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Tut Tut Tuesday – Still No Rain

Tut, tut, it does not look like rain.  

You would think the worst drought in 80 years would merit more than the occasional mention in the Financial media – I've seen CNBC do one-hour specials on the marijuana crops so you'd think actual FOOD would maybe make it a little higher on the list of concerns for the MSM – especially when we are experiencing the worst drought of the past 80 years and the last one that was this bad led to a Global Depression (along with, of course, National Debt Crises and Financial Failures but mission accomplished there already).

You would think the drought has somehow fallen into a Somebody Else's Problem Field, where individuals/populations of individuals choose to decentralize themselves from an issue that may be in critical need of recognition. Such issues may be of large concern to the population as a whole but can easily be a choice of ignorance at an individualistic level.  As Douglas Adams explains in The Hitchiker's Guide to the Galaxy:  

An SEP is something we can't see, or don't see, or our brain doesn't let us see, because we think that it's somebody else's problem…. The brain just edits it out, it's like a blind spot. If you look at it directly you won't see it unless you know precisely what it is. Your only hope is to catch it by surprise out of the corner of your eye.
The technology involved in making something properly invisible is so mind-bogglingly complex that 999,999,999 times out of a billion it's simpler just to take the thing away and do without it……. The "Somebody Else's Problem field" is much simpler, more effective, and "can be run for over a hundred years on a single torch battery.
This is because it relies on people's natural predisposition not to see anything they don't want to, weren't expecting, or can't explain.

Various areas of psychology and philosophy of perception are concerned with the reasons why individuals often ignore issues that are of relative or critical importance. Optimism bias tends to reduce issues of subjectivity due to the tendency to have thought processes that are overly positive- "Overly positive assumptions can lead to disastrous miscalculations — make us less likely to get health checkups, apply sunscreen or open a savings account, and more likely to bet the farm on a bad investment."

JJG WEEKLYBetting the farm is an apropos expression here as the bulls are betting that crops withering on the vine in America's bread basket are not going to have a long-term detrimental affect on the Global economy.  This is despite seeing food riots in Asia in 2009 and 2010 and last year's Arab Spring – all sparked by runaway food prices (see David Fry's grain chart, left).  

How is it possible to ignore such a major macro issue?  With the MSM, it's obvious – they don't want to worry people because worried people don't give their money to the sponsors who can whittle their accounts down with endless fees – some of which find their way back to the "news" station in the form of more advertising money.

To some extent, with ALL the other problems facing us, investors seem to have no room on their plate for something else to worry about but the markets do not appear quite ready to "ignore and soar" either.  We truly stand at a very major inflection point as we hit the point on our charts we predicted two weeks ago – pretty much right on schedule.   Now, two weeks ago, we were not too worried about the drought and, two weeks later, we are still worried about Greece and Spain and Italy and earnings and the Euro and China and India, etc. – so you can see why people hear "record drought" and just sigh at this point. 

I think, in the least, that we have another bit of data (and a pretty big one) that simply tips the scales a bit more bearish and we need to watch that $65 line on JJG, which was only ever crossed in 2008 on the Bush stimulus plan – right before the entire Global market collapsed under the weight of crushing commodity prices.  If you consider $40 to be a baseline cost of food – then $60 on JJG represents a 50% increase in the food budget.  This is not so tragic in the US, where we spend less than 15% of our monthly income on food but, in Asia, where it's more like 30% and up to 50% in poorer areas – a 50% increase in food costs pretty much precludes any kind of discretionary spending on other things.

 As you can see from our Big Chart above – we are right on track with my Friday's prediction that we'd be down on Monday, recover through Tuesday and then a big down day tomorrow when people once again realize not enough is being done to address our problems.  As I said to Members in Chat this morning:  


Nas and RUT recovered just enough to sit on top of their 50s while Dow, S&P an NYSE ALL tested theirs and sit about a point above – ALL – like a coordinated ballet.  What we have discovered is there is no support between here and the 50 dma and we're not even sure that 50 dma support is real.  If the Nas and/or RUT fail their 50s (anything red at this point), then I think it's a pretty safe bet to aggressively play the others to join them so we're looking for a 100-point Dow drop to 12,600 and S&P back to 1,333 if the Nas fails to hold 2,875 (with 2,850 and 2,825 both acting as strong support) or the RUT fails to hold 775 (and those are all the supports it has so nice TZA play below that line). 

As to the "death cross" on the RUT – keep in mind that, as long as the RUT is over the 50 dma, then the 50 DMA will curve up at a faster rate than the 200 dma and, if they can get the RUT back to 800 – you'll have a very impressive-looking floor of the 200 dma that is SO STRONG that even the falling 50 dma bounces off it.  So there is still room to print a bullish technical picture but time is running out if they are going to pull it off.  

After a very bearish turn on Thursday, when we went with our first Long Put List of the year, we were already taking our first set of profits at 10:29 am yesterday, when we cashed in some gains and even picked up a bullish quickie on the Qs (already gone with a quick gain).    The puts we mentioned in yesterday morning's post did very well on the morning drop and finished up with very nice 48-hour gains that were featured on BNN yesterday afternoon:  

  • AMZN Oct $180 puts at $2.75, out at $3.50 – up 27%
  • CMG Sept $350 puts at $5, out at $35 – up 600% 
  • DIA Dec $117 puts at $2.50, out at $3.60 – up 44%
  • ISRG Jan $350 puts at $1.70, out at $5 – up 194%
  • MA Jan $290 puts at $2.85, out at $4 – up 40%
  • SPY Oct $120 puts at $1, out at $1.70 – up 70% 
  • V Jan $100 puts at $2, out at $2.60 – up 30%  
  • XRT Jan $53 puts at $2, now $2.50 – up 25%

With AMZN, we switched to the Oct $185 puts at $3.50 and the rest we are done with for the moment but all will still be on our radar for re-entries if they get back to our strikes because, really, what's changed in 48 hours to change our premise?  In that same Alert to Members, I laid out our targets for strong and weak bounces and we got our weak bounces yesterday (12,660, 1,346, 2,875, 7,650 and 781) and today we look for the strong ones but, most likely, they will be the rejection points at which we begin to layer back in with our shorts at Dow 12,720, S&P 1,354, Nasdaq 2,900, NYSE 7,700 and Russell 787 – anything less than that will be very disappointing and failure to hold our weak bounce lines will be very bearish indeed.  

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  1. StJ / Portfolio's –  There was a ton of updates yesterday, I was just wondering if you could post a note when they are updated.  Thank you very much!

  2. @Felipe
    "Weather the weather, whatever the weather, whether we like it or not".

  3. Good Morning!

  4. Portfolio / Burr – I usually update them between 9:00 and 9:30 AM every morning.

  5. Oil Lines

    R3 – 92.67
    R2 – 91.55
    R1 – 90
    PP – 88.88
    S1 – 87.33
    S2 – 86.21
    S3 – 84.66

  6. This drought can be the icing on the cake that pushes the economy over the proverbial cliff.  Most people don't equate a drought as something that can negatively impact the economy.  Like everything else….the majority are oblivious to everything until it hits them in the face.

  7. Reposting this from Mondays comments…
    Anyone here checked out HDGE? I like the fact that it's a portfolio of selected shorts as opposed to being short everything. Fairly high management fee (around 1.8%) but actively managed. Also, they update their portfolio everyday which is potentially a good source of short ideas.
    #1 short holding right now – DB.

  8. Here we go – bad news (US Manufacturing growth) = everyone plans on QE3. Commods rise, shorts fall till we await
     the Fed's pronouncements . .  don't fight the Fed. It's insane really.

  9. Phil, In my life, I have been amazed by this:
    "This is because it relies on people's natural predisposition not to see anything they don't want to, weren't expecting, or can't explain."
    I may be guilty of not feeling a need for an explanation on many things, but how can you go through life without expecting the unexpected or not seeing what you can see?  :)

  10. And FTSE turns positive too – let's run the presses lads. Insane

  11.  One positive benefit of this drought maybe the fact it makes biodiesel and ethanol WAY less economical (than they already are).

  12. Phil: focusing
    Thanks for the confirmation earlier about "learning" a limited number of stocks.  That was one of the first valuable things I picked up 2 years ago in the New Members Guide.  And yes of course something like GMCR is done as a play now. But, if it were to move back to 35 or so it would then start getting my attention again.  

  13. CSCO -  Chambers say something again?

  14. Birdman: HDGE
    There were a few members here, myself included, who suggested such a grouping of stocks a year or so ago when OPEN, NFLX, SODA could have been good choices.  Does HDGE actually take short positions or sell calls and buy puts?

  15. Anyone get the SVU roll from Oct $4 to Oct $2 to fill for $0.40 yesterday? Mine never did and the mark sat at $0.45 almost all day…
     Not sure if anyone got the order filled?

  16. HDGE/Lincoln – They take short positions in the stocks. Interesting article showing pp at Seeking Alpha:
    I bought a small bit this morning just to start getting acquainted.

  17. iTrade – I got filled in two separate accounts.  Both Ameritrade / TOS.

  18. itrade:
    I held 15 yesterday and was able to get 10 rolled at .40. Still have 5 left. Be patient, we may get another opp. later this week.

  19. Both NFLX and AAPL report tonight!

  20. FU GS!

  21. Bird – watch out for management fees on HDGE, something ridiculous like 3%.  Wouldn't go there myself…

  22. HDGE/jer – It's capped at 1.85% until October, but could go up then. Not too bad right now.

  23. Checking to see if I can post an image here – haven't tried it before. Not trying to sound like a shill for these guys, but I do find them interesting.

  24. Morning All – Well, that was a horrible Richmond Fed print. 

  25. Here is another Dan Sheridan webinar where he goes over monthly Income Trades in a low vol environment.
    I only got through 30min of it, but he had a interesting idea for AAPL where he sells options pre-earnings expecting a vol crush, and buy's options in earnings since vol will stay high.  He looks for 10% return.  Anyway, good free info.

  26. MoMo players alert!     We must buy back the PCLN puts that we have out there naked before EOD.  You must NEVER hold naked calls or puts through an earnings event (witness the CMG move).  

  27. You must mean NFLX lflan! They release tonight. PCLN doesn't release until 8/7.

  28. Good morning!  

    What a nice little BS spike we're getting at the open.  

    Wow, Cramer's logic is like a crazy person.  He's actually saying that, since CMG did poorly it must mean people are eating at home and therefore Ortega (supermarket Mexican) is now a good buy.  You would think he is joking because it sounds so funny to read but he's sitting there being emphatically sincere acting as if his horrifically wrong call on CMG was simply the victim of a new trend where people are choosing to stay at home rather than eat out.   This is a very dangerous man…

    HDGE/Bird – I like GT and DB and KMX and I don't think C is so awful.  I'll stick to the AMZN Oct $185 puts as a hedge, thank you, along with TZA, EDZ…  Do we really need to pay these guys a 1.8% fee to find good hedges?  

    SPG and US making new highs. 

    Euro back over $1.21, Dollar 83.85, Pound $1.555, 78.17 Yen to the Dollar and the Nikkei does not like that at 8,465 but still my favorite bullish futures play if we break higher (/NKD).  

    Swiss accounts/Diamond – Duh…

    How/1020 – That's interesting because, as I read that, I was thinking "always expect the unexpected."   I haven't though of it in a long time and I don't know where it's from – maybe a bastardized version of something from the Spanish Inquisition (which nobody expects) and, of course, I grew up reading Adams, worshiping Python, etc – in my 6th grade talent show, my friend and I did "The Argument Clinic" sketch and my Father (not my step-father, who died more recently) was a systems analyst who would always be pointing out the other side of things.  I remember sitting with him in the car in a car wash and he said "you know, if this thing breaks it will take them ages to back all the cars out of here" – that was my Dad – not a pessimist but always analyzing things from every which way to see if it could be taken apart and done better.  So, for me – I don't understand how people DON'T see things, but I guess I just tend to look a little harder than most.  I try to be like my Dad in that way – who always reminded me of a Fair Witness from Heinlein's "Stranger in a Strange Land":  

    Anne was seated on the springboard; she turned her head. Jubal called out, "That new house on the far hilltop – can you see what color they've painted it?"

    Anne looked in the direction in which Jubal was pointing and answered, "It's white on this side." She did not inquire why Jubal had asked, nor make any comment.

    Jubal went on to Jill in normal tones. "You see? Anne is so thoroughly indoctrinated that it doesn't even occur to her to infer that the other side is probably white too. All the King's horses and all the King's men couldn't force her to commit herself as to the far side . . . unless she herself went around to the other side and looked.

    You're welcome Lincoln! 

    FAS Money – I'm for taking the money and running on the 2 $75 puts at $2 – picking up .93 there is a nice buffer in case we get another dump and, if not, we still have $460 to collect off the $76 puts.  

    $25KPM – Damn, it was so hard to make $2K I would hate to lose it.  I still believe in F and SVU and JRCC seems like a no-brainer and TLT is easy money.  Oh well, nothing to change, I guess.  

    $25KPA – In addition to above, EDZ I'd be happy to own at net $13.80, CHK another no-brainer, and AMZN is a gamble I very much like.  Yawn….

    No Bird, you can't post an image, just a link to one.  

  29. Thanks  stjeanluc….yes, I mean NFLX.    We hold PCLN, but get out of NFLX today. 

  30. And I've closed the NFLX trade at 1.00. 

  31. NFLX does historically terrible in this quarter.  Any good recommendations out there?

  32. A rather timely article on drought investing, FWIW.  I thought some of the plays were not obvious, at least to a non-farmer like me.  Comments welcome, obviously.

  33. Anyone else mildly surprised by this move down so far?

  34. PHIL Don't you dare sale PSW !!!
    that would be the most depressing day …

  35. Most indices are bumping into their 50 DMA. The RUT just went through both 50 and 200 DMA in one swoop! Wheee….

  36. FWIW, I've got 196 buy/sell technical signals from AutoChartist: 8 buys & 188 sells.

  37. Phil — Unexpected — Kung Fu?

  38. That is great on the lists Burr, thanks!   A lot of the TWILs are still playable and make great offsets to bearish hedges. The fact that they are still playable (at essentially 2009 lows) – shows how bad the market really is when so many good companies can still be so cheap.  

    And wheeeeeeee again!  

    NFLX/Lolo – They are too low in the channel to make a comfortable short unfortunately.  Not that I think they will do well but too easy to beat low expectations.   

    Drought/ZZ – One big storm and you get wiped out on that kind of play so be careful. 

    Selling PSW/Micro – I don't intend to, it's too much fun and I think, when we get SWW right, it can turn into a nice little publishing business.  The only sale I would consider would be to join up with a bigger site but I have major issues on content control (remember the Forbes debacle?) so not very likely I'll find someone I trust enough to do a deal with.

    Kung Fu/Esco – Good one!  I used to watch those religiously.  

  39. don't we have treasury auctions all week? hence down into the auction then an anti-gravity move?

  40. QQQ call 62 weeklies at $1.52
     to play a ramp up into AAPL earnings

  41. MrMocha –  Got any "Crazy Play's" for AAPL and NFLX earnings?  Instead of dropping $200 on poker tonight I'd rather bet it on something fun. 

  42. lflan
    Are you going to hold your AAPL through earnings? Just curious.

  43. NFLX / Burr – FYI, their average move on earnings is close to 15%! It would have to be a real crazy play….

  44. mrm – me too for AAPL crazy play!

  45. "taken apart and done better"
    This is the argument I want to see from our leaders, unfortunately, we spend too much time on the "taken apart", part…..

  46. BWLD – another momo with earnings tonight.  Anyone think its going to fall like CMG?

  47. AAPL Spread – how about the buying the Aug 590's and selling this week's 610's – with three week's to adjust & minimal margin?

  48. 0×0 / drought — I found this interesting and another angle: Farmers seen weathering 2012 drought better than in 1988

  49. Crazy Play NFLX / MrM – How about a Double calendar – Buying the Aug strangle and selling this week strangle? IV crush should make it profitable tomorrow. You can cover a lot of ground depending on your greed!

  50. lobobear,
    Both CMG and MCD did not do too well.
    I bot some put spreads on BWLD

  51. The 20% rule:  I'm sure the answer to this question must be obvious, but not, apparently, to me.  I buy X.  It goes down 10%. A few days go by, it goes up [today, as it turns out] 20%.  Net 10%.  How does the ruly apply, please?

  52. Phil, any thoughts on XRX?

  53. The question is becoming academic, because in the time it took to write this now up 27% /17% net and rising.  But, for the record…

  54.   @FGoria: Finnish Finance Minister Jutta Urpilainen: "If we don't receive guarantees we cannot pay into the rescue packages."

  55. Europe closing with Germany down 0.25%, France down 0.5%, London down 0.6%, Italy down 2.7% with strikers marching, Spain down 3.7% with a big dip into the close.   Euro at $1.208 keeping the Dollar over 84

    Nothing there to keep us up.  

    Auctions/Rebel – Yes, but not the big ones.  It's the 7, 10 and 30-years that really matter.  Up to 5 years they generally all get bought no problem. 

    Middle east/ZZ – I'm starting to think that region is like a powder keg…  Oh sorry, I thought this was 1965!  

    BWLD/Lolo – Good one!  They have to be getting hit with higher costs but the Olympics will play in their favor from a guidance perspective, at least.   I like selling 5 Sept $85 calls for $3.50 ($1,750) and buying 3 March $95 calls for $5.20 ($1,560) for a net $190 credit and, if they fail to move $5 higher, the short calls expire worthless and you keep the credit plus the remaining value of the long calls.  Let's do one set like that in the $25KPA to see how it goes. 

    AAPL/Deano – But the Aug $590s are $30.50 so you are paying $620.50 for those (about $15 in premium) and only offsetting it with the $13.50 $610s so very tight window to make money.  I think if you believe AAPL won't beat $610, then why not buy 4 Aug $590 longs ($30.20, $12,080)  and sell 5 short weekly $310 calls ($30.50, $15,250)?  If AAPL flies to $640, the 5 shorts are worth $15,000 and the 4 $590s are worth $20,000 after getting a $3,000 credit to buy the spread so there's a pretty wide margin there in which you can do well.  Let's do one set of these in the $25KPA as well.  

    Drought/Rain – Maybe some but I've seen some pretty dire numbers on the yields.  

    20%/ZZ – It's not so much a rule to sell as a rule to treat it as a new decision point now that you have newer and better information.  At this point, right now, would you make that bet from scratch.  If so, set the stop even and let it ride but, if not – be happy with the 10%.  

    XRX/RMS – I will look them up over lunch.  

    Curse you Finland!!!  

  56. CHK Income Port Question
    Ok, I'm a little confused on the reasoning behind the CHK play.  So it's LONG a Bull CS, but if CHK is at 17 or greater, which we want, the stock get's put to us, or we have to roll.  Why did we do it this way, rather than selling the 15 put or lower to pay for the bull call spread?  Unless you really want to own that stock with a 2% div.
    +10xAug 12 15Call
    -10xAug 12 17Call
    -10xAug 12 17 Put

  57. Oops, forget that AAPL trade, I got the numbers mixed up somehow.  Sorry!  The proper trade is buying 4 of the Aug $610 calls for $19.50 ($7,800) and selling 5 weekly $610 calls for $13.25 ($6,625) and that's a debit of $1,175 and the key to a trade like this, if AAPL goes higher, is selling your longs into the move up and waiting for it to calm down to buy back the caller – which is a great trade but margin-intensive as you do need to have naked calls for a while so not a play we'll make in the $25KP. 

  58. 20%/ Thank you.

  59. CHK/Burr – Huh?  If CHK is over $17, the short puts expire worthless and we collect net $2 on the $15/17 bull call spread.  

  60. Crazy Plays - sorry guys, meetings all day so no fancy trades.  Sometime today I plan to do a cheap OTM AAPL bull call spread plus an OTM NFLX bear put spread, I'm betting one up and the other down – a pairs trade - but not going to spend very much.

  61. CHK – Oh duh, sorry, right on the puts.  But still, why do it like this rather than the "normal" way.  In the "normal" way, even if the stock doesn't go above the short side of the bull cs, then the puts still expire worthless.  This way you have to be "really" right or you get assigned the stock or have to roll.

  62. If AAPL disappoints after the bell this could get really interesting. I know that's obvious, but it could be a big time catalyst. This market doesn't need much of a shove..

  63. BestBuy Pay Consultant Quits due to Exec's getting Huge Bonuses
    Amazing, they make a pay plan tied to performance….then underperform…and decide to give themselves big bonuses anyway.  
    This is why I'm working on starting my own company.

  64. Phil / Drought — I completely agree that things are looking dire. What I was surprised about is how much better positioned they are since '88 and the ammount of aid they are getting: Washington post:  The worst drought in 50 years
    YGLESIAS: The drought is even worse for the economy than it is for farmers. “Bad weather and ruined crops are, of course, terrible for the farmers who are afflicted. But by the same token, the resulting higher prices are a windfall for those farmers lucky enough to be outside the drought area. It’s actually nonfarmers who relentlessly lose out (by paying more for food) in the drought scenario, and targeted assistance at drought-stricken farmers is simply an aggregate transfer from people who eat food to people who grow it…Policymakers can make things worse. Higher food prices will show up as increases in the Consumer Price Index and be discussed by some as ‘food inflation.’ That framing will tend to encourage central banks to raise interest rates in response, which would be a disastrous course of action.” Matthew Yglesias in Slate.

  65. More on feed:
    12:19 PM Smithfield Foods (SFD +0.4%) will begin importing corn from Brazil, a move that reflects how surging costs for U.S. feed grains are rippling through the livestock and meat industry. Tyson Foods (TSN) declines comment on whether it is doing the same. As U.S. corn futures have rallied to ~$354/metric ton due to hot, dry weather, corn at Brazilian ports is said to be going for ~$290. (Read the comments on this)

  66. At the open: Dow +0.2% to 12725. S&P +0.1% to 1351. Nasdaq +0.18% to 2895.

    Treasurys: 30-year -0.22%. 10-yr -0.10%. 5-yr -0.03%.

    Commodities: Crude +0.6% to $88.67. Gold +0.34% to $1582.65.

    Currencies: Euro -0.07% vs. dollar. Yen -0.22%. Pound -0.22%.

    Market preview: Stock futures are flat to lower but slightly up from earlier lows despite a fall in July PMI manufacturing, and the S&P Benchmark is -0.2%. Europe is still weighing, with Moody's Negative outlook for Germany and other AAA nations having animpact on German bond yields. Following a profit warning, DeVry is-28.4%, while UPS is -3.8% and Whirlpool is -4.8% after releasing earnings. Later: FHFA House Price Index, Richmond Fed Mfg, Apple earnings

    10:00 AM On the hour: Dow -0.47%. 10-yr -0.06. Euro -0.11% vs. dollar. Crude +0.48% to $88.56. Gold +0.19% to $1580.55.

    11:01 AM On the hour: Dow -0.68%. 10-yr +0.07%. Euro -0.28% vs. dollar. Crude +0.48% to $88.55. Gold -0.06% to $1576.55.

    11:45 AM It's another ugly day in Europe, particularly the periphery, as stocks close on the lows. Stoxx 50 -1.3%, Germany -0.5%, France-0.9%, Italy -3.1%, Spain -3.8%, U.K. -0.7%. Spain's 3-day loss sums to 10.4%, a crash for that already beaten-down market. In Athens, the main index falls 7.1%, the largest drop since October 2008.

    12:00 PM On the hour: Dow -0.97%. 10-yr +0.10%. Euro -0.41% vs. dollar. Crude +0.61% to $88.68. Gold -0.17% to $1575.15.

    Redbook Chain Store Sales: +1.3% Y/Y vs. +1.7% prior week.

    May FHFA Housing Price Index: +0.8% M/M vs. +0.5% consensus and +0.8% in April.

    July Flash PMI Manufacturing falls to 51.8 vs 52.9 in June. Output 52.2 vs. 53.4 in June. New Orders 51.9 vs. 53.7 in June. Employment 52.9 vs. 52.8 in June. (PR)

    July Richmond Fed Mfg. Survey: -17, vs. -1 expected, -3 previous  More from the report: "Backlogs, capacity utilization, and delivery times continued to contract … Finished goods inventories grew at a much quicker pace … "Manufacturer's optimism regarding future prospects dimmed considerably in July."

    Pre-market BS by GS:  Last night's China HSBC PMI read was a "very strong" one,says Goldman Sachs, noting a still sub-50 level does not indicate contraction. Looking into the sub-indexes, Goldman finds falling Finished Goods Inventory and rising Raw Materials Inventory, both signs of a cyclical recovery in the making. 

    The yield on the Swiss 2-year note falls to a record-low-0.46%. Its credit now officially called into question, Germany's 2-year paper yields -0.06%. Amazingly, longer-term German bond yields do seem to be showing negative reaction to the Moody's threat, the 10-year Bund +6 bps to 1.24% despite continuing carnage in the EU periphery.

    Germany hits back at Moody's after the ratings agency gave the country a negative outlook, pointing out that it has exceptionally low borrowing costs. "Germany will, through solid economic and financial policy, defend its 'safe haven' status," the finance ministry says. Yields on 10-year bonds are +6 bps to 1.24%. 

    Next!  The Italian bond market is taking the worst of it today, 2-year notes 42 bps higher to 5.06% (the yield briefly fell below 2% following LTRO II in February). 10-year paper is 24 bps higher to 6.58%, well above the levels which helped trigger panicky action last summer. With Spain maybe about to fall into the arms of the Troika,the battle moves to Italy.

    "The battle for Spain is already lost," says Gary Jenkins. "The battle for Italy has begun." Soaring 2-year bond yields (up another 15 bps to 6.68% today from under 3% following the LTRO) have saddled the troubled banks with even greater losses that may get worse when they have to sell. As Steen Jakobsen notes, other than the ECB, who will buy? 

    "Catalonia has no other bank than the government of Spain," the region's (home to Barcelona) finance chief tells BBC, suggesting a formal bailout request is coming soon. "Catalonia is a bit of a make-or-break region," says economist Christian Schulz. Shares in Madrid at session lows, -3%.

    Chinese apparent oil demand fell in June, according to Platts, the first decline since the height of the global financial crisis. At 36.84M metric tons, it's the lowest demand since September. "You can't keep watching the engines go slower and slower and not expect to see a drop in the fuel that's needed," says Platts' Song Yen Ling.

    Miami is not Greece? An SEC investigation finds the citymisled investors about its financial health dating back to 2007 as it sold hundreds of millions of dollars of bonds. The probe stemmed from a 2009 Miami Herald report finding officials moving funds about to give the appearance of a balanced budget. The penalties look to range from nothing to a slap on the wrist.

    "Stockton Plan: Make Bondholders Feel Pain," reads the title of a Bond Buyer story on the bankrupt California city. The town's play to slash debt payments has so far gone nowhere during negotiations with creditors. "If Stockton does get relief from bondholders," says strategist Dan Heckman, "that would be disturbing to the muni bond market."

    Two Michigan state legislators call on state officials to step up investigations into possible collusion between Chesapeake (CHK) and Encana (ECA). Emails appeared to show top execs discussing how to avoid bidding against each other in a 2010 public land auction in Michigan and in prospective land deals involving at least nine private landowners in the state. 

    Chesapeake Midstream Partners (CHKM) announces it'schanging its name to Access Midstream Partners with the ticker ACMP, effective immediately.

    More on Peabody Energy (BTU): Q2 sales volumes were 57.4M tons, on par with the prior year as increases from Australia and in trading and brokerage offset lower U.S. production. Company issues downside guidance for Q3, seeing EPS of $0.20-0.45 vs. $0.65 analyst consensus. Shares -3.3% premarket.

    Smithfield Foods (SFD +0.4%) will begin importing corn from Brazil, a move that reflects how surging costs for U.S. feed grains are rippling through the livestock and meat industry. Tyson Foods (TSN) declines comment on whether it is doing the same. As U.S. corn futures have rallied to ~$354/metric ton due to hot, dry weather, corn at Brazilian ports is said to be going for ~$290. 

    For-profit educators tumble at the open following DeVry's (DV -27.4%downbeat forecastAPOL -4.5%ESI -5.8%STRA-6.7%CECO -3.1%COCO -2.8%LOPE -2.9%EDMC -1.9%BPI-2.6%WPO -2%.

    More on Illinois Tool Works (ITW -3.3%Q2: net profit jumps 77% to $881M, reflecting major gains from discontinued operations. Cuts FY guidance, now predicts EPS of $4.03-4.19 on revenue growth of 1-3% vs. prior estimate of $4.14-4.38 and 5-7%. For FQ3, forecasts $1.03-1.11 on flat revenue vs. consensus of $1.10 and +5% to $4.83B.

    More on the Flash PMI: "Overall, Q3 is so far shaping up to be worse than Q2 in terms of growth, which is a growing concern for policymakers," says Markit. From the UPS conference call: The biggest change in outlook was U.S. domestic deceleration more than Europe or Asia (h/t firstadpoter). (UPS earnings/outlook

    Go WMT!  Sticking it to MA & V!  Wal-Mart (WMT) calls on merchants to turn down the proposed settlement in which Visa (V) and Mastercard (MA) would pay them $7.25B for fixing swipe charges. The deal "would not structurally change the broken market or prohibit credit card networks from continually increasing hidden swipe fees," Wal-Mart says. (PR)

  67. Told you so:
      Goodyear Tire (GT+2.4% premarket after shares areupgraded to Neutral from Sell at Goldman, which cites "a second derivative improvement" in replacement tire volumes in North Americaeasing raw material pressures with the firm's tire cost index down 22% from a recent peak, and reduced near-term pension cash contributions helping liquidity.

    Caterpillar's (CAT +1%) 3-month retail-sales data show that while North America continues to outpace other regions of the world, it's showing signs of weakening. For the U.S., growth slowed to 24% from 31% in the previous quarter, while the Asia/Pacific region rose 16% in 2Q versus a 5% rise for Q1. The overall report is being taken as a positive however, as concern over a slowdown in the Far East - China, specifically - has been the reason behind a slump in the stock recently after briefly surging at the beginning of the year.

    WebMD (WBMD -17.4%) plunges after reportingpreliminary Q2 revenue of $112M and EPS of -$0.12, below a consensus of $115.1M and -$0.10. It's also now guiding for 2012 revenue of $455M-$480M and an operating loss of $12.4M-$23.4M, compared with prior guidance for revenue of $500M-$535M and net income of $2.8M-$19.9M. WebMD blames soft ad spending from drugmakers, thanks to patent expirations and delayed product launches. Carl Icahn can't be happy. 

    Wake up AAPL Bulls!!!  AT&T (T -1.9%), which has had a strong 2012 run-up, has turned negative following a mixed Q2 report. While the wireless division saw higher margins, rising ARPUs, and lower churn to go with 1.3M net adds (320K postpaid), wireline revenue fell 0.8% Y/Y, and U-Verse subscriber adds slipped from Q1 levels. Also, smartphone sales fell 7% Q/Q to 5.1M (iPhones -14% to 3.7M) - positive for near-term margins, but negative for long-term growth – and EPS was boosted by $2.5B worth of buybacks. 

    In April, Apple's (AAPL) Chinese sales crushed expectations, and helped deliver a strong EPS beat in spite of slowing U.S. iPhone sales. Could China come to the rescue again today? China's 3G base rose 118% Y/Y in June to 176M subs, and smartphone growth has been torrid. Also possibly helping Apple: strong iPad sales (tablet forecasts have been rising) and a margin boost from low flash memory prices. On the flip side, Europe may have been weak, and MacBook sales soft ahead of a June refresh.

    Apple (AAPL) and Netflix (NFLX) are due to report earnings after the bell, with analysts expecting that Apple's FQ3 EPS grew to $10.36 from $7.79 a year ago, while revenue surged 30% to $37.18B. In contrast, Netflix's Q2 EPS is seen falling to $0.05 from $1.26, although revenue is estimated to have risen 12.7% to $888.9M.

    A German court has issued an EU-wide ban on Samsung's (SSNLF.PK) Galaxy Tab 7.7 for resembling the iPad, but refuses to do so for the 10.1N. Separately, Apple is demanding $2.5B in damages for Samsung's use of its IP, and future royalties of $31.14/unit to license its design IP and 3 software patents. Critics might point out the iPad's design resembles a photo frame, and that 2 of the software patents cover concepts that predate the iPhone, but that assumes the offer is meant to be taken seriously. (more on AAPL)

  68. TWIL List
    Phil, Might be time to consider a new BTU play in the income portfolio after this miss… back down to $20.75.
    Last time we got the Jan 14 $20 Puts sold for $5, currently at $4.90

  69. I used to work in ags at the CBOT and see that corn and beans are limit down due to more rain in forecast, perhaps some relief? Perhaps the MSM will pick up the upside without ever having reported the dire situation that Phil described:)

  70. CHK/Burr – Because I firmly believe they'll be above $17 at expiration so why not sell the highest puts I am comfortable with?  Also, we don't mind rolling CHK back in time and lower in strike and doubling down if they drop to some silly level – this is an example of how it can be more profitable to play stocks you are familiar with – we know CHK's moods and we've seen them at their worst and best so we have a pretty good feel for when to get in and work our bets. 

    Gotta love that 5% rule – rejected at strong bounces, broke under weak bounces and now continuing down along the same lines – it's almost like there's a program trading this stuff for us!  

    Starting your own/Burr – Yep, put me down for a nice bonus too please.  

    Drought/Rain – We're all too young to remember what a drought really is.  If this thing gets worse – we're simply not prepared to handle the fall-out.

    BTU/ITrade – Yes, they are looking attractive again but let's find a bottom in the broad market first.  

    Rain/Sage – I sure hope so.  That's why I didn't like the long play earlier – consecutive days without rain is like a hitting streak in baseball – it's not really a trend you want to keep betting on extending.  

  71. FU BTU!!!
    FU X!!!
    FU HPQ!!!
    FU BBY!!!
    FU JRCC!!!
    FU SVU!!!
    FU GLW!!!
    FU ABX!!!
    FU PCLN!!!
    now I feel a little better ;-)

  72. CSCO, as a long against a short BCS, the Jan 13 $14 puts are selling for $0.85……

  73. Here come AAPL to save the day.

  74. We are going to need one heck of a stick to get a green day today. Maybe down today and up tomorrow on AAPL's earnings. Phil, you were predicting red/green/red for the start of the week. Maybe we get red/red/green. I guess there is still money for "Show".

  75. I have a possible headline for tomorrow:  APPLE-OCALYPSE!  

    SQQQ is at $49 and we can pick up the Sept $50/60 bull call spread for $2 and sell BTU Sept $19 puts for $1.15 or ABX Sept $32 puts for $1.40 to offset.   Let's buy 20 of those in the Income Portfolio but offset with the sale of 20 BTU March $17 puts at $2.  In both $25KPs, I want to buy 6 of the spreads and offset with the sale of 3 of the BTU Sept puts and 3 of the ABX Sept puts.  

    'Just in case…

  76. or not…

  77. One comment I want to make about the BCS  for CHK trade in 25KPA or any BCS in general. If you have a hard time filling the order look at the revers trade with puts. The Open Interest on call side may be too small and thus higher spreads and harder to fill. The bull put spread 15/17 for CHK is technically the same trade as the BCS 15/17.ut the OI for the strike 15 is almost 10k for puts and only 900 for calls.

  78. Yawn/Phil – This is classic bear market action. Nibbled to death by a duck.

  79. TLT making new highs at close to 132 now. This is not a sign of calm!

  80. Obur –  I agree with you and before PSW when I was trading spreads I would always use the spread that favored the OTM options as the spreads were wider.  The BullPut is a credit, the BullCall is a debit.  But then I just started using the strategies here for simplicity.  
    For anyone who wants to read up on this:

  81. Phil:   I have the same question as stj "Phil, you were predicting red/green/red for the start of the week. Maybe we get red/red/green.
    Today looks well beyond a stick save. What do you think for tomorrow?

  82. oburlacu/BCS:   Isn't put/call parity a wonderful thing!

  83. @Feiipe
    I don't think I would have attempted a VXX combo if you hadn't suggested it last week or the week prior.
    If you did, here's what I have: 
    Long $12 Aug Call
    Short $15 Aug Call
    Short  $13 Aug Put 
    This trade is  up, net over $1,000 for 10 of 'em.
    If you did recommend it, would you close or ride?

  84. Phil- i am in the TLT Sept 126 puts for $2.43 after rolling. I made this last adjustment on Friday. I am looking to either DD again or roll up. Should I roll to the 129's for .95 or DD on the 126's to bring my basis to $1.83?

  85. Phil – one of my friends has thousands of WaMu shares that he has been holding for years. He is waiting for a settlement with JPM and he is hoping that this wud be a separate entity and trade as such. Shareholders have valued it at $27 billion.
    Do you think this wud ever happen? If not, why? If yes, how long? AH ok. 

  86. Phil,
    do you think hpq is done similar to nok/mot or is there still some life in it?

  87. Predicting Earnings Announcement Price Action
    Even though I have a rule never to own airlines, I started following HA a while back because I noticed the sharp increase in tourism in Hawaii, especially from Japan. HA announces at the close today and they will have a blow doors number and I anticipate very strong positive guidance for Q3. The stock is languishing at 6.00 today. I know that the more the surprising the earnings announcement, the greater the reaction. It's always fun to scrutinize the charts to see if and to what extent things have leaked (CMG was obviously not leaked!).
    So… Just as a drill, trying to predict what HA will do tomorrow following earnings. Anyone want to play?

  88. Harip – I asked a similar question over the weekend.  Here's Phil's reply:
    HPQ/Rkyrom – I think they are doing what they should be doing to become the next IBM but it's a very slow process (it took IBM 30 years to reinvent themselves) so not for the impatient investor.  HPQ does $130Bn in sales and drops $7Bn to the bottom line while IBM does $107Bn in sales and drops $16Bn to the bottom line because they wisely got out of the hardware business and, at that time, people were dumping IBM too as they fell from $125 to $60 between 1999 and 2002 and then they were choppy through 2009 but all uphill to 2000 since then.  
    IBM is valued at $221Bn on $16Bn in profits (p/e 13.8) while HPQ is valued at $37Bn on $7Bn in profits (p/e 5.3) – that smells like a bargain to me.   HPQ has taken $14Bn in losses on investment write-offs, which is a cost of trying to turn this battleship into more profitable waters.  They've had scandals and CEO issues and all sorts of other nonsense but they still have $130Bn in annual sales that are still growing every year – even in a crap market.  In no way, shape or form do I think HPQ is a good short-term investment but if I had to bet on $0 or $36 in 3 years – I'd say $36 is a lot more likely so that's a good risk-reward to initiate a long-term position.

  89. TLT – what ran that up today?

  90. Not good news for PFE and JNJ (channeling Pharm):

    Pfizer (PFE) says an experimental Alzheimer's treatment it's working on with Johnson & Johnson (JNJ) unit Janssen Pharmaceuticals did not meet clinical endpoints in a late-stage study. In the study, patients with mild-to-moderate Alzheimer's disease given an intravenous form of the drug bapineuzumab didn't fare any better in cognitive and functional performance than those given a placebo.

  91. rkyroma, thanks for info

  92. More on the PFE and JNJ story:


    Pfizer ($PFE) and Johnson & Johnson ($JNJ) are reporting that in the first of four Phase III trials, bapineuzumab failed to outperform a placebo in moderating symptoms of mild-to-moderate Alzheimer's, a clinical train wreck that will only raise further doubts about the R&D track they laid down.

    Investigators had gambled heavily on the belief that an IV formulation of the drug could help a group of patients who shared the ApoE4 (apolipoprotein E epsilon 4) genotype, one of four studies Pfizer and J&J's Janssen had divided between them. With the failure the companies are slamming the brakes on dosing patients in an extension study of this particular Phase III trial, though they will continue to be evaluated. The other three trials are expected to read out soon.

    Pfizer didn't detail the results from the study, but a principal investigator in the trial, Reisa Sperling, told The New York Times that "there was absolutely no evidence at all of a clinical benefit of treatment on either of the primary measures…"

  93. AAPL FROM A GUY WHO OWNS ALMOST A BILLION DOLLARS WORTH OF IT:  really cant gauge aapl reaction…i think much depends on the tone of their cautious comments….if people think it is just the usual conservative bs…the stock will likely pop higher after-hours…but if they get specific and say for example "we are seeing a significant slowdown in asia" where the majority of their recent growth has come from…then the stock likely gets hammered…..i also think any short-term pop higher wont last more than a few days due to overall economic/market concerns…  i dont really like the setup into the report….stock crazy strong versus rest of market, only analyst love, #1 hedgie position, high-end global consumer slowdown very evident

  94. Took the AAPL weekly 560 put at 3 for insurance. Most of my portfolio is "long" in the tooth, so protection is critical. High fliers are a great way to do just that!
    Hopefully PCLN is listening, because THEY'RE NEXT

  95. angel/guy who owns $1 bill of AAPL – is that you or a friend? ????

  96. Better Angel…. Your browser seems to add some font information that makes the text much smaller. Not sure there is anything you can do!

  97. what they are saying about CSCO and vmware is balony.
    Phil should we take a position in csco ?

  98. I'll give Tim Cook a big ol' kiss if he announces a special dividend of $50

  99. ABX 2014 puts back to 4.55.

  100. Hello All – Is it just me or has EDZ just not been moving as much as it used to?  I would've expected more of a bounce than just 2.5% today.

  101. Is this IT?

  102. microflux – I couldn't agree more.  I've worked for years with VMWare servers and Cisco switches and virtual networking crap…  It's crap.  Most people never use it, and the ones that do regret all the complexity that they built into the system.  
    Buy a VMware server, buy a 10G switch, plug server into switch, create VM's….GO.

  103. Burrben/CSCO: completely agree. this is an obvious attack on cisco before earnings. unbelievable !

  104. It;s getting technically ugly out there:

    Dow – Sitting on the 200 DMA. The 50 DMA are blown!
    S&P – 50 DMA is gone.
    Nasdaq – 50 DMA is gone as well. We are on the edge of the 5% Down line.
    NYSE – Below every DMA and the 5% Down line is 20 points behind us now.
    RUT – DMA are gone and the 5% Down line is only 6 points away

    Better get the big stick today!

  105. phil, CHK Aug bull call spread 16/17 is only 60c for a $1 spread that is 70c in the money. is this a good entry for someone who doesn't have any CHK? thanks,

  106. So tomorrow.. a bounce up? or are we going to herald the return of the Plunger?

  107. Seems to be a bit quite on the the board and general news flow because people are processing the FACT that things are going to get worse before they get better.  The eye of the storm as they say.  Remember when facts show up on your charts take action.  Hope is for losers.

  108. Did someone put the Swiss in charge of the dollar?

  109. Very, very hard no to go long here. Just don't need the stress after the early profits this week.

  110. here sicky sticky sticky

  111. I just transferred funds to Dwolla to buy Bitcoins (through MtGox).
    8.78 is a good price

  112. Birdman – i hear you. And harder to pick up new DIA puts. i closed out at low yesterday and did not reload (on those). Would have enjoyed them today.   Could not get fills on SQQQ calls, but did grab some QQQ puts. Much more open interest and volume there, if not the 'ultra' factor.

  113. MSFT on it's 200MA. If earnings are good, should get a nice pop..

  114. Good call by GS to buy the home builders. You really do have to be a muppet to follow them.

  115. Phil said:
    Anti-Cramer/Barf – Hey, I'd love to do it but I don't have time so it would have to be all set up and ready to the point where I show up somewhere and they turn on the camera.  I just have too many things going on to start doing gorilla TV broadcasts.
    did you mean "guerilla"?

  116. MSFT earnings.. oops. they were last week! ;-)

  117. SVU roll… now this is getting annoying! It's been sitting at $0.40 all day… NO FILL… sounds like I got unlucky yesterday when others got fills.  
    This is exactly one of the reason I'm worried about the BBBW Hedge Fund following the 25KP & Income Portfolio. With zoo much money they will represent he majority of the volume on the position.

  118. MSFT had a write down that resulted in the first negative quarter in 26 years! The write down was expected but news-makers can point to this fact while trouncing the economy on misses this quarter.

  119. itrade:
    I am sitting right between the bid and the ask at .40 and nothing for over 3 hours.

  120. dclark41: few cents doesn't matter if you want the trade, move it a bit to get it. the trade are good anough that a little here or there doesn't matter much.

  121. TLT/StJ – $132 is our expected top – great point to grab the short plays. 

    Red, red, green/StJ, Mjj – I was merely predicting we'd test the strong bounce over 2 days and fail it.  Instead we did it in just one day but it doesn't change the overall idea that we don't have any reason to beat the strong bounce lines without more stimulus.  I did think APPL mania would hold us up today but it isn't and now there is the possibility that AAPL gives an upside surprise and saves the markets but, obviously, I'm not betting on it.  On the whole though – I'm very satisfied with this sell-off and not inclined to bet either way until we see AAPL's very critical earnings and how the market takes it.  

    VXX/Flips – You have to look at it as a new trade.  You've got $1.70 on the bull spread and owe .47 on the puts so $1.23 profit out of a possible $3 net if all expires at $15+.  So, there's a lot more left to make and we thought the VIX was ridiculously low at $13, which led to this bet.  That being the case, we have no reason ever to buy back the $13 puts as we're confident that net $12.53 on VXX is a good entry.  So those are now off the table and the only thing to consider is that you own the $12/15 bull call spread for $1.70 with VXX at $14.75 so you are "on track" to make another $1.30, which is good money.  We have no reason to think there's going to be a mad drop in volatility so I'd just put a stop at $1.50 on the spread and not worry about it.  That way, you're risking $200 to make $1,300 more.

    TLT/Calch –  What gives you more bang for $1.25 (the current cost of the $126 puts) doubling down at $126 or rolling up to the $130 puts (now $2.69)?  Let's say TLT falls back to its 200 dma at $118.  1x the $130 puts would be worth $12 each while 2x the $126 puts would be worth $8 each so that's an edge to doubling down.   But, what if we only get down to the 50 dma at $126?  Then the $130 puts are worth $4 (about your net) but the 2x $126s expire worthless.  Since the market is shakey and we're worried about a catastrophic event – I would say now is not the time to burden yourself with a DD (which doubles the cost of subsequent rolls) and you are better off just spending .60 to roll 1x up to the $128 puts ($1.85) and then any time you can roll $2 for .60, do that.  When there is a massive panic – you'll know it and THEN it will be time to DD but consider that doubling down is kind of fixing your position at that point and, with the 50 dma at your current level – doesn't it make sense to improve your position first?  

    WaMu/Nicha – LOL – Good luck!  The were busted and absorbed into JPM – end of story.  I'm glad shareholders have valued it at $27Bn – that's some good money for a bankrupt company!  JPM bought the company and it was arranged by the Government so you can't even really sue JPM, you have to sue the Government and the FDIC and I'm not even aware there's a lawsuit, is there?  Who's going to now GIVE $27Bn to shareholders?   That's like 2 years of JPMs total earnings so it ain't gonna come from them or they'll be the next bank that's shut down and sold for pennies on the Dollar.  I was in the same boat, I had thousands of WM shares when they went to .10 because it seemed like a fun gamble but those were used to light cigars long ago.   Tell your friend it's time to move on.  

    HPQ/Harip – We discussed this on the weekend.  It's nothing at all like NOK or MOT, both of whom are essentially one-trick ponies.  They are a massive company ($130Bn in sales, $8Bn in profits) in transition and a great long-term hold.  

    And what Rkyro said I said! 

    HA/Bird – I agree, they seem very cheap at $6, especially as they are on track to make $1.50 this year (p/e 4) but people have been really bailing on them recently (down from $7) and since last year (down from $8.50) so the trend is not your friend but you can buy the Jan $5/7 bull call spread for $1 and sell the $6 puts for .75 and you're in the $2 spread for net .25 and worst case is you own them for $6.25, which is just .25 over the current price.  

    TLT/Scott – We talked about that yesterday – MASS HYSTERIA!  

    AAPL/Angel – Thanks. 

    CSCO/Micro – I like them long-term but do you see this market collapsing all around you thing that's going on at the moment – maybe some patience is in order…  THAT GOES FOR EVERYONE!!!

    EDZ/Ink – People still believe in the BRICs.  Also, money fleeing Europe gets partially allocated there as well – they are just basketing out of Euro so BRICs get some love – deserved or not.  

    CHK/Ethan – I like the spread but it's a bet, not an entry, when you are taking a spread.  You don't own the stock, you own the $16 calls that expire in 24 days.  If you want to "enter" CHK and make .40 per month, then sell the Jan $15 puts for $2.10 as that's a net $12.90 entry and you DO own the stock at that price or, if they do well, then they expire worthless and you collect 5 months worth of those spreads without all the fuss of having to be right every month.  

    Hard not to go long/Bird – No it's not.  Just stay in cash.  Go get some sushi, go see Batman, go to the beach.  The market will be here when you and what's left of your profits get back.   GS call on builders was stunning, by the way – I can't believe they have clients left.  

    Guerrilla/Newbie – Two "r"s in Geurrilla, Mr. Spell checker, but maybe I meant gorilla as in wearing an ape mask… hmmm?

    SVU/Itrade – Break up the legs, offer .05 less for each side and, whichever fills first, gives you leeway to pay .05 more for the other side.  I'm sure the fund will be more diverse than that.  Certainly not my intention to keep focus so narrow.  

  122. SVU / iTrade – Right now it looks like PSW is the entire volume for them! On the Income portfolio Phil called for 200 contracts of the Jan Calls in the BCS and 100 puts but that's 1/2 the OI for the calls. The puts are over 4000 for the OI so much better. Going to have to be patient with rolls and new positions.

  123. 81M on the Dow at 3pm – zzzzzzzzzzzzzzzzzzzzzzzzz

  124. It's hard not to like an ETF with the symbol TNA. :)

  125. Sushi/Phil – You give a lot of great advice, but that's maybe the best ever. Believe it or not, we have an outstanding sushi restaurant here in Bend.

  126. BIRDMAN, ETF symbol  LMAO

  127. HA/Phil – Thanks for the input. Great strategy and I could do it without violating never own an airline rule, because I wouldn't actually OWN HA. :)  

  128. Market commentary when wearing a gorilla costume is a fantastic idea--—an inversion of gorillas giving market commentary when wearing human costumes.

  129. Good Afternoon—back in time for the AAPL fireworks!!!!!

  130. SVU Oct call rolls just filled for .40 for anyone still trying to do..

  131. scottmi/SVU:
    Same here.

  132. WOHOO !!!  SVU finally filled on the $0.40 order… long 2-day wait for that one.

  133. Sushi/Bird – Is that 5 Fusion?   West coast sushi is very good actually – if you don't mind the glow….

    Oooh, nice stick in progress, right at 3:30.  1,333 has to be the goal to hold on the S&P and getting back to 12,600 if they can…  Bounce off 2,850 on the Nas certainly not a shocker.   Poor AAPL pinning $600.  

    1:01 PM On the hour: Dow -1.12%. 10-yr +0.15%. Euro -0.54% vs. dollar. Crude +0.20% to $88.34. Gold -0.14% to $1574.85.

    1:04 PM The Treasury sells $35B in two-year notes at 0.22% - a new record auction low yield. Bid-to-cover ratio of 4.0, vs. a recent average of 3.72; indirect bidders take 30.9%, vs. last month's 31.7%. Direct bidders take 10%, vs. a previous 7.9%. 

    2:00 PM On the hour: Dow -1.23%. 10-yr +0.19%. Euro -0.51% vs. dollar. Crude +0.41% to $88.5. Gold -0.07% to $1576.35.

    3:00 PM On the hour: Dow -1.23%. 10-yr +0.19%. Euro -0.51% vs. dollar. Crude +0.41% to $88.5. Gold -0.07% to $1576.35. 

    The UPS conference call: "We think current H2 economic forecasts for the U.S. are too high and that GDP growth will likely be closer to 1%," says CEO Scott Davis. "Current trends, such as the lack of B2B growth, are concerning going forward," says CFO Kurt Kuehn, who also notes attempts at controlling expenses were overwhelmed by health care (+7%) and pension (+10%) costs. UPS-5.1%. (earlier

    Long-dated Treasury yields fall to record lows, the 30-year off 4 bps to 2.46%, the 10-year off 3 bps to 1.40%. While 2-year yields in safe havens like Switzerland (-0.46%) and Germany (-0.06%) fall to negative territory (with even France at 0.34%), 2-year U.S. Treasurys stubbornly remain at 0.21% (huge demand at auction earlier). And oh yeah, TLT has pulled ahead of SPY YTD (chart).

    "When I go to the gym and there's no freshly washed socks, I take the pair that's relatively clean," says Japan MOF official Chikashisa Sumi, explaining the enduring attractiveness of 10-year JGBs. Foreign ownership of the paper has risen to a record 8.3% of the total outstanding as the 0.75% yield no longer looks so outlandishly low – and if the yen is going to appreciate, the low yield is but a secondary issue.

    "The French bond market hasn't figured this out yet," writes David Einhorn, hinting maybe skittish investors focused on Spain and Italy should turn their attention to France. The country, he says, is more akin to its southern neighbors than Germany, and has a Socialist, anti-austerity President. French bond yields don't yet compute: 10-year OATS yield 2.26%, 2-years 0.34%. 

    Claims of a housing recovery and price bottoming are "dangerously short sighted," according to Radar Logic’s latest report. "Not only are the immediate signs inconclusive, but the broad dynamics are still quite scary. We think housing is still a short," adding that data from the second half of the year tells more about price trends than the first half

    Homebuilders shake off signs of an improvement inhousing prices to trade lower today, dragged down by lingeringconcerns over Europe: Toll Bros. (TOL -1.7%), NVR (NVR -2.1%), D.R. Horton (DHI -2%), MDC (MDC -2.7%), Lennar (LEN -2.1%), Hovanian (HOV -2.6%), Ryland (RYL -1.4%), Beazer (BZH -2.7%). ETFs: XHB 2.6%, ITB 1.9%

    U.S. companies increased their borrowing in June by 9.5% Y/Y, continuing a slowdown in growth over the last 2 quarters, reports the Equipment Leasing and Finance Association (ELFA). "Recovery from the Great Recession is slowing down," says the group's chief William Sutton. "Everybody's kind of in a holding pattern due to all the uncertainties." 

    Barclays sees weakening operating performance at some of the more Europe-exposed U.S. companies, pointing to five companies - Procter & Gamble (PG), Avon (AVP), Motorola Solutions (MSI), Expedia (EXPE) and Deere (DE) – for which credit concerns are likely to compound Europe-driven weakness and which the firm calls “potential underweights” from a credit perspective.

    European solar makers are set to launch a complaint with the European Commission accusing China’s solar panel makers of selling solar PV cells below cost in the EU, more critical for China’s solar makers than U.S. action because of so many more EU solar installations than in the U.S. Chinese solar makers sink: YGE -11%,LDK -4.6%TSL -5.5%STP -2.5%JASO -3.8%JKS -4%

    Boyd Gaming (BYD -13%) takes a hit after its less-than-stellar 2Q results missed Street estimates earlier today. Net revenues in its Nevada gaming properties declined again, -4% Y/Y. The company blames a slowing economy and cautious consumer, which continues a trend that in turn has pushed the stock to its lowest levels of the year.

    Three lunchtime reads:

    1) Cyclicals: Time for the offense to take over

    2) When this indicator hits 19, stocks always rally

    3) Greece now in Great Depression, PM says

  134. Long AAPL into earnings for a specific reason.  U.S. sales, who knows, but much of the negative banter revolves around "lots of good tablets around, stiffer competition" and so on.  All true — in the U.S.   But foreign buyers, particularly in poorer countries [China is poorer per average citizen, don't let GDP figures distort that] see Apple as THE product to have.  I've held forth previously about reproductive fitness, animals using perfectly good nutrition to grow giant useless horns for display, and so forth.  I think the model fits, and that, in general, U.S. investors are too U.S.-centric to see the importance of this.  
    It is said that the further out an event, the more precisely you can afford to predict it.  On that scale, I am being an idiot for offering an opinion minutes before earnings.  But that's what I think, and why.

  135. strange that no one has mentioned BIDU's 7%+ move yet today….

  136. zero – u must be long AAPL on far months? Not August right?

  137. My only AAPL play is the long term Jan 600/650  bull call spreads.  There may be a better play on AAPL and the market tomorrow.  

  138. nicha:  I have a little close in, most Oct.

  139. Barely Manenough:  Looks Like They Made IT!!   Oooh, nice stick in progress, right at 3:30.  1,333 has to be the goal to hold on the S&P and getting back to 12,600 if they can…

  140. also, not to mention that AAPL's year-to-date chart looks bullish

  141. Another perfectly times headline from the WSJ – "Fed moving closer to action to spur growth, sees action if growth doesn't pick up soon, could make key decisions next week or September."

  142. TD Investools – Anyone here ever use TD Ameritrade's Investools?  They are offering me a trial subscription……which will start charging me monthly if I forget to cancel.  Wondering if anyone else uses it and whether it's worth it.

  143. Hilsenrath also saying "Fed options include bond buing, rate guidance, lower reserve rate"

  144. Cash/Phil – Nice call. Stick, but no money to be made. Love being cashy right now!

  145. I say AAPL meets whisper numbers but beat their guidance. Even if they beat I don't see how they lift this market. We shall see what tomorrow bringss. 

  146. I bought 3 AAPL 550 puts to go against the grain instead of playing poker tonight :)

  147. Oh no – CNBC says Fed says they are "ready for action".  Any confirmation on this at all?  

    BIDU/BDC – Because it happened last night.  

    WSJ/Ink – Thanks.  Boy, they must have dozens of those primed up and ready to spring when they need them.  

    Investools/JJ – I love them.  Lots of good data in there but a bit expensive.  The thing I can't do without is the historical option charting – I like that when deciding on long puts to sell.  

    Oh well, AAPL tends to take their time reporting I think so I'm going swimming.  

    BWLD seems to have missed already….  

  148. LET'S ROLL: I need <560, or greater than 660 by Friday

  149. BWLD down 12% A/H

  150. Apple earnngs definitely need a halftime show w/ wardrobe malfunction.

  151. Phil/Option pricing,
    Where do you find historical option charting?

  152. fed moving "closer to action" if growth doesn't pick up soon…will make decision next week or in sept wsj..hahahahah….they can't even stand mild market pullbacks anymore…their actions are so dumb longer-term its mind-numbing
     these rumors always come out in final hour on modest down days…big hedgies sticking out hand…"big brother can you spare a dime or a dovish comment"

  153. NFLX getting hammered AH.

  154. Crazy Plays - for NFLX I ended up with the 80/75 bear put spread, that one's looking great now.   For APPL I did the 630/640 bull call spreads, waiting…

  155. NFLX hit there numbers and is losing 8 points so far (down to 72)

  156. NFLX guided lower, using Olympics as one reason. FWIW.

  157. Is it possible that the timing of the Fed "news" might be related to AAPL earnings release?

  158. How is hilsenrath able to come out at 3:55 pm and get away with that. The WSJ article had to have been leaked.

  159. Bye bye AAPL, bye bye market…

  160. AAPL RIP!

  161. AAPL/mocha – Wow!

  162. AMZN leaking oil AH

  163. AAPL $555 – come on… I want to buy more!

  164. Hmm… How do I price those 550 puts I bought for $1.86?  

  165. Ah well, there go those big horns!

  166. BDC – congrats on those $560's. 


  168. @Felipe
    The AAPLocalypse has descended and the $650  Friday Put I bought on your recommendation to short it, though not the same trade exactly, has been fruitful, as is the call I sold in another account for the distaff side.
    Now if it only it holds till opening tomorrow since this is afterhours.
    You don't get tired of it,  so thanks once again from the heart of my bottom.

  169. I wish I could bet on some of these earnings gambles, but just to much risk for an old guy like me. Congratulations to everyone who had a play on AAPL.

  170. TRIP…

  171. Burrben good poker hand possible your put will be up 50% of the drop!

  172. Burrben regret you can not sell the put until tomorrow as I see the buyers are running already for the shares of the suckers


  174. AAPL Puts / Burr – Difficult to say as the premium will burn quickly as IV gets crushed! AAPL is still trading around $570 so you would need another 5% down to be ITM!

    I was talking about double calendars earlier and since IV was so high I tried them with NFLX and AAPL today. I have:

    NFLX – Long 60 calls / 90 puts Aug and Short the Jul4 60 calls / 90 puts . With the high IV it cost only $1.75. That covers NFLX between 50 and 115 so it should be profitable tomorrow. 

    AAPL – Long 560 calls / 635 puts Aug and Short the Jul4 560 calls / 635 puts. Cost $9 but it covers a lot of ground to be profitable.

    We'll see what happens tomorrow.  

  175. Yodi –  Thanks!  I normally lose $250-$500 every time I play, so if I can make a little scratch it would be nice.  I just don't have the patience to sit there for over 3hrs.  After that I just get bored….
    This was WAY more fun.

  176. I think buyers are asking for pain before the conference call.  During a product transition AAPL typically sandbags estimates because of margins decrease (introduction of new tech increases production costs).  Let's see what they do here.  I'll be interested to see what their cash holdings become.  here is an interesting chart:

  177. Well, it looks like Phil & Burrs play was the way to go. Thankfully, I rolled up my long calls earlier, or I'd be roadkill!

  178. PCLN – getting killed in sympathy with Trip Advisor.  Ouch.

  179. It's going to be tough sledding in Asia tonight and Europe tomorrow morning. Gonna need some more QE rumors!

  180. amazing that when appl tanked oil dropped 50 cents

  181. We seem to be losing one line a day – today the 5% Down line in the NYSE. With the AAPL, NFLX and right now PCLN debacle, the NASDAQ 5% could be in play tomorrow. The Dow and S&P are still clawing to their 50 DMA. The broader indices (NYSE and RUT) are now below both 50 and 200!

  182. Tried to buy spy weekly 135 puts last friday for .50 at market close. Missed them by .02 they were1.81 at todays close should be over 2.00 tomm

  183. Birdman  /  TNA
    Actually, TNA has given me more enjoyment than the majority of my girlfriends (and in aggregate, has cost me a hell of a lot less).  I'm not sure just exactly what that means, but I don't see the trend changing. TNA's twin sister TZA has been even better to me than TNA, so, uh……………..just sayin'

  184. Mr. Spell Checker       ;)
    Not to be unnecessarily picky, BUT;

    /g??r?l?/ Show Spelled[guh-ril-uh] Show IPA

    noun, adjective


    guerrilla or guerilla  (???r?l?)



    a. a member of an irregular usually politically motivated armed force that combats stronger regular forces, such as the army or police

    b. ( as modifier ): guerrilla warfare

    Compare phalanx a form of vegetative spread in which the advance is from several individual rhizomes or stolons growing rapidly away from the centre, as in some clovers


    [C19: from Spanish, diminutive of guerra war ]


    guerilla or guerilla




    [C19: from Spanish, diminutive of guerra war ]


    guer'rillaism or guerilla




    gue'rillaism or guerilla


    Just defending my rep

  185. All u guerrillas, go get the girrilla ur dreams and watch The Pink Panther on NFLX.  You gotta love the chase scene with the 3 gorillas. I am looking forward to cashing in my NFLX puts in the morning!  And selling some AAPL puts maybe…?

  186. AAPL MISSED?  Wow, who could have seen that coming?  Oh yeah, it was me….

    Nas not at all happy about it, glad we picked up those SQQQs.  

    Now is a good time to go back and read my 2 days of warning people not to be too bullish on AAPL and all the very clever arguments for why I should know better because they ALWAYS beat – this is not for my ego – it's good to see how these conversations go when we're dealing with religious stocks like AAPL.  

    This should tee AMZN up nicely for their miss too!  

    BWLD a bit too far down – won't be much left on our longs so we'll only get the credit on the original sale unfortunately.  

    Historical options charts/Pat – I've never seen them anywhere other than Investools that are really good but TOS has it in their system if you change the time-frames – I just don't like to read them compared to Investools (same company now). 

    Fed/Bird – It's possible they got a heads up that AAPL will miss and tried to mitigate the damages.  

    $550 puts/Burr – Congrats on those!  Just don't forget to sell into the excitement, not right out but watch the price and keep stops.  It's possible AAPL will set of a cascading market failure tomorrow.  There's nothing at all wrong with AAPL, just a trough in the product cycle which seemed kind of obvious to me, but even I am too in awe of them to have dared go super-short.  

    Congrats Flips – nice score!  Glad I could help.  

    Guerrilla/Newbie – Now I'll never be able to spell it correctly!  

    Pink Panther/Mike – Classic.  My kids love it.  

  187. Hmmm,  Apple misses? Really? Despite missing expectations, revenue was up only 36% and profits up only 20%.
    ONLY ? What happened to contextual reality on this side of the Looking Glass?

  188. Looking Glass/8800 – Well, it's all about expectations. When I was a broker I learned quickly to negotiate the lowest expectations that I possibly could with my clients. If I projected 8% and did 7% I was a bum – if I projected 6% and did 7% I was a hero. I doubt AAPL has lost their knack in negotiating low expectations. But they are evidently subject to the same macro-economic winds that blow lesser companies around.

  189. AAPL has downside room. This makes AMZN FB PCLN earnings looking like they'll be fun plays.

  190. Getting bloody. Going cashy with some downside protection against the remaining long portfolio.
    I closed all these stock positions today:
    added: SQQQ

  191. 3:45 spike = an opportunity for the big boys to find some buyers for the shorts they are opening.

  192. I wonder if long Dow, short NAS might be a good pair trade?

  193. Housing – Zillow says the data shows national average value rising for 4 months.

  194. A clarion call to the MSM:
    Hindenburg Omen confirmed today! ;-)

  195. In theory, there is no difference between theory and practice. But, in practice, there is.
     -- Yogi Berra

  196. Diamond/ article,
    I don't think I get it, take distressed mortgages, move them to an underwater governments books, and hope the jobless people will pay them back over time?  
    I guess I still believe in creative destruction at some level as there are many young people coming out of school that can't get housing.  They would love to buy some foreclosed property on the cheap.  By setting an artificial floor under bad loans and preventing foreclosure process takes the opportunity away from folks trying to get on the housing ladder.  
    Also then those same new arrivals on the bottom rung will be paying for more bad loans through their tax further denying their ability to get on the property ladder.  They can also have the pleasure of paying the financial entities for setting up the process.
    I know I am missing something.  Surely more to this plan?

  197. HA!  I think I just described Fannie and Freddie.

  198. Good morning! 

    Nice dive in the Dollar from 84.20 to 83.80 (0.5%) saved the Futures but not the Nas, which is still down half a point but up 0.5% from where it was.  

    Stimulus trumps all and bad news is back to being good news today thanks to bailout rumors (again) from the G20:

    Tues 3:56 PM If it's late afternoon and a down day, a Fed rumor can't be far away, and the WSJ doesn't disappoint, reporting the Fed is moving closer to action to spur growth. Key decisions could be made as soon as next week. The DJIA cuts its loss back to double digits. 

    Tues 4:14 PM More on the late-day Fed leak: Officials have become impatient with sluggish growth and high unemployment, reports Jon Hilsenrath. MBS purchases, a pledge to keep rates low for longer, or even a move to push down nearly microscopic short rates even lower are among the choices available to the FOMC. Action could come at the July 31 meeting.  - Hislenrath, by the way, is just a WSJ writer (Chief Economics Correspondent) who is speculating (with interesting timing).  Of course, this is not the first time he's cried "Wolf" or, in this case "QE3":


    Another Fed Official Looks to Be Leaning Toward More Action

    Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, has downgraed her forecasts for the economy, when compared…



    Fed officials are seriously considering a new round of economic stimulus, but remain split over whether and when the central…



    Friday's disappointing jobs report increases the likelihood that the Federal Reserve will launch a new bond-buying program…


    Fed Warns of Risk to Economy


    Federal Reserve officials extended their efforts to boost the sluggish U.S. economy and said they were ready to do more if…


    Video: Uneven Economic Recovery May Spur Fed to Action

    Disappointing U.S. economic data and worries about Europe's fiscal crisis have prompted a shift at the Federal Reserve, putting…


    Officials Say Fed May Need to Act

    A trio of Federal Reserve officials warned of risks to the health of the U.S. recovery and said the central bank might need…



    The dismal jobs report is sure to sharpen a debate at the Federal Reserve about whether to take new actions to spur economic…





    Well, you get the idea.  

    We had a very nice rally sparked by the June rumors that took us from 12,100 to 12,900 by the 21st but then back to 12,500 on July 17th and again yesterday so that seems to be the point that is being defended at all costs (1,330 on the S&P, 2,850 on the Nas, 7,550 on NYSE and 765 on the RUT).  We'll have to keep an eye on those and see how they hold up.  

    This morning, more stimulus talk boosted Asia and Europe: 

    2:57 AM China’s slowing economy faces significant downside risks and relies too much on investment, says the IMF in its annual review (.pdf), and the yuan is still "moderately" undervalued. The report urges China to boost consumption and to direct savings away from housing.

    3:11 AM Moody's cuts its outlook on the European Financial Stability Facility to negative from stable, following Moody's decision to change the outlooks for Germany, the Netherlands and Luxembourg to negative. All three of those countries are EFSF guarantors, with Germany holding the largest share at ~29%.

    3:23 AM Japan's record foreign-exchange intervention last year was effective, says the country's Finance Ministry, adding to speculation that Japan is preparing for another direct intervention in the market. USD flat at ¥78.18. (But did yen intervention actually help?)

    3:24 AM Asian markets notch losses. Japan -1.4% to 8365.9. Hong Kong -0.5% to 18801. China -0.5% to 2136. India -0.4% to 16849.

    3:27 AM Japan posted an unexpected trade surplus in June as lower oil prices contributed to the first drop in imports since Dec. 2009. Imports were down 2.2% Y/Y and exports fell 2.3%, for a surplus of ¥61.7B ($789M). Economists had expected a trade deficit of ¥140B.

    4:02 AM German July IFO Business Climate comes in at 103.3 in July vs. 104.5 expected and 105.3 prior. (PR)

    4:33 AM ECB council member Ewald Nowotny tells Bloomberg there are "pro arguments" for giving the eurozone's ESM permanent rescue fund a banking license. Such a move would give the ESM access to ECB loans, adding to its €500B of firepower, although there are legal arguments against the granting of a license. Euro is +0.5% vs. the dollar.

    4:37 AM U.K. GDP -0.7% Q/Q in Q2 vs. consensus of -0.2%. (PR)

    4:48 AM More on U.K. GDP: manufacturing output -1.3% Q/Q vs. -0.5% in Q1; construction -5.2% vs. -4.9%; services -0.1% vs. +0.2%. Pound immediately tumbles from $1.5548 to $1.5476, -0.2% on the day. FTSE flat. (PR)

    5:02 AM EU shares are up after the ECB's Ewald Nowotny says there are "pro arguments" for giving the ESM a banking license. Nowotny's comments, and perhaps more rumors of potential Fed loosening, are trumpeting much bad news, including Apple's earnings miss, the U.K.'s GDP miss, and fear about Spain and Greece. Euro STOXX 50+0.4%, London +0.1%, Paris +0.2%, Frankfurt +0.4%, Madrid +1.5%, Milan +1.1%.

    What complete BS.  What's really scary is how coordinated this is.  There are men who meet in back rooms and make the phone calls that pull the strings that jerk the Global economy back and forth.  

    Once again, just talk from the G20 – no concrete action so it's a sugar rush and nothing more – we'll just crash again as soon as the buzz wears off if no actual action is taken but a good example of how you can't ever have all your eggs in one basket in this market and why I like to have just a couple of eggs in play with the other 10 eggs safely in the container – where we can always get them if we need them but first – let's just try to master juggling two in this market chop!  

    6:00 AM Overseas: Japan -1.44%;. Hong Kong -0.14%. China-0.49%. India -0.43%. London +0.23%. Paris +0.79%. Frankfurt+0.50%

    Wednesday's economic calendar:
    7:00 MBA Mortgage Applications
    10:00 New Home Sales
    10:30 EIA Petroleum Inventories
    1:00 PM Results of $35B, 5-Year Note Auction

  199. This is a great example of why I hate Murdoch – the WSJ has too much power to be in the hands of someone who is willing to use it to put forth an agenda.  At the moment, Uncle Rupert is splitting up his company to make it harder for the phone hacking scandal to take down his entire empire and the last thing he needs is a poor market environment while he's essentially pricing out two new issues so it's all sunshine and lollipops in the Journal at the moment.  Here's an update on the front page of the web this morning:  


    Stocks Pare Losses on News

    Stocks are bouncing off session lows in the final trading hour on the news that Fed officials are moving closer to taking new actions if the labor market and economic growth don't pick up soon.


    BOJ Ready to Loosen Monetary Policy


    European Stocks Creep Higher

    European stocks were supported by well-received earnings in the auto sector, and remained positive despite downbeat assessments of the German and U.K. economies.

    Soon!!!  What can be better than SOON???   

  200. when does the game end? or can they play this game forever. I can not for the life of me figure out why people seem to be so complacent about the, corruption etc. had dinner with some friends last nite, no urgency, no action,outrage. I don't get it. deer in the headlights?

  201. Oh god, this is making me laugh my pants off: Falling Global Rates Boost Appeal of Japan
    Investors are chasing yield into JAPAN.

  202. Gold back to $1,600 – good timing on ABX yesterday.  

    AAPL/8800 – It's all about expectations and expectations were for more.  As I said, still a great company, still a cheap stock – just a bit cheaper now.  

    Good point Bird.  

    TZOO had disappointing numbers, bodes well for PCLN shorts. 

    Good call on long Dow, short Nas Bird.  Dow up 100 from lows in Futures (now 12,563), Nas up about 19 at 2,536.  

    Zillow/Scott – I used to own a RE Data company and I can tell you that Zillows data is pretty much a joke.  They only collect what is publicly available, which in no way, shape or form tells you the real story.  Their original intent was to sell data to the industry but the quality of their data made it unusable for people who actually needed to know the value of homes so they re-invented themselves as an on-line site for consumers – who don't know any better – and they keep themselves on people's lips by providing endless free (and inaccurate) data to the press, who never turn down a free anything.  Overall, the market does seem to be bottoming – just be careful of reading too much into Zillow's reports.   

    Meanwhile, looking at Zillow's data – notice Las Vegas ($114,800) is as cheap (avg home value) as Atlanta, ($107,900), Tampa ($107,500), St Louis ($121,600), Pittsburgh ($108,700) or Cleveland ($108,400).   This is why I've got investors looking into buying in Vegas while it's cheap – where would you rather live.  BBBW will be up in September (seems on schedule) and we'll discuss opportunities within that group as well!  

    To me, Vegas is more comparable (as a place to live) with NY ($336,900), DC ($305,900), Boston ($307,600), SF ($465,600!!!), SD ($342,500) or at least Chicago ($158,600), Philadelphia ($184,000), Seattle ($255,400), Denver ($211,300).  Just think about where you would rather live and keep in mind that you are the target audience.  Like waterfront property or on-slope property, there is a limited amount of on-strip properties in Vegas and you simply can't build for what they're currently selling for.  

    Eminent Domain/Diamond – I love that plan.  We discussed it months ago, I'm glad it's getting traction.  

    Hindenberg/Diamond – Perhaps the reason all stops are being pulled out to stop the slide.  

    Foreclosures/Knight – The problem is the banks are sitting on foreclosed, empty properties to hold prices up and that's diminishing supply and making it harder for people to get homes at realistic prices.  The threat of Government takeover of unused homes (which don't add to the local economy and cause other problems) is a "move it or lose it" tactic with the banks to force them to move their inventory more than anything else.  

    Game/Mackey – Summed up in this cartoon, I think:  

    This is essentially the Somebody Else's Problem thing I was talking about yesterday.  You are a relative expert on the Economy compared to most people so it makes sense to you (well, sense being a bad word to describe this nonsense) and you see the problem the way a mechanic sees dirty oil as destroying an engine from the inside even though the car looks fine or a doctor sees a cholesterol reading not just as a number but as an indication of the damage being done internally to your arteries.  

    Most people know as much about the economy as you probably know about the electric grid – you know it's there, you know it's important but, when some engineer starts telling you something like the drought can lead to massive power blackouts – it doesn't mean much to you because it involves a lot of complex relationships outside the scope of your current knowledge and it becomes Somebody Else's Problem.  

    Don't forget, both Romney and Obama assure people that they know how to fix the economy.  That's the message people get – someone is handling it – how are the Mets doing?  

    Japan/Kinki – I know, the day of reckoning is going to be a hum-dinger when it finally happens.  

  203. Dow (/YM) a good short below 12,650 (now).  

  204. Las Vegas – A town with only one industry and the strip, only one street.
    Imagine what only one, dirty bomb can do…..
    In my opinion, this is a town to avoid going "all in"