOS three time but skype is really lousy today very bad connection.


  68. interesting VIX has been up all day


  69. lionel:  RE: Cyprus
    I ran across this while reading today. Interesting observations.
    http://www.philstockworld.com/2012/06/12/an-interesting-bailout-in-the-offing/


  70. I removed the links from the 9:44 comment.  Should clear IE up..i think.


  71. Phil the other day we set up a bull call spread on GOOG looking for a jump in Jul earnings.
    590/620 for 20.44/ 9.39 now 12.05/4.45 GOOG down to 564.00 shall we do something to the long call as it looks very sick today? TIA


  72. CHK / Phil – This story about McClendon keeping his power of chairman while losing the title is really puzzling. Does this guy understand that the company is public now? 


  73. StJ/CHK – The fact that the board would allow him to do that is even more surprising!


  74. Pharm  — Fixed. Thanks.


  75. Dclark/Russia
    Thanks for the reading.
     


  76. WOOD/Jabob – I'd like them more if they were lower.  Seems odd they should be at almost $36 with no housing activity.  I do like them long-term and they actually pay a 2.5% dividend but they don't have options so it's really not interesting enough to play with overall.  I think, on the whole, I'd rather go with IP, who I think are very undervalued at $12.6Bn ($28.93) and pay a 3.7% dividend (and have options) or RYN, who are also fairly valued at $5.25Bn ($43) and also pay a 3.7% dividend.  With IP, you can buy the stock for $28.95 and sell the 2014 $25 puts and calls for $10.40 for net $18.55/21.78 and then you have a 25% cushion built-in and the $1.05 dividend becomes 5.5% while you wait.  Do you still like WOOD?  RYN is not as appealing as their options only go to November but you can do a $40 buy/write for net $37/38.50 on those guys and pick up the $1.60 dividend on that while you wait for housing demand to pick up.  

    Cyprus/Lionel – When Cyprus broke off from the UK in the 60s, Russia backed them and when the Soviet Union fell apart, Cyprus backed the Russian Federation in the UN and Cyprus is another one of Putin's arms clients and make a valuable strategic ally right in the middle of NATO waters.  Anyway, the two countries are very tied economically and I'm sure if Russia needed $62Bn that Cyprus would write them a check.  That check would bounce, but it's the thought that counts…

    FAS/Crussell – If we are pretty sure they'll expire worthless, then we let them expire worthless.  It's always a question of "Do you have anything better to do with your margin/money that is more likely to give you the expected return over that time-frame with equal or less risk?"   If not, we keep it.  Also a factor is that, even if XLF failed if JPM didn't go as well as expected today – then we still feel good about rolling them out in time and down in strike.  

    Breaking up the Union/Flips – I'm all for dumping the red states.  

    IOC/Yodi – Sam Antar thinks they are a scam.  Those calls have .20 spreads, which is like 25% of the price so setting a stop loss is kind of a joke.  I would either wait and let them expire first or sell a few July $65s ($3.60) and then set wide stop at maybe $1.60 on the June callers but I wouldn't sell the $60 calls at all with IOC holding the rising 50 dma at $58 with oil at what we think is a low and Europe maybe being "fixed" with more stimulus next week.  They can pop hard and fast on you – scam or no.  

    GOOG/Yodi – As you know, $60 is not a lot for GOOG earnings.  It's the maps thing that's hurting them currently (everyone is coming out with their own, knocking out growth revenue models for Google Maps) but, down the road, I think GOOG has a big jump and a technical advantage with their product.  July $590s are now $12 and $6 more drops them down to the $575s so that's a good deal (buying $15 of position for $6) and then we can set a stop on the $620 caller at $5 (now $4.50) with the intention of selling something lower on a move up, maybe the $605s, that are now $7.50 for $10 or better.  That would net into a lower $30 spread for about $4, driving the whole spread up to net $15 so a good deal for repositioning.  Of course, if we don't stay green today GOOG will go lower so you might want to wait if you don't want to be too aggressive.  

    McClendon/StJ – It's his company.  He built it.  I'll bet he takes it private at this rate.  He's not crazy, he's just a risk-taker and, usually, his risks pay off very well.  The company was founded in 1989 and is worth $11Bn now and Aubrey is a Billionaire – not bad for a non dot com and, of course, they were worth much more before all this nonsense.  You assume the board wants to get rid of him but who else should run this thing?  It's only a shuffling of deck chairs and Aubrey keeps his power, which is why I still like them long.  

    And the auction, of course, was GOOD!  

    The Treasury sells $21B in reopened 10-year notes at 1.622%, a record auction low. Bid-to-cover ratio of 3.06, vs. a recent average of 3.07; indirect bidders take 42%. Direct bidders take 21%.

    Treasurys edge up a bit after a 10-year note auction with arecord low yield - the 30-year yield now -0.02 to 2.75%; 10-year -0.03 to 1.63%; five-year -0.03 to 0.72%.


  77. Phil--on the TWIL list I have the HPQ Jan 14 , 25s @ 6.35—-would you sell some premium in front month calls --if so what strike and how far out would you go?
    Thx


  78. Thanks Phil/
    Modern history is key to understand nowadays geopolitical moves…


  79. Phil or anyone: Opinion on SHW as a short?


  80. Iflan
    MOMO – are you willing to post some of your AAPL spreads for those that want to play along?  AAPL has been good to us.  Thanks


  81. why does any one feel the unions need to go..they pale in comparison to the agenda shaping powerhouses they once were..and yet at their height they had one tenth the financial clout of some of the PACS out there..they are certainly waning in influence as their leadership has become somewhat indolent and most certainly indulged..but is this not a familiar type of debauchery..they have a useful place in our society and their being present is an important counterweight..i just don't get the automatic disdain that is felt for hourly workers being collectively represented…


  82. CHK / Phil – I don't disagree that he did start the company, but when you own around 3 millions shares out 662 millions (and there is a 94% float), the company is not yours anymore… But hey, more power to him and less to the board I guess.


  83. Oil was falling on a falling dollar.  Now it's falling faster on a [temporary?] dollar reverse.  SCO is styling.



  84. Angelcur/Unions
    Well Put! 
    I find it ironic that some of the same people who bash unions also enjoy vacations, medical benefits, retirement benefits and a safe work environment which wouldn't be possible without unions! 
    People can't possibly believe they would have these benefits as a result of the generosity of our beloved corporations!


  85. HPQ/Savi – You sold the $25 puts?  I think it's very tricky if your plan is to sell naked calls on them into July earnings.  HPQ is not scheduled to report until 8/22 but reports/outlook from others may swing them up as they are at the bottom (hopefully!) of their channel.  The July $23s are .37 and the $22s are .75 and if the $23s get to .75 then they are a reasonable sell as Aug will still have good earnings premium so plenty of room to roll.  

    History/Lionel – Yep, too bad so few people bother to study it anymore.  

    SHW/Lincoln – Well they seem to do very well for themselves and they have that CMG sort of thing going on with about 9 consecutive months of up weeks but, unlike CMG, I don't think they are unfairly valued to growth with a forward p/e of 17.7 so it's not one I'd pick for a short although it might get a nice pullback if the whole economy goes.  

    Unions/Angel – The disdain comes from management, who control the media and fund the PACS that vilify the unions.  Try watching Fox for an hour on Sunday without someone saying that Unions are destroying America and Obama panders to them – you'd think we're stuck in a time-warp to the 50s

    Aubrey/StJ – That doesn't mean he doesn't feel like it's still his baby.  From a good interview with him:  

    The final thought to share on this topic is one should remember that a lease situated in the heart of any shale play is essentially a very cheap call option on the right to develop oil and natural gas at a very low cost.  Take the Eagle Ford shale for example.  Under each acre of land we have acquired there, we believe there is roughly 5,000 barrels of recoverable oil equivalent.  When we put our land position together in that play, we spent roughly $1.2 billion to buy about 600,000 acres of land, giving us an average cost basis of about $2,000 per acre, or roughly $0.40 per barrel of oil equivalent. I ask you, could you go to Wall Street and buy an option to develop 3 billion barrels of oil equivalent at a cost of $10-$15 per barrel for a call option cost of only $0.40 a barrel?  Of course not, there’s no way you could do that in the financial markets.  But yet, we do it in the reality of the oil and gas world all the time.  Too many analysts and investors fail to appreciate that leasehold is simply a very cheap call option on the right to develop resources in some of the best plays the world has to offer.  We understood this financial reality perhaps better than anyone and so today we believe that we have put together the best inventory of future upside the industry that exists today. Results over the next 10 years will let us know if we are correct or not in our assessment, but today, we believe we have achieved something quite distinctive in our industry – commanding positions in the very best plays and tens of billions of dollars of latent value that will be developed in the years ahead and realized in rapid stock price appreciation.

    He plays a long game and the funds who just took up positions as they bottomed out respect that.  This is going to be a TERRIBLE summer for nat gas and CHK can go much lower if Nat gas fails to hold $2 but it doesn't really change their long-term value


  86. StJ – and who's CDS is the highest????? 


  87. New member…
    Phil – What were the strike and exp on the V and MA Puts? 


  88. thx Phil—-I am not sure why I have the 25 instead of the 23 HPQ's


  89. cdel360
     MA and V still have miles to fall if we get a real crash and the MA Oct $315 puts are $6.50 while the V Sept $97.50 puts are $2.10.


  90. CDS / Pharm – Trick question? Who knows what all of these guys are hiding, but MS is doing the worst job at it! That's why maybe someone like USB is a better choice. No exposure outside the US!


  91. CHK / Phil – I don't disagree with the value, but the shares did take a jump when it was announced he was stepping down from the chairmanship. I think that he makes a lot of people uncomfortable. But so do a lot of other CEO for that matter!


  92. Well- VIX ended up being correct.


  93. everyone get their lawn chairs out- Geithner is going to tell us what is going on with the world economy- much like Cramer- he will say the opposite of what is actually the situation! :)


  94. Anybody know what happend to NKE today.


  95. TOT/Phil – how do you like TOT? the jan13 $37.50 puts can be sold for $5 and looks like a good entry for a 1/4 position


  96. Phil / V&MA Hedge question
     
    Trying to catch up on all the reading from the last few days, but simple question.  If we sell premium here, why not sell calls on V and MA as hedges?  I know that the max we could make is 100%, but just wondering?  


  97. TOT – whoops. make that the Jan 14s for $5


  98. Scott i think you meant to say the 2014s, right?


  99. StJ – if there are 700T in CDS out there, someone is going to lose a lot, I don't care how much the EU prints.  They are in the cross hairs, and Japanese T, UST, and other autonomous currency issuers are going to have a field day when the levy breaks….oh, the days long, gone, long….


  100. danny, NKE went down….

     

    really, they were downgraded…


  101. Pharmboy- agreed- there is a debacle waiting to happen- I am not smart enough to figure the trigger- but sooner or later- I am convinced it will be triggered and the consequences will be very ugly. the only way I know they could avoid it is to be short CRM- :) :)


  102. TOT – a 2014 buy write with the 37.50/40 strangle for net #31/07 looks pretty good, yielding a 9.7% dividend while you wait for TOT to go nowhere.  If goes up, you are out with a net 28% gain not including the 1.5 year of dividends. If put to you, avg cost for your 2x is $34.28..against which you could write again…  


  103. jthoma….yessiree….CRM has been a very good one. As has AMZN.  Now, PLCN and CMG are next….


  104. TOT/scott – me love them long time!  RIG and BP are there as well.

     

    Thanks for playing…buu bye….retail, when will they learn?


  105. XRT just went….$h1t……thx you V mooocho….


  106. danny3399
    NKE was on an overpriced list of stocks that Phil included in his news segment from 2 to 3 weeks ago.  The stock has been boucing between 110 and 106 for several weeks and the chart was signaling it was headed down.. Once it broke 106 earlier today it gapped.  


  107. It's like yesterday never happened….poof!


  108. Dollar heading back up, not good.  

    Welcome Cdel!  V and MA were from yesterday's Alert, those usually go out between 9:30 and 10 as my early thoughts on the market open.  You can always go to the Phil tab at the top of the page to see my recent posts and comments but, since you are new, they were:  

    Anyway, back to the markets.  So OPEC meets tomorrow and Thursday and oil is $83 at the moment and that's really pathetic.  I mentioned playing nat gas and gasoline bullish earlier this morning but chasey now as they are both moving up.  I'm still liking those AMZN puts, of course and MA and V still have miles to fall if we get a real crash and the MA Oct $315 puts are $6.50 while the V Sept $97.50 puts are $2.10.  These are Long Put insurance you EXPECT to lose on but should pay very well if we crash – that's a good way to place a little hedge as they should be slow to drop as well.  

    From Monday's Alert, our hedge was an adjustment of the one that didn't work on Friday:

    From Friday AM:  Sell-off/Deano – Total crap shoot but I like TZA at $21.26 and today's pop lets you sell July $19 puts for $1.10 and buy the $21/26 bull call spread for $1.35 for net .25 on the $5 spread and, of course, you can roll the short puts along so a nice way to take a bearish poke.  - Now $20.70 and July $19 puts can be sold for $1.25 with the $20/25 bull call spread at $1.30 for net .05 on the lower $5 spread.  

    So now you are caught up for the week with TZA back at $22 and MA and V down about 2% for the day today.  Hopefully (not a valid investing strategy) these levels hold and that was (from this morning's Alert):  "12,500 on the Dow, 7,500 on the NYSE, 750 on the RUT and, of course 1,310 " below those we'd better add some more hedges but what is this sell-off about anyway?  

    CHK – Back to $16.77 – what a ride!  

    Geithner/Jthom – Good prediction. 

    NKE/Danny – It's not a good sign when a stock like NKE drops 5% but they were toppy. 

    TOT/Scott – I'd hold off until after OPEC and make sure oil doesn't collapse first.  

    V and MA/Burr – That's a bout limiting losses.  If we sell calls and get QE3 and they pop 5% overnight, you will lose quite a lot.  The logic is simply (like our old long put list) that they are a bit toppy so we don't expect to lose too much if we have to stop out the puts but, in a big downturn – we can do very well as they drop 10% or more.  Also, in a real catastrophe, your short calls pay the same while the puts pay exponentially more the worse things get – isn't that what insurance is supposed to do?  

    I hate to say it but we are simply testing the lower part of the flat channel coming off the top of the V and there's 30-year notes to sell tomorrow so, from a manipulation standpoint – that's not too surprising.  


  109. @Felipe
    re: Natural Shale Gas- here in the Marcellus and Utica fields, companies that bought mineral rights for, say, a milliion dollars are now opting to NOT DRILL and frack. They are giving, for nothing, the rights back to those from whom they purchased them many tens of millions of dollars. 
    That doesn't sound too awfully good to me. 


  110. From earlier, in case some missed it (someone posted the link from above, and I do believe it is a very telling picture…


  111. jthom – rolling CRM puts down to 125s.  Taking some money off the table.  Can also do a 1/3 cover with the 125 Jun puts.


  112. WFR up 3%!   That's good because I'm on BNN Monday afternoon and that's the only pick from last time that isn't working so far…  

    Drilling/Flips – Not all companies are smart and even for smart companies, you buy 100M acres for $2,000 in a land grab and decide 40M of them are non-productive but the other 60M will net you $10,000+ so why pay taxes on the 40M you're never going to use?  That's the point he was making, these are "options" to drill, not commitments and when an option of ours expires worthless, we don't buy the stock anyway, do we?   

    VIX 24.77, TLT $126 – now we're getting some panic!  


  113. YAHOO Finance and CNBC take over is CRAP !!!


  114. good roll- it sure looks like it will continue to weaken and I think it eventually has a LONG way to go. Bought a little HOG puts today in case retail remains weak.


  115. NKE/Danny – looks like a similar pattern in M.  Looking at selling NKE Jan 13 90 Puts for $5.40 and Jan 13 32 M Puts for $3. 


  116. Nothing to be proud of with that close but I bet they got another Million retailers to give up and that's what they want ahead of a Fed move.  


  117. 12:00 PM On the hour: Dow -0.13%. 10-yr +0.21%. Euro +0.72%vs. dollar. Crude +0.03% to $83.34. Gold +0.41% to $1620.45.

    1:00 PM On the hour: Dow +0.04%. 10-yr +0.25%. Euro +0.63% vs. dollar. Crude -0.45% to $82.94. Gold +0.14% to $1616.05.

    3:00 PM On the hour: Dow -0.49%. 10-yr +0.4%. Euro +0.68% vs. dollar. Crude -1.14% to $82.37. Gold +0.36% to $1619.55.

    3:39 PM Stocks give up small gains in an afternoon slide, the DJIA now off triple-digits 20 minutes before the bell. Some point to a Dow Jones report of Greek bank withdrawals accelerating to €600M-900M/day ahead of this weekend's elections, but the market looks to have shrugged off a similar story from Reuters early this morning.

    At the close: Dow -0.57% to 12503. S&P -0.64% to 1316. Nasdaq -0.86% to 2819.

    Treasurys: 30-year +0.61%. 10-yr +0.36%. 5-yr +0.15%.

    Commodities: Crude -0.97% to $82.51. Gold +0.36% to $1619.65.

    Currencies: Euro +0.54% vs. dollar. Yen -0.17%. Pound +0.34%.

    Market crasher (works for Pimpco too!):  The euro was a "noble experiment," says Alan Greenspan, but a "failure." "Greenspan throws the euro under the bus … contrarian indicator if I've ever seen one," tweets Robert Sinn. More of Greenspan here.

    Spain is downgraded from B to CCC+, junk territory, by Egan Jones. Last night, the ratings firm warned both Spain and Italy would need full bailouts within 6 months.

    American Express (AXP -2.7%) after Vice Chair Gilligan – speaking at a conference – says billings growth through the quarter ending in May was 9-10%, slower than the year's first quarter, with the strong greenback among the reasons for the weakness.

    Manhattan's shrinking financial services sector is leaving vacancy rates a bit elevated (9.1%) and office landlords like Vornado (VNO), SL Green (SLG), and Boston Properties (BXP) glum. "Until that sector really does pick up, we don't see the 6% or 7% vacancy rates we have seen at prior peaks," says SL Green's Marc Holliday.

    Even with meaty yields, the dividend payout ratios for REITs remain very low, and thus very safe, says Fidelity's Sam Wald. Current low levels of supply mean economic growth does not have to be great for these companies to grow nicely, he adds.

    Chesapeake (CHK -2.9%) is cut to Market Perform at Sanford Bernstein, which expects low natural gas prices to continue to pressure shares and Q2 earnings as "potentially a headwind to the stock." Bernstein sees value elsewhere with EOG Resources (EOG), Noble Energy (NBL) and Apache (APA).

    Goldman Sachs adds Cnooc (CEO +0.9%) to its Conviction Buy list, believing the stock trades as if Brent oil was $75/bbl, not $100, and prices could rise in coming months as demand in China rises. The firm says the risk-reward for the oil market has improved, and Cnooc offers "the best exposure to global oil prices."

    plan by Philip Morris (PM +1.1%) to buy back $18B in shares on top of its lush 3.66% yield makes it an enticing stock for conservative investors, argues Barron's Dimitra Defotis. Though the stock trades with a forward P-E ratio higher than the multiple on the S&P 500, opportunities in emerging markets and the strength of the brand could justify the premium. 

    Target (TGT +0.5%increases its quarterly dividend payout by 20% to $0.36 per share. TGT now trades with a 2.46% yield.

    Caterpillar (CAT -0.8%raises its quarterly dividend 13% to $0.52/share, as its board says it intends to deliver total stockholder return in the upper 25% of the S&P 500. The move does not jeopardize CAT’s capital requirements, Jon Ogg comments; he sees it as "a low payout ratio for a company that is this well-heeled."

    Dendreon (DNDN +19.8%) skyrockets to $7.49/share amidst rumors Sanofi (SNY) is looking to acquire the company for $11/share. Also, Summer Street is starting coverage with a Buy and $18 PT, arguing the Street has "factored in an extremely bear-case scenario" amidst concerns about weaker-than-expected sales of itsProvenge prostate cancer drug. It sees Provenge growth and a "turnaround led by new management" driving shares higher.

    More from Dell's (DELL +4.1%) 2012 analyst meeting: The company forecasts its enterprise solutions division will average 10% annual growth until FY16, and will help produce a 13%+ operating margin for the company. Dell is shooting for a 5%+ op. margin for its PC business, and reiterates it will focus on profits over unit share. Dell's revenues have been declining thanks to weak PC sales and a tough IT spending environment. (presentation - PDF) 

    Square says it's now processing transactions at a $6B annual run rate - it was only several weeks ago the company said it hit $5B. Square also says it has hired Salesforce.com Finance/Strategy VP Sarah Fair to be its new CFO, as well as execs from PayPal, Apple, and Tesla. Square's rapid growth comes as Google Wallet (GOOG) and many other mobile payments platforms see limited traction. PayPal (EBAY), Verifone (PAY), and Groupon (GRPN) are trying to mount challenges (IIIIII).

    While U.S. smartphone growth slows down, and risks declining more thanks to higher service fees, Raymond James' Tavis McCourt thinks the Chinese smartphone market could grow from 100M units in 2011 to 250M-300M units in the coming years, given the country has a base of 1B+ mobile subs. He sees Apple (AAPL -previous), Samsung (SSNLF.PK), and Qualcomm (QCOM - previous) as key beneficiaries, while noting Nokia's (NOK) Chinese smartphone share fell to 11% in Q1 from 80% in 2010.

    Three lunchtime reads:

    1) How the euro will end

    2) Reich: Why the economy can't get out of first gear

    3) Amazon.com's hidden debt 


  118. Bernie Sanders doing his best not to kill Maria, who is amazingly annoying in the interview.  She is NOT getting the sound bytes she wants out of him!  


  119. SVU after the close………………………….


  120. Ron Barber (Democrat, Gabby Gifford's assistant) won a special election against a favored Republican in a "Republican" district in Arizona – a state where they arrest you if you look foreign.  It was 52 to 45 and that's after the Green Party took 2% of the vote (probably not from the Republicans).  When Giffords won, she only won by 2% so this is a big deal and negates all that BS in Wisconsin that "the people have spoken" because they re-elected the kid from Deliverance in the recall election:  

    Social issues such as Social Security, Medicare and health care reform, along with the economy, dominated the campaign. Arizona posted the nation’s eighth-highest foreclosure rate in April, according to RealtyTrac Inc. Unemployment, at 8.2 percent in April, was higher than the national rate of 8.1 percent, according to the Bureau of Labor Statistics.

    The current district leans Republican, with about 159,200 Republicans registered to vote, compared with 133,751 Democrats and 128,242 who filed as “other,” according to the Secretary of State.



  121. So far, not a bad year for US markets, but rough for other countries:

    http://www.bespokeinvest.com/thinkbig/2012/6/13/recent-asset-class-performance.html

    Natural gas down 40%


  122. Phil—maybe we should have the PSW meeting in Arizona—I look good in stripes  ;-)


  123. I just watched a piece about Dylan Ratigan, who apparently no longer has his MSNBC show. He argues that we could go a long way toward reducing systemic risk by restoring pre-1999 capital requirements and trading swaps on public exchanges. I'm no fan of MSNBC, but I have always believed Ratigan was a straight shooter and often right. So, if you agree with his proposal, and a bunch of others I have heard from him, how the hell can you support making it happen? Neither party says anything on financial topics that is tolerable to me.


  124. I have setup the spreadsheet for the Income Portfolio. This one will be updated only once a week on Friday AH so that Phil can update the positions on Friday. It's at the same link as the other portfolios.

    Let me know if I missed anything.


  125. barfinger- I think that is why Ratigan can not keep a job- he is a straight shooter and at times gets out of control- not what the networks want. They want people who will smile and say whatever is needed such as " everything is wonderful and the market always goes up eventually".


  126. stjeanluc
    Could you please provide the link for the Income Portfolio? I know you have provide before, but I am having difficulty finding it. Thanks.



  127. Phil – There seems to be more stock buyback programs and/or buyback increases as well as dividend increases being announced recently. Could corporate America be actually doing better then the MSM is reporting? ;-)
     
    I think earnings are going to be an upside surprise to many …


  128. Diamond,
    Much appreciated.


  129. Phil, my apologies for not posting this earlier, feel free to answer after hours tomorrow, or later, but I have a question on a paper trade I made.
    Thanks again for your excellent feedback on DIS earlier.
    So here is the situation at hand, I effectively acquired 2500 shares of HPQ for net $25.50 (I had sold, I believe March $27 puts on HPQ for $1.50 with the hope of assignment – which with hindsight wasn't ideal, and 25 contracts were arguably far too large a scale unless the account were $1m or I really wanted more HPQ than I knew what to do with.)
    Anyway, I expect a smack-down in terms of scale there, which is deserved, I'm pleased this is in paper.
    I should have sold $25 puts/calls right away, and rolled the puts down now that it fell.  But that didn't happen (sleepy paper trading account perhaps?  No excuse really).  So, what if anything would you suggest?  Do I just ride it out, or assuming I have enough room to scale, would I sell ITM puts if we're close to a bottom (a big IF I know).  Should I wait on selling calls or just do that too?  Or sell half (if we do expect a stimulus induced climb to 2014).  I regard this as an education process, and I welcome the firm but fair response, as always! :)  Thanks, Scot.


  130. Interesting article on mental bias.  I suppose this is why trading can be so difficult at times.
    http://www.newyorker.com/online/blogs/frontal-cortex/2012/06/daniel-kahneman-bias-studies.html
     
    "However, when assessing our own bad choices, we tend to engage in elaborate introspection. We scrutinize our motivations and search for relevant reasons; we lament our mistakes to therapists and ruminate on the beliefs that led us astray.


    The problem with this introspective approach is that the driving forces behind biases—the root causes of our irrationality—are largely unconscious, which means they remain invisible to self-analysis and impermeable to intelligence. In fact, introspection can actually compound the error, blinding us to those primal processes responsible for many of our everyday failings. We spin eloquent stories, but these stories miss the point. The more we attempt to know ourselves, the less we actually understand."


  131. Nice visual of financial crisis from 1810-2010
    http://www.historyshots.com/financialcrisis/index.cfm



  132. Barfinger – you may have missed my question to you yesterday morning; I was doing some homework and digging into past posts/chats, saw your comments about your strangle strategy a couple weeks ago, and was wondering how it differs from PeterD’s. If not too much trouble, could you go into a bit of detail?


  133. JoeMayo:  Perhaps I'm not deep enough to find myself inscrutable.  I lean more in Sun Tzu's direction on the topic: "Know your enemy and know yourself and you can fight a hundred battles without disaster."  [Art of War]  Easier said than done, admittedly.
     
    Macro Man on today's headlines: "GERMAN 10-YEAR BUNDS STAY LOWER; YIELDS 9 BPS HIGHER AT 1.51% 
     
    a) The "get me out of all Europe", including the bund, trade? 
     
     
    b) The "Oh Germany are being sucked in to bail out others so therefore the Bund is not going to be as pure as the driven snow due to possible dilution effects – Sell" trade?
     
    c) A general unwind of the periphery spread trade, or a start of it?
     
    d) Bill Gross talking down bunds, as he looks for an opportunity to scoop them up on the cheap
     
    e) A knock on effect from the Scandies imposing a moratorium so they don't need to buy cart loads of bunds at zip% just to keep the regulator happy, as Euro-refugees led by the SNB drive yields through the floor.


  134. Deviation in the mission of the Corporate Responsibility Dept. -- Roche subliminal ad for Accutane:
     http://www.roche.com/corporate_responsibility/society/community/childrenswalk.htm


  135. New member here.  Excited and impressed.  I will try to contribute more than I question, but I have a few questions at this point.
    1.  Are all of the Virtual Portfolio trades posted in the daily comments as they are made? ( I have a Basic Membership )
    2.  I would like to play the expected increasing beef prices going forward.  I'm looking at COWS etf, but option spreads are huge and vol. is low.  Planning to sell Oct-ish puts, possibly slightly ITM short strike on the put spread to capture more premium.  If this strategy sounds flawed, suggestions welcomed.  Selling futures options is not an "option" for me right now – too much to learn before I add futures to the list.
    3.  I'm also a little overwhelmed trying to figure out which portfolio(s) to jump into, but I hear Cash is King right now, so I suppose I have time to figure that part out.  Suggestions welcome on this topic also. My primary goal is to become proficient and comfortable making 20-30% a year.  


  136. rkyroma/newbie – I'm a newbie myself and am limiting myself to asking Phil just one question a day, which I'm sure is too much given how much he does around here but he has always been extraordinarily gracious. Wish I could answer some of your questions but I'm in learn mode. I have noticed that it helps to address a particular member directly in the format of User ID/Subject. I've never been ignored, good folks here and I plan on attending the big meetup this fall… Hope to see you there.


  137. Spain/ Independent auditors
    https://secure.marketwatch.com/story/spain-auditors-estimate-lenders-need-60b-report-2012-06-14?link=MW_home_latest_news
    And Europe couldnt wait 5 days for this report to be published…
    So what now, we are suppose to rally on this better than expected news. Pathetic manipulators.
    To add insult to injury, Tsipras has now performed a complete U-turn. He says that he is ready to be part of a government that will renegotiate the bailout and promises to keep Greece in the Eurozone. Isnt that what the last election temporary government was supposed to achieve?
    Oh wait, he will obtain better terms….right! Mr El Negotiator is becoming less and less a revolutionary leader and more and more a traditional politician who just wants a seat in the assembly/government. A well paid public service job. That s all he wants…So now that no politician is talking about leaving the euro and printing drachmas anymore what about our drachma nightmarish scenarii?
    Greece is staying in the Euro. Greece will have a bailout (old or new terms).
    We are saved!
    But markets are not rallying yet because like well behaved schoolchildren we remain seated until the fasten your seat belt sign goes off…..Please tell us when to buy!!
    Pathetic investors!


  138. Stjeanluc,
     
    How old is the YTD chart.  I'm coming up with different percentages.


  139.  
    Taxes Etrade
    Nasty gram from the IRS for me.  Etrade reported to the IRS that stocks bought in tax year 2010 but sold in tax year 2011 as simply sales 100% profit in 2011.  For example bough 20k worth of XYZ in 2010 sold XYZ for 21k in 2011.  I report the transaction as such, etrade reports it as 21k profit in 2011.  Anyone else dealt with this?  Suggestions?  Always done my taxes myself with Turbotax.  Guess I will be hiring an accountant! 


  140. Good morning!

    More of the same silliness this morning.  We were all falling but finally we have a rumor floated big enough to actually matter – $2.3 TRILLION of EU bailouts!!!

    With the eurozone debt crisis again threatening to spiral out of control, Angela Merkel is ready to drop her opposition to the idea of a €2.3T "Redemption Pact" that would repay excess sovereign debt over 20 years, The Daily Telegraph reports. The concept is modeled on Alexander Hamilton's Sinking Fund in 1790, which was used to pay off debts from the American revolutionary war.

    Now THAT would make a difference, right?  

    It's turning Europe sharply around and our futures are up about 0.25% with Europe down about 0.25% which is a huge turn over the last 30 mins:  

    3:40 AM Asian markets pull back, with investors wary about the eurozone and following brokerage downgrades to China's growth forecast. Japan -0.2% to 8569. Hong Kong -1.1% to 18818. China-1.0% to 2296. India -0.4% to 16812.

    6:00 AM Overseas: Japan -0.2%. Hong Kong -1.1%. China -1.0%. India -1.2%. London -0.8%. Paris -0.8%. Frankfurt -0.9%.

    Thursday's economic calendar:

    8:30 Consumer Price Index

    8:30 Initial Jobless Claims

    8:30 Current Account

    10:30 EIA Natural Gas Inventory

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

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    Foreclosures starts rise 16% Y/Y in May to 109,051, the first on-year increase in 27 months as banks recommence the repossession machinery after the $25B national mortgage abuse settlement earlier this year. Overall foreclosure activity climbs 9.1% M/M to almost 206,000 properties- That's 206,000 PER MONTH either in foreclosure process or on notice!

    Eurozone GDP will be -0.5% to +0.3% in 2012, says the ECB in its monthly bulletin, with growth between 0% and +2% in 2013. The 2012 projection is unchanged from March; the 2013 projection narrowed slightly. The region's outlook is "subject to increased downside risks relating, in particular, to a further increase in the tensions in several euro area financial markets and their potential spillover to the euro area real economy." (bulletin .pdfhighlights)

    The Swiss National Bank maintains its target range for three-month Libor at 0-0.25%. Maintains its euro/franc ceiling at 1.20 and "will enforce it with the utmost determination. It remains prepared to buy foreign currency in unlimited quantities for this purpose. Even at the current rate, the Swiss franc is still high." (.pdf)

    Italy manages to sell €4.5B at its bond auction, the top of its target range of €2.75B-4.5B, but yields are significantly higher. Three-year yield of 5.3% (vs. 3.91% mid-May) is highest since December.

    Moody's cuts its rating on Spanish sovereign debt by three notches to Baa3 from A3, saying the newly approved eurozone plan to help the country's banks will increase its debt burden and citing the government's "very limited" access to international debt markets.

    Spanish banks borrowed a record €324.6B from the ECB in May, up from €319.9B in April, according to Bank of Spain figures. Total net borrowing was €287.8B in May vs. €263.5B in April. The data casts doubt over whether the proposed €100B banking bailout will be sufficient. And as this post is being written: Spain's 10-year bond yield continues to climb, just hit 6.97%.

    The Spanish 10-year yield hit 6.90% this morning, an all-time record, before pulling back slightly to 6.83%. Investors are reacting to Moody's three-notch downgrade of the country yesterday and to general concerns about Spain's bank bailout and the region's broader problems. Bodes poorly for the Italian bond auction later today; 10-year yields trading around 6.24%. 

    Moody's downgrades Cyprus' sovereign credit rating to Ba3 from Ba1, citing the increased likelihood of a Greek exit from the eurozone and the resulting increase in the likely amount of support the government may have to extend to Cyprus' banks.

    China's growth forecast was lowered by Credit Suisse and Deutsche Bank to 7.7-8.0% and 7.9-8.2% respectively. The predictions indicate the weakest growth since 1999 as corporate profits fall and deflation looms. To unleash productivity gains, the government should break monopolies in banking and utilities, open the services industry, and deregulate interest rates and the exchange rate, suggests Credit Suisse. (previously

    India's headline inflation rose to 7.55% Y/Y in May, up from 7.23% in April. The higher-than-expected figure may keep the RBI from cutting interest rates when it meets next week.

    It's increasingly likely that Stockton, California will default on some of its debt obligations, Moody's warned yesterday, as the city faces a July 1 deadline for confidential talks with its creditors aimed at averting bankruptcy. The muni bond market is watching carefully.

    Oil rises modestly from an 8-month low ahead of an OPEC meeting today where members will likely maintain their output ceiling, despite some sharply divergent views expressed in recent days. Crude futures +0.2% to $82.77.

    Why they are in the Income Portfolio:  The push to improve fuel efficiency in vehicle fleets will more than double the demand for aluminum in the auto market by 2025, an Alcoa (AA) exec says: "We have every car maker calling us, wanting to increase their aluminum content, wanting to start new R&D projects about how they can convert… from steel to aluminum." Average aluminum content per car is forecast to grow from the current 343 lbs to 550 lbs. 

    Why they are in the Income Portfolio:  Though Cisco (CSCO) is hobbled near-term by weak Euro IT spending and softness in certain verticals, it's worth buying due to the strength of its product line, argues Deutsche's Brian Modoff after talking with CFO Frank Calderoni. In particular, he's high on the company's Nexus data center switches, ASR carrier edge routers, and UCS servers.

    Weak European sales amount to a "baseline" presumption for Intel (INTC), claims CFO Stacy Smith at a Reuters conference. He also expresses optimism about the impact of digital content on data center spending, but doesn't provide details about Intel's rumored TV service plans. Last week, it was reported Intel is hoping targeted ads based on facial-recognition tech will somehow convince reluctant media partners to support its service, and is still shooting for a year-end launch. 

    Microsoft (MSFT) is reportedly in talks to buy Yammer, a top provider of enterprise social networking sites, and could end up paying over $1B. Yammer would join an extensive list of Microsoft solutions that enable business collaboration, including SharePoint,ExchangeLync, and Skype. Jive Software (JIVE), which competes with Yammer and has already been the subject of M&A speculation, could trade higher on the report. Salesforce.com (CRMalso competes with Yammer via its Chatter product. (previous)

    Facebook (FBplans to launch an ad bidding system that delivers ads based on user activity on third-party sites. The move risks upsetting privacy advocates, especially since users can only opt out an advertiser-by-advertiser basis. However, the ads could also improve both Facebook's low ad click rate, and the average price it charges for those clicks. (yesterday)

    More on Facebook: Though a recent Reuters surveyindicated many U.S. users are reducing their Facebook time,comScore estimates U.S. Facebook users spent 379 minutes/month on the site in April, up from 364 in September. Nielsen, meanwhile, believes Facebook accounted for 18% of all U.S. Web usage in April, more than twice as much time as was spent on Google (GOOG) and YouTube combined. One caveat about comScore: it just co-authoreda study with Facebook. (previous)

    Nokia (NOK-5.7% in Milan trading after cutting its Q2 outlook, reshuffling management and announcing plans to slash 10,000 jobs and shutter some facilities. Stay tuned for some ugly U.S. premarket trading.

    Nokia (NOKreshuffles management, reduces Q2 outlook and announces plans to cut 10,000 jobs and shutter facilities, in order to return the company to profitable growth.

    Nokia (NOK) on its reduced outlook: From Q2 2012 on, Nokia expects restructuring related cash outflows of ~€650M in 2012 and €600M in 2013. For Q2'12, "competitive industry dynamics are negatively affecting the Smart Devices business unit to a somewhat greater extent than previously expected." Negative impact expected to continue into Q3. Non-IFRS Devices & Services operating margin in Q2 to be below the Q1 level of negative 3.0%.

    Nokia (NOKsells its Vertu luxury phone business to Swedish P-E firm EQT Partners for an undisclosed sum. The whisper figure had been ~$250M. Nokia will retain a 10% minority stake in the business. Also announced today: Nokia will acquire developers and imaging IP from Scalado for undisclosed terms.

    Amazon (AMZN) is close to signing licensing deals with major studios for its cloud music service, sources tell CNET. It's claimed Amazon already has deals with Universal, EMI, and Sony Music (SNE), and is in late-stage negotiations with Warner Music. It'sbelieved the deals will allow Amazon, whose Cloud Drive music service wasn't well-received by studios, to offer an iTunes Match-like ability to stream content a user owns without requiring an upload.

    Apple's (AAPLefforts to stop the June 21 launch of Samsung's (SSNLF.PK) flagship Galaxy S III have been denied by U.S. District Judge Lucy Koh, who appears to be getting fed up with the enormous volume of lawsuits being thrown around. A trial is now set for July 30 – expect the Galaxy S III, which has seen huge pre-orders and will be sold by all 4 nationwide carries, to do brisk business between now and then. 


  141.  
    Taxes etrade,
    Never mind, found the problem.  The software I used to extract the data to schedule D format from etrade had the wrong date range selected.  No fault of etrade, all me.  The schedule D I submitted was incorrect.  


  142. YTD / Exec – Bespoke just published it yesterday.


  143. Sinking Fund – If you are interested in the Hamilton Sinking Fund, there is a scholarly article entitled "Alexander Hamilton's Sinking Fund" from the William & Mary Quarterly.  To access it, just sign up for a free account with http://www.jstor.com and they will let you download three free articles.  url is http://www.jstor.org/stable/2947337.  A quick scan of the article implies that Hamilton really wasn't very interested in debt payments, just obtaining more credit.


  144. Not a bad year so far/StJ – I think that's what people were saying in the summer of 2008 as well…

    Arizona/Savi – I'm not a big fan of that state.  Mountains around Phoenix tend to look like piles of dirt.  Scottsdale is nice but nothing to do but it would be fun going out with you and seeing how many times you have to pull out your ID in one day!  8)  

    Ratigan/Barf – I love that guy:  

     

    Mr. Ratigan, whose news analysis show is now broadcast at 4 p.m. Eastern time, said in a telephone interview that he was electing to leave cable so that he could put into practice what he has talked about on TV. Mr. Ratigan has attacked political systems, corporations and special interests on his show and promoted movements for job creation, bank reform and campaign finance reform in the past.

    “Once you’ve said your piece, you can either keep saying it — and then it’s a job, good job, pays well, everybody knows your name, it’s great — or you can decide what you’re going to do about it,” he said. “And the answer is, I don’t know. But I do know, in order to figure it out, I have to dismount.”

    Thanks for Spreadsheet StJ!  

    Buybacks/Diamond – I read it more like the Fed flooded the top 1% (which includes wealthy Corporations) with cash and they are sitting on record stockpiles but the economy is so bad they don't want to hire or expand or even buy out their competitors and, in the current environment, it's not cool to increase bonuses – so they do buybacks and dividends to "give back" to the shareholders, which usually include the top management and the board.  That's not to say that companies aren't doing relatively well but their motives are generally purely selfish and don't necessarily reflect an exceptionally good quarter – just a lack of options.  

    Again I will mention that in 2007 and 2008, there were tons of stock buy-backs, special dividends but there was also M&A – now we're doing it again but there's no M&A – these companies are even afraid to buy each other at the 2009 lows – that's NOT a good sign! 

    HPQ/Scott – Hey, you know you screwed up so why should I have to tell you?  So that was March – what the Hell have you done since then?  So you haven't heard of stops and you haven't heard of selling calls – you just kind of own $63,750 worth of HPQ (now worth $53,750) and NOW you want to adjust it?  As it stands now, you own them for net $25.50 and you need HPQ to get back to $25.50 to get even.  

    I'd ditch the HPQ stock ($53,750), sell 30 2014 $20 puts for $3.75 ($11,250) and buy 50 2014 $20/25 bull call spreads for $2 ($10,000) so you're in the spread for a $1,250 credit that pays $25,000 if HPQ is at $25 in Jan 2014.  Then you can sell 15 July $22 calls for .70 ($1,050) and you should be able to make up your $10K loss with just some light call selling and then anything you net out of the spread will be profit.  

    Good point Joe.  People should spend more time studying trading psychology.   Cool World chart! 

    India/Nicha – Does seem to be quietly falling apart…

    Welcome Rkyroma!  Yes, all the trades originate here in chat unless I initiate a special article with trade ideas but that would then be dated more recently than the chat anyway.  COWS is flawed as it's thinly traded  and I don't even think they have options.  Also, there's the underlying assumption of a strong Global Economy in that play that may be seriously flawed.  Cash is my favorite portfolio at the moment – especially if you are a less experienced trader but we do seem to find a few things to trade every day.  The Income Portfolio is for more serious long-term investing and I'll be doing a write up on our new one shortly.  We started positions last week and are already up $2,500 on less than $100K deployed so, although our goal is to make just $4,000 a month on $500,000 – we very much follow the Charles Dow rule of investing with our long-term conservative positions:  

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

    IRS/Knight – Good accountants pay for themselves!

    Just obtaining more credit/Rev – LOL, great point!  Well, I'm sure that's underlying all the EU BS too but it's a HUGE can kick – one that could be good for 5 years or more and just what we need stop falling, at least.  


  145. Econ News:

    8:30 AM ET Consumer Price Index
    8:30 AM ET Jobless Claims
    8:30 AM ET Current Account
    9:45 AM ET Bloomberg Consumer Comfort Index
    10:30 AM ET EIA Natural Gas Report
    1:00 PM ET 30-Yr Bond Auction
    4:30 PM ET Fed Balance Sheet
    4:30 PM ET Money Supply


  146. boltdude: I do the same thing in principle as Peter… (does that make it the Peter principle?) However, my version is simpler. The key to my approach is position sizing. I examine the current margin requirement of an ATM put and call, and assume that's the worst it would get as long as that position is open. Currently, one pair SPX put and call carries about $11,000 of margin requirement (if one end is at the money). Note that this is only somewhat better under PM as under RegT – the big advantage of PM is that as an option is moved farther from the money, the requirement drops much faster.
     
    Anyway, I want to have at least 8x reserve, so I divide my current margin available by 8, and then figure 11K a contract, and write that much on each side.
     
    Since I do weeklies, I set them up Thursday afternoon or Friday for the following Friday expiry. I try to hold them in place until the day before expiry so I can roll them to the next week. After that, if one end goes to the money, I have my finger on the rolling trigger at all times.
     
    I take about $4 in premium per pair of contracts – whatever strikes are. I adjust if I'm not comfortable at those strikes. See? simple. Easy to set up, but must be watched.


  147. SPX has four (4!) weeklys expiring every Friday till next monthly (JULY). does any other security have as many weeklys?