All of last week, I kept saying the market was only hitting highs because it was being manipulated that way and, by Friday we'd had enough and took our ill-gotten gains off the table once again. This week, it's obvious we're in trouble – but it's a lot harder to sell your stocks when they're already in trouble, isn't it?
It's a very hard discipline to take winners off the table but you should scale out of posiitons on the way up the same way you should scale into them on the way down (and the Strategy Section at Philstockworld has a great article about scaling – also lots of additional commentary in chat below the article).
There's nothing wrong with being in cash. Yesterday, from 1pm until 2:30, we had on of our Live Futures Trading Workshops (replay available here) and our 4 trades made $360 by the close (4pm) for a very nice $100+ per hour salary for just trading a few contracts. Our trade idea from yesterday's morning post (which you can get delivered to you pre-market, every day by SUBSCRIBING HERE) was to short the Nikkei (/NKD) at 14,350 and this morning we hit 14,050 – good for a $1,500 PER CONTRACT profit!
That's one of the things you can do with cash. We also have fun making earnings plays, like the FSLR trade we added to our Short-Term Portfolio yesterday. That trade idea was:
I think it's worth a try at selling 5 July $75 calls for $3 ($1,500) and buying, to cover, 4 Jan $77.50/85 bull call spreads at $2 ($800) for a net credit of $700 – let's do a set of those in the STP.
If FSLR is under $75 (it's about $69 after earnings), we pocket $700 PLUS whatever value remains on the January bull call spread (probably about half). That's against zero cash outlay ($700 credit, in fact) and possibly we'll just take quick money off the table and reload for our next earnings trade.
This morning, ahead of Yellen's 10am speech, we flipped bullish on the Russell Futures (/TF) at 1,105 in our early morning Member Chat and we've already tested 1,110, which is $500 up from that line (though we were more like 1,106 by the time we caught it for +$400 in an hour). We're done with the long ahead of the Productivity Report at 8:30 – which we expect to be disappointing. Also this morning, I reiterated our short entry on oil at $100.20 and we already got a dip back to $100, but our goal is $98.50 after inventories (10:30) though now we'd stop out again over $100.20 and wait for a better entry – so stay tuned!
We've been watching Brent Crude contracts drifting lower and USO (based on WTIC, which is what the /CL Futures reflect) usually tracks it very closely and now Brent is at $107.25, back where it was in early April, when WTIC was under $99. That is pegging our BS meter to 8.5, especially since the Ukraine crisis SHOULD be supportive of Brent – and it isn't. That's a huge red flag for oil bulls (the kind they run into and get skewered).
Speaking of getting skewered: Here's the Productivity report and is SUCKS – down 1.7% for Q1 and, even worse for our Corporate Masters – Unit Labor Costs are up a whopping 4.2%. In other words labor costs are rising and they can't whip the wage slaves any harder than they already are.
There are no cheaper places left to outsource, even CHINA!!! has been dealing with growing labor unrest as it becomes more and more clear that the Communist Party, which was founded to benefit the country's workers and peasants – has become a Billionaire's club for oligarchs – almost as bad as the US (but not quite).
“In China, there is a common saying,” says Lin Dong, of the Labor Dispute Center. “The government doesn’t help the people fix their problems. They fix the people who point out the problems, instead.” Workers who were valued principally as inexpensive production cogs during China’s initial economic flowering are now expected to star as consumers. Consumption accounts for only 35 percent of the Chinese economy, well below the 50 percent-plus characteristic of East Asian countries such as South Korea, which modernized earlier.
“It’s like that old Henry Ford story: I’ve got to pay my workers enough so they can buy my product,” said David Dollar, a former U.S. Treasury Department official in Beijing. “China’s reaching that Henry Ford moment.”
Unfortunately, the US is far from that "Henry Ford Moment," as you can see from the chart above. Let's face it, we're a nation of timid sheep who have just sat back and taken it while our wages have flatlined for 25 years while UK workers (the above example) were given 30% increases. At least the Chinese are smart enough to march – what the hell is wrong with US?
Maybe the rising Unit Labor Costs are finally a sign that US workers are not going to take it anymore. If so, that will be a long-term benefit for the economy but, in the short run, companies that are addicted to low wages like WMT, NKE, MCD, etc. are in for a bit of pain.
From Bloomberg, May 7, 2014, 7:01:01 PM
He speaks with Bloomberg’s Niki O’Callaghan in London. (Source: Bloomberg)
Here’s what to look for when the
European Central Bank’s 24-member Governing Council releases its
monthly interest-rate decision for the euro area at 1:45 p.m.
and ECB President Mario Draghi holds a press conference in
Brussels at 2:30 p.m.
To read the entire article, go to http://bloom.bg/1nqwgaC
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From Bloomberg, May 7, 2014, 7:01:22 PM
London’s police force will start testing smartphone-sized wearable cameras today, deploying 500 of the devices to record a police-eye-view of the city. The Metropolitan Police service is hopeful that the cameras, clipped onto officers’ chests, will aid evidence gathering, said James Hulme, a spokesman for the Met.
To read the entire article, go to http://www.bloomberg.com/news/2014-05-07/smile-villains-london-cops-start-wearing-cameras-today.html
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From Bloomberg, May 8, 2014, 5:19:20 AM
The U.S. and its allies said there’s no sign Russia is withdrawing forces from the Ukrainian frontier after President Vladimir Putin shifted his tone on the conflict and urged separatists to postpone an autonomy vote.
To read the entire article, go to http://bloom.bg/1kP891B
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From Bloomberg, May 8, 2014, 3:00:28 AM
Vladimir Kiriyev says he was walking
with his children near their apartment in Odessa when he saw an
attack on a pro-Russia camp as the assailants backing Ukrainian
unity set tents on fire and beat everyone who tried to flee.
To read the entire article, go to http://bloom.bg/1oruy8L
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From Bloomberg, May 7, 2014, 4:48:10 PM
President Barack Obama, amid U.S.-
Russia tensions over Ukraine, notified Congress he will withdraw
Russia’s eligibility for lower tariffs accorded to developing
countries under the Generalized System of Preferences program.
To read the entire article, go to http://bloom.bg/1oriu7m
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From Bloomberg, May 8, 2014, 5:00:03 AM
AT&T Inc. (T), the second-biggest U.S.
mobile-phone carrier, is in talks to buy satellite-television
company DirecTV (DTV), people with knowledge of the situation said.
To read the entire article, go to http://bloom.bg/1orsNsi
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From Bloomberg, May 8, 2014, 12:00:01 AM
Greg Leffel, an investor in Columbus, Ohio, said he relishes cash deals as much as he dislikes home loans. He has spent $150,000 buying and renovating 10 foreclosed houses in the past two years and turned them into rentals.
To read the entire article, go to http://bloom.bg/1itNwq2
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From Bloomberg, May 8, 2014, 5:30:44 AM
The prospect of South Korea’s first
interest-rate increase since 2011 is giving the won the world’s
best returns in a resurgent market for carry trades.
To read the entire article, go to http://bloom.bg/1jDDqaY
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From Bloomberg, May 8, 2014, 5:42:15 AM
President Vladimir Putin said Russia
is testing its entire military’s combat readiness through a
series of countrywide drills, ramping up tensions less than a
day after he pledged to pull forces back from Ukraine’s border.
To read the entire article, go to http://bloom.bg/1jDGuDS
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From Bloomberg, May 8, 2014, 5:23:10 AM
Agricultural Bank of China Ltd. is
seeking as much as 80 billion yuan ($12.8 billion) from selling
preferred stock to bolster its capital position, which is the
weakest among China’s top four lenders.
To read the entire article, go to http://bloom.bg/1fY7hvG
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From Bloomberg, May 8, 2014, 12:01:00 AM
NBC’s decades-long partnership with
the Olympics is paying off.
To read the entire article, go to http://bloom.bg/1iXFkUZ
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From Bloomberg, May 8, 2014, 4:50:53 AM
There’s so much cheap iron ore
flooding into China that rates for the ships that carry it are
forecast to jump almost 70 percent by June, even as the world’s
second-biggest economy grows at the slowest rate in 24 years.
To read the entire article, go to http://bloom.bg/RsIODb
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From Bloomberg, May 8, 2014, 2:00:00 AM
German industrial output unexpectedly
fell for the first time in five months in a sign that expansion
in Europe’s largest economy is slowing.
To read the entire article, go to http://bloom.bg/1qgTDrA
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From Bloomberg, May 8, 2014, 4:02:34 AM
Indonesia’s central bank held its key
interest rate for a sixth straight meeting as policy makers seek
to narrow a current-account gap even as economic growth slowed
to the weakest in more than four years.
To read the entire article, go to http://bloom.bg/1ji5TDt
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From Bloomberg, May 7, 2014, 8:00:00 PM
Cities in China from Shanghai to
Chongqing will grow the most among global metropolises in the
next 16 years, according to a study by Oxford Economics Ltd.
To read the entire article, go to http://bloom.bg/1kNckfo
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From Bloomberg, May 8, 2014, 5:37:16 AM
The Philippine central bank ordered
lenders to set aside more money as reserves a second time this
year to curb liquidity and price pressure, while holding the
benchmark rate for a 12th meeting.
To read the entire article, go to http://bloom.bg/1kQ89hK
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From Bloomberg, May 8, 2014, 12:35:45 AM
Japan will start issuing new 5,000 yen
($49) notes to make it easier for a growing number of visually
impaired people in the aging society to distinguish between
denominations of bills.
To read the entire article, go to http://bloom.bg/Rpy0pu
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From Bloomberg, May 8, 2014, 4:21:02 AM
Mario Draghi probably won’t embark on a new era for monetary policy just yet.
To read the entire article, go to http://bloom.bg/1nqnhpM
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From Bloomberg, May 8, 2014, 3:49:42 AM
He speaks with Rishaad Salamat on Bloomberg Television’s “On the Move.” (Source: Bloomberg)
China’s exports and imports (CNFRIMPY)
unexpectedly rose in April, helping leaders put a floor under a
slowdown in the world’s second-biggest economy.
To read the entire article, go to http://bloom.bg/1nq13El
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From Bloomberg, May 8, 2014, 12:30:00 AM
Venezuela’s government announced the start of electricity rationing in western Zulia state as well as water rationing in Caracas to reduce demand on the power grid, a day after Ford Motor Co. (F) halted production in Latin America’s largest oil exporter.
To read the entire article, go to http://bloom.bg/1o7AJl0
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From Bloomberg, May 7, 2014, 6:03:21 PM
Not even armed police could keep middle-age nude sunbathers from Dadonghai Beach in Sanya, a tropical resort in south China, last weekend. But the police could instill a sense of caution, as evidenced by photos published across China’s state media that showed those sunbathers going about their business in Speedos lowered to their thighs (“cunning half mast,” tweeted Chris Buckley of the New York Times), ready to raise them at the first sight of law enforcement.
To read the entire article, go to http://bv.ms/1mDNEaA
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From Bloomberg, May 8, 2014, 12:01:19 AM
In recent months, Europe’s economies have begun a tepid revival. It’s the adjective, not the noun, that should guide the European Central Bank’s next move on monetary policy.
To read the entire article, go to http://bv.ms/1j5oL3u
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From Bloomberg, May 7, 2014, 6:04:43 PM
Employees of a Jack in the Box restaurant in Fort Worth, Texas, got a glimpse last week of an America where the more extreme element of the gun-rights movement has its way. Their reaction? They hid in the freezer. Parents in a public park in Georgia, confronted by another display of gun rights, called 911.
To read the entire article, go to http://bv.ms/1mDNRKK
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From Bloomberg, May 7, 2014, 3:35:41 PM
Alibaba filed for its initial public offering last night and as you can see from the chart below, it is more than merely the “Amazon of China.”
To read the entire article, go to http://bv.ms/1smdL9o
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From Bloomberg, May 7, 2014, 2:00:32 PM
(Corrects description of Thomas’s opinion in first and second paragraph, and in second footnote.)
To read the entire article, go to http://bv.ms/1s3NbzR
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From Bloomberg, May 7, 2014, 1:38:34 PM
Yesterday, Alibaba Group Holding Ltd., China’s largest online retailer, filed the registration statement for its initial public offering. One of the risk factors it cites is the possibility that the Securities and Exchange Commission may suspend the mainland Chinese affiliate of its outside auditor, PricewaterhouseCoopers of Hong Kong.
To read the entire article, go to http://bv.ms/1s3ItSH
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From Bloomberg, May 6, 2014, 9:28:05 PM
Today, Alibaba Group is China’s largest e-commerce company. But more importantly, what will it be tomorrow?
To read the entire article, go to http://www.bloomberg.com/news/2014-05-06/3-things-to-know-about-alibaba-s-ambitions.html
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From Bloomberg, May 7, 2014, 5:58:44 PM
AOL Inc. (AOL)’s higher spending to attract
an audience for advertisers squeezed its profit margin in the
first quarter, causing a shortfall against analysts’ estimates.
The shares sank 21 percent.
To read the entire article, go to http://bloom.bg/1kLClMm
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From Bloomberg, May 7, 2014, 4:43:33 PM
Twitter Inc. (TWTR) shares fell to the lowest
level since the company’s initial public offering, following the
lifting of restrictions on stock sales by insiders and early
investors.
To read the entire article, go to http://www.bloomberg.com/news/2014-05-07/twitter-falls-further-after-record-lows-post-lockup.html
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SunEdison misses by $0.08, misses on revenue
06:20 AM ET · SUNE
Asian and European Indices higher overnight
06:00 AM ET
Middleby misses by $0.23, beats on revenue
05:50 AM ET · MIDD
World stocks boosted by Yellen, Chinese trade
05:11 AM ET
Costco revenue climbs 7% in April
04:44 AM ET · COST
Toyota FQ4 net profit slips 5.4%
03:52 AM ET · TM
Barclays plans to axe 19,000 jobs
03:27 AM ET · BCS
Chinese trade surprisingly grows
02:38 AM ET · FXI
German industrial output surprisingly drops
02:12 AM ET · EWG
Thursday’s economic calendar
12:00 AM ET
PennyMac Mortgage lower after slide in earnings
Yesterday, 10:22 PM ET · PMT
Prospects for Senate vote on Keystone XL fade over amendments fight
Yesterday, 07:35 PM ET · TRP
U.S. takes voluntary approach on crude oil tank car rules
Yesterday, 07:20 PM ET · CSX
Transocean +3% AH after big Q1 earnings beat
Yesterday, 06:43 PM ET · RIG
Zillow +5.1% AH on Q1 beat, guidance; Trulia +1.3%
Yesterday, 05:53 PM ET · Z
Gilead BOD approves share repurchase plan
Yesterday, 05:39 PM ET · GILD
Ford announces $1.8B share buyback
Yesterday, 05:20 PM ET · F
CenturyLink +1% AH on revenue guidance, broadband sub growth
Yesterday, 04:54 PM ET · CTL
Roundy’s Supermarkets misses by $0.02, misses on revenue
Yesterday, 04:39 PM ET · RNDY
SolarCity +5% AH on strong guidance, bookings
Yesterday, 04:39 PM ET · SCTY
Caesars Entertainment misses by $1.34, misses on revenue
Yesterday, 04:34 PM ET · CZR