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Will We Hold It Wednesday – Fiscal Cliff Fever Edition

Time to worry about the cliff again!

We took a few days off from worrying but comments from Senators Harry Reid and Mitch McConnell yesterday both indicated that little progress was being made on the ongoing negotiations and that was all it took to panic people out of positions yesterday afternoon, as we gave back most of Friday's ill-gotten (low volume) gains.

In context, we're still making good, bullish progress but yesterday's action pretty much takes a "V"-shaped recovery off the table and now we'll have to fight and claw tooth and nail just to get back to our strong bounce lines by the week's end.  Anything less than that will not be a bullish signal into the weekend.  Our levels remain:

  • Dow 12,720 weak, 12,950 strong. 
  • S&P 1,375 weak, 1,400 strong.  
  • Nasdaq 2,900 weak, 3,000 strong. 
  • NYSE 8,000 weak, 8,100 strong.
  • Russell 790 weak, 805 strong. 

No serious damage yet but those paying attention to what's going on in China are becoming very concerned about the Shanghai Composite, which just spent it's 2nd day below the the very-critical 2,000 line – and that's down 16.66% since June.

So far, the Hang Seng has avoided the same fate – trading at 22,000 and that's up from 18,500 in January (18,9%) but it's going to matter a lot which one of these indexes breaks first to follow the other.  So far, the drag is down, with the Shanghai finishing today down 0.9% at 1,973 and the Hang Seng dropping 0.62% to finish at 21,708.  It's been a while since China has been a big concern but, if we finish out the month this way – expect it to be a big topic of conversation in December.  

FXP is an ultra-short play on China and makes a nice hedge to Asian exposure (or commodities).  At $21.48, I favor selling the Jan $20 puts for .65 and buying the $21/25 bull call spread for $1.05 so you net into the $4 spread for .40 with a 1,000% upside potential at $25.  This is a nice hedge into the holidays if you're worried about Global Panic as we forget to solver the fiscal cliff by 12/31. 

Chinese economic growth relies on excessively high and potentially destabilizing levels of investment, according to an IMF paper – catching up to news from 2 years ago. The investment is mostly funded by domestic savings – good news, say the authors, but likely only meaning the coming adjustment will look different than if the country relied on foreign capital.

As you can see from the chart on the right, we still rely on those emerging markets for the majority of Global growth in GDP.  With Europe in Recession, we can ill-afford to lose China in 2013 and, of course, that's assuming our own Fiscal Cliff nonsense doesn't throw the US into Recession as well.

This morning, in Member chat, I predicted $85 or less for oil on any kind of build in supply on today's inventory report.   We didn't have to wait as it turns out, as oil has already hit $85.50 in pre-market trading – down $2 already from yesterday's $87.50.  The problem facing oil is the same one facing copper ($3.50), silver ($33.16), gold ($1,712) and gasoline ($2.66) at the moment – people are losing faith in demand growth – especially in Asia. 

We'll watch this story unfold very closely and we'll keep an eye on our levels.

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  1. COST / Phil, others,
    Good morning. I had sold Dec $97.50 Puts on Costco @ $2.16 a week ago.
    I see that Costco has announced a special $7 payout. "Costco Wholesale Corp., the Issaquah, Wash., warehouse retailer, on Wednesday declared a special dividend of $7 a share. The dividend is payable Dec. 18 to holders of record Dec. 10."
    COST has gone from $96.50 yesterday to $100.50 this morning on this news.
    I'm not sure what impact this will have on the Puts I've sold. Given the $7 payout, is the net effective price of the shares really $100.50 – $7.00 = $93.50 and would this cause the price of the $97.50 Puts to jump significantly, or does this share price of $100.50 cause the $97.50 Puts to go down significantly?
    Thoughts please. Thanks.

  2. Oil Lines

    R3 – 89.46
    R2 – 88.85
    R1 – 88.04
    PP – 87.43
    S1 – 86.62
    S2 – 86.01
    S3 – 85.20

    Yesterday's high and low – 88.25/86.83
    Daily Fib lines – 89.12/88.63 and 86.50/86.28

    Woke up this morning dreaming that oil was trading at $45…. Must stay away from the charts!

  3. Hey StJ….have a glass of wine….the repubs continue to have more poor vote for them b'c they are brainwashing them thinking they can make it to that next level.  Don'tcha love irony?

    Yet during the 2012 election, Newt Gingrich constantly referred to President Obama as “the food stamp president,” a term whistling with “welfare queen”-like racial overtones. Despite Gingrich’s racial connotations, the majority of Americans who use food stamps are white, and they increasingly live in Republican areas.

    Bloomberg recently compiled U.S. Department of Agriculture data and found that, “70 percent of counties with the fastest growth in food-stamp aid during the last four years voted for the Republican presidential candidate in 2008.”

  4. Sank – depends upon how it is handled.  They could be adjusted.  I would exit on any excitement….like, now.

  5. Indeed Pharm, all these people that keep on voting against their best economic interest. But gotta make sure them feds don't come take my guns and my bible…

  6. Double POMO Buy Operations Today.a break and hold above S&P 1410 will likely open the door for an extension bullish move up to the 50 day above while a break and hold below S&P 1390 would trigger
    some large stops by killing the cup/handle setup now in motion with risk for a move back down to the 200 day moving average now at S&P 1383

  7. Phil – What Powerball numbers are we playing today? :-)

  8. Good Morning!

  9. And wheee on oil! Maybe we do get to $45 today after all and my dream was a premonition.

  10. VRTX/pharm – nice drop overnight!

  11. Might be worth it to take our 75% and run on the short calls especially with all the numbers still to come this week! Beige book this afternoon also!

  12. CMG stopped out at $7.00 yesterday. But still the AAPL roller coaster here!

  13. Stopped out of CMG as well when we did with the other portfolio.

  14. SODA good, CMG going the other way!

  15. GMCR!!!! Holy WTF???

  16. lflan…..Thanks for the GMCR gamble.  It paid off nicely…:)  Sold weekly puts yesterday

  17. Good Morning!   MoMo portfolio   AAPL….1/2 covered April calls  No adjustments.   SODA…moving up.  Glad we doubled down a few days ago.   No adjustments.   CMG….floundering, but I think it turns at some point.  Hold.  

  18. Apparently, when YTD gains in the markets are over 5% through November (we are up close to 12% on the S&P), December is positive 95% of the time since 1928 with an average gain of over 3%. Of course, we have not had a nihilistic bunch of congressmen like the ones we have since 1928 either so who knows. 

  19. SGEN/pharm – how come acting weak?

  20. FU CLF!!!

  21. COST/Sank – On ex-dividend it's going to make for a messy contract.  You sold the puts and COST popped 4.5% on the news so I'd take it and run (now .65) rather than wait and have to unwind a special obligation contract.  

    Oil $45/StJ – Might take a while to get there again.

    Reps/Pharm – Yep, they are at the point where they end up attacking their own base.  But this is what happens when you destroy the middle class and leave society literally divided between us and them – after a while, even their loyal followers begin to realize that they simply are not included in that GOP tent and never will be.  

    By the way, they switched me to a medicine that costs $75 a month as a co-pay!  I now have 3 pills I'm taking and the other two were $25 and that didn't bother me but $75 made me really take notice and I asked my Mom and she says my Dad's co-pay was near $1,000 a month at some point (dialysis, etc.).  My question is – what the f*ck is wrong with people that we haven't already had a revolution over this BS?  The crap that Americans are willing to put up with is amazing.  

    Dollar over 80.50 doing the damage we'd expect at the open.  

    Powerball/Diamond – I'm just going to buy all 175M combinations to make sure I win.  

    FAS Money/StJ – Hmmm, it was a little close yesterday, wasn't it?  Now we're down to $102.34 though so seems a shame to spend $50 to get out so let's wait and see how the day goes.  

  22. Slightly weaker than expected New Home Sales (368,000 vs 387,000 expected) is enough to plunge us down to test the weak bounce levels – now we'll see what sticks. 

  23. Phil,
    Any new S/T trade in FAS. Took my profit and ran on Dec FAS $97. Thanks

  24. Phil / co-pay — Consider youself lucky.  Most people can't afford to know how sick they are! :O

  25. What's with /TF and .RUT dipping below 800?

  26. Phil – Those of us who don't have employer provided insurance, are scared sh*tless to make a fuss….. :(

  27. AAPL/ Phil: yesterday we talked about a 2/10 cover on the BCS I have. Dec $590 was around $9 now it's crushed. I'm holding on selling these and seeing how it settles.  Good idea or initiate on weakness?

  28. Virtual Short Strangles portfolio update:
    - Sell 10 SPX Jan 1230 puts for $3.4, Buy 10 SPX Jan 1205 puts for $2.4
    - Sell 5 SPX Dec 1280 puts for $2, buy 5 SPX Dec 1260 puts for $1.4

  29. COST/phil – a $7 dividend is 7% right away on $100 stock. How would you play this per your LVS example yesterday? is there really a play here or is it one of those over-complicated things that as stj provided with the harry browne quote yesterday: “Almost nothing turns out as expected. Forecasts rarely come true, trading systems never produce the results advertised for them, investment advisers with records of phenomenal success fail to deliver when your money is on the line, the best investment analysis is contradicted by reality. In short, the best-laid investment plans usually go wrong. Not sometimes, not occasionally — but usually.”

  30. Obama will  speak this morning at 11:35am.Today is a full moon.Violaity is expected. Bull need to kill the bearish double trouble setup by taking out the November 2nd highs.

  31. 1020 / fuss — I'd restate that as "those of us that don't have employer provided insurance are afraid to go to the doctor!"  What's that $75 co-pay?  20% of retail?  That's cheap right?  Here's another good for you Phil – I get my doctor bills reduced by sending it through my insurance company when I know they aren't going to pay it (I only have catastrophic).  They often get the bill reduced anyway since they often won't pay what is stated on the bill but some reduced rate. It's such a scam. I've also learned never to bother asking how much a doctor's visit will cost or try to hand them a credit card as I exit since either action will take hours off my life. Considering moving to Panama if my health needs increase.

  32. Hi Phil Cost – is there an option strategy to capture special div without buying stock thx ahead

  33. why the quick recovery? fiscal cliff resolved?

  34. 1950s – Cafe Hayek re-examines the glorious past of strong unions and high marginal tax rates recently hailed by Krugman…

  35. Boner? I mean Boehner?

  36. Medical Cost / Phil – Imagine if we didn't have Medicare or Medicaid. The damage that would be done to the senior citizen population. Of course, that would solve social security's problem which might be one of the objectives…

  37. Phil
    Cost of medicine, you are starting to get it. I picked up 1 month supply 2 weeks ago copay $254 for 1!!!!. I have learned the hard way to never ask a doctor about something cheaper. My medical costs this year are more than my total income, so now I'm a cronic complainer. I do see a day that I will be at zero and I doubt I will die first, All my problems are someone elses fault and the system saved the insurance industry. Please help start something to end this.

  38. Deficit fight – I agree with Michael Moore's statement in his open letter to President Obama, posted last night:
    "DRIVE THE RICH RIGHT OFF THEIR FISCAL CLIFF. The "fiscal cliff" is a ruse, an invention by the Right and the rich, to try and keep their huge tax breaks. On December 31, let ALL the tax cuts expire. Then, on January 1, put forth a bill that restores the tax cuts for 98% of the public. I dare the Republicans to vote against that! They can't and they won't. As for the spending cuts, the 2011 agreement states that, for every domestic program dollar the Republicans want to cut, a Pentagon dollar must also be cut. See, you are a genius! No way will the Right vote against the masters of war."
    And as I've asked in the past, Why is lloyd blankfiend or any Wall Street banker involved in the fiscal cliff discussion?……

  39. …sorry, I woke up in a bad mood that even meditation couldn't help….. :(

  40. 1020 / why — You're kidding right?  Of course the answer is that Wall St knows how to manage money and risk, silly. ;)

  41. Phil / I'm holding some naked Jan 670 and 700 AAPL calls worth about 20K. Sold my cover this morning with a decent gain. Looking to cover again. What would you recommend? TIA.

  42. rain – Thanks for the  :)

  43. MRVL trying to bounce out of a year-long downtrend, any opinions here on this one?

  44. FAS/Jasu – Nope.  I guess we'll wait for FAS to get back to about $15.75 and see about selling some more calls.  

    Co-pay/Rain – I know.  I haven't been sick in ages so this is kind of shocking.  This isn't about a donut hole or something like that, this is just ordinary costs people get whacked with – it's crazy, how do they put up with it?  

    Now THIS is a V-shaped recovery!  What silliness…

    AAPL/Newt – So yesterday we talked about covering your 2015 $500/600 spread with short $450 puts by selling 2 next week $590s for $9 and they are now $6.50.  I'm not sure what the question is.   While it's nice to make $2.50 on day one – it's only an 8-day trade and you expect to make $1.25 a day so you're only a day ahead of schedule.  If you try to time every little move AAPL makes, you will drive yourself nuts (and probably make less money).

    COST/Scott – Well, now you'd be chasing a $4.50 move up and that takes out a lot of your gains.  Also, COST doesn't have the debt load of LVS so I don't consider the dividend pay-out to be as detrimental to shareholders as LVS, who have $9Bn in debt and the $2.5Bn dividend they are giving out represents every penny they've made for the past 5 years.  COST is paying out 2 year's worth of earnings but the cash has been sitting on their books anyway.  

    Panama/Rain – Yep, there's something very civilized about going to a doctor and knowing it's fully covered as a Government service.  

    Recovery/Jabob – I thought the drop on housing was kind of ridiculous but this is just a joke.  Down and up for no real reason.  We just have to ignore it and wait and see what's real at the day's end.  

    Durables/Scott – That's very apples to oranges.  They are talking about a time when those appliances were state-of-the-art and very relatively expensive – something barely in reach of the average family – like when PCs were $3,000.   It tells us nothing about the relative benefits of lower marginal tax rates except to those people so pre-disposed to hearing this conclusion that they don't really care what kind of story is weaved to make it fit.  Also, the guy talks about "typical American manufacturing workers" then and now except, in the 1950s, there were 50M Americans making those wages while today there are 11M people lucky enough to still be employed in manufacturing.  Ask the 39M people who now work at McDonald's how long it takes them to pay for a refrigerator.  

    Medicare/StJ – That's one of those nasty entitlements we need to cut.  In fact, a guy is on CNBC saying so now.  

    Medicine/Shadow – It just amazes me that almost half the population supports candidates that don't want to put a stop to this ridiculous system.

    AAPL/Amalfi – I would recommend NOT holding calls that are 100% premium.  Isn't that the main thing we try to tell you never to do?  Why would you do that?  If AAPL doesn't gain over $100 by Jan, that $20K is gone.  What kind of bet is that?  We have AAPL money and the AAPL position in the $25KP – those are sensible risk/reward plays and even they took a huge beating on the dip.  Under no circumstances whatsoever would I think it's OK to be the idiot paying naked premium to bet AAPL gains 20% just to get your money back. 

  45. COST / Pharm, Phil,
    Thanks for the input. I'm out of the Puts.

  46. Christmas Rally!  Sorry, got carried away with reversals, GMCR 25% swings and even JCP! 
    Hi Phil:  Back after dealing with some issues. I have a number of Jan 2013 buy-writes where the calls are up >50%.  (Great VIX when I bought). 
    Example:  A (agilent) $37 call -  7.52, now 1.67.  Stock now at 37.54, bought at 34.50.  I like the stock and would probably do another buy-write…  Would you recommend rolling to 2014's or waiting 2 months to see if it is called away?  Any advantages to either?

  47. VRTX/Pharm – as you think they are good value here, does that mean the May/June pump/dump on revised Phase II data is no longer relevant?
    On the one hand, the price is back to the pre-release level, but on the other hand, the revised data suggests to me (a total layman) that their pipeline is not as strong as perceived before the data release, so, perhaps an even lower price is justified.  Flawed logic?
    As always, thanks for sharing informed insight on things within your industry. -Christian

  48. PHIL    Servers are slow for us west coasters trying to refresh 

  49. Phil   Working better now :)

  50. willsons / slow — Fine in Portland, OR.

  51. Buy/writes/Arivera – It really just depends on if you want to hold them another year and how much you can make for adding one.  In the example of A, you bought it for $34.50 and sold the $37 calls for $7.50 so net $27 and now the caller is $1.70 and the stock is $37.60 so you made about $10 in a year.  You got a great price for selling calls, you can't get that anymore but you can sell the 2015 $37 calls for another $7 and, if you are willing, to also sell the 2015 $28 puts for $3.50 and that drops your basis to $16.50 (assuming the Jan calls expire worthless) so, if it's a long-term hold for you – well worth it.

    Refresh/Willsons – I'm not having any delays.  

    11:00 AM On the hour: Dow -0.05%. 10-yr +0.14%. Euro -0.27% vs. dollar. Crude -0.96% to $86.34. Gold -1.64% to $1716.15.

     EIA Petroleum Inventories: Crude -0.3M barrels vs. consensus of +0.9M. Gasoline +3.9M barrels vs. +1.2M. Distillates -0.8M barrels vs. +0.2M. Crude -1.7% at $85.71. - Big Build in gasoline keeps us around $86.

    More on New Home Sales: Sales are running at a rate 17.2% above the level of a year ago. There was a particularly steep drop in the northeast (from 31K to 21K, seasonally adjusted) as perhaps Sandy took effect. National inventory is 4.8 months, up from 4.7 a month ago, down from 6.1 a year ago. (full report)

    Stocks rebound from sizable early losses as the word "optimistic" escapes John Boehner's lips during a press briefing. The House Speaker says he's willing to put revenues on the table if they can be accompanied by spending cuts. The other side: Erskine Bowles tells the WSJ the WH is flexible on the level of top tax rates. S&P 500 -0.2%. 

    The steel industry is suffering from chronic over capacity, with production ability of 1.8B tons but expected 2012 orders of just 1.5B tons. And instead of cutting back, the sector is building more mills, often supported by governments. Major problems include the fragmentation in the industry and the political difficulties of closing plants – witness ArcelorMittal's (MTtravails in eastern France.

  52. Phil
    With all the extra money left I can charge up $900 at the dentist yesterday. A $700 warranty for life onlay broke with another chunk of tooth, the dentist retired so does his lifetime warrany. The new guy wrote off $230 because this is the second tooth. And medicare doesn't cover any of that or if you want to see. I am totally screwed, out of pocket this year is close to $4,000 over income. The cops follow me because they know I am pissed off and have guns! They and regular people are safe with me, but the congress should think about all the people with guns!

  53. Phil: Thanks. I had not sold the additional covers and was wondering on waiting or  taking the prem while I can.

  54. Obama needs to sound more conciliatory – this isn't doing it so far….

  55. Obama is really pressing with this blame Congress if anything goes wrong strategy. 

    Congress/Shadow – Obama is asking you to do something…

    Covers/Newt – Whenever possible, you just want to make your one, conservative sale and let it expire.  Wash, rinse repeat until you hit your sales goal.

    Not much from Obama – now we wait for the BBook at 2pm.

  56. Phil
    I can't get the speach, what is Obama asking me to do?

  57. WFR – Up nicely.

  58. Thanks Phil.

  59. Phil: Thanks.

  60. Obama/Shadow – He says contact your Congressman – didn't specify how. 

    You're welcome Arivera. 

    WFR/Albo – Nice, almost $3.

    Dow up 66 now – crazy.

  61. Phil – Conciliatory?  After a tough last four years and a brutal campaign, I would have had only two words…..
    "Scoreboard B*tches!"

  62. Bought some DRWI.  Total speculation.

  63. DECK good

  64. Our MoMo SODA calls are cranking!    I may put some covers on it this afternoon. 

  65. Phil
    That would be John Brasso, and I have done that over and over, he contacts me about once a month, he was an orthopedic doctor, and used to be sums up another problem, this crop shit is hitting them to the point of find another way. Ever wonder why so many doctors are on this site? They are not practicing medicine while trading or so I hope! Have you noticed they don't say anything? They could help.

  66. I think there will be no fix before January and I hope it blows up everything. For certain I don't need any tax brakes and a good deflationary spiral will help me and all the 98%ers. I know noone not willing to pay more taxes and a bunch like me that would love to owe the government taxes because we had a life when we did, I never complained until now!

  67. Phil….re EDZ in ira acct.What am I missing in going long? EDZ now around 11.30,was 18-12 Jan-Mar/12 and 18-14 Jun-Sept/12.Same thing in 2011.Buy now and wait for events to sell into? Thx in advance

  68. MoMo portfolio trade:   I have covered 1/2 of the SODA Dec 35 calls with Dec 37.50 calls, at 1.50.  Logic of the trade is to sell some premium, but only 1/2 cover to allow for continued profits if SODA continues upward, which I think it will. 

  69. DRWI / albo – I like that spec play.  DRWI has good technology and if they can successfully use the NSN channel they should get an added boost. I worked with both companies together in a wireless roll-out previously when they were in effect competing and I think that the new relationship between them  should pay-off for DRWI over time in terms of cost and sales synergies.  The biggest risk may be the stability of NSN. 

  70. stjeanluc….that would be sold to open 10 SODA Dec 37.50 calls at 1.50.   Thanks. 

  71. Phil…re AAPL…in same position as Newt with 500/600 BCS. If I sell front weekly or monthly calls( 1or2) am I not also having additional margin on that sale?Thx

  72. Are you guys all jumping on the SODA bandwagon? This thing is going parabolic now…

  73. Phil / BBY – I bought a Jan 14/17 call spreads prior to earnings.  Sold the cover after the earnings tank, and now I need to recover, but the $14's are now all premium.  I would like to roll further out in time, and assume I should also roll down to ITM.  What do you suggest.  The good news is that selling the covers near the post-earnings lows, plus the recovery in stock price, has me basically even on the trade right now.  

  74. Back near Monday's highs now but doesn't look like we'll break them.

    Scoreboard/1020 – That's fine but the question is whether or not we have a solution, which then determines (apparently) whether or not we can have a Santa rally.  I'd love to see Obama take a hard line – but not from a market perspective.

    SODA/LFlan – Great call.  Certainly not one I would have gone for…

    Doctors/Shadow – No longer a path to wealth and fortune.

    EDZ/490 – It's an ultra that decays – not great for a long-term hold.  

    AAPL/490 – If you sold puts, you shouldn't be paying more margin (net) on short calls.  If you don't have the margin to sell short calls – then the whole position is simply a bet that AAPL holds $600 by 2015 – there's no investment and no plan other than to cross your fingers and hope the wheel spins your way.   The whole reason I like the long AAPL spreads is BECAUSE we can sell the front-month calls to pay for them.  

    BBY/Rkyroma – Well you still have $1.50 in the Jan $14s and you can roll them along another year to the 2014 $15s for about .30.  No need to spend a lot right now.  See if the short Jan $17s expire worthless (likely, now .64) and then sell some more calls and use that money to roll yourself to a better position.  So the goal is to keep improving your position while letting other people pay for it.  

    1:05 PM The Treasury sells $35B in five-year notes at 0.641%, slightly less than the when-issued rate. Bid-to-cover ratio of 2.89, vs. a recent average of 2.86; indirect bidders take 45.3%, vs. a recent 41.7%. Direct bidders take 15.9%, vs. a recent 10.6%.

    The Chicago Fed's Charles Evans envisions the central bank continuing with $85B/month in asset purchases for another 6 months to a year. The amount is notable, as QE∞ is just $40B, so Evans clearly expects a supplemental QE to be launched upon the ending of Operation Twist in December. He made the remarks during a Canadian TV interview.

    The Swiss franc remains too high vs. the euro, says SNB Chairman Jordan, promising to defend the CHF 1.20 floor with "determination." The floor defense – printing francs in unlimited quantities – has ballooned the SNB balance sheet to 10X its level of 5 years ago. Running out of euros to buy, the bank now has 12% of its reserves invested in foreign stocks. And we give Bernanke a hard time?

    Beige Book Time.

  75. Beige Book – So so report but hurricane being used as an excuse – certainly nothing to get excited about.

  76. Hello All – It is funny that they blame Sandy.  I looked and about 15% of US GDP comes from the states hit by Sandy.  Also, the states most responsible for manufacturing in the US aren't predominantly in the New England region.  Delusion is a nasty thing.

  77. PCLN – On a tear.  Trading above the 200.

  78. FU PCLN!!!

  79. Summary of Commentary on Current Economic Conditions by Federal Reserve District

    Prepared at the Federal Reserve Bank of Richmond and based on information collected before November 14, 2012. This document summarizes comments received from businesses and other contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.

    Economic activity expanded at a measured pace in recent weeks, according to reports from contacts in the twelve Federal Reserve Districts. Cleveland, Richmond, Atlanta, Chicago, Kansas City, Dallas, and San Francisco grew at a modest pace, while St. Louis and Minneapolis indicated a somewhat stronger increase in activity. In contrast, Boston reported a slower rate of growth. Weaker conditions in New York were attributed to widespread disruptions at the end of October and into November caused by Hurricane Sandy. Philadelphia reported general weakness that was exacerbated by the hurricane. However, in the Boston and Richmond Districts, the storm's effects were mostly limited. Contacts in a number of Districts expressed concern and uncertainty about the federal budget, especially the fiscal cliff.

    Among key sectors, consumer spending grew at a moderate pace in most Districts, while manufacturing weakened, on balance. Seven of the twelve Districts reported either slowing or outright contraction in manufacturing, and two others gave mixed reports. In some cases, such as high-tech equipment and steel production, an industry slowed in one District while strengthening in another. Several Districts reported slight gains in residential and commercial real estate. Travel and tourism varied by District; for example, Minneapolis contacts marked levels of activity above a year ago, and tourism fell in the Kansas City District. Non-financial services also differed among Districts, with Philadelphia businesses indicating softer demand, while firms in other Districts reported pockets of robust demand for professional, scientific, and technical services. In transportation, reports were, again, mixed. In addition, hurricane disruptions slowed freight shipments in some Districts, while simultaneously boosting demand for shipments of emergency supplies. In banking and financial services, higher demand for home mortgage loans and auto loans increased consumer lending in some Districts, although small business loan demand was generally described as weaker to only moderately higher. Credit quality improved on net.

    Reports on agricultural conditions were mixed, as drought conditions persisted in several Districts, such as Atlanta, Chicago, and Kansas City; other areas reported solid production and, in some cases, increased investment. In the energy sector, extraction expanded on balance in San Francisco and activity remained at high levels in the Minneapolis and Dallas Districts. However, there were fewer active oil rigs in Kansas City, Dallas, and San Francisco. In addition, coal production fell in the Cleveland and Kansas City Districts. Most Districts reported modest gains in hiring, while wage and price pressures remained mostly subdued. Employment increased in more than half of the twelve Districts. Wage growth was described as modest at best, constrained in part by an abundant labor supply. However, a few Districts reported pockets of strength in wage growth, notably in North Dakota, where oil drilling had pushed up demand for workers, and in the Kansas City District, where wages were rising for specialized workers in transportation, high-tech, and energy. San Francisco reported stronger wage growth for truck drivers and health-care workers. Price increases, for the most part, remained in line with the modest pace reported in our last assessment. Examples of some exceptions were input prices for construction in Cleveland, Chicago, Minneapolis, Kansas City, and San Francisco. Richmond reported generally slower retail price increases, and in Chicago, retail food prices eased, except for meats. In contrast, Kansas City contacts indicated that retail prices had edged up.


    Wow, talk about mixed data!  I forgot about the drought but effects still being felt.  Mixed report in last paragraph didn't merit a highlight but keep in mind that oil demand was a key driver the last two quarters and if that's falling off without being replaced by something equivalent, like construction – it's a problem.  

    Consumer Spending and Tourism 

    Consumer spending increased at a moderate pace in most Districts in recent weeks, with mixed reports from Dallas. In New York, sales were ahead of plan prior to Hurricane Sandy, and merchants expect to recoup sales lost during the storm as residents replace destroyed or damaged property. Philadelphia contacts reported slower growth since the last report. Apparel sales picked up in Boston, and Richmond indicated that home and garden stores reported stronger sales ahead of Hurricane Sandy. Durable goods sales varied across Districts. For example, Boston and Chicago noted an improvement in furniture, while sales in that category declined in Cleveland. Chicago reported flattening in electronics sales, whereas San Francisco contacts reported significant sales gains for consumer technology products.

    Automobile sales varied by District, with Cleveland, St. Louis, Minneapolis, and San Francisco indicating strength. Sales of both new and used vehicles in the San Francisco District were reported as running well above year-ago levels. Car sales were strong in Atlanta, although a bit less robust than earlier in the year. Richmond car sales were mixed. New York contacts said sales had flattened, and sales held steady in Kansas City. In contrast, auto sales slowed in Philadelphia and new vehicle sales fell at dealerships contacted by Chicago and Dallas. Sales of used vehicles were also mixed. Used car sales remained robust in New York and rose in Cleveland, with Cleveland District inventories remaining tight; in St. Louis, a majority of dealerships noted that used car sales had decreased relative to new car purchases, and in Minneapolis, used car sales softened.

    Looking to the holiday sales season, the Districts whose contacts gave an outlook noted mostly upbeat expectations. New York retailers anticipated recovering lost sales during the holiday season, and in Philadelphia, expectations remained bright overall for holiday sales, despite somewhat less optimism among general retailers. Boston contacts indicated that they were positioning their businesses for increased internet sales, and a Richmond retailer commented that he was competing with his suppliers for online sales. While retailers anticipated a good holiday season in Minneapolis, mall contacts reported recent declines in traffic and sales. Contacts in Boston, Cleveland, and Chicago remarked on their uncertain sales expectations because of the potential for tax changes in 2013, as the national budget outlook remained uncertain.

    Tourism slowed in some Districts while strengthening in others. New York District tourism was mixed prior to Hurricane Sandy; hotel bookings initially dropped off following the storm, but business bounced back the next week. In addition, late cancellation of the New York marathon likely brought large numbers of visitors to the city in early November. Hurricane Sandy affected areas of the Philadelphia District along the coastlines of Delaware and southern New Jersey, in some cases demolishing houses and devastating businesses. New Jersey also suffered losses in revenue from the closure of Atlantic City casinos and the cancellation or delay of conventions there; expectations were that most areas along the Jersey shore would be rebuilt and ready for the summer season. Richmond reported seasonally slower autumn bookings, along with scattered cancellations caused by Hurricane Sandy, and in the Kansas City District, tourism spending fell, leading to price reductions by hoteliers. In contrast, travel and tourism remained strong in Atlanta, with international visitors bolstering activity in Florida and District convention bookings picking up. The exception there was at cruise lines, for which bookings continued to fall below expectations. Travel and tourism rose in Minneapolis.

    I don't like it.  A lot of things that have been strong, like auto sales and tourism – are now "OK" – "OK" is bad – something is turning negative.  

    Nonfinancial Services 

    Reports from nonfinancial services providers differed among Districts. Boston reports were generally weaker than expected for tech services, while New York businesses indicated that the effects of Hurricane Sandy had negatively impacted both workers and customers. In the New York District, prolonged power and communications outages and extreme flooding hurt firms and residents, particularly on Long Island and in northern New Jersey. Slowing demand for nonfinancial services in the Philadelphia District was further hampered by the hurricane. St. Louis reported a net decline, but with expansion in some categories such as business support, telecommunications, casinos, legal, and crisis management services. Dallas noted steady demand overall, and contacts reported robust demand for insurance, audit, and legal services. However, Richmond, Minneapolis, and San Francisco reported net expansion, with examples of growth at engineering, technology, and architectural firms. A number of contacts across Districts expressed uncertainty about business conditions for the months ahead as the firms and their customers waited for the outcome of federal budget negotiations.

    Transportation sector activity was generally mixed since the last assessment. Dallas noted that intermodal cargo volumes were down. Declines in rail cargo volumes were led by such products as coal, metals, and forest materials. Atlanta also cited declines in coal shipments, due to softening global demand for metallurgical coal and less demand from domestic utility plants. Cleveland reported fewer freight shipments, which their contacts attributed to hurricane disruptions and weakness in Europe, even as freight demand was boosted by housing, motor vehicles, and retail. Kansas City also noted a pickup in trucking traffic due to emergency food shipments in the wake of Hurricane Sandy. Shippers in that District also reported an increase in their capital expenditures. According to contacts for the Dallas District, domestic airline demand was flat to down, and in the St. Louis District, air transportation firms announced plans to reduce operations.

    This is now the worst BBook we've had in a long time.  


    Conditions in the manufacturing sector were mixed, though on balance, most Districts reported that conditions had weakened since the previous report. The Boston, New York, Philadelphia, Atlanta, Chicago, Minneapolis and Kansas City Districts reported that activity had either slowed or declined somewhat, with most reports leaning toward the latter. Activity was mixed in the Dallas and San Francisco Districts, while reports from the Cleveland, Richmond, and St. Louis Districts were positive. The Boston, Dallas, and San Francisco Districts noted slower growth for information technology equipment, while business activity expanded at high-tech firms in the Kansas City District. Car and auto parts producers in the Atlanta District said that orders softened slightly. Similarly, auto production in the Cleveland District declined somewhat for domestic nameplates but increased for foreign nameplates. In contrast, heavy equipment and auto industries remained sources of strength in the Chicago and the Kansas City Districts. Demand was flat to down for transportation equipment in the Dallas District, and the Philadelphia District indicated that makers of primary metals, industrial machinery, and electronic equipment reported further declines.

    Noteworthy gains in manufacturing related to the aerospace industry were reported in the Richmond and San Francisco Districts, while demand for aviation equipment held steady in Dallas. Steel production was down slightly in Cleveland, while the demand for steel in the San Francisco District improved a bit from low levels. Manufacturing contacts from five of the twelve Districts expressed concern about the outlook for 2013, in part, due to the uncertainty regarding the outcome of the fiscal cliff.

    It could be all the cliff talk is putting a negative spin on all the commentary and you know the Fed boys get a gold star from Bernanke for coming to him with a report that proves this is Congress' fault but this is the "data" we have to go on and it doesn't sound very investable

    Real Estate and Construction

    Overall, markets for single-family homes continued to improve across most Districts
    with the exception of Boston and Philadelphia. Residential real estate markets in the New York District were mixed but generally firm prior to the storm. Selling prices were steady or rising. Boston, New York, Richmond, Atlanta, Kansas City, and Dallas noted declining or tight inventories. The Cleveland District indicated that the number of single-family housing starts had increased since our last report and from a year ago; most sales contracts were in higher price-point categories. Similarly, Richmond noted more residential work in the high-end home category for the first time in three years, and builders cited significant pent-up demand in the first-time buyer segment. Atlanta indicated that existing home sales were up slightly compared to a year ago and reported that investors were more active in Florida than in the rest of the District. In Chicago, residential construction increased at a slow but steady pace in October and early November, and construction increased for single-family as well as multi-family homes. St. Louis reported that residential real estate market conditions continued to improve, and Minneapolis indicated that segments of construction and real estate were growing at a double-digit clip. Kansas City characterized residential real estate activity as brisk and noted that a solid rise in home sales had reduced home inventories. Dallas noted that single-family housing activity remained strong, with both new and existing home sales activity increasing. San Francisco reported that home demand continued to strengthen and that home sales continued to grow on a sustained basis in most areas, spurring new home construction. However, sales growth generally slowed for both the condominium and single-family home markets in the Boston District, and the Philadelphia District noted that October began as a disappointing month for some Realtors, only to be punctuated by Hurricane Sandy.

    Construction and commercial real estate activity generally improved across Districts since the last report. Gains, albeit modest in most cases, were reported by Philadelphia, Richmond, Chicago, and Minneapolis. The gains among Cleveland's contacts were tempered by reports in recent weeks of a slowdown in inquiries and a decline in public-sector projects. Kansas City described activity as holding firm and noted that real estate markets remained stronger than a year ago. Demand for office and industrial space continued to increase in Dallas, although contacts at some businesses said they were "holding back on expansions due to uncertainty." Several Districts noted segments of little change in commercial real estate activity. Boston described market fundamentals as flat, and San Francisco depicted market conditions as stable but with pockets of strength for large infrastructure projects such as roads and bridges. Commercial and industrial conditions were mixed in the St. Louis District and throughout most of New York prior to the hurricane. New York added that, while office markets across upstate New York were unaffected by the storm, there were some signs of recent softening.

    What's up with Boston?  Weak, weak and weak.  Unfortunately, we've been very focused on the positives of good housing data but, as is apparent from this report – the things we thought we didn't have to worry about are slipping back to red.  Not good


    Banking and Financial Services

    Loan demand generally was either mixed or slightly stronger across most Districts in recent weeks
    . Among those noting mixed results, New York reported that demand for consumer and especially commercial and industrial loans weakened, but commercial and residential mortgage demand was steady. Richmond said that a small commercial banker was encountering a slight improvement in overall loan demand but added that consumer loans were unchanged from "meager" levels and small business loans were virtually non-existent. Chicago noted that small business loan demand experienced modest growth, but a decrease in credit demand occurred among middle-market customers. According to St. Louis contacts, overall lending activity was essentially unchanged over the period. St. Louis added that, while credit standards for commercial and industrial loans were largely unchanged, both the demand for these loans and the number of inquiries ranged from moderately lower to moderately higher. Used car loan demand was weak in the Dallas District, although first mortgage and energy-related lending increased. San Francisco cited weak-to-moderate business loan demand, but consumer lending expanded further with the help of auto loans and home mortgage refinancing; however, San Francisco noted that lending activity as a whole was unchanged. Most remaining Districts, including Philadelphia, Cleveland, Atlanta, and Kansas City reported moderate increases in total loan demand. In the Philadelphia District, banks reported widespread bank and ATM closings due to Hurricane Sandy.

    Credit standards and credit quality were somewhat improved, on net, since the last report. Chicago, St. Louis, and Kansas City noted that credit standards on most types of loans were unchanged, and Dallas cited a loosening of credit standards, which contributed to very competitive loan pricing. Atlanta cited contacts who reported that underwriting standards had become more restrictive and burdensome since its last report, both in terms of credit scores and information requests. With respect to loan quality, New York reported that delinquency rates increased in the consumer and commercial and industrial segments but held steady in the residential and commercial mortgage segments. Philadelphia contacts cited moderate improvement. Cleveland and Richmond noted improvements in delinquency rates across consumer and business loan categories. Richmond added, however, that some contacts were concerned that banks were increasing their risk exposure by making longer-term loans in an effort to get higher yields. Kansas City and San Francisco also mentioned moderate improvement in loan quality.

    Lending goes hand in hand with real estate recovery and it's good that it's not holding it back.  


    Agriculture and Natural Resources

    Assessments of agricultural activity were mixed. Varying degrees of drought conditions persisted in several Districts, while Hurricane Sandy's agricultural damage was minimal and localized mainly in coastal areas. In the Atlanta District, much of Georgia experienced drought conditions, while Chicago reported that corn and soybean production in their District did not suffer as much from the drought as previously expected. Correspondingly, Minneapolis indicated that their District crop producers remained in mostly good shape, despite this year's drought. Low soil-moisture levels in the Kansas City District hindered winter wheat emergence, raising concerns that persistent drought could strain U.S. crop production, keep crop and feed prices high, and force further livestock herd liquidations. However, Richmond stated that most farmers in Virginia were relieved that Hurricane Sandy brought much needed rain without significant damage to the corn and soybeans still in the fields. San Francisco noted that production activity and sales of most crop and livestock products have been growing at a solid pace, as had investment spending on new production equipment. Moreover, the St. Louis District reported that harvest completion rates were considerably higher than the five-year average there.

    Activity in the energy industry was generally mixed since the last report. Coal production was above year-ago levels in the St. Louis District but was lower in the Cleveland and Kansas City Districts. More electricity was being generated from natural gas in Kansas City. In the Atlanta District, Hurricane Sandy's damage to refineries and infrastructure in the Northeast caused southeastern regional refiners to increase production and transportation of oil products to supply affected areas. Minneapolis reported that oil and gas production remained at record levels but noted that exploration activity was flat to down in some areas since our last report. Similarly, extraction activity in the San Francisco District expanded on balance for petroleum and natural gas, although the number of rigs used for natural gas extraction fell as producers shifted their activities toward higher-valued oil formations. The number of active oil rigs also fell in the Kansas City and Dallas Districts. Minneapolis mentioned that iron mines in northern Minnesota remained busy, although production fell slightly compared to recent months.


    Agriculture damage not so bad on the whole but slowdown in energy production came pretty fast and those are good jobs to lose.

    Employment, Wages, and Prices

    Modest improvements in hiring activity were reported by most Districts
    . Labor markets were generally described as improving modestly by Boston, Atlanta, Chicago, Minneapolis, and Dallas. Staffing firms, according to Boston and Cleveland, experienced improved business conditions. However, Richmond reported that labor markets in general were weaker than in the last report, citing examples of soft demand and an unwillingness of some manufacturers to hire long-term unemployed workers. Contacts for Boston noted that demand for office and clerical assistants and accountants remained weak, and Cleveland reported that hiring across industries was generally sluggish except in autos. Atlanta indicated that employment agencies were seeing a pickup in orders for temporary help. Some large employers, however, announced plans to move toward hiring more part-time, rather than full-time, employees. Chicago reported that a number of firms were putting hiring on hold and had delayed temp-to-perm conversion decisions until next year. With respect to the upcoming holiday season, Cleveland reported that retailers were planning to hire the same number of temporary workers as last year, while Boston and Atlanta noted that some retailers were expecting to hire more help over the holidays. Finally, contacts in a number of Districts reported difficulties finding qualified workers in some specialized occupations.

    Wage pressures were generally characterized as "subdued" or "contained" throughout much of the nation, according to the latest District reports. Virtually every District described wage growth as modest at best. Contacts in the Atlanta District attributed flatness in wages to the large number of applicants for newly posted positions. Richmond reported that manufacturing and retail wage growth edged up, but wage growth slowed at non-retail firms. In addition, non-labor costs were increasing in the Chicago District, mostly due to health-care costs. St. Louis cited stable wages but added that non-labor costs in manufacturing were rising. Minneapolis noted pockets of stronger wage growth in some geographical areas, such as North Dakota where oil drilling was pushing up demand for workers. However, even this pressure was easing in recent weeks. Kansas City noted strengthening in wage growth among specialized positions in transportation and high-tech firms. Finally, San Francisco noted that limited hiring and abundant labor supply were holding down wage and compensation increases. However, San Francisco added that a few cases of wage pressures were occurring among truck drivers, health-care workers, and entry level positions in areas with low unemployment.

    As with wages, price pressures changed little from the modest pace that was reported in the last assessment. Almost every District described price growth as modest, although examples of higher price growth were occasionally cited. For example, Atlanta noted that, even though overall input price increases had eased, firms were being challenged by higher energy and crop-related input prices and by rising health-care costs. Cleveland, Chicago, Minneapolis, Kansas City, and San Francisco all reported increasing prices of construction-related materials, and Chicago and Minneapolis also cited increases in metals prices. In addition, Kansas City remarked on rising prices in construction materials and manufacturing raw materials in general. Richmond reported increasing raw materials prices and slower increases in finished goods prices. Retail prices in general eased in the Richmond District, and Chicago noted that retail food prices eased, except for meats. According to contacts in the Kansas City District, however, retail prices edged higher. In the Richmond District, the pace of increases in services prices also moved up.

    So inflation remains low, which allows the Fed Doves to push for more QE but, on the whole, this is not a robust recovery at all.  So far, the market is shrugging this report off but I'm not so sure that will be the case in the morning – especially if there's any kind of downturn in GDP at 8:30 (2.8% expected in 2nd estimate).  Tune in tomorrow for more fun but make sure you have some hedges!  

  80. VRTX/bolt – CF is a very difficult disease, and anything that shows promise will be put forward.  Their two Hep C compounds are moving forward, but the CF ones are what holds the most weight in my eyes.  It is my belief that they make it.  That Immuno one is a Jak3 inhibitor, and if it is as good as or better than Pfizer's…..they will NOT be around.  Note VX compound in the cartoon below.

  81. Beige book and Obama not killing the market. Not that there is any real correlation between the market and reality anyway. Only when "they" want it to be…

  82. Forget AAPL folks.  Biotechs biotechs biotechs…..I know AAPL makes money, but it is discretionary – meds are not (or usually not)….and stop b#tch'n about prices…..they make you live longer.  Sheesh.

  83. VRTX Jan 39 calls.  2.75.

  84. We need to go short because the republicants are going to be all over Obama as the death of the world, tune in at 6!

  85. MoMo trade:   I've covered the last 1/2 of SODA.   Sold to open 10 Dec 40 calls for .90 each. 

  86. pharmboy
    I want to clear it up, pPhil is complaining about small prices! I am pissed of about not being able to afford $1,000 copays with ass holes that want to cut what help I get! IPAID IN!!!!!!

  87. ;) shadow…..

  88. Phil,
    Your thgts please on best hedges both:
    (1) short-term (for a reactive drop before gov't damage control reverses the sell-off) in a narrower spread, more liquid contract and
    (2) longer term should China/Europe implode in perfect storm fashion

  89. BOTS that were buying are now selling. The buying now is every broker in the country calling all the little guys to get in before it is too late. WHY?????? Big clients saying FU!

  90. If I was high up in Congress, I'd make 100 million in my 6 years.  I'd short the hell out of the market then say, no deal is close then cover my positions and go long and say, I think we can complete this deal very soon, then keep flip flopping for another few weeks.  It's amazing the power some people have over the markets.

  91. IRA portfolio update

    SELL 2 MSFT JAN 27 PUT $0.70

    BUY 2 MSFT JAN 21 PUT $0.03

  92. Current Amount – $16,317,681,766,441.44 or about $77B away from the debt ceiling.  Didn't they start discussing the debt ceiling when we were a few hundred billion away from the ceiling last year?  If so, this is clearly not important right now. 

  93. Obama dissed, no news on him but check this Phil!
    Only issue is Sandy and noone gives a shit/ship about those stupid coastal fools. Never listened to location location location is all that counts in real estate.

  94. I'm looking at about 15 MoMo stocks on my screen.   All are green except NFLX and AAPL.   Weak hands of the day. 

  95. Reason to rally really, or is this the reverse flush set up for the anti-stick?

  96. Sold 1/2 DRWI.  Quick daytrade.  Keeping 1/2.

  97. My undersatnding is that the Pres wants to extend the tax cuts for those not making $250k+ now with the idea to work out the rest of the tax issues next year.  Since I hear no talk about the debt ceiling now and the only thing I hear is that we will hit the ceiling sometime in Q1 2014, it seems possible that politicians may try to use the debt ceiling issue to try and atrong arm each other.  I really hope they don't do this again but this is just my conclusion.

  98. Reality/StJ – Fiscal Cliff rumors trump everything else apparently.  Still, GDP is the big block but, if we can get past that – we're ready to rally on any cliff progress.

    Not discretionary/Pharm – You can say that again.  I visit the Doctor and presto – I'm on the hook for $1,500 a year in meds.  Maybe you live longer – but you do it without the new TV…. 8)  

    Small prices/Shadow – I realize this is nothing (said so re. my Dad's meds earlier) but what strikes me is how it can hit anyone at any time and most people really don't have a spare $125 a month to buy meds with.  

    Hedges/8800 – Well I liked FXP this morning – still do.  If China begins to turn down harshly, things could get nasty.  Otherwise, it's the usual TZA, like the Jan $15/19 bull call spread at $1.05 and you can offset with any short put or just wait to see if the RUT flies higher and then sell something like the TZA Jan $14 puts, now .43, for $1+ to make a free trade where the worst case is you are covering your additional gains with hard TZA holdings in Jan.

    Very daring buying ahead of GDP tomorrow. 

    Congress/Rustle – Good plan.  We should back your run.

    Debt Cieling/Ink – Never important until they blow it, then immediate crisis.  

    Economy/Shadow – That's a way rosier spin than my take out of it.  I think it's a flush to pull in buyers who will get slammed in the morning on weak GDP (hard to see how it will be strong after that BBook).  

  99. AVEO selling off b'c FDA accepts NDA…, what a bunch of bunk.  Selling the straddle Dec 7.5.  No stock. Will take the stock with the puts.

  100. Watching S & P at the 100 SMA line.  Has traded between there and the 200 for the past 6 sessions.

  101. LOL Phil… maybe you buy the new TV, but cannot (will not) see it, or you stick with the old one you can see…..!

  102. C'mon Phil & Pharm, you guys know we can have both ! !

  103. Fed flapping their gums all day, the gift that keeps on giving.

  104. I don't know if anyone has also noticed this trend but for individual and group health plans, the co-pays, deductibles and co-insurance figures are getting more and more expensive for the participants.  Someone has one event and boom….a few thousand on a medical bill that I do not think the majority of people have lying around.

  105. Meds – My doctor switch heart medicines and presto: $15 / month instead of $125 / month.  Cholesterol med went from $150 / month to $50 / month by buying in Canada…  Now, the real question is why they push the expensive stuff having cheaper alternatives…   Some of us are not 1% ! 

  106. Phil,
    Thanks for the hedge guidance. Trying to adopt the counsel to sell an up mkt – when others are buying.

  107. Phil
    I really do get your message which I expose myself to try to change views. I hope we can do something. All I can do is move or wish I could, around here it is go red or be dead! Congress men and woman, the worst of the worst!

  108. ariveraA – They frequently are seduced (not literally) by good lookiing drug reps.  Tongue partially in cheek.

  109. Phil/Pharm:  What's a TV?……..Oh…do they still make those?  Is that the box where everyone speaks in slow motion with an information transfer rate of 2 kb per second — that bulky box burdened with an an astronomical noise-to-signal ratio?  Glad I live in a country that doesn't use them, I forgot they still existed!!

  110. Anyone notice generics?
    Copays have tripeled in 2 years, My blood preasure pills $250 name brand, $235 generic per month, copay last year was $33 next $59. Till then full price because I sucked out tooo much! Watch out everyone age goes one way.

  111. Cheaper alternatives/Arivera – You should always ask.

    Selling up/8800 – That's a very hard discipline to get used to.  I look at it as I'll get back in if the line that made me nervous breaks up and then all I missed is the little gap in the move.  Over time, you miss more pullbacks than continuing rallies. 

    Red/Shadow – I hear Romney set up a good plan in Massachusetts.

    Nice stick into the close – good for almost half the Dow's gains since 3pm.  Volume ending around 126M – pretty good but, with GDP at 8:30 am – we could give it all back in minutes.  

  112. Zero – Used for Madden13….and MLB13….and NHL13….love the graphics!  Hurt my ribs the other day from the Kinetic blowing me over on the tackle from Ulracher…..

  113. BTW drug plan up 157% in January! What inflation? Born by those that can most afford it!

  114. Phil – Would that be a 3-D TV?  ;)

  115. Pharm:  Thanks, forgot about "sports," we don't have those either.  Funny what you learn to do without.

  116. Bought a bunch of Dec 22 QQQ puts into the close, some are green in 10 minutes, half almost.

    Do you think they know that clif dive or not demand will stay down? I say no, not a chance, pit traders don't drive to work!

  118. Yesterday I  referred to "France being the next domino to fall."  Crazy Boris [Mayor of London] gave it a push today:

  119. Zero
    What happened to sports in UK? Too violent?

  120. Shadow:  The UK has rugby, which is  pleasantly violent, I think one of my three nose fractures was in a game.  My current neighborhood isn't much for spectator sports, they like to get drunk and chop away with machetes.  One of the best macheteros in the region was painting a wall in my house today; I'm going to take a lesson.  Although, when I asked a Navy Seal buddy in San Diego, who was a close combat specialist, what his preferred technique was, he said "a Winchester Model 70 at 1000' yards.  Indeed.

  121. Close Combat / Zero – 1000 yards is close enough for me… Although I think a Barrett would do more damage at a longer distance.

  122. BYW, that data that TOS now shows in the Company Profile button comes from here:

    They seem to have some good data there mostly built around fundamentals which is refreshing I guess…

    Right now, the most undervalued stock in their list – AMD.

  123. Zero STJ
    STJ the ammo for the barrett cost to much to practice. Model 700, nice practical gun but what flavor Zero? I have 2 for that job custom 98 Mousers, match barrels 30.06 or 300 mag depending on how fast you want it to get there. Never missed a shot with 06, 300mag once at 600 yards, scope broke on the previous shot. Thousands of rounds practice, burn out barrel on 06, replaced with a heavier one. It is not the gun that makes the difference. Therefore I would go with Zero's friend's choice.

  124. TV/1020 – Still very happy with my Mitsubishi 84".  Has 3D but we never hooked it up.

    France/ZZ – Like Spain and Italy, they say they are fine. 

    LOL ZZ – Too true.  Better to face your enemies through a sniper scope. 

    AMD/StJ – We do like them long-term.

  125. Zero et al: Remington M24 sws w/ m4 and a sig p229 sas on the side.

  126. ariveraA – Back to healthcare.  One reason for the unbelievably high medical costs is the huge expense brought about by ambulance chasing lawyers, (who are  very big contributors to the Democratic Party to ensure they keep their over-the-top right to continue to sue anyone who makes the least false move).  Malpractice insurance premiums are thru the roof because of that.  In fact, I have a friend, a retired surgeon, who pays more than $20,000 in malpractice insurance so that he can volunteer at a free clinic twice a week.  Yes, he is a Republican.   Just trying to even the discussion on this board a little bit.

  127. Newt:  Sig 229's a nice gun, .40 a great round, and everyone seems to love the Sig .357 round, which I've not yet fired.  I had a 226 stovepipe on me once, probably the fault of the reloads I was using, since everyone agrees Sigs are jam-proof.  But I hooked with some guys that were building .45s in SDO, and have an abiding affection for .45 Commanders, 180 gr. +Ps.  Actually had to fire one over someone's head one time,and I was as shocked as the perp by the size of the muzzle flash at night.  But there's no magic gun, only practice — kinda like options.    Shadow: Agree Barrett — too big, heavy and clunky for sniper work.  If you need to take out an armored vehicle at over a mile away, better to call in an airstrike.  Or run away.

  128. Albo / republican
    I'm a (was) a republican didn't and won't vote for anyone who signs a tax pledge author buy Grover Norquist and think all the a@@ that signed it should have there pictures on the front of every news paper in the country to let everyone know exactly which reps are trying to ruin our country

  129. I agree totally.  I'm for raising taxes back to the Clinton years.  But we must get a handle on the freight train called Medicare and Medicaid which is rushing toward us.  If we don't do it now, WHEN ?

  130. Albo
    That excuse is tired, It is the insurance companies excuse that doctors buy into. Yes there have been a few big law suits but somehow eveyone knows someone that got screwed and no one knows the big winners. Insurance companies spend 85% of their money making sure no one gets paid and 1 time out of a million they loose. The next issue is how many will get nothing for Sandy damage, it was a flood, an electrical fault, or the other trillion reasons to say we don't cover that. I have been in a few big accidents, I was close to killed in the hospital in April, I tried, not a single lawyer would help, no ambulance chasers. Your doc friend is ripped off and it will continue until you and many others stop buying a line of total BULL SHIT!!

  131. This country was in great shape at the end of the Clinton administration.  Then we had 911, and after that the regrettable decision to invade IRAQ (by a Republican President, and to escalate the war in Afghanistan, a God-forsaken country where you can't fight a war. Then we had  Katrina, and the CDO fiasco brought about by greedy mortgage lenders and rating services who were clueless, and here we are.  Now we need some courage by Congress and the President to make some tough choices.

  132. Obama screwed up again, main negotiator for him is totally bought out Tim. Like I stated earlier let the cliff diving begin!

  133. Albo
    If you think what you state at 7:07 why do you side with insurance companies. Just heard the media's oppinion of the Fed report, expanding in all regeions. What is your view on that? Phil and I read it as shit and not shinola. Who owns all this?

  134. shadowfax – Sorry, I don't follow.

  135. shadowfax – I'm in Florida.  Seems like every other commercial is for personal injury attorneys trying to drum up suits.  Of course, they're for the little guy, and don't even charge you unless they win the lawsuit.  Ask them how many people had legitimate claims that they turned down because it wasn't worth their time.  Oh, and if they win an obvious meritorious suit they still charge 30 %.  Sorry, but I think they are parasites, and John Edwards was one of the worst.

  136. I am interested in the medical insurance issue.  I have only the uniformed impression that there really is an unholy conspiracy between insurance companies, drug companies, the AMA and the American Association of Trial Lawyers [which admitted publicly to its astounding unpopularity by changing its name in 2006 to the "American Association for Justice] to maintain health costs high and Americans unhealthy.  I do know that medical, drug and hospital costs are a mere fraction of their level in both Europe and most of South America, and this can hardly be accidental or coincidental..
      My wife had a kidney infection in Utah which was properly cared for and cured in a four-day hospital stay – for $16,000, cash, which exceeds the annual [nominal] per capita GDP of all but 50 of the world's 192 countries.  In much of the Third World, you can buy brand name German drugs for 1/2 to 1/4 of the U.S. price, or the perfectly good local generics for 10% of that.  And pharmacists can give it to you — one trick I've learned in the U.S. is to ask hypothetical questions of pharmacists, who are happy to give hypothetical and very useful answers to most routine queries. 
    While it seems that many commonly-used drugs may be obtained by prescription only, it doesn't appear that corn-syrup laden McDonald's pink slime hamburgers,  Big Gulps or super sized fries, a meal of which reportedly would require seven hours of walking to burn off and have more salt, sugar and fat than an equivalent quantity of dog food, are regulated by the FDA. Again, this is all anecdotal, as I understand virtually nothing about the economics of health care, but suspect that there must be a calculable number of shares per family member of pharmaceutical and insurance companies I must buy in order to offset with dividends and stock price gains the astonishing costs of keeping a family healthy in the U.S.  [That's meant to be tongue-in-cheek, Shadow!]

  137. Fed Report / Hedges – Since the /es broke the 61.8% retracement (yeah TA) at 1394 again premarket, I initiated a Apr 15/20 BCS as a hedge (advance order since I was at work).  Of course, I got net neutral today and seen the /es retrace to the 1407 high (since I initiated a trade).  Nothing in the news to make me think we are going higher until our collective idiots in Washington negotiate so hedging is the right course and peel it off when we have some resolution.

  138. St j /Oil line
    thanx for the oil line down to almost S3 then back up with rest of market

  139. Pharm / VRTX – Looks like VRTX filled the May gap.  Would you recommend VRTX long term?  Sell the Jan 39 Put for 2.20 for an entry of 36.80?

  140. zero: I am on the hunt for a .45 and front sight therapy is the only way.

  141. Phil/3D   Hah!  We have not hooked up ours as well…… :)

  142. I practice with a Daisy Red Ryder and am looking to move up to a Crosman multi pump .177……. ;)
    Oh, and I have not seen a commercial for any attorney since moving to San Diego from Vegas…. Sweet… :)

  143. Pharm – Madden13….and MLB13….and NHL13….Now I understand the need for a bigger home…. :)

  144. Might be tough to trade this market for the next 20 days as we seem to be driven by the latest rumors from Washington…

  145. Pharma / Zero – The problem is that in most countries (Western Europe for example), government actually negotiate prices with big pharma companies because they have a vested interest – they pay for most of them. In the US when we put in place Medicare Part D, the GOP made sure that we would not negotiate prices so here we are… I read somewhere that pharma companies make all their profits in the US and they break even in the rest of the world. Somehow we got suckered into paying for everybody!

  146. Why would PGNX do that?  They have ~40M in the bank, and burning about 6M/Q.  They have at least another year of cash, unless they are ramping up something.  Insiders started buying a bit lower, so that should be a good base.  They have about 35M in shares outstanding, so not too bad….but not liking the management decisions to do it now vs a few months ago at 10.

  147. StJ – don't forget, Pharma uses data and discoveries from NIH, NCI, etc. to find new targets…they do the early discovery work, pharma reaps the rewards…..

  148. Margins overseas are much less than in the US.  Margin on some of the top sellers are 60-70%, overseas more in the teens.  Remember, there are two businesses in pharma, discovery/development, where the writeoffs happen, and then the 'sales'.  These are separate companies in the shell….so the tax benefits are plentiful. 

  149. Good morning!

    Lot's of enthusiasm that we're fixing our cliff this morning.  Still have to see if GDP holds up, seems like we'll be at 2.4, not 2.8 to me.   Busy day overall:

    Thursday's economic calendar:
    Chain Store Sales
    6:00 Fed's Fisher: 'Monetary and Fiscal Challenges in the United States and the Euro Area'
    8:30 Initial Jobless Claims
    8:30 GDP Q3
    8:30 Corporate Profits
    9:00 Fed's Williams: Economic Outlook
    9:45 Bloomberg Consumer Comfort Index
    10:00 Pending Home Sales
    10:30 EIA Natural Gas Inventory
    11:00 Kansas City Fed Mfg Survey
    1:00 PM Results of $29B, 7-Year Note Auction
    4:30 PM Money Supply
    4:30 PM Fed Balance Sheet

    Dollar back down to 80.13 with Euro back to test $1.30 ($1.2990) and Pound at $1.6017 with 82.09 Yen to the Dollar.  

    Nikkei up to 9,450 and commodities coming back a bit with oil at good old $87.50, gold $1,.725, silver $33.84, copper $3.56, nat gas $3.77 and gasoline $2.70 – up a nickel off yesterday's low. 

    Dow Futures are up 80 so we have a pretty good buffer – even if GDP does disappoint – and we can be gapping right back up over our 50 dmas if it doesn't – erasing all of November's losses with another day to go to close out the month.  

    3:45 AM Asian and European stocks mostly follow U.S. shares higher after President Obama and House Speaker John Boehner made optimistic noises that Washington will be able to reach a deal over the fiscal cliff. However, China continues the bear run that has seen stocks lose around 18% this year. Japan +1%, Hong Kong +1%, China-0.5%, India +1.4%. EU Stoxx 50 +0.9%, London +0.4%, Paris +0.8%, Frankfurt +0.6%, Milan +1.3%, Madrid +1.3%.

    6:00 AM Overseas: Japan +0.99%;. Hong Kong +0.99%. China-0.51%. India +1.75%. London +1.09%. Paris +1.07%. Frankfurt+0.72%.

    Frustrated with the lack of substantial job gains, the Fed is likely to continue buying both MBS and Treasurys in 2013, says the WSJ's Jon Hilsenrath, meaning he believes a new QE is soon to be imposed to replace the expiring Operation Twist. Stocks move to new highs for the day, the S&P 500 +0.7%Beige Book earlier.

    Eurozone economic sentiment unexpectedly rises in November, increasing 1.4 points to 85.7 and halting eight months of declines. However, a survey of industry forecasts that real investment will fall 1% next year. Business climate indicator +0.42 points to -1.19 vs consensus for -1.6, with optimism increasing about order books, output and other parts of the economy.

    The Bank of England's Financial Policy Committee accuses British banks of possibly misleading investors about the health of their finances. In its semi-annual report, the panel says banks may be overstating capital levels by not recognizing potential losses on loans and playing down risks. Banks may also not have made enough provisions to cover the costs of compensating customers for the mis-selling of certain financial products. 

    Italy sells €2.98B of 10 year bonds at a yield of 4.45%, down from 4.92% in a previous auction and the lowest in two years. However, the bid-cover ratio falls to 1.18 from 1.43. The government also issues €3B of five-year paper at 3.23%, down from 3.8%. The total sale of €5.98B was at the top end of the government's target of €4-6B. In the secondary market, 10-year yields are -9 bps at 4.51%.

    Japanese retail sales drop the most in 11 months, falling 1.2% Y/Y in October vs +0.4% in September and vs consensus of -0.8%. On month, sales +0.7%. Car sales -3.5% following the ending of a government program to subsidize the purchase of fuel-efficient vehicles, while sales of flat-panel TVs also fall.

    S&P affirms China's sovereign long-term rating at "AA-" and its outlook at stable, citing "strong economic growth potential, (a) robust external position, and the government's relatively healthy fiscal position." Despite the conservative nature of China's new Politburo Standing Committee, S&P reckons that "efforts toward deepening structural and fiscal reforms are likely to continue."

    "I feel pretty good about our level of innovation," Steve Ballmer told Microsoft (MSFT) investors at his company's annual shareholder meeting, where he had to take some pointed questions about the software giant's slumping stock price. Ballmer asserted Windows 8 is "off to a great start," though not everyone is sold on that, and boasted Windows Phone sales are up 4x from the same time last year, when sales were miniscule.

  150. Health Care – Everyone can blame their favorite part of the system for failing but why not step back and just look at the bigger picture?  The US has, by far, the most expensive health care system in the World.  That's just a fact.  We also have only mediocre outcomes for the money – also a fact.  So it's not like health care can't be fixed – we're the only civilized country on the planet that HASN'T fixed it – it's lunacy.  Only Luxembourgh, Norway and Switzerland spend more than 1/2 of what we spend per-capita on health care.  The OECD average is close to 1/3 of what we spend.  So it's not like we need to re-invent the wheel to fix health care – we just need to do what EVERY OTHER COUNTRY does – but US.  

    You can blame lawyers, drug companies, regulation – whatever you want but other countries have lawyers and drug companies (the same ones, in fact) and regulations.  We're doing so many things wrong on so many levels that it looks unfixable but the rest of the planet seems to be able to handle this and have been doing it for decades.  We don't need to invent the wheel here – just pick a plan and drive it

    Here's a map of the countries that do have Universal Health Care:

    mf healthcaremap p.jpg

  151. The Onion. Classic…

  152. Amazon – An observation —  In the words of Jabo – FU AMZN!!!!  My wife shopped on line and I can tell you, doing the accounting to what was ordered and delivered is a Fricking nightmare.  I have no idea how these idiots broke out the credit card charge to what was delivered (to various parts of the U.S.).  They bill as the item is shipped not what is printed on your online receipt. I will be spending hours resolving to be sure I got what I paid for and nothing was overcharged!  I wonder how many other consumers are as pissed as I am shopping via Amazon vs a brick and mortar.  I sure don't want this hassle again.  Will it change consumer habits????  May change mine.