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Monday’s Mobbed-Up Markets – “Investment Banks are the Mafia”

You HAVE to watch this!  

Matt Taibbi and Yves Smith, two people who really understand what the Banksters are up to, explain to Bill Moyers how Investment Banks are no different than any other form of organized crime except for the fact that they completely own the politicians and the judges and the regulators who are supposed to be prosecuting them and the ones that can't be bought – like Elliott Spitzer – are destroyed.  

 

Things are not going to get better in this country – or anywhere in the World – until we begin to treat these Banksters like what they are – criminal organizations that are stealing the wealth of the World.  The problem is they are smart enough to share their ill-gotten gains with the little people along the way who look the other way – so there's no one in power who wants this game to end.  This is obvious to anyone who saw that farce last week when Jamie Dimon went to Capital Hill so all the Congressmen and Senators could apologize to him for wasting his valuable time.  

Jefferson County in Alabama is bankrupt thanks to JPM, Stockton California is now filing for bankruptcy as well with $700M in bond debt going into default.  Tiabbi exposed the auction-rigging that has led to these bankruptcies (as well as those in Europe) in "The Scam Wall Street Learned From the Mafia" and the fact that you hear almost nothing about this in the MSM shows you just how far the Banksters control of the media extends.   

ALL of the major banks were involved in the systematic rigging of bond auctions throughout the country yet very few Americans even know it happened.  They did the same thing in Europe but it's the people who are being blamed for spending money they didn't have – not the people who sold them the loans at unrealistic rates that were essentially a massive Ponzi scheme aimed only at generating fees for the lenders – who were not just lenders but the consultants who deemed the spending programs "necessary and affordable."

The muni bid-rigging investigation described in the article, as large as it is in scope, is likely just the appetizer for an even broader and more serious investigation into another cartel-style corruption scheme, the manipulation of LIBOR, the interbank exchange rate often used to determine variable interest rates for things like mortgages.  Regulators in at least four different countries – the U.S., Canada, Japan, and the U.K. – are conducting a probe into the manipulation of LIBOR.
 
At least one bank, UBS, is cooperating with authorities, and Wall Street has been abuzz with rumors in recent months that another major cooperating witness has come forward. That, coupled with news this winter and spring of dismissals of rate traders at several major banks in connection with these probes, suggests that these investigations are gaining momentum.  JP Morgan is currently being probed by Canada but not one Senator or Congressman thought it was worth mentioning last week, did they?

As Yves Smith points out:  

Global financial markets have become destroyers of states, not a new kind of state. That the traders rely, as citizens, on some sort of state structure to live, is merely an irrelevance, an inconvenient aside. 

It is impossible to deregulate financial markets because money is rules about value and obligation. So what happened instead when financial markets were “deregulated” is that the governments’ role as the setter of rules was handed over to traders, who made up their own rules: more than $700 trillion of derivatives, intense high frequency trading and so on. It results in a weird contradiction: governments trying to save their systems from the new rules being created by the traders, yet the traders relying on the state’s rules about finance to overlay their games of meta money. Meta money traders have to have conventional share trades between buyers and sellers to apply algorithms to manipulate the markets at high speed.

You need conventional commerce in commodities to use derivatives to play commodity futures, for example. It is why governments are constantly attacked by players in the financial markets who are simultaneously hard at work exploiting those “errors” to make money. Meta hypocrisy to accompany the meta money.

The tsunami of this meta money, which is borderless, stateless and has no thought for its effect on governments or polities, still relies for its very existence on the rules set up by governments. And as has been obvious since the GFC, governments and tax payers are expected to clean up the mess when it inevitably all goes wrong. That can be done once. When it goes wrong a second time, the firepower will not be there, as is increasingly evident in Europe. The conventional rules will have been weakened too much by the rules invented by the traders of meta money.

It represents a comprehensive failure of government, and will not lead to the creation of a new type of state. It is rather a new type of chaos. It is especially pernicious when governments start to dabble in the meta money, as Greece did when the government covered up its debt by using derivatives. That is wholly unforgiveable. It is bad enough that governments have allowed traders to make up their own rules with money, in effect playing Russian roulette with money itself. But when they, too, start using the same tricks, then the road back to sanity becomes long indeed.

Moises Naim of Carnegie's IEP likens the state-sanctioned use of Banksters to the nod and wink attitude nations used to have towards pirates, who would destroy foreign ships attempting to establish trade routs that may compete with their established business concerns.  There have always been countries whose leaders have behaved criminally, says Naim.  Today is no different and in most of the world's nations, graft, dishonesty in the use of public funds and the "sale" of government decisions to the highest private bidder are common. Corruption is the "norm" and we have become inured to it.  

These are countries where the state controls and uses large and powerful criminal networks to defend and advance the national interest and — as importantly — the personal interests of the governing elite, their family and friends. 

In the last two decades a series of profound transformations in politics and the global economy have added new capabilities to mafia states thus spurring their influence. These are countries in which the traditional concepts of corruption, organized crime, or government agencies infiltrated by criminal groups do not fully capture the phenomenon in all its complexity, magnitude, and consequences.

In mafia states, it is not the criminals who capture the state through the bribery and extortion of officials, but it is the state that controls the criminal networks. It runs them for the benefit of government leaders and their network of accomplices and associates. When it takes over existing criminal cartels it's not to stamp them out, but to control and use them for the benefit of the criminalized government elites.

Like the final scene in a 1970s future dystopia film, we cut from this devastating exposition of the corruption in the system to the United States General Election, where an actual Bankster is running for President.  The chilling prospect that he might win is the perfect spot to end the film – there's no need for Charlton Heston to pound the sand and scream "you maniacs – you blew it up – damn you all to Hell" – it's obvious where this is going, isn't it?  

Or, perhaps, we should say "going, going, GONE!" as they do in baseball as we're already more than halfway there.  In fact we're all the way back to the conditions that gave us the Great Depression – the last time the Banksters took control of this country – as we near the point of record Corporate Profits as a percentage of GDP – despite the recent economic downturn:  

Corporate profits as Percent of GDP

How is it possible for Corporations to make SO MUCH MONEY when sales are declining?  Well, it's the age-old formula of SLAVERY that comes to the rescue.  Note how wages as a percentage of GDP has dropped 17% since Nixon took us off the gold standard with 10% of that drop coming in just 12 years since the Supreme Court decided Al Gore could not be President:  

Wages to GDP

How much is 17% of our GDP?  Why it's 2.7 TRILLION Dollars!  That's enough to pay 54M Americans $50,000 each and that $2.7Tn in salary, taxed at 35% (which citizens pay but Corporations do not) would drop another $1Tn a year into the Federal coffers.  In other words, the United States would not have a deficit at all if the EXCESS Corporate Profits had been, instead, used to hire workers or, in the very least – taxed properly.  

54M just so happens to also be how many American Citizens don't have health insurance and the Supreme Court is expected to advance the cause of wage slavery this week by striking down some or all of Obama's health-care reforms – essentially condemning millions of people to pain, suffering and even death – unless they can find a job that lets them put aside $8,500 a year – the price of the average American Family's annual health care!   

Health care is now costing the US $2.8Tn a year – another 17% of our GDP flushed down the toilet.  That is double what the EU spends for Universal Health care and they have 500M citizens to our 300M citizens AND they have better health outcomes across all measurements –  "it's a madhouse, a MADHOUSE" – I tell you!

Speaking of mad-houses, Europe is still in the news and once again the EU did NOTHING over the weekend and, of course, our markets are off quite a bit in the futures, leaving us THRILLED with our decision last week to cash out at the top (see this week's Stock World Weekly for a full summary of our overall stance).

We did pick up a few bullish trades in case we got some stimulus action but already our premise is blown and now we are left with the EU summit on Thursday and, of course, the end of the quarter on Friday makes us think the pump crowd will be out in force to pretty up the numbers for the first half otherwise it's going to be VERY difficult to get those sideline investors back into the markets over the summer.  So we'll still be playing for a pop into the end of the week but we're also going to watch our levels for a sign to dump the bull plays and, of course, we do love our hedges!  

Be careful out there. 


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  1. Phil/Banksters

     
    It is disgusting how the special interest own our politicians.  The Banksters are only one example of the outrageously corrupt political system we know live with.


  2. WTF……BMY down 4.55% in premarket?


  3. BMY/exec – well, after the FDA told JNJ/Bayer to go back and redo some things, BMY/PFE will have to as well, although no new clinical trials (unlike JNJ, who migh thave to).  Sell puts into the excitement.

    PP for today:


  4. "except for the fact that they completely own the politicians and the judges and the regulators who are supposed to be prosecuting them and the ones that can't be bought – like Elliott Spitzer – are destroyed" – is that any different than the Mafia?


  5. Good Morning!


  6. Pharm, any particular BMY puts that you recommend here? Thanks!


  7. Is CNBC stuck in a loop for you guys?  


  8. BMY/bd – out and down in time.  How about Aug 30s to start, as that is down 10% and should be relatively liquid to do.  I am very conservative when selling puts, as I want time on my side, and the ability to roll JIC things get a bit hairy…otherwise, start with 1/4 or 1/3 entry Jan 2013 $30s and just sit back and relax.


  9. ….And, let's not forget North Las Vegas….
     
    http://money.msn.com/business-news/article.aspx?feed=AP&date=20120622&id=15256450&ocid=ansmony11
     
    ….takes my breath away….


  10. Exec:  I have almost zero respect for U.S. politicians.  But I do respect the notion of causality, and the fact is that you cannot get elected to a significant political position without participating in the corruption.  The Super PACs will simply outgun you — that's why they exist.  People who have run for elected office over the history of the U.S. have done so for a variety of reasons.  Those reasons have now been distilled to a only one — getting richer — because candidates with alternative reasons can't win.  


  11. I had to turn CNBS once Mitch "I know my sh*t" Cabrerra got on her clueless soapbox…..


  12. Pharm, thanks! Sounds good. I like BMY longterm so I wouldnt mind starting with a Jan 2013 $30 sale…


  13. ….and to think I woke up in a good mood….   ;)


  14. I wonder if Jamie would like to be a guest speaker in Las Vegas?-LOL!


  15. Darn 1020, it was such a nice weekend, must be the hangover affect from all that sun we had!


  16. Ditto, 1020!!  I watched "Abe Lincoln, Vampire Killer" last night and came away with hope for America, now dashed with the first few headlines.


  17. Hey Pharm!  Nice weekend indeed…. :)
     
    zero – Good flick?  I hope our only inspiration to look forward to won't just be coming out of Hollywood….


  18. OFF topic- does anyone use the iPad to connect to PSW and their trading platforms?  I am curious about security etc….


  19. newt- I have at times with no problems.


  20. 1020 – Vampires are not to everyone's "taste", perhaps.  But lots of Lincoln quotes, and watching Gettysburg with the vampires in play was pretty hilarious.  Critics panned it, Fandango fan base thought it was great, power to the people!


  21. Sounds like we are doomed since most solutions are implausible in this environment. I would love a third, or fourth party so we would have better choices, but all we ever hear is: you will split the ticket, it won't work, they don't have a chance, blah, blah, blah. Is it possible that we will ever see great leadership again without the flopping that comes with the BS two-party system we have today? I still say the problem is leadership. (AND THAT DOESN'T IMPLY ROMNEY!) We need better choices. The question is how do we get them out of the woodwork? I think a great start for a new third party would be THE JBUR PARTY to tell all the Banksters FU! :)


  22. We all heart Bram Stoker


  23. Drop this mother like a rock boyz….after Friday's bs pump, they just dumped it all in the laps of the little guy who's 401K is getting a nice wringing out.  Wash, rinse, repeat.


  24. Pharm- love to see sub 130 on CRM this week


  25. Phil what do you make of the reuters story?


  26. Thanks zero – Sounds like a nice film for the family.  :)


  27. Pharm - MNTA back to your preferred entry of $14, did it more quickly than I would have liked.  Should I DD?


  28. Good morning!  

    Had to get that stuff off my chest – reminds us why we like cash so much at the moment.

    If we can't hold the top of those Vs – there's no reason to hold bullish positions.  That's going to be 3 of 5 on Dow 12,400, S&P 1,310, Nas 2,800, NYSE 7,450 and RUT 750.  Note those are the BOTTOMS of the range that makes the top of the V.  

    No one is under yet so all we are doing is going back to the consolidation range so far, which is about where we expect to be in absence of stimulus.  

    In summary, what is happening so far is we have been rejected by the 50 dmas after a brief move above them that was pushed by Dollar weakness and the DMA's do not adjust for the Dollar so we only APPEAR to have broken out but we broke out due to relative Dollar weakness, not stock strength.  If you adjusted last week for the Dollar – I'm sure you'd see a pretty clean rejection at the 50 dma but that is NOT tragic as it's our first attempt and, as long as we remain over the 200 dma – which is now the bottom of our Vs by no coincidence whatsoever – then we'll begin to bend those red lines higher and that will make it easier to pierce the blue 50 dmas on our next attempt.  

    Still, without stimulus you can kiss this whole thing goodbye – including the bottom of those Vs (the June lows) but there will be something this week – unfortunately, anything less than $600Bn will not be enough to turn the tide as near as I can tell.  So, exciting as this week is likely to be – cash is nice and boring and remains the safest option until we get a bit of clarity.  

    Our main hedges (Tuesday's chat, Wednesday's post) remain:  

     

    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). 

    EDZ has flown up to $17.55 and that bull spread is already $2 but the USO Aug $30 puts are $1.85 so only a .15 change in the overall spread.  TZA is also up $2 and the July spread hit $2.70 but the short BTU puts are now $1.85 so still playable but I'd flip BTU to the short Aug $22 puts at $1.88.  With TZA at $22, now this trade pays 100% on the bull side UNLESS the RUT holds 760 for the month.  

    Those QQQ Weekly $63s in the $25KPs dropped to .40 and a DD at that price nets us in for .575 so that's worthwhile as QQQ is still $62.55 and can easily pop back up.  Keep in mind our goal is to get 1/2 out even!  

    Remember – our only bullish premise is stimulus – otherwise, cash is our best hedge.  

    At the open: Dow -0.86% to 12532. S&P -1.05% to 1321. Nasdaq -1.11% to 2860.

    Treasurys: 30-year +0.68%. 10-yr +0.33%. 5-yr +0.15%.

    Commodities: Crude -1.08% to $78.9. Gold +0.35% to $1572.45.

    Currencies: Euro -0.64% vs. dollar. Yen -1.01%. Pound +0.24%.

    7:55 AM Session lows in Europe: Stoxx 50 -2.1%, Germany -1.8%, Italy and Spain off about 3%. The U.K. – often the best gauge for what the U.S. might do on these jittery days - down 0.8%. The euro -0.7% to $1.2482. S&P futures -0.9%.

    Market preview: U.S. stock futures join EU shares in the red, weighed down by fears that an EU summit this week will achieve precious little, which surely isn't a new feeling. The S&P benchmark is-0.8%. Back home, all eyes are on the Supreme Court and a possibleverdict today on Obamacare. Meanwhile, Teva is +6.8% following a positive Copaxone patent ruling, although Momenta is -22.1%Later: New Home Sales, Dallas Fed Manufacturing Outlook 

    May Chicago Fed National Activity Index: -0.45 vs. +0.08 prior (revised). The index's 3-month moving average decreased to -0.34%, from a level of -0.13% in Apr (revised).

    The deteriorating U.S. economic outlook is of more concern than Europe to Goldman's Jim O'Neill. A year ago, the conventional wisdom said if contagion spread to Spain, it was game over. Well, it has, and here we are. "Does it ultimately matter to European equities whether the euro persists or not? … (they're) so cheap that perhaps investors should … turn off their computers and TV and disappear on vacation."

    Merkel, "Nein," Merkel rejects … whatever. Crossing the wires are familiar comments from the German Chancellor. She's worried this week's EU summit will focus too much on sharing debt. The aim, she says, is political union, not mutual liability. "Living beyond means led to the debt crisis."

    Bunds are losing some of their safe haven status, as investors wonder whether Germany can continue to bear the burden of backstopping the eurozone crisis. U.S. Treasurys are likely to benefit, as few other havens remain; Switzerland and Japan are trying to deter investors to keep their currencies from appreciating, while Denmark and its northern neighbors aren't large enough to be true havens.

    June 28th's European summit could be a "fiasco," says George Soros, unless leaders in the next few days can agree on measures to support peripheral bond markets. "That could actually be fatal," he says. As usual, he lays the blame on Angela Merkel, calling her a strong leader who is leading in the "wrong direction." (full interview)

    Central banks' "emergency measures could have undesirable side effects if continued for too long," says BIS general manager Jaime Caruana. "Fiscal adjustment, the repair of banks' balance sheets and other reforms cannot be put off in the hope of better times. Relying only on central bankers but failing to act on other fronts would ultimately damage confidence and increase the risks to macroeconomic and financial stability."

    The BIS Annual Report (.pdf) is full of uplifting statistics. Take this one, for example: It would take 20 straight years of surpluses greater than 2% of GDP to bring debt/GDP ratios back to pre-crisis levels across most advanced economies.

    Greece's new PM and finmin will both be absent from the eurozone summit later this week, the former recovering from eye surgery and the latter hospitalized for nausea. In their place, Greece will send its outgoing finmin and it foreign minister, a blow to Athens' chances to ease the terms of its bailout.

    CEO pay packages at 15 leading U.S. and European banksrose an average of 11.9% to $12.8M in 2011, the second increase in succession, despite falls in profits and shareprices, analysis from research company Equilar shows. JPMorgan's (JPM) Jamie Dimon earned the most with $23.1M and Barclays' (BCS) Bob Diamond was second with $20.1M.

    With the Supreme Court set to decide possibly today on the constitutionality of Obamacare, Scott Rubin provides a primer on how to trade the verdict. If the law is struck down, Medicaid HMO and hospital chain stocks could be hurt, while insurers and medical-device companies could benefit. A verdict could come at 10 am; follow the court's live blog here from 9 am.


  29. Pharm – thanks for the article on GSK.  Do you have a suggested way to ease in to a long term position?


  30. AMRS / PHarm – Breaking on signifcant volume.  Are you familiar with it? Any perspective? Cheers!


  31. I'm sorry, this should have been strongly emphasized:  

    The BIS Annual Report (.pdf) is full of uplifting statistics. Take this one, for example: It would take 20 straight years of surpluses greater than 2% of GDP to bring debt/GDP ratios back to pre-crisis levels across most advanced economies.

    It's a very important (and very depressing) report.  Hyperinflation or BUST! is my conclusion.  


  32. MNTA getting slammed per loss of patent lawsuit – how serious is this?


  33. Phil/hyper   Got real estate? 


  34. HOV and IMAX – weird.. these doing so well when all the world is all so bad..


  35. CHK – every few weeks a new negative issue comes out of the closet.  As if dealing with low nat gas prices is not enough of a challenge.  argh. 


  36. Monday – 6-25-2012
     
    Dr. John L. Faessel
    ON THE MARKET
    Commentary and Insights
     
    Quotes of the Day
    "It will take a massive market riot to galvanize the sort of policy response necessary to save the euro.”
    ~ The Bank Credit Analyst ~
    &
    “An economy cannot spend or tax itself into prosperity.”
    ~ Milton Friedman ~
    ~~~
    Global Slowdown Underway
     
    Lumber and Copper Hit Cycle Lows
     
    EuroLand Doomed! Lunacy reigns supreme… This says it all;
    Europe’s highest court ruled that workers who happened to get sick on vacation were legally entitled to take another vacation. See NY Times link: http://www.nytimes.com/2012/06/22/world/europe/europe-court-says-sick-workers-can-retake-vacations.html?_r=2
     
    So the numnuts in EuroLand, blind to reality, who continue to throw more and more ECB created from thin air Euros at their debt bomb, now from their highest court, add another massive anvil to the structurally untenable situation. Simply incredible…  
     
    Accordingly the Bond Vigilantes are pushing Up key southern Euro bond yields [PIGS] again.
     
    Last week’s market moving news; Moody's slashes the credit rating of America's No. 1 and No. 3 banks to near junk on exposure to bad government risk.
    ——————--
     
    Last week stocks rallied on higher volume, but were still mostly down by Fridays close.
     
     
    Always worth at read. From the NY Times ? How we got into this mess –
    Fannie Mae Eases Credit to Aid Mortgage Lending
    September 30, 1999
    By STEVEN A. HOLMES
    http://query.nytimes.com/gst/fullpage.html?res=9c0de7db153ef933a0575ac0a96f958260
     
    EuroLand Bond Yields off their recent highs
    Greek 10-year yields 25.79%
    Italy 10-year (gross) bond yield – 5.90% – off from highs of 7.29% on 11-24.
    Spanish 10-year (generic) bond yield at new cycle highs of – 6.45%
     
    Prepare for more selling as the market looks weak both long term and short term. Bullish sentiment remains gloomy and is just off the lows of the cycle. (See below) The McClellan Oscillator (my favorite measure of overboughtness or oversoldness) is in high range of neutral at plus 137. Stochastics overview is Bearish, but the Bollinger bands are also showing that the market is oversold.
     
     
    —————————————
    The S&P 500 (SPX) closed Friday at 1335.02
     
    Short term price support is at 1333 / 1328 / 1324
    Longer out term price support is at 1320 / 1306
    The 200-day moving average support is at (SPX) 1295
    Stronger ‘Price’ support (the lows last Monday) in the (SPX) is at 1266 and will be the battleground zone as the market tests its lows.
     
    50-day moving average resistance is at 1344
    Resistance at the lows of the pattern of former support broken on June 21st is at 1346.
    Price resistance at the ‘top’ of the recent rally is at 1363.
    _____________________________
     
    Friday’s key indicators and metrics:
     
    Cycle highs or lows are in red
         
    ·     McClellan Oscillator is in high range of neutral at plus 137
    ·     Copper – 3.3060
    ·     Crude oil (NYMEX) $79.76


  37. The fun of traveling… Lost power just as I was ready to post my lines!


  38. I don;t have my usual setup with me… only oil lines today:

    R3 – 83.97
    R2 – 82.17
    R1 – 81.16
    PP – 79.36
    S1 – 78.35
    S2 – 76.55
    S3 – 75.54



  39. No health care decision today…. (cnbc)





  40. StJean- Don’t we also have a new FAS Money position from Friday? TIA

    “FAS Money – Not a very exciting drop in XLF but let’s grab 10 of the 2014 $14 calls for 2 and sell 2 FAS July $70 puts for $1.80.  That’s a good start and we won’t cry if it goes lower as we’ll just grab more calls and sell more puts!”


  41. Pharm, do you follow Ohad Hammer on SA?  I dabble in his picks.  His favorites for 2012 at the beginning of the year were: ARRY, CLDX, EXEL, SNTA; all are winners, and did you see SNTA lately?  The only one I bought of the four in JAN was CLDX, because you like it.  Next January I'll probably buy everything he recommends…


  42. NVS/pharm – thanks for the weekend writeup. what happened to knock them today?


  43. Thanks Aussie…Still catching up! 


  44. BMY/Exec –  Clot preventer delayed by FDA.  At least they're not VTUS….

    Different/Yshen – Well, I like to think the Mob's reach doesn't extend as far as the Banksters but maybe I'm just an eternal optimist…

    North Vegas/1020 – True.  

    Lincoln/ZZ – I'd like to put Yves Smith in a room with the Banksters and an axe – she know's whose skulls needs crushing.  

    IPad/Newt – I won't trade on the IPad – I have no idea if those Apps are as secured as regular programs but I must say I haven't heard of an incident and I have friends who trade on their phones all the time.  

    3rd party/DC – We need to form a 3rd party that splits the Republican ticket, that way we won't care if it splits.  The trick is finding two or three things that the Reps believe in that we'd want to represent…

    MNTA/Canuck – I think they are screwed, TEVA will take that business and keep it.  

    Real estate/1020 – As I noted in BBBW – it's getting more and more attractive.  

    IMAX/Scott – They are back in a very good movie cycle with Spiderman and Batman coming out – just don't forget to sell on the Batman news.  HOV is simply undervalued.  

    CHK/Terra – Very frustrating and now it's hard to guess a bottom until we get more details.  Someone is really going out of their way to destroy Aubrey and CHK.  

    Workers/Rustle – Note the propaganda machine using that story about workers who get sick on vacation over and over again when the reality is it's maybe 0.000000000000000001% of all the money in play.  What a completely ridiculous thing to focus on but I saw Fox spend 20 minutes of a 30 minute show on the subject this weekend.  "Massive anvil" – Really?  

    Court/LV – Amazing!  They won't even allow a hearing:  

     

    WASHINGTON (AP) — The Supreme Court on Monday reaffirmed its 2-year-old decision allowing corporations to spend freely to influence elections. The justices struck down a Montana law limiting corporate campaign spending.

    By a 5-4 vote, the court's conservative justices said the decision in the Citizens United case in 2010 applies to state campaign finance laws and guarantees corporate and labor union interests the right to spend freely to advocate for or against candidates for state and local offices.

    The majority turned away pleas from the court's liberal justices to give a full hearing to the case because massive campaign spending since the January 2010 ruling has called into question some of its underpinnings.

    10:00 AM On the hour: Dow -1.07%. 10-yr +0.35%. Euro -0.63% vs. dollar. Crude -1.65% to $78.44. Gold +0.34% to $1572.25.

    11:00 AM On the hour: Dow -1.19%. 10-yr +0.38%. Euro -0.71% vs. dollar. Crude -1.59% to $78.49. Gold +0.35% to $1572.45.

    May New Home Sales: 369K vs. 350K expected, 343K (revised) prior.

    More on the New Home Sales beat: At 369K, it's the fastest annualized pace of sales in more than 2 years. For broader context, says the WSJ's Nick Timiraos, do realize the May print is the worst ever in the series dating back to 1963, beating only 2010 and 2011. The bump is hardly visible on a long-term chart

    Jun Texas Fed Manufacturing Outlook: Business Activity Index +5.8 vs. 0.0 estimated, -5.1 prior in May. Manufacturing production 15.5 vs. 5.5. New orders 7.9 vs. 0. Capacity utilization 13.3 vs. 5. Shipments 9.6 vs. 0. Employment 13.7 vs. 8.5.

    The Bank of Israel cuts its benchmark rate 25 basis points to 2.25%, citing inflation "below the center" of the 1-3% target range, and, of course, nodding to slowing worldwide growth and the risks from Europe. The Bank expects Israeli growth to continue at the moderate pace of 3%.

    EGPT soars 11.6% following the Presidential victory for the Muslim Brotherhood's Mohamed Morsi. The military continues to run the country, writes ICAP's Ken Polcari, as the Presidency is largely a figurehead position. Morsi is no friend to the U.S. or Israel, but it seems having a clear victor in what has been a protracted mess is good enough for shares today.

    The well-connected head of Morgan Stanley's (MS) German unit – Dirk Notheis - has been granted leave of absence following emails he allegedly sent to the premier of a German state, the content of which made the relationship between Notheis and the government appear to be a bit too cozy. (earlier)

    Expect more posturing out of Germany this week before it agrees to turn on the printing press, writes Jeff Saut. If he's right, look for stocks to fall early, but bottom later this week or early next. Merkelposturing today.

    Companies that sell electronics underperform broad market indexes on heightened concerns that if sales volume fall off, razor-thin margins will see even more pressure from pricing. Falling off: RSH -4.3%BBY -3.1%HGG -3.9%.

    Auto industry suppliers are falling off on concerns production will come in lower for 2012 that originally forecast. China is of special concern, with word out that the government won't provide stimulus to stoke demand. Decliners: DAN -4.7%FDML -4.6%AXL-4.4%TOWR -2.7%.

    Gizmodo reports Google's (GOOG) Nexus tablet, expected to be announced this week at Google I/O, will feature an Nvidia (NVDA) Tegra 3 processor (previous) and 7" display. An 8GB version of the device, which will be called the Nexus 7 (ed: maybe that suggests a Nexus 9 or 10 with a larger display will follow), will sell for $199, and a 16B version will go for $249. Even with those prices, the tablet faces an uphill battle against the iPad, the Kindle Fire, and perhaps soon Microsoft Surface


  45. Once Yves Smith is done with the bankers, send her over to do the job on the 5 bastards in black robes….


  46. EXC – tripping my bottom fishing alerts..


  47. I love taking a stab at IMAX for July.  Bought the 23 calls and wrote 23 puts for July earlier.  One paid for the other, haven't written calls against the 23 because they don't pay much now.  Would rather see if we have a spike next week with Spidey and then look at writing calls against the ones I bought.


  48. Supreme Court – Now you know why Obama needs to be re-elected. These guys have been trouble since 2000…..


  49. SOX and Transports are huge drags today – down 2.7%.  

    VIX back around 21 – that was fast!  TLT $126.83 – also a quick turn.  Good to see that this drop is already flashing panic signals.  Well, good if it holds, bad if panic and drop get worse!  

    Oil failed to hold $78.50, very pathetic.  

    Debbie is doing for nat gas what it failed to do for oil – up to $2.70 today.  Funny how that was negated by sudden release of negative news on CHK, isn't it?  Why suddenly today does a 2010 EMail come out?  Note in this article that they point out that Gunniso and SG investments were prosecuted for this and paid a $275,000 fine – I'm sure CHK and ECA are shaking in their multi-billion dollar boots!  

    For the $25KPA only, I like 20 CHK July $17/18 bull call spreads at .47

    Supremes/1020 – People fail to realize how critical that is to the way this country is run.  


  50. GSK/hasc – start small, and sell a few puts.  How about Jan 13 $40s.  Nice and juicy, plus > 10% more down.

    AMRS/dpst – sorry. Not my area.

    Ohad/mrm – yes, he is a good writer and we seem to be on the same page.  SNTA was a good pick, but the risk for me was a bit great as there are several Hsp90 inhibitors out there, as well as other things that I did not know enough about, or were too early to risk jumping in at $4.  At $8,  and that parabolic move, I think it is too late to go with, but one could scale in by selling $5 puts in Aug.  Overall, sometimes he is ahead, sometimes I am on the writing front, but overall, I like him.

    MNTA – well, that is a loss of some serious (future) revenues, as Copaxone is a big bread winner for TEVA.  Not much longer though, so MNTA knows how to make it…and will rebound.  I would give it a few days, but I don't think that MNTA was selling it yet, so it hurts future revenues, not current.

    NVS – looks like all pharma is taking a haircut with the market.


  51. Phil / SMA — I noticed you have been focused on the 50 DMA.  Have a look at the 100 DMA, that was the rejection point for the majors (except the NYA).  Just an observation.


  52. Europe closing down around 2%, Spain and Italy down 4% – MADNESS!  

    Wow, are they really going to let this thing crash and burn?  


  53. Phil/supremes  My beef is they show very little compassion for societal issues; I mean, just look at what "corporations are people too" has done in the last two years….. (I know I'm preaching to the choir)
     
    http://www.youtube.com/watch?v=Nby3aNkk66g
     
    Hey! That guy could be my twin….  ;)


  54. phil,
    couple of things i would like to get ur thoughts.
     
    took your rec re the gdx jan14 40-55 selling the 35 early on ….last wed bought the put and on thurs took off 5/half of the spread.  didnt want to give back all the profit.
     
    per your earlier thought, if we go hyperinflation which way to go…..miners gdx who have underperformed or gld and do u have an entry point or at least give us the high sign to get back in.
     
    i am carrying some jjg 1/2 position from a while ago and basis is 46.  dont have any p/c s at present.  really like the ag space and the ferts have been left for dead.
     
    any thoughts on hedging the jjg position going forward…..tks


  55. Phil- AAPL dropped all the way to S3. Any thoughts on bullish spreads? Any suggested hedges (a little late now, I know)?


  56. Phil,
    I see you have Peabody  energy on your list of twice in a life time.  With coal prices at 10 year lows and utilities stockpiling coal because they have to buy it, even if natural gas prices recover, won't it will take a while for the coal price to recover.  So with that said, wouldn't it be a good idea to wait until early next year to step into a coal type stock?
    Appreciate your thoughts?
    Thanks


  57. Poor TIE making lows.  People really losing faith in the global economy.  

    TIF making new lows too – even the top 1% are bailing.  

    $25KP (both) – 10 TLT Sept $117 puts at $1.06


  58. phil, I didn't catch the XLF ($2) FAS Money entry on Friday that you recommended…now down to $1.88…good to dive in now, or you think we're heading lower?


  59. Greece finance minister resigns….what's next over there?  


  60. CMI getting into bottom fishing territory as well.


  61. Here comes 1300 on SPX…..gimme gimme gimme….


  62. lvmoda – the Greek Soccer Minister, I would imagine…


  63. X – sold Jan 14 $ 20 puts for $6.10. pays for a few TLTs..


  64. If today follows pattern, we will now spend three hours watching the market flatline before it performs an amazing stick and completely frazzles all of us who went short momos this morning.


  65. Lost power again… And we have these huge high power lines nearby coming from some dam down the road. First time in 10 years that I have been coming here!

    Here is the FAS Money update:


  66. PHIL HYPERINFLATION: i still dont see hyperinflation any time soon, but its defintely likely over longer-term…wayyyyy too much overcapacity and excess labor for inflation troubles globally…select countries could see it..they might have it as a strategy but that doesn't mean they can engineer the desired result (hyper inflation the 'desired result' hahahaha) 
     
    greek finmin rapanos resigning..with bad ministry for a guy with a last name like that to be running! he needs to work for gs or in the dimon district


  67. The Greek PM can't fly due to a "bad eye"……lol….


  68. st jean where are you ?


  69. …I think a tummy ache is a better excuse….


  70. 100/Rain – Well it's right between the tow.  I really stick to the 50 and 200 because they are the default in stock charts – if you keep looking, you will always find some level of DMA that fits a move, I prefer to stick with the classics.    

    SCOTUS/1020 – No argument there.  Packing the court is what we used to hear about in the bad old days yet we're into our 2nd decade of it with no end in site.  

    Hyperinflation/Mill – I don't think it will matter once inflation kicks in but gold will probably outpace miners for a while.  Miners are better on possible pullback so I prefer them now to gold since, if gold drops 50% – at least you still own a miner that can hopefully squeeze out of profit.  As to hedging JJG – I don't like to play things that are based on the weather.  Their options only run to Jan and are very thinly traded so really no way to hedge them.  You could short DBA but that's an imperfect way to hedge them to say the least.  

    AAPL/Kurt – Well you can always hedge AAPL with the Nas, of course.  Usually it's cheaper (less premium) to do that.  As to bullish AAPL plays.  My trade idea from Friday was:  

     

    I think a nice earnings play can be constructed with the Sept $525/575 bull call spread at $31.50, selling the Jan $450 puts for $15.50 for net $16 on the $50 spread that's in the money for a 200% gain if AAPL holds $575 through Sept and $450 through Jan.   TOS wants net $45 for the sale of the $450s, which is not a bad use of margin to make $34 (75%) in 6 months.  

    If we assume AAPL should be over $600 and will prove it in July, then the Sept $575/600 bull call spread at $10.25 is very attractive and I like having 5 of those ($5,125)  and selling 3 of the July $600s for $6.65 ($1,995) for net $3,130 on the potential $12,500 spread. 

    You can get very nice entries on those spreads at the moment and I still like them until the EU fails to deliver this week – then I won't be liking anything.  

    BTU/Ging – Yes, it will take time for coal to recover but it's a long-term position.  You can wait but if nat gas goes back over $5, coal will fly back.   Could take a while or could be a hurricane away.  

    XLF/Lucky – I think without stimulus we'll go lower but I think we'll get it so I still like the bet.  

    Hyperinflation/Angel – Yes but so much cash in the system – if it ever starts to move, then look out.  

    Ah, here we go!  


  71. Angel – Mt Saint Anne near Quebec!


  72. lvmoda/ Greece
    When was the last time I pretended to be sick in order to escape from a tough meeting?  Primary school :)
    Good luck to our Greek friends. Their newly elected government doesnt seem ready to harden up and to raise money where it hurts (from the really rich Greeks – and there are plenty of them).
    I can hear boots marching in. The generals are coming back.
    Interesting to see that old fascist Europe is having problem with their finances (Italy, Spain, Greece…)


  73. 12,400 is a good bull line to play the Dow (/YM) as is, of course, $78.50 oil (/CL) if they take it back (now $78.40) and let's watch XLF to make sure it holds $14 too. 

    20 USO July $29/30 bull spreads at .52 in both $25KPs.  

     

     


  74. The NYT trawls through thousands of recently unsealed documents and depositions that shed light on how Pfizer (PFI) was allegedly "less than forthcoming" about its arthritis drug Celebrex, which was no safer on the stomach than rival treatments despite Pfizer's initial claims to the contrary. "They swallowed our story, hook, line and sinker," wrote one research director in 2000.

     

    I have been saying this for years on this board.  Merck should never, ever, have pulled Vioxx from the market.


  75. Looks like 1305 is S3 on my /ES chart and they seem to want to stop here for now….


  76. /DX making new lows.


  77. ST JEAN come see us in vermont!


  78. EXC – intereting. trying to do a buy write with jan 14 35 puts and 40 calls.. at and above the bid for covered call write and fill with fidelity. ridiculous.


  79. Good Afternoon—Phil  what about /RB with July 4th around the corner?


  80. Lionel/Greece –  It seems that the message has been made clear from the Troika to the new Greek government that larger issues will dominate attention from now on, and politicians are avoiding the embarrassment of being ignored in their "renegotiation" demands.  Does any one else get the feeling that it's 'every country for itself' mode now in euroland (starting and ending with Germany)?  I think the Greeks will now be ignored until they decide to leave the Euro.


  81. I come up every June. Next year I'll plan on a stop at your place Angel… 


  82. Angel – my family used to be across the river (Windsor on VT side), up the mountain on Saint Gauden's Road.  Now if I only had a few hundred of those coins…..


  83. Time to buy some beach property around Philadelphia?

    http://idealab.talkingpointsmemo.com/2012/06/sea-level-rise-accelerating-on-east-coast-government-study.php

    “Since about 1990, sea-level rise in the 600-mile stretch of coastal zone from Cape Hatteras, N.C. to north of Boston, Mass. — coined a “hotspot” by scientists — has increased 2 – 3.7 millimeters per year; the global increase over the same period was 0.6 – 1.0 millimeter per year,” the U.S. Geological Survey said in a news release. “Based on data and analyses included in the report, if global temperatures continue to rise, rates of sea level rise in this area are expected to continue increasing.”

    Of course, as usual, only 50% of the people in the US will believe the evidence…. 


  84. Quote of the day:

    "It used to be you had real friends on the other side of the aisle. It’s not like that anymore. Society has changed. The public is to blame as well. I think the people have gotten dumber. I don’t know that I would’ve said that out loud pre-my announcement that I was going to be leaving. [Laughter] But I think that’s true. I mean everything has changed. The media has changed. We now give broadcast licenses to philosophies instead of people. People get confused and think there is no difference between news and entertainment. People who project themselves as journalists on television don’t know the first thing about journalism. They are just there stirring up a hockey game," - Gary Ackerman a retiring 30 year veteran of Congress, responding to the question “Can you define comity as it existed when you arrived versus how it exists now?”


  85. lvmoda/Greece
    It has been leaked in a Greek newspaper over the weekend that the Greek government has lied over the hiring of at least 70,000 extra civil servants during 2010 and 2011. 58,000 have retired during the same period and should have been replaced at a rate of 1 for 5.
    If true the number of civil servants has not decreased as promised and it may even have slightly increased since the 1st bailout package. The Troika wont bulge until they go there and sort it out.
    There are two many "ghost" jobs in the Greek government. Corruption is very present. And the current government doesnt seem to be willing to do anything about it.
    Greece really needs the Troika.
    When an African nation is beeing schooled for 10 years by the IMF no one seems to care and no one talks about loss of sovereignty. Why Greece should be any different? Oh yes, because their ancestors invented democracy 2500 years ago…Greece was under a military junta until 1974 at the time Ford got elected.
    They should be treated like a new democracy….like….uhhh. Spain! (Francist until 1975)


  86. Speaking of SCOTU, James Fallows goes one step further….

    http://www.theatlantic.com/politics/archive/2012/06/5-signs-the-united-states-is-undergoing-a-coup/258904/

    This is distilled from a longer item earlier today, at the suggestion of my colleagues. It's a simple game you can try at home. Pick a country and describe a sequence in which:

    • First, a presidential election is decided by five people, who don't even try to explain their choice in normal legal terms.
    • Then the beneficiary of that decision appoints the next two members of the court, who present themselves for consideration as restrained, humble figures who care only about law rather than ideology.
    • Once on the bench, for life, those two actively second-guess and re-do existing law, to advance the interests of the party that appointed them.
    • Meanwhile their party's representatives in the Senate abuse procedural rules to an extent never previously seen to block legislation — and appointments, especially to the courts.
    • And, when a major piece of legislation gets through, the party's majority on the Supreme Court prepares to negate it — even though the details of the plan were originally Republican proposals and even though the party's presidential nominee endorsed these concepts only a few years ago.

    How would you describe a democracy where power was being shifted that way? 


  87. Fallows/Stj – the only (glaring!) problem with Fallows game is the presumption that one is beginning with a democracy at all.


  88. Pharm – any thoughts on the valuation of PCYC? The chart has one of the most steady climbs out there, completely immune to the market. I have no interest in trading/investing in it , but wow. 


  89. UK/ Austerity?
    Wasnt Cameron the man mocking Merkel 4 DAYS AGO for promoting austerity measures in the Eurozone?
    Flip-Flop David. Nasty prime minister, nasty!
    http://www.independent.co.uk/news/uk/politics/return-of-the-nasty-party-as-david-cameron-looks-at-stripping-welfare-benefits-7879749.html


  90. Indeed Scott…. 


  91. St JEAN EXCELLENT..maybe we can drag PHIL and ZERO up..


  92.  Ouch, bdonnelly713, you opened a wound with PCYC, we were playing that one two years ago and I got out around 5 on 1/20/11 when Pharm said "PCYC is most likely dead unless they release some data."  95% of the time I'm happy that I listen to him, but this ticker is in the 5%.


  93. Make sure that you have a good supply of maple syrup cookies Angel…


  94. PFE/Pharm – And that's just the stuff we know about.  Imagine what must go on with some of these drugs.  

    Israel/Jomp – Looks like next July under Romney.  Look at the people – could be any city in the US, any day now.  

    Gasoline/Savi – Yep, that's our plan but need to see oil less weak.  Don't forget gasoline has held up well despite oil sell-off, you don't want to be in /RB when it decides to catch up.  Gas gapped down .10 Friday morning and has laid around $2.45 since (now $2.479).  I think I'd like to see them take back $2.50 or re-test $2.45 for a bullish play off that line.  

    Every country/LV – If they don't all hang together, they will surely all hang separately. 

    Philly/StJ – I think those elevation charts are going to become more and more valuable down the road.  Also, if you look at the main study, it's a comprehensive review of 30 studies involving dozens of scientist yet Fox will trot out one idiot who will declare it flawed and put the issue to bed.  

    In addition to the warming effects of temperature, ice melt could freshen surface water, further reducing its buoyancy, for example, in the deepwater formation area south of Greenland. The authors of ref. 18 detected acceleration of Greenland ice sheet (GIS) melt of 21.9±1Gtyr−2 that began in the early 1990s, roughly coincident with NEH initiation. Investigators have developed indexes for GIS melt through multiple regression of forcing parameters with dependent estimates of melt from satellite measurements over the past few decades192021. We use the recent index of ref. 19 (see equation (1) and Supplementary Information) based on Greenland coastal summer temperatures and winter NAO. (Seawater temperature is not included and may be important to GIS melt from below2223.) With a 12-yr lag, ice melt rate differences explained 84% of the variance of SLRDs (Fig. 4b,c and Supplementary Fig. S9Ar2=0.84; lag=12yr). The relatively short lag is consistent with model projections24. The good agreement results mostly from the Greenland temperature term (compare correlation for ice melt to correlation for Greenland temperatures alone).

    Loss of Sovereignty/Lionel – Well I guess they'll be able to say that about us too.  What's 200 years in the grand scheme of things and we don't even qualify for a quorum with less than 40% of the people voting in a general election, which means our President is elected by less than 20% of the people – hardly representative compared to most countries.  

    And what StJ said!  

    UK/Lionel – If they couldn't print money, they'd be hanging out with Spain and Italy waiting for their bailout.  

    CHK looks like it is bottoming out at $17.   Jan $14 puts can be sold for $1.95 for a net $12.05 entry and the 2014 $10 puts can be sold for $2.10 for a net $7.90 entry!  

    Let's sell 10 of the CHK Jan $14 puts for $1.95 ($1,950) in the Income Portfolio


  95. Look at oil go!  That was easy.  

    FAS July $80/85 bull calls spread at $2.10, selling $65 puts for $1.55 is net .55 on $5 spread with FAS at $79.


  96. Thank you, stjeanluc, for the portfolio update yesterday.
     
    Everyone,
    I'm back in town and just checking in.  Looks like the jump in VIX to 20.9 is an opportunity to sell more premium.  As usual, our antennas are telling us that VIX can go to 30+ if SPX breaks below the 200 MA, and we need to weigh the risks against the scenario where SPX bounces off the 200 MA, the options premium would evaporate.  Do we wait to sell more premium (and possibly waiting for a long time), or do we sell some this week?  It's the same question every month, so Phil's #2 rule comes in:  "If we are not sure, sell half".  In this case we'd scale in 1/4 or 1/8 positions for August by Friday this week.


  97. Evidence / Phil – The problem we have in this country is that 50% of the people believe in evidence (scientific  or others) while the other 50% believe in propaganda… And now propaganda is recognized as real news. It's becoming hard to govern that way!


  98. AMZN - looks like they're getting ready to unleash the momo bots, picked up a few AMZN calls for the day.


  99. PCYC – mrm is right.  We played them made a little, and then watched them from afar.  Hell, look at ARNA.  I am happy that they company is doing well, as it helps the whole industry, but one cannot invest in all of these, b'c, as an old lurker here who is also in the biotech industry would say, 90% of these do nothing but suck up money and go no where.  For every 1 that goes like SGEN, PCYC, RGEN, etc, there are 9 others that go Poof…..cough cough, SVNT.


  100. "….. our President is elected by less than 20% of the people …..– " 
    For once, the vast majority display great wisdom, foresight and understanding. 
    They know that the POTUS doesn't make one damned bit of difference in their daily lives no matter who is elected. 
    They may not know that the Senate is real power in this country, and even more refined, it is concentrated in the hands of a half dozen men and women who head the various Committees. They control the agenda, the resources and power.
    And as a citizen of one state they may know that Mitch McConnell, a citizen of another state is someone they cannot throw out of office but is a 1% er and beholden to men behind the curtain. They may also know that Nancy Pelosi —a citizen of Californica —can't be thrown out of office by a citizen from Pennsylvania.
    Here's to the majority who know that the system cannot be changed from the inside, who are not prepared to revolt, to take up arms against the insiders corrupt, all of them to the core, so why even bother to waste their time?


  101. QCOR…..that is a biotech engine!  Sheesh.  One product for infant spasms/epilepsy…..


  102. MRX…selling a few Aug 30 Puts for 75c.


  103. Cyprus have asked for a bailout of their banking system….


  104. Phil—Thanks


  105. Phil/ Couldnt agree more with you.
    But since when is the US a role model? :)
    Re Cameron, my point was more about Euro bashing than UK monetary policy.
    The UK economy is in real dire straits. Good luck to them.


  106. lionel i hope you are  are you gloating from a perch along the rhine?..its not as though greece is the only leper's bell we have heard chiming? will germany  opt out altogether?..the whole concept of any entity having power in this matter is silly but greece with its ancient claim on inventing civilization..yawn.. germany with its need for "correct solutions"( and fungible rules) france  how many petards can one country hoist in 1000 years et al should consider… three guys with matches in a basement half filled with gasoline..one guy..let's call him 'Fitzcarraldo" has two matches and thinks he has all the power.. merkel  will use the populist lilt toward an exit to run as fast as her little piano legs will carry her away from the euro..or be known forever as the last german PRINTCESS.. my german buddies want their DM back. you?


  107. StJean/ Cyprus/
    That is OLD news, but for some reason it makes it to the headlines today….I dont know why?
    Phil even took the time to explain the historical relationships between Cyprus and Russia.
    Russia will fork out as much as Europe for their bailout.
    So what is your prediction for Euro finals?


  108. How about a 2:00 stick!


  109. Anyone like CAT down here?  Jan 72.50 Puts are $5.25


  110. PHIL, what a great ARTICLE on the BOND BS from RS!
     
    THANKS


  111. Angel/
    I am not sure I understand your point.
    But if you want to know if Germans wants to leave the Euro (39% do) or if they want Greece to exit the Eurozone (78% do) I would recommend Der Spiegel in English.


  112. Euro 2012 / Lionel – Spain-Germany! But I am not making predictions on a winner…

    As far as Cyprus is concerned, they have been on the ropes for a while, that's true. I guess today was the official recognition. 

    I getting more and more pessimistic about this European experience!


  113. Vegas Update
    I guess you did not see my previous post—-anyway, please remember that pay pal takes out a fee of $6.10 if you request the "issue refund" feature—thus you need to pay that upfront  in order for  me to get the full $200 registration fee— the pay pal fee is nominal but  will add up .
    Thanks


  114. Stjeanluc/
    I will go with Portugal-Germany and "Deutschland uber alles" wins!
    Angel, it is a joke :)


  115. Hello Phil,
    I missed the CSCO, GLW,OIH and X trades last week for Income Portfolio.  Should I buy today or wait?
    Thanks
    J


  116. Lionel – I guess Portugal could beat Spain, but I find it difficult to support that team… Ronaldo is just too much for me! This guy doesn't realize how much more popular he could be by being a bit more "humble".


  117. Stjeanluc/ Ronaldo
    He is just a superstar in Asia! You wouldnt imagine how many idiots are walking around with a number 7 on their Tshirt.
    I am talking Beckham-like superstardom.
    Now if he was humble and hardworking he would have landed a job with Goldman Sachs, wouldnt he? :)


  118. Phil

    QQQ weekly $63 calls @0.20
    - time DD or sit on hands?


  119. Ronaldo / Lionel – Look at Messi for example, hard working and yet humble… Ronaldo is a great player, but not the sharpest tool in the shed. 



  120. You have a point Stjeanluc.
    I cant say anything bad against my namesake.
    Let see what happens in two days. Portugal campeao del copa?


  121. Mr Moscovici told French television that savings of between €7bn and €10bn would be needed, but insisted they would not be found through painful austerity.

    “There’ll be tax increases, there’ll be spending cuts,” he said. “But I reject any talk of austerity. We must avoid a budget policy that hurts economic activity.”


  122. Phil/Hyperinflation

     
    I tend to agree. 
     
    $100 question…..what's the best way to be positioned for hyper…….gold????


  123. Really rotten action, barely holding on to bottom levels.  

    Why bother/Flips – And that is why you get exactly the Government you deserve.  

    CAT/Emunster – Too much dependent on emerging markets.  Not at all safe.  

    Income Portfolio/Jacalyn – Well we're pretty happy to scale into those so today is as good a day as any.  Our real fear is that the go flying up and we never get a chance to get in again at these prices.  If they go down, then we'll own twice as much for even cheaper!  

    QQQ/Itrade – Good money after bad if we don't get good news tomorrow.  

    11:43 AM European shares close sharply lower as a Monday panic again grips the periphery. Stoxx 50 -2.6%, Germany -2%, France-2.2%, Italy -4.1%, Spain -3.7%, U.K. -1.2%. If the last two Mondays are any predictor, European shares have bottomed for the week. Peter Lynch used to like to buy at the close on Mondays.

    12:00 PM On the hour: Dow -1.39%. 10-yr +0.44%. Euro -0.71% vs. dollar. Crude -1.78% to $78.34. Gold +1.04% to $1583.25.

    1:00 PM On the hour: Dow -1.31%. 10-yr +0.41%. Euro -0.57% vs. dollar. Crude -1.68% to $78.42. Gold +1.15% to $1584.85.

    2:00 PM On the hour: Dow -1.16%. 10-yr +0.39%. Euro -0.56% vs. dollar. Crude -0.9% to $79.04. Gold +1.21% to $1585.85.

    3:00 PM On the hour: Dow -1.28%. 10-yr +0.43%. Euro -0.59% vs. dollar. Crude -0.81% to $79.11. Gold +1.13% to $1584.65.

    Avik Roy predicts on Forbes that the Supreme Court will partially void Obamacare, including the individual mandate. Veteran court watchers reckon Chief Justice John Roberts – who expressed much skepticism about the mandate during the hearings – will almost certainly write the majority opinion after Anthony Kennedy took the lead in the Arizona immigration case today.

    The measly $12B in global investment banking revenues collected this quarter is the lowest 3-month amount since the dark day of 2009 Q1. For the year's first 6 months, global revenues are off 31% Y/Y. The banks are better-capitalized, now what about profits?

    "NOT just Euroland problem folks," tweets Bill Gross. "All global economies (are) delevering with insufficient central bank response." Presumably, Bernanke and the others follow the news. Is it not just a matter of time before the response becomes sufficient?

    The win for Greece's pro-bailout parties was no victory for the SNB as the country saw another $16.7B in inflows in the week since and pressure continues on the bank's euro/franc floor of CHF 1.20. Government efforts to talk down the economy, the country's banks, and future inflation risks last week were totally overlooked by cash seeking a safe haven.

    Cyprus joins Spain today in officially requesting an EU bailout. Earlier, Fitch downgraded Cyprus from BBB- to BB+, or "junk" status, predicting that the country would need a rescue. Cyprus requires €1.8B to recapitalize Popular bank, which has been hit by the Greek crisis, by June 30. However, Fitch reckons the total bill for the whole sector could reach €6B.

    Casino stocks with ties to Macau face pressure from areport (Chinese) tipping off that new visa and credit policies could cut into revenue totals for companies such Wynn Resorts (WYNN -1.8%), MGM Resorts (MGM -5.1%), and Melco Crown Entertainment (MPEL-4.9%). It's a game that local officials have played many times with gaming companies, with cynics pointing out their ability to reverse course as the wind magically changes direction.

    James Hamilton says gasoline prices will continue to fall but that’s not a good thing: The primary reason is because of growing signs of weakness in the world economy. "I am very concerned about where events in Europe are going to lead, and recent U.S. data indicate some weakening… But I will offer this advice: wait another week or two if you can before filling up the tank." (earlier)

    Gartner predicts the chip equipment market will decline 8.9% this year to $33B, as a recent rebound in orders loses momentum. Moreover, while the market is expected to grow 7.4% next year, it will remain smaller than in 2011. Improving chip manufacturing yields are seen hurting demand, though Gartner expects higher capacity utilization to lead to a gradual pickup. Trade association SEMI's latest book-to-bill data indicates demand is starting to falter.

    Stung by Apple's abandoning of Google Maps on iOS, Google (GOOG) says it will slash prices for high-volume access to its Maps API (previous) by 87%. Google is also staying committed to iOS via its own mapping apps, and is talking up the higher click ratesobtained by new ad formats for its mobile maps. With mobile ads related to maps and locations accounting for an estimated 25% of mobile ad revenue, Google has plenty of incentive to invest heavily in this space. 

    Materials distributed by Apple to iOS developers indicate its new mapping solution will include the ability for users to "check in" to Yelp (YELP -0.2%) at restaurants and other points of interest. That could be helping Yelp, which is already tightly integrated with Apple's Siri, outperform today. 

    In response to rumors it's considering a major asset sale or business model change, Research In Motion (RIMM -6.7%reiterates its commitment to its existing turnaround plan, while noting its recent hiring of JPMorgan and RBC to evaluate "strategic alternatives." Today's huge selloff, fueled by a harsh Morgan Stanley downgrade, drives home just how little confidence the Street has in that turnaround plan.

    More on Apple: A survey from Mizuho suggests Mac buyers are as loyal as ever. 95% of respondents who only owned Macs indicated their next purchase would be a Mac, and the same went for 70% of respondents owning both Windows and Mac machines. Mizuho is slightly lifting its Mac sales estimates as a result, and is also raising its iPad estimates. iPhone estimates are being lowered for the next 2 quarters after checks indicated slowing demand, but a strong holiday season is forecast.

    Three lunchtime reads:

    1) Maybe not 2008 – but still worrying

    2) A long wait to the next FOMC meeting

    3) Krugman: 1931 all over again?


  124. does anyone know when the EU summit is this week?


  125. PHIL, I think someone else had the CAT question. My comment was THANKS for the ROLLING STONE article on BONDS. thought is was GREAT!


  126. Gingbaum/
    Here is the week calendar for the Euro Council
    http://www.eucouncilpress.eu/week
    The Eurogroup summit is on the 27-28 of June


  127. Wow something just lit a fire under SVU's ass.  Surging big time.


  128. thanks Lionel : )


  129. phil, tks.


  130. Hyperinflation/Exec – Best thing is to put 20% down on a luxury condo.  Needs to be something unique that a rich person would pay cash for, like a penthouse in an ocean-front building or right on the slopes.  Wages don't keep up with big inflation but the top 1% make oodles in stocks and dividends and they need to spend their money before it goes down as well as avoid taxes on gains that are only keeping up with inflation (another hidden nasty in an inflationary environment).  Gold works too.  

    EU/Ging – Thurs and maybe into Friday.  

    And what Lionel said.  

    Oh, you are welcome then EM!  8)  

    SVU/Kinki – Maybe buyout rumors again.  


  131. Good call on oil Phil/
    I am off with a bit less than $2 for the day (3 trades)
    Really good day!


  132. AMZN - close out the 220 calls now if you followed my 1:34 post, not holding overnight.  30% gain.


  133. Mario Monti: we have a week to save the eurozone (The Guardian)

    Italy's prime minister, Mario Monti, has warned of the apocalyptic consequences of failure at next week's summit of EU leaders, outlining a potential death spiral that could threaten the political and economic future of Europe.

     

    Outlining the result of a failure at the talks, Monti said that, faced with creeping economic paralysis, "the frustration of the public towards Europe would grow", creating a vicious circle. "To emerge in good shape from this crisis of the eurozone and the European economy, ever more integration is needed," said Monti. Yet, if the summit failed to resolve the problems quickly, "public opinion, but also that of the governments and parliament… will turn against that greater integration".

    Monti said he could see the beginnings of the process "even in the Italian parliament, which has traditionally been pro-European and no longer is".


  134. @Felipe
    re:  the AAPL  BCS of yesterday— the $575 leg of that combo is up nicely today.  Do you recommend buying it back and rolling to the $565 for a net credit, while keeping the other two legs?


  135. Just off a plane, market looks pale.  Read an article I'll quote later, but the gist isn't good for Europe — it claims that there is no austerity in Europe, that it's just a sham.  Then I get on PSW and read the Greek "austerity" comment, which may not be a generalized confirmation of the point, but is at least a scary coincidence.  


  136. Phil/CAT – I am new and very impressed by your ability to track and get in front of market swings.  Maybe after hours you could clarify for me why you would call selling CAT puts for a trade "unsafe" (I get the global growth aspect), but recommend selling Puts on (I guess) "safer" stocks like CHK and BBY.  The ATM Puts yield on margin (annualized) are similar on all 3…
    NOT a criticism, simply trying to understand the premise.  I like bottom fishing too


  137. Short strangle virtual portfolios – let's sell 13 SPX August 1060 for $2.075 each and buy 15 SPX Aug 1010 put for $1.05 each (1 custom spread).  This nets us $1,120 with $4,000 initial margin on PM and max margin of $35,000 on PM.  This is not endorsing any direction of the market, just selling the premium.  Thanks, stjeanluc, in advance.


  138. I don't think it is the lack of firepower, liquidity or stimulus that is the core euro problem, but rather those aspects are reflections of the lack of a macro-roadmap and agreement for the EU as an institution such that it can support a common currency.  No amount of firepower, liquidity tools or injected stimulus will address the fact that Europeans do not have cultural history nor alignment to achieve any sort of political integration at this time.


  139. Gotta run to a meeting, but seems like we can get a little bit better pricing now for the SPX spreads.


  140. Congrats Lionel, nicely played.  

    Good call (again) Mr. M!  

    AAPL/Flips – I take it you mean the short $575s?  As an aggressive AAPL player, I'm all for buying them back, leaving it naked and THEN reselling on a move back up and, IF NOT, THEN to roll down the long calls and make the more aggressive sale but your way works too.  

    Coincidence/ZZ – No such thing.  

    Why are there constant commercials for Roger Waters doing the Wall at Yankee Stadium?  Can they seriously not sell out that show?  If I were in town, I'd go…

    CAT/CDel – When the markets failed in '08, CAT dropped to $23.  Why, no demand for new equipment and credit failures for existing orders.  Income fell from $3.5Bn to $895M in 2009 on almost 40% drop-off in sales and stock fell from $80 to $23.  Now they have come back strong but a lot of it is sales in Asia, where we may see a collapse again and I'd buy them hand over fist if they went back to $40 and I'd even be interested at $60 but $82.88 compared to $17 for CHK or $20 for BTU or $19 for X is just not that sexy as they all pretty much need the same Global economic conditions to turn higher and those three have already priced in another collapse but it would take CAT investors totally by surprise at $83.  

    Europe/LV – They need to announce the intention of a major re-working of their charter and, while we wait, they need to set up at least $1Tn to buy bonds with at fixed rates.  

    131M is pretty lame volume so can't read too much into today other than it was very weak.   


  141. Phil, saw the wall last year for my birthday, it was Outstanding.


  142.  131M is pretty lame volume so can't read too much into today other than it was very weak.

    Same goes for the day b'f that (up), and b'f that and that (down)….although today's volume was more than Friday. ;)


  143. Saw Roger Waters last week. Great show!


  144. Peter D – please pardon my ignorance, but with SPX — unlike SPY — there do not appear to be underlying shares.  If assigned, what must option writers buy or sell?


  145. Bolt / SPX – they are cash settled.  more info here.
    http://www.cboe.com/products/indexopts/spx_spec.aspx


  146. Austerity in Europe?  "National budgets are NOT decreasing their spending, they are increasing it:
     
    Between 2000 and 2010, national budgets in the EU increased by 62 % while the EU budget increased by 37% over the same period.
    In 2011, 23 national budgets out of 27 are currently increasing.
    In 2012, 24 national budgets out of 27 are due to increase according to the latest estimations."
    http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/459&format=HTML&aged=0&language=EN&guiLanguage=en


  147. Bolt – this article will get you started on the differences between SPY and SPX.
    http://seekingalpha.com/article/307729-spy-or-spx-a-tale-of-2-options


  148. The above quote is from the official EU website, not some commentator! http://europa.eu/index_en.htm


  149. Does anyone know what options receive the favorable tax treatment that SPX does?  Is there a list somewhere?  TIA.


  150. And more: "BD Calls Out Establishment Press For Promoting 'Myth' of European 'Austerity'" -- By Tom Blumer | May 08, 2012 | "In one of a virtually endless stream of such examples, a Monday Associated Press report by Elaine Ganley and Greg Keller on challenges facing newly elected French Prime Minister, Socialist Francois Hollande, described him as "the leftist who has pledged to buck Europe's austerity trend."
     
    "What a deceptive joke. Europe's attempt at "austerity" can't be a "trend," because it hasn't even started. The "Fiscal Treaty" involved (at Google Docs; at RTE News [large PDF]) hasn't even taken effect. Article 14, as explained by RTE's Europe Editor Tony Connelly, 'will enter into force on January 1 2013 so long as 12 member states have completed ratification.'"
    Read more: http://newsbusters.org/media-places/investors-business-daily#ixzz1yq6PqzsR



  151. Robert – tax treatment – futures and futures options are treated as 60% long term 40% short term regardless of holding period.

    If you want to look it up – google tax treatment of futures


  152. I was hoping someone would say that.  Isn't that the same treatment SPX / Index cash settled options have?


  153. it is the same.  I just googled it.  Thanks Samz!


  154. ZERO AUSTERITY//our leaders are largely bereft of any motivation except self interest..most of them don't even have a working knowledge of finance..the lack of sophistication is mind numbing..i suppose we should count ourselves lucky that our leaders don't understand managerial economics and complex finance..then they would be armed with knowledge AND power now that's a scary thought..rather they stumble from fix to fix like junkies hoping that massive shape careening toward them is Busty Heart


  155. boltdude, looks like your question has been answered.  Thanks to rkyroma too for the link.  SPY & SPX comparison is always interesting.  Each on can be used in different situations.  For this case, the commission is too high if we trying to do a -130/+150 SPY put spread.  SPY has better bid-ask spread of course and can be filled faster in other set ups.


  156. Angel:  There seems to be considerable evidence that "stimulus" simply puts off the downturn and tends to worsen it, I suppose because more "money" not backed up by GDP is spent, i.e., a deeper debt is created that requires either more savings or a default [someone's loss] to liquidate. Basic arithmetic.  While this may be true, the mechanism matters.  Europe, with its single currency/ multiple nation setup, will tend to suffer deeper unemployment, more severe losses of wealth, and a more protracted fall in GDP.  The U.S., with it's lovely fiat currency that is accepted worldwide as legal tender, has the ability to shift the losses to its creditors by printing more of the stuff, causing other countries to lose wealth, employment and GDP.  But someone always takes the hit, and the whole "stimulus" exercise tends to prolong the aggregate suffering.  
     
    Understanding?  I think the U.S. leaders understand it quite well, since the U.S. has done it before [shifted losses to Asia, Mexico, et. al.]. I suspect that "Europe" didn't quite foresee how it would work in the context of their strait jacket currency setup, so we now have an unseemly scramble among them for who ends up with the hot debt potato.
     
     Germany, the putative "savior" of Europe, having reaped the benefits of a weaker-than-the-DM-would-have-been-over-the-last-ten-years-currency, isn't showing much enthusiasm for giving back any of their extra GDP growth to the weaker Eurozone nations,  which collectively lost a corresponding amount of GDP through being forced to use a stronger-than-it-should-have-been currency.
     
    Since Germany has the whip hand, it's not hard to predict who will lose among them.  But all countries are losing to some degree from the global contraction that seems to be just warming up.  I tend toward the sunny and optimistic, but this has the makings of a real death spiral.  De-globalization, you might say. I think the Euro is toast, oil will head for $60, and the U.S. 10-year will break below 1%.   There could always appear some Deus ex machina, but it would probably have to come from another planet.


  157. Rkyroma – thanks for the links.  Very informative, and I recommend them to anyone else that may be unsure of the differences between SPX and SPY options.
    Peter – do you agree with the conclusions reached in that SA article?


  158. boltdude,
    The writer of the SA article has a different view than mine and I respect what he wrote.  However, there are big misses in the article.  We know that we never pay the Ask price on SPX, nor sell at the Bid price on SPX.  Anything closer to one side is snapped up by the market makers very fast.  When basing the assumption on the Bid price, he is making a judgement call that is not realistic.  I read one other article that he wrote too and he does have good options basic, but seems to be lacking the 10,000 hours of actual plays in these instruments.  Again, just my humble opinion.


  159. Peter — thanks for further justifying my PSW subscription. :)
     
    On another note, is there a Cliff Notes version of your two "chapters" posted in the wiki?  If not, I will diligently comb through all of it, but was wondering if there was another article archived that could more-concisely net out the essentials for relative newbie "stranglers" like me.


  160. ZERO that's very true and as you know i have been saying for a year and a half that ultimately the us is the cleanest shirt in the laundry and we will benefit as a result of china's fall from grace the euro breakup etcetc.,.but can we truly say that the apraratchnik understand what they are doing because if they had a level of practical awareness that their premise is in fact exacerbating the problem  to such an exponential degree that remediation is impossible..they would have had to have set down this road as a conscious attempt at a type of structural/policy driven anarchy and i can't see how these very lightheaded men can profit by a circumstance that will require their deaths?…the results are beyond catastrophic and for such a result this isn't a clever choice?


  161. Hmm, what does "Your comment is awaiting moderation" mean?  Did I use Peter's name in vain?!!


  162. Phil/inflation

    How about a private Island. We have the inside on a good one.


  163. Uncontrolled global warming (unless, of course, we turn the country over to the demos) will make island nations a bit damp, don't you think?
     
    Peter: it is insanely tempting (damn, that Jobs guy won't die) to sell out month premium, and there's nothing wrong with the trade you posted. However, I weaned myself off the monthly and out-month trades for the most part because in a hard move, those trades don't look so good. I am actually sticking completely to the weeklies, on the assumption that the sh*t will hit the fan (massive stimulus? no stimulus?) and I become a holy roller.
     
    Out month strangles are most attractive with a massive VIX. I know I have set $2 as the target weekly premium, but I'm thinking that 10x the VIX makes a great deal of sense. VIX now 21, so if I were selling today, I would look to collect 2.10. When the VIX was 16, I should have taken $1.60, but I didn't and had to roll a bit to dodge it.


  164. One comment about the SPY/SPX difference, beyond the tax treatment (which completely decides the issue for me): SPY has tight spreads, so those who day trade would prefer it. I often have a SPX ask in place for several hours, waiting for enough movement to execute me. My horizon is a week, which gives me more patience. The monthly folks can wait several days, I would think.


  165. iPhones – today at a meeting there were 4 iphones with 3 different times. the owners were freaked out and figured jobs would be rising from the grave to strike down whatever led to this inconceivable state of affairs. not being  a smartphone user, i simply looked at my watch..  ;-)


  166. Pharm / Big Pharm Series – Printed and read your articles today.  Very nice job in putting into it all together.  Appreciate what you do and I know why Phil leaves this area of the market to you for our benefit.  Thanks!


  167. Thx jfawcett.  Much appreciated.  This is my second fun 'job,' as I have one that pays the bills, but I do enjoy reading about science and reporting back for us all to benefit.


  168. Lovelock -  Et tu Brutus? Don't tell me the Guardian is now a shill for Fox News?


  169. boltdude/cliff notes version – I don't know if there is one, but the Wiki is an easy read I think.
     
    barf/weeklys – Thanks for the comments.  I'm sure you have a better system for the weeklys than I do, as I'm not making as much profit on them as the monthly.  I often found that the weeklys need to be closer to the money to get the $2 or $1.5 premium, usually within 5% of the money.  A 2.5% day would drive them crazy, and more importantly, a 2X roll doesn't give as much cushion as it's too close to the expiration.  A 5% day is a bigger disaster for the weeklys than the monthly.  I also found it hard to roll the weekly to the next weekly on expiration day.


  170. R e: election for POTUS

    “you can fool all of the people some of the time and some of the people all of the time; which is just long enough to get elected President”


  171. Ritholtz and Rosenberg on Bloomberg Surveillance this morning, good stuff.  Ritholtz thinks secular bear market will run through to next election (2016).  Rosenberg thinks inflection point will be this election.   Rosenberg more bullish than Ritholtz in the near-term regarding the US economy…surprising!


  172. bear/lvmoda: If China bubble pops, that flows into Canada and Australia, which would make 2013 kind of a tough year I think.


  173. Good morning!  

    Up about 0.3% in the Futures as the Dollar pulls back to 82.50.  Not helping oil yet ($79.32) or gold ($1,585).

    Asia was mixed with Hang Seng up half a point, Shanghai and BSE flat and Nikkei down 0.75%.  Europe is choppy and flat.  

    Tuesday's economic calendar:

    7:45 ICSC Retail Store Sales

    8:55 Redbook Chain Store Sales

    9:00 S&P Case-Shiller Home Price Index

    10:00 Consumer Confidence

    10:00 State Street Investor Confidence Index

    10:00 Richmond Fed Mfg. 

    BoE Governor King continues to lay the groundwork for further QE, telling Parliament he's "struck" by how much things have deteriorated in the last 6 weeks. "Pessimistic," and "particularly concerned," make his testimony as well. This month's vote for more QE was 5-4 against. Look for that to be reversed in July.

    German consumer confidence will rise in July, according to GfK (analyst had expected the firm to predict a decline), as strong wage growth outweighs concerns about the continent's debt crisis. "Germans regard the international threat as a risk the economy in general rather than to their personal situation," says GfK.

    Spain's borrowing costs again soar as the government auctions €3.08B in short-term bills, which was above its target of €2B-€3B. The Treasury sold €1.6B of 3-month paper at a yield of 2.36%, up from 0.85% in May, while the bid-to-cover ratio fell to 2.6 from 4. Spain also auctioned €1.48B of 6-month bills with a yield of 3.24% vs. 1.74% and a bid-to-cover ratio of 2.8 vs. 4.3. 

    Japan's lower house of parliament approves a bill to double the national sales tax to 10% by 2015. The measure passed 363-96, though the 96 against reportedly included 57 members of the ruling Democratic Party of Japan. The bill will go to the upper house in the next few weeks, where its passage is virtually guaranteed.

    China can achieve a 10% gain in exports and imports this year if the world economy doesn’t worsen further, says China's commerce ministry. Trade growth had "sound momentum" in June.

    Republican and Democratic leaders in both houses of Congress are discussing proposals that would put off having to worry about the "fiscal cliff" until after the election. They're considering a billthat would delay automatic spending cuts from January until March, Bloomberg reports, as well as extend the George Bush tax cuts and fund the government for the same period.

    Orbitz Worldwide (OWW) has begun experimenting withshowing different search results on Macs vs. PCs after finding that Mac users spend as much as 30% more a night on hotels and are 40% more likely than PC users to book a 4-5 star hotel. The move demonstrates how even seemingly innocuous information – like what type of computer someone uses – can change the way companies target consumers.


  174. Favorable tax treatment/Robert – That would be a good article for someone to write.  If you buy and sell leaps and stick with them, then you get 100% long-term cap gains on the profit vs. 60/40 on SPX (60% of the taxes are charged at the long-term rate) – I don't know if that applies to indexes other than SPX, NDX and RUT, but I believe it does apply to Forex and Commodities Futures (another way the IBanks avoid taxes).  Also, you should talk to your accountant about electing trader status with the IRS – that has a lot of tax benefits as well.  

    Austerity/ZZ – That would be a disaster if they actually do it.  

    Uh-oh – Dollar coming back as Euro fails $1.25 yet again.  

    Big Chart – Barely hanging on.  We can't afford another down day from here.  

    Death spiral/ZZ – Without hyperinflation, we go down the drain.  The people who are "unrealistic" are the ones who think you can pay off $16Tn in debt by cutting spending (especially if you don't increase collections).  Cut spending and less money in circulation, less money in circulation means Governments have to offer more interest to attract money and then debt goes up anyway.  You can use austerity when you are 10% in debt, 20% in debt, even 30% in debt but when you are 100% of your GDP in debt – that ship has sailed long ago.  

    Talk about kicking the can down the road – what's the austerity plan – 20 years of no spending until we pay off our debts?  Our Government (and Europe about the same) currently spends $3.2Tn a year and takes in $2.2Tn for a $1Tn annual deficit and we have $16Tn in debt.  So if we reduce spending by 66% and maintain collections (generally a mutually exclusive proposition) at the same level, then it will "only" take us 16 years to pay off the debt – if interest levels stay at 3% – otherwise we are totally screwed anyway.  

    So we scrap the army and SS and Medicare (but keep collecting the money for SS and Medicare anyway because that's currently $800Bn a year (1/3) of the Government's revenues) and another $500Bn of discretionary spending and then we're down to spending just $1.2Tn a year and collecting $2.2Tn and THEN austerity works (as long as there are no natural disasters, attacks on our country, wars or infrastructure emergencies).  What a F'ing brilliant plan that is – so well thought out…

    Good point Peter. 

    Moderation/Bolt – That's our little spam filter.  It works off patterns of things that look like ads and it changes depending on what ads we get bombarded with that week.  I know Savi tripped it a few times by talking about Vegas because it sounds like a solicitation but as soon as one of the admins see it, we can release it when it's from a Member.  As it stands, the filter catches a couple of hundred a day and works really well – it's pretty rare that it nails a Member comment but no big deal when it does as we can just release it.  

    Island/Exec – It's sold, isn't it?  Problem with private island is you may end up hosting a pirate party.  I like Jersey because we get UK military protection and those guys went all the way to the Fauklands to blow up some penguins so I'm pretty sure they'll cross the channel to defend our sheep!  

    Islands/Barf – Oh yes, you do need to watch your sea levels.  Jersey is at 276 feet (another unique feature that pushed it up my list) while Sea Isle City in New Jersey, by comparison is 6 feet.  I would hesitate to even put a deposit on a vacation rental over there!  

    IPhones/Scott – What's up with that?  Different carriers or something more serious?


  175. We did rather shamedly leave the Channel Islands to the Germans after concurring they had no strategic value but giiven most of our weathly comdiens/filmstarts/musicions like to put all their cash in Jersey I cannot see us letting it go again.  Phil's right … we are a nation of animal lovers and usuallly have a couple of typhoon fighters and a destroyer parked down south to protect the penguins.
    Having got trapped on Jersey for 3 days  I can safely say its a lovely island with some definate high points …..