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Non-Farm Friday – Finally Good News Can Be Good News Again

Now that we have QInfinity, it's OK to have a good jobs report.  

Previously in the market, bad news has been good news as poor jobs growth has put the Fed "on the table" but now that the Fed has committed to QE, more QE and, failing that, MORE QE – it's finally OK to have a good jobs report

Last month we had terrible August Job numbers with just 103,000 jobs created in the US and it was very "disappointing," even though Aug 2011 was 96,000 jobs and Sept 2011 was even lower at 85,000 jobs.  So what we have this report is very low expectations of 115,000 jobs for this September and anything over 150,000 jobs will be an upside surprise and anything over 200,000 jobs, or unemployment going below 8%, will be big trouble for Mitt Romney, who's hitched his wagon to people believing Obama is not creating jobs. 

The reality is, we are currently creating jobs at a pace not seen since the first half of the last decade before the Bush/Romney tax policies kicked in and shifted capital investing away from production and into financial instruments and commodities.  

Perspective is very hard to come by in America and we have very short memories – especially when it comes to jobs because 30M Americans didn't lose their jobs overnight.  Even with the monthly job losses of over 400,000 a month during the crash – it still took YEARS of losing 100,000 here and 200,000 there coupled with anemic gains for us to get into the mess we're slowly working our way out of today

Since January, 2011, over 4M jobs have been added in 20 months but, unfortunately, we need 3M jobs just to keep up with normal population growth (1.5%/yr) over that time so the extra 1M jobs is just a drop in the bucket when it comes to reversing the damage that's already been done to America.  This is why it terrifies me that Romney wants to go back to "the good old days" – they weren't actually very good for middle-class Americans, were they?  

Barack Obama is about 300,000 jobs away from avoiding being the second President in 50 years to have a negative jobs number for a full term – considering the month he took office we lost 900,000 jobs that were charged to him, that's pretty good but, as I said, not good enough – we need Bill Clinton numbers (22.7M jobs in 8 years) just to get America working again.  

8:30 Update:  This is interesting, only 114,000 jobs were created yet unemployment has plunged to 7.8% as the number of unemployed people dropped by over 400,000.  The number of people who are employed rose by 879,000 but the U6 Unemployment rate is flat at 14M.  The employment-population ratio increased by 0.4 percentage point to 58.7 percent, after edging down in the prior 2 months. The overall trend in the employment-population ratio for this year has been flat. The civilian labor force rose by 418,000 to 155.1 million in September, while the labor force participation rate was little changed at 63.6 percent.

Obviously, some of the revisions to March unemployment (300,000+ improvement) are filtering through to this report so our overall civilian workforce is up nicely (155.1M/63.6% of adult population working) and, although it's not being counted as jobs created, the effect on unemployment is severe.  This is not, as far as I can tell, a BS number – this is a fairly significant improvement in our overall jobs picture.  The biggest flaw I can find is a disturbing 600,000 increase in people working part-time for economic reasons (they would rather have a real job) – now at 8.6M.  

As I write this (8:55), money is flying out of bonds and will likely plow into the market today – essentially we just found 873,000 more people who can afford an IPhone – and that's going to count for something in the Appleconomy.  We've been leaning bullish but maybe not bullish enough – we'll have to see if the Dow can clear 13,600 and hold it on this news – at the moment, the Futures are up 50 points.  Europe is loving the numbers and EU markets are up about 1% and trading at the day's highs into the US open and, even better, the BOJ has switched to buying Euros today and that's keeping the Dollar low despite the jobs gains (more demand for dollars to pay people with) and the Yen is at 78.77 with the Euro at $1.304 and the Pound at $1.621 and that leaves the Dollar in the dust at 79.30, down 1% for the week and helping to lift stocks and commodities, which are priced in Dollars. 

Although more jobs should be good for oil, we lost interest on yesterday's bullish oil plays (see morning post) as our USO calls tripled and, of course, the Futures trade (/CL) took us from $88.50 to $91.50 and $3,000 per contract is A LOT of money to make in an oil trade – especially as it's the second time this week as we caught it going the other way as well so not worth the risk into the weekend.  

Gasoline (/RB) is our normal weekend play and we bottomed out at $2.75 on Wednesday, got back over the $2.80 line yesterday morning and just tested $2.98 so that should be it for that play too at $420 per penny per contract because $3 is just too painful at the pump – even with a few extra people driving to work.  

Another trade idea from yesterday's morning post was BBY at $17.50, already at $18.50 this morning and those TNA weekly $61.50s should be about $2.50 this morning after dipping back to .84 yesterday morning.   AAPL was disappointing so we sold calls against it but we're going to buy them back this morning and give our long positions room to run in case money starts pouring into the market.  

Next week things get very serious indeed with earnings season kicking into high gear but today can give us some good momentum leading up to it. 

Have a great weekend, 

- Phil

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  1. Good Morning!

  2. 7.8%!?    Hows that taste mittens?

  3. Santelli is about to implode…..

  4. It's a conspiracy 1020… I am telling you! BTW, labor participation is higher this time.

  5. Oil Lines:

    R3 – 96.64
    R2 – 94.24
    R1 – 92.82
    PP – 90.42
    S1 – 89
    S2 – 86.60
    S3 – 85.15

    Yesterday's high and low – 91.84 / 88.02. I also have a Fib line at 91.02.

  6. Today's revisions have got to be the most relaxed ever…after that massage….. ;)

  7. VXX and GLL doing reverse splits today.

  8. These guys on CNBC are talking about how the numbers are OK but could be better and that the economy is still not recovering fast enough, etc… The entire world is contracting now! What do they expect? We don't live in a vacuum anymore.

  9. It's going to be hard to drink coffee with the big grin on my face……

  10. Austin Goolsby has a big smile….Bwa ha ha ha……..

  11. Gotta wonder if Obama knew the NFP before the debate.

  12. If you guys want to see something interesting, check out TBT right now premarket

  13. It split btw, nothing nefarious ;D

  14. GM everyone  looks like SPX to 1470 today , amazing this mkt is ready to explode

  15. Kink, what is TBT doing?  I am not at my station.  TIA,

  16. Is that number on TBT for real?!

  17. Laptop – Just in case anyone is looking for a new one, I picked up a Samsung 17in, corei7, 2gb video, 8gb ram that looks like a Mbpro for $1400.  Cowboom has them on sale for $800, a smokin deal.  Not new, but most store returns.  Look for a 8 in condition.  I'm going to get a second just as a backup.  I put a SSD in mine, but it's not really necessary.
    Samsung from Cowboom

  18. Jack Welsh is an idiot… What is he now, the Donald Trump of job numbers?

  19. With the VXX split, might be a good time for a review:

  20. Burrben/
    Great find!
    Thanks for sharing

  21. Hey Jack!  WINNING!     :)

  22. Iceland – shows us the way to do it: arrest the bankers. maybe spain will try it next.

  23. TBT/dclark: It reverse split 3 for 1 today, but by some miracle of timing, it coincided with today's blockbuster unemployment numbers which will boost TBT anyway and you get this super-exaggerated looking move and the average person is going to be like "OMFG INFLATION!!" LOL.

  24. Millcreek
    My email is  Just send me a email and we can talk more about Nicaragua and Rancho S.

  25. sorry make that 4-for-1 for TBT

  26. Moody's not helping HPQ this morning as they place their debt under review for downgrade!

  27. GLD Calendars…Roll to Oct2 174s.  They should be in the 1.10 range.

  28. Looks like oil will retest PP today.
    Heavy selling into good news with USD weakness tailwind… we could go way lower!

  29. And how are we supposed to grow when Germany's factory orders shrunk by -4.8% last month… They expected -4.3%! 

  30. for the life of me I don't get these jobs reports. long way from my 10K hrs fellas :D think I'll go to the beach.

  31. Kink
    I forgot about the split. That will make a difference! I will go put my head back in the sand.

  32. WTF – AAPL looks to open lower!

  33. stjeanluc
    Not like the good ole days when AAPL would explode upwards on good news.

  34. Back to over $4000… Do we risk the FAS puts over the weekend? We have 80% in the hand.

  35. Good morning!  

    Very exciting stuff today and a great opportunity to kill those AAPL $670 callers (today) at $1 and let's buy back the next week $675s as well for $5.70 and we'll play for the bounce in the $25KP.


  36. Sorry that was the next week $670s we sold for $9 and now $7.50 but same idea, whichever you ended up selling. 

  37. Poor Romney – he must have been in such a good mood when he went to bed…

    Nothing is more important than 13,600 holding on the Dow – if it doesn't, something is wrong.  S&P 1,465 is a good line (1.25%) and Nas 3,150 is the +5%, NYSE 8,400 also a + 5% and RUT has been waiting for the others to catch up and now has a goal of 860 but we'll take 850 if they can hold it.  

    What we don't want is any kind of failures here so let's call it 13,600, 1,465, 3,150, 8,400 and 845 as lines where we'll cover if 2 fail.  In the $25KP, the logical cover is simply to roll our DIA Oct $135 puts, now .80 to the $136 puts, now $1.20 for .40 ($1,600) as they will make good weekend protection anyway and lock in some gains.  

  38. Real-time update!

    I need to recalculate the cost basis for AAPL and AMZN! 

    QQQ – Net $0.42.
    V – Net $1.42

  39. If I said that the over/under on number of weeks it will take for VXX to be back under $10 is 36, which way would you bet?

  40. StJ – I believe the word you're looking for is "magic".

  41. FU PCLN!!!
    FU AMZN!!!
    FU MA!!!

  42. FU HPQ!!!

  43. Phil/ Selling AMZN 255 next week puts for $1.21

  44. Lion- Funny I was just looking at those too!

  45. LOL 1020!  

    CNBC/StJ – They are firmly in the Romney camp – a lot of angry people over there today.  Defeat snatched from the jaws of victory. 

    TBT/Kinki – TLT splashed down to $121 – that's a big mover for TBT.  Hate the spit though…

    Rick Santelli "can't prove the number was fudged" – so funny…

    Sounds like a deal Burr.   Good VXX review, thanks.

    Arrest bankers/Scott – Good plan!  Someone was just saying to me – how do we fix the system when it's so clearly weighted to the top 1% in less than a generation and I said – well, the French did a good job of it in 1779…  

    Thanks Amit.  

    AAPL dragging the Nas for the moment – actually down $2 ($664).  

    FAS Money – Patience clearly it's own reward!  I agree with StJ – no reason to risk the short puts over the weekend – we have a very nice gain for the month already and it's only the 5th…

    $25KP – Well the good news is we were perfectly balanced for the jobs report.  The bad news is we were perfectly balanced for the jobs report….  We're going to take the money and run on the 1/2 the Qs, now .60 for no less than .55 but, hopefully we can do better so call it a .15 trail if we move higher but our goal is .90 so no trail if we get that far.  

    PCLN testing $650 getting to be a tempting short again.  

    Dollar 79.25 but oil $90.50 – that's a bad sign. Copper not getting over $3.80 either.  

    VXX/Stocks – Weeks?  That's a bit fast.  18 months I would say very likely. 

    AMZN/Lionel – That's brave.  Don't forget earnings.  If someone in the sector misses, people could get nervous on AMZN too.  

  46. FAS Money – Wow, they don't make next week calls higher than $119 and those are $1.20 but let's sell 3 $118 calls for $1.60 to lock in some gains and drop $480 into our pockets.  We're 5:1 covered on the 3:1 ETF so I'm not too worried if we move higher.  $16.50 is still our XLF target but it comes down to JPM on Friday. 

  47. Phil – why do you keep saying Romney's having a bad day?? Did I miss something? Was it the apology for the 47% remark?

  48. hi Phil,
    I have been holding an XRT short at $55 from a play you had suggested back in February.  I ended up getting put the short and have been under water since.  Do you think i should just cover as retail is heading into seasonal strength? What would you do?

  49. Romney / Lolo – Unemployment under 8%….

  50. I just had to check because I was thinking we must have doubled FAS Money this week and check out where we were last Friday:  

    Crazy, right?  And the only move we made all week was selling those 5 $11 calls yesterday.  I think we were down from $3,600 at the top so a good lesson that, sometimes, doing nothing is the best way to play a position. 

  51. VXX / Stocks – The last time we had a reverse split was 11/9/2010 so about 2 years! I believe it took 2 years the previous time as well. Now we need to wait for the 2015 LEAPS to start shorting it because the schedule says that they are at 10 around November 2014 or so. 

    My idea last week was to buy VXX 2015 20 Puts as you know they will be worth about $10 in the fall of 2014! Start with a small position and add to it every month that VXX is higher than the month before. If we get a huge spike in between (not too close to 2015) you could actually do quite well as you can DD for really cheap. It's almost like a martingale!

  52. FAS Money / Phil – Previous high was $3921 so very good week overall…. Remember we had up and down like that last time but patience paid off as well. Clearly our most consistent short term portfolio!

  53. stjean.. I agree about VXX being a POS but the VIX is a lot lower now than it was then.
    Maybe, it makes sense to wait until the VIX pops before shorting VXX?

  54. Pham – can you give brief opinion updates on EXEL and SGEN? thx

  55. VXX / Jabo – It would make more sense to wait for it to pop, but can you time that? Last time they reverse-split it, they started at about $45 and it popped to $60. But dropped to $20 in between… But if you had bought 1 2013 20 put contract each month it was higher than the month before, you would be up nicely today! The only problem would be if it pops at the end of 2014, but would be up big by then anyway! Just a thought…

  56. Newt/ You are brave, as Phil would say :)

  57. Phil—how much do you think the strong Euro will help PCLN?
    You know I think PCLN is not worth 650 but I am a little concerned about the Euro and QE infinity..

  58. VXX – I'll start a test portfolio on that as soon as the 2015 are out just for sh@t and giggles!

  59. Lion- Just lookin'

  60. PhiL: I sold 20 of todays DIA $135.50 P and bought 20 Oct.20 Dia $ 135 P that you recommended yesterday. Do I now roll to next week $135 P ?

  61. EXEL & SGEN – I like them a ton, and continue to sell premium.  Oct/Nov are biotech data time.  Patience.  PGNX has a ADC mAb using SGEN's technology.  Early on, but it works…well.  For prostate cancer, which is why I suggested them. CLDX has the same technology for a different target.  SGEN has a ton of shots on goal.

  62. What the hell is wrong with AAPL?

  63. Romney/Lolo – He's been harping on jobs and saying Obama not creating jobs and now unemployment down from 9.8% three years ago to 7.8% kind of weakens his main point. 

    XRT/Ging – Well, you're down $9 but $65.26 was the Sept high and it seems kind of silly to bail without seeing how the test goes for a possible double top.  Retail numbers have been pretty weak but getting better so kind of iffy.  You might want to consider freeing up some cash by switching to the March $67 puts at $5.20 and then you can sell the Nov $63 puts for $1 and hopefully you can work your way into a free put by selling $1 a month and, if not, then you'll be glad you freed up the cash for better things.  If XRT does drop, Jan $59s are $1 and you'd be in the $8 spread for net $4.20 so nothing to worry about to the downside.  

    VXX/StJ – Good plan.  

    FAS Money/StJ – Yep, my favorite for sure.  

    VIX/Jabob – Yes, you may get a better entry but the Fed has a put on the market which means it's not likely we'll see VIX 20 again other than some serious Global crash.  

    Euro/Jabob – Most of their earnings are outside the US so likely to be good for them and they had the Olympics to boost travel in their target area so hard to bet against here but $679 was where they were last earnings and they plunged to $560 with the Dollar at 83 on Aug 7th.  If they pop on earnings, unless there's some major change, I'm pretty sure I'll want to short into that.  

    DIA/Dflam – You got a nice win so I'd say naked over the weekend as the idea was to have protection anyway.  If we're still up on Monday, then it's time to sell more and roll.  

    AAPL/Nicha – I know, must be pinning $662.50.   Starting to kill the whole rally…

  64. Phil – From your early morning comments, I agree with the "rope a dope" strategy, if that was not the plan before the debate, it is now….
    The two things I would have liked to see more of in the debate were, Keep your eyes focused on your opponent and be ready to jump when a "tale" is told. Then again, with all the rebuttals Obama would give, it would have kept him off his own message…..
    lastly, ALWAYS make your last two minutes count!…..
    Politics – off 

  65. Slow morning for me.  Just getting my head on and catching up with the reading.  I think Welch has completed his Ferengi transformation.  Nice to see his peeps tweeting for him early in the news cycle.  He appears to be doing the Wall Street equivalent of Bret Favre.  Time to just go away…..

  66. Phil,
    Re selling Goog puts (550 – 600 strikes), is the huge premium diff normal/economic? 1/13 (1.15 – 2.85) vs 1/14 (20.70 – 30.35).

  67. TZA today $14 calls for .15 – 40 in the $25KP.  

  68. I received some funny emails this morning.  I own (since thats my name).  I am getting emails intended for Craig Stevenson Jr, CEO of Diamond S Shipping.  Anyone interested in how there CFO search is going ;)

  69. Gas up 20 cents overnight in Cali….. stations closing,… bike sales up…. ;)

  70. Debates/1020 – I think this first one says it all: 

  71. LoL Phil!

  72. Welch/Mjj – Ferengi, LOL.  Doesn't need much make-up either.  

    GOOG /8800 – Well it reflects the chance of GOOG dropping over $170 by Jan (22%) vs by 12 months later (5x months) so your risk for the spread is drastically higher in 2014.  

    Email/Craig – I wonder what his Email is?

    AAPL $659 – damn!  

  73. Hello All – Craig, sure.  I just looked over the data on the NFP on the BLS site and in all honesty(and I'm not an expert), the underlying data is not good.  If anything, the revisions to July and August (181 and 142 respectively) just show that the trend is not our friend with September coming in at 114.  It also seems that the the government added a heck of a lot of jobs in August compared to July and September.  The only sectors that appear to have had any meaningful jobs added were healthcare and transportation/warehousing.  Manufacturing is continuing to shed jobs. 
    Cali/Gasoline – I saw places in LA where premium gas was over $5/gallon. 

  74.  i think aapl wants 640 for expiration

  75. AAPL – i believe 660 was the max pain for today, indicated yesterday. 640 is the current max pain for 10/20 expiration

  76. AAPL – might even have been 655 for today.. hmm..

  77. His email is craig.stevenson.jr.

  78. I read Max Pain at 665 for today?

  79. AAPL – using this option pain calculator, click on the historical chart tab and interesting to see for AAPL the closing price is consistently between the Actual pain and max pain pricing.. which right now says AAPL is going to close between 680 and 640 on 10/20.  not so good for my Oct 680 calls. :-(

  80. TZA calls- buy or sell?

  81. If your a gambler, In Trade has Romney picking up 8 points on the President after the debate….Obama still favored 66% to 33%. FWIW.

  82. AAPL low today 658.42

  83. Newt/TZA – Buy.

  84. Phil, I have a FAS Oct 108 call I was losing money on two days ago and I covered it with a weekly FAS Oct1 112.
    What's my best roll time wise — got to next week's 113.5 say or to the monthly 115? Or is there another way of playing it.

  85. Aaron- Thanks.

  86.  two big red flags for market….aapl historically leads market and it trades terribly…and companies that miss earnings are getting crushed even though poor earnings are supposedly priced in to stocks

  87. wow ZNGA 

  88. PCLN and AAPL ???

  89. are TBT options not trading?

  90. Well someone sure is selling this rally off.  

    Europe closed green so no excuse there.  Glad for the TZAs and the rolled DIA puts. 

    On AAPL, I'm looking at next week $665 calls that can be sold for $6.20 and that pays for 1/2 a roll to the Nov $665s and, of course, we'll have plenty more sales to make but I want to see how $665 holds first as this move is a bit silly.  Apparently, the selling began yesterday with this report


    According to a new study by the Pew Research Center, the U.S. market share of Apple’s iPad is reduced, mainly due to strong rise in sales of Android tablets, from 81 percent to just 52 percent by mid-2012.

    And the news can turn worse as this drop in Apple Inc (AAPL)’s iPad market share in U.S. is even before the release of two much popular Android tablets, Amazon Kindle Fire and Google Nexus 7.

    The Pew report states that of the 44 percent of adults, who have a smartphone, 46 percent have an Android phone, 38 percent have an iPhone and 10 percent have a Blackberry. Further in report they indicated that “The influx of Android-based devices has changed the tablet market, much as it did for smartphones over the past several years.”

    TZA/Newt – I would never sell 40 naked calls for .15. 

    FAS/Zipla – I'd just roll the weekly $112 ($3.40) to the next week $114 ($3.30) which is only $1.40 in the money.  You have to be happy with a $7 spread after collecting your original money on the sale of the $112s, right?  

    PCLN – Damn, I knew it!  

    Dow volume 42.5M at 11:55 – kind of low for all this excitement.  

    Dollar finally bounced at 79.15, now 79.28.  

    Oil super-lame at $89.31.  

    VIX 14.37.

  91. Where we thinking about unloading the TZA todays?

  92. Bio – TBT did a reverse 4 for 1 split.

  93. I hate seeing CMG tank pre-earnings like this. I had a fistful of dimes I was going to gamble on the 225 puts pre-release and now they are something ridiculous 50 cents! 
    FU CMG!

  94. TZA/$25KP – Let's take .25 and run on all of them – I think that may be it and we have our DIA puts.  

  95. Any one going long off s1 on oil

  96. NM, dumped 1/2 TZA at 0.27 and put $0.05 stop on rest……which filled while I was typing this….

  97. Uncovered my AAPL at 653….so now naked long, seems overdone, although setting up a nice double bottom off 650 touch on Tuesday.

  98. Also, re-entered QQQ at $0.42….closed out this am at $.57….so basically back to where I was Tuesday when AAPL ramped…..crazy

  99. Jr - TBT – the options seem frozen though. Maybe they trade tomorrow?

  100. earnings calendar tee-up:
    10/10 – GOOG
    10/18 – CMG
    10/22 – AMZN 
    10/23 – PNRA, BWLD, FB
    10/25 – AAPL 
    10/29 – LNKD
    11/5 – PCLN
    11/6 – FOSL
    puts on all!  8)

  101. Phil,
    What's your theory that oil is being kept in this range to help Obama right now?  You would think with QE it would've went up not down.

  102. At the open: Dow +0.43% to 13634. S&P +0.53% to 1469. Nasdaq +0.38% to 3161.

    Treasurys: 30-year -0.59%. 10-yr -0.24%. 5-yr -0.11%.

    Commodities: Crude -1.02% to $90.77. Gold -0.69% to $1784.05.

    Currencies: Euro +0.19% vs. dollar. Yen +0.3%. Pound -0.06%.

    Market preview: S&P futures +0.5% after the U.S. unemployment rate fell to 7.8% last month, dropping below 8% for the first time in nearly four years. But the Fed would like to see the economy adding closer to 200K jobs a month, not 114K, so "the data does nothing to dent a QE3-fueled moderate risk-on bias." Treasury prices tumbled, gold and silver slid, and crude oil surged ~$1/bbl.

    10:00 AM On the hour: Dow +0.46%. 10-yr -0.28%. Euro +0.32%vs. dollar. Crude -1.31% to $90.51. Gold -0.63% to $1785.15.

    11:00 AM On the hour: Dow +0.43%. 10-yr -0.19%. Euro +0.27%vs. dollar. Crude -1.8% to $90.06. Gold -0.53% to $1787.05

    12:00 PM On the hour: Dow +0.41%. 10-yr -0.22%. Euro +0.31%vs. dollar. Crude -2.7% to $89.23. Gold -0.68% to $1784.35.

    Goldman's end-of-2013 S&P 500 price target of 1,575 is a 9% gain from here, but the team envisions a bumpy ride, says John Melloy, with the index falling to 1,250 (a 14% decline) by the end of this year. 

    Canada adds 52.1K jobs in September, soaring past estimates for a gain of 10K. The unemployment rate actually rose to 7.4% from 7.3% as the labor force grew by more than the job gain. The loonie flies higher, +0.6% vs the greenback to $1.0265. FXC+0.5% premarket. 

    Sep Monster Employment Index: -2% to 153, up 3% Y/Y.

    September Nonfarm Payrolls: +114K vs. consensus +115K, +142K previous (revised from 96K). Unemployment rate 7.8%vs. consensus 8.2%, 8.1% previous.

    More on Nonfarm Payrolls: The big surprise is the major revision upward (86K) in jobs for July and August. Average workweek up 0.1 to 34.5 hours. Average hourly earnings up $0.07 to $23.58 (Y/Y gain of 1.8%). The household survey shows a big jump, +873K jobs after 3 months of essentially no gains.

    More on Nonfarm payrolls: The labor force participation rate rose to 63.6% from 63.5% – check. The employment-population ratio rose to 58.7% from 58.3% – check. Those working part time for economic reasons soared 582K to 8.6M – there's your drop in the unemployment rate.

    Weighing in on the NFP report, Goldman Sachs also notes the extraordinary jump in those working part-time for economic reasons as a factor behind the drop  in the headline unemployment. The broader U-6 rate showed no decline, remaining at 14.7%. Still, Goldman calls the report encouraging, noting a large increase (418K) in the previously shrinking labor force.

    Work from home soars 41% in 10 years. The number of Americans working from home has soared 41% in the last decade. About 13.4 million people currently work from home in the United States, according to a Census Bureau report out Thursday. That's about four million more Americans since 1999.

    "I think we've lost another generation," says Steve Leuthold, with the money quote in yet another article about the retail investor not coming back to the stock market. These "Death of Equities" stories are getting tedious, but probably important to note for the contrarians out there.

    Bullard Says Investors Doubt Fed to Hold Inflation to 2%Federal Reserve Bank of St. Louis President James Bullard said measures of inflation expectations indicate bond holders have doubts the central bank will hold price increases within its 2 percent goal. “Distant inflation expectations from the TIPS market seem to suggest that investors do not completely trust the Fed to deliver on its 2 percent inflation target…  A partial default today through higher inflation would be paid for via higher inflation premiums in future borrowing,” he said. “This type of policy would likely impair U.S. credit markets for many years.”  

    FRBNY President Dudley  - speaking at a conference about distressed real estate – says housing has failed to respond adequately to monetary policy and remains a key impediment to economic growth. We'll ask again (previous): What planet are the Fed's QE boosters living on (IIIIII)?

    The continuing rise in the NAHB Homebuilder Sentiment Index suggests housing could add 1.5% to GDP over the next 12 months, says Pawel Morski. A great chart from Deutsche shifts the NAHB index one year forward and plots it against residential investment as a percentage of GDP. If form holds, investment has some catching up to do. 

    Continuing to leave the housing bust to the history books, banks are competing for jumbo loans, rolling out discounts on points and rates for those who have serious dollars socked away. Yes housing is improving, but lenders are also looking to replace revenue streams lost or reduced thanks to new regulations.

    France's INSEE Sees No Pickup in Economy Through Year End. Institut de la Statistique et des Etudes Economiques said 2H growth will be +.2% GDP, down from +.4% forecast in June. INSEE forecasts unemployment will reach 10.2% by year end, 10.6% including overseas territories. French purchasing power will drop -.5%, the most since 1984, according to INSEE.

    Greece has until the end of November before its money runs out unless it receives the next tranche of its bailout, PM Antonis Samaras tells German newspaper Handelsblatt. Touching a German nerve by comparing Greece to the Weimar Republic, Samaras says the ECB could assist by accepting lower interest rates on its Greek debt and roll them over, while the ESM could be used to recapitalize the country's banks.

    Draghi Says Next Move Not His as Spain Resists Bailout.

    EU Doubts on Deficit Cutting May Hinder Spain’s Path to Bailout. European officials’ concern over’s Spain’s ability to reach its 2013 deficit-reduction target may obstruct Prime Minister Mariano Rajoy’s path toward a possible bailout.

    As Iran’s Currency Keeps Tumbling, Anxiety Is Rising (NYT)

    The Senkaku-Diaoyu islands dispute between Japan and China hit Japanese car makers hard in September, with Mitsubishi's Chinese sales plunging 63% Y/Y and those of Mazda by 35%. Toyota's (TM) sales skidded 40%, the FT reports, adding that the company will cut production in China by over half and suspend Lexus exports. Non-Japanese car makers have been benefiting from the spat.

    Mazda China Sales Tumble to 19-Month Low on Anti-Japan Protests

    Toyota Sept. China Sales Dropped 50% From Previous Month.

    India gets introduced to a flash crash, the Niffy index plunging 15.5% in early trade overnight after a brokerage firm sent 59 incorrect orders on behalf of a client. Trading was briefly halted, and the index regained nearly all of the loss by the session close, ending-0.6%.

    Gold Traders More Bullish as Holdings Reach Record: Commodities. Gold traders are the most bullish in three weeks as investors’ bullion holdings expanded to a record after central banks pledged to do more to spur economic growth. Twenty of 32 analysts surveyed by Bloomberg expect prices to rise next week, nine were bearish and three were neutral. Investors are holding the most metal ever through gold-backed exchange-traded products after buying 85.4 metric tons last month, the most since July 2011. Hedge funds’ bets on a rally are the biggest in seven months, U.S. Commodity Futures Trading Commission data show.

    The international drilling rig count fell 0.6% in September, but at 1,254 is 6.8% higher Y/Y, according to Baker Hughes. The average U.S. rig count fell to 1,859, off 6% Y/Y as producers stop drilling for natural gas amidst low prices. 

    Natural Gas Glut Pushes Exports.

    Russia could make a radical shift in policy and allow western crude producers to own oil licenses in the Arctic, Energy Minister Alexander Novak has told the FT. Until now, Russia has awarded such licenses only to state-owned companies, with foreign firms taking just minority stakes in projects. However, Russia needs to attract Western know-how and money for it to fully exploit its Arctic resources.

    The Utica Shale contains ~38 Tcf of undiscovered, technically recoverable natural gas, plus an average of 940M barrels of oil and ~9M barrels of natural gas liquids, according to a new assessment by the U.S. Geological Survey. Some early wells from the likes of CHK and REXX show promise, but the estimates still pale vs. the Marcellus, which holds ~84 Tcf of gas.

    First Solar (FSLR -7.7%) tumbles after receiving adowngrade to Negative from Positive from Avian, which claims thejunction boxes accompanying First Solar's solar module installations are suffering from reliability issues. Avian, which smartly upgradedFirst Solar in May, notes the warranty on First Solar's modules lasts for 20 years. Solar stocks in general are selling off (TAN -1.9%) following a critical NYT column about Chinese production. TSL -3.5%.STP -3.5%.

    U.S. and European solar energy companies have been downsizing for a while, but NYT reports China's solar firms are hurting too because the Chinese market is saturated by panels that can’t be exported. The government could subsidize more solar installations at home, but the cost of solar remains heavily discounted to coal-fired electricity, which means any subsidy would balloon enormously.

    In its presentation at the Credit Suisse Global Credit Products Conference, United Continental (UAL +1.4%) says it sees its end 2012 available seat miles to be down 0.75% – 1.75% compared to the prior year, and it expects to cut capacity by 1% in 2013 in what would be its third consecutive year of shrinkage. Airlines have been scaling back on flying unprofitable routes lately in an effort to boost their pricing power. (Presentation Slides)

    Constellation Brands (STZ +4.3%) posted a mixed FQ2 result this morning, missing on revenue but easily beats its bottom line consensus. Net profit shrank 23% as results were hurt by higher tax provisions and overhead costs. Despite the mixed overall performance, the better than anticipated margins have prompted the company to raise its FY EPS estimate, now seeing $2.00 to $2.10 per share. Its previous forecast was for $1.93 to $2.03.

    Cache (CACH -20%) takes a hit after saying it's taking alarger Q3 loss than it had previously expected, as its results were hurt by increas

  103. Cache (
    CACH -20%) takes a hit after saying it's taking alarger Q3 loss than it had previously expected, as its results were hurt by increased promotions and lackluster sales for its early fall offerings. The lifestyle sportswear retailer now expects Q3 sales of about $45.8M, below the Street consensus of $49.2M. Separately, the company also says it's launched a search for a new president and merchandising chief.

    Alcatel-Lucent (ALU -2.8%) is now a Convinction Sell at Goldman. The firm, which has lowered its target to a mere $0.60, is worried about Alcatel's future liquidity – the telecom equipment vendor is still hemorrhaging cash, and will see billions in debt mature in the coming years. UBS downgraded Alcatel on Monday.

    Samsung (SSNLF.PK) expects that its Q3 earnings beat forecasts as operating profit jumped 91% to a record 8.1T won ($7.09B) and that sales rose to 51T-53T won from 41.27T won a year earlier. Earnings were boosted by Samsung's mobile phone division, whose profit is likely to have doubled to 5T won as smartphone shipments passed 58M. Sales of high-end TVs were also strong. (PR)

    Zynga (ZNGA-20.4% to $2.24 following its bookings warning, which suggests paying users are tiring of its mainstay "Ville"franchises in spite of attempts to keep things fresh. Controversial CEO Mark Pincus, who has seen a huge number of lieutenants departin recent weeks, followed up by telling employees Zynga is planning "targeted cost reductions" (probably layoffs) and focusing on "strategic priorities" such as mobile and gambling titles.

    Facebook (FB) has its payments revenue target cut at JPMorgan following the Zynga warning last night. Analysts now project payments revenue of $582M, down from a previous estimate of $797M! Shares -2.3% premarket.

    Overseas Cash and the Tax Games Multinationals Play (DealBook)

    Mitt Romney must prove that debate performance was the real him (Washington Post)

  104. Oil/Bert – $89 is a good spot to go long on (/CL) but gotta get the hell out if it breaks.  

    Good playing Hoss. 

    AAPL barely holding $655 – tempting to buy calls here.  Today $650s are $5.20 and you can sell $655s for $2.10 for net $3.10 on the $5 spread.  

  105. Oil/Rustle – No one really cares about oil – it's gasoline that drives consumer sentiment.  I think oil is suffering from the stuffed strip at the NYMEX, the supply glut, the lack of demand and the fact that Iran's entire production is off-line and it's having no affect whatsoever on the Global markets so now the supply cushion is known to be much more than was previously stated and it's going to be much harder, going forward, to panic prices higher when a 150Kbd Nigerian pipeline goes down for a few days.  


    Click for
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    Nov'12 91.51 91.71 89.01 89.40 12:26
    Oct 05


    -2.31 176301 91.71 272776 Call Put
    Dec'12 91.86 92.05 89.38 89.79 12:26
    Oct 05


    -2.28 52324 92.07 234265 Call Put
    Jan'13 92.31 92.41 89.87 90.15 12:26
    Oct 05


    -2.33 17108 92.48 118905 Call Put
    Feb'13 92.63 92.69 90.26 90.68 12:26
    Oct 05


    -2.22 11493 92.90 71538 Call Put

    620M barrels on order in the front 3 months a LOT of open contracts, especially when you have this to look forward to: 


    Dec'14 90.24 90.30 89.05 89.05 12:26
    Oct 05


    -1.45 2291 90.50 91043 Call Put


    Dec'15 88.50 88.50 87.00 87.00 12:18
    Oct 05


    -1.42 427 88.42 42319 Call Put

  106. Ipad is too good -it's hard to see a reason to buy a new one.
    I have the first generation – its getting a little slow but for $800 I am willing to keep using the thing – they seem to have a longer life than Iphones.
    If you are mostly using it on Wi-Fi, then the improvements are less significant than with the Iphone were you are upgrading to 4G.
    At some point, apps wont work well but don't see the need to get a new one now.

  107. BDC – what's your premise for puts on LNKD?

  108. Having gone skydiving a bunch of times, this guy has my total respect, would love to see the video of this on Monday:

  109. scottmi
    Thanks for the option pain calc.  I clicked on the historical and it comes up blank what am i doing wrong?

  110. Craig/ Diamond S Shipping:  I'm interested in the CFO search.  Our PSW amazes me….no matter the field of expertise, somewhere on this site someone has the inside story/expertise.  Craig S began at a non union Texas based US tanker company that made money but never had a strong professional reputation in the fleet.  The made money by cutting corners, wink wink nod nod.  This is the generation of CEO's that did a superb job of leveraging every ounce of value out of a company and then selling it or declaring bankruptcy.  Hvide Marine (George Steinbrenner invested a good sum in) was a classic example. Sea Bulk very simialr.   In the end he left everyone holding the bag while he moved onto OMI.  A decent profitable tanker operation that eventually ran up oppressive debt  Same formulae…sell or declare bankruptcy.  Teekay was in the acquistion mode at the time, buying up a lot of the competition.  I contend they have never recovered from the debt service they took on…it became a part of their corperate theology almost.  OMI was not a good acquisition for Teekay.  But Craig did very well on the way out.  Now it's the same old new story with a new investment group as a partner.  Amazes me.  I will go out on a limb and predict that a leopard does not change his spots.  this venture will end the same wya all the rest did. 

  111. Cool documentary on What's Wrong with Corporate America

    IPad/Samz – I love my "New IPad" – the 4G LTE is great in the car.  If you don't travel with it, however, you are right, not a compelling upgrade.  

    Cool Rustle. 

    Nice rundown Living, thanks.  

    Obviously, on that AAPL spread, now $4.50, it really doesn't make sense to let it go below $4.25. 

    Volume only 49M on the Dow at 1:08 – not much in last hour.   Transports up 1.2% though…

  112. Phil…please educate me on the 4:1 TBT split.  doesn;t make sense to me.  At $13-$15 as a retail customer I was dollar cost averaging…why not?  But at $65 my dipping in here and there will come to an end unless I see the Fed stop putting a floor under the markets. 

  113. OptionCalc/williex – odd. blank for me now too..for all stocks. maybe it broke. i suspect it is a server issue.

  114. Phil, when volume picks up, thats when we need to worry.

  115. iPad / Windows / Android site layout difference,
    Could anyone comment on what I'm seeing in terms of display sequence of this site on the three different devices? I'm using the Chrome browser on a Windows laptop, Android phone and iPad.
    While the comments are sequentially arranged from oldest to newest (latest comments appear at the bottom of the page) on the Windows laptop and the Android phone, I just realized the comments are arranged from newest to oldest (latest comments appear at the top of the page, just after Phil's morning commentary) on the iPad.
    Is there some setting I can change that would enable the Windows laptop and Android phone to have the same display sequence as the iPad? When I login mid-day, I don't have to scroll to the bottom of the page to get to the latest comments…. scrolling to the bottom of the comment list takes quite a few swipes on the phone.

  116. sank1 – I have the same problem. This is the reason I have not switched from iPhone to Android.

  117. TBT/Living – It's a bad instrument anyway – just bleeds out over time no matter what.  They may lose you at $65 but there will be other suckers lining up to buy and then they'll be trapped as well.  That's why we gave up on it.  VXX is the same problem. 

    Dollar climbing (79.40), markets don't like it.  Oil $89.25, gold $1,780.  

    Comments/Sank – We have an "IPhone view" which may be active on your IPad.  That's there because it's easier than scrolling all the way down every time you refresh with the IDevices.  If you see a button at the top of comments that says "switch to IPhone view" then you can on the other devices.  If not, tell Greg and maybe the programmers can make it work for more than just the IStuff.  I know it's easy to identify someone is using an IDevice – not sure if it's the same for Droids. 

  118. samz
    ipads are no different than any computer. If it has slowed down the reason is not wearing out but slowly or fast they get bogged down with what I call, left behinds, compressed kind of cookies. A professional cleaning maybe at Apple will bring it back. Processor speeds are not up much so if yours has a good amount of ram, the program is about the same, and your battery is good, keep it. Even 4G the big difference is the 4G link and it is not close to everywhere.
    What I do for myself is make a system image copy to another drive, delete and format the main one in your ipad, then load the system back from original CD, download the updates to avoid anything holding on to what you had in either, next load your programs from the backup one at a time and forget what you never use, leave that out. This avoids all the tracking crap.
    Warning if you just dump the backup back you get all the crap too. It takes time but is worth the effort to start with a clean slate, or have someone do it for you.

  119. We're skirting right on those levels from this morning:  13,600, 1,465, 3,150, 8,400 and 845

    I don't think the Dollar will break over 79.50 (now 79.42) and the volume is light enough for a stick but it's been an OK week without it so I wouldn't count on a big finish.  

    Oil can't even get back to $90 ($89.84) but probably will for the NYMEX close, copper sliding at $3.765 and nat gas off too at $3.35 and gasoline holding $2.945 with 30 mins to NYMEX close. 

  120. there is our weekend recovery for /cl missed it though

  121. Romney complaining that this is not a real recovery… compared to what, the Bush Boom?

    Actually, compared to the last 2 recession, the unemployment recovery is pretty normal. Nothing to write home about but in the current macro environment it's tough to ask for much better. The 2001 recession was a mild recession and was followed by a huge construction boom (and much better macro except beginning in 2008) and yet unemployment didn't move that much although 5% is probably close to full employment.


  122. Re IPAD – Thanks Shadowfax - 

  123. StJ – How does the RoR on money borrowed factor into the chart you posted?  What I mean is, we have added about $6T in debt since 1/1/2009 and have added about 5M jobs(some say) which translates to a cost of $1.2M in additional debt per job added.  Maybe my way of looking at this is skewed but still doesn't look pretty. 

  124. Apparently Blockbuster is giving up on competing against Netflix:

    It's been an especially bumpy road for the Blockbuster brand these past few years, and things just got a bit more rough. In an interview with Bloomberg, Dish Network founder and CEO Charlie Ergen confirmed that the company is abandoning its current efforts to challenge Netflix with Blockbuster, saying that it no longer plans to use the brand as a video streaming or DVD-by-mail service in the US. Ergen did say that Dish had other plans for Blockbuster, but he didn't elaborate on what those may be. He also seems to be fairly resigned to the whole matter, saying "worst case, we'll take our money after having wasted some time, not much money, and life goes on."

  125. Debt / lnk – We didn't use all of that debt to create jobs! We added more debt between 2001 and 2009 and we actually lost private jobs! There is no relationship between the 2 numbers. 

  126. The point I'm trying to make is through various means, we have spent a tremendous amount of resources for anemic results unless you look at the stock markets.

  127. Ink – i know what you mean. and i feel i've spent a tremendous amount of resources on aapl for anemic results.

  128. Agreed lnk, but it has been going on for the last 12 years now… And actually, under Bush, not only did we pile on debt and didn't get jobs, we could not even say we got good results in the markets either. You take what you can I guess. There is no magic trick that will lead us to 4-5% growth in the near future no matter what you hear in political commercials! Not with the macro headwinds!

  129. Can I get in any trouble for posting emails that were accidently sent to me?  Once they are in my inbox are they considered my property and i can do anything I want with them?

  130. craigzooka – Only if they do not say something to the effect of this is private/personal and NOT for dissemination. If you do post them, you SHOULD also delete who and where they are from for privacy concerns. 

  131. Dollar back to even  market flat for day

  132. The reason I ask is, it appears craig.stevenson.jr may be up to something shady, given some of the language I have read.

  133. craigzooka,
    If you are not the correct person that the email was meant for, you have the legal responsibility to inform the sender that the email was sent out incorrectly to you and return it to the original sender. No different if you received mail in your postbox meant for your neighbor. Hope this helps.

  134. Craig/ Jasu- Damn! I am always up for something shady.

  135. Phil,
    Wonder if they take apple up to paint the Nasdaq green into the close

  136. Come to Mama CMG!

  137. Oil finishing at $89.86 – couldn't close the deal at $90.  Gasoline made $2.95 – poor California.  

    Big drop for AAPL from last Friday – $15, someone is happy with puts.  Still haven't re-tested Tuesday's low of $651 – where we did our roll down.  

    Employment/StJ – Especially when you consider it's 2% out of a 160M workforce so 3.2M jobs to get to 5.8% but the reality is we still have the overhang of discouraged workers and part-time workers so it's still going to be a long time before we start seeing "help wanted" signs in windows again.  

    $6Tn/Ink – It would be nice if that money had gone towards jobs but it went towards filling the black holes in bank balance sheets – which still are not being reported at market prices.  Our banking system lost Trillions of Dollars in the collapse and revealing that fact would have led to a complete Global melt-down so, in many indirect ways, they have been bailed out of their unpayable debts.  That's where all the money is going – Congress has approved just $800Bn for the American Recovery and Reinvestment act and the CBO credits it with creating as much as 4M jobs so $20K per job – not bad if the job lasts more than a year.  

    Blockbuster/StJ – Are they still around?  

    AAPL/$25KP – Still looking at selling the next week $665s for $6.20 to cover into weekend.  

    Debt/Ink – So let me get this straight.  Bush comes in with $5.6Tn in debt and he leaves with $10.7Tn in debt but you're saying that he didn't actually increase the debt by $5.1Tn (91%) but in fact Obama, who came in with $10.6 and now has 15.8 (49%) is the guy doing a bad job?  More to the point, Bush reversed a downtrend in debt because Clinton knocked it down by $100Bn as he handed the $5.6Tn to Bush but Bush handed Obama a $1.45Tn deficit that took it to $10.7Tn and the budget Bush left him ran to June and that year Obama is charged with another $1.6Tn, which brought the deficit to $12.3Tn by December of 2009.  

    Maybe the 2nd set of data is more telling.  Under Bush, the Per capita debt went from $20,848 to $42,500 (splitting the difference into June) so up over 100%.  Under Obama, we're up to $48,358 – up another 13.7%.  Yeah, let's toss Obama out and give the Reps another at bat – that's REAL SMART!  

    I wouldn't Craig.  Who knows what the rules are?  

    $1,000/Nicha – That would be nice. 

    AAPL/Jasu – I think they recover a little but I don't see more than $660 the way things look.  

  138. Iflan — if you are here today would you add more Jan 665 call today or waait till monday, second should we cover 1/2 thx in advance

  139. Here is a hypothetical question.  Suppose someone, lets call them BOB, was the head of a major company and another executive at the same company says the following, "BOB wants to be careful about email to his work account which is why I have used his gmail account".  Could this be innocent or is BOB up to something shady?

  140. jasu1 – E-mails do not have the same legal protection that regular mail has. The only additional concern is that nothing should be included in a post that would identify the sender. However, if the substance is shady, perhaps the proper authorities should be notified first. Keeping something secret (if it might be illegal) would make craigzooka an unintentional accomplice.

  141. craig,
    it does not matter, it is still legally wrong, even if it appears shady to you…my $.02….

  142. I deleted the emails and notified them that they were screwing up.  After a tiny bit of investigation, turns out the CEO was trying to forward a bunch of emails to his home account, craig.stevenson.jr, but he left off the .jr, so they ended up in mine.  

  143. Phil – I was not bashing Obama, I know he inherited a mess.  My point was a general one that we have spent a tremendous amount of resources and the pay off doesn't seem worth it, be it under Bush or Obama.   

  144. For the country as a whole.

  145. Phil,
    I was looking at selling TQQQ Dec12 56 puts this pm. Your input?

  146. Phil/AAPL
    Sell next week $660 / $7.30 and roll to Nov.$665?

  147. Check that. The volume is increasing on AAPL. Are we going to $640?

  148. Phil,

    Reload on QQQ again?? BTW your TZA 14 Call are 0.55 now :-)

  149. Phil,
    might be a good time to initiate the apple trade from yesterday…
    Sell Nov 720 call, sell Nov 630 Put, Buy April 700 call…   Debit $24.3 yesterday, $13.70 debit today

  150. Bob/Craig – Sounds shady to me.  Could be Bob is job hunting though or having an affair, not nec. Corporate evil.  

    Dollar popped 79.50.  

    Well Craig, if a South American hit squad assassinates you over the weekend – at least we'll know why!  

    Pay off/Ink – I just find it a bit silly to say that we haven't turned around a $15Tn economy immediately just because we spent a few Trillion.  As I noted earlier – those few Trillion were already lost by paying for Tax cuts and Wars with a credit card – Bush ran up a massive bill and left Obama with the check and first that bill has to be paid and THEN we can spend money to make progress.  Like most investors, voters in this country are just way too impatient.   That's Obama's fault too – he did set expectations high and then he didn't re-set them along the way.  That was the brilliance of Roosevelts' fireside chats – at least he gave people updates and kept up the feeling that we're all in this together – that depression lasted a decade – we're only in year 4 and people want to know why everything isn't fixed (and the stock market is, by the way). 

    TQQQ/Chas – I don't know what will happen over the weekend, seems very risky. 

    AAPL/DC – I'm still hoping they bounce but now so weak I think maybe we'd better sell Oct $650s for $17.25 and get neutral over the weekend.  We may miss a move up but we're intending to use the money to roll to Nov anyway.  

    QQQ/Pat – No too weak.  

    $25KP – Well have to pull the trigger and sell 8 AAPL Oct $650 calls for $16.70 – can't afford the risk.  

  151. Interesting post about AAPL:

    Way too many factors to come to a conclusion though!

  152. 10 Next week AAPL $670/680 bull call spreads for $1.90 in the $25KP so we don't get burned to the upside – hopefully we either get a gain or dump them with a small loss but better to have them in case AAPL gaps up.  

  153. Phil,

  154. Craigzooka
    When my email was hacked I was told that nothing could be done. It is not like US mail, it becomes public because it is common to all. It blurs between telephone and 2 way radio and the government has set a president for spying. The answer is incripted delivery and retranslated at the recieving end, then it is private like regular mail and requires a court order to open. Officially nothing can be done about it, you may have done the right thing and hopfully someone does the same back to you. In idaho yesterday a convict got away stole a boat and hid on an island in the Snake River, couldn't keep his mouth shut on the phone talking about what he did and lost the cops, only fools say anything on cell phones or email. Land lines are a little better if no wire tap and not talking to a cell.

  155. Happy Canadian ThanksGiving to all for Monday

  156. Whats shakin in the MoMo portfolio?

  157. did anyone get the 670/680 spread to fill i was .05 over ask and it did'nt fill

  158. Thanks everyone- have a great wkend. 

  159. Thanks all – have a good weekend!

  160. Crazy action in AAPL at the close….strange

  161. AAPL – boy what a week to be trading aapl.

  162. AAPL/Jasu – Sure, I still like that one.  

    What a rotten way to end the week.  Of course, we're pretty flat so only disappointing compared to the open.

    Have a great weekend everyone – next week things start to get very interesting….

    - Phil

  163. Well, nailed and intraday bottom, purely by accident, but then didn't get covers back up till end of the day, so hurt a little.  But covered now.  Not really liking the action overall…wonder if We are beginning to see some buyer exhaustion….not just in AAPL…..have to do some chart looking this weekend.
    Have a great weekend all……T

  164. Compressed air – bring it on. another storage option to improve the utility of the idle windmills we have all over WA state…

  165. Still trouble a Foxconn:

    Not the best of PR…


    The underpaid, overworked Chinese workers of Foxconn have had enough, according to anew report by China Labor Watch: thousands have gone on strike over immense iPhone manufacturing pressure and fistfights with their bosses.

    The report comes after both a claimed uptick in working conditions by Foxconn, and a shortage of new iPhones—the most intricate of all time—on Apple's part. The latter, the labor watchdog claims, pushed Apple to demand greater output (and longer hours) by its outsourced labor army—and a steep drop in quality. Simply, people were being asked to build extremely sophisticated things without proper training. Exasperated by stretched hours and seemingly unfair expectations, the workers started beating up quality control staff, caught between enraged labor and indifferent management.

    There has to be a better way to make these products than use slave labor…

  166. Updates to the Income and Strangles portfolio this weekend.

    Also, I am working on a proprietary earnings database to help with earning plays. There is some data out there but it's either expensive, not entirely accurate or not what I want. That will take time though…

  167. stjeanluc – Are you going to be doing earning plays again?

  168. stjeanluc – I forgot to refresh. So you answered before I ask! ;-)

  169. Let's try ASKED not ask!!!   Long week indeed!

  170. Earnings / Diamond – I want to post the data that will allow us (Phil?) to come up with some decent plays. For example, which straddle is expensive compared to the average move. That way we can try coming with strangles or calendars with a good winning chance. 

  171. Phil:  I have also noticed that the comments list first-to-last or last-to-first depending on which device I'm using.  Would it be possible to put a "reverse comments" button on PSW so that we could do so at will?  Aside from different devices, members probably have different preferences — in fact mine change, depending on what time I'm logging on.  Just asking.

  172. Barry's succinct summation of week’s events:


    1) The Sept unemployment rate falls to 7.8%, the lowest since Jan ’09 as 873k jobs are added according to the household survey, exceeding the labor force increase of 418k. Avg hourly earnings up .3% m/o/m and avg work week up .1.
    2) Initial Claims total 367k, below 370k for 2nd week after two previous above 380k.
    3) Vehicle sales in Sept rise to best since Mar ’08.
    4) ISM mfr’g and services both surprisingly rise from Aug.
    5) Greek stocks end week up 12% and bond maturing 2/24/23 at .30 on euro, the highest since the debt exchange, due to growing sense Greece will get cut some slack and possible bank merger.
    6) Spanish 2 yr falls almost 40 bps, are we getting closer to official help as Draghi is ready to spend some money?
    7) Our largest trading partner Canada reports blowout payroll jump of 52.1k vs est of 10k.
    8) RBA cuts rates 25 bps as they have flexibility to move.


    1) Private sector adds only 104k jobs in Sept according to establishment survey, 26k below estimates and the U6 unemployment rate remains unchanged at 14.7%, reflecting the influence of part timers on the 7.8% print.
    2) Sept retail comps very mixed.
    3) China’s mfr’g PMI rises to 49.8 from 49.2 but below 50 for 2nd month.
    4) China’s PMI services index falls to 53.7 from 56.3, the lowest in its short 19 month history.
    5) South Korea’s mfr’g PMI falls to early ’09 low at 45.7 from 47.5.
    6) India’s mfr’g PMI holds at 52.8 but at 9 month low.
    7) Taiwan’s mfr’g PMI drops to lowest since Nov at 45.6 v 46.1.
    8) Japan’s Tankan mfr’g index falls to -3 from -1,
    9) UK PMI below 50 for 5th month at 48.4 v 49.6.
    10) Euro zone PMI holds at 46.1, below 50 for a 14th straight month.
    11) Australia’s trade deficit widens to most since Mar ’08 with merchandise exports to China falling to 6 month low.


    Public Service Announcement on the Non-farm Payroll

    By Barry Ritholtz – October 5th, 2012, 1:30PM

    Philippa Dunne and Doug Henwood are co-editors of The Liscio Report:

    The large upward revisions to August payrolls released by the Bureau of Labor Statistics this morning (with jobs data for September) drove conspiracy theorists wild. And they were strong, about three times the usual revision. But, as we pointed out in a report we sent to our clients earlier this week, this is a long-standing pattern. It almost always happens, whether there’s an election coming up or not. Facts here:

    August’s gain was revised upward by 46,000, and July’s by 40,000. Almost all the revisions, however, came from an upward revision of 101,000 to local government education in August before seasonal adjustment – a recurrent anomaly at this time of year that we wrote about in Wednesday’s report. The concurrent seasonal adjustment technique distributes large changes like that backwards, so the gain was split between July and August in the adjusted numbers. Some excitable types are attributing the upward revision to political machinations, but this pattern has been around a long time. It’s likely something is amiss in the BLS’s collection process, and they are working on it. There shouldn’t be a recurrent pattern of error like this. (Excitable types should also note that the birth/death model subtracted 9,000 jobs in September.)

    -Philippa Dunne and Doug Henwood

    Perhaps in the future, we should stick with the data professionals and ignore the fools and old men.


    GE’s Jack Welch Knows About Cooking the Books

    By Barry Ritholtz – October 5th, 2012, 12:15PM


    Of all the people who have something to say about the BLS, none is more unintentionally ironic than former GE CEO Jack Welch.

    I have long stated that Jack welch was one of the luckier, more wildly over-compensated CEOs around. He became CEO of General Electric in 1981, just before an 18 year bull market in big cap stocks began. he left in 2001, just as the market implosion was getting rolling.

    GE’s revenues grew 385% under his watch, but the company’s market cap grew 4000%. How did that happen? GE increased earnings over the years, and with stunning regularity, managed a quarterly profit beat.

    Indeed, it was too regular: After the 2000 crash, we learned of earnings manipulation and accounting shenanigans. The criticism was GE Capital acted as an opaque leveraged hedge fund that always be counted on to help GE beat by a penny. (GE eventually had to settle accounting fraud charges with the SEC).

    So if anyone knows a thing or two about cooking the books, its GE’s Jack Welch. Want even more proof? Have a look at this chart of Welch’s earnings versus his successor, Jeff Immelt:


    Hat tip Tom Brakke

  175. Notice Barry's summation is essentially USA improving, rest of World sucking.  That's fine, we're used to being World leaders and we need to keep this in mind when guessing earnings.  It would be very useful if someone could find a chart that tells us what % of revenues are international for the S&P 500 companies – not sure if it exists but keep an eye out.  

    AAPL/Hoss – Murderous week on that one, I hope earnings are kind to us…

    Compressed air/Scott – I would think that there must be some fluid compression that is more efficient but, then again, I suppose air is cheap.  

    Foxconn/StJ – That's interesting.  Why was this not big news?  Certainly explains the negativity on AAPL but – to what extent can a strike like this be manipulated?  Great way to tank AAPL stock, pay off a few key people to call a strike while you're short AAPL…  That used to be one of the great things about unions – if you had the cash, you could call in a hit on almost any company that would be timed to the exact day and hour you need it.

    And by the way, the labor cost of the IPhone is 10% of the unit so it would not kill AAPL to be more generous with their workers.  They can't afford US workers but they could mandate minimum compensation for the ones they outsource.  What's the difference if the IPhone 5 is $899 or $999 unsubsidized?   

    Earnings/StJ – Looking forward to it. 

    Comments/ZZ – I forwarded to Matt and Greg – if possible, it will be implemented.  

    At the close: Dow +0.3% to 13616. S&P -0.02% to 1461. Nasdaq -0.42% to 3136.

    Treasurys: 30-year -0.77%. 10-yr -0.3%. 5-yr -0.13%.

    Commodities: Crude -1.91% to $89.95. Gold -0.75% to $1782.95.

    Currencies: Euro +0.08% vs. dollar. Yen +0.23%. Pound +0.39%.

    Market recap: Stocks finished flat, erasing an early rally fueled by the U.S. jobs report, as an ECB official said it isn't certain Greece would receive an aid payment next month. The drop in unemployment to 7.8%, lowest of the Obama presidency, could lift some of the clouds over upcoming Q3 earnings reports. Crude oil fell 2% after an early pop; Treasurys erased a two-week rally. NYSE losers led winners six to five.

    The jobs report today was good, observes Pimco's Mohamed El-Erian, but markets won’t be able to push much higher until the economic fundamentals strengthen. “So far, we’ve had a rally based on chopping off the tails of catastrophe," he says. "But in order to keep going, we need the hand-off to fundamentals. And today’s employment report, while better, is not strong enough for that hand-off.” If fundamentals don't catch up to valuations soon, the equity markets will start coming down. 

    Kudos to Stone & McCarthy for its month-ago (mostly ridiculed) call to watch out for a big revision upward in August's payroll numbers. It's exactly what we got. 

    This is very sensible advice:  "Buy what central banks buy before they buy them," says Bill Gross (BOND), explaining why he's been stocking up on Spanish and Italian sovereign debt. It's not complicated – the ECB unveiled a program to buy the same, but hasn't started yet, so Gross is taking advantage by getting in there first.

    QE3 was a clear sign of failure

    Stiglitz: Monetary mystification

    August Consumer Credit rises $18.1B vs. expectations of $7.25B, prior -$2.45B (revised from -$3.3). Revolving loans up $4.3B, non-revolving (student loans) up $13.9. On percentage terms outstanding credit rose 8% in August – revolving +5.9%, non-revolving +9%.

    The ECRI Weekly Leading Index declines to 126.3 from a revised 126.6 last week, but the annualized growth rate jumps to 4.7% from 3.8%. It's the highest level for the growth rate since June 2011The group's future inflation gauge leaped to an 18-month high of 103.4 from 100.6.

    The WSJ launches Mansion, its new residential real estate page. Unbounded ZIRP and QE, and Mansion. Makes perfect sense.

    It's eye clearly on the future, Singapore plans a $2.85B port expansion, betting on a big pickup in global trade and that it can withstand Malaysia's challenge to its market share. The country sits at a key spot for shipping routes, and is the world's biggest refueling stop, but saw exports decline 10.6% Y/Y in August.

    Remember the U.K. funding for lending scheme. It's underway and killing the country's securitization market as banks find it significantly cheaper to borrow from the BOE. Citigroup predicts ABS supply will plunge 55% in 2013. In other words, it doesn't appear a whole lot of new lending is going on – instead just a switch in funding sources.

    Zillow (Z +2.9%) treks higher after Benchmark's James Dobson predicts the company's "importance to realtors as a source of leads" will grow in tandem with the adoption of its mobile apps, since individual realtors don't have apps of their own. Dobson, who calls Zillow "the fastest growing real estate information provider," notes the company saw a 125% Y/Y increase in homes viewed/second over mobile in July. (also)

    Pres. Obama may have caught a break in today's jobs numbers, but retail gasoline prices – already the highest on average since July 2008 – likely will continue to climb this month as refinery and pipeline problems overshadow weakness in U.S. consumer demand. "It will only take another refinery issue and a bit more geopolitical noise to have the first U.S. election [with gas] at $4/gallon," one analyst says. - Time to release the SPR?

    Mitt Romney may "like coal," but utility companies love natural gas more - it’s cheaper and cleaner and is likely to remain so regardless of the next president, even if prices double from today’s levels. "Until the U.S. runs out of cheap natural gas, coal miners face dim prospects," Paul Ausick writes. Among coal names, only James River (JRCC +1.3%) is adding to yesterday's big gains.

    Bottom fishers in the beaten down coal sector might be interested to know the carts of several of the names are forming a very bullish inverse head and shoulder pattern, according to UpsideTrader. At this point, WLTANRACI, and BTU all seem to be finishing out the formation, so a bit more time is necessary to validate the move.

    California gas prices shot up $0.17/gallon overnight, prompting some stations to close and others to charge more than $5/gallon. Production disruptions linger at local Chevron (CVX) and Exxon (XOM) refineries; Valero (VLOstopped spot sales in SoCal, and XOM is rationing to buyers at West Coast terminals. Average gas prices across the state are nearly $4.49/gallon, highest in the U.S.

    Exxon Mobil (XOM) returns to normal production at its oil refinery in Torrance, Calif., following an outage at a Southern California Edison substation on Monday which caused some units to shut down and others to slow down. Gas prices in California have spiked recently due largely to XOM and other California refineries being forced to shut down operations over the outage.

    Tighter environmental standards forcing truck makers to use more aluminum to save weight could make Alcoa's (AA) business making wheels for commercial vehicles a bright spot in its earnings release next week. But while Alcoa is propped up by downstream businesses, it faces challenges in its core businesses of mining bauxite and producing aluminum.

    Volkswagen (VLKAY.PK) reportedly slashes production of its Passat cars in Germany, part of a move to cut its output by 300K vehicles this year amidst the slump in Europe. "Western European car markets are in free fall – those cutbacks are completely unavoidable," says Stefan Bratzel, head of an industry group. 

    European plane maker Airbus won less than half as many aircraft orders as Boeing (BA +1.3%) in the first 9 months of the year as its U.S. arch-rival benefited from a surge in demand for its new single-aisle model. Airbus sold 437 planes from January to September, compared with 962 for BA over the same period. After cancellations, it outsold Airbus by 879 to 382. BA also outpaced Airbus in terms of deliveries, with 436 planes delivered versus 405 for Airbus. 

    Boeing (BA +1.3%) and GE Capital Aviation Services, the commercial aircraft leasing and financing wing of General Electric (GE +0.7%), finalize a $6B deal for 85 737s, comprised of 75 737 MAX 8s and 10 Next-Gen 737-800s. The order also allows for a further 15 737-800s.

    Pep Boys (PBY +3.7%) moves higher after Benchmarkupgraded the shares to Buy and increased its price target to $12 from $10, saying that tire profit margins are starting to show improvement with further gains coming in Q4. The firm adds that its balance sheet is strong, and the company is building cash to pay down and refinance debt.

    Owens-Illinois (OI +4%) is raised to Buy with a $28 price target (up from $20) at Goldman Sachs, which says the change in capital allocation strategy ushered in by the new CFO will drive OI's' EV/EBITDA multiple back to historical average levels. OI also says it will use 90% of its cash over the next two years for debt reduction vs. a previous focus on M&A.

    The Supreme Court agrees to hear an Indiana farmer's appeal that challenges the patent rights of Monsanto's (MON) Roundup Ready seeds. MON, whose genetically modified seeds produce crops resistant to herbicide, has required farmers to use the patented seeds only for a single crop and not save the second-generation seeds from the harvest.

    As it struggles in its effort to become current with its periodic report filings with the SEC, Diamond Foods (DMND) says it'sreceived a determination letter from the Nasdaq stating that it's failure to file its annual 10-K for the year ended July 31, 2012 serves as an additional basis for the potential delisting of its shares.

    Marriott (MAR -1.7%) moves lower after suffering three separate downgrades to Neutral/Hold from Buy at UBS, Lazard and ISI Group (IIIIII). The negative views are based on expected incrementally softer growth for FY13, Q3 below midpoint of guidance, limited upside to Q4 RevPAR +6% estimate, and the stock's 33% gain YTD vs. S&P +16%. 

    Monster Worldwide is in a late day plunge. No news has hit the wires, but it's the kind of move that may mean on-again/off-again talk of the company being purchased is off-again.

    More on Monster Worldwide's (MWW -9.4%decline: Talks between Monster and a P-E suitor reportedly fell apart, with Monster turning down a $10/share buyout offer. Monster closed at $8.05 yesterday, and $7.30 today. On Monday, the company was reported to be in "advanced talks" with a P-E firm. 

    More on Barclays' downgrade of F5 (FFIV -3.8%): Analyst Jeff Kvaal thinks the application delivery controller (ADC) market, which F5 leads, is "settling into a 12%-15% growth range," which isn't high enough to support F5's P/E of 20. In addition, Kvaal's industry checks and a CIO survey indicate soft demand for networking gear, though he does think F5 can boost 2013 EPS by taking share from Cisco (previous). Adtran (ADTN -2.9%), which just issued an ugly 

  176. But yet Jack Welch will be on CNBC many more times and being taken seriously… 

  177. More
     on Barclays' downgrade of F5 (FFIV -3.8%): Analyst Jeff Kvaal thinks the application delivery controller (ADC) market, which F5 leads, is "settling into a 12%-15% growth range," which isn't high enough to support F5's P/E of 20. In addition, Kvaal's industry checks and a CIO survey indicate soft demand for networking gear, though he does think F5 can boost 2013 EPS by taking share from Cisco (previous). Adtran (ADTN -2.9%), which just issued an ugly Q4 warning, has also been downgraded.

    Hungry to create new markets for its Atom CPU line now that tablets have wrecked netbook demand, Intel (INTC) is developing Atom reference designs for cheap, Internet-accessible storage appliances aimed at consumers and small businesses. Such appliances have been around for a while, largely relying on processors from rival chipmakers such as Marvell.

    Ouch!  "[HP's] balance sheet is a mess, says Sterne Agee's Shaw Wu, who joined other analysts in downgrading the IT giant following its analyst day warning. Though H-P (HPQ -1.4%) officially has a book value of $16/share, Wu suggests it's actually -$2/share after backing out goodwill. Wu's sum-of-the-parts analysis of H-P produces a bull-case valuation of $15/share, but he thinks $10/share is more reasonable. Argus also downgraded H-P, and suggested its job cuts need to go beyond 29K.

    Green Mountain Coffee (GMCR -5%) is off again today – shares are now down 32% from their Sep. 12 high. A harsh Reuters column could be partly to blame. In addition to noting the arrival of Starbucks' Verismo, the column points out Wal-Mart and commercial brewer king Bunn are planning to sell new single-serve brewers, and that K-Cup pricing has come under pressure from private-label offerings from Supervalu and Safeway.

    Zynga's (ZNGA -16.7%) bad day gets worse with newsWords With Friends developers Paul and Dave Bettner are leaving the companyWords With Friends was a big hit for Zynga last year, but has seen activity decline lately. Resignations have become fashionable these days for Zynga execs and perhaps also developers. (more)

    Facebook (FB -4.7%), which sold off in late trading as the Street weighed the implications of Zynga's warning, is planning tohalve the size of its credit line to $1.5B, according to the WSJ. Its coffers enriched by its controversial IPO, Facebook ended Q2 with over $10.1B in cash and investments. 

    The FCC is expected to ease rules mandating cable providers such as Comcast (CMCSA) and Time Warner Cable (TWC) offer rivals access to regional sports networks they own. Instead of requiring cable providers to provide access in the event satellite links are used to get the content onto cable networks, the FCC's chairman will handle enforcement on a case-by-case basis. The policy shift could be a negative for DISHDTVT, and VZ. (previous)

    Ilari Nurmi, the Nokia (NOK) exec responsible for the company's smartphone strategy, has left the company for unknown reasons. Nurmi's departure comes as speculation grows CEO Stephen Elop will get axed next year if Nokia's Windows Phone 8 sales disappoint, and 3 months after chairman Risto Siilasmaa talked about having a "contingency plan" (believed by many to be Android) should WP8 fail to meet expectations.

    This won't help get rid of those iPhone 5 shortages: China Labor Watch claims 3K-4K Foxconn workers at a plant in the city of Zhengzhou went on strike this afternoon, protesting over a lack of quality control training needed to meet the iPhone 5's (AAPL -2.1%) exceptional requirements, and demands to work during a holiday. Multiple iPhone 5 production lines were reportedly put into a "state of paralysis." Two weeks ago, Foxconn had to shut down another Chinese plant due to a riot.

  178. iPhone / Phil – Labor costs are actually closer to 1% if I remember well. I recall seeing $7 per phone. It is actually almost shameful for Apple because they have such high margins to begin with. They could double everyone's salary and still do great. And it would be good PR instead of what they get now looking like slave drivers. 

  179. 1%/StJ – No one seems to know but it's not $8 to make an IPhone.  This article estimates maybe $30, which seems reasonable at $2 an hour, which is about right with Foxconn's cut as it's only $4,160 for a year's work.  I remember making $2 an hour – didn't like it 40 years ago, can't imagine today.  A Big Mac in China is still $2.50 so figure it's like making $4 an hour here now.  

  180. Phil – RE: " It would be very useful if someone could find a chart that tells us what % of revenues are international for the S&P 500 companies – not sure if it exists but keep an eye out."
    I am not exactly sure what you are looking for, but perhaps the following two links might help:
    August 9, 2012
    46.1% of S&P 500 Company Sales Were Derived From Outside of the United States in 2011
    July 30, 2008
    S&P 500 Company Sales Increasingly International

  181. iPhone / Phil – Here was an estimate for the cost of the iPhone 4:

    They show labor costs of $7.00 and another $7.00 for Foxconn margin. So $14.00 for labor of which only 1/2 goes to the people actually working. And Apple's margin is $368. 

  182. Phil – Perhaps as MA approaches $500 it may be a good short, not on any fundamentals but perhaps a psychological barrier?  Maybe some long puts on MA would be a good idea soon…

  183. I will be posting some info about PSW – Las Vegas Meeting in the next few days.  Just watch for it and I will send an alert.  I will also have a few new postings on some smaller biotechs to watch.


    In MarketShadows, I have a few picks there as well FWIW, but many have been posted here b'f there.

    Have a great weekend all.

    - Pharm

    Fareed Zakaria mirrors Phil's comments exactly.  Romney is a moderate Republican — how else could you be elected Gov. of Massachusetts?  He correctly perceives that, having won the primary, the Red State Yahoos have no one else to turn to, and he can now appeal to the center, where the swing votes are.  The only issue on which they seem to differ is defense, and you can bet that Romney hasn't overlooked the fact that having the largest military force in the world by a huge margin is an easy target for contributions towards balancing the budget.  And the Congress — Romney has a better chance of blowing through the stonewalling of his own party if he moves quickly during the halcyon early months of the Presidency, when he might get a free pass on budget cutting  -- as long as Paul Ryan stays in his cage, as VPs are wont to do. In short, I think that the causes of America's economic plight are plain to see, each candidate is fully aware of them, and Romney will simply do what Obama [arguably] tried to do and was not allowed to accomplish.  Obamacare may be a wild card, I do not have a sense of what might happen there, but Romney is making sympathetic noises in that direction, too.

  185. "Georgia Rep. Paul Broun … a medical doctor, is running for re-election in November unopposed …"
    Congressman calls evolution lie from 'pit of hell' – Fox News

  186.  From Google + : 
    "New Medicare Part G Program
    In case you missed the announcement.

    You're a sick senior citizen and the government says there is no nursing home available for you. So what do you do?

    Our plan gives anyone 65 years or older a gun and 4 bullets. You are allowed to shoot four Politicians.

    Of course, this means you will be sent to prison where you will get three meals a day, a roof over your head, central heating, air conditioning and all the health care you need! 
    Need new teeth? No problem. Need glasses? That’s great. Need a new hip, knees, kidney, lungs or heart? They’re all covered. 
    As an added bonus, your kids can come and visit you as often as they do now.

    And who will be paying for all of this? It’s the same government that just told you that you they cannot afford for you to go into a home.

    And you can get rid of 4 useless politicians while you are at it. 
    Plus, you might not have to pay income taxes anymore. 
    Is this a great country or what? 

  187. Zero – It was hard for me to believe that romney could move so far to the right, pick ryan as his running mate and then just pivot on debate night saying he'll do nearly everything the same as Obama, only better…..
    My only concern about an Obama victory, is the ability to gain some cooperation from a republican congress. Could it be that a romney presidency may mark the end of stalemates on Capitol Hill and help to start debates that in the future, are closer to center?
    Could it be that romney is as dumb as a fox?
    Could it be that I should have something better to do on a Saturday night, than talking politics?….. :)

  188. ….and then there is zero, talking about his plan for when he turns 65…..  ;)

  189. Medicate Part G/ZZ
    ROFL.  Now, if they could add a video game like screen with cross hairs moving on a map and showing where the politician is.  How about "Rent a drone" program too..

  190. 1020: Romney knew exactly what he was doing all along, I would guess.  Americans have always leaning towards the middle ground.  Third party candidates, for example, have always crashed and burned, usually serving as a foil to nudge the mainstream guys in one direction or the other.  As Phil continues to point out, the Tea Party movement has been characterized more by economic illiteracy than net worth; this was just fresh meat to any professional politician, who could capture their support for nomination by painting Democrats as patrons of a Welfare State and paint himself as a champion of "free markets" which, in the literal sense that Tea Party members understand the term, do not exist.  Mao was pretty clear on the point that "power flows from the barrel of a gun."  Markets require law and effective regulation, there is nothing "free" about them.  But now that Romney has captured the nomination, he can ignore them and play for the middle ground voters that determine virtually all U.S. elections.   But this race is too early to call; I'm just glad both candidates seem rational.

  191. Diamond / Iran:  Diamond:  I agree entirely with the premise, an Al Jazeera article made the same point: it is the educated middle class which are affected by "Iranian inflation," which is the class which poses the greatest threat to the regime.  The "Green  Revolution" crowd were not the poor, who are, always and everywhere, susceptible to "panem et circenses." The Persians are playing the long game, as they have always done.  They expect the U.S. to tire of it's western Asian adventures, as it did in eastern Asia after Vietnam. The development of natural gas technologies will enable it to do that, and the withdrawals from Iraq and Afghanistan point to the continuing devolution of U.S. military adventurism in the MIddle East, leaving  Russia, India and China will delimit Iran's geopolitical ambitions, as they have done for centuries
    Israel does present certain difficulties, but I rather doubt that there will be war between Iran and Israel, because there is little to be gained by either side in such a war, notwithstanding the widely publicized misquote about "wiping Israel off the map." Such an idiom does not exist in Persian; it was the "illigitimate regime" in Israel that was the subject of the statement, which in fact was  "the Imam said that this regime occupying Jerusalem [een rezhim-e eshghalgar-e gods] must [vanish from] the page of time [bayad az safheh-ye ruzgar mahv shavad] Both Ahmadinejad and the Deputy Prime Minister of Israel, Dan Meridor, have both stated that the statement was misinterpreted, although the fault lies with Iran's Islamic Republic News Agency, which re-wrote the statement in a more inflammatory manner, probably to support the price of oil.

  192. VEGAS UPDATE—-the dinner will be at Nobu, Hard Rock as the one at Caesars will not be open —also due to the larger attendance this year the dinner format will be a tad more formal—we will have a set menu (there are choices within this) and have to place a deposit of 50%.  I am still working with the events manager and will post asap--but it will be under Pharm's tab—Pharm or I will alert you when it is posted—-looking forward to a splendid time

  193. Keep It Simple. The last couple of years have been extremely kind to my portfolio, and now seems like a good time to consider whether a change of tack is in order. I have been captivated by many of the ideas on this board, and have a plethora of positions with many, quite frankly, taking more time to manage than they are worth. I am now assessing the advantages of managing a portfolio of perhaps 3 to 5 positions, with a laser like focus. Objective is to make 10% a year.
    First up for consideration is the following:
    SPY Dec 14, 130/160 BCS @ $15.89 funded by the sale of SPY Dec 14 120 Put @ $10.13, so net $5.76 on the 30 point spread that is $16 in the money (SPY currently @ $146.14. 
    Reduction in buying power for 10 contracts is $23,375 for the BCS and $10,728 for the sold put = $34,103 in total.
    In order to bring the cost of the trade to zero, front month calls could be sold for the next 26 months. The Nov 13, 150 calls can be sold for $0.84 (reduction in buying power $20,375). Currently the Dec 14, 200 calls are selling for $0.78 so the opportunities for rolling are there.
    I would welcome a critique of this trade, as well as other suggestions that would fit well in a reduced size portfolio. 

  194. While Oil may be 'falling,' gas is not in CA. 

    Average pump prices in California hit a record $4.614/gallon yesterday vs. $4.145 a week earlier following refinery and pipeline outages, with one downtown LA station even selling regular grade at $5.49/gallon. Prices might now have peaked, as Exxon's Torrance refinery resumed normal ops on Friday after experiencing power problems.

    While this is a CA problem….I can only imagine what it is doing to the nation if gas is near its highs, while oil remains range bound.

  195. I have updated my High and Low from 2009 spreadsheet with the latest prices. I also added some fundamental information as requested by Phil. You can now see P/E, PEG, Prices/Sales, Forward P/E and also Yahoo 1-Yr Price Target (just for fun)

    Here are the top 21 (AAPL fell one spot) stocks:

    And the bottom 20:

    Looks like 66 stocks are at their highs since 2009…

  196. Good morning!  

    Thanks for the articles Diamond – I was hoping for a list breaking down the individual 500's % of foreign revenues.  

    Cool breakdown StJ, thanks.

    MA/Jerconn – You would think so but V killed us and QE3 makes it a bad bet to go against the CC Cos at the moment.  So I think taking a short-term play for a bounce back off the $500 line would be better than going long against them – we'll see how they handled it – they got a pretty violent rejection off $467 back in April and dropped almost 20%.  

    Good article ZZ. 

    Georgia/Diamond – What is wrong with those people?  

    Part G/ZZ – Great idea.  

    Income Portfolio – Looks good but we're just not getting dips to buy into.  Hopefully earnings will give us some opportunities.  

    Vegas/Savi – Thanks!  

    SPY/Winston – Good plan but make sure you don't fully cover with short sales or at least leave stops in place that reduce the cover if the S&P breaks over targets (2.5% lines on the Big Chart are a good line in the sand to draw).  It's a great system if you avoid letting a big run get away from you – otherwise you can be stuck with a 2-year workout for little return.  

    Average pump prices in California hit a record $4.614/gallonyesterday vs. $4.145 a week earlier following refinery and pipeline outages, with one downtown LA station even selling regular grade at $5.49/gallon. Prices might now have peaked, as Exxon's Torrance refinery resumed normal ops on Friday after experiencing power problems.

    Jack Welch is only half right - don't trust the numbers in any jobs report, not just the latest oneRevisions on top of revisions… thevast discrepancy between two sets of employment totals… lumpingpart-time workers with full-timers. But the numbers aren't rigged; if they were, the BLS isn't doing a very good job of it. In 2011: 153K jobs created per month. So far in 2012: 146K/month. 

    Welch Conspiracy Theory on Jobs Data Not Tied to Reality (BusinessWeeksee also Debunking the jobs report conspiracy theories (Washington Post)

    October Surprise? (Barron’s)

    Bernanke’s QE3 Will Turn Out Better Than Japan’s (Bloomberg)

    Stock investors: Don’t fight QE3 in Q4  (MarketWatch)

    The trustee for Lehman Brothers' U.S. brokerage and the overseers of its European arm have ended a long-running dispute of claim and counter-claim after the U.S. brokerage agreed to pay the European ops $12B that the latter will pay to its creditors. The deal should speed up recoveries for Lehman's customers, as well as its creditors.

    Why Breaking Up MegaBanks Would Help Investors (naked capitalism)

    The financial (XLF) and healthcare (XLV) sectors were the big winners this week, both adding to their gains relative to the S&P YTD. Another YTD outperformer, tech (XLK) combined with energy (XLE) to be the weakest sectors this week as both Apple (post-iPhone 5) and oil (post-QE∞) can't shake their hangovers. The defensive utility area (XLU) – which had a big (and worrying to some) run from mid-Spring to mid-Summer – continues to lose ground to the broader market.

    What’s Your ‘Magic’ Retirement-Savings Number? (WSJ)

    Pfizer's (PFE) aggressive tax-avoidance schemes are under scrutiny from the SEC, which has sent the phama giant a letter asking how it was able to earn record profit abroad and losses domestically despite generating 40% of its sales in the U.S. Pfizer's trick is to park its cash in low-tax jurisdictions

    Boeing (BA) engineers and technicians who are members of the Speea union were due to continue working as normal this week after their labor contract ran out at midnight, with more talks set to take place over the coming days. Meanwhile, Boeing has delivered the first 787 jet built at its nonunion South Carolina factory to Air India, while Qatar Airways has received its first 787 despite saying that it would wait for engine problems to be resolved.

    Time Warner Cable (TWC), Comcast (CMCSA) and other cable TV operators may withhold non-sports programming from their rivals after the FCC allowed program-sharing requirements to expire on Friday. The change is a blow to the likes of Dish (DISH), DirecTV (DTV), Verizon (VZ) and AT&T (T), which had wanted the rule to continue.

    TechCrunch's Josh Constine does a post-mortem on Zynga's (ZNGAcollapse. In addition to the mobile gaming shift, he blames higher customer acquisition costs, Facebook's efforts to reduce "game spam" within notifications and news feeds, and the growing popularity of more complex games than the likes ofFarmVille. Zynga now has a market cap of just $1.88B, in spite of having $1.2B in cash in the bank. Have shares sunk low enough that aNexonYahoo, or Amazon will make a bid? 

    Apple Critics Sharpen Their Pens, But Lack Logic (Barron’s)

    How Republicans Went Crazy, Democrats Became Useless and the Middle Class Got Shafted (Truth Out)

    O’Reilly, Stewart joust at mock debate (AP)

  197. Calling all PSW travel consultants: Our family is going on a 1 week New England College visit tour starting next weekend. I am looking for ideas for a few dinners (Lobster rolls, Chowder, Pizza?) and afternoon excursions. We are spending 3 nights in the Boston area, 2 in Amherst and 1 each in Green Mtn.  VT & Portsmouth NH.  TIA

  198. Amherst is my old stomping grounds.  I haven't been up for a while but Judie's is a must-have for lunch (popovers!) and Herrell's Ice Cream is a good enough reason to drive up the road to Northampton by itself but the town is gorgeous too.  La Cucina di Pinocchio is good Italian in Amherst and I used to be a waiter at Moshi Moshi in Northampton and made the Miso Soup myself so I know it was good when I left…

    If your kids like food – neither Green Mountain or Portsmouth are really hot-spots for gourmet eats but Boston is endless fun.  Too bad you're not there this weekend as today is the food festival.  A few I like there are Church, Oishii and Congnac Bistro as well as Chez Henri and Rialto (Cambridge).  I'm not a lobster person but Neptune Oyster seems to be the place to go for lobstah and chowdah.  

    Duck tour is a fun ride around town and I assume you'll see Cambridge/Harvard – that's kind of a must.  

  199. Randers – I live in Northampton near Smith College and not far from Amherst.  In Amherst, try Fresh Side downtown for Asian fusion, its great.  Make sure you try to tea roles. Northampton is loaded with good food- Paul and Elizabeth's for the Northampton all-vegetarian feel, India House is the best Indian food I've had, and Bistro La Gras is our favorite.  If it gets warm enough, rent bikes and hit the bike trails.

  200. randers
    You havn't been to Boston witout Leagal Seafood, paper plates and no waiting on tables, all about the food and used to be excellent. I lived there in the 70's but the real deal was seafood in Marbelhead, north shore where all the kool people keep their boats or whatever you want to glamorize them to.

  201. I know PSW doesn't trade currencies as a rule, but I'm guessing that the Yen may have reached a 5 year peak.  There is perhaps a derivative of that trade that someone here might recommend, instead of just shorting the Yen, but here's the five year performance.  The sudden disappearance of Chinese tourism may have turned the tide, which was already ebbing on the perception that the U.S. economy may have bottomed.  Just guessing, for the moment, but thought I'd mention it.
      1 Day                                 -0.31                    
      1 Week                              -1.14                    
      4 Weeks                            -0.84                    
      13 Weeks                           0.96                     
      1 Year                               -2.61                      
      3 Years                             12.45                   
      5 Years                             45.89

  202. Sad news, Chavez got reelected…
    Oil should be a short for a retest of $85

  203. Boston
    Unfortunately  Legal Sea Food  is white linen instead of paper plates now, but really excellent food nonetheless. Make sure you go to Boston's North End --best Italian food this side of Pisa--,make sure you walk, don't drive.

  204. I wonder what sort of investment portfolio PSW would recommend for someone who cloned themselves through stem cells made from their own skin cells and became their own heir.  Don't laugh too hard — the ultimate exercise in amour propre is apparently no longer science fiction, but coming sooner than you think to your local [Chinese] fertility center.

  205. Postscript:  My wife, who is no shrinking violet, upon being informed of this felicitous development in human reproductive evolution, smiled slyly and said [roughtly translated from her native language], "Well, if women can clone themselves with their own skin cells, then men will have some very serious negotiating to do going forward!!"

  206. Oil on its way to $88 to retest its lows and then…

  207. ….it went back up!
    weak bounce off $88.30
    Reloading shorts

  208.  "…..But the numbers aren't rigged."
    Depends on your definition of,  "rigged".
    A baker's dozen of the post modern world:
    1) a 'reduction in the rate of increase is now considered a, "cut"', even in the WSJ,  , 2)  the word 'is' must be defined, 3) oral sex is not sex, 4) a tax cut must be "paid for", 5) creating new FRNs is called Q.E., 6) when a celebrity appears in her usual role only 99% of the time, she has "retired", 7) trillions in bonuses are paid— with those newly printed FRNs— to bankers (and politicians) who failed utterly, 8) in finance, politics, and law, failure is the now Success, 9) Rights are denied for victims, but sought for perpetrators, 10) "mistakes are made" in government and politics, but no one is {(because it must be defined) blamed and prosecuted for making them, 11) duty and responsibility are tertiary to amusement, entertainment, and distraction which are now considered vital, essential, and mandatory, 12) Santa Claus is not a fictional character, 13) Law has replaced Justice.

  209. looks like that 3am trade is back on again for oil

  210. Still talking about jobs on cnbc this morning

  211. Better late than never…

  212. Good morning!

    Future's down about half a point but Dollar's up half a point (79.75), so all even so far. 

    Oil back at $88.50, gold $1,771, silver $33.91, copper $3.71, nat gas $3.37, gasoline $2.94.  

    China came back from vacation and dropped half a point, Europe not very good this morning:

    6:00 AM Overseas: Japan closed. Hong Kong -0.89%. China-0.56%. India -1.26%. London -0.74%. Paris -1.23%. Frankfurt-1.33%.

    Here's Goldman's Worst-Possible, Black-Sky Scenario For The Fiscal Cliff. 

    The New Der Spiegel Cover Warns About Inflation.



    European Stocks Fall

    European stocks fell and the euro lost ground, as investors looked to a meeting of euro-zone finance ministers for further clues as to whether Spain will request a bailout, amid worries about Greece's next aid tranche.


    Merkel Arrival in Athens to Be Met by Anti-Austerity ProtestersGreek protesters are gearing up for German Chancellor Angela Merkel’s first visit to Athens since the financial crisis began with plans for strikes, rallies and a petition demanding reparations from the Nazi occupation. Greece’s need for bailouts and the German-led conditions attached to the emergency loans have made Merkel the face of austerity to Greeks. She has been depicted in the media wearing jackboots and an SS uniform. While Greek Prime Minister Antonis Samaras called her visit tomorrow a “very positive development,” opposition leaders intend a show of anger and frustration after five years of recession.

    ECB board member shuts door on Greek pleas for leniencyGreece cannot have more time to repay its debt to the European Central Bank because it would be illegal and "illogical", board member Joerg Asmussen has said, as he shut the door on pleas for leniency from the bank.

    Greece may miss its target of reducing debt to 120% of GDP in next eight years, citing people familiar with Greek talks. Greece faces debt of 140% of GDP in 2020. The German government has ruled out a third rescue package or cancellation of its share of debt.

    Greece is sure to exit the euro, Ifo Institute for Economic Research President Hans-Werner Sinn said. Economic problems to arise if Greece remains in the euro are "simply not solvable," citing Sinn. A temporary Greek exit is "better for the Greeks and better for us," he said.

    The Dismal Truth About Spain's Desperate Economic Situation.

    Spain to Lend EU560m to Catalonia for Past Due Bills. Spain to make payment to region on Tuesday, citing people in the Budget Ministry. Cash will be used by Catalonia to pay down liabilities including EU387m of bills past due dates to hospitals, schools.

    Canary Islands Request EU757m From Spain Rescue Fund. Region will use loan to repay debt, citing Javier Gonzalez, head of the Canary Islands finance office.

    EU braced for budget fight with UK. Brussels is bracing itself for a battle with David Cameron as fears grow that the British prime minister will block a proposed €1tn seven-year spending plan and push for a two-tier EU budget. Mr Cameron is understood to be interested in Brussel’s longer-term plan of a separate spending programme for the eurozone, with UK and European officials considering a compromise that would see the EU budget split in two –marking a further acceleration towards a divided Europe.

    IMF to cut growth forecast for UK in gloomy global outlookThe International Monetary Fund is expected to cut its growth forecast for the UK next week, when it downgrades the outlook for the global economy.

    The French government is looking into ways to get companies such as Google Inc.(GOOG), Microsoft(MSFT) and Apple Inc.(AAPL) to pay more taxes in France on revenue they make in the country.

    World Bank Cuts Asia Growth Forecast

    The World Bank cut its forecasts for economic expansion in developing East Asia, and warned that Europe's debt crisis could wipe more than two percentage points off growth next year

    The Shanghai Composite fell 0.6% in its first action following a week-long holiday in China, bringing its YTD loss to about 13%. Nearing two years, the bear market has seen Shanghai shed 34% of its value. The Composite now trades at 11.3X earnings, its cheapest valuation since 1997, and well below that of fellow BRIC member Brazil at 18.8.

    Vietnam Property Projects Delayed by Finance Problems. 900 of 1,108 property projects in Ho Chi Minh City unfinished due to financial problems, citing city's construction dept. figures.

    Japan’s China Row May Spur GDP Fall This Quarter, JPMorgan Says. Japan’s territorial spat with China may cause the Japanese economy to contract this quarter and hasten a current account slide as exports decline and Chinese tourism to Japan drops off, according to a JPMorgan report. The dispute will knock 0.8 percentage point off Japan’s gross domestic product in the October-December period, JPMorgan Securities Japan Co. economists Masaaki Kanno and Masamichi Adachi wrote in an e-mailed note yesterday. They now estimate fourth-quarter GDP will contract 0.8 percent from the previous quarter, compared with a previous estimate of no growth.

    Sun Hung Kai Says H.K. Builders Face China-Led Cost PressureHong Kong builders face increases of more than 10 percent a year in construction costs because of competition for workers and materials from projects in China, according to Sun Hung Kai (16) Properties Ltd., the world’s biggest developer by value. “We’re seeing double-digit increases every year and we’ll be seeing this for quite some time,” Victor Lui, deputy managing director at Hong Kong-based Sun Hung Kai, said in an interview. “There’re a lot of projects going on in mainland China and we are competing with them for everything: materials, workers, even architects, designers and surveyors.”

    Chavez Declared Winner Over Capriles in Venezuelan ElectionVenezuelan President Hugo Chavez was declared the winner in his closest election fight since taking office 14 years ago, overcoming cancer surgeries to extend his self-declared socialist revolution by six more years

    Copper Rally Is Overdone, Set to Move Lower, INTL FCStone sees copper falling to around $8,050/t in next four weeks. Steel, iron ore are also "vulnerable" as steelmills are not cutting back enough output, keeping the market oversupplied, the co. said.

  213. Hi Phil
    I would really appreciate some advice on my AAPL trades. I have been buying LEAP APPL BCS (700/725 Jan 13, 665/690 Apr 13) and I have invested around $5K so far buying an option, every time there was a dip in the past few weeks. But now it seems like AAPL has run into technical trouble and I really think it could go down to 620 or even 580. I am willing to rough it out as I believe the long term story is still intact.
    However, to make some money off the weakness, I was thinking of selling naked calls – 680 next week calls are ~$2 and I really don't think AAPL tests 680 next week. I would like to hear your opinion. Are there any better trades that you can suggest.

  214. Currencies/ZZ – Well the BOJ is purposely trying to weaken the Yen so there's a pretty good floor at 78 to the Dollar or about 126 on FXY, why play anything else when that's such an easy line?   It's kind of like when we play the top of TLT – you just have to be patient and eventually you get a nice dip.  

    Chavez/Lionel – He won by like 20% – not even close.  Only wishful thinking by Conservative MSM over here gave Capriles a chance (kind of like Romney).  

    Cloning Portfolio/ZZ – Not sure why it would be different from any long-term portfolio. Need to use the Romney plan for his kids to leave yourself hundreds of millions of tax-free dollars.  Of course, if you just clone yourself and don't somehow put your brain in – it's not you anyway – just an identical twin that's born decades later will make for great advances in the whole nature/nurture question…

    Oil/Lionel – $88.50 was our downside target.  Going to be hard to fail it and then $87.50 is again big support.  

    CNBC/Bert – Fox too, they just can't let it go.  As expected, good unemployment number totally derailed Romney's post-debate advantage.  

    Big Chart – Getting that double-top rejection so far this morning.

    AAPL/Gandhjo – Down around $647 pre-market!  Sure, that's what we do, even with the shorter-term longs but why have 2 leaps?  I'd just pick one and be happy.  Your Jan $700s are $24.50 and the April $665s are $58 so you get 3 more months for AAPL to go higher and $35 in position for $34 – seems fair.  If you roll the calls you own and leave the short $725s ($17.20) then you have an opportunity to make another sale once the Jans expire or you could roll the short Jan $725s to the Nov $690s ($15.25) and you are still well in position against them with many more months to sell.  Now you know, with the Apr $665/690 spread, that you're making about $20 at anything over $690 so you can use the covered spreads to sell something relaxing like the Nov $735s for $5.40 – no need to take a big risk when you can sell something so far out of the money for more than 1/3 the cost of the spread.  

  215. Thanks Phil!