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…






 
 
 

Zero Hedge

Schiff: Negative Interest Rates Are "Boneheaded"

Courtesy of ZeroHedge View original post here.

Via SchiffGold.com,

Donald Trump has been badgering Federal Reserve Chairman Jerome Powell for months, begging for lower interest rates. This week, he took things to another level, saying that the “boneheads” at the Fed need to push rates into negative territory.

In his podcast, Peter Schiff said negative interest rates are boneheaded. ...



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The Technical Traders

Metals are following downside sell off prediction before the next rally

Courtesy of Technical Traders

It is absolutely amazing how the precious metals markets have followed our October 2018 predictions almost like clockwork.  Our call for an April 21~24 momentum base below $1300 followed by an extensive rally to levels above $1550 has been playing out almost like we scripted these future price moves.

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1490~1500 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold...



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Chart School

Crude Oil Cycle Bottom aligns with Saudi Oil Attack

Courtesy of Read the Ticker

Do the cycles know? Funny how cycle lows attract the need for higher prices, no matter what the news is!

These are the questions before markets on on Monday 16th Aug 2019:

1) A much higher oil price in quick time can not be tolerated by the consumer, as it gives birth to much higher inflation and a tax on the average Joe disposable income. This is recessionary pressure.

2) With (1) above the real issue will be the higher interest rate and US dollar effect on the SP500 near all time highs.

3) A moderately higher oil price is likely to be absorbed and be bullish as it creates income for struggling energy companies and the inflation shock may be muted. 

We shall see. 

...

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Phil's Favorites

Black Hole Investing

 

Black Hole Investing

Courtesy of John Mauldin, Thoughts from the Frontline 

Scientists say the rules change in a cosmic “black hole” at what astrophysicists call the event horizon. How do they know that? Not by observation, since what happens in there is, by definition, un-seeable. They infer it from the surroundings, which say that the mathematics of the universe as we understand them change at the event horizon.

Or maybe not. One theory says we are all inside a black hole right now. That could possibly explain a few things about central bank policy. ...



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Insider Scoop

The Street Reacts To Kroger's Q2 With Mixed Takeaways

Courtesy of Benzinga

Kroger Co (NYSE: KR) reported second-quarter results that came in better than expected. The earnings beat may have been overshadowed by management's decision to remove its prior guidance of $400 million in incremental EBIT by fiscal 2021.

Q2 A Mix Of Positives And Negativ...

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Kimble Charting Solutions

Bond Yields Due For Rally After Declining More Than 1987 Stock Crash

Courtesy of Chris Kimble

U.S. Treasury Bond Yields – 2, 5, 10, 30 Year Durations

The past year has seen treasury bond yields decline sharply, yet in an orderly fashion.

This has spurred recession concerns for much of 2019. Needless to say, it’s a confusing time for investors.

In today’s chart of the day, we look at a longer-term view of the 2, 5, 10, and 30-year treasury bond yields.

Short to long term bond yields are all testing 7 to 10-year support levels as momentum is at the lowest levels in a decade.

A yield rally is likely due across the board after a recent decline that was bigger than the stock crash in 1987!

If yields fail to ral...



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Lee's Free Thinking

Nonfarm Payrolls Not Seasonally Adjusted Tell the Real Story - Unspinning Wall Street™

Courtesy of Lee Adler

Not seasonally adjusted nonfarm payrolls, that is, the actual numbers, give us a truer picture of the jobs market than the seasonally adjusted garbage that Wall Street spews.

Friday’s seasonally adjusted nonfarm payrolls jobs headline numbers disappointed investors with slower than expected growth. But was it really that bad?

Here’s How The Street Spun It – Wall Street Journal Modest August Job Growth Shows Economy Expanding, but Slowly

Employers added 130,000 nonfarm jobs, jobless rate held steady at 3.7%

U.S. employment grew only modestly in August, suggesting that a global economic slowdown isn’t driving the U.S. into recession but has dente...



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Digital Currencies

China Crypto Miners Wiped Out By Flood; Bitcoin Hash Rate Hits ATHs

Courtesy of ZeroHedge View original post here.

Last week, a devastating rainstorm in China's Sichuan province triggered mudslides, forcing local hydropower plants and cryptocurrency miners to halt operations, reported CoinDesk.

Torrential rains flooded some parts of Sichuan's mountainous Aba prefecture last Monday, with mudslides seen across 17 counties in the area, according to local government posts on Weibo. 

One of the worst-hit areas was Wenchuan county, ...



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Biotech

The Big Pharma Takeover of Medical Cannabis

Reminder: We are available to chat with Members, comments are found below each post.

 

The Big Pharma Takeover of Medical Cannabis

Courtesy of  , Visual Capitalist

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless co...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

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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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