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Wild Wednesday – $500Bn or Bust!

Dude, where's my bailout?

The tentative deal at the G20 summit to mobilize the EU's rescue machinery to douse the raging fire in Spain and Italy comes in the nick of time, but is fraught with fresh dangers.  According to Ambrose Pritchard:

Monday's explosive rise in Spanish two-year bond yields was a warning that Spain's crisis would spiral out of control within days, taking Italy with it.  Yet the deal explored over ceviche and mango at Los Cabos in Mexico remains murky. Any plan will backfire horribly unless conducted in the right way, and with overwhelming force.

From what we know, the eurozone's leaders aim to deploy the European Stability Mechanism (ESM) to cap borrowing costs for Spain and Italy by purchasing sovereign bonds on the open market.  Unfortunately, the ESM fund does not yet exist. It has not been ratified by Germany and Italy. When it does come into being, it won't have much money.  It has a theoretical limit of €500bn — a nice wish — but its paid up capital will start at just €22bn.
Britain's George Osborne cautioned against exuberance. "One thing we have learnt is: don't expect a single summit to solve the eurozone's problems, otherwise you are going to be disappointed. The eurozone is inching towards solutions."

David Owen from Jefferies Fixed Income said the Franco-German plan will fail unless EU leaders give the ESM a banking licence to borrow from the European Central Bank. "This is not going work unless they let the fund gear up and draw on the full firepower of the ECB," said.  Such a move that has been blocked until now by Germany.

The ECB's chief Mario Draghi has in the past scoffed at the idea, saying it would be a back-door bailout of sovereign states and would violate the spirit — if not the letter — of the Lisbon Treaty.  Mr Owen said the ECB is the "only institution with the credibility and balance sheet to reassure markets. It would be much simpler if the ECB carried out quantitative easing but that does not seem to be an option".

Lack of direct action by the G20 (in the G20 Communique, they essentially promise to do something, but no specifics)  puts the ball back in Bernanke's court today (conference at 2:15, after Fed Statement) and then we have an EU meeting on Friday but, as Mark Cuban reminds us – "When your thesis is wrong, you don't wait – you just get out."  

Our premise has been that the Fed and the G20, between them, would come up with $1.1Tn worth of stimulus THIS WEEK – to justify a rally in the S&P back to 1,412 (5% up from here) ahead of earnings, which we would probably short anyway.  I discussed this on BNN yesterday but  I do not consider what the G20 has done so far to be anything and our total still stands at the $125Bn that was given to Spain and we're $975Bn short of our goal.  If Bernanke does not come up  with $500Bn of new cash TODAY – then our thesis is wrong – and we need to GET OUT!

As you can see from BNN's notes from my last appearance, our bullish calls have been great – and that's just the performance of the underlying stocks.  The options plays I suggested on BNN on May 22nd were:  

  • BBY Jan $18/21 bull call spread at $1.25, selling Jan $14 puts for $1.10 for net .15 on the spread. The spread is now $1.65 and the short puts are .80 for net .85 – up 500% in a month! BBY was $18.49 at the time and today it's $20.50 so up 11% on the straight stock play as well.
  • WFR was $1.63 and now $2.17 – up 33% – IN A MONTH!
  • XLF Jan $13/14 bull call spread at .59, selling Jan $12 puts for 0.75 for a .16 credit, now net .21 for a gain of .38, up 220% – IN A MONTH!
  • CHK 2014 $5 puts sold for $1.25, now .70 is up 44% – IN A MONTH! 

So we've had a fantastic run, those were just 4 of the 20 trade ideas from our Twice in a Lifetime List (Members only).  Unfortunately, BNN cut me short yesterday because I had wanted to talk about Hedging for Disaster – something we were doing in Member Chat yesterday as we had a nice run-up in the morning and I was looking for a reason to take the money and run on our Income Portfolio (as we discussed in yesterday's post), as well as our other small portfolios – but our levels didn't trigger the stops (but came close in the pm sell-off).  

Just because our stops (the 50 dmas) didn't trigger doesn't mean we sit there like idiots.  At 1:30 pm in Member Chat we pretty much caught the dead top of the market run as we added our first major disaster hedges since we flipped bullish at the beginning of the month and my first two trade ideas were:

TZA – Always a good play but EDZ back to $14.90 (from $19.50) is getting fun again too.  I like your hedge very much – good for all:   TZA ($19) July 17/22 for $1.90, selling BTU July 23s for $0.90, for net $1 on the $5 spread.  

Also, I like EDZ ($14.90) Aug $15/21 bull call spread at $1, selling USO $30 puts for $1 for a free bear spread (assuming oil holds $75).  

It's possible those hedges will still be playable this morning but, either way, we'll add two more in the morning Alert and my intention is still to get back to cash ahead of the Fed unless we get such a ridiculous run-up that those gains themselves become our cushion.  As I have been saying – I don't think the Fed and the G20 really have a choice – they MUST stimulate the economy or we risk a severe downturn but, then again, I also said that in September of 2008, right before the House Republicans sabotaged the original Paulson bailout plan and sent our Markets spinning out of control.  

We have learned from that catastrophe there is no limit to the greed and stupidity of our elected officials – especially when they are in the pockets of business interests that do not align with the people who elected them.  At the time, I said:  

President Bush said to the renegade Republicans "If money isn’t loosened up, this sucker could go down” and still they let it happen!

Granted the G20 aren't a pack of psychopathic Republicans but they are also a fractious, self-interested group that's unwilling to make necessary sacrifices for the common good – and that's a recipe for disaster if they can't get out of their own way and actually accomplish something for a change.  

Unlike the GOP, the G20 must come up with a plan that actually helps THE PEOPLE, whose suffering during the past few years has reached biblical proportions and the erosion of the middle class that is evident from this chart, continues at a rapid pace and only a stimulus program that creates JOBS (not BS from "job creators" while they ship another Million overseas) and puts money into the pockets of the bottom 80% – where it is desperately needed and will be spent in the economy – and not into the troughs of the top 1%, where it will stagnate along with the rest of the Economy. 

As noted in "Who Destroyed the Middle Class":  A 39% decline in median net worth over a three year time frame is almost incomprehensible. Even worse, the decline has surely continued for the average American household through 2012 as home prices have continued to fall. Median family income plunged by 7.7% over a three year time frame and has not recovered since the collection of this data 18 months ago. Even more shocking is the fact that median household income was $48,900 in 2001. Families are making 6.3% less today than they were a decade ago. These figures are adjusted for inflation using the BLS massaged CPI figures. Anyone not under the influence of psychotic drugs or engaged as a paid shill for the financial oligarchy knows that inflation is purposely under reported in order to keep the masses sedated and pacified. The real decline in median household income is in excess of 20% since 2001.

The destruction of the blue collar jobs has been underway since the early 1970s. And the relentless decline in real blue collar wages has followed a bumpy downward path for decades. Sadly, the average person doesn’t understand the insidious destruction caused to their lives by the Federal Reserve generated inflation, as they actually believe their wages today are higher than they were in 1973. The reality is the oligarchy has used foreign wage differentials and the perceived benefits of globalization to ship manufacturing and now service jobs to Asia while using their captured mainstream media to convince the average American that this has been beneficial to their lives. Using one of their 15 credit cards to buy cheap foreign goods made by people who took their jobs was never so easy.  I wonder if the benefits of being able to buy cheap Chinese electronics, toxic dog food, and slave labor produced igadgets outweighed the $2.3 trillion increase in consumer debt, 27% decline in real wages, 7 million manufacturing jobs lost since the mid-1970s, 46 million people on food stamps, $15 trillion increase in the National Debt since 1978, and a gutted decaying industrial base.

college graduate wages

Not only have the oligarchs gutted our industrial base, resulting in enormous job losses among middle aged industrial workers, but they are now in the process of impoverishing the youth of this country by sucking them into crushing college debt with the false promise of decent paying jobs when they graduate with a degree in feminist studies from the University of Phoenix. The fabricated mantra that a college education guarantees a good paying job and a better future is not borne out by the facts. There are over 4,800 institutions of higher learning in this country, with only about 50 considered elite. There are another few hundred top notch institutions, with a few thousand mediocre schools and hundreds of for profit on-line diploma mills exploiting the easy Federal government debt to lure millions into their profit scheme of bilking unemployed naïve middle aged dupes and eventually the American taxpayer. The average student loan debt per student is $29,000. Student loan debt outstanding has risen from $200 billion in 2000 to over $1 trillion today. The Federal Government is blowing another bubble. They are the issuer, regulator and guarantor of these loans. They are making the loans with teaser rates to the ultimate in subprime borrowers – students without jobs going for worthless degrees at mediocre schools. The taxpayer is on the hook for the billions in loses that will surely follow. The payoff for this quadrupling of debt has been an 8% real decline in wages for college graduates since 2000. The monetary policies of the Federal Reserve and bipartisan fiscal policies of our government have led to this dreadful job market for the middle class.

I highly recommend the whole article, hopefully we'll be featuring it on our main site today as well.  Send it to your friends, your Congresspeople, your World Leaders – tell them it's time to WAKE UP!  


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  1. Cap – here is the link.


  2. Good Morning!


  3. Fed Days and Market Performance (good 71% rip up FWIW):



  4. Morning Phil

    Congrat's to you and your wife on Jackie's accomplishments. You deserve to be proud.
    Nice to know there's a Davis  in training when you decide to move in another direction

    Enjoyed your appearance on BNN – too bad nobody there gets how good your picks are.
    I'm sure when you left they all looked at each other and asked "did anyone understand what Phil said?"
    Hence they just show the performance of the underlying and not the real meat of the pick.
    Suggestion — next time bring your own card with your option play on it showing the performance of your pick vs the performance of just the stock.
    That should wake someone up :)


  5. anyone else having trouble getting on Etrade this morning?


  6. Good morning!

    I don't know if you guys usually click on my little links but this one was the most important of the day – Don't be white people – GET OUT!!!!

    We are killing all directional (unhedged) long positions in all of our portfolios – cash, Cash CASH.  That goes for the Income Portfolio as well.  We DID NOT get firm action from the G20 – if we don't get it from the Fed or, if it's no enough – we are very likely to collapse.  If we do get Fed action but no or not enough G20 action – we might collapse.  We already had a nice run and if we do get a lot of stimulus – we might miss the first 2% of the pop but then we'll find some fun things to trade but I am not comfortable with the longs and we had a good run so. 

    CASH!!!





  7. morx
    I'm on etrade and all ok so far


  8. wow never heard phil make a call quite so emphatically



  9. Dow (/YM) can be shorted below 12,750.  20 DIA $124 puts at $1.10 in the $25KP and 5 in the $5KP are good to play that.  


  10. MoMo portfolio is all in cash with a P&L of $8535.


  11. Phil on the AGQ Silver 40/45 Bull CS.  Cash out as well?  If we don't get fed, won't this rise?  I'm not "silver man".


  12. mo' free money….not! 


  13. Stimulus/FWIW -
    reported on the local news last night that neither Canada nor the US will provide any funds for the Euro bailout (from the G20 meeting)


  14. Keep in mind we can still be popped by a rumor so stop at $1 on the DIA puts.  Looking at the $25KP – I'm good leaving the FAS in place as we're playing for a fail to get to $94 but let's just get 100% clean and start fresh – it will be more fun for the 2nd half of the year.  Even DMND I'd rather shut down now.  

    Thanks Ban.  I don't mind the way they did it as a lot of people say to me "don't you ever pick stocks" and I try to tell them that if I'm making a bullish options play, of course I expect the stock to go up too but people are very thick…

    I do so love those FAS Money trades!  

    Emphatic/Samz – I am very much having September 2008 flashbacks.  Maybe it's just posttraumatic stress but I was at CNN yesterday talking to the news people and listening to the chatter of various guests and then I went to a power dinner at night and I got the impression that people are counting WAY too much on QE and that, even if we get it, it won't be a real fix (see excellent article on destruction of middle class above).  Had we not already popped 7% off the June low, I'd play for a bounce but I'm sticking to my formula and saying that $650Bn of stimulus is already baked into this rally (1,300 to 1,365) and we haven't had confirmation of more than $125Bn and the most Bernanke will give us is $600Bn so not much upside but massive downside potential today.  

    That's not to say we won't get a pop off some FOMC easing or happy talk from Uncle Ben but to gamble a 40% gain in the $25KP on it and a 20% gain in the $5KP and 2 months worth of gains in the Income Portfolio and ridiculous gains in FAS Money and IWM Money – no thanks!    We can always find something to play tomorrow if we have cash…

    AGQ/Burr – That's a bet on rising silver and no Fed means no rise (probable dip) gold back at $1,600 indicates that premise is blown already.  


  15. Phil – to be a bit contrarian…..
    http://www.youtube.com/watch?v=K5n3p97-tuQ
     
    ….and fall to your death….
     
    I think "they" could take the market up without QE3….


  16. McClellan was a +253 this morning, a extremely overbought level.  If they take the market higher I will be going all in short, much more than I am now.


  17. FU PCLN- LOL!


  18. Pharmboy- I am back in CRM short fwiw


  19. TLT — Sep $115 put up to $1.30…..


  20. Eddie Murphy – Amazing how much of that stand up is completely unacceptable today… and hilarious!


  21. Gold is falling but markets holding on to hopium!


  22. jthoma….plenty of time for that…I am long RIG and short SPY, MS, FXE, Emerging markets (EDZ), TOL, Russel (TZA)…that about does it.


  23. Phil – are you taking all income port plays to cash also?


  24. Looks like that 650/700 PCLN Strangle from Monday is working out well… I would close that now with over 50%!


  25. Don't forget – last June contract day for oil – could be violent and too dangerous to play.  

     

    9:31 AM At the open: Dow +0.07% to 12846. S&P +0.1% to 1359. Nasdaq +0.16% to 2934.
    Treasurys: 30-year -0.59%. 10-yr -0.28%. 5-yr -0.15%.
    Commodities: Crude -0.36% to $84.05. Gold -0.94% to $1607.95.
    Currencies: Euro +0.13% vs. dollar. Yen +0.48%. Pound -0.12%.

    10:00 AM On the hour: Dow -0.12%. 10-yr -0.28%. Euro +0.17% vs. dollar. Crude -0.9% to $83.59. Gold -1.24% to $1603.05.

    Market preview: Stock futures are higher ahead of the latest FOMC policy decision today, with many economists expecting the Fed to extend "Operation Twist," although Lance Roberts reckons they'll be disappointed. The S&P Benchmark is +0.2%. Adobe is-6.8% after it gave weak guidance, although P&G is just -1.5% after it did the sameLater: Mass Layoffs 

    May. Mass Layoffs: 1,380 mass layoff events (at least 50 workers), resulting in 130K job losses (seasonally adjusted). -8 events from Apr's mark.

    Americans Say They’re Better Off Since Obama Took Office (Bloomberg)

    Truck tonnage fell 0.7% in May after falling 1.1% in April, reflective of the slowing economy, according to the American Trucking Association. “The good news is that the decrease in fuel prices will help support retail sales going forward, which is a big part of truck tonnage," ATA economist Bob Costello says.

    A quiet day (thus far) for equities is not matched in EU peripheral bond markets, where Spanish 10-year yields are set for their biggest decline of the year, off 28 bps to 6.76%. Italian yields are shrinking as well, but not quite at Spain's pace. Shares in Madrid+0.8%. (ideas EU rescue funds may buy sovereign debt) 

    New Democracy leader Antonis Samaras has been sworn inas Greek Prime Minister. Buy the rumor sell the news? After moving higher by 33% over the past 2 weeks, the Athens 20 Index -2.2%, led by especially sharp falls in the banks.

    Bob McTeer: The FOMC’s Options (Economic Policy Blog)

    JPMorgan (JPM +1.8%) pops at the open, helped by a report the recently strong financial markets have allowed it to unload 65-70% of its money-bleeding London Whale position. 

    JPMorgan (JPM) is set to see a windfall (though only a bit more than a rounding error next to the CIO loss) from a stake in the London Metal Exchange it picked up last November from bankrupt MF Global. The LME last week was offered a very fancy buyout price from Hong Kong Exchanges.

    10 Things I Learned From the Jamie Dimon Hearings (The Street)

    ConocoPhillips (COP-1.2% premarket after shares aredowngraded to Sell from Neutral at Goldman Sachs. COP "continue[s] to trade more like a defensive super major rather than a somewhat higher-beta domestic oil/E&P post the spin-off of its downstream assets," the firm says, as it sees greater upside elsewhere in the integrated/domestic oil and refiner sector.

    Shares of Tesla Motors (TSLA) roar to a 5.1% gain after Goldman Sach raises its price target to $50 and cites positive catalysts including the highly-anticipated launch of the Model S sedan. With only 5K models set to hit the road this year, it may be the critical industry reviews (still waiting on) as much as the raw sales numbers that tip the scales for the model's future.

    Shares of La-Z-Boy (LZB -8.1%) sink after its FQ4 reporthighlights a trend of declining revenue for the furniture maker. It's been a big swing in the price action of LZB, which traded up 4% in AH trading last night following the report.

    Major medical device companies such as GE, Siemens (SI) and Medtronic (MDT) are developing cheaper equipment that can generate sales in emerging markets and maybe even in cost-cutting developed countries. Rather than making devices more complex and expensive, the idea behind this "frugal innovation" is to strip them down as much as possible. 

    Good for SVU:  Execs with Kroger (KR) are discussing the firm's outlook at the Jefferies Consumer Conference (webcast). Right off the bat, the word is that FY12 EPS is still in line to fall in a range of $2.33 to $2.40 on growth of 6%-8% in Q2 and with an even higher rate projected for Q3 and Q4.

    Adobe (ADBE -6.1%) dives thanks to the soft FQ3 guidance included within its FQ2 report; JMP and Atlantic Securities are downgrading shares in response. Also, Credit Suisse (Neutral) is worried the implied guidance for FQ4 is "relatively aggressive." During its earnings call, Adobe boasted promotions helped it end FQ2 with over 90K paid subs for its closely-watched Creative Cloud platform, and that 65% of paid subs are subscribing to the entire Creative Cloud suite. 

    What Happened to the Microsoft Monopoly? (Economix)

    New NSA docs contradict 9/11 claims (Salon)


  26. That NSA article is chilling…


  27. Totally off topic but I had incredible seats to Steve Miller last night at the Bergen PAC in NJ.  I was front row dead center.  Took these two vids from my iphone.  Anyone who likes Steve Miller, check this out:
     
    http://www.youtube.com/watch?v=1Dx6XeaaAEY

    http://www.youtube.com/watch?v=28psshQmtCg


  28. Phil, would you still leave this trade on?
    BBY Jan $18/21 bull call spread at $1.25, selling Jan $14 puts for $1.10 for net .15 on the spread.  The spread is now $1.65 and the short puts are .80 for net .85 – up 500% in a month!  BBY was $18.49 at the time and today it's $20.50 so up 11% on the straight stock play as well. 


  29. That NSA article shows how arrogant and incompetent the Bush administation was and how the reaction, I believe, opened the door to the huge mess we are now in…..
     
    FU BUSH!  :(


  30. Indeed Pharm… These NSA documents do paint a bad picture of the previous administration. What a bunch of liars!


  31. Market/1020 – They can do whatever they want but the reward simply does not justify the risk when we have a chance to cash out with massive gains – or possibly allow ourselves to fall into a hole that will take months to dig out of.  Think of it that way and it's a pretty simple decision…  

    Short/Rustle – Still very dangerous to be short as well but nothing dangerous about CASH!  

    PCLN/Jthom – Stopped dead at the 50 dma.  I like them short as well as AMZN and MA (though that one never works!).  AAPL sharply rejected at $590.  

    TLT/Esco – GET OUT!!!  

    Murphy/Arivera – I was lucky enough to have caught him when he used to stand in Washington Square park with a PA and do his routines – he was friggin' amazing when he was young.  

    Income Portfolio/Scott – Just the first 5 for now.  No sense in risking those gains.  The others are 2014 and we like them enough to buy more so we can stick those out but EXC we need to stop out if they go red.  

    NSA/Pharm – This country is certainly not what it used to be.

    Miller/Rustle – Cool, I like him. 

    BBY/Jrod – I'd leave them but put a stop on the $18s (now $3.80) at $3.50, you can always buy back in if you have to but any move back below $20 is a bad sign for them.  


  32. Cash / Phil,
    Would we get out of the Twice in a Lifetime positions? Thanks.


  33. Oil down $1 …. but it is expiration day
    So who knows
    I like Phil s call to cash today
    Eurogroup is on the 28/29 June
    Report from Spain banks tomorrow
    So whatever happens today it wont be big ever way…
    If I was Ben I will hint that hope is around the corner…and lots of it.
    Hope (or Fear of Stimulus) could boost us even higher than any announcement of an actual stimulus
    I wouldnt short this market….


  34. Oil / Lionel – The action on oil is really something today as there is no corresponding move in the dollar. Might be just expiration, but still….


  35. Gold is having trouble keeping $1600… 1598 is S3 so that's the last line!


  36. Phil / premium and time decay
     
    I have an HOV jan 14 1/ jan 13 2.5 BCS  the 1 call has about  .11 premium and the 2.5 call has .43 premium, does this make sense to you? If so, how?


  37. Pharm / NSA — "New enemies for a new world order".


  38. Phil,
     In support of no Fed action today….even though, today's macro econ news has a negative cast, wouldn't it be more likely that the Fed would ease after a significant mkt decline (>20%) than after a 5% rally?
    Just a thought


  39. I remember the last time I totally ignored a Phil "it's going down" message [pre-subscriber] and it wasn't pretty.  Not this time — all my cherished ideas just got tossed in the garbage, and I'm a cool fool now.  


  40. Anyone following WAG?
     
    Interesting:
    10:25 AM Domino's Pizza (DPZ -0.2%) marks a milestone by opening its 5,000th store outside the U.S. The company is a below-the-radar play on international growth as it now operates more stores internationally than domestically with its on-track recipe of adapting pizza to local tastes. (Read the comments on this)


  41. Dominos/rain – very popular in India, more so than Pizza Hut.


  42. 8800 – Zerohedge perhaps in agreement with your theory.
    http://www.zerohedge.com/news/frontrunning-qe-did-market-make-qe-impossible


  43. StJean/ Open interest on July contract was down to 66k (daily roll of 20-25k per day for the last week and a half)
    So they should have just a maximum of 40+k contracts to offload today
    And yesterday PM, Eur/Usd moved up 70c on no oil move at all (That was even weirder than today)
    On decent future volume – for a decent daily volume too. So the monthly roll should be ok
    Someone knew something :)
    Big build up in inventory and the oil stimulus is already here!
    S2 is at $81.72….


  44. Phil/
     
    It seems to me QE3 or not there will be a whipsaw effect and that could stop us out of those puts buys don't you think?


  45. Anyone trade EXPE here?  I know PCLN is a fav, but on another tactical site that I'm on, they love EXPE.  If/when we get a pullback I'm thinking of selling some puts.  The charts look good.


  46. I think Jack Welch has turned stupid, blaming, in part, OSHA and the EPA for "hampering business"…..
     
    Jack, you mean those outfits that insure worker safety and American citizens from sh*t that can injure or kill?……
     
    http://finance.yahoo.com/news/doing-better-welch-says-us-135608049.html


  47. Welch/1020
     
    Welch has had a very Republican agenda for the last few years getting worse and worse.  His wife is just as bad.  They should have a show on FOX.


  48. Anyone -what time is the FED news released?


  49. Phil/TZA/BTU spread – you mentioned selling BTU puts against TZA call spread  Any other puts you would sell here?


  50. Phil:
    Does BEN lead or follow? In my opinion, he could clearly lead by doing another round of QE something knowing that his action may get us closer to a firmer action by the EU (Germany). A rising EURO simply adds to the pain going on over there and may be what's necessary to push Germany over the edge. The question remains whether big Ben thinks that he can afford to wait and follow Europe's lead (perhaps less pressure politically) or whether action is necessary today because waiting another month for the EU to respond may risk default and that is too great a risk for his constituents to endure. I am not sure the FED would be motivated to do anything if not for Europe.What say you?


  51. Rkyroma/ZH art,
    It would say a lot  and further lend credence to the manipulation hypothesis that, if after the Fed does not QE (new verb) today, there is a flurry of commentary to the effect that 'significant progress' has been made by our European brethren to resolve their crisis. Could be that the most likely outcome is to move within a trading range until Brussels either disappoints or sees the Emperor's bare bottom.


  52. Gold sneaking up…


  53. jromeha/FED, CNBC said it's 12:30pm.


  54. rustle123/Welch  Gotta have someone to sell books to……
     
    http://www.brainyquote.com/quotes/authors/j/jack_welch.html


  55. Welch / 1020 – I love these guys that keep on railing against regulating agencies. Have they ever lived in countries with weak or no regulations? How do they like their drinking waters, the air they breathe, the food they eat and the medications they take. Do they like not having to worry when they fly or they drive. And be safe at their place of employment? It's just unreal!


  56. EURUSD RISING ON CYPRUS BAILOUT RUMOR..HAHAHA
    i think this shows that big money thinks euro fiscal union a done deal…while i think its not…..market could be very disappointed if it doesn't happen.


  57. stjeanluc – I'm not saying OSHA and the EPA are not without fault – They do come up with the occasional head scratchers….


  58. I love to read the morons telling us that Spain is the new country to leave the Eurozone.
    After blasting the same kind of scaremongering tactics for about a month about Greece, now they have found another country they know NOTHING about.
    The good news for them, there are 17 countries in the Eurozone. So plenty of stories to tell.
    The bad news, I went long Euro just below 1.24 and I am loving it….
    Come on Bennie, Europe is closed and Oil is getting ready for S2!


  59. Rainman
     
    I invest/trade WAG.  Kinda disappointed with the recent acquisition as mkt seems not to like it at all.  on the other hand dollar is stronger and europe is cheap.  wait awhile and it may get cheaper.


  60. That's true 1020, but I can't imagine living without agencies like them. I have been to places like that and it's not pleasant!


  61. Non Sequitur by Wiley Miller: June 19, 2012 and June 20, 2012


  62. Jack Welch is a tool, the fact is why should he care if others protected, what is the worst that happens to him?? He will always have access to the best info, doctors, lawyers, housing , food , water the list goes on…oh piss boy!


  63. A little snippit to warm the hearts of OSHA haters…… :)
     
    http://www.youtube.com/watch?v=bEnCpWMl91s
     
    Catchy tune as well – Enjoy Jack!!!


  64. Come to Papa…….muuuahhhhhhaaaaaa


  65. Welch/Sagemm
     
    And at his age, he's basically playing with the casino's money.


  66. Phil, Lionel et al/oil – I’m tempted to sell some USO puts as a QE hedge, but want a reasonable margin of safety. Even with a stronger dollar, how low would the cartel let oil go? Would you regular oil traders stay away right now, or is there a strike/date that might be attractive?


  67. oil trades like its about to break through lower end of range its been in for 2 weeks


  68. I guess no QE.


  69. Williex / WAG -- Thanks!
     
    sage / Jack — He's making a comparison between the US and China.  If the US employee wasn't protected by these agencies, we'd be more competitive. 


  70. TWIL/Sank – I think if you have a nice winner, it's good to look for a fresh horse anyway.  Otherwise, they are 2014s and I don't think it's critical but, on the whole, I'm just more comfortable with cash until we know what the G20 and the Fed are ACTUALLY going to commit to.  

    HOV/Sage – Sure, the out of money position will have more premium, that's normal.  Nothing you can do about it but wait for it to expire.  

    Fed/8800 – They should ease because we are deflating and unemployment is too high – a violation of both of their mandates.  The market should not be a consideration (but it is).  

    Cool/ZZ – Much more relaxing to be in cash at a cusp. 

    WAG/Rain – Very confusing with all these cross dealings.  Sad that DPZ is going to represent the US in the International Pizza game.  

    Frontrunning/Rky – Good point. 

    Oil/Lionel – Down sharply from $85 to $82 but holding that line for the moment.  Next month oil is not much higher at $82.90 though so not at all strong.  

    Whipsaw/Sage – Very easily but it's a gamble.  

    EXPE/Burr – I made a case for them back when they were cheap at $25, at $50 I find them not interesting. 

    Welch – Went senile ages ago.  

    Puts/Rexx – Generally from the TWIL list, anything is a good candidate.

    Ben/DC – I think the problem with Ben going first is that he doesn't want to be in the position of having to bail out the rest of the World.  He needs them to step up and do their part otherwise all we're doing is artificially weakening the Dollar to the Euro and buying them a month or two for $600Bn – even Ben cares about that.  I think the Fed needs to hold their firepower as leverage to force the EU to act and that's the evolving chess game I'm seeing since yesterday.  

    Safety/StJ – You forget that GE does own and operate businesses in all those places and when you are Jack Welch and you compare the cost of providing a safe work environment for 1,000 men at a factory to the cost of paying for 3 or 4 funerals a year and maybe a few thousand bucks to shut up the families in foreign countries then your psychotic Capitalist brain can and does warp that into "regulations are killing American business".  Keep in mind that most CEOs are sociopaths (we've looked at studies before) – especially Wall Street types like Jack.   It's very hard to have empathy for your fellow man when your job is to screw him over and take all his money at every possible turn….

    11:00 AM On the hour: Dow -0.12%. 10-yr -0.23%. Euro +0.13% vs. dollar. Crude -2.05% to $82.63. Gold -1.3% to $1602.15.

    11:43 AM European shares close higher, led by the idea (denied in some circles) that the formality of bailouts is set to be ditched and replaced with the simplicity of using rescue funds to mop up peripheral debt. Stoxx 50 +0.4%, Germany +0.4%, France +0.3%, Italy +2.3%, Spain +1.6%, U.K. +0.6%.

    12:00 PM On the hour: Dow -0.18%. 10-yr -0.28%. Euro +0.13% vs. dollar. Crude -2.6% to $82.16. Gold -1% to $1606.95.

    Don't fight the Fed. The S&P's performance with (good) and without (not so much) the assistance of QE. Earlier: The behavior of Treasury yields with and without unusual Fed stimulus.

    See also Real Time Economics.<br />
(Cardiff)

    What would "Tall Paul" do? For one, writes Vince Cignarella, a Volcker-led Fed wouldn't act to preserve asset priceswhen what the economy needs is policy reform, not more liquidity. Bernanke needs a similar discipline "to allow markets to take a breather and not dictate monetary policy terms to the Fed."

    EIA Petroleum Inventories: Crude +2.9M barrels vs. consensus of -1M. Gasoline +0.9M vs. consensus of +1.2M. Distillates+1.2M vs. consensus of +1.4M

    With Europe, China and the "fiscal cliff" on their minds, CEOs of major firms are getting more bearish: the economic outlook index of the Business Roundtable falls to 89.1 in Q2 from 96.9 in Q1, although that still represents healthy expansion. Fewer firms are  predicting that sales will rise in the next 6 months or that they'll hire more staff.

    The May Architecture Billings Index suffers a big decline to 45.8 vs. 48.4 previously. The new projects inquiry index held steadier at 54.0 vs. 54.4 previously. "This should be an alarm bell going off for the design and construction industry," says AIA Chief Economist Kermit Baker. 

    Gold and oil don't seem to expect much from the FOMC today, the metal -1.2% and WTI crude -1.8%. Crude added to already solid losses on the release of storage data showing an unexpected build in inventories.

    There is "no plan as such," nor any "formal request" for the EU rescue funds to directly purchase the sovereign debt of troubled states, according to a EC spokesman. A German government spokesman insists all is as before: Countries needing assistance must formally apply for a bailout. Separately, Finnish PM Katainen rejects any such proposal.

    Goldman Sachs (GS) and SocGen (SCGLY.PK) could be facing further liabilities, as the Libyan Investment Authority (LIA) is investigating whether it can "claim a refund" for the $1.75B that it lost on structured products managed by the banks. (previous)

    China is the world's largest buyer of Iranian oil, and it's also the only nation still threatened with U.S. sanctions because of its purchases of Iranian crude. But analysts say the Obama administration likely will grant China a waiver rather than risk a trade war. China's 400K bbl/day in imports from Iran way down from earlier levels, ostensibly due to a disagreement between the two countries.

    Rare earth stocks (REMX +1%) extend yesterday's gainsas rumors of tighter regulation on rare earth mining production from Chinese authorities gain traction, with a new report from Xinhua sparking further interest today. MCP +8.8%REE +6.8%AVL +5.2%

    Unconventional gas activity has already created ~1M jobs in the U.S. but will produce nearly 1.5M jobs by 2015 and more than 2.4M jobs by 2035, according to a new report by IHS Global Insight. Nearly all the jobs will added by the states producing the most unconventional gas: Texas, Louisiana, Colorado, Pennsylvania, Arkansas.

    The spot price for the main grade of California-specific gasoline, known as Los Angeles CARBOB, has slipped below $2.50/gal. for the first time since Jan. 2011, Platts reports. The West Coast remains the region with the highest average retail price for regular gasoline, although it slid 12.9 cents to $3.964 in the survey week ending Monday, EIA data showed. 

    JetBlue (JBLU +1.4%) will glide its way to cost savings by literally using a new approach to landings at JFK Airport in NYC. Instead of dropping altitude in a typical stair-step method, JetBlue pilots will descend in one continuous path that will require less fuel and keep jets flying in auto-pilot longer. The FAA has backed the new plan.

    Procter & Gamble's (PG -3%) weakness is not a buying opportunity, says Morgan Stanley, noting the company's new guidance isn't conservative enough given its lack of repurchases, higher pension expense, and negative FX considerations. The firm maintains its Equal Weight rating.

    It's make-or-break time for A123 Systems (AONE), according to Automotive News' Dustin Walsh. If the hype from the firm is correct over its lithium-ion battery that can deliver 10X the life of traditional lead acid batteries and withstand temperature extremes, then it's a game-changer. But without additional funding or a slew of new contracts, the naysayers may be proven correct. Shares of AONE+9.1% after aides with Obama make positive comments about fuel cell technology.

    Cisco (CSCO +2.2%) rallies on an upgrade to Outperformfrom BMO's Tim Long, who thinks the strength of the company's data center offerings will drive growth. Long adds new Cisco switches have "stymied competitors" such as JNPR and HPQ, and the company is gaining share in the lucrative core router market. The data center networking market has seen healthy growth in recent quarters, as theadoption of cloud services and virtualization help drive demand for costlier 10G equipment.

    "Gee Bert, Obama had really F'd up this country":  Bert and Ernie will finally hit the big screen after 20th Century Fox (NWSA +1.1%) picks up the rights to the long-running PBS show and has a script in the works. Industry buzz has set the bar high for a potential box office haul, with estimates that over one billion people have seen the show at one point in their lives giving it an iconic status. 

    Shares of Sodastream (SODA +5.8%) continue to trade higher on heavy volume with positive comments from Monness Crespi about its channel checks helping to provided a lift and chatter that shorts are starting to get squeezed. (Earlier: KO vs. SODA)

    Google (GOOG -0.7%) edges lower after Benchmark's Clay Moran slashes his PT to $615 from $650, while arguing weak European online ad sales, a declining euro, and soft U.S. search volumes will hurt the company's Q2 results. Benchmark, which notes Google obtains 35%-40% of its revenue from Europe, and has a 90%+ share of the region's search activity. (previous

    More on Samsung: Reviews pour in for the U.S. version of the Galaxy S III, as domestic sales commence. David Pogue calls it "a bright, beautiful star." Mashable's Peter Pachal likes the phone's S Beam file-sharing feature, but isn't crazy about its voice-recognition tech. Walt Mossberg argues the phone's real impact comes from its iPhone-like ubiquity, a first for an Android device. QCOMBRCM, and SWKS are among the chipmakers that benefit from U.S. sales. (previous)

    Samsung (SSNLF.PKscores a victory in its never-ending patent feud with Apple (AAPL), as a Dutch court declares the iPhone and iPad to be infringing a Euro patent related to mobile data encoding. However, the patent is considered to be standards-essential, which means Samsung must license it under FRAND terms. The EU is investigating the unwillingness of certain mobile IP owners to adhere to FRAND principles. (Apple-Motorola)

    As Nokia (NOK -2%) states it's open to selling some of its ~30K patents to raise cash, IP consultant Alexander Butler suggestsNokia's portfolio could be worth more than the company's market cap (currently $9.3B), given the value assigned to Motorola and Nortel's patents. Nokia's portfolio includes both numerous standards-essential 3G/4G patents, as well as many innovations related to smartphone software, touchscreen interfaces, and phone design. 


  71. Boltdude/
    Phil s answer is in this morning post :)
    Also, I like EDZ ($14.90) Aug $15/21 bull call spread at $1, selling USO $30 puts for $1 for a free bear spread (assuming oil holds $75).


  72. USO is a good way to play positive Fed news – July $31 calls are $1.03 and were $1.60 yesterday so you can pick them up as momentum even after we get some news. 

    GLD is another way, of course, weekly $156/157 bull call spread is just .40 so 150% upside on a fairly small move in gold so these are two moves to jump in IF AND ONLY IF (IFF) we do get more easing on the FOMC statement.  


  73. Just to aver that I agree with Phil .   Safest place for you money right now……..cash.    But I'm looking for a trade which might take advantage of a large move up or down over the next 48 hours.  Ideas?  If the FED blows this off, look out below.   If they actually DO something, then AAPL and others may blow throught their tops.  


  74. How about a FAS 87/86 bull put spread for no QE3, wouldn't the logic that financials who would most benefit take it on the chin if no mo money?? at .45 now


  75. AAPL dropping.  If they get below 570 again I will back up the truck and load the long calls. 


  76. Good one Diamond:  

    Non Sequitur

    Oil/Bolt – The problem is, without QE, we could face a global melt-down and speculators will liquidate and drive prices way down (we hit $35 in 2008).  It's fine if you are willing to roll and stick with it as it would likely come back eventually but it's hard to count on OPEC as they now only control 1/3 of the oil produced and they also all desperately need the revenues so they're not going to cut back in a crisis when they need every petro-Dollar they can get.  It's a fun trade but don't delude yourself that it's in any way "safe".  

    Empire state/1020 – Actually only 5 people died building it (they expected 100 so it was considered a huge success).  

    FAS/Sage – That could work too but will sting if we go the other way.  

    1 minute to Bernanke….


  77. This is the PREVIOUS statement for comparison:  

     

    Release Date: April 25, 2012

    For immediate release

    Information received since the Federal Open Market Committee met in March suggests that the economy has been expanding moderately. Labor market conditions have improved in recent months; the unemployment rate has declined but remains elevated. Household spending and business fixed investment have continued to advance. Despite some signs of improvement, the housing sector remains depressed. Inflation has picked up somewhat, mainly reflecting higher prices of crude oil and gasoline. However, longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that it judges to be consistent with its dual mandate. Strains in global financial markets continue to pose significant downside risks to the economic outlook. The increase in oil and gasoline prices earlier this year is expected to affect inflation only temporarily, and the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

    The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.


  78. Twist extended


  79. Oh no – NOTHING!!!!  

     

    Release Date: June 20, 2012

    For immediate release

    Information received since the Federal Open Market Committee met in April suggests that the economy has been expanding moderately this year. However, growth in employment has slowed in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending appears to be rising at a somewhat slower pace than earlier in the year. Despite some signs of improvement, the housing sector remains depressed. Inflation has declined, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

    The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed continuation of the maturity extension program.

     


  80. Look at TLT taking off….


  81. Release Date: June 20, 2012

    For immediate release

    Information received since the Federal Open Market Committee met in April suggests that the economy has been expanding moderately this year. However, growth in employment has slowed in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending appears to be rising at a somewhat slower pace than earlier in the year. Despite some signs of improvement, the housing sector remains depressed. Inflation has declined, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

    The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. This continuation of the maturity extension program should put downward pressure on longer-term interest rates and help to make broader financial conditions more accommodative. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed continuation of the maturity extension program.

    They indicated an extension of Twist last time, this was just specifics.  Boy do I feel justified in my fear that these people are IDIOTS!  


  82. See, now we get to sit on our piles of cash and relax and just see how much damage is being done and we can make nice, calm decisions – isn't that nice?  


  83. Phil/VIX, VXX,
     
    do you think there is an upside play here?


  84. AAPL coming back up…. Are the markets actually taking this as a good thing?


  85. Twist – pretty much what i expected. no QE, but twist goes on (and maybe enlarged?). i've moved up the stops on my DIA, SQQQ and EDZ plays.  and there goes the DIAs…


  86. Stocks making a comeback..


  87. Nothing changes too much expect TLT. 


  88. ts comical how EVERY short-term tiny dip in stocks in US is met with a European rumor


  89. So, if "must hold" lines remain intact by close, is it back to bullish?


  90. Funny 10% swing in the VIX in 2 minutes. 


  91. Considering going long Oil off S2 $81.72 (July) – or USO 30.80
    AAPL up – like on any down day (that is called damage control)


  92. LION/ USO: What are you thinking of doing with this? Sounds intriguing…


  93. Newt/ Using Phil play!!
    I am long futures but you could use Phil s advice too:
    "USO is a good way to play positive Fed news – July $31 calls are $1.03 and were $1.60 yesterday so you can pick them up as momentum even after we get some news. "


  94. VIX/Canuck – I think now we're waiting on the EU and you have to count extending Twist as something positive so it's iffy at best.  I just think the correct move at the moment is to wait and see how things shake out.  

    Good thing/Lol – Extension of twist will keep rates low and it's already been proven they can do it without inflating so some kind of plus but not enough to sustain us – I don't think.  

    Must Holds/Cdel – It would be technically bullish but it won't get me off the sidelines until we hold up through the weekend.  

    Still hope for the Bulls until Bernanke speaks at 2:15.

    Fed Open Market Committee: Operation Twist is extended through the end of the year adding $267B to the total purchased. The Fed is prepared to take additional steps as necessary. Richmond Fed President Lacker dissents, opposing the extension of the Twist.

    More from the FOMC: "Growth in employment has slowed in recent months … Household spending appears to be rising at a somewhat slower pace." Separate statement regarding the extension of Operation Twist: The Open Markets Desk at the FBRNY is directed to "extend the average maturity of the Fed's holdings of Treasury securities." 

    1:00 PM On the hour: Dow -0.11%. 10-yr -0.12%. Euro +0.06% vs. dollar. Crude -2.58% to $82.17. Gold -1.12% to $1604.95.

    12:43 PM Stocks sell off a bit more – the S&P 500 -0.8% - in reaction to the Fed (the original Twist announcement saw the DJIA drop 300). The Twist is not QE and the best that can be said for it may be slightly lower long-term rates, but the 10-year is already at 1.63%. The Chairman holds a press conference at 2:15 ET.

    Released the minute the Fed came out negative:  Maybe trumping disappointment over the Fed announcement is a leak out of Europe that European Council head Herman Van Rompuy has prepared a blueprint of reform that will include jointly issued short-term bills, reports Bloomberg. 

    The 30-year Treasury yield falls 6 basis points to 2.72% following the Operation Twist extension. The 10-year declines 3 bps to1.63%. Yields on the short end (where the Fed will be selling paper as it buys the long end) rise a hair, the 2-year up nearly 2 bps to 0.30%.

    "Hyper-optimism has returned to the stock market," writes Steve Sears, noting the sharp recent decline (26% in a week) in the VIX (VXX) has brought it just about to levels associated with bull markets. He finds it disturbing as the move is seemingly not tied to economic fundamentals, but the hopium of easier central bank policy.

    Since money from the federal stimulus peaked in April 2009, the public sector has contracted by 657K jobs, with Moody's saying that the losses over the past three years are worth around a percentage point on the unemployment rate. The pace of firings this year will hit spending power by $15B.

    The mortgage REIT sector ticks down on news the Fed is reloading to flatten the yield curve even more. The mREITs make their living off of a steep curve, levering up to borrow short and lend long. Two popular ones:  AGNC -1.1%NLY flat (but both lower than before the announcement). 

    Simmons reduces its forecast for Halliburton's (HAL) 2012 EPS to $3.15-$3.20 from $3.50 while admitting that anything more than an educated guess on HAL's profit margins beyond Q2 – thanks to volatile prices of crude oil and fracking ingredients, and as natural gas drillers ponder a return to production – is nearly impossible. "Don't get hung up on the illusion of precision," Simmons says.

    One of our Boeing Buddies:  Shares of aircraft leasing and maintenance company AAR Corp. (AIR +6.6%) are on the rise after both its chairman/CEO andpresident added to their stakes in the company.

    News Corp. (NSWA +0.7%) won't have to dig too hard tofind the cash to buy Disney's ESPN Star Sports and make sizable buybacks as part of an expanded share repurchase plan with over $10B sitting around in cash. The company grew its stockpile in anticipation that it would need it to gain full control of British Sky Broadcasting – a plan that went awry after the phone hacking scandal broke. 

    Gartner lowers its growth forecast for the enterprise application software space to 4.5% from 5%, citing macro worries. The biggest chunks of total sales will be claimed by ERP software (top vendors: SAPORCL), office suites (dominated by MSFT), BI software (top vendors: SAP, ORCL, IBMMSTR), and CRM software (top vendors: CRM, ORCL, SAP). Cloud services (offered by CRM, MSFT, AMZN) are expected to account for 16% of industry revenue by 2016, up from 11% in 2010.

    Three lunchtime reads:

    1) How Asia will fare if Europe cracks

    2) Silver, copper, gold … and China

    3) Cheap coal is dead; long live renewables


  95. LION- Thanks.


  96. TLT on a yoyo


  97. Dow volume just 59M – can't read anything into this at all.  

    If anything, I think it's a great opportunity to finish getting out of longs and add some shorts.  

    AMZN Oct $155 puts at $2.05.

    MA Oct $325 puts at $4.10

    Our DIA puts failed on us, now .92 but I still like them if they get cheaper.  


  98. Phil:
    Did you get stopped out of DIA 124 puts?


  99. DIA/DC – Of course, they didn't hold $1, went right to .99 (now .94).  No harm in keeping them if you have them – I still think they'll come in handy.  


  100. french pm saying eurobonds YEARS away..market doesn't think that
    so merkle say maybe and hollande says no..the thing about the french they are the germans with good cooking..so this will be fun


  101. Oldie but goodie…
    http://youtu.be/Yi6XV8yBFoU


  102. july tza 18 puts can be sold for .84 right now.  Not a bad spot to start getting short.


  103. Theres that whipsaw I was referring to.


  104. Phil,
     
    Keeping with the put theme: What do you think of this trade?
    NKE July 97.5/ 92.5 put spread for less than $ 1. Nike’s chart looks like the coaster is starting down,
    they are dependent on international sales and have earnings June 28th .


  105. DIA – put some puts back on..


  106. Randers / NKE – The bull case for NKE is:  1.  Olympic year,  2.  They make all the NFL jerseys now, and 3.  Tiger playing better golf lately.  That's all I know.  No opinion on the stock, but I like it as a short better at 115.


  107. FAS – XLF / Phil – Financials still up..do you think the Jul play is still good?


  108. From the IWM watcher, the up is on air the down has some backing.


  109. Oil crossing S2 again with lower lows – second dip!


  110. Pandora Short – P is on my watch list to short.  IMO, Spotify is just that awesome.  


  111. Phil….where are u????


  112. PHIL? in hanover having a few tequila slammahs with timmy g


  113. Ben addressing reporters questions – Live on Marketwatch


  114. Did he just say "asset purchase programs induce[dupe] investors to move into securities?


  115. angel - Phil is sleeping off the Zero Hedge Drinking Game.


  116. TZA/Joel – Good call.  

    Whipsaw/Sage – Just a head fake. 

    NKE/Randers – They are a bit high but I have no particular reason to short them.  Very good company.  It's a reasonable trade if you think they can't hold into earnings.  

    And what Rkyro said!

    Financials/Dpast – I'd cash those too.

    Here Pat!   Just reading and listening to news.  

    Bernanke not saying anything worthwhile so far…

    "By nature, these tend to be lumpy" – Bernanke answers Steve Liesman on whether the Fed has been too incremental with policy moves. (Watch live)

    The Fed lowers its GDP growth forecasts for 2012 to 1.9%-2.4%, backing off its April expectations of GDP growth of 2.4%-2.9%. New unemployment rate expected at 8.0%-8.2% through 2012, and 7.0%-7.7% through 2014.

    Along with a more modest GDP forecast and more slowly declining unemployment, the Fed now sees significantly lower inflationthan last time, with personal-consumption inflation seen at 1.2%-1.7% (vs. previous 1.9%-2.0%).


  117. I guess the VIX is down 3% because this market isn't volatile enough.


  118. Fed twists more, benefit little, BS risks grow

     
    By Peter Boockvar – June 20th, 2012, 12:55PM

    As widely expected, the FOMC will “continue through the end of the year its program to extend the average maturity of its holdings of securities.” Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 yrs to 30 yrs at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 yrs or less.” The $ amount will be $267b by the end 2012 vs the $400b of what is expiring at month end. The thought of shifting twist to the MBS did not happen but the Fed will continue reinvesting principal payments from its MBS holdings into agency MBS. They also said they are prepared to “take further action as appropriate…” Lacker dissented and wanted to end Twist. Bottom line, from a market perspective, sell on the news as we got what most expected. From an economic standpoint, the operation is irrelevant as the bond market has already lowered rates for them. Negatively, the Fed is tying their own hands by extending the duration of its portfolio, thus making it more interest rate sensitive and subject to losses when they want to exit in the yrs to come by selling Treasuries. I just don’t get the benefit relative to the growing risks they continue to take with their balance sheet and putting aside the daily misallocation of capital that their policy encourages with the artificial cost of money.


  119. MA- check the open interest & volume on the $325 puts…. did everyone in chat get on this?


  120. i don't think we will see any QE until after the elections hope i am wrong.


  121. angelcur / QE — I think you're right but what we really need is a "new deal" out of Obama.


  122. QE3 – interesting opinion i read on twitter
     
    QE3 is a morning after pill for a coming Euro crash, not a contraceptive that will prevent it.


  123. The more Ben talks the worse it gets – like the old tar baby story…

    MA/Newt – Huge potential if we collapse.  

    50 Dmas:  Dow(12,746), S&P (1,347), Nasdaq (2,920), NYSE(7,756) and the Russell (781) - Let's all thank Mark Cuban for reminding us to get out when our premise is blown!  

    After elections/Angel – If Romney gets in they'll just start selling off pieces of the country to the highest bidder.  


  124. I know Romney clearly stated that Bernanke would not be reappointed, hope Obama feels the same way.


  125. Did Ben just say that the asset purchase programs have gone as far as they can?


  126. MA- now I am confused- did you sell naked puts or buy the puts?


  127. Sounds like Uncle Ben just all but said they are tying their own hands with this  extension


  128. Oh, that gives me a warm fuzzy — Ben making parallels to Japan.


  129. newt – phil suggested buying the MA puts


  130. MA- thank you.  Sometimes the wording gets lost on me.


  131. newt/MA, I am very sure it's a BUY the puts.


  132. So I'm reading and it turns out nobody knows nothing.  Have I mentioned how much I like cash lately?  

    Who's not down on my watch list?  AA, AXP, BAC, C, CHK, CMG, DIS, GE, GMCR, HOV, INTC, JPM (way up), MSFT, SKX, SVU, TASR, TM, V, VLO, WMT, X, XOM, YRCW – an interesting collection…  

    I think the PG news was a tipping point for me – I was worried about earnings before and now I"m getting really concerned about what the big boys will be reporting.  

    Th-th-th-that's all folks from Ben – if the bulls were hanging on to hope, they must be getting very tired now…

    MA/Newt – Buy puts!!!  


  133. Phil – I am still short July puts in AA $8, BA $65, CELG $60, CHK $15, CSCO $16, SVU $4 and WFR $2.  I have longer dated puts and spreads, too, and am about 66% cash.
     
    In the case of the first five, I have resisted selling today because they are well OTM and it would take a major beatdown for me to get in trouble, and I'll have decay working for me at an accelerating rate for the next 30 days.
     
    In the case of SVU and WFR, they are cheap, and as much as they've fallen I don't expect much more downside, even in a market meltdown.  Frankly — after the premium I've pocketed — I wouldn't mind being assigned and selling calls.
     
    Flawed logic?  What else should I be considering?


  134. Bolt, IF you have nice profits on your short puts AND if you are pretty sure of an imminent downdraft, don't you think you'll get another chance to resell them. I've round tripped way too many times without taking my profits.


  135. Phil/PG  I did not have a good feeling about their warning as well…..
     
    ….on the bright side, maybe I can get a discount on their outrageously overpriced, Gillette shaving blades…..
     
    :)


  136. So far, all the indices seem to be riding over their 50 DMA! We'll see if they hold!


  137. Oil just bounced off S3 right on the button… Pretty scary though when you start mentioning S3!


  138. Jbur/roundtrip — I've done that ride too, but not so much in the case of short — and very OTM — puts.  As long as I have plenty of cash/margin, my attitude has been, perhaps wrongly, "why bother?"


  139. Logic/Bolt – Nothing wrong with it but you have to set a line at which point you will cover.  It's all well and good to say you love all those stocks but if the market drops 20% and they all go in the money – can you afford to buy them all and DD?  Don't forget what a flash crash is!  Also, taking profits (would have been nice earlier) doesn't stop you from selling the puts again once you get comfortable the sell-off is done.  In fact, don't you make more money if you buy back the BA $65 puts for $3.30 now and then sell them again for $4.30 (where they were last week) rather than riding them out through the dip?  

    So, let's say you know those puts were $6.10 on June 4th, when BA was at $66 but you don't care because you would love to net into BA at $60 in any event.  Well, that's nice but, since you are ready, willing and able to lose $3 on the BA puts if we have a dip, then it shouldn't bother you to buy some SDS Aug $15/17 bull call spreads at .75, which pay about 200% if SDS goes from $16 now to $17 (up 6.25%) which would be about a 3% drop in the S&P, which is VERY likely if your BA puts get tripped.  The only way they go to zero is if the S&P goes up 3% but then your puts are in great shape so you can cover 1/3 of your put dollars with SDS and, if the S&P rises, THEN you can sell more puts to cover the loss and roll the SDS calls to Sept whatevers to lock in the gains.

    So let's say you have $30,000 worth of puts that could go to $60,000 if the market dives.  You can buy $10,000 worth of the SDS hedge (133) and, if the S&P drops more than 3%, you have $26,666 worth to put towards rolls or just taking losses.  If SDS falls as the S&P rises, you didn't cash out your short puts and you have $30,000 coming to you and when the hedge drops to about $5,000 – you can sell $10,000 more puts (or just roll a few of the ones you have to longer months) and use $5K of that to re-establish a new, longer, lower SDS hedge.  

    Isn't that worth giving up 20% of your potential gains so that you can sleep better (or go to the bathroom without worrying – for that matter!). 


  140. Those 50 dmas are holding up well so far but no volume (88M) to test them yet and now it's stick time.  

    Oil/StJ – Very hard to tell with the contract rollover but probably a great spot to go long now.  


  141. If this works out, this could be a game changer for energy:

    http://idealab.talkingpointsmemo.com/2012/06/tunisia-wind-power-saphon.php

     

    So far, Saphon has constructed two working prototypes of its first generation “Saphonian” device from scratch in Tunisia which have attained two to three times the efficiency of a common “three blade” wind turbine, Labaied told TPM.

    “People around the globe got so obsessed with improving the three blade technology, but that was like a box to us,” Labaied said. “We said, ‘why don’t we try to think outside the box,
    and for us that meant non-rotational and no blades.”

    Something to keep an eye on!


  142. MA Oct puts  - I have never tracked MA, so perhaps this behavior is normal, but why, when MA is down modestly, are almost all its OCT put prices down as well?  That can't be a result of decay this far out, can it?


  143. MA – ..or reduced volatility?


  144. For a while I was worried that oil inventories were going down. Have no fear, we are back in record territory… If it was not for manipulation, who knows where the prices would be today!

    http://www.bespokeinvest.com/thinkbig/2012/6/20/crude-oil-inventories-rise-to-record-highs.html


  145. I think that a lot of people are defensive:

    http://www.bespokeinvest.com/thinkbig/2012/6/20/technology-has-lower-pe-ratio-than-utilities.html

     

    The Utilities sector has had a pretty amazing run over the past few months.  But this run has pushed its P/E ratio (trailing 12-month) up to 14.95.  For a defensive sector, 14.95 is not a very attractive valuation.  It's even less attractive when you consider that the P/E ratio for the Technology sector is currently at 14.48.

    Below is a chart showing the ratio of Technology's P/E to that of the Utilities sector.  When the ratio is above 1, it means the Technology sector has a higher valuation than the Utilities sector.  While Technology has historically had a much higher P/E than Utilities, the two have traded more inline with each other recently.  

    Only two other times have we seen Utilities have a higher P/E than Technology.  One period came in late 2008 during the financial crisis and the other came during last summer's version of the Euro-crisis.  Following the ratio's drop below 1 in late 2008, we saw a big reversal higher as Technology significantly outperformed Utilities for quite awhile.  Following last year's drop below 1, we saw a bounce in Technology for a few months, but the trend reversed pretty quickly.


  146. Oil — if all is as hunky dory as the indexes are indicating, why is oil not recovering?


  147. VIX down at 17.91 – What us worry? 

    TLT rejected at $126.

    Dollar 81.78, Euro $1.266, Pound $1.566, 79.48 Yen to Dollar, EUR/CHF 1.2009, oil $81.03 (July final), gold $1,605, silver $27.975, copper $3.37, nat gas $2.51, gasoline $2.59.  

    On the hour: Dow +0.05%. 10-yr -0.31%. Euro +0.18% vs. dollar. Crude -2.79% to $82. Gold -0.54% to $1614.45.

    3:00 PM On the hour: Dow -0.47%. 10-yr -0.18%. Euro -0.12% vs. dollar. Crude -3.81% to $81.14. Gold -0.98% to $1607.35.

    3:12 PM The decline in oil accelerates as the Chairman wraps up his press conference, WTI crude -3.8% to $81.15. Stocks near session lows, the S&P 500 -0.7%.

    The Fed "isn't going to be buying European sovereign debt," Bernanke says before wrapping up his news conference. Those looking for hints of a bigger QE3 were thwarted, as usual, but the questions now are coalescing around a single one: If the Fed "can do more" if necessary – why isn't it doing it now? (Earlier: Fed statement;projections)

    ZHedge Tweets:  Berlusconi Casts Doubt on Italy’s Austerity Plan: WSJ. You mean Italy was not serious about its austerity? Get out of here

    The Fundamental Flaw In The Fed's Thinking

    Money market funds have been rescued by their parent companies from possibly breaking the buck nearly 300 times between 1980 and 2010, according to SEC Chair Schapiro. She's using the information to bolster her call for greater oversight of the industry as she appears before the Senate on Thursday. (previous)

    Last week's OPEC decision to maintain its quota of 30M bbl/day had the added effect of emboldening tanker operators to raise shipping rates for very-large crude carriers, as Bloomberg calculates Q3 rates will average $18K/day vs. a low of nearly half as much in Q2. Stocks poised to benefit after painful declines: FROSFLNATOSG,TNKTNP.

    The trust tasked with the job of selling over 89 General Motors (GM -1.6%) properties left over from its 2009 bankruptcy is finding the going rather tough. Only 17 properties have been offloaded in the last three years, forcing administrators to seek new uses for the vacant buildings which are often found in depressed areas.

    The newly-released annual survey from J.D. Power on customer satisfaction in the auto industry shows Ford (F +0.8%) and Chrysler (FIATY.PK) slipping lower with their brands, while Toyota's (TM +0.4%) Lexus retains its top ranking. Foreign names largely dominated the list, with Jaguar (TTM +1.9%), Porsche (POAHY.PK), Cadillac (GM -1.9%), and Honda (HMC -0.1%) all showing strong. The poor result for Ford seems to emanate from its MyFord Touch entertainment system, which presented a myriad of issues for confused owners.

    The gun trade is back on with shares of both Sturm Ruger (RGR +4.3%) and Smith & Wesson (SWHC +5.4%) both running hot. Though analysts predict that typical election year jitters will bounce around shares of gun sellers as polls gyrate, they also see that on a macro level gun ownership is gaining more widespread social acceptance. Data on FBI background checks backs up the premise, as checks stand up 20% YTD compared to last year.

    Caterpillar (CAT -2.5%) says retail sales of machines for the three-month rolling period ending in May rose 11% across all world regions, vs. +12% for the three-month rolling period ending April and +18% for the three months ending March. For the May rolling period, sales +5% in Asia/Pacific, +4% in Europe/Africa/Middle East, +31% in North America, -6% in Latin America.

    Caterpillar (CAT) CEO Doug Oberhelman urges Congressto act urgently to pass legislation establishing Permanent Normal Trade Relations with Russia: "In the last five years, Caterpillar's exports to Russia from its U.S. factories totaled nearly $2B, butRussia's entry into the WTO, combined with PNTR, could open the door for greater exports and… American jobs."

    Burger King (BKW +4.1%) plans to continue to overhaul its menu with items such as smoothies and salads that appeal to a wider demographic than its original target of young males, according to CFO Daniel Schwartz. Oversea expansion will also be a key goal, with expansion in China and Russia already on the agenda. If it all sounds vaguely familiar, it's nearly a carbon copy of the the strategy McDonald's (MCD -1.1%) used to expand while Burger King was stuck in neutral.

    Starbucks (SBUX +0.8%plans to open its first store under the Tazo brand name in Seattle with a focus on selling a wide variety of tea drinks. It's another example of the company keeping the petal to the metal in areas outside of its ubiquitous coffee chain.

    AAPL victims round-up: 

    Though its FQ3 revenues missed estimates and its FQ4 guidance was slightly below expectations, contract manufacturer Jabil (JBL +6.8%) is shooting higher. Investors may have assumed the company, which sports a single-digit P/E, would offer a gloomier outlook given worries about slowing mobile phone and IT hardwaredemand. UBS expects strong orders from Apple (Jabil's only 10%+ customer) to give 2H sales a lift, even as orders from RIM and Cisco decline. (transcript)

    Possibly contributing to today's weakness in Nokia's (NOK-1.8%) is a statement from Finnish PM Jykri Katainen shooting down speculation the Finnish government will buy Nokia shares to help prop up the company. Nokia once accounted for ~4% of Finland's GDP, but makes up less than 1% after major job cuts. Also: Nokia says its cost-cutting won't stop it from investing heavily in China, where its market share has plunged.

    Research In Motion (RIMM -4.3%) slumps after confirming it has begun conducting layoffs as part of its restructuring efforts. There may be concerns the job cuts won't go far enough – the WSJ reportsRIM's layoffs have thus far involved letting go of "small batches of employees" at a time. More clarity may be provided when RIM delivers its FQ1 report on June 28.


  148. Why is FAS up if XLF is flat?


  149. So, PG and FDX are saying slow to no growth.  CEOs are starting to get pessimistic.  I am loaded and ready.

    Oh God, it's raining, …but I haven't felt so alive….


  150. Pharm- what is your SPY put position, if any?


  151. stjeanluc/saphon  …..and it can be used for locating extraterrestrials and listening in on the most private of conversations……
     
    I would surround capital hill with saphon's to solve all of our energy needs…. :)


  152. Lots of them…. :)


  153. New member here.  Been watching and learning (lots!) for a couple months…still got a long ways to go to reach my 10K hr mark though (my new trees are but mere saplings).  Curious to know — what is the best method for entering into the FAS Money strategy at this point in time?  It seems to be an ATM! Thanks to all on this site — there's a tremendous wealth of knowledge here!! 


  154. I am in July 131, 132 and 134s.  I am also in Sept 120 and 125s.  I have been selling weekly calendars against them and rolling up as we rise to pay for the rolls. 


  155. Down with TOL, down down down down


  156. Phil – with everyone and thing pulling at your attention, it is impressive that you can still manage to whip out such detailed and articulate explanations as the one you gave me above.  It is much appreciated.  Thanks.


  157. Pahrm/ SPY: can you say more about the strategy? Thanks.


  158. That was a hell of a stick into the close!  Dow finished at 117M – that's usually lunch.  

    Turbines/StJ – That is excellent!  

    MA/Bolt – They get whacked in a downturn in several ways.  If money gets tight (no free money from Fed), it costs them more to lend it.  If the consumers are hurting, they shop less and default more.  VIX went down so long options fell (now 17.15) – if the market drops, MA drops, VIX goes up and those options will pop but it's a safety play, only likely to pay well on a real downturn.  

    Inventories/StJ – WOW!  

    FAS/Burr – Speculation.  Housing numbers tomorrow expected to show improvement.  

    Welcome Lucky!  Best way to enter FAS Money is to start from scratch when we re-deploy our cash.  Probably I won't want to be shifting back from cash until next week at this point but then it's the end of the month so could be a dull week ahead.  

    No problem Bolt – sometimes people just ask something that I think many would benefit from and, if I happen to also have time (cash is helpful) then I have a chance to go into more detail.  


  159.   volume terrible for fomc day…this is why msb had such success


  160. Phil / Income Port – Read the posts last night on the possible exit of positions.  Home early from work today and did a quick scan and saw the call to exit the the first 5 trades.  I had two of the 5.  Exited BA and BBY +89.5% and +76.8%.  I also traded X (TWIL) and Exited X at +35%.  Lost on a USO trade -40% (learning my lessons).  All told +1100.00 (2 weeks).  Thanks for the continuing education!  As you have said many times, Sell premium vs. being the sucker!


  161. Nasdaq ended green – all is good :)


  162. Good day for JRCC…. 27%  :)


  163. BBBY no longer at 52  week high


  164. Portfolios / Phil – My understanding is as follows:

    FAS Money – All cash
    IWM Money – All cash
    $5KP – All cash
    $25KP – All cash except for the FAS Position
    Income Portfolio – We cashed out the first 5 positions (the July puts)


  165. Very nice JFaw!  

    Market recap: Stocks ended mixed after the Fed chose to merely extend Operation Twist, holding off on more aggressive action. The recent run-up in stocks had been fueled by QE3 hopes, but the Fed saved some bullets and will wait for its next meeting in six weeks. Crude oil closed at $81.90, an eight-month low, after a surpriseinventory rise. NYSE losers led gainers seven to five.

    ECB member Beniot Coeure tells the FT the eurozone's bailout funds should buy the sovereign debt of troubled EU states – the first time a top central bank policymaker has publicly backed such a policy. "It's a mystery why the EFSF was allowed almost a year ago to undertake (such actions) and governments have not yet chosen to use that possibility."

    Still a major political force in Italy, Silvio Berlusconi tells the WSJ his party is making a mistake propping up the government of technocrat PM Mario Monti. "The policies of Merkel … will end up in a worsening recessionary spiral." Italy would regain "many advantages" should it be forced from the eurozone, he says. 

    Watch Romney dance:  



  166. Newt – I play SPY much like Phil does with DIA, only I use weekly options to manage my positions.  you can read about Phil's DIA management here and here.

    I am typically in a 0.3X delta position with the puts I own vs what I sell.  I use Opts methods and Springheel Jack's charts to decide how I cover, full or partial. 


  167. Cash StJ – I wanted to be done with FAS too in the end as it's big so no real reason to bother when it will be nice for new people to come in fresh from all cash.  


  168. I’m trading in an Etrade account, $500k+ doing about 10 trades a day on average. A mix of bcs, bw, puts, and equities. Any thoughts on which broker has the best deal on commissions these days, I can’t believe it’s Etrade from what I pay.

    Thanks,


  169. RMS – It's a toss up between IB and Lightspeed.  I'm with IB.  0.70/c, no ticket fees.  cheaper if you trade BIG size


  170. Hey Phil :
    I'm not clear what action I should take in today's market. Should I go to CASH?  Just kidding!!!!
    Seriously, why do u go on that  business program? This is the 3rd interview I watched.They never give u enough time, they don't have the faintest idea of what u are recommending, and they want 3 second answers to questions that would take at least 2 hours to explain. If you want more members, let's have a "Thank you"  members drive where all existing members pledge to get you at least 1  new member. I owe u that much considering what I learned over the last 2 years.
    Also. how about a Las Vegas meeting 2 x a year. this is the 2nd yr I  was unable to attend in the Fall.


  171. Portfolios – All right, all cash then. I'll see if I can post some stats for all the portfolios next week.

    I guess we start fresh with everything… 


  172. Is this guy for real:

    http://www.cato-at-liberty.org/more-skepticism-on-romneys-military-spending-promise/

    Romney’s Four Percent Gimmick would result in taxpayers spending more than twice as much on the Pentagon as in 2000 (111 percent higher, to be precise), and 45 percent more than in 1985, the height of the Reagan buildup. Over the next ten years, Romney’s annual spending (in constant dollars) for the Pentagon would average 64 percent higher than annual post-Cold War budgets (1990-2012), and 42 percent more than the average during the Reagan era (1981-1989).

    And while lowering taxes….:

    http://reason.com/blog/2012/06/19/where-in-the-world-will-mitt-romney-get

    He has variously promised to cap overall government spending as a percentage of GDP, not cut Medicare, and not raise taxes. How might all of these promises fit together? Romney won't say, admitting that his budget plan can't be scored. Independent analysts that have tried to score his proposals suggest it will increase the debt over the next decade.

    In GOP land, tax cuts pay for themselves, we can never spend too much on defense, who needs an infrastructure, welfare is just a give away and poor people are lazy!


  173. I went to cash as suggested today, and tried a new technique to make it stick — I turned off the computer and went to an art museum with my surprised [and beautiful] wife.  Miles Davis, after suffering through another of John Coltrane's hyper-extended solos while playing with Miles's band, told him in no uncertain terms to stop playing.  Coltrane responded, "But Miles, I just can't stop!!!", to which Miles responded "Try taking the horn out of your mouth."  It worked like a charm!! 


  174. Saphon Energy:  Tunisian sail power, a 4 ft. sail the future of energy?  You're kidding, right?  Vestas uses 44 meter blades.  Has anyone noticed the similarity between wind turbine blades and airplane wings?  Has anyone here tried mounting a dacron sail to a frame in a 7 meter p/second wind regime?  Fodder for Ripley's.


  175. Kinda interesting.  I've been looking around for some type of Alert system that will look for unusual option volume within the last hour.  Haven't found anything good yet.  I'll have to take a look at this
    http://www.optionmonster.com/drj_blog/article.php?page=drj_blog%2Fheres_what_depthcharge_saw_in_bbby_puts_into_eps_70056.html&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+optionmonsterDRJsBlog+%28optionMONSTER%3A+DRJ%27s+Blog%29


  176.  
    Wind Sail/
    There is one of these "new" wind capture devices based on "ancient" technology about every four years!  There is betz law, but there is another formula for max energy contained a parcel of moving air.  My understanding is that wind turbines are about as good as it gets.  Based in Tunisia?!?  You guys may be right but I am getting a real Nigerian prince buzz off this one.  I suspect it is to take advantage of the single family homesteaders and preppers.  What about those devices that capture energy from the back and forth of waves.  Wouldn't that be a much better application for something like this if it really worked efficiently?


  177.  
    Phil,  
    I suspect your get out call will be remembered as one of the best calls ever!  I am really happy to be very cashy and cautious.  I just don't see what good news we have been rallying on the past few weeks if not QE anticipation.  Thanks!


  178. RMS / commissions – IB will probably end up being cheapest if you are trading volume.  I am with Ameritrade ( TOS ).  You should be able to get $1.25/contract or lower with them.  Barron's annual broker review is lots of good info.    With AT, make them an offer.  I like TOS, but haven't used an IB platform since over 10 years ago…
    http://online.barrons.com/article/SB50001424052748704759704577267660673833538.html#articleTabs_article%3D1


  179. Man that's an ugly link.  I'll install a URL shortener.  Sorry…


  180. zeroxzero/Coltrane
     
    I guess that is why his playing was much more disciplined when he was playing 'Round Midnight' with Miles's band in the mid 50's. I can't stand the Sound of his Music by the time he started playing 'My Favorite Things'.


  181. RMS/Comm
    I'm with TOS.  $0.75/c, no ticket fee.  Do about 3,000 contracts per month.  I pointed that out to them 2 months ago, not enough to get a lower contract charge.


  182. you know zero you're play in the forex with euro..will soon be back..i ve been short since the earth was cool i covered a couple weeks ago and will wait til we see 1.30ish to assess ..today an odd one made all my money on the rumor merkle was happy (is she ever really  happy?)..that surge was gone in a blink..so was i..futures are rentals in or out on a dip or spike or pre set $ goal..sometimes i use return on margin as a basis for trading and keeping the 'wildfire' aspect of the instrument you are trading  in perspective in or out..it puts everything into an immediate tangible perspective.


  183. IB is 0.70 for anything under 10K/month.  For more than 10K/mo it's 0.50.  For under 0.10 of premium it's 0.50.


  184. Portfolio / Phil – Here are some thoughts for when we restart the portfolios:

    FAS Money – This is the most fun, but I think that we should try to limit the FAS positions to 2 contracts (on each side) to begin with, allowing us to roll to 4 if needed as FAS is really margin expensive. This should not be much of a problem as we have limited ourselves to 2 most of the time, but we had 6 at one point and it's about $50K of Reg-T margin – too much for a small aggressive portfolio I think.

    IWM Money – That was not much fun for me and I would not mind dropping that.

    $25KP – I would suggest renaming that to Aggressive Portfolio as we used up well over $250K of margin at some point and the name would be more accurate.

    $5KP – I think that $5K is too constraining to get anything done. I checked and we bought and sold 324 contracts over the life of the portfolio. At best, that's $250 of commission and for most closer to $350. Counting slippage (we never get the best prices), it's tough to make money unless we limit the transactions to some BCS every month for example (maybe the way to go). But not as much fun. Maybe we should raise it to $25K which is manageable for most and use some limited margin to sell premium for example – not selling 3x ETF. That would be the real $25K… 

    On top of these, we have the MoMo portfolio, the Income portfolio, the Peter Strangle portfolio and the IRA portfolio. Overall, that should be enough for everybody's taste! Just some thoughts. Maybe others have some feedback!


  185. Knightpilot:  "Nigerian prince buzz" is classic, needs no clarification!  Angel, I ain't waiting around for 1.30, although it would be nice.  I agree with Phil that, in general, forex is a coin flip and not a percentage play, but unless Merkel is willing to turn the Euro into Deutschmarks at one-to-one by the end of the week I need the cover, since I own stuff I can't dump that will get crushed if the Euro disappears below the event horizon.


  186. St. Jean,
    great idea on the $5K. I was thinking along those lines as well:
    $5KP – I think that $5K is too constraining to get anything done. I checked and we bought and sold 324 contracts over the life of the portfolio. At best, that's $250 of commission and for most closer to $350. Counting slippage (we never get the best prices), it's tough to make money unless we limit the transactions to some BCS every month for example (maybe the way to go). But not as much fun. Maybe we should raise it to $25K which is manageable for most and use some limited margin to sell premium for example – not selling 3x ETF. That would be the real $25K…


  187. Whew, finally checking in PSW and looking at my portfolios.  The good news is that they are showing big gain due to the drop in VIX and that the market ended the day almost unchanged.  Another fine example of selling premium (and the black swan didn't come).  My portfolios are well hedged, so I was confident in leaving it alone in such a volatile day with Fed announcement and be away from the computer.  It worked out well, so if you are sweating with your short strangles, you'll need additional hedging or "do your own maths" to be comfortable with your positions as mentioned by lflan yesterday (or was it Monday?).
     
    Futures /ES is down 6 points currently, but tomorrow is another day and there are plenty of time for manipulation until tomorrow's open.


  188. Broker/Rms – Most of us use Think or Swim our rep used to be scott @ thinkorswim dot com but I think he changed – I'm sure someone knows.  IB seems to have lower rates and we might have a guy there but I don't know who.  

    Members drive/Dflam – I do want to get more Voyeur and Report Members so any ideas to do that would be super-helpful.  Not too many more Basic and Premium as we have a comfortable amount now as I can keep up with chat even on a busy day.  As to another meeting – maybe if there's enough interest.

    Fresh start/StJ – I like it, especially halfway through the year.  

    Romney/StJ – That's one thing the pollsters don't realize, Romney seems like he can win on paper but once people get to know him and actually listen to his ideas – he's a total disaster.

    Sounds like a good day (not) in the markets to me ZZ!  What's the point of making money if you don't take some time off to enjoy it once in a while.  

    Speaking of enjoying it – I'll be in LA on the 11th, 12th and 13th next month and need a good hotel that's fun for the kids – maybe something with a beach or a cool part of town (or maybe Hollywood or Universal – whatever is good for kids matters most) and then we're off to San Diego the night of the 13th so need a cool hotel there too and I think we're sleeping at the Zoo on Saturday and then Sun night need a hotel again.  Comicon is that weekend in SD so gotta go check that out…  

    Saphon/ZZ – So you figure it's a scam?  Too bad…  I agree the physics seem against them but I did figure someone checked as they did win the KPMG Innovation Award this year but, then again, they're just accountants so what do they know?  

    Option Monster/Burr – They talk a good game in hindsight but (and I haven't tried them for years), in practice I did not find it to be of much predictive use.  

    Waves/Knight – Do not get me started on that one!  I pushed a wave tech idea back in the 90s and couldn't get a dime from VC's, who were all chasing dot com companies and didn't want to touch anything that had an exit date past next Tuesday.  On the whole, they were kind of right because OPTT never really made any money (but they do have cool tech) but what I wanted to do was use decommissioned super-tankers and park them where there were waves to lift them and drop them (100,000 tons) onto hydraulic presses that would compress fluids or just turn turbines.  It was, I thought, a very good plan but the scale of the project scared people.  Think about the energy conversion though of having the sea lift a 100,000 ton tanker 3-4 feet over and over again and picking up the energy from the drops…

    A diagram of the WRASPA device

    Best call/Knight – Remains to be seen but much more relaxing this way in the least.  

    Links/Rkyro – Use the linky thing on the top of the comment box.  Just highlight the text you want to create a link for, then click on the globey thing (stop me if I'm getting too technical) and then just put in the URL and that's that. 

    FAS Money/StJ – I agree start with 2 but sometimes it moves against you and you will end up with 6 and we need to make it clear to people that they shouldn't play in low-margin accounts.  You should never play anything you don't have the margin to double down twice on in the first place.  IWM I found less volatile than FAS so less dangerous – it still made good money but we can find something else I guess.  Renaming $25KP is fine or $25,000 Aggressive Portfolio (10% of main account max) might be a good title.  How about $25KP Ordinary Margin Portfolio?  We can still sell puts but only within the bounds of the margin you'd have with $25K in a normal account.  


  189. "need a good hotel that's fun for the kids – maybe something with a beach or a cool part of town"
    Universal and Hollywood are in reach but you wouldn't want to stay near them so you should check out Shutters in Santa Monica. http://www.shuttersonthebeach.com/santa-monica-luxury-hotels
    It is right on the beach. You can walk from your room to the Pacific. Just a few minutes south is the Venice boardwalk which, while it's not as sanitized as a Disney experience for the kids, will give them lots to be amazed at and plenty to talk about. Lots of shopping: Santa Monica has all the usual big names and more; Venice, with its no big box policy, has lots of interesting boutiques. My god-daughter, a teenager, is drawn to them like a moth to a welding torch — my credit card only knows how scorched she gets. Good eats too. Can give you a short list list if you go West LA and the beach instead of elsewhere. And lots for kids to do: surfing lessons, skating, beach bike riding and on and on. Malibu is up the road and east of that are some interesting parks and walks. All in all not bad.


  190. PHil/Pharm, what's your opinion on CIGX?  It's gaining traction as an up and coming bio-tech, they originally sold a surrogate smoking product but now also a new compound called Anatabloc sold thru GNC, under tests for all kinds of interesting health applications.  Thinking of selling 2014 $5 puts and buying @2014 $3 calls…


  191. Peter- re: Short Strangle – you say your portfolio is hedged- do you maintain hedges in addition to put verticals? If so, can you elaborate?


  192. TOS- Scott is no longer active day to day at Think or Swim. New contact is Mike Barwacz
    mbarwacz@thinkorswim.com


  193. Crude oil prices fell on Wednesday to an 18-month low, fast approaching the $90-a-barrel mark, as investors dumped commodities because of fears about global economic growth.
    http://www.ft.com/intl/cms/s/0/807f802c-bb19-11e1-b445-00144feabdc0.html#axzz1yQSFXWmj


  194. LA Hotel- I stayed at the Malibu Beach Inn a couple of year ago – very nice place right on the ocean. Get an ocean view room- nothing beats sleeping to the sound of the surf breaking on the beach. An excellent Italian restaurant just a short walk from the hotel- been there forever I was told- the name escapes me at the moment. Surfing, kayak rentals, fishing pier all within a short walk. Patio dining right on the water.
    http://www.tripadvisor.com/Hotel_Review-g32676-d113240-Reviews-Malibu_Beach_Inn-Malibu_California.html


  195. Good morning!  

    Shutters sounds like a winner, thanks Zip!  

    CIGX/Jerconn – I leave that stuff to Pharm.  It's relatively easy to follow tech companies compared to Biotech because it's such a fluid environment with so many moving parts you have to really immerse yourself in it to get a proper feel for the movements.  I decided a long time ago that that was a block of time I did not have and, fortunately, Pharm is absolutely amazing at it.  

    OK, so Dollar at 80.80, Euro $1.2669, Pound $1.57 – Yen flew up to 79.92 in a 1% move on the day and the Nikkei flew up to 8,850 (good call from Monday's Alert although cashed) but China fell 1.4% on poor data – again.  

    China HSBC Flash PMI for June falls to 48.1 from the 48.4 final read for May. It's the 8th consecutive month of contraction for the manufacturing sector. New export orders fell to 45.9, the lowest level since March 2009, and both input and output prices fell to their lowest levels in 2 years. Shanghai -1.4%, Hong Kong -0.9%, Sydney -0.9%. The aussie -0.3%.

    China 4 Big Banks Lost 460b Yuan Deposits in Early June. Industrial and Commercial Bank of China Ltd., China Construction Bank Corp., Bank of china Ltd. and Agricultural Bank of China Ltd. saw net deposits decline by a combined 460b yuan in the first two weeks of this month, citing a lender.

    Europe is down half a point and our Futures are down a quarter point but off the lows, which were down a half point at about 4am.  

    Oil very sad at $80.63 and so is gold – just failing $1,600 and silver bounced off $27.50 so far ($27.84), copper down .10 to $3.34, nat gas also fell .10 to $2.55 and gasoline bounced off $2.55 – also down a massive .10 and now back to $2.57.  Weak, Weak, WEAK!  

    The weakness in the oil market is a warning, says Josh Brown. He sees the weakness as a leading indicator, and as oil prices hit their lowest levels in over a year and a half, it's a sign that global growth is facing some serious headwinds. With the fiscal cliff looming and persistent European troubles that never seem to go away, the energy markets seem to be confirming an inevitable downturn, and Josh, along with a host of other traders, are warning investors to prepare, now. 

    USO WEEKLY

    Still, we're a little bit back in that "news is so bad it's good" thing due to Bernanke's comments that the Fed is ready to do more if things get worse but I don't think he meant 1% worse since we were 7% worse two weeks ago and that wasn't bad enough to get them off their asses.  

    Markets moving up a bit now thanks to this gem:  

    "This is not a subject of debate right now … but there is a possibility," says Angela Merkel of the recently oft-floated idea of doing away with pesky bailout agreements and just using EU rescue funds to buy troubled sovereign debate. Germany has been consistent that it wants tighter joint control of EU states' fiscal policy before moving on this issue.

    Angela Merkel's government and Germany's opposition parties reach an agreement to next week provide Bundestag approvalfor the eurozone's permanent bailout scheme and the fiscal compact. The ESM needs to be ratified so that it can come into effect on July 1.

    6:00 AM Overseas: Japan +0.8%. Hong Kong -1.3%. China -1.4%. India +0.9%. London -0.5%. Paris -0.4%. Frankfurt -0.3%.

    7:00 AM On the hour: S&P -0.27%. 10-yr +0.03%. Euro -0.28% vs. dollar. Crude -0.93% to $80.69. Gold -1.06% to $1598.75.

    Thursday's economic calendar:

    8:30 Initial Jobless Claims

    10:00 Existing Home Sales

    10:00 Philly Fed Business Outlook

    10:00 Leading Indicators

    10:00 FHFA House Price Index

    10:30 EIA Natural Gas Inventory

    4:30 PM Money Supply

    4:30 PM Fed Balance Sheet

    Former Fed Governor Robert Heller says the Fed'smonetary easing policy has run it course, and it's time to focus on fiscal policy. "The Fed has done what it can do," Heller says. Besides, the real problem with the economy isn't a lack of liquidity in the marketplace, but the poor credit quality of individuals and some companies. There just aren't enough credit worthy borrowers around, and the tight regulatory environment is just making a bad situation worse.

    Treasury yields are little-changed – the 10-year yielding 1.65% – after having a night to sleep on news the Fed is going to pump another $267B into the long-end between now and the end of the year. Last fall's Operation Twist had no success at bringing long rates down – they started falling this Spring when it became evident growth was again slowing. 

    Eurozone PMI manufacturing (flash) comes in at 44.8 in June, in-line with expectations and down from 45.1 prior. PMI services (flash) comes in at 46.8, a smidge above the 46.4 consensus and the 46.7 prior reading. June's fall in business activity rounds off the worst quarter in three years. (.pdf)

    Germany flash PMI manufacturing falls to 44.7 in June vs. 45.2 expected and prior. PMI services comes in at 50.3 vs. 51.5 expected and 51.8 prior. It's the steepest drop in German private sector output in three years. Euro reacts to the soft data: -0.4% to $1.2652. (PR

    Italy, Spain Heading for Full Bailouts, Fidelity’s Stuttard SaysItaly and Spain, which account for more than a quarter of the euro-area economy, are heading for sovereign bailouts in the next 12 months that will send shockwaves through the global economy, Fidelity Investments’s Jamie Stuttard said. Both sovereigns will likely stumble over debt auctions in the next year, forcing European authorities to find official funding for them to hold the single-currency area together, Stuttard, Fidelity’s head of international bond portfolio management in London, said in a telephone interview on June 19.

    Italians Openly Dodge Property Tax in Test for Monti’s Austerity. Luciano Di Pardo, a lawyer in Milan, is dodging Italian Prime Minister Mario Monti’s new real estate tax. “I didn’t pay it,” Di Pardo, 75, said of the levy that was the centerpiece of Monti’s austerity budget. “I get that we are on the edge of failure and disaster, but you can’t keep taking from ordinary people.” The new levy, which should have cost Di Pardo about 500 euros ($630) when the first payment was due on June 18, may mark the limit of how much Monti can squeeze out of taxpayers. The belt-tightening is also sinking the prospects of Monti’s supporters in parliament and deepening Italy’s fourth recession since 2001.

    An independent audit, due out today, will reportedly show that Spanish banks need around €65B ($82B) to recapitalize, far less than the €150B speculated upon earlier this week, and more in line with Fitch and IMF estimates of €40-€80B. There have been fears that the EU's €100B rescue won't be enough.

    Spain sells €2.22B of bonds, exceeding the target range of €1B-2B, but yields for 5-year paper rise to 6.072%, the highest in fifteen years and a jump from the 4.960% yield last month.

    7:26 Update:  Spanish bond yields are off sharply again, the 10-year -19 bps to 6.55%, the 2-year -24 bps to 4.78%. The country earlier saw plenty of demand as it moved €2.2B in 5-year notes at 6.07% (now trading at 5.91% in the secondary market). Madrid shares are the outperformer in Europe, +1.1%.

    Bank Regulator Warns Hedge Funds of CrunchThe Bank of England regulator Robert Jenkins yesterday warned senior hedge fund managers to beware of a potential massive clampdown on their trading activities if the eurozone crisis triggers a return to the kind of liquidity crunch that followed the collapse of Lehman Brothers. In a stark warning to traders who have become complacent again with the assumption that liquidity in financial markets – the willingness of investors to buy and sell assets – could be taken for granted, Mr Jenkins, pictured, warned that this may not be the case. "Short-term traders count on it; algo [algorithmic "black box"] trading depends on it. Long/short strategies presume you can short… "But here's the thing: confronted with sudden surges in cross-border flows, elected government will attempt to intervene in the interests of stability generally and to protect their taxpayers specifically, " Mr Jenkins said. He added that "like air and water, market liquidity is no longer limitless and no longer free".

    If you didn't pile in in Russia after its 1998 currency crisis, or Argentina after it defaulted, or the S&P in March 2009, "you're not qualified" to brush off Greece as an outstanding investment opportunity, says George Elliot, who is raising funds to invest in the defaulted EU state. For now, he's focusing on companies that generate most of their business outside the country.

    Japanese Prime Minister Yoshihiko Noda gains the support of the main opposition groups for a controversial proposal to hike the country's sales tax to 10% by 2015 as part of an attempt to bring down the government's massive debt. A vote could come tomorrow or next week, but the measure could split Noda's party.

    Japan machine tool orders comes in at a final -3% Y/Y in May vs. -2.9% Y/Y preliminary reading. (via)

    The rupee falls to a record low of 56.53 to the dollar. Traders are on watch for any potential intervention from the Reserve Bank of India to defend the currency.

    New Zealand's GDP grew a much faster-than-expected 1.1% in Q1, helped by a rise in agriculture and business services. Economists had targeted 0.5% growth. It's NZ's fastest pace of growth in nearly five years, but some strategists worry "the large rise will only cast further doubt on the veracity of the national accounts data, which have been subject to considerable revisions recently."

    Citigroup's (C) book value could take a $3B-5B hit this quarter as currencies in some of its biggest markets decline against the U.S. dollar, says Charles Peabody of Portales Partners LLC. Citi disputes Peabody's conclusions, though it doesn't dispute that it relies on developing nations for more than half its profit and that currencies like the Mexican peso and the Brazilian real have weakened.

    Eagle Bulk Shipping (EGLE+14.1% AH after reaching a debt restructuring deal. $1.13B in debt outstanding through a revolving credit facility will be turned into a term loan due at the end of 2015, with a possible 18-month extension. Eagle will receive a new $20M credit facility, and all debt outstanding via its current credit agreement will carry an interest rate of LIBOR plus 6%. Creditors will receive warrants convertible into common stock equal to 20% of current outstanding shares. (PR)

    Lenovo Cuts PC Shipment Guidance to 13%-15% Growth. Co. told suppliers it will lower guidance of its global PC shipment growth for this year to 13%-15%, from previous forecast of 20%-25%. Shares fell as much as 7.2% today on 45% above avg. volume. Dell(DELL) shipments growth will be flat vs. earlier guidance of about +5% y/y.


  196. Gee, no one noticed the big chart missing…


  197. The Fed’s extension of “Operation Twist” was greeted with a mixed reaction on Wall Street. The Dow crossed zero 48 times during yesterday’s session before finishing down 13 points, not exactly a ringing endorsement for the central bank’s latest move.
    http://on.wsj.com/L7iW5m


  198. Phil / MA and AMZN long puts from yesterday — assuming you still like those plays, will you ride until you call a bottom, or until a certain profit?