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Tuesday, November 29, 2022

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TGIF – Hail to the Cash!

SPY DAILYWheeeeee – that was fun!

A bit more violent than we expected but now you can see why we went to cash on Wednesday.  We even took a bullish bet on the Qs at the end of the day as we were hoping for a bounce this morning and we had really cleaned up with DIA July $124 puts from the morning Alert to Members, which came in at .95 and ran all the way to $1.85 but we took the money and ran at $1.40 for a nice 47% gain on the day

We also picked up AAPL weekly $570 puts for .50 and those made a quick 40% as well, closing at .70 at the day's end.  

In the afternoon, we took our winnings and played the QQQ next weekly $63s for .75 and they dropped a dime to .65 but we're playing with house money and a stop at .50 on the hopes there will be a rumor of stimulus that spikes the market back up.  

We were too scared to play the Financials bullish with the Moody's downgrade looming but we will be restarting our FAS Money Portfolio today in the hopes that this will be a bottom for the Financials (about $14 on XLF) that we can begin to makes some bets on.  Fas Money was, by far, our most profitable portfolio in the first half of the year, cashing in Wednesday with a virtual $12,175 profit with almost no cash in play (but using margin to sell FAS puts and calls on a regular basis).  

There are still rumors that MS will suffer heavy margin calls.  I say rumors because The Street reports $6.8Bn as a fact but, since Cramer is behind it, I don't believe a word they say.  

Moody's lowered its long-term senior unsecured debt rating for Morgan Stanley to Baa1 from A2, with a negative outlook, while cutting its short-term rating for the firm to P-2 from P-1 but this move was a long time coming and MS stock has already plunged from $21.13 in March to $12.26 in early June and that's very close to the $10 line they hit in 2009 – which they tripled off by June.  

We don't trust MS enough to bet on them directly but, if they DON'T blow up, XLF should do quite well and, even if they do fall apart, we think XLF has enough strong players to weather the storm.   Our previous favorite, JPM, seems to be doing just fun and, with an A2 rating – is still the star of the group!  If you want to be aggressive, MS can be played to hold $12.50 by selling the 2014 $13 puts for $3.15 and buying the $10/15 bull call spread for $2.50 for a net .65 credit on the $5 spread that's $4 in the money to start.  

Your worst case is you own MS at net $12.35 and Think or Swim tells me that you hold aside just $1.80 of net margin on this trade and that margin requirement will reduce if MS takes off and, if it doesn't, then your premise is blown and you should probably get out.  If all goes well, this trade will return $5.65 against the .65 credit an over 8x return on cash and a 3x return on margin if MS is at $15 come the Jan 2014 expirations.  

See how much fun we can have with our cash!   There are tons of great opportunities out there – so no hurry, we're not rushing into these trades because, with 800% returns, we don't mind missing the first 200% if they "fix" Europe next week because THEN we will feel nice and confident playing for that next 600% of upside.  Still, deploying a little bit of cash on a greed play is fun, right?

Speaking of fun plays.  Some of our Members had trouble filling LQMT on Tuesday and BNN rushed me off the air before I could mention them as my fun trade of the month.  Today they are back to .30 and we still like them.  AAPL just extended their licensing deal with the company for 2 more years and we're just looking for another rumor that LQMT's alloys will be used in the IPhone 5 to spike them up again (we caught a ride from .15 to .55 in April) but it's a craps roll kind of bet, so we're thrilled to take a dime and run when it comes.  

We'll be going back to the well on our Twice in a Lifetime List (Members Only) as we begin to re-establish some of our long positions but only tentatively ahead of the weekend.  We HOPE (not a valid investing strategy) that the EU gets it together and drops another Trillion on the PIGGS – that should be enough to take us to the end of the year at S&P 1,350 or higher but, until we get the ACTUAL stimulus – Cash remains KING!  

Have a great weekend, 

– Phil

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New York
OT –  I'm heading to NYC for a day in the big city on Sunday and Monday.  Looking for any recommendations for off the wall places to eat/see that people love.  Dinners are already planned, but I'm looking for those cool things that only city people know.  Like where are famous donut/cupcake/bagel/pizza,etc.  Something that you would tell someone they NEED to have before they die.  Any sugesstions are appreciated!!!

I was raised in a French Canadian town in Maine…they were wonderful hardworking fun loving people..
I will actually be in Montreal July 27th for a week. Anyone who is going to be around let me know 
"I told him for a job he asked me no I said come to hell you son of a bastard"
(my friend roger arsenault's dad after a job interview)
'Hey Angie I am on your way to my house"
(My friend Gas Dumais calling to let me know he was  coming to visit.)
"fuckshit le ding dong i cut it twice its still too gaddam short!"
conrad st hilaire realizing he had made a mistake with his band saw calculations

if you know the "haccent" you get the above

Angel:  Maine is in the U.S.  But close enough for government work.

Burrben – I really like Norma’s for brunch. Make sure to book ahead if going. Whilst I’m not a huge cupcake guy, Sweet Revenge is pretty cool as they match your cupcake up with a specialty beer.

NYC/Burrben:
Pizza – DiFara's in Brooklyn or John's in Greenwich Village
Bagels – Since H&H went under, Ess-a-Bagel is defacto best.  Dunno if its to die for though…
 
My "Go-to" brunch for visitors is always Dim Sum in Chinatown.  Incredibly-good authentic Chinese small-plate foods at super-cheap prices in a raucous, unforgettable environment.  Definitely not for the button-down crowd as Dim sum is the epitome of "slumming it".   I usually hit Jing Fong or Golden Unicorn on the weekends, though there can be a wait and if your group is small you might be seated with other parties.   If its your first time at dim sum, you might want to bring a chinese friend or ask some of the other patrons how the "system" works.

Good Morning!
 
Phil, nice rant for the American Worker….. 🙂

Burrben/NYC/West Village –  Red Farm on Hudson St is local ingredients/Chinese style- unique, really great, large line – call at least an hour before,though now they have brunch which may be more accessible.  Taim on Waverly is awesome falafel. Popbar @6 Ave and Carmine has great popsicles.  And Spunto on Carmine is almost as good as John's on Bleecker., less crowded, no Pete Rose autograph on the wall. (I think the same people run more established Posto on 2nd Ave).

Vegas Payments—-just a reminder that if you check "issue refund" option on pay pal there is a fee of $6.10 taken out–please take that into consideration
Thanks

Went to a Walgreen's last night.  Since I live outside of the U.S., this is a novelty.  It was huge.  There were, that I could observe, three employees in a half-football field expanse.  No one spoke to me.
 
 I loaded up a cart and had a very fractured discussion with some kind of check out computer that kept repeating "put the item in the bag" no matter what state of physical reality obtained.  We both got through it, but after leaving the place, an employee ran after me, asking "did you buy razor blades?"  Well, yes.  She reached into one of the bags, took out the blades, which were encased in some kind of plastic box, and extracted the razors, keeping the box.  Federico Fellini would have been amused; I was merely bemused, thinking "this is the kind of future Phil keeps describing."  The employee never cracked a smile or showed any traditional signs of life beyond locomotion; it's not clear she was human, either, although a robot would have been programmed to say "have a nice day", I reckon.

Burrben / NYC
I normally do not tell this secret even to a girl until I know her pretty well (because she will go there and tell her friends and her friends will go there and tell their friends and soon there will be no chocolate left for me!).
Go to Li-Lac Chocolate – specializing in chocolate covered marshmallow bars and chocolate covered caramel bars made fresh every day.
Greenwich Village:
40 Eighth Avenue (where Eighth Street meets Jane Street)
212-924-2280
Grand Central Station Market
Enter Market Hall at Lexington and East 43rd Street
212-370-4866
If you like chocolate you need to eat this before you die!

As promised, here is the update of Peter's portfolio including the roll he called on Friday:

Burrben/NYC
Here's a pleasant and short walk with some payoffs. Start in Madison Square Park and marvel at the Flatiron Building. Depending on the time of day you could drop into a diver bar looking place Live Bait at the bottom of the park on 23St. They do oysters and clams at incredibly low prices. From the park head south on Broadway. Two stores of interest along the way at 19th street. ABC Furnishing & Carpet is worth a visit. Just do the main first floor — unless you're looking for something specific like a lamp — it's a cornucopia of household bits and decorative pieces you'd never thought you'd want until you see them. Great for gifts as it Fish's Eddy across the street that specializes in unusual and novelty ceramic ware. After all that head south again to Union Square. Check out the square as they're always something going on and end up for hot chocolate or coffee and pastries at City Bakery
Since your time is limited just one other suggestion: Check out Katz's Deli on Houston Street. It's an experience from start to finish. The Pastrami on Rye is what to have — good most times although a bit dry on my last visit. But the real reason to go is that there is the overall atmosphere — the style of service hasn't changed in decades. And don't lost your "ticket" or you'll end up in the seven circles of hell!

Euro/Germany inaction/action
Here's an interesting comment I came across on an Irish economics blog from a poster called Rapid Eddy:
 
 
Will Germany backstop the euro and is it paying for others’ profligacy? Well, it all depends (a) how much the euro is worth to Germany and (b) where the money eventually, finally ends up.
The euro has been guided – you might say controlled – by German interests. The interest rate has followed German domestic interests. It was low when the German economy needed boosting at the same time as a higher interest rate might have helped cool down the overheating Irish economy and property bubble.
The eurozone – enthusiastically enlarged by Germany – enabled Germany, as a huge exporter to sell into a 400m strong quasi-domestic market, unhampered by a soaring Deutschmark making their exports prohibitively expensive. Outside the eurozone, the euro traded at a value way below where the Deutschmark would have been.
Long story short: the euro made German exports much, much more competitive both within the eurozone and outside the eurozone. So the question is: how much has the euro been worth to Germany in the last ten years in terms of additional exports? Tens of billions? Hundreds of billions? Trillion plus?
And what about the German banks? On average, German depositors squirrel away about a quarter of a trillion euro each year. Banks don’t like money unused and with the eurozone, they could lend freely unhindered by exchange controls and fluctuating exchange rates. Obviously, the Irish, Greek banks, etc., borrowed like there was no tomorrow and in the case of Greece and Ireland there barely is. Once again, how much was that additional banking activity worth to Germany?
People seemed astonished that Germans don’t seem to (a) follow or appreciate the gravity of the situation or (b) understand that their policies are ultimately counterproductive in that austerity is exactly the wrong thing to do in a recession and it will contract the economies it is extracting money from.
But Germany understands it all very well. What Germany is currently doing is not a failure to react to the circumstances but a calm, medium-to-long-term game plan. They (and their banks) are owed money – rather a lot of it. What they are doing is extracting the maximum possible amount of payback until payback is no longer possible. So if they can get Ireland to pay back all those pesky bonds/promissory notes, then they might ease up thereafter. The Irish government knows this, which is why they’re playing good boy in the class. In the case of Greece, they will keep the austerity and ‘fiscal discipline’ for as long as possible, until the Greeks cannot or will not pay any more. But it’s a rational, if cold, German tactic. Keeping squeezing until the pips squeak and the juice runs out.
The Germans will backstop the euro because it benefits them to a far, far greater extent than any other national economy. In the meantime, they’ll take the maximum benefit from the plunging euro rate, extract the maximum payback from the debtor states and do as little as possible, as late as possible. Germany and Merkel are quite happy for people to characterize what they’re doing as a muddle, inaction or too little, too late. Too little, too late is the strategy that benefits them most."

And here is an update of the income portfolio. The first 5 positions were closed on Wednesday.

And here is an update of the MoMo portfolio after a big trade day on Friday:

Lflan – At the end of the day you mentioned Jul 575 Calls for AAPL, but we already had the 580 and the prices didn't match the 575 so we have 20 575 long. Let me know if I missed anything.

Crazy $hit happening here in Colorado Springs. Wild fire started two days in Waldo Canyon off Highway 24 at the base of Pikes Peak. It's burned close to 3000 acres with no containment. Temperature is 99 degrees, extremely dry and windy.
We can see the glow of the 100 ft. high flames from my house as the fire is about 2.5 miles away. We are about 1 mile from the evacuation zone.
11,000 people have been evacuated, including the town of Manitou Springs soon after midnight last night.
Last night the smoke was so thick I couldn't stay out with the dog for more than two minutes without getting a headache and lungs hurting.

Needless to say, we have been busy packing all personal, valuables, and ready to unplug computers etc and get the H out if necessary.
Hard to think straight with all this going on. Seems almost surreal.  Check out some of the photos if you get a chance.

Seems like the whole state is on fire with 7 different wild fires going on at one time. I guess all the years of drought, and Pine Beetle destruction of whole pine forests if finally catching up with us.  It may be time to relocate.

Hi All,
Which are good websites/blogs to get a good read of the current market news? SeekingAlpha/Finviz/Bloomberg/Yahoo???
Thanks

Good luck Jbur…

Good luck, Jbur

Stj: Thanks much.

Good stuff from Barry's site:

http://www.ritholtz.com/blog/2012/06/austerity-at-work/

Arthur Laffer and Stephen Moore wrote an op-ed in the WSJ titled Obama’s Real Spending Record. In it, they used the following chart to demonstrate what a big spender Obama is. Seriously, they did. The beauty of it was the mental gymnastics they went through to convince their readership to ignore the actual decline in spending we’ve seen for the past 2+ years. See that (very inconvenient) red line moving down and to the right? And they used that chart anyway. Mind bending – I actually could have used their chart in my May piece demonstrating Obama’s relative frugality. To their credit, though, they do get one thing right: “Sadly for fiscal conservatives, the biggest surge in government spending came during the last two years of President George W. Bush’s eight years in office (2007-2008).”

Barry concurs:

This is not politics, but simple numbers. Sorry if it conflicts with your previously assumed narrative . . .

 

Here is the WSJ:

One reason the unemployment rate may have remained persistently high: The sharp cuts in state and local government spending in the wake of the 2008 financial crisis, and the layoffs those cuts wrought.

The Labor Department’s establishment survey of employers — the jobs count that it bases its payroll figures on — shows that the government has been steadily shedding workers since the crisis struck, with 586,000 fewer jobs than in December 2008. Friday’s employment report showed the cuts continued in April, with 15,000 government jobs lost.

Jbur – Where in Colorado are  you? I'm in Denver and it's hot as hell, but no fires in the immediate vicinity (that I'm aware of anyway). Anyone else in Colorado? I hope I don't have to relocate anytime soon. Though living in the foothills would be a little disconcerting. 

kurtww: I live in North West Colorado Springs about a mile from the southern border of the USAFA. Been here for 26 years. It's been a great place to live… but I have to wonder…

Jbur
Sounds intense.  Best to you and yours and your community.

Best of luck, Jbur, keep us posted.

Good morning,
Oil bounced on PP at 79.20
I will play a retrace to R1 (80.50)
This weekend news are plentiful
– Germany Finmin tells Obama to mind his own garden
– Merkel tells Greece to stop whingeing and to get to work
– Greece caught red handed for replacing retiring civil servants in breach of its bailout agreement
– A Turkish aircraft gunned down at the Syrian border
We should have a fun week ahead of us 🙂

Oops and I forgot about Debby…
Long oil

Another try off $79

I'm with you off 79 but only looking for .25 before I have to go to work

Alot fo RAIN here in FL thanks TO DEBBY, Nice leak in the room w water dripping onto the 40 TV, NO FUN

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