Archive for December, 2012

Senate Agrees To Kick Can For Two Months; Breached Debt Ceiling Untouched

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Well, we appear to be nearing a mini ‘delay’ deal of some sort. The agglomeration of headlines continues with Senate deals on and off, Biden proclaiming victory yet Senate Democrats are said not have consented (yet).

  • *WHITE HOUSE SAID TO REACH BUDGET DEAL WITH REPUBLICANS
  • *SENATE FISCAL CLIFF VOTE POSSIBLE BY 10:30 P.M.: REID SPOKESMAN
  • *SENATE DEMOCRATS SAID NOT TO HAVE CONSENTED TO DEAL

State of the idiocy appears to be: The 2-month sequester delay: cuts would come half from defense & half-non-defense. 2 month window to give all sides time for bigger deal. No debt ceiling resolution. Tax rises for 400/450k, Cap Gains/Dividend up to 20%, small rise in estate tax and restrictions on personal tax deductions. Simple – as we have said for a while – assuming this passes seamlessly, this is nothing but a can-kicking delay to the ‘extraordinary’ debt ceiling date – two words – Stop.Gap. And in two months, it’s not just the sequester but the debt ceiling too. Enjoy your night.

Via AP:

A Democratic aide says the White House and congressional Republicans have reached an agreement to avert the so-called fiscal cliff.

 

The measure would extend Bush-era tax cuts for family incomes below $450,000 and briefly avert across-the-board spending cuts set to strike the Pentagon and domestic agencies this week.

 

Vice President Joe Biden was set to sell the agreement to Senate Democrats at a meeting at the Capitol on Monday night.

 

The aide required anonymity because he wasn’t authorized to speak publicly.





China PMI Prints Most “Schrodinger-ish” In 23 Months As Japan Ups Growth ‘Guess’

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

It’s 815ET on New Year’s Eve and China PMI just printed below expectations at 50.6 – very marginally in expansion. The trouble is this is now the most divergent from the HSBC China PMI since January 2011 indicating once again that nothing matters and yet at the same time – the PBOC ain’t coming to the rescue anytime soon. Meanwhile, in another epic realm of imaginary finance, Japan just increased its growth expectation to 2% for next year – whilst we are at it, we ‘expect’ rainbow-pooping unicorns for everyone next year (we just ‘hope’ noone is disappointed).

  • *JAPAN GOVT MAY RAISE FY GROWTH FORECAST TO 2%, YOMIURI SAYS

The diverging awesomeness of China’s PMI…

 

and rainbow-pooping unicorns…





Weekly Gasoline Update: The 2012 Twin Peaks

Courtesy of Doug Short.

Here is my weekly gasoline chart update from the Energy Information Administration (EIA) data. Gasoline prices at the pump rose last week. Rounded to the penny, the average for Regular and Premium were up four cents.

According to GasBuddy.com, Hawaii has the highest gasoline price, averaging $3.95. New York is second at $3.72. At the other end of the price range, four states have average prices under $3.00: Colorado is the cheapest at $2.96; the other three are Wyoming, Oklahoma and Utah.

How far are we from the interim high prices of 2011 and the all-time highs of 2008? Here’s a visual answer.

 

 

The year 2012 was certainly a roller coaster ride for gasoline. The adjacent thumbnail shows the range for Regular and Premium. From the last week of 2011 we see near twin price peaks. Regular and Premium both peaked in early April, up 21.0% and 19.2% respectively. They hit interim lows in early July, only a few cents above the 2011 year end prices. They hit their second (slightly lower) high in mid-September and then fell to December 2012 lows two weeks ago, essentially at the anniversary of their December 2011 lows.

The next chart is a weekly chart overlay of West Texas Intermediate Crude, Brent Crude and unleaded gasoline end-of-day spot prices (GASO). WTIC is listed at 91.74, up 3.00 from last Monday. GASO hit its intraday high at 3.43 on April 3rd. It closed today at 2.76, up 0.04 from last Monday.

The volatility in crude oil and gasoline prices has been clearly reflected in recent years in both the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE). For additional perspective on how energy prices are factored into the CPI, see What Inflation Means to You: Inside the Consumer Price Index.

 

 

The chart below offers a comparison of the broader aggregate category of energy inflation since 2000, based on categories within Consumer Price Index (commentary here).

 

 

Here are some additional commentaries related to gasoline prices:

 

 

 

 





Covered Calls – The Hidden Risk for 2013 and Beyond

Courtesy of Dr. Paul Price

Covered Calls – The Hidden Risk for 2013 and Beyond 

I’ve scaled way back on covered call writing (selling calls) lately.

For the last three decades, writing calls has worked very well for me. Writing calls on shares of stocks is the simplest, most conservative approach to option trading. "Covered call writing" means

  • you own the underlying shares (each sold call is "covered" by 100 shares of stock), and
  • you're agreeing to sell 100 shares, or some round multiple of 100, for a set price through a predetermined expiration date.

Note: Selling one call is making a contract to sell 100 shares of the underlying stock at a particular price on or before a particular date. In a "covered call" scenario, because you already own the shares, you do not risk being forced to buy the shares at higher prices. Selling a "naked call," in contrast, means you don't own the shares and would have to first buy them to sell them – if the stock is dramatically higher, that would entail a significant loss – it's a much riskier trade.

Here's a generic example of covered call writing:

Covered Call Generic Example

So what’s not to like? Why have I been reluctant to use this strategy?

Because, in the crazy world of QE Infinity, there is a real possibility of a market melt-up due to a major dollar devaluation.

A look at December’s action in the Japanese Yen and the Nikkei 225 shows how this could…
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Government and Big Banks Joined Forces to Violently Crush Peaceful Protests

Courtesy of ZeroHedge. View original post here.

Submitted by George Washington.

The definition of fascism used by Mussolini is the “merger of state and corporate power“.

Government and the big banks are in a malignant, symbiotic relationship. And our economy now exhibits a merger of state and bank power.

Prominent economist Robert Kuttner said in 2009:

What we have is something perilously close to a dictatorship of the Fed and the Treasury, acting in the interests of Wall Street.

The government and banks use anti-terror laws to stifle dissent.

As Naomi Wolf reports, they joined efforts to violently crush the occupy protests:

The violent crackdown on Occupy [which was protesting the SAME THING as the Tea Party ... and the Boston Tea Party] last fall … was not just coordinated at the level of the FBI, the Department of Homeland Security, and local police. The crackdown, which involved, as you may recall, violent arrests, group disruption, canister missiles to the skulls of protesters, people held in handcuffs so tight they were injured, people held in bondage till they were forced to wet or soil themselves –was coordinated with the big banks themselves.

[A newly-released document] shows a terrifying network of coordinated DHS, FBI, police, regional fusion center, and private-sector activity so completely merged into one another that the monstrous whole is, in fact, one entity: in some cases, bearing a single name, the Domestic Security Alliance Council. And it reveals this merged entity to have one centrally planned, locally executed mission. The documents, in short, show the cops and DHS working for and with banks to target, arrest, and politically disable peaceful American citizens. ….

Plans to crush Occupy events, planned for a month down the road, were made by the FBI – and offered to the representatives of the same organizations that the protests would target ….

The FBI – though it acknowledges Occupy movement as being, in fact, a peaceful organization – nonetheless designated OWS repeatedly as a “terrorist threat”….

[The executive Director of The Partnership for Civil Justice Fund - the group which obtained the document] points out the close partnering of banks, the New York Stock Exchange and at least one local Federal Reserve


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Senate Deal “Apparently Short Of Needed Support”

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Update: U.S. Senate will attempt to vote on fiscal cliff Monday night, but still work to be done – Sen. Kyl. So the deal is done, but there is “hope” it passes. Should be good for another 10 ES points.

* * *

Everyone’s worst nightmare has come true: the endless Greek bailout has now shifted to D.C., where deals are leaked, rumored, preannounced, and priced in, long before they are discovered to never have been there in the first place. The winners, as in Europe: hedge funds, and caterers. Everyone else is a bystanding loser.

From Reuters:

Skeptical U.S. Senate Democrats requested a meeting on Monday with Vice President Joe Biden about the tentative deal on the “fiscal cliff” that he is forging with Senate Republican leader Mitch McConnell, a Democratic Senate aide said.

 

With the deal apparently short of needed support, Democrats are hopeful that Biden will meet with them, but have not yet received a commitment, the aide said. Some Democrats complain that Biden went too far to find common ground with McConnell. Congress and the White House face a midnight deadline (0500 GMT Tuesday) to avert the fiscal cliff of tax hikes and spending cuts.

And now we look forward to tonight’s Senate vote on the deal which “passed“… It passed right? The market said so.





S&P 500 Snapshot: A Happy End to the 2012 Roller Coaster Ride

Courtesy of Doug Short.

Despite the lack of a vote on the Fiscal Cliff issues, the constant stream of breaking news, comments from congressional sources and assorted tweets kept the markets in an upward trend on this last day of 2012. The S&P 500 closed the day with a gain of 1.69% to finish the year up 13.41%, the best performance in three years.

Here is a look at today’s action — a fairly subdued performance until the noon hour followed by a steady acceleration as the Cliff optimism increased.


And here is a snapshot of 2012 with the roller coaster peaks and troughs highlighted.

The S&P 500 finished 2012 with a gain of 13.41%, but the index is 2.70% below the interim closing high of September 14th.

From a longer-term perspective, the index is 110.8% above the March 2009 closing low and 8.9% below the nominal all-time high of October 2007.

 

 

 

 

For a better sense of how these declines figure into a larger historical context, here’s a long-term view of secular bull and bear markets in the S&P Composite since 1871.

 

 

 

 





A Faux Deal and Ongoing Currency Wars

Gold This Time Last Year – A Faux Deal and Ongoing Currency Wars

Courtesy of Jesse's Cafe Americain

The waters are a little muddied this time around because of the fiscal fluff and the January debt ceiling policy scrum to come, but lo and behold, gold rallied sharply on the last day of the year, after a series of repeated hits lower.

How unusual.

New year, same old games.

And Washington announced, in time before the markets close, that they reached a deal, kind of. 

No grand bargain, but a deferral.

It looks like the Senate will agree to avert the tax increases for those with less than 450,000 per year in income, arrangements on capital gains, 40% inheritance tax on estates over 5 million, and AMT. It appears they will leave the budget cut wrangling for the debt ceiling fight in January, and possibly every two months next year after that. 

The House will not have a chance to vote for it until later this week most likely.

And at the bottom, an update on Jim Rickards on the ongoing currency wars.
 

 





Cliff Deal – Winners and Losers

Courtesy of Bruce Krasting

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My read of the President's speech is that there is a deal that will avoid the cliff. So go enjoy New Year’s Eve. Give it another 30 days, and we’ll be right back into the soup. My scorecard on the deal.

-If you’re unemployed, you’re a winner. You get another extension of benefits.

-If you’re employed, you’re a loser. Fully 155m workers are going to pay 2% more on income starting tomorrow. The increase in FICA taxes will come to a lumpy $120B. This will rank as one of the largest YoY tax increases in history. This is a very regressive tax increase. There is a $108K cap on what is subject to FICA taxes, so high incomes do not feel the bite. But those who earn an average income will see a meaningful reduction in disposable income ($2,000 per household).

This is a decidedly un-Democratic outcome. The rich avoid taxes, lower incomes pays a disproportionate share. Who insisted that this unfair outcome was part of the deal? Answer: Harry Reid, Nancy Pelosi and Barack Obama. Don’t blame the Republicans when your next check has an extra bite out of it. “Go figure?,” on this outcome.

-If you make between $250 and $400k, you are a very big winner, congratulations. Half of the top 2% just got a free pass.

-If you make over $450k, the cliff deal says you may have to pay more taxes. I wouldn’t worry too much about the top 1% – that group has 18% of all income. The move from 35 to 39.6% for America’s richest will not matter a bit. None of them paid the old rate, they won’t pay the new higher rate either.

-If you’re one of the 33 million taxpayers who avoided falling prey to the Alternative Minimum Tax (AMT) by the last minute patch, you dodged a bullet. This would have taken an average of $4k out of your pocket. I’m happy for you.

-If you’re one of the 4 million hopeless losers who have been stuck with AMT in prior years, you’re going to get stuck again. I’m one of those poor souls who is mired in this tax trap. It's a very unfair outcome for me. I make a fraction of the top 1%, but because of AMT, I pay a minimum federal tax of 28% while…
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3% Market Ramp… On No Deal, And On Debt Ceiling Breach

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

S&P 500 futures staged a 3% rally off their overnight lows – taking them back to 3-day highs as  headline after headline triggered another round of stop-runs. VIX compression led the way as hedges were pushed off to March and higher levels enabled better exits above Friday’s plunge VWAP levels. The year ends with the Dow beating Gold for the first time in nine years (just). The USD fell 0.5% on the year. European stocks beat US stocks (EuroStoxx50 almost doubling the Dow’s performance). US Treasuries and US stocks both rallied. Financials gained 26% on the year. The Treasury curve flattened with the front-end selling off modestly and the belly rallying 10-15bps. VIX was unchanged from the start of the year at the open today – but thanks to the epic compression and steepening we have fallen back (VIX lower on the year). Of course, today’s epic ramp really dislocated from risk-asset reality as soon as Bonds closed…

 

 

Epic rampathon – to 3-day highs…

 

Treasury Curve from 12/30/11 to 12/31/12…

 

VIX on the year…

 

Sectors YTD…

 

Asset Classes YTD – Dow beats Gold by 0.3% for first time in nine years…

 

Charts: Bloomberg and Capital Context

 

Bonus Chart: AAPL’s epic stop-run-athon today…






 
 
 

Phil's Favorites

Coronavirus: the blow to the Chinese economy could be felt for years

 

Coronavirus: the blow to the Chinese economy could be felt for years

Courtesy of Chusu He, Coventry University

Investors are still being fairly complacent about the novel coronavirus. After the number of new daily cases suddenly shot up to more than 15,000 on February 12 following more than a week of decline, there were some jitters in the markets. With Chinese authorities saying the increase was due to a decision to broaden the definition for diagnosing people, there were falls in the region of 1% in European markets, and smaller retrenchments in Asia and North America.

It is...



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Biotech & Health

Coronavirus: the blow to the Chinese economy could be felt for years

 

Coronavirus: the blow to the Chinese economy could be felt for years

Courtesy of Chusu He, Coventry University

Investors are still being fairly complacent about the novel coronavirus. After the number of new daily cases suddenly shot up to more than 15,000 on February 12 following more than a week of decline, there were some jitters in the markets. With Chinese authorities saying the increase was due to a decision to broaden the definition for diagnosing people, there were falls in the region of 1% in European markets, and smaller retrenchments in Asia and North America.

It is...



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Zero Hedge

China Adopts 'Cultural Revolution-Style' Social Controls To Crush Outbreak As Death Toll Nears 2,000

Courtesy of ZeroHedge View original post here.

Summary:

  • Taiwan reports 1st coronavirus death
  • Hubei reports 1,933 new cases, 100 deaths
  • Hubei health officials report 1,933 new cases, 100 new deaths
  • Taiwan taxi driver who died from virus carried passengers from mainland, Hong Kong, Macau
  • Singapore reports 3 more cases
  • Total cases aboard 'Diamond Princess' climbs to 355 as US prepares to evacuate citizens
  • Indonesia says 6 passengers from Westerdam cruise ship tested negative
  • There are now at least 68,500 cases worldwide, and at least 1,665 de...


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Members' Corner

How to Stop Bill Barr

 

How to Stop Bill Barr

We must remove this cancer on our democracy.

Courtesy of Greg Olear, at PREVAIL, author of Dirty Rubles: An Introduction to Trump/Russia

...



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The Technical Traders

Is The Technology Sector Setting Up For A Crash? Part I

Courtesy of Technical Traders

One thing that continues to amaze our research team is the total scale and scope of the Capital Shift which is taking place across the globe.  For almost 5+ years, foreign investors have been piling into the US stock market chasing the stronger US dollar and continued advancement of US share prices. It is almost like there is no other place on the planet that will allow investors to pool capital into such a variety of strong assets while protecting against foreign capital risks.  Yet the one big question remains – when will a price reversion event hit the US stock
market?

So many researchers, even our team of researchers, believe we have found the keys to unloc...



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Kimble Charting Solutions

Joe Friday Says Germany (DAX) Could Rally 30%, Happy Valentines Day For The Bulls!

Courtesy of Chris Kimble

German DAX Index “weekly” Chart

The German DAX is one of the more important global stock market indices, as it represents the largest economy / market in the Euro Zone.

So it would be a real treat for the bulls to see this stock market index breakout as we celebrate Valentine’s Day.

The facts, Ma’am. Just the facts; The German DAX looks to have formed a bullish ascending triangle over the past 3 years and it is currently attempting to breakout above the top at (1)....



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Insider Scoop

Nissan Shares Tumble To Decade Low After Q3 Earnings Miss

Courtesy of Benzinga

The shares of Nissan Motor Co. Ltd. (OTC: NSANY) dropped to a decade low on Thursday after the company missed third-quarter earnings estimates and significantly cut its annual forecast for the financial 2019 year.

What Happened

Nissan, on Thursday, reported a net loss o...



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ValueWalk

Russell 2000 Index (RUT) hits an almost one-month high

By Gorilla Trades. Originally published at ValueWalk.

Ad the Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, commenting on today’s trading Gorilla Trades strategist Ken Berman said:

Q4 2019 hedge fund letters, conferences and more

Russell 2000 Index (INDEXRUSSELL: RUT) Outperforms Large-Cap Benchmarks

While the overnight session was nothing short of scary stocks held on to most of yesterday's gains and small-caps even extended their winning streak. The Russell 2000 Index (INDEXRUSSELL: RUT) hit an almost one-month high today, finishing higher for the fourth day in a row while outperforming the large-cap benchmarks, and since the Volatility...



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Chart School

Dow theory warning from the Utilities Index

Courtesy of Read the Ticker

Charles Dow died in 1902, and the investors should thank him for his ever lasting Dow Theory Analysis.

Carrying on this blog theme looking at the Utility stocks. Previous post.
Dow Jones Utility index could trade like the FANGs
Formula for when the Great Stock Market Rally ends



You can learn about Dow Theory here

This post is concerned wi...

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Digital Currencies

Bitcoin Price May Hit $27K All-Time High By Summer, Predicts Fundstrat's Tom Lee

Courtesy of ZeroHedge View original post here.

Authored by William Suberg via CoinTelegraph.com,

Bitcoin is primed for average gains of almost 200% over the next six months, one of its best-known supporters has told mainstream media. 

...



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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

Courtesy of  

The repo market problem isn’t the problem. It’s a sideshow, a diversion, and a joke. It’s a symptom of the problem.

Today, I got a note from Liquidity Trader subscriber David, a professional investor, and it got me to thinking. Here’s what David wrote:

Lee,

The ‘experts’ I hear from keep saying that once 300B more in reserves have ...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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