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America About to Turn 238 – Rally Turns 2.5

Happy Birthday America! 

The markets are closed tomorrow and today is a half day but the trend is certainly our friend on the S&P as we haven't been below the 200 day moving average since December of 2011 (except a couple of very brief dips).  Though the average volume is about 30% lower than it was back then – it's still an impressive feat.  

Of course, if 10% of the market was manipulated before and the manipulators haven't left (they certainly haven't) – even if the level of manipulation remained the same, 30% of the 90% that wasn't manipulated (retail investors) did leave (possibly BECAUSE of the manipulation) and that means now manipulators control 10% of the remaining 70%, a 42% increase in manipulation!  Of course we know it's much worse than that because now the Central Banksters perform their own brand of market manipulation.  As noted by Salient Partners in a great article about PBOC Manipulation:

The explicit purpose of recent monetary policy is: to paper over anemic real economic growth with financial asset inflation. It’s a brilliant political solution to the political problem of low growth in the West, because our political stability does not depend on robust real economic growth. So long as we avoid outright negative growth (and even that’s okay so long as it can be explained away by “the weather” or some such rationale) and prop up the financial asset values that in turn support a levered system, we can very slowly grow or inflate our way out of debt. Or not. The debt can hang out there … forever, essentially … so long as there’s no exogenous shock. A low-growth zombie financial system where credit is treated as a government utility is a perfectly stable outcome in the West. 

So China has indeed learned the most valuable lesson of Capitalism – that money is a meaningless contstruct that can be freely manipulated to fit whatever narrative the Government wishes to spin and that debt is not to be feared, but embraced, especially by our Corporate Masters – because our National Debt becomes their Private Profits!  

When you own a store, you want to sell stuff.  When a person comes in with money and wants to buy stuff, you don't ask him where he got it (especially if you are HSBC, apparently) – you just take the money.  If he robbed someone else, or borrowed himself into unsustainable debt – it makes no difference to your bottom line – you just want to make the sale.  Don't feel bad, that's Capitalism!  

Of course, Corporate America takes it one giant leap forward and our Corporate Masters have become political activists who push for policies that cause more and more debt and collect less and less taxes to balance that debt and, if they can stir up an occasional war to boost business – so much the better!  

After this summer break we head into the first major political election in the US since Corporations last year were given the unlimited ability to contribute to political campaigns.  As you can see from the chart on the right, the Koch Brothers' have already (as of April) put $125M into their Americans for Progress Pac, which dwarfs the $40M the Democrats have put away for Congress and the $20M they have put away for Senate races. 

What's the difference between the US and China?  China doesn't pretend to still have a Democracy.   As this country celebrates it's 238th anniversary of "Independence Day," we have never been less free.   We are a nation of wage slaves who are held captive by Big Business and spied upon by our own Government, both of whom control the once-independent Judiciary Branch.   

As we wait for today's Non-Farm Payroll Report (expected to be 250,000), let's keep in mind that the QUALITY of US jobs has gone completely to Hell over the last decade:

I'm sorry to harp on depressing items like this, especially into a holiday weekend (and jobs were up 288,000 this month so YIPEE!!!, by the way) but, when Russia used to have Pravda and Izvestia and they would tell the Russian people how great everything was while clearly (to us) things were falling apart – we would ask ourselves "how could they believe such nonsense?"  Perhaps the reason is because the Russian people would read something like this and say – "I don't want to hear that crap, I'd rather listen to happy news!"  

I'm not here to give you happy news – I'm here to give you real news and, since there's so little of it in the mainstream media, I tend to highlight the darker side of the US economy in an attempt to balance the overall news you are likely to digest.  Let's call it a healthy dose of skepticism and remember that I'm still in this country and I love this country and I still hold out hope that this country can be fixed – but not the way it's going now!  

For us rich folks in the top 1%, there's never been a better time to move up to the top 0.01% as money and opportunities are everywhere.  Things are so good for the top 0.001% (3,000 richest in the US) that just 20 US Companies were able to spend $62.5 BILLION buying back their own stock in the first 3 months of this year!  On the whole, $159Bn was spent buying back S&P 500 stocks in Q1 with $1.8 TRILLION spent in 5 years – reducing the total outstanding amount of shares by 10% (and making earnings per remaining share 11% higher).  

It's just another form of manipulation, folks.  If I'm IBM and I have a $200Bn market cap and I'm making $20Bn in profits then my PE is 10 and I can't make more sales because the economy sucks so I can hire more people or develop new products, but maybe that won't increase my sales – so that's a gamble and I might get fired. 

Instead I dip into the corporate kitty and remove $5Bn of our $15Bn in cash and I borrow $15Bn at 3% and use that to buy back 10% of my stock for $20Bn (100M of 1Bn shares).  

The interest on the $15Bn is $450M a year so that comes out of my $20Bn in earnings but now the $19.55Bn that's left is divided by 900M shares instead of 1Bn shares and my earnings go UP from $20 per share to $21.72 per share and VIOLA! – I have boosted "earnings" by 10% and now I (the CEO and board) get more dividends for each of my remaining shares – a "free" bonus!

Is the company STRONGER than it was before I bought back the stock?  Not at all – we are selling the same amount and making the same amount but now we have used 1/3 of our cash and taken on $15Bn in debt and we're even making less because we're paying $450M a year in interest on the money we borrowed.  

In fact, there is NOTHING good about a buyback except in those rare circumstances where a stock gets so cheap that it's worth buying (Bufett's formula). 

With a p/e of 10, IBM could argue that buying their own stock was the best use of their money, but it still indicates they are out of ideas or simply unable to grow by deploying available cash – that is NOT a good sign.  Similarly, companies that buy out other companies are effectively having the same effect as buybacks because – if there were 2 IBMs with 1Bn shares making $20 per share and one buys the other one for $200Bn, then there would be one IBM with 1Bn shares making $40 per share and the whole S&P would seem to have better earnings per share – even though the total earnings are the same.  

As you can see from the chart above, Q1 PROFITS were falling hard and fast but not fast enough not to be covered up by the removal of so many shares that those profits were divided by – so the S&P LOOKS healthy, even as it declines.  As we get our Q2 reports, we'll try to wade through the BS and get a real picture of what's going on but, meanwhile, we just BOUGHT IBM.

After all, it's not like we expect this BS to stop anytime soon – so we may as well go along for the ride! 

Have a fantastic holiday, 

- Phil


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  1. Why do they have Kudlow early in the morning on CNBC?

    And now he is looking at all the arcane job numbers that no one ever looked at before because the headline number is good. What a hypocrite! It's funny that Zandi tells him that we have not had 5 months over 200K since Clinton was president. Subtle message there.

  2. Well, good news is not so good.  Market spiked, fell, and now is us in a zone.  Even the HFT machines are turned off.  Good morning!  Good riddance.  Good day!

  3. Phil, earlier you posted:

    " That goes back to my theory that the markets are being propped up for show while the real smart money is sneaking out the back door – quietly, so as not to panic the herd.  "


    I may be naïve,  but I don't know who the "smart money" is.  Have you looked at the performance of the hedge funds this year ?   Not so "smart" ! :-)  

  4. Services industries employment jumped by 236,000, the biggest increase since October 2012, while government employment increased 26,000.  Yep….awesome!

  5. lol I bet those 'smart' hedge funds missed this 28-day rally but still charge big fees….

  6. From the Fly on the Wall:

     Lululemon (LULU), up 3.7% after The Wall Street Journal reported last night, citing people familiar with the situation, that the company's founder has been talking to private equity firms through advisers about taking the company private.

  7. I am sure the MSM will be telling their audiences how good things are now that the employment rate is near 6%. What a sham we've become.  But on the bright side, at least there won't be any shortages of fast food this weekend, or anytime soon. Apparently, it's the breakfast, lunch, and dinner of Americans!  

  8. Full time vs Part-Time…..yep.  All is well.

  9. And wages…nah…they don't matter when one is 'creating' jobs….it's like a 3D printer.  Manufacture what you want with a small labor force that needs to be there at the start and the end.  BooYah!

  10. Good morning!  

    Gasoline (/RB) back over $3.02 already for another quick $500 gain but don't forget that's all we made yesterday before it went the other way so be careful.

    Oil had trouble at $104.20, which was our weak bounce line so still not looking like a good bull play, despite the weekend.  Brent $110.85 and below $111 is very bad for /CL.  

    In the STP we have 20 TZA Aug $15 calls at 0.70 and they are now .40 with TZA at $13.49.  We can DD or we can spend 0.23 to roll them down to the $14s.  Since TZA was $15 last week and since Aug is 43 days from expiration, I think it makes more sense to roll closer to the money than DD.  Keep in mind that, if TZA goes $1 lower and we had doubled down, we will have spent .40 more to have 40 contracts that would be $2.50 out of the money but if we roll again for another .23, we would have 20 of the $13 calls for about the same price and our net $1.16 would still be back to even on less than a 10% move higher, vs 20% we'd need to get back to $15.55 (break-even on 2x).  

    So let's roll our 20 TZA Aug $15 calls (.43 now) to the $14 calls (.66) for 0.23 per contract.   Our short puts are the $12s, so no worries yet (and not even if they fall another $1.   

  11. Phil – Excellent piece on stock buybacks !  The one part you didn't touch on was a situation such a AAPL's where they didn't have to use their cash, but could go into the market and borrow cheap money.  In their case, they could borrow money at a rate lower than their dividend payout  rate.  In which case, it was accretive and made sense, IMO, to buy back stock.

  12. what is our tza short $12 put position?  what expiration?

  13. Good Morning from D.C.!


    Have a great Fourth of July everyone!!!

  14. PARTY at 1020s house!!!!!  Happy 4th to All!

  15. phil, or anyone, what is our tza short put position? thx.

  16. Manufacturing 16,000 jobs, Construction 6,000 jobs out of the 288,000 added.  That is so sad!  

    • In addition to May's 7K upward revision, April's 282K job gain is revised higher to 304K, making for a total of 29K more jobs added during those two months.
    • Average hourly earnings of $24.45 in June is up $0.06 from May, and ahead 2% from a year ago.
    • The average hourly workweek remained flat at 34.5 hours for the fourth straight month.
    • The labor force participation rate is flat at 62.8%; it was 63.5% one year ago.
    • The employment-to-population ratio rose a tick to 59%.
    • The broader U-6 unemployment rate fell to 12.1% from 12.2% in May; one year ago it was 14.2%.
    • Previously: Jobs gain of 288K; UE rate down to 6.1%

    Kudlow/StJ – That man is like nails on a chalkboard to me!  I have to switch the channel when he's on, I literally cannot stand the sound of his voice…

    Good summary Pharm.  

    Smart Money/Albo – It's the nefarious "THEY" – certainly not hedge funds.  Hedge funds are not smarter than anyone else with money.  They are useful if you are too busy to manage your own money but, otherwise, the fees aren't worth it.  In fact, they are detrimental because they focus on day to day performance instead of long-term investing strategies.  Really SMART money moves behind closed doors in the IBanks and the private funds.  Why do you think GS, MS, JPM can be on TV with evidence that they mislead their own investors and yet people put more and more money into them?  Because those investors, rich though they may be, are nothing compared to the 30,000 people who actually matter (top 0.001%).  Also, keep in mind it's really just 10,000 actual people and their families.  Those are our Billionaires and $100M+aires and they meet in places were not invited to with people you will never see or even know about and THEY are the smart money and they have 36% of the wealth in this country. 

    Cheap money/Albo – I thought I covered that with the IBM cash + debt example.   Anyway, can't write a whole book – just trying to get a little learning in every day!  As you know, I had no problem at all with AAPL's buyback because there literally wasn't anything better to do with their money than buy their own stock below $500 (now $71.43).  Same with IBM – that one doesn't bother me – I just used them for the example because they happened to have nice, even numbers for the example (which I rounded, of course). 

    Thanks 1020 and happy holiday to all of you who are sensible enough to leave early.  

    Meanwhile, Santelli seems very happy with the ISM report.  I don't know what the number was but it must have been good because he was screaming for 30 seconds about something.  

    Global PMIs at 11 is our last bit of data and then our attention shifts to earnings next week.

    No stop out for /RB yet as it  tests $3.025 but I'd lighten up here, assuming a pullback and add a few back if we get over.

    LOL – Turns out Santelli is just an idiot, nothing very exciting about these numbers:

    • June ISM Non-Manufacturing Index: 56 vs. 56.1 expected and 56.3 prior (>50 denotes expansion)
    • Business Activity: 57.5 vs. 62.1
    • New Orders: 61.2 vs. 60.5
    • Employment: 54.4 vs 52.4

  17. Phil – no cover on LULU?

  18. PMI / Phil – They were release this morning. The time I put in the calendars are EST all the time:

  19. Euro-zone retail sales well below estimates! PMI around the world, not great either.

  20. Kudlow / Phil – If the guy could only admit that things could be so much better if only his friends in Congress could have spent as much money on the US infrastructure as we spent in Iraq and Afghanistan or if Congress could so something else than investigate Benghazi and the IRS!

    We would not be talking about bad paying jobs if we were rebuilding bridges, roads or our electric grid and installing solar panels on every roof… And oil prices would not be over $100. Idiots…

  21. XRT is acting as though all those HIGH-PAYING jobs are going to bring back shoppers.

  22. Job Report/ All

    I think some of the cynicism is unjustified regarding the jobs report.  ALL jobs added are an improvement to the economy because the excessive labor pool suppresses wages and the quality of jobs.  We NEED people to be willing to accept crappy jobs, even if they are worse than what they worked at before, to keep down the ratio of applicants per job and get money moving again.  With every extra person applying for a job, the wage gets depressed.  If we keep growing jobs at any positive rate, eventually (and in the not too distant future), corporations will be forced to raise wages to attract talent which they will need to continue producing for the extra consumers coming to the table that are now working.

    No matter how you slice it, this is a good report it will just take some time for that to be recognized.  Have some hope gents…that world isn't yet a terrible place!

  23. Phil – I have 9,000 shares of TZA average around $18.51.  They were accumulated from various offsetting short PUTs assignments for my TZA Bull Call Spread hedges over the past year.   Would appreciate you advice on adjusting the position.  Thank you in advance!

  24. bshing8 –  I'm not sure holding onto TZA as a stock position is the best hedge.  It's tends to degrade over time if there is no movement in the underlying.  It's like a slow bleeding would, TZA, SCO.  They are more for short term hedges I think.   But I might not be seeing the whole picture either……

  25. I'm advocating for 4 year dictatorships in this country.  Impossible to get things done with a Congress that is for sale to the highest bidder.  At least things would get done.  More like a USA CEO.

  26. Also, Phil, what do you think of JMI?

  27. Peak oil gets pushed back!

    Okay, okay, okay – it's not as bad as that headline says it is. First of all, even if we did only have 53.3 years of oil left, it'd represent a 1.1-percent improvement over last year's estimate, to 1.69 trillion barrels of oil left. But more importantly, we probably have a hell of a lot more oil left than that. Of course, a lot of it comes from shale, which means fracking, which isn't exactly great for the environment. So, it's not all roses here.

    According to BP, the United States has 44.2 billion barrels in reserve, which is itself a 26-percent increase over previous estimates. As the years go on, though, that figure is still likely to increase, thanks to technologies like horizontal drilling that could unlock an additional 75 billion barrels of oil and natural gas from shale formations in the Permian Basin of west Texas, according USA Today, which cited estimates by Pioneer Natural Resources. The Permian Basin is the largest of three major shale oil operations, along with Bakken and Eagle Ford.

    What's interesting, though, is that there's still a lot of shale oil we don't know about. Another resource company, EOG Resources, has already set up four horizontal rigs in the Rockies and estimates that there's even more black gold in them there hills. The other big play could be in the Gulf Coast.

    Regardless of where the oil ends up, it's a fair bet that we have more than 53.3 years of oil left. While that's good news, here's hoping it doesn't halt the march towards fuel efficiency we've been seeing over the past several years.

  28. Speaking of jobs and salary, good site where there graph salaries by categories in each state:

  29. Phil if you needed a new hedge going into next week, which option would you go with? I recently closed a DXD spread I had, which I gladly take the loss on while watching the value of my portfolio rise nicely. I would love to find something better though in case the charade falls apart in the next month. Thanks for any help you can suggest. 

  30. One other question, having sold LQMT at .29 after getting in at .17 (thanks for that one) do you have a reentry target on this one? It is in between my entry and sale point, so I am willing to be patient, but I do like the long term story here I think, so I was wondering what your thinking is now?

  31. TZA / Phil, Burrben – I agree.     I am thinking perhaps selling the 9,000 shares of TZA stocks (average around $18.51) that were assigned and buy some TZA bull call spread for hedging and try to get some of the losses back.  With BCS, I get more leverage and get some premium from selling the short calls.  Any suggestion as to strikes and which month?

  32. LULU/Deano – What do you mean "no cover"?  

    PMIs/StJ – I guess 11 is when the summary report comes out.  Retail Sales have been sucking (can't tell by XRT).

    All around Asia, PMIs are tumbling.The last few days saw a number of nations' manufacturing PMIs drop with the notable miraculous surge in China (at 2014 highs). Tonight saw the Services PMI side also tumbling with Australia first (at 2014 lows) and Japan fade back to 49 for its 3rd month in contraction. But (unlike the manufacturing side) China 'official' Services PMI faded from its rebound (55 vs 55.5). The drop in Services PMI makes some sense given the 8-month lows in employment indices within the manufacturing PMIs… But then the baffle 'em with total bullshit brigade arrived as Markit/HSBC unveiled their version of Services PMI which jumped to 53.1 – its biggest MoM on record - makes perefect sense.


    Every other PMI measure dropped… even China's official Services PMI… but HSBC/Markit soared by its most on record!!

    Japanese Real Wages Tumble Most Since Lehman

    DISASTROUS Retail Sales Number In Australia

    China's infamous swag markets lose their shine

    Russia's economic crisis deepens as EU readies fresh sanctions over Ukraine

    18 Signs That The Global Economic Crisis Is Accelerating As We Enter H2 2014

    Buy, hey, record highs!  

    Kudlow/StJ – The man has been delusional for 40 years, not going to stop now.  

    Jobs/JPH – Actually, if you replace unemployment at $300 a week with a job at $300 a week – you are NOT improving the economy at all.  It doesn't lower what you pay in taxes nor does it increase the net money available to spend.   In fact, a store owner that was not previously spending $300 a week for that new employee now has $300 less while the employee has no more money than he had while on unemployment.  You need GOOD jobs to boost an economy – not just any old job…

    Also, Corporations are simply seeking their profits outside of the US.  They are taking the piles of money they made in this country (taken from the pockets of our citizens) and spending them overseas to buy other companies and open new offices and stores and hire new employees in growing nations – this one is all played out – so, like any good carpet-baggers, they are leaving!  

    Really there's nothing wrong with this behavior – that's Capitalism and Capitalism on a Global scale has no respect for Nationalism.  What I object to is that they are stripping this country to the bone and leaving nothing but a carcass of debt and decay as they (the top 0.001% people and Corporations) head off to greener pastures.  

    Your attitude is that of the goat that has been taken down by a lion and is now about to be picked over by vultures – you admire the lion for his skill and you don't blame the vultures for doing their job and hey, look – the sun is shining – so things really aren't so bad…

    The decline of the 238 year-old American Empire isn't going to happen in one smooth downward graph.  You are bound to get a few good spikes along the way, like Radio Shack:

    There's always hope – I'm just saying try not to fool yourself with a few nice news spikes on the road to ruin.  

    TZA/Bshing – You have $120,000 worth of TZA?  I certainly hope you have at least a $1M bullish porfolio or WTF?  So you are down about $45K overall and question #1 is do you still want a hedge or are you just looking to get even on TZA?  Like any ultra, TZA decays over time so holding it long-term is always going to lead you to zero – that's mistake number 1.  Still, over a year, the RUT is up 20% and TZA is down 60%, so not too terrible.  

    I'd cash the $120,000 you have left and (assuming you want to stick with TZA as your primary hedge) sell the 100 2016 $12 puts for $3.  So the worst thing that can happen there is you are re-assigned 10,000 shares of TZA at $12 = the same $120,000 you started with.  That puts $30,000 in your pocket and you can use that to buy 100 2016 $13/20 bull call spreads for $1.20 ($12,000) so that leaves $18,000 in your pocket (1/3 of your losses) but still leaves you with $70,000 of upside up to $20 and you can't lose any money unless the Russell is higher than it is now, which means (I hope) that you are making money on your longs to offset it.   

    Dictatorship/Rustle – I think I'll need a 6-year term to straighten things out.  

    JMI/JPH – I try not to think of penny stock REITs at all.  Honestly, the effort it takes to analyze these guys isn't worth the amount of time most of them survive.  The good thing about JMI is that they are run by the ARR team, though their performance has not been stellar over the past few years.  At least there's some experience there though they have no experience splitting their jobs or resolving endless conflicts of interest (one of CIM's early problems) so it's not the kind of thing I'd be buying – yet.  Another year or so of track record and some more liquid option contracts and I might get interested.  

    Peak oil/StJ – Also the assumptions assume increasing demand along the curve.  I'm fairly certain 

    Hedge/Craigs – Nas is full of over-valued stocks who could miss and take down the index.  That makes SQQQ at $41 interesting.  Aug $40/44 bull call spreads are just $1.15 so essentially no premium with a 250% upside if the Nasdaq even flinches down.  Figure if you put $4,600 into 40 of them you get $16,000 back at $44 (Nas drops 3%, boosting SQQQ 9%) and the net delta is .30 so the Nas has to move up about 2% (to 4,565) before you lose half, where you could stop out with hopefully nice profits on your longs.  

    LQMT/Craigs – I hate being out of them and the 50 dma is now 0.216 and the 200 dma is 0.212 so we may never see .21 again which means 0.22 is a reasonable new entry point or back over .25 if you don't mind chasing (with tight stops below). 

  33. A couple of questions for the board/Phil:

    1. What is the best way to play a high dividend payer in order to collect the dividend as well as protect the position with options while profiting from the options?  I used to think that deep in the money calls was the answer, but, come ex div day you lose the stock as well as the dividend.

    2. Over the years, we(wifey and me), have accumulated quit a number of company shares that will be able to be rolled into common shares.  What is the best option play to hold on to the shares while generating revenue?

  34. What company Buster?  

  35. GSK

  36. Phil – LULU – I thought we had a BCS of 35/50, selling 35 puts. I was thinking of selling a Sept caller against the spread given the bounce on a rumor this am.

  37. Jobs / Phil

    Again though, if there are a million jobs available and 10 million people applying for them, why would wages ever rise?  Sure, that $300 a week is break even from the consumer standpoint…except that the job he just accepted is no longer available for somebody else to take.  Fewer jobs means lower wages.  Flip things the other direction where a shortage of labor occurs, and wages must rise.  We are no where near a labor shortage right now…but with enough people accepting $300 a week jobs, that shortage WILL eventually occur.  Our present problem is that we're too damn far away from our natural rate of unemployment and so wages will continue to fall until the labor supply has sufficiently decreased.

    Not all economics work out well in the real world but you gotta call this aspect of it a no-brainer.  Too many people are "above" the jobs that are available right now (I sure as hell would have a hard time even taking $30 an hour anymore) but, again, I'm in an industry with a huge labor shortage.  If it weren't for the bull$%@# collusion between FB, GOOG, etc I'd probably be making a lot more right now on top of it.

  38. Thinking WWE might be an interesting turnaround.  Currently looks like a bag of worms, but might be worth keeping an eye on.  Hey, we're talking Vince and Linda Mcmahon and pro rassling ! ! !

  39. STJ – QCOM looking better.  Still only partially in and not overly confident.

  40. TZA / Phil – Thank you!   Most of my long positions (mostly options) are trading on NASDAQ.  If my main target is to break even on the losses from the TZA and I don't have a lock on using TZA as hedge, would you recommend something different?  TIA.

  41. QCOM / albo & stj

    My issue with QCOM is that the smartphone market is saturated and we don't presently need more power, or much more battery life, out of our devices.  I'm a tech lover but I had a hard time forking out the cash for my last phone upgrade because the one I had was already so great that its successor, which was "twice" as good, was a meaningless improvement.  Only reason I took the upgrade was my girlfriend and I were on the same plan and she really DID need a new phone; hence, I upgraded mine and gave her my old one.

    If somebody like me, who loves having top of the line tech(I'm an electrical engineer), just doesn't see the point in upgrading, who IS going to care to pay a few hundred bucks to upgrade? 

    Of course, we are still selling at record numbers, but until we get a good reason to move to new technology, there's no reason for sustaining higher growth rates and the need for high end SoCs.

  42. Thanks, JPH.

  43. Hi Phil, URBN … would you consider this stock now for short puts out to Jan 2016? Happy holiday to all you guys in the USA :)

  44. Add to the JPH story the marginal difference that the latest is change the platform adding your pulse, now you can worry about that which feeds on itself and the people around you know when your nerves are shot.

    Then all those $300 per week jobs only 2 weeks pay for the latest unnecessary.

  45. phil, what is our price target for ABX? thx.

  46. GSK/Buster – They pay 4.7% ($2.56), which is great and it does concern me if you and your wife work there and have too much of your money tied up there as well because, if there were some kind of disaster and the company stock dropped 50% and they cut your jobs – you'd be doubly screwed.  

    While I am not a fan of collars, your situation is one in which it can be useful – especially if you don't want to (or can't) diversify out of the stock.  Since you own the stock, you can sell the 2016 $55 calls for $2.80 and use that $2.80 to buy the $55 puts at $6.20 and sell the $45 puts for $1.80 for net $1.60 and that protects you from a $20 drop in the stock but leaves you with no upside (GSK $54.52 now) and the $3.80(ish) dividend you would collect over 18 months leaves you with $2.40, or about 5% of the stock price over 18 months.  

    That's not sexy at all but, if you are able to borrow $1Bn at 3% and then leverage it 5:1 through IAB's standard margin at 1%, you end up paying 1.6% on $5Bn worth of stock and net back over 3% for a 1.5(ish)% profit on $5Bn a year or $75M a year - so there is a place for that kind of strategy. 

    In your case, if you are at all concerned GSK may go down more than 10% in the next few years then why on earth would you be so concentrated in the first place?  If you don't think they are heading lower, why spend so much to hedge against the unlikely or limit your upside?  

    The problem is, like all big dividend-payers, the price you can collect for the options sucks but a moderate strategy would be to sell 2016 $55 calls for $2.80, since that's the same as selling the stock for $57.80 plus you'd get your $3.80 in dividends (not too likely you get called away unless the stock is well over $60) for $6.60 over 18 months.  Since you are taking the $6.60 off the table in advance, you are only leaving $47.90 on the table which makes the rate of return 13.7% over 18 months – very nice.  

    Unless you think GSK will be below $50, you're not going to lose and, of course if it goes up you can always roll the caller to 2018 $60s or higher – so it's not like your stock will be called away, even in 18 months, unless it really flies higher.  

    If that isn't enough to make you comfortable, then you should really consider selling half of what you have and then you could take the remaining 1/2 and sell the $50 calls for $5.50 and SELL the $47 puts for $2.30 and that puts (if you have 10,000 shares, for example) $272,500 in pocket from the 5,000 you sell plus $39,000 from the puts and calls you sell plus you'll still get $19,000 in dividends so net $58,000 in pocket, which is way more than you'd get just collecting dividends on 10,000 shares ($38,000) over the same 18 months AND you are half cased out and the worst-case tot he downside is having to buy back 5,000 shares at $47 ($235,000) which would leave you in the same 10,000 shares you have now but with $95,000 of cash on the sidelines.  

    When your "worst" case is getting $95,000 of cash out of your $555,000 in shares over 18 months – that's probably a path you should consider!  Do that every 18 months for 5 cycles and you end up with free stock and all your money back…

    LULU/Deano – That's not uncovered then, we sold the long calls.  In this kind of markets, selling short-term calls – ESPECIALLY against MoMo stocks, is way too dangerous.  That's a generic thing.  Selling uncovered calls on LULU, which is insanely undervalued at $40 (or $45 or $50) is probably suicide.  

    Jobs/JPH – Just because someone gets a job flipping burgers at Wendy's, doesn't mean he's no longer applying for other jobs.  If you really want to get rid of those pesky applicants – easier to start a war and kill them off – that's how we did it in the 60s!  We have a surplus of labor because jobs that used to be done in America are now being done overseas and the labor force isn't mobile enough to follow the work.  Without PROTECTING jobs at home, nothing is going to reverse that trend until there is wage equality between the US and the rest of the world.  All that does is make the US look more and more like a 3rd World country while companies flee this sinking ship like rats and head off to greener pastures overseas, where wages are rising and consumers are in a spending mood.  

    There's nothing that's happening now that Marx didn't predict 150 years ago – it just took a little longer to play out than he thought.  

    "The need of a constantly expanding market for its products chases the bourgeoisie over the entire surface of the globe.  It must nestle everywhere, settle everywhere, establish connections everywhere.

    Marx believed that wages would be held down by a "reserve army of labor," which he explained simply using classical economic techniques: Capitalists wish to pay as little as possible for labor, and this is easiest to do when there are too many workers floating around. Thus, after a recession, using a Marxist analysis, we would predict that high unemployment would keep wages stagnant as profits soared, because workers are too scared of unemployment to quit their terrible, exploitative jobs

    You're even complaining about the collusion of the Corporate Masters that exploits your high-paying labor – what do you think minimum wage jobs are?  A bunch of companies got together and set a fixed wage to pay people and, from that fixed wage, they index other people's wages and the longer they keep the minimum wage ridiculously low, people in the middle are at least relieved they aren't doing as badly as that. 

    The bourgeoisie has stripped of its halo every occupation hitherto honored and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage laborers.

    The bourgeoisie has torn away from the family its sentimental veil, and has reduced the family relation to a mere money relation.” 

    “The less you eat, drink and read books; the less you go to the theatre, the dance hall, the public house; the less you think, love, theorize, sing, paint, fence, etc., the more you save-the greater becomes your treasure which neither moths nor dust will devour-your capital. The less you are, the more you have; the less you express your own life, the greater is your alienated life-the greater is the store of your estranged being.

    WWE/Albo – From May, when they first fell:

    Submitted on 2014/05/16 at 2:47 pm

    WWE is almost interesting now, but only almost.  They're taking a $50M hit this year (two year's earnings) gambling on a subscription model for their fans, rather than the constant pay-per-view marketing thing they do now.  They pay a 2.5% dividend that's .48, so more like 4.2% at $11.34.  Still, I just don't like them and it doesn't really get compelling until they are below $10, which it touched today – worth keeping an eye on.  They don't have LEAPS but you can sell Oct $12.50 puts for $2.70, buy the stock for $11.34 and sell the $11 calls for $2.15 for net $6.49/9.50, which would make the .48 dividend 7.4% while you wait.  As I said – ALMOST compelling but then you have to explain to people what you like about the WWE or, even worst, the McMahons…

    TZA/Bshing – Well if you are mainly in the Nasdaq, then SQQQ or QQQ make more sense as a hedge.  We just put up a short-term hedge on SQQQ above but, if you want to go longer-term, the Jan $40s are $5 and the 2016 $60s are $5.50 so, for a net .50 credit you can be in a net $20 spread.  If the Nas falls and SQQQ goes up short-term, you have a .58 to .39 delta advantage (about 50%) and then you can decide if you want to cover or roll or whatever.  Meanwhile if down, you have a net .50 credit and you roll out to next year cheaply (before you lose half of the Jan $40s!) and if the Nas is flat, again you'll be able to roll – so not too much downside vs huge upside (since the net of the spread is free).  

    URBN/DM – I know my kids don't shop there.  They did some God-awful thing in NYC that was considered pro-drug (some heroin thing) and it was a REALLY bad marketing move by them but their problems started long before that as they have f'd up their mix and, of course, 50% of teenagers are unemployed and their parents don't have much money either – not a good mix.   They missed by a mile (4%) last Q and expectations are down about 10% this Q so low bar to get over but if they only hit it (.49 per share), that's off 0.02 from last year so I'd certainly want to see earnings (mid Aug) before risking money that these guys can turn it around in a single quarter.  

  47. Phil

    I have SQQQ Sept 45/50 call spreads, in at $1.45.  The 45 call is now 1.40 and after reading what you just wrote about SQQQ I'm wondering if I should roll them down to 40/45's.  I have another month longer for these than the August contracts you suggested above but not sure what the best thing to do with them at this point would be.  Appreciate your suggestion. Thanks.

  48. With all the negativism about this country, it was refreshing to read this from Hays Advisory :"

    "It makes me proud when I see American crowds at international events. You almost always know what
    other country’s citizens will look like before they are shown on TV. The United States' crowds are
    usually identified by their diversity, and at the World Cup in Brazil we've seen the typical US attendees -
    Caucasions, Hispanics, African Americans and Asians, all together cheering arm in arm. The ability to
    accept others and remain the great melting pot is one of the things that makes America great. We
    have a lot of flaws, but don’t forget to celebrate all of the things that make the United States of America
    one of the greatest places to live."


    Happy 4th everybody !

  49. The Fed. played fireworks for us in the entire week. I’m sure the real one would be prettier. Gotta eat some hotdogs n drink some beer for sure :)

  50. Thx Phil.  The latter suggestion makes the most sense to me.  Selling the risk, while having the dry powder to reload always wins over time(excluding bankruptcy which I don't think will happen).

  51. I agree, US is one of the best countries to live. SoCal has one of the nicest weather….. Happy 4th,folks!

  52. Phil – LULU - Thanks for the opinion. Sold the caller in any case, but I reserve the right to call you when I'm suicidal for help. Hopefully this doesn't become a legendary part of my 10k  hrs.

  53. Phil/Buster:

    Overconcentration in stock of the company you work for:

    I had a friend who lived across the street from me who had a wonderful wife, three children, a nice home, and great company benefits. He essentially put all of his savings into the company's stock ownership plan, which seemed like such a good idea because the company was doing so well. He even had the education accounts for all three children in the company's programs.

    Well, to make a long story short, the company suddenly and violently blew up. My friend lost almost everything: his wife, the home, the comfortable retirement he was looking forward to, the childrens educations, and almost his health and mental wellness.

    That company was MCI, and while it was just a bookmark in the annals of the business world, this company and his choice to not diversify changed his and his family's lives forever.

    As a footnote, I did not hear from him for tens years after this happened. 

  54. Wow, there's the day gone already – Have a great holiday folks!  

    SQQQ/Jeff – Yes, generally you want to try to salvage the net of the spread when that's what's left on the calls you own.  Generally, assuming it's a hedge, we simply want to buy more time and the Jan $45s are $3.60 so 3 months cost you $2.20 – UNTIL the Sept $50s expire and then you get some back by selling the Jan $50s (now $2.40).  Figure you'll get $1.20 back and that nets you $1 on the roll and that means your insurance costs you $1 per quarter.  With a $5 spread, that's not particularly good – you may want to consider my above suggestion to Bshing. 

    Melting pot/Albo – Great point (at least until we can get more GOP'ers in the Senate and send those damned immigrants packing!).  

    You're welcome Buster.  

    Nice half-point gain on the day to inspire the foreign markets while we're closed and, more importantly, to allow everyone who is "in the market" to brag about how well they are doing to their friends and relatives who are not and, hopefully, that will convince a few more people to come in off the sidelines and BUYBUYBUY!!! 

    VIX 10.37 isn't worried, so why should we?

    Have a great weekend, 

    - Phil

  55. MCI/Jbur – I have a friend who was at BSC and same thing happened.  Fortunately, her husband is a lawyer, so they were able to struggle back but they got blown out of the upper middle class as if a bomb had gone off in their kitchen!  

  56. Happy birthday America!!

  57. JPH

    I agree with you on smart phones but Phil has it right on jobs. This shit system has been tearing America apart for longer than you have lived. His latest words above are the wasting of human resources. Those are American human resources. I am old enough to remember when the country was on the rise and a stagnant minimum wage was not an issue. I paid my way through school, no loans at $1.40 to $2.00 per hour, that is not remotely possible today.

  58. I should clarify.  Although we have quit a large holding in GSK, it is far from the biggest percentage of the total.  I am also in a different field from my wife.  We have been lucky enough to avoid the mine fields in our individual industrys(pharma and aviation).  I have always been if the mindset that anyone can get to critical mass, learning to make it work for you is the unanswered piece of the puzzle that most don't think about, care about, or avoid through ignorance.  It is the piece of the puzzle that I want a firm grip on going forward.

  59. Good to know, Buster – as you can see, you have a lot of people here looking out for you!  Better to hear the warnings of experience.   Though you may not be on that path, it's helpful to others as well so somtimes we'll end up going over lessons you don't specifically need – always feel free to clarify along the way.  

  60. I'm not normally an "agree to disagree" type, and regardless, I do mostly agree…I just view this jobs report as a good one despite the caveats.

    Anyway, I'm curious what the opinions would be on the trajectory of oil prices if the commodity could no longer be purchased on margin.

  61. WSJ Headline just emailed:

    Dow Closes Above 17000 for First Time

    The Dow Jones Industrial Average closed above 17000 for the first time Thursday after a rosy report on U.S. job creation helped reassure investors that economic growth can support stock benchmarks at all-time highs.

    The Dow closed at 17068.65, up 0.5% or 92.41 points, hitting a new record. The S&P 500 also closed at a record in the holiday-shortened trading session.

    The Dow's move above 17000 comes just 153 trading sessions since it first closed above 16000 on Nov. 21, 2013. It marks the seventh-fastest 1,000-point gain in the blue chip barometer's history.

  62. So the market obviously like the job report. You could say or think what you want, but the market is the ultimate boss that pay us.

  63. Only need 3000 more points on the DJIA for my DIA $180 calls to turn in to an epic profit ;) .

  64. Phil / 2
    DBA / I originally bought calls as an inflation hedge. Since the only 'solution' to dig ourselves out of this hole is hyperinflation – wouldn't the premise still hold regardless of corn reports, etc.

    /CL / would it not make sense for NYMEX and Co. to jack oil up end of day for the 4th ?

  65. Trader/Investor would never go broke if they take profits wisely.~ Anonymous

  66. Phil/Stjeanluc: Infrastructure.  Hello strangers……just got back from an extended European stay.  Last 4 weeks was a driving tour of Germany.  A tour of the German ports into a tour of Germany.  I was stunned at the massive infrastucture construction projects all over Germany.  The autobahn was a pain in the arse due to continual single lane road and bridge work.  The port cities look like giant construction projects…roads torn up…bridges being built…railway work…dock work…massive new port construction….their biggest challenge is from environmental groups filing what amounts to injunctions challenging the environmental impact studies on all these construction projects.  I was really non-plused at the scale of work currently ongoing.  

  67. QCOM / Albo – Turned positive on my charts but now we have to worry about hitting overhead resistance. As JPH said, I am worried about the saturation of the smartphone market at least in our neck of the woods. Google just talked about the next billion users for Android, and released specs for a low cost version of the phones. But these will use low cost chips, not the top of the line ones where QCOM makes bigger profits. So, still cautious…

    On the other, FNSR climbing back over $20!

  68. Infrastructure / Living – I guess they have to find a place to spend all the trade balance surplus in Germany! And don't forget, Germany collects about 45% of GDP in taxes from its citizen between VAT, income and local taxes. We collect less than 35%. And we spend a lot (close to 3% of GDP) in defense, they spend 1.5%. Between these 2 numbers, we could get another $2T more each year and that would pay for a lot of infrastructure. But we would first need to get rid of 1/2 of Congress….

  69. Speaking of the economy, I had a real estate agent in my house today and she told me that I could list my house for 20% more than what I bought it for back in 2007! I was shocked because we bought when the market started to go a bit downhill, but still pretty high (I also sold my previous house at the high so a wash). She was saying that prices were coming back strong right now. Either a good sign or a scary sign of irrational exuberance. 

  70. Happy 4th of July to everybody. It's my favorite holiday of the year. Good weather, happy people, fireworks. Who could ask for anything more…

  71. And this year, World Cup soccer with France-Germany and Brazil-Colombia tomorrow. Allez les Bleus…

  72. Company stock diversification/ For those of us lucky enough to have been enlightened by the artificial buy/write financed with a short put, there is no excuse to keep overly excessive amounts of employer company stock – only up to the minimum holdings that are sometimes applied. Selling the stock and still cheerleading for the company stock price to reflect all the hard work of its employees (even those without company stock) by investing in a rolling strategy of artificial buy/writes should make the corporate audit committee proud. It would not surprise me if most corporate management teams are advised to diversify into other stocks. This also avoids such compliance issues that executives are so tied to the performance of the company that they sometimes forget the lines that separate right and wrong in terms of doing business ethically.

  73. Hedges and the apocalypse. We are a mixed bunch in terms of trading years and market decline experience. Yes, the market goes go down sometimes. The only 'true' hedge is taking the other side of the trade that you are already in. The triple ETFs haven't really been tested in the environment where they should work (from my part, thank god). Most of us are probably in a double bind – heavily long, short short puts, and enjoying hay making while the sun is shining. Phil does a good job of admonishing us when we get greedy or presumptious that things can only get better – and his job as headmaster is an important one. 

    But if we look at our portfolios, have we really studied and prepared a game plan for when the 'inevitable' correction comes. As I have said before, Phil is a reluctant bull (although he may disagree), and a cautious bear. He manages that equivalence in a masterful way. I am not sure many of us can manage the nuances of the daily comments in terms of up or down. 

    But at the risk of stating the obvious, there will be many tears before bedtime when the next sudden and sustained decline comes.

  74. America Brave and Free. July 4th is one of those days when some of us separated by a common language reflect on what might have been if things had not gone so wrong (right) all those years ago. From comments on this board, I could get the impression that taxation without representation was not so bad after all, and that there is a guilty feeling that so much tea was dumped in Boston harbour. I have visited the USA on several occasions, and thought that despite the disadvantages of rejecting a system of corporate governance that had worked for hundreds of years you have done very well. I distinctly got the impression that a young man, with initiative and talent could make their way very far in your fair land. 

    What I find rather curious, is that for those US citizens that make comments on the board, you seem not to realize the good fortune that you have had and continue to benefit from. On certain occasions, you come across as despondent with the tax system, exasperated by your politicians, dejected by your health care, envious of those who have done well, and wishing (and I emphasize wishing) that things were so much better.

    At the risk of sounding arrogant, I hope that tomorrow you will take the time to reflect on how lucky you are as a nation. That you have achieved to produce a level of abundance that all other nations can only dream of. You stick together in times of need, and are the firmest friends. 

    I will raise a glass to all of you tomorrow. 

  75. Winston,

    Very wise words in both posts.  I thank you for the kind words in the later.  They just made my weekend even brighter. 

  76. A profile in courage:

    New Jersey Gov. Chris Christie vetoed a bill on Wednesday to lower the limit on ammunition magazines from 15 rounds to 10 rounds, handing gun rights activists a victory after they lost the battle in the legislature.

    Plenty of talk in this guy, not much action… Except to punish political opponents.

  77. Digging through the ISM numbers:

    Internals not so bad…

  78. Winston:  I agree with Sibe, you words are very well taken.  Americans have always been rather insular in the worldview, which, given that is is a very large country surrounded by oceans, is not entirely surprising.  But it is myopic:  "the lady doth protest too much, methinks."  I spent my early youth in a still war-damaged Europe, another half-dozen years in South American countries, another nine years in Europe beginning in 1998 followed by another 8 years in a Caribbean nation of no great wealth.  Half of my life, essentially — and I am always surprised at how Americans feel that their nation is in decline.


     Compared to what, one wonders.  Over the last 20-30 years, the U.S. has invented and propagated information technologies never dreamed of, and is among those in the forefront of a great variety of scientific and technological enterprises.  It also have a far greater degree of racial and ethnic tolerance than most — a far more important aspect of our economy than is generally recognized, even if one is  indifferent to the social influence of Judeo-Christian morality.  I have lived among many people whom have had to flee their countries merely to survive, and am in fact married to one.  Americans should get out more — and give a appreciative thought to what our Founding Fathers initiated with their Declaration on July 4, 1776.

  79. Pharm/PLX – PLX is getting pretty low, now down to 3.47.  Time to bottom fish?

  80. All:  As we end the first half of 2014 and celebrate the independence of our nation on July 4, we need to count our blessings for hanging tough in this market where the fundamentals are miss alligned with the market averages. May the second half be as good as the first. My $500K LTP has yielded 32% in closed profitable trades in the first half of 2014.

    If there is a substantial 10% market decline or more, then those of us who set hard stops will be the beneficiaries of limiting our losses to stay in the game.

  81. Winston:  Thanks for your thoughts, and yes we Americans need to remember how fortunate we are and count our blessings.

  82. With all said lets give a good wish for mb22 a member too busy to even read the blog of late. She has moved from the east to southwest to northwest and finally Austin TX, working crappy jobs pursuing a job for which she took on significant debt to educate herself. She has reported passing skill and logic tests, interviews, and next week meets the CEO. During all this she still never forgets promising to amend the fund site by July 6th although that will be pushed back. This is the  core of greatness! Best wishes success is at hand!  

  83. America Brave and Free.


    While visiting our nations capital, I am reminded about how far as a nation we have come; The trials and tribulations, the sacrifices of brave men and women and all for the right to "life, liberty and the pursuit of happiness"


    While I realize that some of us are not happy with the 'state of our union' it's only because of where we've been and not where we are going. So while I am thankful to be an American, I too, appreciate those 'canaries in the coal mine' that keep us aware of our current state of affairs.


    Thanks Phil – You're a true American!  :)

  84. oh my – i haven't laughed this hard in a while. To Phil's point ( an long-time engagement with SA ) this is so embarrassing it makes a really funny read. Phil – is there any legal recourse from dribble like this ; I feel really bad for first-time investors that get snagged by this crap.

  85. Happy Holididays!  

    Not much going on this morning.  Asia up a bit, Europe down a bit.  Futures are open but who cares.

    I have family stuff today but I'll check in later.

  86. Here's one politician we don't need to get rid of:

  87. How to piss off people from NYC.

    The difference between a NYC friend and your other friends.

    • A normal friend will stick up for you when someone hurts your feelings.

      A friend from New York City will ask where you want them to hide the bodies.

    Progress report on Colorado's legal pot trade.  

    Speaking of countries that need to spend more on infrastructure:

    This Facebook study, though incredibly disturbing, does get to my point about media manipulation:

     nearly 700,000 Facebook users were manipulated to show more positive or negative posts. The study found that users who saw more positive content were more likely to write positive posts, and vice versa.

    As I often say, you have to make an effort to spend about 25% of your time reading things that completely disagree with you.  Especially in today's media environment, it's so easy to funnel yourself down into an echo chamber, where you only end up hearing what you want to hear. 

    Speaking of which, good article in the NYTimes about the state of the GOP strategy.  

  88. Why tax cut snake oil is still for sale.

    Speaking of listening to things I totally disagree with, it seems Rush Limbaugh is still on the air:

    Limbaugh: A caller asked, when did birth control pills become so important to the humane condition, the federal government requires every insurance policy to cover them? Eye examines, dental work are not mandated by Obamacare, but contraception is. Birth control pills are. Which is worse, to go blind from lack of regular eye exams or or to get pregnant?

    And again, pregnancy is something that you have to do to cause. It doesn't just happen to you while you're walking down the street except in the case of sexual abuse. Pregnancy requires actions and yet we treat it as a great imposition that women need to be protected from. It's a sickness, it's a disease, it's whatever and there's got to be a pill for it. And yet they wouldn't have the problem if they didn't do a certain thing. It's that simple.

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  89. Limbaugh / Phil – And coming from him who goes whoring to many places… It's rich! It's tough to listen to 25% of people you don't agree with when they stoop so low 95% of the time.

  90. Here is BP's current expectations for energy supply and demand to 2035.  They are as savy as anyone in the business but their projections are about as accurate as the Fed's are on GDP.  So take it with a grain of salt.

  91. Storm not Coming Anytime Soon:   Twelve of the 18 states you cite: Andorra, Luxembourg, Sweden, Finland, Denmark, Holland, Japan, San Marino, New Zealand, Slovenia, Hong Kong & Iceland — have a combined population of 56,600,000 people.  Most of these countries have an ethnically and culturally homogeneous populations, and have existed as "a people" if not a democratically-constituted political system, for thousands of years.  The U.S. has a population of 317,000,000 at present, effectively 4X the total population of all those countries combined, and is both a  far younger country,not yet 240 years old, and has a far more heterogeneous population – approx. 63% white, 15% latino and 15% black — spread far less densely upon its territory.


    So the U.S. is "not #1 across a broad swath of civilized indicia?  That may be.  But, judging from the overwhelming immigration backlog that has clogged the USCIS offices for a decade and which waxes daily [], it appears that the poor ranking of the U.S. has not been noticed by the people to whom it really matters — potential immigrants. 


    Of the other remaining  six,countries listed as seizing a march on the U.S. in terms of civilized amenities, Germany, Russia and Italy only make the list of advanced civilizations for having the most mobile phones per capita, a dubious indicium of civilization – one could easily make the opposite case, given the amount of public braying it entails.   

  92. Zero – While certainly not speaking for Phil, I feel his examples clearly show that the U.S. in many ways, is in decline. So while we could never be number one in all of the examples given, it was our founding Fathers wish that we would form "A more perfect union" and many of us believe that should not end with the drafting of our constitution.


    The attempt at perfection is what has made this country great and a shining example for others to follow…. :)

  93. Korea & China meet-up/all – The meeting in (south) Korea this last week has received virtually no coverage in Western media, and the few that did cover it don't seem to pick up on the most important point. For decades, the Korean won has been tied to the dollar and only the dollar. Therefore, when trading with its biggest partner, China, exchanges happen based on the dollar. Now the two countries have opened direct exchange. This has important ramifications, especially for north Korea and Japan. It means China considers the south a more important partner, and is willing to help support that economy. There are even broader implications, but that's plenty for the moment.

  94. It's good to be cautious, but tough to be too cautious in the face of this renewed rally fueled by low volume. But indices are up between 5 and 10% since May… Sell in May didn't work so well this year.

  95. ~~cturb

    Batteries exploding will not be counted because stolen speeding. The issue that is to be noted is a problem with aluminum construction, lighter and stronger in certain ways it dose not bend and stretch like steel. This is the second indicator of safety problems in the rear of the car. 100 mph crashes don't end in 2 pieces and without ejection the driver would have burnt to death. Tragedy without the criminal excuse is on deck.

  96. Off Topic but fascinating and mind bending

    The Ferni Paradox – Wait but Why

  97. Drone’s eye view of fireworks.

  98. The Arab Spring Just Got Serious Again – Kuwait Is Burning

  99. Report shows tech is forcing full-time employees into part-time work (2 graphs)

  100. California tightens some water restrictions as drought continues

  101. Banks should avoid bitcoin and other virtual currencies for now, EU regulator warns

  102. It’s Getting Really Hard To Argue That Stocks Are Cheap

  103. Potential Game Changer for Funding Awaits Final Approval From SEC

  104. Oil industry’s wastewater wells blamed for triggering Oklahoma quakes

  105. Mario Draghi’s idea of richer ECB communication is to hold fewer press conferences

  106. Alibaba now runs the fourth-largest money-market fund in the world—and maybe the biggest challenge to Chinese banks

  107. Rackspace insider: Reports we’ll go private are ‘bulls***’

  108. OECD: Wage Inequality Will Only Get Worse From Now Through 2060

  109. Korea/snow:  That coincides with North Korea's pivot to Japan as the two countries have been in talks over North Korea abductions of Japanese citizens.  Japan is easing sanctions while N.Korea is promising more detailed information on the abductees.   Perhaps NK is doing this as a counterbalance to the China/S.Korea deal.


  110. Entrepreneurs put Europe’s leftover food online

  111. Snow / Kinki — Can't say which way N. Korea might "pivot,"  but this movie might well provoke a saber-rattling incident that could tank the Nikkei for the better  part of a week or more.


     Pure speculation, admittedly, but the one thing N. Korea cannot afford to become is a subject of general ridicule.  Which now threatens:

  112. N.Korea/snow:  Yeah, Phil mentioned he thought it was a pretty f*cked up to make a movie about assassinating a current world leader.   I think NK launched some SCUD missiles into the ocean last week, before the big Japan talks, which I think was a big temper tantrum over the movie and the Korea/China deal and I guess everything in general.   I think the Japan talks were kind of a face-saving act to make it seem they are cutting big deals with major players like Korea/China.  Plus N.Korea wins big on the deal since they are getting something for nothing (lifting of sanctions in exchange for "information" about abductions that happened over 30 years ago which may or may not be reliable). 


    Anyway, would love for the Nikkei to tank.  I have some open GTC orders on TM which I need to get filled.  Speaking of tanking, I hear President Park's approval ratings have been taking a hit recently.  How do you think the China deal will impact her popularity?

  113. Shadow I hear what you're saying but the trade bots often go on the google search results like tesla=fiery crash.  USA today tried to spin the news as a positive. Either way it will be interesting to see how TSLA trades early Monday morning. I'm playing both sides but tilted more on the short end so I'm just hoping for a small dip at the least.

  114. Sorry Zero, I thought your comment was from snow. My bad. The last comment was directed toward you.

  115. They re-opened Action Park in NJ – we are so psyched!  

    This documentary doesn't exaggerate at all, I don't know anyone who wasn't injured at Action Park – but we loved it – especially for the incredibly lax drinking policy! 

    Having a great vacation, off to the water park today with the kids – wish us luck…

  116. The Crash Reel: watched this HBO documentary over the weekend, with a hat tip to Sinophile Maoxian:

    Told the story of a professional snowboarder named Kevin Pearce who suffered a terrible fall (see below) in 2009 and is brain damaged as a result. Documented his recovery which was pretty amazing … he's a genuinely sweet kid, has a really nice, strong family behind him … when they did play the crash reel of all these skateboarders and BMXers, and snowmobile and dirtbike jumpers, I admit I covered my eyes, couldn't watch it. 22 foot walls in the half pipe present a lot of risk. I had a childhood friend who was in a terrible car crash and is also brain damaged as a result … he too made a remarkable recovery, but like Pearce, is not his old self. Good movie to show to someone who takes outsized risks, it might make them think twice.

  117. Scary…

    The most amazing stat for the Nasdaq, though, is that it is now just 12.5% away from its dot-com bubble closing high from March 2000.  Yes, the index needs to gain just 12.5% to eclipse those prior highs that just a few years ago seemed light-years away for many.  Just since its lows this April, the Nasdaq is up 13.7%, so another rally like we've had over the last 2+ months, and we'll be at new highs.  Pretty remarkable, but also kind of scary.

    On the other hand, the inflation adjusted high is at 7090 so still ways to go before we get to the go-go highs of 2000!

  118. Maybe the World Cup is impacting our volume as well:

    According to ECB data, workers everywhere—even financial types—are paying more attention to the games than to their jobs. One way of measuring the global epidemic of distraction is to look at plunges in stock market trading volumes. The European Central Bank analyzed data from the 2010 World Cup showing significant drops in trading during all games. The effect was especially pronounced when the traders’ own country was on the field.

    Sorry guys, that doesn't happen during the World Series….

  119. From Bloomberg, Jul 6, 2014, 9:07:44 PM

    July 4 (Bloomberg) — Michael McCarthy, chief strategist at CMC Markets in Sydney, talks about global stocks.
    McCarthy also discusses the global economy, financial markets and central banks’ policies. He speaks with Angie Lau on Bloomberg Television’s “First Up.” (Source: Bloomberg)

    The dollar strengthened against major
    peers and Treasuries fell amid speculation a stronger U.S. labor
    market means the Federal Reserve may raise rates sooner than
    anticipated. Asia’s benchmark equity gauge traded near a six-year
    high and oil fell with gold.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  120. From Bloomberg, Jul 6, 2014, 7:00:11 PM

    In the relative calm that is the
    market for U.S. Treasuries, a sense of unease over a vital cog
    in the financial system’s plumbing is beginning to rise.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  121. From Bloomberg, Jul 6, 2014, 11:00:01 AM

    Japan’s stock rout in the quarter
    through March spurred the first loss for the world’s biggest
    pension fund in almost two years, just as it moves toward buying
    more equities.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  122. From Bloomberg, Jul 6, 2014, 12:00:01 PM

    June 20 (Bloomberg) — Liu Yang, Hong Kong-based chairwoman of Atlantis Investment Management Ltd., talks about China’s economy, government policies, and stock market.
    She speaks with Rishaad Salamat and Angie Lau on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

    Last year’s most-profitable bets on the Chinese economy have turned into money losers in 2014 as policy makers send mixed signals on which industries will lead the country’s expansion.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  123. From Bloomberg, Jul 6, 2014, 11:00:01 AM

    Haruhiko Kuroda, governor of the Bank of Japan (BOJ). Kuroda said last month that the economy is recovering moderately while holding off on expanding stimulus. Photographer: Kiyoshi Ota/Bloomberg

    Bears are finding nowhere to hide in
    Japan’s financial markets.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  124. From Bloomberg, Jul 6, 2014, 12:01:00 PM

    July 1 (Bloomberg) — Jing Ulrich, vice chairman of Asia Pacific at JPMorgan Chase & Co., talks about China’s economy and government policies.
    China’s manufacturing expanded in June at the fastest pace this year, adding to signs that the government’s efforts to arrest a slowdown are helping to stabilize the world’s second-biggest economy. Ulrich speaks in Hong Kong with Angie Lau and Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

    China’s central bank is seeking to support economic growth with unconventional tools that Credit Suisse Group AG and Everbright Securities Co. say look more like fiscal policy.

    To read the entire article, go to

    Sent from the Bloomberg iPad application. Download the free application at

  125. Good morning!

    I hope everyone had a great weekend and you are all rested up for the excitement ahead.

    Asia was pretty flat and Europe down about half a point and our Futures are down very slightly.  

    Still, barely a nudge down and this rally will continue until it doesn't – that's my firm prediction. 

    Oil at $103.88 but gasoline (/RB) all the way down at $3.005 and nice for a bull play as long as $3 holds but very tight stops below.  

    /NKD rejected at 15,500 again – that's been a great line – now 15,400.  

    Mondays are usually meaningless and this one is likely to be as well as it's hard to get back from vacation mode.  

    Very little data this week but tons of Fed speak around the minutes – we'll see what they are up to but likely a unified message that there are no plans to raise rates until way into next year at the soonest.  

    Gold $1,315, silver $20.90, copper $3.25, nat gas $4.31 with the Dollar at 80.3, Euro $1.36, Pound $1.71 and Yen 102.  

    Inside the FBI's Operation Pennypincher

    Operation Pennypincher targeted the murky world of penny stocks, a historical haven for con men and hustlers that the FBI says is 'rife with fraud.'