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Thursday: Draghi Disappoints, Consumer Confidence Disconnected – Market Up?

Well, on the bright side, what worse can happen?

Both the ECB and the BOE left their rates unchanged (because Europe is fine, I guess) but we're still waiting for Draghi (8:05) to explain himself.  Yesterday's Fed Beige Book indicated the US is still in a SLOW but steady recovery and we're waiting for Unemployment at 8:30 and Consumer Comfort at 9:45 but it's all about the Non-Farm Payrolls Tomorrow morning (8:30) as the key data-point for the week.  

Unfortunately, according to the WSJ, at our present rate of job growth, it will take the US more than a decade to get back to "full employment," which is 4.5% Unemployment.  Of course, the WSJ does need to be reminded that, at the Bush rate of job losses, no one in the country would have had a job by the end of the decade so, despite their concerns – we are a bit better off than we were 5 years ago.  Slow and steady does indeed win the race, especially when the alternative is plunging headlong into the depths of Economic Hell…

Speaking of plunging – as you can see from our Big Chart, we're hitting our predicted pullback targets (the 50 dmas) already so of course we expect a little bouncing action.  As I noted to our Members yesterday, we expect at least weak bounce levels to be made on our indexes and those are, according to our 5% Rule® (see original comment for details):

  • Dow 15,108 (weak bounce) and 15,216 (strong bounce)
  • S&P 1,622 and 1,634
  • Nasdaq 3,420 and 3,440
  • NYSE 9,280 and 9,360 
  • Russell 975 and 981.40

RUT WEEKLYNotice that Russell 975 was the breakdown line we predicted last Wednesday and now it's forming overhead resistance – so we'll be keeping a very sharp eye on that line for directional plays.  Anything less than a weak bounce will keep us bearish this morning and, if we fail to retake those weak bounce lines today, nothing less than a strong bounce will get us off the bearish bandwagon we jumped on last week.  Of course, we don't just talk the talk at Philstockworld, we also walk the walk and, over the weekend, I wrote "Hedging For Disaster – 3 More Option Plays that Make 300% if the Market Falls" (as we already had other bear plays from Member Chat) and, already, we can see some good results:

  • DIA June $148 puts at .60 (as low as .31 on Tuesday morning's move up), now $1.44 – up 140%
  • DIA Aug $147 puts at $1.72, now $3.15 – up 83%
  • TZA Oct $30/37 bull call spread at $2, now $2.30 – up 15%
  • DXD July $35 calls at $1.20, selling July $38 calls for .55 for net .65, now .90 – up 38%
  • TZA Oct $30/37 bull call spread at $2, selling Oct $24 puts for $1.05 for net .95, now $1.55 – up 63%
  • SDS July $37 calls at $3.30, selling July $41 calls for $1.40 and selling KO Jan $35 puts for .90 for net .90, now $1.59 – up 76%

So far, so good with those hedges (and yes, I know, there's 6 not 3 – I was very generous) and, of course, they are all capable of making 300% or more so, in general, they are merely "on track" with these fantastic 3-day gains.  As usual, the longer bull call spread on TZA has the least movement but TZA is at $33.13 so the spread is $3.13 in the money and only showing net $2.30 because the caller still has premium and we KNOW that eventually wears down.  It's good to layer combinations of short and long-term hedges as we can take off the quick profits and let the slow ones ride. As noted above, those weak bounce lines make for easy stops for early profit taking – especially for direction bets like DIA, that are already up 100% (shame on you if you leave 100% short-term gains on the table!).  

Meanwhile, our virtual Short-Term Portfolio is flying with a $4,189 gain as of yesterday's open (as always, we've made changes in Member Chat since), which is really good in less than 3 weeks!  We had a little scare with SODA flying up pre-market on complete BS rumors that PEP was going to buy them (we entered the trade on BS rumors that KO would buy them) and it's amazing how many legitimate news sources picked this story up as if it were a fact:

My comments in early morning Member Chat while this was going on say it all:

Son of a bitch!  The hot rumor on Tuesday was that Coca-Cola in interested in buying SodaStream (SODA); today's hot speculation is that PepsiCo (PEP) is in negotiations to acquire the Israeli company for $2B or more, well above its market cap of $1.43B. PepsiCo could even be willing to pay as much as $95 a share, or 37% more than SodaStream's close of $69.35 yesterday. However, the latter also wants to check its options with Coca Cola. - This story is from The Calcalist, the same Israeli business magazine that said FB was buying Waze, which turned out to be totally untrue.  Our move will be to buy back the short puts in the STP and keep our long puts, most likely as this is the same nonsense as KO was a couple of days ago – I wish I could short them now ($89).  

SodaStream (SODA +26% to $87.01) shares froth effervescently following a report that PepsiCo (PEP) is in negotiations to acquire the Israeli company for $2B or more and is willing to pay up to $95/share. Barclays says that a deal would be "earlier cycle than we would have thought." - What idiots!  They don't have the balls to say "this sounds like BS to us!"  I can't believe what passes for news these days.  Of course, no arrests will be made.

Yes, very sadly, no arrests will be made.  That's the second time this week the same Israeli magazine has pumped up the share price of an Israeli company on COMPLETELY FALSE rumors of the company being bought and NOTHING HAPPENS.  Shame on the MSM and the way they run with this nonsense before confirming it – especially when the "news" is coming from such a questionable source.  We jumped on the bear put spread in our Short-Term Portfolio when they floated the KO buyout rumor and, had the rumor persisted into the morning, we would have bought back the short puts we sold and kept or even rolled up the long puts we owned to take advantage of that nonsense.  That's the difference between Fundamental and Technical trading!

Speaking of BS rumor-driven rallies – TSLA – enough said…  

As it turns out, it doesn't look like we'll be stopping out any of our bearish bets this morning as the Futures have turned negative as Draghi's commentary did nothing to inspire the bulls with that Central Bankster saying the ECB is "technically ready" to use negative rates, but sees no reason to act right now.  No reason???   Greek unemployment is at 26.8% and he sees no reason???  

Amazingly, no arrests will be made…

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  1. Oil Lines

    R3 – 95.50
    R2 – 95
    R1 – 94.43
    PP – 93.92
    S1 – 93.36
    S2 – 92.85
    S3 – 92.29

    Yesterday's high and low – 94.48 / 93.41

  2. FU SODA!!!!

  3. Phil – Love that chart that you posted this morning:


    So basically, before 2009 we were all Keynesian, with the government basically holding the GDP up with massive spending but since then we have seen the deficit light and government cuts have basically cost us about 1% of GDP which is huge and probably means another 1% in the unemployment. I wonder what happened around 2010 to change that. I am sure it will come back to me….

    If you look at the chart of employment in the public sector over the last 5 years (going down fast) and government spending as a share of GDP, it's a miracle that we are holding up so well now. On the other hand, that Bush boom looks less miraculous now!

  4. Yup, ECB is doing its job:

    Too bad it's costing other people's job:

    Some euro zone unemployment data is out today, and it’s not pretty. In Q1, France’s jobless rate hit 10.8% (pdf), the highest it’s been since 1998, and significantly higher than the 10.5% in Q4 of 2012. Worse, Eurostat, which calculates things a little differently, estimates that it’s already risen to 11%.

    In Greece, 1.31 million people were jobless in March. Compare that with 390,000 in March 2008. And that’s despite slightly positive signs elsewhere in the Greek economy.  245,949 people lost their jobs (pdf) in March, compared with just 6,697 in February. That meant 26.8% of the working population were unemployed in March, up from 26.7% the previous month and 22.2% in March 2012. That’s not even counting whatever share of the 3.4 million inactive people who have simply given up looking for work.

    Ireland is the only bright spot: May jobless claims sunk to the same level that they were in August 2009. However, it’s hard to tell how much of the drop relates to people dropping out of the labor force, leaving the country or actually finding work. 

    But inflation is absolutely under control…

  5. Grenowoods: Thanks for the link.

  6. Soda: Anyone shorting it?

  7. Fascinating numbers about the global top 1%:

    Despite its name, it is a less “exclusive” club than the US top 1 percent: the global top 1% consists of more than 60 million people, the US top 1% of only 3 million. Thus, among the global top percent, we find the richest 12 percent of Americans (more than 30 million people) and between 3 and 6 percent of the richest Britons, Japanese, Germans, and French. It is a “club” still overwhelmingly composed of the “old rich” world of western Europe, northern America and Japan. The richest 1% of the embattled Euro countries of Italy, Spain, Portugal and Greece are all part of the global top 1 percentile. However, the richest 1% of Brazilians, Russians and South Africans belong there, too.

  8. Good Morning!

  9. I though it funny when Cramer stated he wouldn't buy another SodaStream because the one he owned "blew up" in his kitchen….. :)

  10. That FAS spread needs to be addressed now – sell calls, roll down?

  11. newt/soda shorting
    I had gotten out of a short on yesterday's drop only to jump back in this AM, doing what I am NOT supposed to but I bought the June 70'P for 2.75 on the opening pop (Using Phil's Philospy of sell ing into excitement in reverse) I figured those getting up would see the rumor buy then page down and get to the facts thinking end of week we end up around yesterdays close or lower…we shall see

  12. Newt/SODA – I have a bid to buy the July 65 put for 2.50

  13. Soda: I think I'm going for the 75 put long. then will cover (if necessary) as it falls.

  14. That was a quick correction:

    The S&P 500's 10-day advance/decline line measures the total number of daily advancers minus decliners in the index over the last ten days.  It's a great measure of short-term strength and weakness in the market, and extreme readings are thought to be indicative of a reversal.  As of the close today, the S&P 500's 10-day A/D line had ticked to -1,500, which is the most oversold reading the market has seen in more than a year.  Yes, market internals are extremely oversold on a near-term basis, even though the index is still above its 50-day moving average.

  15. With the SEC letting manipulation on the main markets equal that of penny stocks, now is the time to start a company with some futuristic device, make sure it loses money, tweet every week about progress and expectations and how shorts will be sorry, then plant false stories in Israeli and India newspapers talking about a major company that will buy me out as I dump all my shares.  There's the formula.  Anyone who wants in on the angel round of my Time Traveling Device, put your name on the list.  We expect 5000 to be sold by 2016, and I know that because I went to 2016 and saw the results.

  16. Good morning!  

    Why did we lose $400 in the STP?  That's the first thing you want to do when there's a spike up or down, see which positions are problematic:

    • SCTY is $38.21 but we're happy with our spread as the longs are already paid for.  
    • CLF we're just waiting for a nice pop to $20 or $22 and we'll be done.  
    • TZA – Not doing much so far but as long as the RUT is under $975, we REALLY want that protection
    • SHLD – Just a waiting game.  
    • TLT – $114.62 today so "on track"
    • FAS – Ah, here's one we should fix but I want to know if the markets are weak bouncing or not. If they hold a weak bounce, then we give them a chance to strong bounce tomorrow.  If not, we expect worse things to come and get more bearish.  The long spread was $1.65 and we already made more than that off our first sale.  No reason to rush just because it's now .90, as that can change VERY quickly. 
    • LQMT – is a waiting game. 
    • AAPL – Not good today so we buy back the June $450s for $7 and leaves us in the $440s at net $12.25 (now $12) and we do need to cover again or quit if AAPL can't hold $440.
    • SODA – Not much action there.  Too bad they didn't open higher.  
    • USO – Oil $94.50 not helping so far, should start melting after 10:30 Nat gas inventory.
    • SCO – Same as oil, we're playing for under $95 and we're under $95, right? 
    • AMZN – If we get strong bounces we bounce out of this one.  

    So, not much to do here, just the normal silliness of options swinging wildly but no major changes to our premises.  

    Consumer Comfort unchanged so no help there:

    The Bloomberg Consumer Comfort Index is unchanged this week at -29.7, nevertheless remaining above the -30 level at which it's spent about the entirety of the last 5 years. 24% rate the national economy positively – the most since January 2008 – while 31% say the economy is in "poor" shape, the fewest since January 2008. The index remains 13.6 points below the long-term (27 year) average of -16.1.

    Keep in mind that 24% is pretty much the top 20% plus some brain-washed idiots.  The rest deal with reality on a daily basis and, again, these surveys are flawed as they only reach people who have homes and phones – so they're not even asking people who have been foreclosed on or can't pay their bills.  

    AGNC hitting $25! 

    Dollar down to 82.28 on relative weakness to Euro that isn't printing more every day.  Yen still 99.19 and Euro up half a point to $1.316 and Pound at $1.545.  

    Nat gas plunged to $3.92, which is strange ahead of the report.  Oil is going the other way at $94.79 and will make a nice short on /CL at $95 or below $94.75.  

  17. rustle123: brilliant!
    However rather than an actual device perhaps you could say it was software which would run on in the cloud.  That way you don't actually have to show any real product in various stages of development while you jam the price up ;)

  18. PHil – on FAS and in general – at what point do you decide that we are or are not holding weak bounce?  Right now, not even close, but do you wait til the end of the day or make a call before then?

  19. Soda: I bailed on it.  Just not comfortable with its pricing and the Jun 75's are too rich for gambling.

  20. Chart/StJ – Yes, like Europe, austerity does have consequences.  Unfortunately, the Dems always have to come in and clean up the Reps messes.  

    AAPL/STP – 50 dma is $433 so that's our line in the sand for longs.  June $440s are $10.80 now so down about $2 and the delta is .50 so, at $433, we'd be down another $3.50ish at about $7 and the July $440s, now $16.70, would be about $13 so $6 to make the roll and then we cover with July $450s, now $12 for hopefully more than that and we'd be in that spread for net $14.60 – $9.55 + $7 (our recent buyback) + $6 (the roll) – $12 (the re-cover) for net $6.05 and, since that's a pleasant outcome and we can sell June somethings for $2 or $3, let's offer $6 for the roll from the June to July $440s now and see if it fills.  

  21. FCX         director-officer James Flores buys $34M of stock on June 3rd.  I'll need to look into this further

  22. 1998/StJ – Overall, it's so much worse:

    SODA/Newt – The way they jammed up to $100 on rumors last night – I wouldn't do a naked short.  If it goes back to $90, THEN I'll want naked shorts.  

    Top 1%/StJ – That's a bit off as the richest 1% of Americans are far richer than the richest 1% in random countries.   The way they slice it up distorts the reality, which is that we have about 40% of the world's Ultra-HNW individuals (over $5M liquid) and about 33% of all the World's HNWs (over $1M liquid):

    That's not bad considering we're just 5% of the World's population (or not good, depending on which side of the inequality game you're on).  

    SODA/1020 – LOL, I didn't hear that, that's great.  

    Oil $95.15 on a weak nat gas report:

    EIA Natural Gas Inventory: +111bcf. Futures -1.76% to 3.93. 

    Much bigger build than expected and Nat gas dove to $3.84.  Oil should follow eventually, once the NYMEX crew gets tired and have to settle up.  Too early to press our oil shorts but, of course, that $95 line is a juicy cross in the Futures (/CL) when it comes back down.  

  23. Phil/AAPL – i have June 430/440 bcs bought for $6, now $7 with AAPL at $438. Any adjustments. 

  24. TZA Call 34 tomorrow for 38c

  25. HOV – $5.98!

  26. Lincoln/Time Device
    Congratulations, you just became my COO.

  27. rustle/ How about using an old police phone booth and calling yourself the Doctor!  Maybe the cloud can run inside the booth since it is much larger inside than outside!

  28. Note that the McClellan is -330 coming into today.  If we are down moderately today, it might be a good time to go bullish in the short term as the market will act like a short squeeze if things aren't that bad.

  29. Really running the dollar lower to $82.   This is keeping USO at elevated level $33.80 and oil at $95.

  30. Dollar 82.21 is down half a point, masking a lot of market weakness. 

    Missiles/1020 – Well that explains the oil pop.  Of course Israel is always being hit by missiles and these seem like strays, not an actual attack.  

    Two missiles from Syria landed in Israel Thursday as fighting between President Bashar Assad’s forces and rebels raged on the Golan Heights.  The Israel Defense Forces said that a “closed military zone” was declared near the Quneitra border crossing in response to the fighting. People were not being allowed inside the area and locals were warned not to work in the fields.  No one was injured on the Israeli side, but two wounded Syrians who came to the border were taken to hospitals in Israel, an IDF spokeswoman said.

    That is certainly no reason for oil to be up $1.50!  

    Soda/Sage – Good move but you need to check if, in fact, the puts were a good price compared to yesterday.  The real money was to be made in SELLING premium, like the $75 calls, which opened at $5.50 and are already below $3.50.  Your puts were a good choice, they were $4+ yesterday and bottomed at $2.29 and now back to $2.60.  Generally I set a goal of getting halfway back to yesterday from the low so $3.10 is a point at which you might want to protect profits.  

    Correction/StJ – And check out the short-term McClellan Index – Shockingly oversold:


    But not oversold at all in the longer-term Summation index.  


    The key with McLellan is to watch how fast the short-term indicator moves back to neutral from oversold.  In other words, if we flatline or go up half a point and that shoves it all the way back to neutral, then we're still pretty bearish as another half a point up would probably put us back in overbought.  If, on the other hand, we move up 1% and we barely get to neutral, then we can assume there's more rally to come.  

  31. Not much to trade on today. Markets up when indicates down. Not even weak bounce #s.

  32. Phil/missiles  I agree, they could be stray, but we're winding down a war and that's not good for business…..

  33. Dollar all the way down to 82 not helping oil much.  Or gold, just $1,404.  

    Silver $22.50, copper $3.31, Nat gas bounced finally at $3.84, now $3.874, gasoline up to $2.85 but being rejected but oil is still the better short at $95 (/CL).  

  34. LOL Rustle – I'm in.  FUTR will be the symbol.  

    Device/Lincoln – Good point.  Actually, I bet if we had a little cash, we could put together some future news-reading program that looks legit.  Following the same premise we use to follow oil or call out BS like SODA – we could put up our calls "from the machine" and make predictions and then, whenever we hit a streak and get 60% accurate, we'll have some Stanford guys (who happen to have options) release a study on how statistically impossible it would be for us to know these things without having actual future knowledge.  

    FAS/STP, Jercon – That's more of a general market view thing so I'm just watching the bigger picture but, as I said yesterday, I don't think $19.50 is much of a dip and our strategy is to roll and sell and the roll gets cheaper as FAS goes lower so there's no hurry – the main point is to sell calls into a spike back to $20 or, at this point, I think we'd settle for $19.75.  If we feel $19.50 isn't coming back, then we consider selling FAS June $64s (now $2.20) for about $2 and $2 pays for us to roll the Oct $75 puts, now $3 to the Oct $70 puts, now $4.30 while knocking .70 off our $1.65 basis.  So then we're in the Oct $70/80 bull call spread for net .95, not even counting the profits we already took off the table and we'd be short the June $64s, which are an even(ish) roll to July $70s (now $1.70) where we are then in the money on our bull call spread.  See how easy that is to plan out?

    SODA/Newt – Could be a wise move, I hear DPS will buy them for 2x their market cap!  8)  You know, because the concept of adding seltzer to water has got to be the patent of the century!  

    SodaSparkle Soda Machine, 5 Chargers, 15 Single Serve Packs Asst Flavors 1.3 and 1 Liter - 1 ea

    Kitchen Talks - Essential Gadgets for your Kitchen - Soda Maker

    Anyway, I hope you get the point!  

    FCX/Stock – About time. 

    AAPL/Nicha – As with our play, I'd buy back the $440s and play for a bounce off $438 but, of course, you'd want to re-cover at the day's end.  

    Dollar fails 82!  That's helping a little.  

    Tardis/Arivera – Brilliant!

    Squeeze/Rustle – I'd expect at least a weak bounce but we can't even get there with Dollar 81.93 – that's not a bullish sign. 

    $94.66 was oil low just then, now back to $95 for another chance to pocket .25.  

    Not trading Shadow – very wise. 

    Business/1020 – Oh yes, gotta have a war somewhere.  Those missiles aren't going to shoot themselves.   And, of course, it's no good for Tomahawk makers if it's a little rebel war – they tend not to fire off $1M missiles.  They need a war that the big guys get involved in so they stir the pot to drum up business.  That's why McCain went to Syria to make a fool of himself – he's so far up the ass of Defense Contractors he can't see straight.  

  35. Phil/McCain   Yeah, you would have thought after losing the '08 election, he'd take on the role of an elder statesman and ride off into the sunset….

  36. Time Travel Company/rustle123,
    I am very impressed with your company.  After conducting a thorough analysis, I am increasing my price target from $150 to $300.  I would also have given it a 'Sector Outperform', but since there are no other time travel companies, I can't really compare it to anything else.

    The closest I can think think of is PCLN, which is also a travel company – oh, isn't there a rumor that PCLN is looking into acquiring your company?  I guess I'll have to raise my target to $400 then…

  37. forex/phil – so is it us going down or euro and yen going up? some move.

  38. Stjeanluc,
    Do you have the support and resistance levels for gold today?

  39. What is going on with the USD?

  40. Dollar down to $81.50.  Over 1% move.  Do we have some theories to explain the big move?

  41. Shadow- What indicators are you using for IWM? Thnx

  42. Ah, there we go – Dollar plunges to 81.39 just in time to cover the exit out of equities but now the selling is overwhelming even the weak Dollar and the market's true direction is once again revealed.  What a silly game this is! 

    McCain/1020 – That role doesn't get the payola that warmongering brings him from his defense buddies.  His trip to Syria was hysterical – he went there to "prove" that the White House's assertion that you couldn't tell good guys from bad guys over there was wrong and that we should hand out arms to the "rebels" and, on his first day there, he's taking pictures with known terrorists.  What a tool!  And, of course, the whole thing was ignored by the MSM.  

    PCLN/Wappler – Not so fast, OWW isn't going to be left behind in the future so I'm starting a rumor that they are already in talks with FUTR and Carl Ichan will have already gone back to the past and put $1Bn on PCLN at $5, which he'll use to buy out FUTR and PCLN at the same time (once he gets back to today, of course).  

    Forex/Scott – Well, legitimately the Euro should be stronger because we and Japan are printing our asses off and they are not but, with Japan up too, we can assume it's a case of the Dollar being driven down to mask the serious weakness in US equities.  

    Dollar/Samz, Den – See above.  Now below 81.50, down 1.5% for the day.   This is exactly what I waned about when I said funds would pull out all the stops to mask their exits as they pull money out of the market. 

    Europe closed down 1% or more and Italy down 2.6% so I think it's only a matter of time before we join them.  

    TLT 116!  VIX 18!  

  43. 97.2 Yen to the Dollar – that's down 2% (stronger) today.  /NKD down 290 to 12,635 but that's nothing if 97 sticks into the Japan open! 

    NFLX failing $215, that makes me happy. 

  44. time to short oil?

  45. Phil, since Draghi disappointed, as you said he would, do you still believe we will drop 5% from here? 

  46. AAPL
    just got the $440's filled @ $6

  47. Phil / DIA
    My $147's stopped out this morning at $3 – any replacement or mod with TZA ?

  48. Out of TZA at .55 waiting to reload with calls 33.5 or 33 this time

  49. Phil: Thanks

  50. Shorting USO has to be a gift.  There's nothing surer or purer in this world than that the Euro ain't going to appreciate much from here. 

  51. vedonomics
    The dollar, oil a little, money flow, 20 and 50 SMA, 8 XMA, and the ticker. Check these times;
    There was a strong sell at 11:45 ish, sorry I resisted and then never chase, 12:30 was the reversal. Some how today seems like we end where we begin. I want to see another sell point at at a higher confuence line after lunch then maybe it will go really down or nowhere, that could be safer. Everything is below Phils 5% lines without weak bounces, tomorrow looking down so far.

  52. Phil
    Any tomorrow SPY puts that look like a good buy if there's a further drop?

  53. Cheap dollar will just pull in more foreign capital, given that Europe's economy is shrinking and the U.S. appears not to be: [From FT, 35mins ago]:
    "U.S. Household wealth reached a record $70.3tn in the first quarter of this year, up $3tn from the end of last year and $6tn from the same quarter a year ago.  The rising values of corporate equities and mutual funds accounted for half of the increase. The value of residential real estate grew by $784bn.  Meanwhile, households and businesses pared down their debts during the quarter and even the federal government slowed the rate at which its debt is rising.
    Millan Mulraine, head of research and strategy at TD Securities, said the data was evidence that the Fed's accomodative monetary policy was succeeding:

    'The improvement in financial wealth, while likely to contribute only modestly to spending activity – given the low marginal propensity to consume from wealth – is crucial to reigniting the virtuous cycle between confidence, spending, hiring and overall economic activity.'

    Since the depths of the recession in 2008, US households have added more than $16tn in wealth."

  54. Wappler/Time Machine
    Congratulations, because of your favorable price target, your firm just got the investment banking business to bring us public and then do a secondary as the stock moves up 300%.

  55. IRA Portfolio update

    We are currently short 1 ABX JUN 19-14 PUT Spread.  We originally sold it for $.80 and it is now trading at $.13 so I don't think there any reason to risk a $67 gain in the hopes that we make another $13.  The 14 PUT is trading for nothing so lets just buy back our short 19 put for $0.13 or less.  While I was writing this I got filled buying it back at $0.13.

  56. Krugman thinks that Bernanke is closet Rawlsian looking at his Princeton address:

    But the big thing in Bernanke’s remarks was his discussion of the obligations of the successful, even within a supposedly meritocratic society:

    We have been taught that meritocratic institutions and societies are fair. Putting aside the reality that no system, including our own, is really entirely meritocratic, meritocracies may be fairer and more efficient than some alternatives. But fair in an absolute sense? Think about it. A meritocracy is a system in which the people who are the luckiest in their health and genetic endowment; luckiest in terms of family support, encouragement, and, probably, income; luckiest in their educational and career opportunities; and luckiest in so many other ways difficult to enumerate–these are the folks who reap the largest rewards. The only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world, and to share their luck with others.

    OK, this is, whether BB realizes it or not (he probably does) basically a Rawlsian view of the world, in which you think of life as a kind of lottery in which you draw a ticket that includes things like your genetic endowment as well as the wealth of your parents. And what you’re supposed to do, ethically, is support the economic and social system you would choose if you had to enter that lottery not knowing what ticket you were going to draw — if you were making political choices behind the “veil of ignorance”.

    As soon as you portray the choice that way, you’ve introduced a strong presumption in favor of redistribution. After all, if you should happen to end up as a member of the top 1 percent, an extra dollar at the margin won’t mean a lot to you; but if you should happen to end up as a member of, say, the bottom quintile, an extra dollar could make a lot of difference. So you should, other things equal, favor a system of progressive taxation and generous aid to the poor and unlucky.

  57. Lionel
    FWIW Be careful shorting now dollar and TLT down trends with money flowing in NAS and RUT.

  58. Now people are panicking out of yen futures – it's drop 70 pips in 30 minutes – insane move -
    I don't know what the equivalent is in the stock market but it would be like a 300+ move in the dow

  59. Thanks Shadow
    Still on the sidelines
    C 33 tomorrow looking attractive…

  60. Apparently, this is an interesting investment book:

    I am buying it now and will post a review.

  61. Rawls/StJ – thanks so much for that post. The way the article describes Rawls makes it seem very close to Korean Confucianism, especially the part about reciprocal responsibility in a hierarchical society. You reminded me, though, of The Law Of Peoples (, something that is highly pertinent to the current Korean situation. Must find a way to get a copy to President Park & make sure she reads it…….

  62. Lionel

    • Wow, Dow down to 14,850, which was the top of the April rally so, hopefully, some support here at least. 
    • S&P at obvious support at 1,600 (Must Hold line)
    • Nas filling a gap to 3,450 from the month's end and 3.470 was where they gapped to so maybe support there. 
    • NYSE April spiked to 9,250 and we've blown that but I'd call 9,100 a more solid support and now 9,153.
    • RUT clearly topped at 950 but the 50 dma is 955 so I'd expect that to hold up for a bounce. 

    So, THIS would be a good place for a bounce but, of course, anything less than a 0.5% GAIN for the day is WEAK and, since it's not likely we'll have a 1% rally into the close – I'd say we're pretty screwed.

    The Dollar tested 80.065 and that couldn't turn us around.  Now it's 81.46 so no more help from the Dollar. 

    Dow volume 53M at 1pm is "normal" and we'll see how far the bottom fishers can take us.  

    YRCW interestingly up 4.5% for the day.  

    Oil/Scott – It's always time to short oil! 

    That's 45 MILLION barrels above average AFTER dropping 7M this week.  It would take another 7 weeks like this week (all summer) just to get back to "normal" inventory levels.  And, every week they don't, more and more US capacity comes on line and more and more electric and hybrid cars are sold that use 50% less gas, etc, etc…  It's not a pretty outlook for the oil sector.

    Draghi/Imho – Well I'd say we've already had a good 2.5% of it so another 2.5% is as far as I'd want to predict bearish.  That should be RUT 950 on the nose and about 1,585 on the S&P and 14,700 on the Dow (another 1% there).  If we fail those, THEN maybe a 10% correction (another 5%) coming.  

    AAPL/STP, Wombat – Thanks for update.  Now that we're in July $440s, we would be safe to sell June $455 calls, now $4 but they were $10 earlier in the week so we'll split the difference and hope to get $7 on a move back to $440.  

    DIA/Wombat – Congrats, you sold at the day's low!  This is why we don't use hard stops, we thought the move was fake so no reason to stop out but it's OK as a profit's a profit and now you have cheaper TZAs.  As above, we need to watch our levels but I certainly wouldn't want to rebuy DIA puts when you just stopped out of them without a compelling reason (like a cheaper re-entry).  So patience is key, you can always buy more TZAs…

    TZA/Lionel – Good job.  

    You're welcome Newt.  

    USO/ZZ – If you have the patience to pick up nickels and dimes, it's like a broken slot machine.  

    SPY/Strether – Nothing looks like a good buy after a 4% drop!  Patience is key.  The TZA spread is still cheap but I would hate to be the sucker buying puts into the excitement until we get a significant cross to set a stop line at.  (like 1,600 on the S&P). 

    Wealth/ZZ – Be careful with numbers like that.  We already know the top 10% recovered but the bottom 80% lost ground so all that Financial Wealth only helped a select few.  On the housing front, people were underwater and now they're not and that's nice but it doesn't put any money in their pockets.  Of course, those that could refinanced their debts but we already know that was mostly the wealthy and those few who managed to get a Government-backed loan modification. Student loan debt is at record levels (over $1Tn) with 25% of them behind on payments – if things are so "good" – why would that be happening?  Mortgage applications fell off a cliff so we know the housing "recovery" is only based on cheap loans and not on an actual improving economy.  That's why any hint of even "tapering" QE is terrifying investors.  

    Rawlsian/StJ – Interesting

    Yen/Samz – Down to 95.89 and back to 97.15 in an hour – magical! 

  63. Lionel
    That sounds like a good one. I am looking to buy IWM put for tomorrow but think the prices will be better sometime before the close. What I really dislike today is changing between the lines.

  64. IWM is strong today… it's a broader index.  Do you guys think weakness in DOW is fake?  Volume is very controlled so far, so am partially expecting a snap-back leading to tomorrow's big number.

  65. Shadow/ Agreed

  66. First tweet from Rustle CEO of FUTR:
    "We now have the capability to get you two hours in the future faster than you can get to the airport, go through security, get on the plane and wait till it takes off from the tarmac.  This is just the first step as we see our technology getting better in the next few years where we can expand to a few days at a time"

  67. hi everyone.   Just checking in from vacation in Gulf Shores, Alabama.  Looks like I am pretty much even this week (down a very small amount actually), so I am going to add a SDS hedge (I am still burning off the last of the premium on a short call left over from a previous SDS hedge) to go along with my DIA puts and TZA spread, and then back to the pool.  Thanks to Phil for the hedges.  It's  so much easier to relax during vacation with them on.  Hope you all are having a good week!

  68. Phil
    AAPL June 430/440 call spread cost $5.30  apple is at $437 so the spread is $7 in the money… Not a bad way to play for a pop next week at the WWDC!
    what do you think?

  69. rperi – hi, and wow, with this market action if you're even your ship is amazingly balanced, good work.  Enjoy time off!

  70. Looks like the top of a weak 50% bounce
    33 C TZA for 66c

  71. Phil // Confused
    I had DIA stops from your call yesterday to stop these out at half $200 , and half $2.50 ( protecting any profits ). I was watching the volume so I upped it to $3 overnight hoping to catch some extra cash.  ???

    Also, original post was covering the rolled AAPL $440's with $450's (which just filled for $12 ) – not $455's
    Any update on the USO/SCO inventory play ?

  72. apparently no one at SODA heard the rumors were false 

  73. Fake/Mecho – No, I think we're selling off, very simply.  The market made it's last leg higher as Draghi promised the ECB would do whatever is necessary to boost the economy and people expected about $50Bn a month from the ECB and, something from the BOE as well.  Now the window came and went and it turns out "nothing" was necessary and we're just giving back all of the gains since April (14,600 on the Dow, 1,580 on S&P) and that's likely where we'll settle out and then form a proper floor until Q2 earnings tells us whether or not the "improving" economy is improving the bottom line of Corporations enough to grow into their new values or, if indeed, another 10% of market fluff is purely based on QE and will disappear as soon as the Fed does. 

    Tweet/Rustle – Wow, I got that Tweet before you wrote it!  

    Hi Rperi – Glad you are able to enjoy your vacation.

    AAPL/Itrade – Hell, we're naked long at the moment so, sure, I like the spread.  

    DIA/Wombat – Sorry, that was yesterday.  Once we finished the day at the lows our expectations changed for at least a follow-through down move today.  No biggie – following rules only means you take profits, not the worst thing.  Hard stops are fine if they make you comfortable but they do tend to get triggered as the Bots hunt your strike to clear you out before a good move.  On AAPL, yes, I changed my mind but the $450 cover is fine.  As to oil plays, it's not cooperating yet. 

    SODA/Wombat – Hard to imagine what it will take but TSLA people still have that near $97 and GMCR still $75 – there's no stopping fools from parting with their money.  

  74. DIA // dont look now but here comes the bounce off 50DMA

  75. Looks like staying over our intra-day highs will be a challenge….

  76. Bargain hunting on the higher VIX (nice offsets to bearish spreads): 

    • BTU at $18.90.  2015 $15 puts can be sold for $2.35 for a net $12.65 entry.  
    • RIG at $50.  2015 $40 puts can be sold for $4.15 for a net $35.85 entry.  
    • EXC at $31.41.  2015 $28 puts at $2.50 for a net $25.50 entry. 
    • SHLD still cheap at $46.78.  2015 $40 puts at $8 for a net $32 entry. 
    • EKDKQ (Kodak) a fun gamble at .13.  
    • DF at $10.44 is, I think, mispriced as they still own 80% of WWAV, who they spun out.  Selling 2015 $10 puts for $1.60 drops the net entry another 20% to $8.40. 
    • VNO is an old favorite REIT at $79.72.  Put selling not exciting but Jan $75 puts can be sold for $3.80 for a net $71.20 entry and that's a nice start for a long-term hold. 
    • AAPL (still like them!) at $438.  2015 $350 puts can be sold for $30.50 for a net $319.50 entry. 
    • NEM is being rediscovered at $35.31.  Selling 2015 $25 puts for $2.45 make it net $22.55.  
    • ABX at $21.28.  2015 $18 puts can be sold for $3.10 for net $14.90.  
    • X at $17.33.  2015 $13 puts can be sold for $2.10 for net $10.90. 
    • WIN at $7.88 pays a $1 dividend.  2015 $7 puts can be sold for $1.30 for net $5.70, which would make the $1 dividend almost 20%!  

  77. Time machine/Rustle123,
    Thank you, we appreciate your business!  Upon further review of your company's fundamentals, our bank has decided to raise the price target to $500 and change our recommendation from 'Strong Buy' to 'Momo Outperform'.
    Our decision to upgrade your company was mostly driven by your company's new mobile strategy and the fact that the new generation of your company's time machines will be available in multiple colors.  Also, the marketing tie-in with SBUX is a nice touch, allowing them to double their revenue (=now and in the future) and offering your customers a great user experience.  Personally, I'd rather be caught dead than timetravel without a double capuccino!

  78. Damnit PHIL!  You totally stold my thunder.  I was in the middle of typing up a trade in X for the IRA Portfolio ;)

  79. Time machine/Rustle123,
    Based on the rumor of a technology venture between FUTR and SCTY, I assume the next generation of time travel machines will be solar powered?

  80. IRA Portfolio

    With the higher VIX I like initiating a position in X here. 

    Selling 1x the JUL 17-12 put spread for a credit of $80.

  81. I got filled on the 17-12 put spread at $.80 almost instantly.  You may want to try and work it at $.81 or $.82

  82. Phil / Wealth:  Well argued, thank you.

  83. CNBC the commentary is so obscure that they lose themselves and the audience constantly. I find Bloomberg refreshing at the very least they are clear even if the arguments are weak.

  84. Time machine – Sorry but we've been beaten to the punch already

    Ali Razeghi, a Tehran scientist has registered "The Aryayek Time Traveling Machine" with the state-run Centre for Strategic Inventions.

    The device can predict the future in a print out after taking readings from the touch of a user, he told the Fars state newsagency.

    Razaeghi, 27, said the device worked by a set of complex algorithims to "predict five to eight years of the future life of any individual, with 98 percent accuracy".

    As the managing director of Iran's Centre for Strategic Inventions, Razeghi is a serial inventor with 179 other inventions listed under his own name. "I have been working on this project for the last 10 years," he said.

    "My invention easily fits into the size of a personal computer case and can predict details of the next 5-8 years of the life of its users. It will not take you into the future, it will bring the future to you."

    Now, if we got to VCs, they will ask us a lot of dopey questions about what differentiates our Time Machine from existing models and give us crap about first mover opportunities lost and raise all sorts of margin concerns if we end up having time wars with our competition.  I think we can fight much of this by saying that we'll sell this machine in the past, before our competitors invent it but they'll ask what barrier to entry prevents our competition from doing the same if they get a little more R&D funding…

    X/Craig – Hey, feel free, GMTA.  It's so cheap I couldn't resist.  

    76M on the Dow at 3 – not enough volume to be a proper reversal day.  Keep in mind that we're only consolidating at yesterday's low overall.  

    You're welcome, ZZ – just trying to keep things grounded.  


  85. Hey Phil,
    Here is some guys opinion that was sent to me on Barrick Gold, what are your thoughts?
    "A quick heads up, short Barrick Gold stock!

    They're committed to producing 65 million ounces of silver for the market this year and production in Chile Pascua-Lama mine has been halted. Sophia (office Mgr) has shares in a mining company currently disputing ownership of that mine. Barrick is likely to face a severe penalty and have to pay out on previous sales as compensation. They've also been slapped with a $16 million USD fine for an environmental violation tied to improper disposal of tailings.

    Long story short, Barrick Gold is on the verge of bankruptcy, consider the repercussions if they are unable to produce and the affect that will have on large Canadian institutions that are heavily invested in Barrick Gold.

    Also, India has implemented a ban on selling gold coins due to overwhelming demand. My guess is much like guns and ammo, if you try to take it away or restrict access more people want it."

  86. Forex sideways since 1, markets on their own

  87. ABX/Ging – It's full of misinformation, what do you want me to say.  A $16M fine against a company that has $14.5Bn in revenues?  You know the guy's an idiot for bringing it up as a negative. Verge of Bankruptcy?  That's slander.  In the last 3 years they've had a $8Bn profit total including last year's $677M loss when they wrote off the Pascua-Lama expenses to zero out their taxes (they were left with a $236M tax credit to carry forward).  Despite that, they paid out $750M in dividends and bought back $500M of their own stock.  The guy's a moron but we need counterparties, I suppose…

    15,000 on the dot with the Dow.  RUT 975 on the button.  S&P 1,620 is 2 off the weak bounce line.  It's like we programmed the bots ourselves to follow our morning predictions….  

    Could still break either way on NFP tomorrow.

    Dollar 81.54 – God help us all if it normalizes back to 82.50. 

    Oil $94.58, nice chunk of change on the last dip.  

    So, to summarize the day – the Dollar dropped 1.5% and our markets bounced a bit less than half a point…

    Check out the S&P priced in oil for a more realistic picture of where we are.

  88. 132785 600 Immigration Bill cartoons

    132754 600 DNA Swab cartoons


    132732 600 Climate Change cartoons

  89. Time Machine/Phil
    I'll just tweet that I will take care of the company in the next two years by going back in time to when Ali Razeghi's parents were creating him that night and interrupt them with a false fire alarm thus making sure Ali and Sarah Connor are eliminated.

  90. Phil TLT we do have the Jun play good as is I think would it be good to set up a further play for Jul or Aug?

  91. FUTR/Rustle – be sure to drop 'graphene' in your tweet.

  92. SODA traders finally got the news that no one is actually buying their company.  

    Dow volume just 88M with 10 mins left – not good upside volume so far.  

    OK, with AAPL we'd feel silly if we didn't sell the June $455 calls for $4.20 and we went lower and the $455 calls can be rolled to July $475 calls (now $4.50) if AAPL pops so let's do the right thing and cover in the STP.  

  93. And one more cartoon…

    Joel Pett

  94. HD – wow!

  95. BTW, at the first shareholder meeting for FUTR, I will be unveiling a sketch of our 2016 model, E=MC Hammer.  It should be half the price and technology should be caught up that it can be powered by 4 rechargeable D batteries.

  96. Time travel/Rustle – Gosh, I hope they don't invent that, it makes everything so complicated!  

    TLT/Yodi – I think it does break down at some point, I just thought in the next 15 days was unlikely.  It's more of a patience play – when they do dip and we get good prices, THEN I want an entry but I don't see the point in keeping a constant bet on.

    Graphene/Scott – Good one, that's a nice buzz compound these days.  

    LOL StJ. 

    HD/Scott – Yes, monster move.  

    Big Finish to our weak bounce levels!  

  97. FUTR/Rustle – I think we should put super-charging stations at key points in history – so you're never more than 20 years from a charger…

  98. rustle123 – Did you mention China? ;-)

  99. 128M at the bell, probably good for 140M once things settle out. 

    LOL – Check out the morning lines and our finish.   TradeBot Rules!  

  100. I appreciate all the good ideas, but I'm too busy just promoting and pumping the stock than actually doing business.  Also involved in many meetings to keep selling shares for more money.

  101. Rustle LOLZ - do you have a CTO position? I'll be submitting me resume…

  102. 140M on the nose!!  Man, they should give me a booth at a carnival…

  103. It's just incredible how deep these guys mine data:

    Google has already proven surprisingly adept at predicting Oscar winners with search data, and now it says it's figured out how to predict box office results too. With between 90 and 92 percent accuracy, Google can tell how much money any picture will make during its first two weeks in theaters — be it a blockbuster like The Avengers or a run-of-the-mill comedy like Identity Thief. To figure that amount out, Google looks at how heavily a film's trailer is searched for during the month before its premiere, both on YouTube and in traditional search. But data from immediately before a picture's release is just as important: if one movie receives 250,000 more searches than another movie that's opening the same weekend, the first picture should take in about $4.3 million more.

  104. LOL, I forgot about this show (came after TradeBot) – I wish I still had the patience to make them but the novelty wore off:

  105. Time Machine/BioDiesel
    It is open and lucky for you that salary is paid in shares of stock, no cash.

  106. Rustle/stock: Sweet, as long as this is the background image for the stock certificate

  107. Today's 80 up on the Dow is a Fib retracement of yesterday's 217 point fall.  Guess that means we can expect more of a decline tomorrow…

  108. If I were a gambler, I would say we go higher tomorrow because of the technical picture. On the other hand, the job numbers could really go either way. On the third hand, really bad numbers could be good news and really good numbers would also be good news. I guess meeting expectation would be the worse case scenario but then we might fall back on the technicals and that would be positive as we bounced from the 50 DMA. Overall, a better chance to go higher than lower tomorrow!

  109. StJ – point well taken…

  110. Everyone:  New Cell phone time.  I have a Droid Bionic.  Ok phone but the battery life sucks; especially when TOS is on for the day.  Any recommendations.  I am considering the Samsung Galaxy S4 and the iPhone5.  What I hate about any phone is the APPS that are preloaded and crappy battery life.
    WOMBAT – I would appreciate the iPhone document on highjacking.  My Droid is cracked so I would need to do that to the iPhone.  Email me at:

  111. X – I sold the 13 Short Puts in late April for 2.40. :)    I must be learning something.

  112. Phone / Jfaw – Did you look at the HTC One? Pretty slick and they are coming out with one that has the standard Android on it – no skin or anything else.

  113. Stj – Thanks.  I will look at the HTC line.  The Samsung 4S battery life reviews suck so, no go.

  114. /DX – Big moves in the currency market.  /DX, EUR/USD, etc are on the lower parts of their channels.  A move back up in the dollar will move the market down.  Comments?

  115. Jfawcett / Phone :  The Galaxy has a replaceable battery.  If that is a huge deal for you, then there you go.  I have an S3 and am very happy with it. I grew tired of my iPhone and the restrictive eco-system IOS and small screen.  I will unlock and root the S3 as soon as it comes off contract.  I'm going to keep it for a while longer as it works really well for me.  BTW the larger screen has been a positive for my ever older eyes.  Before the contract expires, I will just take it into ATT and complain that the battery life sucks and they will send me a new one.  I do that every 6 months.  My battery collection is up to three currently.  Way more than I will ever need.

  116. Jfawcett:  I've got the Samsung Galaxy, it's a little fiddly but I'm used to it, big screen eliminates my need to carry a tablet — it's all about travel.  Between the Samsung and a Sony Vaio 13" which weighs no more than an iPad with full keyboard [I type, fast] and Windows 7, I'm good to go for any length trip.  Battery life, you say?  I solved it with a battery pack device which I can plug into Galaxy or laptop which you can pick up at Best Buy and doubtless elsewhere.   I got tired of one-finger poking at a tablet --plus the Galaxy has dictation apps I occasionally use.

  117. Jfaw – I would go a step up and get the Galaxy Note – biggest screen around for a phone, but still fits in the pocket, it's somewhere between a phone and a tablet.  If you're running TOS all the time, then you need a big screen, I would think…just my 2 cents…I don't have the Note yet myself but it's likely to be my next phone purchase…

  118. Phones – Thanks for all the suggestions.  I do carry a external battery pack but maybe that hassle is the size.  it is the largest one on the market.  About twice the size of the Droid.  Choices?? 
    Happy trading today.  /CL is poised for fastball right over the plate.

  119. Good morning!

    Very flat overnight.  I guess we've found our level for the weekend already but, then again, it's still a matter of getting past the NFP report at 8:30.

    Another wild ride on the Nikkei from 12,310 to 13,150 and then finishing at 12,655 made for good overnight entertainment.  Officially, they finished down 0.21%.  Hang Seng and Shanghai fell the requisite 1.25% and they both finished at the day's low so likely to be follow-through on Monday as that's a very 5% Rule move in a controlled sell-off.  

    Europe is also flat but not as fakely flat as our Futures.

    Oil $95.03 gives us a rare shorting line on a Friday (/CL) – but only after the NYMEX open at 9am – until then, it's probably a better long.   Gold is $1,408, rejected from $1,420 at yesterday's close, siver just fell back to $22.56 and we'll see if $22.50 begins to firm up.  Poor copper is at $3.324, right back where we started the week, Nat gas completely collapsed, now $3.825 and gasoline, of course, remembered it's the weekend and popped back to $2.85.

    The Dollars at 81.51 but wants to go higher, Euro is $1.322 and wants to go lower, Pound $1.555 isn't going to hold that either and Japan is now WORSE off than before Abe started with 96 Yen to the Dollar.  If I were Japan, I'd just buy up all the gold in the World – could be useful one day.  Or, they could swoop in and buy up all our REITS with printed at 0% – it's a no-lose situation for Japan because either the REITs crash and wreck their currency (which is what they want!) or the REITs do well and they own more land in America than Japan has land total.

    4:08 AM Asian markets fall as investors position themselves for weak U.S. payroll figures today and for Chinese economic data over the weekend. Japanese shares (NKY) enjoy another roller coaster day but end a mere -0.2%, while the dollar-yen is -0.4% as the Japanese currency continues to strengthen. In China, stocks (FXICAF) drop for a seventh day in a row amid fears about economic growth and tightening liquidity, while Hong Kong's (EWH) fall of -1.3% puts it in and around correction territory. India +0.5%.

    4:16 AM European equities struggle for direction as investors stay on the sidelines ahead of non-farm payroll data later in the session. EU Stoxx 50 +0.4%, London -0.1%, Paris +0.4%, Frankfurt +0.2%, Madrid +0.25%, Milan +0.5%.

    6:00 AM Overseas: Japan -0.2%. Hong Kong -1.2%. China -1.4%. India -0.4%. London +0.1%. Paris +0.1%. Frankfurt -0.2%.

    Helped by rising stocks and home prices, Americans have recovered much of the wealth they lost because of the financial crisis, in nominal terms at least. In Q1, the net worth of U.S. households and nonprofit organizations climbed 4.5%, or $3T, to $70.35T. However, UBS estimates that on an inflation-adjusted, per-household basis, just 63% of losses have been regained. 

    SPY Option Quote Stuffing Or Explaining Today's 25 Point S&P Levitation. (graphs)

    Rates for 30-year fixed mortgages rose for the fifth straight week, according to Freddie Mac's latest survey, averaging 3.91% in the week ending June 6 from 3.81% the prior week. The average 15-year fixed rate rose above 3% for the first time in more than a year, to 3.03% from 2.98%. A year ago, the respective rates were 3.67% and 2.94%. 

    Pimco's Total Return ETF (BOND) suffered the first monthly outflows in its 13-month life in May and has tacked on another $119M in fewer AUM in the first 5 days of June. The losses come as fixed-income in general skidded last month, but they're particularly noteworthy for BOND which went from nothing to $4.9B in AUM in just more than a year. Previous: The Total Return Fund sees outflows.

    Junk Bond Funds See Record $4.6 Billion of Outflows – Lipper. Bond funds saw waves of outflows in the week ended Wednesday, with funds dedicated to low-grade, or "junk," debt seeing record withdrawals, according to fund tracker Lipper. As much as $4.63 billion was pulled from mutual funds and exchange-traded funds dedicated to junk bonds, the data provider said late Thursday, compared with $875 million in outflows the prior week. That reading contributed to what was the second largest weekly outflow on record for taxable bond funds overall, at $9.1 billion

    12 Clear Signals That The U.S. Economy Is About To Really Slow Down

    Austerity Isn't Europe's Only Burden. Arguments continue in Europe over whether governments should relax budgets to encourage growth. But some analysts argue this debate is drawing attention from something more important that is generating serious headwinds for the region's economies: Europe's broken financial sector. António Borges, a former European director of the International Monetary Fund who is now at the Católica Lisbon School of Business and Economics, says arguing about austerity misses the point. In most of Europe, he says, governments have no scope for expansionary budgets because there is no market appetite for more of their debt. - Very clever by the WSJ:  Austerity is out of favor so they force austerity but talking down the ability of countries to borrow more funds!  Look for more attacks like this from the Right to become a trend.  

    The Bundesbank has cut its outlook for Germany, lowering its 2013 GDP forecast to 0.3% from a prior prediction of 0.4% and its 2014 estimate to 1.5% from 1.9%. "The positive situation on the labor market, the fairly sharp increase in wages and the easing of inflation are supporting private consumption in Germany," the Bundesbank says, although much will depend on the situation in the eurozone's crisis countries. (PR)

    German trade surplus dropped to €17.6B in April from €20.4B in March but beat consensus of €13.0B. Exports +1.9% on month vs +0.5% in March and forecasts of +0.2%. Imports +2.3% vs +0.7% and +0.5%. 

    France's April trade deficit stayed unchanged from a month earlier at €4.5B, as expected. Exports rose to €37.8B from €36.4B, while imports fell to €42.3B from €40.8B.

    French authorities have widened their probe of UBS (UBS), placing the Swiss bank under formal investigation for possibly offering clients investments that were designed to evade taxes. Such an inquiry means there is "serious or consistent evidence" that can implicate a suspect in a crime. Last week, France put UBS's French unit under formal investigation.

    U.S. and U.K. authorities are reportedly preparing this summer to file criminal charges against former employees of Barclays (BCS) as the Libor investigation moves from institutions to individuals. Though it's not yet clear who will be charged, the current probe, say sources, is focused on midlevel traders, not top executives.

    Greece Slides Into The "Fourth World" – The Full Photo Album.

    Nikkei sinks into bear market territory; JGBs gain.

    Aso Says Japan Won’t Intervene After Biggest Yen Gain in 3 Years. Japanese Finance Minister Taro Aso said that the government won’t intervene in the currency market for now after the yen strengthened by the most in three years against the dollar. “We are carefully watching, but we don’t have any immediate intention of taking any action, such as intervention,” the finance minister told reporters in Tokyo today, when asked to respond to the currency’s surge. 

    Asked and answered: Midday Thursday (U.S. time),Forbes wondered if "Soros and the gang …. have unwound their bets on Japan."  Friday morning (Asia time), the answer via Dow Jones Newswire: Soros is "back placing bets in Japan, shorting the yen and snapping up local stocks."

    Japan's $1T Government Pension Investment Fund (GPIF) plans to reduce its yen bond weighting to 60% from 67% and increase its allocation for Japanese stocks to 12% from 11%, as well as boost its investments in foreign equities and debt. The GPIF's move, which had been expected, comes as Japanese shares fall sharply following a huge run-up that ended late last month. Given the government's massive debt, the effect on bond yields will probably also be closely watched

    Why The BoJ’s Policy Is Inherently Destabilizing. (graphs)

    Specter of Another Bond Crash Spooks Asia.

    Chinese President Xi Jinping is due to meet President Obama in the U.S. today, with Xi thought to be looking to allay American fears about Chinese business activity in the U.S and convince Obama about the his country's reform program. The visit comes amid Shuanghui's attempts to acquire Smithfield and strong suspicions about Chinese hacking. Chinese accession talks to the Trans-Pacific Partnership might also be on agenda, although the yuan rate is less likely to be a point of contention this time.

    China's record increase in debt, which has caused much concern, could be overstated partly because of double-counting, with the problem possibly accounting for 3.6T yuan ($587B) in outstanding credit out of 90T yuan as of April. The double-counting may have occurred because companies used money that they borrowed to re-lend to other firms. The theory stems from efforts to reconcile slowing growth with the increasing debt.

    Bearish Bets on Emerging-Market Bond ETF Surge to Record on Fed. Investors are the most bearish ever on the largest exchange traded fun for emerging-market bonds as concern the Federal Reserve will reduce stimulus prompts investors to dump debt from developing nations. Short interest, a measure of shares borrowed and sold on speculation they will fall, on the iShares JPMorgan USD Emerging Markets Bond Fund surged to 8.5 million on June 5, according to data compiled by London-based Markit Group Ltd. That's up from 1.9 million on Dec. 31 and is equivalent to 18% of the outstanding shares, the data showed. JPMorgan's EMBI Global Index for dollar-denominated bonds fell 4.9% over the past month, the most since 2008, as anti-government protests in Turkey, mining strikes in South Africa and slower growth in China hurt investor confidence.  

    S&P takes negative outlook on Brazil due to slow growthStandard & Poor's revised its outlook on long-term ratings for Brazil's sovereign debt to negative from stable on Thursday, citing deteriorating fiscal fundamentals and slow economic growth under left-leaning President Dilma Rousseff. The darker outlook was the latest blow to Latin America's largest economy, which has also seen its currency battered and economic growth data fall short of expectations in the last few weeks as investors lose faith in what just two years ago was considered an overwhelming success story.

    Two credit downgrades in one week (III) have Illinois Gov. Pat Quinn calling lawmakers back to the capitol to address the worst pension crisis among U.S. states. Perhaps the potentially vast New Albany shale eventually can lead the state's way back; one estimate puts the play's gas reserves at 1T-8T cu. ft. The energy boom has sparked North Dakota's rise as no. 1 in U.S. economic growth. - Notice how financial crises lead to Governments to get desperate to sell new resources for Corporations to exploit.  Another happy side benefit to manipulating the markets lower!

    Venezuela secures $4B in funds from China to be used for oilfield development, adding to a separate $4B loan for state oil company PdVSA. China also is extending a $1B credit line to Pemexfor vessels and offshore equipment. China gains access to much-needed fuel: Venezuela sends 600K-plus bbl/day of oil to China and aims to hit 1M bbl/day soon, and Pemex will increase oil exports to China by an initial 30K bbl/day.

    In hundreds of cases across the U.S., drillers have agreed to cash settlements with people who say fracking ruined their water, according to a Bloomberg analysis of legal and regulatory filings. The strategy keeps data from regulators, policymakers, the media and health researchers, and makes it difficult to challenge the industry’s claim that fracking has never tainted anyone’s water.

    James River Coal (JRCC-14.3% AH after filing for a public offering of ~24.6M shares of its common stock, all of which will be offered by selling shareholders. JRCC will receive no proceeds from the offering.

    Freeport McMoRan (FCX +2.3%) Vice Chairman James Flores sees better times ahead after FCX's purchase of Plains Exploration; this week he bought an impressive 1.1M shares (~$34.2M). But Jefferies analyst Peter Ward, even as he reiterates a Buy rating and $40 target price on FCX, slams the sale as offering "no operational synergies."

    In commodity pricing, silence and secrecy not limited to oil. A major European probe into the manipulation of global oil prices has raised concerns that could equally resonate across opaque cash markets for a host of raw materials ranging from iron ore to fertilizer. Benchmarks established by journalists assessing the value of commodities are not unique to oil, and are used in markets for many raw materials to price cash contracts worth billions of dollars a day globally. Producers, consumers and middlemen in those markets seek prices favourable to their business, and have leeway to be selective about what they reveal to the reporters assessing trade and prices. Cash commodity markets are subject to little regulation, and companies are not required by law to disclose every trade they execute in the often illiquid markets.

    With interest rate fears subsiding until at least 8:30 tomorrow morning, mREITs (MORT +1.9%) get a breather. Leading higher were American Capital (AGNC +3.4%), (MTGE +1.1%), Chimera (CIM+2.7%), Hatteras (HTS +2.4%), CYS Investments (CYS +1.9%), Javelin (JMI +4.7%), and Annaly (NLY +1.9%). One theme from conference presentations this week: Most have taken advantage of widening spreads to buy – if rates come in, they're set to profit.

    Vail Resorts (MTN): FQ3 EPS of $2.66 misses by $0.08. Revenue of $469.7M (+11.5% Y/Y) misses by $4.47M. (PR)  More on Vail Resorts (MTN): FQ3 misses across the board despite an 11% Y/Y jump in total sales. Net earnings rose 23% as the ski-resort operator reported strong revenue growth out of its core skiing operations. Mountain segment revenue was up 13%, as revenue from lift tickets, ski school, retail and equipment rental all improved. Dining revenue was also up 21%. Spring pass sales for the coming year climbed 24%, while unit growth was 18%. Shares -4% AH.

  120. Iron Mountain (
    IRM-11.3% after disclosing the IRS is "tentatively adverse" to providing a favorable private letter ruling regarding its conversion to a REIT, and that the agency has "formed a new internal working group" to study legal standards for what constitutes "real estate" for the purposes of REIT conversion. Equinix (EQIX), which is also planning to become a REIT, is down 2.9%.Update (5:56): The losses steepen: IRM now -15% AH, EQIX -8.8%.

    Wal-Mart (WMT) is due to hold its annual investors meeting today, when it is set to face serious discontent from heavy hitters such as Calpers and the New York City pension funds. Shareholders are particularly concerned about the Mexico bribery scandal, with investors set to vote against directors over the affair and ask about disciplinary action against those involved. However, given the Walton family's control Wal-Mart, major change is unlikely.

    Home Depot (HD +2.1%) and Lowe's (LOW +1.6%) trade higher to outperform broad market indexes. It might not be a shock to execs at Home Depot who have been telling anyone that would listen that the unemployment rate and the availability of credit are just as big of factors for the company's business as the raw numbers on housing starts and home prices.

    More on TiVo: Susquehanna reports TiVo (TIVO +8.5%) and Motorola Mobility have settled. Tomorrow's court hearing is reportedly cancelled. No word yet on deal terms. Update: "A clerk in the trial judge's chambers" tells Bloomberg a settlement has been reached.Update 2: TiVo also confirms the settlement.

    Glass demand is expected to grow in the low- to mid-single-digit range in 2013, says Corning (GLW -0.1%) at Computex. The company stated during its Q1 call its sees retail display glass demand (measured in sq. feet) growing in the mid- to high-single digits this year, with LCD TV and mobile growth partly offset by PC weakness. Talking up Gorilla Glass, Corning states ~1.5B devices now use the cover glass, and that about 1/3 of customers plan to use Gorilla Glass 3; Samsung and HTC are using it in smartphones. (Asus Zenbook Infinity)

    A positive WSJ column about the 3D printing industry's potential could be helping printer makers (DDDSSYSXONE) rally. The paper notes GE's aviation unit prints fuel injectors and other combustion system components, Mattel uses 30 3D printers to prototype its toys, and Ford both prints auto part prototypes and "sees a future where customers will be able to print their own replacement parts." Also: the WSJ reports fast-growing 3D printer startup MakerBot is in buyout talks, and that recent VC funding talks valued the company at $300M. 3D Systems is fresh off raising $237M many think will be directed towards M&A. (ExOne coverage launch)

    Redbox Instant (CSTRVZ) will be available soon to Roku users as the companies look to expand access to their streaming service. It's the second major deal of the week in the streaming space appearing like it could put some pressure on Netflix (NFLX -3.4%) and Hulu after Amazon landed a plush content arrangement with Viacom earlier.

    Salesforce (CRMhires former Oracle North American sales chief Keith Block to be its president, vice chairman, and sales/customer support/consulting chief, and makes him a board member. Block had a 26-year run at Oracle, which ended a year agoafter an IM conversation in which he declared Oracle's Sun Microsystems unit to be "dead dead dead"  was made public (judging by sales trends, Block might've not been too far off the mark). 

    "If SAP's Hana is a success, we estimate its [database] market share rising to between 15-20% from its current low single digits. This inevitably will [impact] Oracle’s market share, but more importantly we believe it could affect the margin structure of the industry," says Berenberg's Daud Khan, explaining his 2-notch downgrade of Oracle (ORCL -2.3%) to Sell. Khan notes some Hana users are still paying maintenance fees to Oracle due to contracts, which won't last forever. The downgrade comes shortly after SAP stated it now has 1,500+ Hana customers, up from 1,300+ at the end of Q1. SAP is targeting €650M-€700M in 2013 Hana revenue – that's up from 2012's €392M, but well below Oracle's database revenue.

    Microsoft (MSFT) won't charge a fee for Xbox One used game sales to "retailers, publishers, or consumers," the company states in a blog post. GameStop (GME) investors are relieved, shares+5% AH. Other details: 1) With games/data stored in the cloud, users will be able to access owned games on friends' consoles by logging in. 2) Users are required to be online once every 24 hours on their home console, and once an hour on a friend's console, to verify usage rights. 3) Games can be shared with up to 10 family members, who can play them on any console (though only one can play from a shared library at a given time). (previous)

    After unleashing a barrage of new ad products over the last 2 years, Facebook (FB) is looking to streamline: the company says it will eliminate half of its 27 ad units to make things simpler for advertisers. "What we want to do is take the guesswork out of the process," says a Facebook product manager. Among other things, Facebook is eliminating its very popular Sponsored Stories format as a standalone unit, and instead giving marketers the option to provide Sponsored Stories-like "social context" to other ads. Also getting axed is Facebook online offers product (viewed as indirect competition for GRPN), though an in-store offers product remains.

    Unanswered questions about the NFL's deal with Verizon: 1) Are CBS (CBS -0.9%) and Fox (NWS -0.8%) getting a free ride out of the arrangement between the NFL and Verizon which will see games steamed live on mobile phones or will it cut into the benefits of their own deal to stream games on devices other than TVs and smartphones? 2) If the deal allows games to be viewed on phones, but not tablets, where will the line be drawn as the two wireless products increasingly resemble each other? 3) Will Verizon (VZ+2.3%) recoup its investment over the long-term as new subscribers stay on board or will the fees subscribers pay for access to the NFL cover the cost? 4) Is DirecTV (DTV +0.2%) the odd man out as its NFL Sunday Ticket package begins to look outdated?

    YouTube's (GOOG) mobile ad sales have tripled over the last 6 months and about a quarter of its 1B users now watch videos on handheld devices, boasts sales VP Lucas Watson. The yanking of an ad-free YouTube app from iOS 6, and Google's subsequent release of an ad-featuring iOS app, likely have much to do with the jump. But so does soaring traffic: Nielsen estimates at least 70M U.S. smartphone users accessed YouTube apps in March, +42% Y/Y; international growth is probably higher. Last fall, Nomura estimated YouTube, whose short-form material is more mobile-friendly than Netflix and Hulu's fare, will yield $3.2B in 2013 revenue. Wedge Partners sees 20%-25% of YouTube's ad sales now coming from mobile.

    Samsung's (SSNLF.PK) shares plummeted 6.2% in Seoul and wiped $12B off the company's market value, although it's still worth $188B. The plunge followed bearish analyst reports, with JP Morgan writing that Q3 Galaxy S4 shipments will probably disappoint and lead to lower-than-expected margins. JPM's supply chain checks show that Samsung has cut monthly orders by 20-30% to 7-8M units from 10M starting from July, due to weak demand in Europe and South Korea. (previously) - Somehow, this will be considered bad for AAPL!  

    Apple (AAPL -1.8%) roundup: 1) In a note likely pressuring shares, Wedge Partners estimates Chinese iPhone 5/4S sales have fallen to 10K-12K/day in Q2 from 35K/day in Q1 (the iPhone 5 hit China in December), that retailers/carriers have cut iPhone 5/4S prices by 10%, and that iPhone 5 subsidies have fallen as carriers promote the Galaxy S4. Phablet sales have been gaining steam in China. 2) Cowen says European smartphone sales are improving, and that this could provide upside to iPhone estimates if Apple holds share. 3) Brian White (hit-and-miss with iPredictions) says the low-cost iPhone will arrive in 5 colors and feature a plastic case with more rounded corners than the regular iPhone.

    More on Apple: Bloomberg reports the company is teaming up with top phone distributor BrightStar to create an iPhone trade-in program; the program will only be available via Apple (AAPL) retail outlets. Such a move could both help Apple boost iPhone upgrade rates and profit from a burgeoning refurbished phone market.TechCrunch observes Apple offered a trade-in program last year ahead of the iPhone 5 launch, in partnership with private PowerON. However, that tie-up didn't leverage Apple Stores.

    1984 + 29: Revelations over government electronic surveillance have widened to include several of the country's largest technology companies under a program called PRISM. A National Security Agency document reportedly shows that it has "direct access" to the servers of Microsoft (MSFT), Yahoo (YHOO), Google (GOOG), Facebook (FB), Paltalk, AOL (AOL), Skype, YouTube and Apple (AAPL). While the NSA document says PRISM has the consent of these firms, those contacted denied any knowledge of the program. The question is whether the disclosures will cause a drop-off in user activity.

    Documents: U.S. mining data from 9 leading Internet firms; companies deny knowledgeThe National Security Agency and the FBI are tapping directly into the central servers of nine leading U.S. Internet companies, extracting audio and video chats, photographs, e-mails, documents, and connection logs that enable analysts to track one target or trace a whole network of associates, according to a top-secret document obtained by The Washington Post. The program, code-named PRISM, has not been made public until now. It may be the first of its kind. The NSA prides itself on stealing secrets and breaking codes, and it is accustomed to co

  121. Documents: U.S. mining data from 9 leading Internet firms; companies deny knowledgeThe National Security Agency and the FBI are tapping directly into the central servers of nine leading U.S. Internet companies, extracting audio and video chats, photographs, e-mails, documents, and connection logs that enable analysts to track one target or trace a whole network of associates, according to a top-secret document obtained by The Washington Post. The program, code-named PRISM, has not been made public until now. It may be the first of its kind. The NSA prides itself on stealing secrets and breaking codes, and it is accustomed to corporate partnerships that help it divert data traffic or sidestep barriers. But there has never been a Google or Facebook before, and it is unlikely that there are richer troves of valuable intelligence than the ones in Silicon Valley. Equally unusual is the way the NSA extracts what it wants, according to the document: “Collection directly from the servers of these U.S. Service Providers: Microsoft, Yahoo, Google, Facebook, PalTalk, AOL, Skype, YouTube, Apple.”

    More on NSA tracking: the agency reportedly monitors call data from AT&T (T) and Sprint (S), as well as from Verizon (VZ) (as reported yesterday). Together, the service providers have 314.6M wirelesss and landline accounts. The NSA's operations also encompass purchase information from unnamed credit-card providers. 

    Whistleblower Was 'Horrified' That Government Could 'Literally Watch Your Ideas Form As You Type Them'.

    AT&T (T) -0.9% AH after stating in a Q2 business update it expects wireless postpaid net adds of 500K for the quarter. Wireless EBITDA margin is expected to be flat Q/Q, and (thanks to investments and phone subsidies) consolidated margins are expecte to be down Y/Y. AT&T reported 296K postpaid net adds for Q1 (-69K if not for 365K tablet net adds), a number that didn't go over well with investors. No details about Q2 prepaid net adds; they were -184K in Q1.

    Verizon (VZ-1.2% AH after AT&T forecasts 500K wireless postpaid net adds for Q2, along with a flat wireless EBITDA margin on a Q/Q basis. Shares had risen 3.5% in regular trading, shrugging off the firestorm created by news of the NSA's call-tracking activity. 

    Homework for today.  Check out this headline and article from Fox news: New York Times editorial board says administration has 'lost all credibility' - and then read the actual NY Times article, where it simply says "The administration has now lost all credibility on this issue."  If you read these two articles and still believe Fox news doesn't do it's best to manipulate you with out of context BS – you're hopeless…

  122. Batteries/Jfaw – According to Gizmodo, the Razr has the best battery overall, about 10% better than AAPL and 5% better than HTC.  I think, rather than worry about the phone, how about look for which phone has the easiest accessory to double your battery life, since no phone is going to plow through a whole day of heavy use without a charge.  I have the 5 and I don't use it much since I'm home most days but I can say I go days without charging it, so it says a lot for it's standby mode – at least.  There are cases that have battery packs in them and, if you find a comfortable one, that should be the best combo.  

    Or what Mjj said re. replaceable battery (didn't occur to me as it's not possible with AAPL). 

    X/Jfaw – Definitely learning something.  ;)

    Dollar 81.31, Yen 95.41 and falling!!! 

  123. Good report from American Progress on the excessive focus on deficits, and how these trumped up concerns have hijacked almost all political decisions in Congress:

    Part of the trouble is that the debate over these issues is stuck in a time and context that no longer exists. First and foremost, the fiscal outlook for both the medium-term and the long-term has improved substantially compared to what it was just a few years ago. This incredible improvement has been driven by three main factors:
    •We have enacted about $2.5 trillion in deficit reduction with about three-quarters coming from spending cuts.
    •Health care costs have slowed dramatically in the past several years.
    •We have a better understanding of what is driving the debt in the long-term projections.
    There have also been important changes in the economic context that surrounds 
    the entire budget debate. These include:
    •The key argument that high debt causes slower growth has crumbled
    .•Countries around the world have experimented with austerity, and those experiments have failed spectacularly.
    •The U.S. economy has not healed nearly as swiftly as was projected when the budget cutting began.
    •The push for immediate debt reduction has resulted in some perverse policy outcomes.These changes should dramatically affect the debate on federal economic policy in general and the federal budget in particular.To start with, all of these changes mean that the deficit should no longer be the country’s most pressing economic concern. The predictions that the abnormally large deficits of the past several years would inevitably lead to spiking interest rates or ruinous economic collapse have proved to be extraordinarily wrong. More importantly, between the legislated spending cuts and revenue increases and the slowdown in health care costs, the medium-term fiscal projections now look downright tame. Even the long-term outlook appears far less dire than it did just a few years ago. And the argument that higher debt leads to slower growth over a 90 percent of GDP threshold has collapsed. When considered all together, there is clearly no need for deficit reduction to take precedence over every other important issue facing the country.
    We need to stop allowing deficit concerns to hijack every other policy discussion.

  124. Also:
    No more surveillance drones at the U of Iowa.  

  125. Good Morning

  126. TSLA/Phil,
    Oh, oh, TSLA is now establishing a presence in China?  Wow, let me add to my many, many long TSLA contracts, LOL!  This morning I thought they were up because they had invented cold fusion, but of course going to China is even more compelling!