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Tricky Tuesday – Two Days to the Fed

Once again we're waiting on the Fed.  

As you can see from the chart on the right, while we had a very impressive break-out last Friday, it was only impressive when you price the indexes in Dollars – priced in Euros, we were unable to break over the 50 dmas, which are in decline in a constant currency.  The Dollar stopped going down yesterday and the markets stopped going up – it's a pretty straightforward relationship.  

To be bullish on stocks and commodities here means you are bearish on the Dollar at 80 and, of course, bullish on the Euro at $1.28, which just so happens to be its own 50 dma ($1.2827).  Should gold be higher than $1,750?  Should oil be higher than $96.74?  Should AMZN be higher than 260 with a p/e of 313?  

It's not just AMZN, of course but that's one of our favorite shorts because, even with the most bullish of forward projections – they are still priced like dot com mania never left us at 8x the valuation of AAPL, who make 41 TIMES more money than AMZN.   AAPL makes $25Bn a year on $108Bn in sales, AMZN make $600M on $48Bn in sales.  AMZN has been around since 1994 – it's not like they just started doing this stuff.  If AMZN doubled their bottom line without increasing sales, then they'd make $1.2Bn on $48Bn in sales, still 1/20th of AAPL's profits.  

In order for AMZN to match AAPL's $25Bn in profits, even giving them a free double on margin, they would have to sell $1.8Tn worth of merchandise.  That's 4 times bigger than WMT and would essentially mean that AMZN is the only retailer in the United States, with over 90% of the total retail market share.  And that's JUST to get to AAPL's valuation!  Isn't that completely ridiculous?  The suckers buying AMZN don't seem to think so

It's not just AMZN that has completely unrealistic pricing, of course, with the consumer taking it on the chin, much of Retail is way overpriced for realistic forward prospects.  In fact, the p/e ratio of the entire S&P 500 is up to 15 again – about the value at which we usually get our market corrections, while, at the same time, 2012 consensus earnings estimates have fallen off sharply.

As you can see from the chart, we passed our April highs long ago and now we are exploring uncharted territory where value and price diverge at extreme levels.  Remember, in January, expectations were very high and the market was lagging but had been boosted by Operation Twist in the Fall and carried that forward momentum into April's earnings before reality hit. 

Since then, earnings expectations have gone lower and lower but traders are snapping up stocks at higher and higher prices, pushing the p/e multiplier to extremes – and that's only if October earnings come in as expected (July was generally disappointing).  Of course, having a $660Bn company like AAPL (4% of the S&P) with a forward p/e of 12.5 certainly papers over a travesty like AMZN, with a $116Bn market cap and a forward p/e of 108.  Certainly there is no room for error in those numbers and, obviously, there is not even the whiff of a possibility that the economy won't be better next year than it is now.  IF ALL THAT HAPPENS, THEN AMZN will be well on their way to that $1.8Tn in sales while WMT, TGT, COST and even AAPL just roll over and hand their business to Bezos without a fight.

So we have a weak Dollar driving up the price of everything you use Dollars to buy, we have consumers(who still make up 70% of our GDP) with low confidence and declining credit and we have extremely unrealistic market pricing and earnings expectations.  What could possibly go wrong?  

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  1. Oil Lines

    R3 – 98.15
    R2 – 97.39
    R1 – 96.86
    PP – 96.1
    S1 – 95.57
    S2 – 94.81
    S3 – 94.28

  2. I remember 11 years ago at almost this time (also on a Tuesday) walking into my office and my assistant telling me that a plane had crashed into the WTC tower. I was then working from NJ for a company whose HQ was in Belgium and the next couple hours were very surreal as they were trying to contact us and phone lines were busy, the Internet was slow as everyone was trying to connect. We ended up sending all the employees home as work became secondary to the drama that was unfolding. I still remember like it was yesterday… Still shocking 11 years later. 

  3. I was watching it all unfold on CNBC 11 years ago.  My boss (Roger Rhiney Scottrade) told us to stay at work to make sure the (or should I say his)clients  were ok and knew we were there for them.  Yeah sure while my 3 year old is alone in daycare and I have no idea why planes are falling out of the sky?  I locked the doors picked him up and went home trying to feel safe.  I didn't sing in the am (a morning ritual for me) for months. 

  4. My business partner, Lloyd Glick’s son Jeremy was one of the people who rushed the cockpit on flight 93.  Doug, who does the programming for Stock World Weekly is married to Jeremy’s sister (Lloyd’s daughter) – that’s how close we all are to these events in NY/NJ…
    Jeremy’s daughter Emerson (named after Ralph Waldo) was born that June – she never got to know her father, who was awarded the Medal of Heroism, but he will be remembered by his large family (5 siblings) and many, many friends as a great guy who went out a hero, although that’s small consolation to Emerson and Lyzbeth, who has to raise her alone.
    Tina worked at 7 World Trade Center (which also collapsed) but was on maternity leave at the time, we lost many friends and colleagues that day.  When Tina and I lived in Jersey City, we would meet after work at least once a week at Windows on the World, on top of the Trade Center, which had a great bar and a fabulous view and the most beautiful bathrooms I’ve ever seen (funny what you remember).
    When you rode the elevator up you could feel the woosh of air as they pressed you to the floor and, when they went back down, you felt the floor dropping away from you as they fell at an incredible rate and dropped you off in a magnificent glass lobby the size of whole block, with international flags and every possible airline agent at desks going around it that just gave you a feeling of all the wonders man could achieve working together. 
    We saw the Red Hot Chili Peppers play a concert on the roof of one of the towers about a year before they went down and I’ve been to several great weddings and Bar Mitzvohs in the top floor catering halls but what I loved most about the World Trade Center was that, on the restaurant level, they had a glass floor that extended out past the rest of the building so you could see the street 100 floors below you.  Madeline used to crawl on that floor and got very excited when a helicopter would pass below us (which was about the coolest thing ever). 
    That’s what New York lost that day – not just the people (and for each one of those 3,000 bells there’s a tragedy just like Jeremy’s that touches just as many people) but those buildings were the hub of the city – they connected NY and NJ together (the path subways stopped right under the building and you walked up and out through the lobby) and I guess, just like the people we lost, you never really appreciate what you have until it’s gone.  
    So say a prayer for them all on this sad anniversary but, more importantly, take a little time to appreciate what you have in your own life – call some old friends, tell your sister you love her, that sort of thing because it’s those connections that make us who we are and it’s too late to make up for it when they are gone.
    Both memories and regrets last forever – let’s make the memories while we can. 

  5. What Doug Short calls the best indicator is still bullish:

    Here is an explanation:

    Looking at the past 10 years, it has been quite effective at predicting major bullish periods. But like most indicators, it's lagging so we need to tread carefully!


    Bernanke as a child….


  8. WTC/Phil
    I miss those buildings also.  Used to see them every morning for 15 years straight and worked in them for 3 years including the year the bomb went off in the early 90's.  Also was interviewed by MTV in the WTC which is my 15 seconds of fame.  Like you, being in the financial industry, I also knew many people that died that day, including people I went to HS with and my brother's girlfriend's brother died there also.  He worked for Cantor Fitzgerald.

  9. rpme,
    thanks for the good laugh this morning haha

  10. GMCR/lflan – i don't know how you do it sometimes… :-)

  11. Phil
    Is there any trade in CSCO at the current price, or wait until we see which way the market is going?

  12. Getting close to the DD price on SCO – $2.50

  13. TIBX – on 32K premarket shares….'they' drop the price 10%.  When the market opens, the stops are triggered and it falls further b'c algos are now playing the game.  Might be time to pick a little more up should 'they' decide to jack it back up. 

  14. Companies seem to be issuing debt at a record pace:


    Monday’s sales have pushed the total for US investment-grade issuance to nearly $50bn so far this month, the best start to a month since March, and comes after the busiest August on record for global debt sales. More than $130bn of corporate bonds were sold last month, according to Dealogic – the best August figure since its records began in 1995.

    The sales were met with strong demand as returns on corporate bonds have far outpaced government securities this year. On average, US investment-grade debt has returned 7.9 per cent, compared with 2.4 per cent for US Treasuries, according to Barclays indices.

  15. Much Thx lflan!

  16. PLX getting hit…and the Co. initiates Phase 1/2 study for Fabry's disease.  Genzyme/SNY territory again…….

  17. Tomorrow is the iPhone 5 announcement and I just read a story in Le Monde that Foxconn can't produce them fast enough. They are apparently forcing local students to work on the factory floors to make up for the 10,000 workers that they need.

    One of the students mentioned that she is paid $192/month to work 12 hours a day, 6 days a week. Worker's paradise and all….

    Foxconn denies the stories of course!

  18. Good morning! 


    Getting the usual Tuesday morning pump job and we'll see if it lasts, last Tuesday's bullish Dow play is still my favorite upside hedge, that was 2 DIA Oct $135 calls (now $1), selling 1 HPQ 2014 $15 put, now $2.20 for a net .20 credit.  

    Yesterday we floated until the EU close, took a dip, recovered and then really headed straight down from 1:30 on so we'll see how today times out.  German court will make a decision tomorrow and, after that, it's all about the Fed.

    Europe down about 0.25% and up from lows with DAX up 0.2% as the only green over there. We're still watching SOX 400 for a bullish sign but NYSE is back over 8,200 so technically still generally bullish signals.  

    Nat gas has been making huge moves, now $2.92, up from $2.65 yesterday morning.  Oil's at $97.07 and gasoline is still $3.027.  Gold back to $1,730 and silver outpacing them at $33.75 (go AGQ!) and copper is $3.70 as the Dollar opened at 80.12 with a big pop to the Euro ($1.2836) and the Pound ($1.6045) so all must be fixed over there.  

    Just 77.82 Yen to the Dollar and the Nikkei doesn't like that one bit at 8,810 and I like playing /NKD off that 8,800 line as well as EWJ as the Oct $8 calls are just $1.12, which is .03 premium so a nice, bullish offset although it's the kind of trade you should be thrilled to make .15 on.  

    At the open: Dow +0.14% to 13273. S&P +0.1% to 1431. Nasdaq +0.63% to 3106.

    Treasurys: 30-year -0.24%. 10-yr -0.11%. 5-yr -0.04%.

    Commodities: Crude +0.58% to $97.1. Gold +0.34% to $1735.15.

    Currencies: Euro +0.48% vs. dollar. Yen -0.61%. Pound -0.29%.

    Market preview: Stock futures are higher as data shows increased optimism among small-business owners and a less-than-expected rise in the trade deficit. The S&P Benchmark is +0.3%. Luxury goods makers are getting hit after a profit warning from U.K. player Burberry and a downgrade on Coach. Later: Consumer Confidence

    NFIB Small Business Optimism Index: +1.7 to 92.9, vs. consensus of 91.5, 91.2 in July. The employment indicators and capital outlays and expectations for business conditions improved substantially. The percent of owners viewing the current period as a bad time to expand due to political uncertainty reached a new record high of 22%.

    Moody's expects to lower its U.S. credit rating to Aa1 from Aaa in 2013 unless budget negotiations "produce a stabilization and then downward trend" in the government's debt/GDP ratio.

    It's hard to believe this is happening given what's happened in the year since S&P downgraded the U.S., but the greenback and Treasurys both sell off following the Moody's warning of a possible cut in America's credit rating. The long bond yield rises 3.5 bps to 2.84%. The bull dollar ETF: UUP -0.5% premarket.

    International Trade: The U.S. international trade deficit in goods and services fell to -$42.0B in Jul vs. consensus of -$44.3B, $41.9B (revised) in June.

    The slowdown in growth is evident in this Barclays chart looking at the sales deceleration in economically sensitive sectors. (via) 

    Redbook Chain Store Sales: +2.7% Y/Y vs. +2.5% last week. The report cited strenghh in back-to-school sales and expects a 1.9% gain for September.

    ICSC Retail Store Sales: +1.0% W/W, vs. -0.4% last week.+3.4% Y/Y, vs. +3.7% last week. The report cited special strength at grocery stores and special weakness at drug stores.

    The double whammy of a downgrade on Coach and a biting profit warning from British luxury player Burberry is cutting a wide swath of selling in the sector. Though some of Burberry's struggles are pegged as "self-afflicted," the company's weakening sales in Europe and China has to be considered alarming for high-end sellers. Premarket: COH -3.4%RL -2.7%WRC -0.7%KORS -1.2%,TIF-2.5%. 

    As Burberry plummets 19% in London following a profit warning, one clever analyst charts the Chinese slowdown by comparing the share prices of 3 luxury brands against the price of iron ore. Richemont shareholders may not want to look down.

    Germany's economic ministry expects GDP to grow at a "fairly stable" rate in H2 despite the significant downward pressure from southern European economies. Still, rising eurozone imports in H1 indicate that structural reforms in nations such as Portugal are boosting their competitiveness.

    Germany's Constitutional Court says it will provide a verdict tomorrow morning on the legality of the eurzone's ESM rescue fund and the fiscal compact, as scheduled. The court had received a request to delay the ruling from eurosceptic legislator Peter Gauweiler, who said the ESM should only be implemented after the ECB has rowed back from its bond-buying plan. 

    This will be fun!  The Greek finance ministry sets up a "working group" to scour the archives and figure out how much Germany might owe in reparations for Nazi war crimes. "Greece has never resigned its rights," says Deputy finmin Christos Staikouras. A report is expected by year's end. This should help thaw relations between the two countries. 

    Of course you know, this means war:  China will "make absolutely no concession" on territory, says Premier Wen following Japan's decision to buy the disputed Diayou Islands. "Consequences arising from (the action) can only be shouldered by Japan." Chinese defense stocks posted major rallies in a down session overnight in Shanghai. Now we're starting to figure out how the world works.

    Chinese new bank loans in August totaled ¥703.9, greater than July's ¥540B and expectations for ¥600B. Aggregate financing – which adds in off-balance sheet loans and bond and stock sales – jumped ¥1.24T, up 16% Y/Y. Bullish analysts say the data confirm their idea Beijing has gotten serious about stimulus.

    Moody's remains negative on U.K. banks, due to the travails of the British and eurozone economies. The agency says the likes of RBS (RBS), Lloyds (LYG) and Barclays (BCS) could also be hit by high regulatory costs following various scandals and write-downs on their exposure to foreign real estate. (PR)

    McDonald's (MCDreports same-store sales rose 3.7% in August, led by solid gains in all key geographic regions. Strong traffic for breakfast helped lift sales in the U.S. by 3.0% – while the company's stores in the U.K., France, and Russia paced a 3.1% gain in Europe sales. In the Asia/Pacific, Middle East and Africa (APMEA) segment, sales were up 5.7% for the month. MCD +0.6% premarket.

    Sunesis (SNSSrockets 53% after saying that it's increasing the size of its Phase 3 trial for its Vosaroxin leukemia drug by 225 patients to 675. The move follows a recommendation by the study's independent Data & Safety Monitoring Board following its interim analysis of trial data. The recommendation triggers an obligation of Royalty Pharma to invest $25M in Sunesis. (PR)

    Facebook (FB) and Netflix's (NFLX) unique U.S. PC visitors each fell 6% Y/Y in August (III), according to comScore's August Web traffic data. Facebook's decline was due to a methodology change, insists comScore, which has co-sponsored a study with the company. But even if growth was flat, Facebook can't be thrilled, given the U.S. is one of its most lucrative markets, and mobile monetization is a work-in-progress. Netflix's decline could partly be due to higher TV and mobile viewing.

    Mark Zuckerberg is due to speak at a TechCrunch conference in San Francisco today in a rare public appearance since Facebook's (FB) bungled IPO in May, following which shares have plummeted and communication has been scarce. Issues of interest to investors include heavy insider selling and how Facebook can better monetize its user base, especially in mobile

    Google (GOOG) releases the latest version of its YouTube app for the iPhone and iPod Touch, which will feature thousands of additional videos as well as advertising for the first time, but won't come pre-installed on Apple's (AAPL) products. Google also discloses that mobile devices account for a whopping 1B video views a day. (Google blog) 

    Amazon (AMZNcuts prices on "a broad assortment" of HarperCollins e-books following a judge last week approving an antitrust settlement in which the News Corp. (NWS) unit and other major publishers agreed to end alleged price-fixing deals with Apple (AAPL). HarperCollins also reaches agreements with other e-retailers to lower prices. 

  19. Pharm- Any thoughts / plays on the jump up of SNSS?

  20. Nicely said about WTC Phil.  Cherish everyday, for yesterday's history and tomorrow promised to no one.

  21. SNSS/newt – now that is manipulation.  I would not want to play it, as they could do it again, no?  Expanding their trial….why?  If the trial was designed right the first time, then they should not have to expand it.  Sell a few puts out in time to start an entry, but otherwise, I would rather have other things.  PLX, YMI. YMI is being added to another portfolio/biotech person here (Ohad).

  22. Netflix / Phil – This web data is probably useless now as most people access Netflix using their iPad, phones or DVD players using proprietary apps and that doesn't show up in web stats…  

  23. Pharm- Thank you.

  24. More layoffs coming pending the fiscal cliff….notice to defense industry groups…I don't know about Politico or its associations, but interesting none-the-less.

  25. Big move up in the Dow, was at 13,200 in the Futures this morning, now 13,320.  CAT making a big move (2%) but almost everyone is green.  Not sure it will last, volume is dreck (15M at 10) and the Nas is not looking too healthy.  

    We have enough shorts but DIA weekly $132.50 puts at .50 are a fun gamble as long as the Dow is under 13,335 (now 13,319).  

    Shocking/StJ – When the first tower got hit, I was getting dressed for a meeting in town.  We thought it was an accident and I headed out but I was driving towards the bridge when I heard on the radio live as the 2nd plane hit and that made it obvious we were under attack – so glad I wasn't in the city already, it was very tough to get out that day.  

    Bullish percent/StJ – Doesn't it show we're closer to a top than a bottom?   Seems to me that 80 has been a pretty reliable indication that the rally is over, not that it's beginning.  

    LOL Rpme – I needed that today.  

    Thanks Angel, Rustle.  

    CSCO/QC – They are still pretty cheap at $19.10 but the low VIX makes option combos unattractive.  As they pay a .50 dividend, you can buy them for $19.10 and sell the 2014 $18 calls for $2.90 and the $15 puts for $1.30 for net $14.90/14.95, which is a nice 22% discount and it makes the .56 dividend 3.7% while you wait.  I would very much expect CSCO to go back to $16 in a sell-off so it's definitely something you want to scale into.  

    BTU zooming back to $25. 

    AAPL Slaves/StJ – Yeah, I read that too.  Apparently about 3% of the workforce is made up of what they call "forced internships" – so the poor kids go to college and then are told that they paid tuition for the privilege of being assigned to do exactly the sort of job they had hoped to avoid by going to college in the first place.  Don't tell Romney and Ryan – they'll want to make it part of their economic plan for America!  

    Amen Hoss.  

    NFLX/StJ – I'm sure it's very hard to track usage now (although you would think NFLX can do it).  

    Layoffs/Pharm – Defense will get hammered if we fall of the fiscal cliff.  It's the only reason I think the Reps will come to the table. 

  26. I don't remember if this went up here yesterday…but considering the consequences…here it is again:

    The stock market may have already priced in additional quantitative easing whose chances are mixed, former Federal Reserve Governor Mark Olson told CNBC on Monday.

    “I would put it at no better than 50-50 for a couple of reasons,” he said on “Fast Money.”

    Olson said those reasons included an estimated half-trillion-dollar investment for QE3, as well as last week’s jobs report, which was in line with what the Fed expected.


    “What the Fed doesn’t want to get into position of, is having to react because of market anticipation,” he said.


  27. Totally great Daily Show video highlighting that "fair and balanced" reporting style:  

  28. Phil/Pharm - What do you recommend for a good put spread or bearish play on LLY? I know youve already had some bearish plays in the past.. One of my co-workers actually has a lot of family who work for the company. His family is telling him to sell all stock in the company. They see no positive drivers and have little faith in the direction of the company. They are all mid/upper level management at the company.

  29. jro – I would wait a bit longer on them.  Like after Friday…..Looking at the January 2014 $40 puts….selling against the position every month until things look good.  The one thing I am starting to pay attention to is the weekly/monthly charts to enter a longer term position.

  30. Anyone seen my whistle?

    The Internal Revenue Service awarded tax whistleblower and former UBS banker Bradley Birkenfeld $104 million for providing the agency with insider information in UBS's alleged encouragement of secret offshore accounts by U.S. taxpayers. Mr. Birkenfeld's lawyers said this is believed to be the largest reward ever given to an individual whistleblower in the U.S.

  31. Bullish chart / Phil – Actually, going back in time, the chart can stay above 80 for long periods of time. I was thinking that same way, that 80 would be a top indicator but looking back last year and early this year, we were above 80 for over 3 months. In '09 this indicator was above 90 for almost 6 months… It was also at 0 early in '09. 

    Of course, past results, blah, blah, blah…. Just another tool in the toolbox! I think I am going to update that on a regular basis and post it as it would have certainly been a good sign in mid-July.

  32. Dollar tested 80, nice pop off of that.  

    Volume on Dow 26M at 11.  

    DIA $132.50 puts fell to .47 so not too bad a spot to gamble on but clearly we're breaking up now.  

    10:00 AM On the hour: Dow +0.48%. 10-yr -0.13%. Euro +0.56%vs. dollar. Crude +0.55% to $97.07. Gold +0.42% to $1736.45.

    The Gallup Economic Confidence Index does a hockey-stick, posting its largest ever gain in the week ended Sept. 9. Gallup credits the Democratic Convention for the rise, noting the entirety of the improvement came from Democrat and Independent respondents

    Gallup Economic Confidence Index -- Weekly Averages, 2012


  33. LLY/Jrom – What Pharm said.  If Bernanke waves the QE want, no shorts will be safe.  

    $104M/Pstas – Damn, I have to go work for some disreputable bank!  

    Chart/StJ – Ah, thanks.

  34. Any news to explain Visa breakout this morning?

  35. FU VXX!!!

  36. “What the Fed doesn’t want to get into position of, is having to react because of market anticipation,” he said.

    Bit late for that isnt it? The market has virtually guaranteed the fed will have to do something. Bernank listens to the markets.

  37. Phil,
    Thanks for sharing your memories of Sept 11.    May we never forget!!!!  Why do I still cry about that ?

  38. WTC / Phil / rustle123
    Beautifully written, Phil.  I was at Highbridge at 9 West 57th Street, when we all watched on the big screens in the trading room the second plane hit.  I and throngs of people walked South down the middle of Madison Avenue towards my apartment on 37th Street.  Every few blocks people were grouped together peering inside brokerage firms to see the TV screens facing the street to see the latest reports.  I remember that every few blocks as I walked South something else bad happened.  I stopped and saw on TV that the Pentagon had been hit . A few blocks later I stopped and saw that a plane crashed in PA.  A few blocks later I heard a distant roar and watched a gigantic plume of smoke and debris rise up from the Southern part of Manhattan as the WTC collapsed.  My apartment was on the 42nd floor of a high-rise facing South.  It was surreal to wake up the next day to see the entire Southern part of Manhattan engulfed in a cloud of debris.  When the debris cleared it was surreal to wake up and not see the towers I had looked at every morning for 15 years. 

  39. Dollar failed 80!   Euro $1.2863, Pound $1.6073, Yen down to 77.77 despite Japan's 220% debt to GDP ratio.

    Seems a bit much but up and up the markets go. 

    V/Den – MA declared a dividend and popped so people with V see MA go up and think something is up and start buying V.  

    Fed/Customz – I think they extend their rate deadline to 2015 and promise they are ready but do nothing.   Don't forget, if they do something and it's baked in and it has no effect, they have essentially ruined their ability to influence the markets by talking.  Much better off continuing to jawbone.  

    Crying/Ron – I still don't like being down at the site – it's just not the same.  

    Waking up/Opes – That lasted a long time, the NY skyline just seemed "wrong" for years after every time we looked at it.  

  40. What if Hilsenrath tipped it off….no QE directly, more jawboning but back it up with 1/8 cut on overnight rate?  IBOR currently 0.25%……so jawboning with a little starch, but not enough to look political?

  41. Phil – Just read your first few comments. Amazing how much different (for the worse) our country is since 9/11. I lost no friends/acquaintances on the days of the attack but have lost plenty since then. We had a nice ceremony here with a bunch of Afghan Generals, the US Ambassador to Afghanistan, and of course plenty of our Generals. Good speeches, etc. 
    Funny how events shape your life. I sure as hell never wouldve envisioned Afghanistan as where Id be spending my 2012. lol. Anyways….
    Can someone tell me why we are up 100 points!?!?!?! How much 'anticipation' of QE can this market go up on!?!?!

  42. Phil,
    In 2010 I did a b/w on HOV, buying 3000 for $3.97 and selling 30 JAN 13 $5 puts/calls for 2.80 for net $1.16/3.08 and an  artificial b/w, selling 20 JAN 13 $5 puts for $1.70 and buying 40 JAN 13 $2.50/$5 bull call spreads for $1.15 for net .30.
    After adjustments you recommended when HOV took that nasty drop, I'm left with the 3000 shares, the 30 sold JAN 13 $5 calls (.10), the 40 JAN 13 $2.50/5 spreads (.92), 20 sold JAN 13 $5 puts ($1.80), and 20 JAN 14 sold $2 puts (.40).
    Would you recommed buying back the JAN 13 $5 calls to preserve potential upside? roll the 20 JAN 13 sold  $5 puts to 40 $3 JAN 14 puts so I would get 2X the shares for almost the same price?
    I have been looking at HOV as a long term accumulate, thinking it could go back to double digits 3-5 years down the road. What do you think? 

  43. IWM did cross the 84.50 line but failed to stay over 20 minutes. The dollar is dropping fast along with most indexes.
    Ya think the market has come to reality on QE3?

  44. Phil – If Ben does anything, I'll buy what Hoss said ( and BI article you posted yesterday ) as the most likely move.  If he does cut the overnight rate, how do you think the market reacts?  Also, do you think gold tanks on no news, or is Draghi enough to keep it moving?

  45. Jabo / VXX – I think we need to day trade our way out of this VXX-hole ( new word? ).  Every time you post FU VXX ( about the same time I'm saying it ), need to go long for a quick day trade.  Lots of intra-day movement, and that's really what it was intended for.

  46. What would QE3 do to the rest of the world? People are already starving, drought, have the QEs contributed to world unrest? The US can not survive without the rest of the world now. We do not make most of what consumers buy so how will this boost employment in the long term?   

  47. Tom Keys say time to go to cash Breakout Yahoo Business!

  48. Who The Hell Is Tom Keys?!
    J/K Shadow…… :)

  49. 1020
    I actually don't know but he was interviewed because he thinks this is a market top with 5 to 10 years before the economy turns no matter who wins or what the fed does. He seem to believe we are in a chanel that is the only opertunity for investor. Very much like Phil, cash at tops and buy back after the market corrects. Now is time to go to cash.

  50. Thanks Shadow   :)

  51. I failed at getting the link but if you start with 3 Reasons the Fed Should Avoid QE3 it is under that.

  52. Unforgivable – A follow up comment:

    All those (neo-conned Republicans) who scream that this is simply a lesson in 20-20-911 hindsight consistently ignore the lessons of history. They are dangerously arrogant in their unwillingness to learn from mistakes — though they'll impeach a President for anything in order to gain power, and obstruct an entire party for their own ends rather than the country's. They mock, through their actions and very culture, the essence of democracy as shared truth, common and commonly debated information. The mock reason; they mock sincere governance. They (Bush, Cheney, Halliburton, et al) are not the "loyal opposition" — they are a pox. And studying their breathtaking incompetence and greed, we are only the better for finally, at some point, saying "never again."

    Sept. 11, 2012 at 8:43 a.m.

  53. Woops….that did not turn out well….sorry….

  54. Unfortunately 1020….they are winning….we are not.  Repubs, Dems, anyone with $$.  The middle class is a dying breed.

  55. 1/8th/Hoss – I can't see that, it would be a silly amount – meaningless.

    Up 100/Jrom – There is no news at all for this – just the normal Tuesday nonsense.  

    On Tues the 21st, we rocketed up to about 13,320 and we finished the day at 13,200 – that's why I liked those Dow puts.  

    HOV/Kevin – I doubt HOV is going to $5 by Jan.  You have 3,000 shares at net $1.16/3.08 – let's look at that first.  HOV is at $3.46 so it's a winner but just .10 left on the short $5s and $1.85 left on the short calls.  If you roll the calls out to the 2014 $3.50s at .85, you drop your basis by net .75 and then if you roll the short puts to the 2014 $4 puts at $1.65 that puts .20 back in but still it drops you to net 0.61/2.31 so very nice money if called away at $3.50.  On the artificial, you're $1 in the money on the bull spread so no worries there and it's the same deal for rolling the short $5 puts although you may want to buy back the $2s and just sell 30 $4 puts as you'll put a bit in your pocket with no change to margin.  HOV can pop when and IF housing turns around but you can always buy another bull spread if your first goes in the money – better to just play for a nice win on this one.  

    Cutting raters/Rkyro – I think if he cuts rates .125 or 0.25 it will seem like something is wrong that's worse than people thought.  Also, it leaves them nowhere to go but up in the Future so firing their last bullet would be very stupid and AGAIN – with the market at all-time highs and commodities at multi-year highs it's idiotic – what is wrong with you people getting brain-washed into this BS?   How will buying bonds create jobs?  How will flooding the market with more cheap money promote price stability?  Is the Fed just a total joke institution whose only concern is to maintain double-digit market returns each quarter?  Really – do all you people actually believe the Fed "HAS" to act?  Why – because Hilsenrath said so?  He's been saying so since March – it's September and still nothing but the market is up 10% and oil is back near $100 (it was $75 when the Fed did twist and the S&P was at 1,100).  This is like standing around a house that was on fire last year but is not currently and saying "any minute now the fire department will come and douse it with water" – it doesn't need it again so they won't come and, if they do – they are idiots.  

    And what Shadow said! 

    Never again/1020 – That's what I said after Reagan – set us right on the road to the disaster we're enjoying today.  

  56. Phil/VXX - Your input on buying the Sept 14 $10.50 VXX weekly calls?  7% seems very reasonable if QE3 is delayed.  Would love to get in on some VIX action without using futures.  VXX might get a very short term pop on the news, and then decay?  I believe 2015 guidance will be punished by Mr. Markets…as Mr. Markets will want to show Ben who is really running the show.
    Also, what do you think would be the best % rise option if QE3 is released and is bigger than $500B?  Will oil rise to $100 instantly, which would be close to the Sept 14 w 37 USO calls strike (which happen to have a decent amount of volume today).  Considering picking up a chunk of those around .10-.12 Wed if/when German court creates more market euphoria by blessing the financial and political destruction of their country…

  57. Phil / BBY :  Wonder if I could get some guidance on BBY.  I think I jumped in following the Income Port with the BBY 2014 15/20 BCS and selling a 2014 $15 Put.  At some point we broke the spread by buying back the short $20 leg when BBY dipped.  Wondering, now that BBY is approaching $19 again, if it is time to reestablish the short leg on the spread?  I am still believing in the buyout stick possibility BTW.  Thanks.

  58. pharmboy 1020
    The money live in the house of cards. The foundation of that house is decomposing, the middle class. We have little to loose. Take our purchasing power away and all those overseas manufacturing plants fail. China manufacturing is down but what does the media headline, forced labor to build Iphones. One company, one product, and consumers out of money. It better be different this time. Chances are .00000000000001%

  59. Phil/VXX calls - wow, just got 20 to fill at .11 before it took off on me (.15 now).  So much for that plan…grrr….

  60. Phil/AAPL: BCS in 25k- getting close to $10 on the shorts. Buy back? also I have a AAPL Feb13 BCS 635/685- how should I look at this- buy shorts back, let it ride…..

  61. Phil / Cutting Raters – Ouch.  I'm definitely not one of the "you people" that thinks he has to do something.  Honestly, I think the "threat" of QE is the most effective tool.  Just trying to learn about possible outcomes, since I clearly don't understand what moves this market.
    SVU – what do you think about selling SVU Oct. puts if you can get .20 for them?

  62. Flan- Did the email come through?

  63. If the fed is not going to ease THursday…it would be wise to leak news soon to let Mr. Market down easier.  Watching for WSJ Fed Puppet Jon Hilsenrath articles…etc…

  64. When logic makes no sense we have to listen closely for signs.  Phil can't you hear the whispers "Blue Horseshoe loves …."  When they say Ignorance is Bliss I get it.  So many of my friends don't follow the chaos and seem so much "better off" for it.  It's just damn depressing being Awake and so wrong everyday lately.  I need a break from the chaos.  Probably get a cheap place in Greece hu???

  65. Phil/HRB – I have a long term buy/write on HRB.  Long the stock, short the 2013 12.50 puts/calls.  My net is 7.90/10.20.  I'm interested in how you would adjust a successful buy write like this?  I would like to stay in the position (as the dividend is nice), but selling puts isn't very attractive right now.  I could roll the caller, maybe to the 2014 $15 calls, but that costs money.  Your thoughts would be appreciated.

  66. AA crossing 200mda. 

  67. Metals seem to be overdone on the threat of small Chinese stimulus, unless someone knows something else.

  68. Phil,
    When you have a moment, given what I perceive to be your quite dim view of the market if you could offer an opinion.
    At this time, my biggest (by far) position is AAPL 2014 $450-$550 Bull Call Spread coupled with the 2014 $380 Putter. Currently, this structure is worth approximately $57.00 per share and ultimately will max out at $100.00 barring a decline in the underlying price of more than 20%.
    If you were holding this position, would you continue or do you see the market so dangerous that you would go to cash even if you had a lot of unused margin?
    Thanks for your comments

  69. The "impoverished prole" message goes mainstream.  Political sympathies aside, is there [legal] pari-mutuel betting on the presidential election?  Or perhaps Phil has a stock play that will accomplish the same thing.  I'm starting to think it could be a walkover:

  70. Dude, I'm not drinking the Kool Aid, and actually wish they would do NOTHING.  Just gaming outcomes to help build a strategy. I think leaning bearish with bull hedges is the way to go, like we are in $25kP.  
    Having a hard time understanding whyEuro printing is driving dollar down.  Curious.

  71. World Trade Center:  RIP.  Glad to hear from other New Yorkers here, I spent '77 to '88 working downtown, and spent many happy hours at the bar and restaurant at Windows on the World.  I particularly like being there at sunset, and watching the lights blink on throughout the City.  I worked for the State of NY at WTC I for a summer, on the 25th floor, and watched a parachutist drop past my window that summer!  It might have been the only one, I think they tightened up roof security after that.  I distinctly remember telling a co-worker that I was thinking about keeping a parachute and a .45 under my desk — these were the days of "disaster movies", and the "Towering Inferno", a dreadful soap opera-ish Ernest Borgnine thing, was about  too tall buildings that firemen couldn't reach.  He asked why I need the .45, and I told him that being on the roof of the WTC with the only parachute seems like a poor choice of of survival tactics.
    And a poor attempt a humor, as it turned out.  I was in the Rocky Mountains when it happened, and receive a call from Europe in time to see the second hit, just mind-bending.  My parents lived in Tribeca on Franklin & Hudson, a mere eight blocks away, and were covered in smoke and ash.  I had a wonderful dinner with them at Windows before I left Manhattan, they both passed on in the last 18 months, so I do have that memory.   I still suffer from residual anti-Muslim sentiment, my only irrational prejudice, and I dislike the feeling, but there it is. 

  72. Phil – I am having a hard time understanding where we are with your technical analysis.  I joined this site because I was impressed by your ability to predict market direction using technical analysis, but, now I am having a hard time following it first being adjusted for the weaker dollar (past few weeks) and now to being denominated in Euros (as per this AM post).  I understand fully the bear case for this market, but adjusting the technicals to support it has been expensive to your virtual portfolios.  When you have a chance can you clarify exactly how you see the technicals according to your model at this point?

  73. hoss18/Euro printing – I don't believe Euro printing is driving dollar down.  Rather, the anticipation of Uncle Ben flooding the banks with more liquidity that eventually will lead to an inflationary cycle. Politicians afraid to make tough calls on economic and taxation issues so the course of least resistance is to cheapen current debt load via inflation.

    usa today has most detailed account of cairo..hahaha…our media is turning into such a joke its amazing.

  75. At least the north of Italy, it's most important industrial region, is not trying to secede from the south of Italy in recent years.  If the ECB is determined to impose more austerity  and budget cuts on Spain in exchange for bond buying support — and that is, at least, what they are saying they will do [I rather doubt in the end that they will force the issue, but not without making a lot of market-frightening noises first], the nationalist stubborness of the Catalans, who pay much and receive little from the central governmen in Madrid [in their view] may become a Giant Fly in the ECB Ointment.
    Not a prediction — predictions are dumb — but worth watching, and it doesn't look like the ECB Deal is going to Go Down without a bit of tension.
    Masiva manifestación por la independencia de Catalunya por la Diada

  76. angel wasn't that a year ag?

  77. Phil, something for after hours perhaps.  
    I was wondering if you might suggest a small scale bullish entry ahead of the Fed on Thursday?  (FAS perhaps?  I missed that entry you had on Wednesday and regret it very much now.)
    I'm really describing a small bullish cover (hopefully).  I have some (5 contracts) VXX calls ($11 in Oct) in my real account and a little off the wall in my paper account (somewhat mirroring some of the 25kp).  The latter I can run some calculations on as extrapolate to get closer to the 25kp in paper.
    Is there any play that might make sense, and this assumes it is insurance that I'm expected to lose on, and of course cash would be the best hedge, but I want to learn how to ride it out.  Just given that I missed the bullish FAS 'boat' and was wondering.  Thanks in advance.

  78. Would it make sense if the dollar wer rising before the much wanted QE? Would that not take a bite out of an up after?
    Now the kicker is no QE makes the dollar stronger and the markets fall farther. The question we should all try to answer is the big money in or out of the market?
    The US is the safest place for money now. I feel the buck is better up for us and the QEs didn't work much for jobs.
    A real correction is the only fix. My hope is extend and pretend is coming to an end.

  79. VXX/Rogue – I will be a great play if Bernanke disappoints and the markets crash but it will go to zero very fast if things go the other way.  I like it as a gamble.  I don't see oil sustaining $100 other than a brief pop no matter what Bernanke does. 

    BBY/Mjj – I still like the whole spread.  The excitement has died down but it seems to me that BBY will be worth $20 regardless and, if they get bought out in between, that's just a bonus.  Meanwhile, though, selling the $20 calls to re-establish the spread falls under the "Always sell into the initial excitement" rule as we're back up from $16 to $18.50 and those 2014 $20 calls can be sold for $2.50 again.  Keep in mind, Rule #2 is "when in doubt, sell half".  In this case you can collect $3.50 for selling 1/2 the $18s…

    VXX/Rogue – Not bad but do you have the discipline to take a .10 profit on half?  

    AAPL/$25KP, Newt – Thanks for pointing that out but persistent weakness makes me unwilling to take the risk at the moment.  On the Feb spread, you can collect $68.50 for your $635 calls, which is $18.50 more than you can make if you hold the spread and it works out.  If you cash those and pick up the 2014 $635/735 bull call spread for $40, you are $50 in the money to the caller and have another $50 to make plus $28.50 in your pocket and a year to roll.  It's an aggressive way to go and you probably want to set stops on 1/4 of the short calls (now $43.60) at maybe $55 and $65 but you can always layer the long spread if AAPL takes off.

    You people/Rkryo – I didn't actually mean you other than you were one of the people asking but this has to be the 1,000th time in the past week that someone has premised a question on the certainty of QE so you got the lucky diatribe.  Maybe I'm crazy for thinking the Fed is not but really it would be completely irrational and detrimental in the long run for the Fed to act now.  As to selling SVU puts – .20 is a great price for the Oct $2 puts, you can only get .70 for the 2014 $2 puts and, in theory, you can make a half dozen sales at least between now and then and the net isn't all that different.  

    Hilsenrath/Rogue – He's not a Fed puppet.  He's a Murdoch puppet who uses the Fed to place rumors that move the market when the master orders it.  It's not like he's ever been right or made a good call but the WSJ continues to feature him and the myth of his "connection" to the Fed grows.  Watch what happens when he's spectacularly wrong this time – no one will mention it and, in a month or two – he'll start more QE3 rumors and people will once again go "Hilsenrath says…"  It's simply not possible for people to lose credibility these days – you are only as bad as your PR people let you be….

    Logic/Jacalyn – It's all about your time-frame.  Don't make short-term bets on macro outcomes – that seems simple enough, right?  The market will go down when it goes down and we should enjoy this fantastic opportunity to short everything at very cheap prices (for the shorts) the same way we enjoyed bottom-fishing from Oct 2008 – March 2009.  Sure it was a roller-coaster and the March dip was scary but, for those who stuck to their guns and stayed long – it was the money-making opportunity of a lifetime.   

    This is actually a good time for people to read 2009's "Stock Market Crash – Year One in Review" – it's a 3-parter I wrote reviewing the events of that time period.  It's amazing, in retrospect, how everything old is new again – only now it's a top and not a bottom.  

    HRB/Palotay – Well your max gain at $12.50 is $4.60 and currently your net is $4.24 so not much point to keeping it open to make another .36 between now and Jan, is there?  IF you roll, you can take the current $12.50 puts and calls and roll them up to 2014 $15 puts and calls for a bit better than even and lets say that puts you at $7.50/11.25 so not much additional risk and you take your $4.24 in the hand and you're going for $7.50 in the bush so, if you have nothing better to do with $12.14 you currently have than turn it into $15 (+25%) then it's fine to roll but you made 53% in the first round and now you are risking the whole 153% to make 25% more – diminishing returns to say the least.  Maybe time for a fresh horse but, if you REALLY love HRB, why not sell the 2014 $13 puts for $1.50 and be happy if you get a re-entry at net $11.50 while you move on to a more attractive position with the bulk of your cash?  

    CHINA!!!/Rain – It's not a threat, China is actively stimulating a decent amount again.  That does not, however, mean they will spark actual demand outside of the $180Bn they just committed to more infrastructure.  

    AAPL/Csl – I don't see AAPL going to $550 unless we have a severe crash but 2014 is a lot of time so it's really a function of if you are willing to ride our a 40% correction to $400 and stick to your guns or if that will make you bail.  If that's going to make you bail (rather than roll down and maybe out on your longs and patiently wait another year or two for the markets to recover) then we've established the principle that you can be forced to stop out and, therefore, you'd damn well better do it sooner than later.  Same goes for the $380 puts, which are more than 40% down and can be rolled to 50% or 60% down as time goes on but unless you REALLY want to own AAPL at net $350 or so and unless you REALLY wouldn't care if the puts go from $13.50 to $32 (the price of the $480 puts) or $65 (the price of the $580 puts) then, again, you damned well better have stops in place.  AAPL could have easily dropped 10% if the Samsung case went the other way, right?  You already dodged that bullet but many more patent suits to navigate and AAPL hasn't had a truly disappointing product in a decade so we really have no idea what happens if they announce a dud so there's always risk – just be realistic about how much risk you are really willing to take.  

    Election betting/ZZ – That's Intrade, which is a cool site.  

    Euro/Hoss – I think it was priced for collapse so printing money and staying whole is better than collapse – until people realize they are being diluted, of course.  Also, don't forget they expect the Fed to match their easing at the moment, if Bernanke doesn't drop another $500Bn tomorrow, I think you'll see a pretty sharp correction. 

    Windows on the World/ZZ – Used to be my favorite place in NYC…

    Technicals/Cdel – We're still using the rough adjustment of moving the lines in the big chart up 2.5% to reflect the drop in the Dollar from 83.50 to 81.50 but now were at 80 so almost time for another 2.5% adjustment and, as I was showing by pricing the indexes in Euros this morning – we still have not broken out of anything in constant dollars.  It just means the charts that most people rely on are flawed but, since most people rely on those charts – they act accordingly and will play the "breakout".  Those people will be stunned if we suddenly reverse and they will cry that the technicals were so clear – how could we reverse like that?  I said a long time ago that if the $25KP was money you cared about, it should have been cashed out with 60% gains.  What we've been doing since then is "going for it" and positioning for a crash that may never come but, if Ben waves the QE wand – I would think the past month of Tuesday hedges has clearly demonstrated that we can happily make money in a mindlessly up market as well.  

    Cairo/Angel – I think it's just protesters causing some damage, not tanks rolling on our embassy.  

    Spain/ZZ – That's very possible.  Why should they suffer under the ECBs thumb?  Why should they pay off the rest of Spain's debts?   Spain will be a very hard sell for the austerity police.  

    Bullish/Scott – I'll take a look. 

  80. Nice shake out on TIBX…

  81. Hoss18/Euro – I am of the opinion that euro strength can  mostly be chalked up to be the SNB … every time a euro is offered the SNB prints 1.20 swissies and buys it.

  82. I wonder if the question is if there is no QE tomorrow, will the market still go up if Ben hints there might be next month?

  83. Hoss/denlundy Euro:  I just asked the Euro/dollar question to a European money manager, particularly in the context of possible Spanish recalcitrance in the face of more ECB fiscal cuts.  His answer is:  there is no choice here; Europe is going to have to cut its debt as a % of GDP further — but so is the U.S., which is spending much more as a percentage of GDP than Europe.  Consequently, the U.S. will have to keep rates near zero for a long time, because any meaningful rate increases in the US. would bankrupt it.  Hence no one is that interested in owning dollars.  FWIW 

  84. rustle --  A new "twist" on Anticipation

  85. isn't qe or no qe going to be announced Thursday, not tomorrow?

  86. Bullish hedges on Bernanke (which I do not believe in):  

    • BA 2014 $60/72.50 bull call spread for $7.50, selling $60 puts for $5.10 for net $2.40 on the $12.50 spread that's 90% in the money. 
    • FB Jan $18/22 bull call spread for $1.90, selling 2014 $13 puts for $1.60 for net .30 on the $4 spread that's $1.30 in the money.  
    • HPQ Jan $16/18 bull call spread for $1.25, selling $16 puts for .75 for net .50 on the $2 spread that's $1.85 in the money.  
    • X 2014 $13/18 bull call spread at $3.30, selling $13 puts for $1.75 for net $1.55 on the $5 spread that's 100% in the money.
    • FAS Jan $120/129 bull call spread at $2.50, selling $60 puts for $1.85 for net .65 on the $9 spread.  

    The stocks are all ones I think won't get too trashed on a quick sell-off (but no one is safe from a major sell-off) and FAS is FAS – you have to have something that can be a 10-bagger…

  87. Hoss/Den: To underline the dollar point:
    FT: September 11, 2012 7:34 pm
    Moody’s threatens US Credit rating
    Moody’s has threatened to downgrade America’s prized triple A credit rating if Congress fails to reach a deficit reduction deal, raising the stakes in the fiscal debate that lies at the heart of the November election.
    The ratings agency said on Tuesday it is considering joining its rival Standard & Poor’s – which stripped the US of its top rating last year – if a deal is not reached by the end of the year. The threat is likely to feed into election campaign concerns over the state of the economy and lift Republican hopes of a boost for Barack Obama’s challenger, Mitt Romney, by focusing attention on the size of the national debt

  88. Technicals/Phil – I guess that is what is confusing…adjusting for the weaker dollar, when the market and the dollar are so intimately linked seems like a never ending spiral, especially when the MSM touts their version so heavily.  Obviously the market will pull back eventually, but, especially when trading options, (obviously) timing is everything.  So, when, if ever, do you get bullish?  Or, do you stay bearish until you actually get a crash, whenever that might be?  personally, I see no possibility of a crash scenario unless the German court does something drastic…"fiscal cliff" is still a ways off in options market terms…we shall see
    My money, no matter how much, is always important to me…but that's just me… I do appreciate that the portfolios are "virtual" and it is a lot easier to take more risk on paper.  I have been 90% cash for weeks now and can't really justify placing bets in either direction….except for weekly options plays on individual names…
    I look forward to reading your article from 2009 after hours…
    Iflan/GMCR – nice call!  I sure wish I had followed your lead on that one…are you holding out for more upside?

  89. zero/moody's
    I think no one is concerned about the agencies anymore.  Last time we were downgraded, our debt actually sold at lower yields and the market went up.

  90. Visa's 52 week high is 132.58 and looks like a triple top with today's spike. Does anyone think it's a good put candidate and if so what recommendations do you have?

  91. Funny, I'm thinking about the damage that can be done if there is a QE3 tomorrow with oil prices going higher and food and the longer term view that we eventually have to sell all these notes we're buying and I think of what Phil wrote over a year ago about Bernanke, being a student of the depression would like to witness it first hand.

  92. I think if there is any form of stimulus and oil takes off to 100, writing SCO puts out of the money might be a great play.

  93. Fair and balanced as usual:


    The 7.8 percent figure is the official unemployment rate from January 2009. This statistic reports on people who are unemployed and actively looking for a job. But as of the latest report, the official unemployment rateis 8.1 percent (0.3 percent higher than it was in January 2009), not 14.7 percent.

    The 14.7 percent figure is a completely different measurement of the unemployed, which in addition to those who are actively looking for work, also counts people who are unemployed and discouraged from looking for a new job, part-time workers who prefer full-time employment, and more. This alternative measure of unemployment, which conservatives often call the "real" unemployment rate, was 14.2 percent in January 2009 -- 0.5 percentage points lower than it is today.

    Making Goebbels proud, one day at a time…

  94. I have a 50/50 shot, but I still maintain my ground….and I have said it here every time this lil' subject comes up (every day it seems), QE3….I don't see it in the bond market. 

  95. Funny, there is very little press commentary on the Egyptian hardliners storming the U.S. embassy in Cairo and tearing up the U.S. flag.  The Egyptian President, Morsi, is hanging out in London for the announcement of a UK trade delegation, and the Brits are praising him for his hard [Sunni] line on [Alawite-ruled] Syria.  I dunno, looks a lot like Iran 1979 to me, but it's a damp squib in the press.  Maybe I'll reduce my oil short position, not that Egypt actually has any. ???

  96. Bernank – i'm beginning to think that whatever is done tomorrow, it's going to cause ALL of my positions, even the ones that bet opposite ways, to somehow go against me, all at once.

  97. people keep saying QE3 tomorrow here on the board???
    We will not find out until THURSDAY, right???

  98. Phil / LO – I asked about LO a while ago – and you asked me to remind you to take a look.  I've watched it fall for a while and now its below the 200dma and falling.  I wonder if its time now – and what your thoughts are on tobacco stocks – generally?  Thanks.

  99. QE thursday, right. i meant thursday..

  100. Dr. Ben speaks Thursday, yes.  Meeting starts tomorrow.

  101. Volume super lame at 58M at 3:07.  Keep in mind we were at 26M at 11 so, in 4 hours, another 32M shares were traded on the Dow (8M per hour) – that's some really dead trading!  

    Nas flirting with red with AAPL failing $660.  

    Dollar bottomed at 79.93 (so far) now back to 79.99.  

    SNB/Bdy – Good point.  Also Yen is strong too so essentially, this is much about Dollar weakness which means the Forex crowd has been convinced Bernanke will be diluting us on Thursday.

    Hints/Rustle – I can guarantee no QE tomorrow but, if there is no QE Thurs then I'm sure the Fed will leave strong language about how it stands ready to step in – maybe they'll even say they are considering something particular if some Jobs benchmark is not met by the last meeting of the year – that will then give people a lot of hope and put us back to praying for bad news to boost the markets. 

    No dollars/ZZ – Then why is the Yen even stronger?  Doesn't follow using that logic. 

    Fiscal cliff/ZZ – So more incentive for the Reps to block any compromise talks.  

    Bullish/Cdel – I will be all out gung ho bullish if Bernanke drops the QE bomb.  We generally get most bearish at the top of our range and then we have to flip bullish if we break out.  That's why it's so important to understand your ranges.  For the last 2 years, we've had a nice trend in the S&P that's topped out about 1,350 4 times and bottomed out at 1,250 or 1,150 each time and that has been phenomenally profitable to play.  Maybe this time is different and it's time to track a new range because the Dollar will never recover and we'll have QE forever and earnings will be fantastic and China won't collapse and Europe is all fixed now.  I guess we'll go with your plan though and toss it all out since you see no possibility of any of those things going wrong.  Gosh, where were you a month ago – you could have straightened us right out!  8-)  

    V/Jcristal – I like the Jan $110 puts at $1.60.  Figure V can drop 10% and you pick up a double but if V goes up 10% then you should have about the .80 that the $100 puts are going for and then you can roll up to the $120 puts for .80 and DD there and you'd be in 2x the $120 puts (now $3.35) for net $2 with them trading at $1.60 so you'd be down 20% on 2x if V goes 10% against you but a nice double on 1x if it goes 10% your way – that's a nice risk/reward.  

    Boring outcome on the DIA $132.50 puts (.56) but certainly not an overnight hold if you are still in them.  

    Unemployment/StJ – Not only that but this myth being spun by the Reps that the massive job losses of early 2009 had anything to do with him is simply ridiculous.  I'm surprised the "liberal" media let him get away with it.  It's like Bush was a drunken pilot and was pulled out of the cockpit with the plane in a tailspin and Obama took control and the plane dropped another few thousand feet before he could save it from crashing.  The Reps are the passengers who step over the drunken Bush passed out on the floor and go to the cockpit and say to Obama "don't you know how to fly a plane?"  

    You have to be willfully ignorant of facts to even entertain these idiotic claims.  As the Jon Stewart video illustrates, these people are willing to say anything to push their agenda and they have no shame in completely contradicting themselves from week to week because their audience is full of uncritical users who WANT to be lied to because reality is not what they like to believe it is.  

    Bernanke/Jabob – Yes, Thursday.  

    LO/GBase – They're not particularly cheap at $121, are they?  Nice 5% dividend keeps them up but 15 is a big multiple for tobacco so not the kind of thing I'd play with the VIX so low (because you can't sell good enough options to protect it).  If they fall back to test $100 and hold that, then they are very interesting.  

  102. 3 pm train used to be buy express…

  103. CELG Sept/Oct 75 calendar for 1.08.

  104. Volume almost 80M on the Dow coming into the bell, strong last hour and we'll probably tack on 30M at the bell.  Nice little stick at the end got the Nas green.   Dollar still 79.99.  

  105. Ugly last minute and selling after the close.

  106. Only 104M at the end but all down volume at the bell – Nas is red again in Futures.  

  107. Phil: Thanks.  Not to beat a horse dead- what does a guy take into account when looking to change the BCS on AAPL? On first pass I was thinking about the buy back as a good strategy- in the past I have had BCS on AAPL where the naked call goes ITM and is expensive to buy back then.  I saw on the current position that if we bought back the caller for $10 then I'd have $7 in my pocket to apply towards the cost of the longs which I own for $21.84 bringing my basis to $14.84. Maybe not as savvy as I thought….

  108. No dollars / Phil:  Your "Yen" comment was made offhand, and is not dispositive of the issue.  There are a lot of reasons not to prefer Yen to dollars or Euros beyond the "strength" of the Japanese economy [itself not an item you should take on faith.]  After all, the Scandinavian currencies are also strong, and we don't see kronor taking over world trade.
    The dollar and the Euro have an effective duopoly over international trade. It has been argued that the predominance of the dollar since the decline of the pound in that role is in great part a function of its strength in international relations.  Not to lapse into pedantry, these numbers pretty much point to why the Yen is not preferred to the dollar as might be the Euro, and therefore is not likely to explain one way or another the Euro/Dollar exchange rate, which reflects their roles as a medium of international trade:
    Table 1.1:  Currency Distribution in Foreign Exchange Transactions 
    Currency  2001 2004 2007 2011 
    US dollar 89.9 88.0 85.6 84.9 %
    euro          37.9 37.4 37.0 39.1 %
    Japanese yen 23.5 20.8 17.2 19.0 %
    Pound Sterling 13.0 16.5 14.9 12.9 %
    Australian dollar 4.3 6.0 6.6 7.6 %
    Swiss Franc 6.0 6.0 6.8 6.4%

  109. I did not hate the muslims that flew the planes into the WTC, but one of the images I will never forget that has tainted my view of muslims is the video of them dancing in the street from across the river in high celebration with the smoking tower(s) in the background. Now, THEM, I hate.

  110. Excellent insight, as always, thanks Phil!

  111. Barf:  There is a movie short about the event by Uwe Boll [fiction] that one might find amusingly clever or in freaky bad taste [Germans, you know], I won't post the site out of delicacy for our members but it's on Youtube if you care to look for it.

  112. Good Afternoon!   First post of the day.  Full day of meetings.  Pretty much a sore arse is all I get at EOD from these meetings.  No trades today.  GMCR looks strong.   AAPL is pulling back only because of tentativeness ahead of iPhone event.   I am not concerned about the Jan bull call spreads.  They have another 134 days and 2 more earnings events to follow tomorrow's event., so the trade will likely just be left alone.  The spread has a 30.00 differential right now and can easily make another 15.00+.   As for GMCR, this will likely be held into early October at least.  And Newt,  I will get back with you this evening by email. 

  113. Thank you all for thoughts and input on the Euro, really appreciate the input.  Beginning to think Big Ben better bring at least $600B Thursday or things are going to get hairy!  And frankly, I can't see why he would do that.  It would beg the question, what is so bad that we don't know about and need that much money for?
    And I can't see Bernanke pulling the trigger on his last bullet with data being what it is….simply too strong to print into, IMO

  114. PHil / BBY :  Thanks Phil.  I have been out all afternoon, so I will look to re-establish the spread tomorrow…or whenever the market moves in the right direction.  I had mentally set a goal of BBY @ $19 to sell the short legs again.  I could not decide between the $18 and $20 strike.  If BBY drops back down, I will buy the short leg back as you suggest.  I am all for a little bit of channel surfing!!

  115. Im sure a lot of you subscribe to Mauldin, and I just saw his repost of the talk by Harry Dent, forecasting deflation as the inevitable endgame. This is not what I was thinking. and I'm not sure what to think! Confused again!
    I welcome comments. The link wouldn't copy, goto mauldin's site if you dont already subscribe.

  116. Barf – Maybe a little but from both columns….stagflation.

  117. Jackson gets a break lower wind but human caused, 10% contained. What bothers me is where it may destroy is not in the mega rich area but rather where the lowest of the lowest live and then downtown and the Snow king town ski hill were it cost 1/10 the famous ski runs.

  118. Phil/Israel and Iran conflict- Likely only a matter of time, sooner than later seeing how much pressure Israeli leaders are pressuring the U.S. RIGHT BEFORE an upcoming election.  Just imagine how much less constraint there will be AFTER the election…if they wait that long.  Would not want to be short oil futures and wake up to an Israel independent strike.  Simply amazing how little anyone discounts another "oil war" impact on the markets and global economy, one in which could drag out for many months and spike oil to record highs.  Time to set up some plays for the inevitable?  Example…defense related stocks option plays if it looks like Romney is going to win, and Israel is going to strike after the election???  
    Israeli Leader Ratchets Up Feud With U.S.

  119. Mish and gas!
    Check it out, I have tried to relate this by observation living at the southern end of Yellowstone and Grand Teton Parks. The only way to see is in a car, truck, or RV. The roads and fuel stations are empty, worst year ever. Of course somehow the reported numbers will not show it because now they include workers and commuters through the gates.

  120. In the end, any political argument that pretends to rely on facts must stretch those facts. The truth is rarely clearcut. The fact that the other side can poke holes in your facts only exposes that you over-reached in the first place. It does not say anything about the point you were trying to make.
    Subtlety and nuance do not sell as political arguments, because, as we all know, fully 50% of our population is damned ignorant, and most of them are dumb as a post. Ok, I know, you can't say that publicly, but I am sick to death of the ballerina tiptoe we do all the time to avoid admitting the flat obvious truth.
    The founding fathers knew damn well their country was full of simpletons, however, they understood that all of us then shared (more or less) the same value system. If I could find the links again, and if I wanted to go into the professor business, I could cite numerous examples of writings, inept but eloquent, with which I agreed completely. Our leaders then represented our common values. This is simply not the case now.
    I begin to suspect our electorate of idiots will re-appoint Obama to be our President. I do not expect this will solve our problems, nor, do I figure it will make them more hopeless than they are already. I am not interested in hearing the fact-related, but fully irrelevant arguments. This man does not share my values, and speaking for my vision for the country, this is a bad thing. I am one person that knows what a shafting we are about to take.
    There is much to talk about, but here, we don't deal with those things. Some of you are so desperate for a populist outcome, to defrock the rich, that you don't realize we are sacrificing our values to the altar of expediency.
    And Phil: I was moved by your comments about 9/11, and pasted them to several of my friends. Just to show that even a misguided guy like you can be eloquent. I appreciate my experience here, although sometimes, I want to scream.

  121. I guess we go up or down from here:

    With Bernanke on deck this week, and with the SPX resting so close to what has become a long term resistance threshold, can the market cross the Meridian bridge onto another reflationary road – or will it continue to serve as the upper boundary of the post crash recovery? 


  123. Anyone show me an up! I can invision sideways. I see no real fix whoever wins. The only chance is all demos all 3 branches but they blew it last time and Obama is still spineless.

  124. David Stockman, former Reagan OMB Director, opens fire on the Fed, Congress, the fiscal cliff, entitlement reform and a number of other issues on CNBC today.

  125. The case of CSCO:


    Cisco remains by far the leader in revenue among providers of equipment for connecting computers. Revenue last year was $46.1 billion. That means it is sensitive to economic trends, especially slowdowns in major economies like Europe. Indeed, fourth quarter growth slowed to 4% from 7% for the full year. But it also benefits when governments react by boosting infrastructure spending, because its technology is almost inevitably part of any big new project.

    The question for investors, of course, is whether Cisco remains a growth stock. The short term answer is “just barely.”

    In the earnings call of Aug. 14, Cisco said that during the current quarter it expects revenue growth of just 2% to 4%. And it forecast that earnings per share will rise 5% to 9%. Still, the power of stock buybacks in reducing shares outstanding should make it possible for Cisco usually to deliver low double digit EPS gains, with single-digit revenue growth. That’s a formula that has powered IBM’s stock for many years.

    At its current dividend level, Cisco is paying investors more than Treasury rates to wait for an upturn in the networking business.

  126. Is Mario Draghi a threat to democracy in Europe?

    But to say "we are acting within our mandate"; but we shall only do so, if you (the country in question) deliver on certain political conditions; then — I am sorry — the ECB is taking on a role it was never designed for and that is certainly outside its mandate. The ECB was designed for supporting "the general economic policies in the Community with a view to contributing to the achievement of the objectives of the Community" (in as far as it doesn't´t infringe upon the primary mandate of safeguarding price stability). Supporting policy, not setting conditions for it or setting an agenda for which economic of financial policies a given country embarks upon.


    As a result of the ECB’s actions, voters from Germany to Spain will increasingly find that crucial decisions about national economic policy can no longer be changed at the ballot box. In Germany, in particular, there is a growing realisation that the ECB, an unelected body that prides itself on its independence from government, has just taken a decision that has profound implications for German taxpayers – but one that they cannot challenge or change.

  127. barf:
    You are not alone. I am essentially party-less and take offense that I will have to pull the lever for idiot #1 or idiot #2. I have yet to see any real leadership. Instead, just a lot of "change the country" promises that I don't identify with.

  128. Rogue / Iran-Israel: There is no doubt that the fear of an Israel-Iran conflict could send oil into the stratosphere, and is therefore a very dangerous short.  Any number of events could trigger that fear.
     But the Iranians are neither unsophisticated nor unintelligent, as an even cursory review of their long history indicates.  Their country has both a complex administrative and technological apparatus [the latter being what all the fuss is about], run successful intellgence operations in three client states — and  look at how effectively and quietly they have dealt with the Iranian "Green Movement" compared to  Assad's crude sectarian dictatorship, and have fared reasonably well despite the severe sanctions they have faced for a long time.   They are not remotely comparable to a one-man state run by an ignorant thug — Saddam Hussein.
    Dont' mistake this for admiration — it is just analysis.  Here's an interview with someone who, one would have to admit, probably has studied them far more and knows them far better than any foreign journalist could — the ex-head of Mossad.  He believes they are quite adept at brinksmanship, and quite unlikely to make a serious misstep — although, again, they are perfectly capable of bluffing in manner convincing enough to run up oil prices.  In fact, that's probably part of their strategy, because Phil is pretty clear on oil's current level being economically unsustainable by Europe and the West for very long.   This is the 60 Minutes interview with Meir Dagan, formerly chief of Israel's intelligence service.;storyMediaBox

  129. Things might be interesting with FAS this week as weekly options only run to 107 and we are at 106.19 now with 3 days and 2 huge decisions to go. Do the MM know something? Or will they need to add more strikes? Last time I recall that happening, no strikes were added, the market corrected and it ended up OK. We'll see…

  130. AAPL/$25KP, Newt – It depends on the spread and where you think AAPL is going, etc.  It's tricky with the AAPL spread we have as it's a bullish $4.50 spread but, don't forget, it was taken as a hedge, not a bet.  On the whole, we'll be happier (in the $25KP) if APPL tanks and crashes the Nasdaq because maybe it will cost us $2,500 on the AAPL spread but it will do wonders for our AMZN, PCLN and SQQQ short plays.  Also, even if AAPL does tank, we don't mind owning Oct $685s for net $4.50 and maybe we'll roll them back to something in Jan and give them a chance to recover.  While it was tempting to buy back the $695s for $10 or less, with our $685s that far out of the money, we become exposed to a risk we never intended to take (naked $685 calls at net $14.50).  With the net delta on the spread at just .06, we have no expectations of big losses but, if we uncover the $695s, then we have $14.50 invested in $685s with a delta of .37 and suddenly we can lose $1,800 on a $5 dip in AAPL – that's not what we signed up for….

    Yen/ZZ – I've made that case before, that the Yen is disproportionately bought because it's considered the 3rd tradeable currency ahead of the Pound so, when people in Europe diversify, it's Yen and Dollars and they don't tend to split it 80/20 as they should.  Since no one is buying Euros right now and the Dollar has the constant threat of Bernanke – the Yen is getting more than it's share of buyers.  What the Euro has right now is mainly short covering.  

    You're welcome Scott.  

    Big Chart – So, to go back to today's earlier discussions – the Dollar is down from 84 to 80 and that's 5% so really these lines need to be moved up 5% which means the 2.5% we gained last week (all on Thursday) is really nothing more than a reflection of the Dollar falling from 81.50 to 80 (1.8%) and that means, the Dow is still below the 5% down line and still below the 200 dma,, which must be adjusted to 13,392, the S&P is just under the adjusted Must Hold line at 1,440 but well below it's adjusted 50 dma at 1,456, the Nasdaq is also under the Must Hold at 3,150 and just below its adjusted 50 dma at 3,143.  The NYSE is just over the -2.5% line and just over the adjusted 200 dma at 8,218 but trapped below the adjusted 50 dma at 8,320 and the Russell is almost dead on the must hold line and trying to break it's adjusted 50 dma at 844 and, if you look at the day's chart – you can see how it struggled at that line all day.  

    So I'm still willing to be bullish if we do break our levels but, without QE3, it doesn't make sense to count on the Dollar staying around 80 or, more to the point, it doesn't make sense for the other Global currencies to stay so high.  

    Deflation/Barf – That would be totally out of control.  I don't see it as long as the CBs have a printing press.  

    Israel/Rogue – I've been hearing that prediction for about 30 straight years.  So far, they've waited.  These are exactly the kind of headlines they run whenever they want to pop oil.   That particular article it a Mitt Romney commercial aimed at pro-Israeli readers.  Notice they say "falling out" and "unusually blunt attack" but what is it?  Is the WSJ so bad at constructing an article that they don't include the quotes the article is about or is this a blatant attempt to make something out of nothing because:  "In the election campaign, Jewish-American voters could be crucial in deciding the election in swing states like Florida and historically have voted for the Democrats."  The Jerusalem Post has a more fair and balanced take on the subject:


    A White House official said he did not have a final schedule for the president for that week. His response left open the possibility that a last minute meeting could be added to the agenda.

    A request from Netanyahu’s office to meet with Obama in Washington as part of the prime minister’s trip to the United Nations in New York later this month was rejected for scheduling reasons, an Israeli official said Tuesday.

    Netanyahu, however, is expected to meet with other senior US officials in New York, including Secretary of State Hillary Clinton.  When asked about the White House’s refusal to schedule a meeting between Netanyahu and Obama, an official there noted that the two leaders would be visiting New York at different times.


    Truth/Barf – I'm sorry but there are such things as facts.  Evolution occurs, the Earth is 5Bn years old, Bush caused the Deficit and tanked the economy with his unfunded tax cuts and wars – these are FACTS, not opinions.  Our Founding Fathers said a lot of things but why is it only Conservative's OPINIONS of what the founders meant seems to matter when their ACTUAL words very clearly indicate they'd be happy to use their second amendment rights to put some buckshot in the average modern Conservative:  

    In an article for the National Gazette in 1792 James Madison wrote that the republic would be well served by laws which “reduce extreme wealth towards a state of mediocrity and raise extreme indigence towards a state of comfort.” 

    Thomas Paine's Agrarian Justice (1795) described a tax supported, government administered system of monetary support for the aged, the poor, and the disabled that bears a startling resemblance to Social Security. As Paine put it, "Accumulation … of personal property, beyond what a man's own hands produce, is derived to him by living in society; and he owes on every principle of justice, of gratitude, and of civilization, a part of that accumulation back again to society from whence the whole came.”

    The very first Congress, in 1790, passed a law that included a mandate that ship owners buy medical insurance, but not hospital insurance, for their seamen. That Congress included 20 framers and was signed by another framer: President George Washington.  In 1798, Congress, with 5 framers, passed a federal law that required seamen to buy hospital insurance for themselves.


    The Founding Fathers viewed corporations with suspicion and largely kept them at arms length. In fact, one reason the founding generation went to war with Britain is because of the influence that the East India Trading Company had on the British Parliament. A corporation even once governed Massachusetts on behalf of England. The Revolutionary War ended this practice. After the nation’s founding, corporations were granted charters by the state as they are today.
    Unlike today, however, corporations were only permitted to exist 20 or 30 years and could only deal in one commodity, could not hold stock in other companies, and their property holdings were limited to what they needed to accomplish their business goals. And perhaps the most important facet of all this is that most states in the early days of the nation had laws on the books that made any political contribution by corporations a criminal offense.
    “I hope that we shall crush in its birth the aristocracy of our monied corporations, which dare already to challenge our government to a trial of strength, and bid defiance to the laws of our country.” – Jefferson

    The electorate are indeed idiots to follow a party that worships corporations, limits Government (the whole point of the Constitution was to establish a strong central Government), doesn't maintain a separation of Church and state (where is God mentioned in our constitution?  Nowhere) refuses to tax as necessary and fails to look out for the health and general welfare of its citizens.  Those our our AMERICAN values – not this perversion of intent trumpeted by the modern GOP, who are so far removed from original Republican ideals that they shouldn't even be allowed to use the name anymore.  

  131. I am a conservative by both inclination and history – Bill Buckley was my godfather – but that is conservative with a small "c". It means, to me, giving a preference to the accumulated wisdom of our country's history, but not a monopoly.  That we sift out with a critical eye good changes [universal sufferance, woman's rights, civil rights] from bad [in my view, corporate "citizenship" that unleashes their purely non-citizen like character — profit maximizing by design and under corporate law — and permit them to participate in elections and in a government by, of and for the people.
     I have no problem with rich people. I've done my level best to become one, though not born to wealth.  I do have problems with rich people who believe they earned, or inherited, their wealth through their unique gifts and not in part by the forebearance and law-abiding nature of their fellow citizens, who are sufficient in number to torch all their mansions in a night.  The well-off should be respectful of this forebearance,  humanistic and generous in their support of the public weal, and conscious that we are blessed with a country in which the rule of law and a generosity of spirit toward people of other cultures and races prevails to an extent virtually unknown on the planet.  I have lived , been educated, and earned my living in countries across Europe, Asia and South America, both as boy and man, and I still bless the luck that had me born an American, son of immigrants, like virtually all of us.

  132. Bring me the head and hands of the man who wrote the Phillipics!
    (HINT he was a Republican)

  133. Phil/fact    A nice showing on how powerful that pesky little, four letter word can be…. :)

  134. zero/ "c"   Interesting and well stated!

  135. zero/ Interesting and well stated – I agree.  But I disagree with the substance.  I wish my grandfather had never emigrated from Norway, and I am doing everything in my power to get my 23 and 25-year-old sons out of this disgusting country.

  136. Good morning! 

    Waiting on German ruling (in progress).  Futures were jammed up ahead of announcement but already gave up those gains and now we're listening to procedural BS but announcement should be in a few minutes..

  137. By the way, this is why they are so desperate to have you believe Israel will attack Iran or whatever – OVER 600M barrels on order at NYMEX through the end of the year.  Usually 500M is considered too high:


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Oct'12 96.85 97.43 96.71 97.25 04:02
    Sep 12


    0.08 5925 97.17 165051 Call Put
    Nov'12 97.27 97.76 97.08 97.58 04:02
    Sep 12


    0.08 1111 97.50 255567 Call Put
    Dec'12 97.50 98.06 97.37 97.95 04:02
    Sep 12


    0.13 813 97.82 212033 Call Put

    January has 109,000 open contracts already so nowhere to roll to when the Oct contracts come due (20th), so it will be an exciting week at the NYMEX next week.  

    Court allows German aid to go through (strings attached but that's the headline) – It's going to be a bullish morning! 


  138. Essentially, the court hasn't really ruled on the Constitutionality of the ESM but it has thrown out any attempts at injunctions blocking German participation pending a full review.  The court is not allowing new funds to be committed but will allow currently committed funds to be used.  

    Now we have AAPL and The Bernanke to keep this party going over the next two days. 

  139. Calendar of coming Apple events:

    • September 12: iPhone 5 unveiled.
    • September 14: Pre-orders begin.
    • September 21: iPhone 5 retailer sales start.
    • September 23: Announcement of first weekend sales.
    • September 28: Announcement of first week sales.
    • By October 10: Invitation to iPad Mini event.
    • Mid-October: iPad Mini event takes place.
    • October 23: Expected release of September quarter results.
    • End of October: iPad Mini Launches.

  140. Sounds to me like they just drew Draghi a "line in the sand"…thoughts?

  141. Phil,
    Is it too late to initiate a new AAPL position using a BCS? Missed the boat last time they were around $550. 

  142. This is a fantastic article and I would urge our Conservative friends take the time to read it.   I have very much the same experiences as the writer except I started, not so much as a Democrat, but as a person who thought the Republican party had some valid points and evolved, over time, to become someone who feels the Republican party is the enemy of America and especially the American people (the bottom 90% of them).  Like the author, it's an opinion that evolved over time and through experience and this guy did a fantastic job of detailing his journey from right to left in "Why I left the GOP":


    I always imagined that I was full of heart, but it turned out that I was oblivious.  Like so many Republicans, I had assumed that society’s “losers” had somehow earned their deserts.  As I came to recognize that poverty is not earned or chosen or deserved, and that our use of force is far less precise than I had believed, I realized with a shock that I had effectively viewed whole swaths of the country and the world as second-class people.

    No longer oblivious, I couldn’t remain in today’s Republican Party, not unless I embraced an individualism that was even more heartless than the one I had previously accepted.  The more I learned about reality, the more I started to care about people as people, and my values shifted.  Had I always known what I know today, it would have been clear that there hasn’t been a place for me in the Republican Party since the Free Soil days of Abe Lincoln.

    One can only hope that General Eisenhower (R) was right when he said: 

    “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible and they are stupid.”

    Now I'll be the first to defend the Republican party and say that their numbers are no longer negligible…

    “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” ~ Abraham Lincoln (R) 

    “The laboring classes constitute the main part of our population. They should be protected in their efforts peaceably to assert their rights when endangered by aggregated capital, and all statutes on this subject should recognize the care of the State for honest toil, and be framed with a view of improving the condition of the workingman.” ~ Grover Cleveland (D)

    “It is essential that there should be organization of labor. This is an era of organization. Capital organizes and therefore labor must organize.” ~ Theodore Roosevelt (R)

    “If capitalism is fair then unionism must be. If men have a right to capitalize their ideas and the resources of their country, then that implies the right of men to capitalize their labor.” ~  Frank Lloyd Wright

    “Only a fool would try to deprive working men and working women of their right to join the union of their choice.” ~ Dwight D. Eisenhower

    “Where free unions and collective bargaining are forbidden, freedom is lost.” ~ Ronald Reagan

    “No business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By living wages I mean more than a bare subsistence level – I mean the wages of decent living.” ~Franklin D. Roosevelt (D)

    “I believe that there should be a very much heavier progressive tax on very large incomes, a tax which should increase in a very marked fashion for the gigantic incomes.” ~ Theodore Roosevelt (R) 

    “Taxes, after all, are dues that we pay for the privileges of membership in an organized society.” ~Franklin D. Roosevelt (D)

    “I like to pay taxes. With them, I buy civilization.” ~ Oliver Wendell Holmes

    “To impose taxes when the public exigencies require them is an obligation of the most sacred character, especially with a free people.” ~ James Monroe

    “The tax which will be paid for the purpose of education is not more than the thousandth part of what will be paid to kings, priests and nobles who will rise up among us if we leave the people in ignorance.” ~ Thomas Jefferson

    “I know of no safe repository of the ultimate power of society but people. And if we think them not enlightened enough, the remedy is not to take the power from them, but to inform them by education.” ~ Thomas Jefferson

    “The most effective way to restrict democracy is to transfer decision-making from the public arena to unaccountable institutions: kings and princes, priestly castes, military juntas, party dictatorships, or modern corporations.” ~ Noam Chomsky

     “We establish no religion in this country. We command no worship. We mandate no belief, nor will we ever. Church and state are and must remain separate.” ~ Ronald Reagan (R)

    “We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” ~ Supreme Court Justice Louis Brandeis

    “Every gun that is made, every warship launched, every rocket fired, signifies in the final sense a theft from those who hunger and are not fed, those who are cold and are not clothed.” ~ Dwight D. Eisenhower

    “I believe that, as long as there is plenty, poverty is evil.” ~ Robert Kennedy

    “While I am a great believer in the free enterprise system and all that it entails, I am an even stronger believer in the right of our people to live in a clean and pollution-free environment.” ~ Barry Goldwater (R)

    “Today’s so-called ‘conservatives’ don’t even know what the word means. They think I’ve turned liberal because I believe a woman has a right to an abortion. That’s a decision that’s up to the pregnant woman, not up to the pope or some do-gooders or the Religious Right. It’s not a conservative issue at all.” ~ Barry Goldwater (R)

    “America was established not to create wealth but to realize a vision, to realize an ideal – to discover and maintain liberty among men.” ~ Woodrow Wilson (D)

    “Compassion is not weakness, and concern for the unfortunate is not socialism.” ~ Hubert Humphrey (D)

     “Not only our future economic soundness but the very soundness of our democratic institutions depends on the determination of our government to give employment to idle men.” ~ Franklin D. Roosevelt

    “As Mankind becomes more liberal, they will be more apt to allow that all those who conduct themselves as worthy members of the community are equally entitled to the protections of civil government. I hope ever to see America among the foremost nations of justice and liberality.” ~ George Washington

    “The liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is fascism – ownership of government by an individual, by a group.” ~ Franklin D. Roosevelt (D)

    “We will bankrupt ourselves in the vain search for absolute security.” ~ Dwight D. Eisenhower (R)

  143. Line/Cdel – Today was actually just a procedural hearing on 6 suits filed to place a temporary injunction against the ramification of the ESM by Germany.  It's much like when US lawyers move for a dismissal or an injunction – the court is loathe to grant them unless there is no case at all by the other side.  So, what the Court is saying is that German participation in the ESM has merit and is not clearly unconstitutional.  That means they are almost certain to allow it (in December decision) but perhaps with strings attached or maybe saying "OK, $230Bn we promised but no more unless A, B and C."   Either way, ESM is a go for $650Bn but it was pretty much being counted on so not actually new stimulus but much better than losing it, of course.  

    AAPL/Japar – Depends where they open.  We liked them over the $666 line but yesterday they opened at $684 and I would not want to chase it up there.  

  144. Really!?!?!  We are up another 70 pts in futures cuz of this bullsh!t!!!!!!!!! arghhhhhhhhhhhh so sick of this!!!!

  145. That above chart can continue down for the next 10 years unless Romney pulls Obama's mileage standards.  


    Guest Post: Who Moved My Recession?

    Submitted by Alexander Gloy of Lighthouse Investment Management,

    Lakshman Achutan, ECRI (Economic Cycle Research Institute) made a recession callfor the US on September 30, 2011 (and confirmed it multiple times since then).

    Gary Shilling, titling his August letter “Global Recession”, says “We are already in a global recession.”

    However, equity markets don’t think so, with the S&P 500 trading less than 10% away from a new all-time high. Only one side can be right. Could this be a repeat of October 2007, when the S&P 500 hit new all-time highs mere six weeks before the “Great Recession” began? Are so-called leading indicators, as used by the Conference Board, still reliable?

    SUMMARY: Established leading indicators incorporate questionable input. While there is no perfect indicator, a combination of the ones tested above, weighed by accuracy, confidence and timeliness should produce a good reading.

    The higher-confidence indicators say that 2011 was a “close call”, but we are currently not in a recession. However, a lot of lower-confidence indicators are showing readings consistent with a severe recession.

    It is entirely possible we narrowly avoided a recession in 2011 and are heading towards another one in 2013. Currently, however, combined indicators suggest only a 10% likelihood of being in a recession at this point (September 2012).

    The US economy is experiencing the slowest recovery of the past 50 years (both from an employment perspective as well as from GDP growth). After looking at total credit market debt outstanding I concluded this was due to a decline in the marginal utility of additional debt (see this post). Some readers have mistaken me for an advocate of more quantitative easing. I should have been more clear about this: I do not think printing money is an appropriate remedy for economic woes. Enabling the government to finance fiscal largess at artificially low rates is unlikely to cure problems related to excessive debt levels.

  146. 70 points/Jrom – It's all about Bernanke tomorrow but AAPL can pop the markets even more today.  

    Cramer's father is one of the 10% of Pennsylvania's population that is being disenfranchised by new registration laws.  This is the only reason Romney has a chance to win.  Reps have changed the laws in 30 states to knock as many poor voters as possible off the rolls:

    Is this really the America you believe in?  Is this what we were taught about Democracy in school?  Are you happy with the direction your country is heading?  

  147. As we head towards that fiscal cliff (which is one of the factors killing the Dollar as we may default on our loans in 90 days), check out what the House Majority Tool, Eric Cantor, says in his CNBC interview:  


    BARTIROMO: So what are you willing to give on, Congressman? When you look at what the two sides are basically sticking to their guns, can it really be realistic to say taxes can never go up, that, you know, taxes should stay where they are forever in any environment? What are you willing to give on?

    CANTOR: First of all, raising taxes is not the answer. We all know that. This problem is too large to think we can tax our way out of it. What we really need to be focused on is how big do we want the government to be, and begin to assess our priorities so we can manage down the deficit. That’s clearly how it is. Once we get a plan in place where, in fact, we’ve got a solution to the overspending, you know, we can begin to tell people their tax revenues will go to be paying off the deficit. But the problem is, Maria, there’s been an unwillingness to face up to the hard facts that there are obligations that have been assumed by the taxpayers, frankly, and there’s not enough money to satisfy those obligations. That’s what we have to sit down, iron out the differences, and go forward.


    During a press conference to commemorate the 11th anniversary of the 9/11 attacks, House Speaker John Boehner (R-OH) hinted that a deal is unlikely. “I’m not confident at all,” he said of the prospect of forestalling the cliff, adding, “the House has done its job on both the sequester and on the looming tax hikes that’ll cost our economy some 700,000 jobs.” Cantor also tried to connect the terrorist strike to the automatic military cuts included in the Budget Control Act. “The best thing that we can do as a people to honor those individuals is to make sure that it never happens again, and we have looming massive defense cuts that this House has acted to substitute,” he argued.

    Republicans have so far refused to give an inch on taxes and have in the past brought the government to the brink of shutdown over the Democrats’ efforts to raise revenues.

    This reminds me of another quote by Goldwater:  

    “Mark my word, if and when these preachers get control of the [Republican] party, and they’re sure trying to do so, it’s going to be a terrible damn problem. Frankly, these people frighten me. Politics and governing demand compromise. But these Christians believe they are acting in the name of God, so they can’t and won’t compromise. I know, I’ve tried to deal with them.” ~ Barry Goldwater

    This is, by far, the best Government money can buy.  And why not?  Check out the return on his campaign contribution investments Shelly Adelson is getting by backing Romney over Obama:


    Romney’s corporate tax reforms would also provide Adelson’s casino company approximately$1.2 billion in tax breaks on overseas profits and $565 million from Romney’s proposed shift to a territorial tax system. Adelson’s share of that, the report says, would be upward of $900 million, nine times what he pledged to spend to get Romney to the White House.

    While Romney’s tax plan would further enrich billionaires like Adelson, it would have to raise taxes on middle class families by as much as $2,000 if Romney were to keep his plan to maintain current levels of revenue.

    mitt romney bain capital

    Like AMZN's p/e ratio – I wonder how high this ratio can possibly go before our citizens finally storm the Bastille and start chopping off some heads:

    The top 1% have almost doubled their wealth spread over the past 5 years while wages and savings of the bottom 90% are now worse than they were in the 70s – with 40 years of progress wiped away to benefit 1 in 100 of us.  


    Obstruct and Exploit

    Obstruct and Exploit | Offshore Stock Broker News |

     A cynical Republican strategy: block all efforts to strengthen the economy, then exploit the economy’s weakness.


    What about the argument, which I hear all the time, that Mr. Obama should have fixed the economy long ago? The claim goes like this: during his first two years in office Mr. Obama had a majority in Congress that would have let him do anything he wanted, so he’s had his chance.

    The short answer is, you’ve got to be kidding.

    As anyone who was paying attention knows, the period during which Democrats controlled both houses of Congress was marked by unprecedented obstructionism in the Senate. The filibuster, formerly a tactic reserved for rare occasions, became standard operating procedure; in practice, it became impossible to pass anything without 60 votes. And Democrats had those 60 votes for only a few months. Should they have tried to push through a major new economic program during that narrow window? In retrospect, yes — but that doesn’t change the reality that for most of Mr. Obama’s time in office U.S. fiscal policy has been defined not by the president’s plans but by Republican stonewalling.

  148. "Capital is only the fruit of labor, and could never have existed if labor had not first existed".
    This man never contemplated a world in which, 1) complicated 20x, 100x, 1000x Derivatives, 2) the use of a laptop to 'create capital out of thin air' by the FED, or 3) unsecured credit. 
    Arguably, all together, far more in quantity, today, worth more than any labor effort taken together since the beginning of time, ever created.
    And those arguing that even more virtual capital is necessary to avoid a collapse. 
    Had those earnest men in the days of Eisenhower realized that capital could literally be invented without so much labor as licking a postage stamp, one wonders about the havoc they would have wrought upon the people then.
    Labor is becoming increasingly irrelevant and will be continuing its downward trend the more the population of the globe grows.  One day, nearly everything we need, want, desire, or lust after will be done by a half dozen human beans, and what we now call labor will be as prehensile as our tails.
    I'm learing how to do laundry, specializing in bras and panties. I figure those delicacies will always need to be hand washed and therefore will always provide a means of support.

  149. Robert Reich has been getting into making informational videos:

  150. And the scaremongering by obama fans is just that.  Romney has no more chance of being elected than I do.
    All this handwringing on this site and a few, a very, very few others—- that Romney could win —is complete  and total B.S. and I wonder why it goes unremarked upon.

  151. Capitalism/Flips – Are you saying Lincoln would have been more conservative if he had a laptop???  I'm pretty sure no one in the mid 1800's would have been inclined to consider abstract financial instruments to be Capital in the first place – especially as we still had metal-backed currency at the time.  I agree with the point that labor is becoming irrelevant but what does that mean for society when no one has to work?  Does all the money go to the 1% who own the machines and zero to the bottom 99%?  We need to rethink things sooner, rather than later.

    As to Romney, I mentioned last Friday that it was over (as far as my friends in DC, who are supposed to know told me) but I still think this disenfranchisement of voters – especially in PA and Florida – could make it closer than we think or even tip the election to Romney if he captures those two states.  

  152. phil,
    not sure what you had for breakfast but this am you are in rare form.  for a while i thought my browser had mistakenly took me to hufpo or salon or mother jone. 
    now there are some bastions for fairness in reporting and then reich and krugman yowzah…………i was waiting for frodo to come along next. 8)
    maybe cramer ought to take his dad to get a photo id so he can vote instead his liberal whining and sucking up to the msm as a journalist wannabe.
    im a bit confused since we ask people for id to buy alcohol, get on a plane, cash a check and on and on………so why not make sure j doe is j doe for voting esp with all the anedcotal evidence of chicanery in the past..
    oh by the way, i hear the official dem spin is romney cant win.  crazy why the dems are spending all that money in the swing states for a guy who cant win. 
    now for some important stuff………….do we roll the fas 103 this week…….post or pre bernanke…………
    phil, you are

  153. Obviously Mill, you did not bother to read the article I asked you to read as you still live in your little bubble world where you believe there is equal access for all.  Do you think Cramer's Dad doesn't buy liquor?  Do you have to show your ID to buy it?  PA is a big state and lots of people live in rural conditions and you can't get an ID in every town, you have to get there and they charge money to make the ID – block, block, block for the poor.  That's not one man, one vote.  Also, I have no idea what you can possibly be talking about re. the spending.  The Jets were winning 48-28 on Sunday with 5 minutes to go and the Bills couldn't possibly win – UNLESS the Jets did something as asinine as walk off the field and stop playing. 

    As to FAS – A quick pop up in XLF gives us a good roll but hopefully we can wait until tomorrow.  

  154. Hi Phil, 
    I am having a stability problem with the your site on the iPad. If I ignore you as a user everything works well. Obviously that's not what I want to do. When your added back on the comments cannot be scrolled through. This has occurred before but this time is much more problematic. It's been happening for a few days now. I thought I'd wait to see if it would  resolve itself, just getting worse.  

  155. Problem/Dent – I think this only occurs on some versions of IPad (my 2 is fine) and it seems to be when I post a video in comments.   Might be a good excuse to upgrade.  8-) 

  156. Phil- Thanks.

  157. Nice work this morning, Phil!

  158. mill – I hate to be the one to inform you, but disenfranchising fellow AMERICANS is a real f*cking problem in this country – but then again, you are the one that thinks the elderly still need ID to buy beer……:(

  159. I've bee getting conflicting reports in the news about when Bernake is speaking.  Tomorrow or Friday?  does anyone know the date and time of his speech?

  160. @Felipe
    As a resident of Pennsylvania, I can assure you that the two major cities, Pgh and Philadelphia, which will carry the entire state, have no intention of voting for Romney.  EVER.  So there goes the possibility of PA rolling to the Mittster's camp. Done.
    As for Florida, there is NO possibility after what happened in the Bush/Gore debacle that they would go for Romney.
    This Election was over months ago and I put my money where my mouth was when it was 50/50 on InTrade. And guess who is bitching about it???
    The republicans! 
    One of our republican talk show hosts is upset that Romney is now behind 7 pts nationally and even more so in PA.  So he has been challenging the democrats —-who are attempting to stop our Voter ID law from having any effect on the election to explain why all the fuss???  TheBamster is a shoo in. He is having caniptions about how he might as well stay home because Rove and another Super-Pac have decided to pull ALL the millions and millions of advertising dollars out of Pennsylvania that they budgeted to spend because the state is being conceded to theBamster.
    Disenfranchised??? I don't think so.

  161. Jerconn: Traveling, so a little out of step, and about to step on another plane, so another out-of-market-synch comment, sorry.    Having the Jerusalem Post point to [Muslim] Barbary pirate actions in the 18th C as somehow representative of Islamic beliefs and history is a rhetorical distortion aimed at the ignorant who are already inclined to believe that Muslims are bloodthirsty camel drivers bent on stuffing the whole planet into their Umma by force.  Funny, I seem to remember the same sort of rhetoric about Jews having issued from Christian "civilization" at least a dozen times over the last thousand years [the Spanish "Reconquista" being just one of many examples, without even reaching the 20th Century.  The JP should be ashamed of themselves.
    Not to belabor the point, I would refer you, among other sources [Saudi Arabia has an interesting website] to The House of Wisdom, Jonathan Lyons, Bloomsbury Press, 2009; it was a real eye-opener for me, I actually felt embarassed after reading it at the extent to which I'd been brainwashed on the subject.