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Tempting Tuesday – Lead Us Not Into Betting on Bounces

"Forgive us our debts, as we have also forgiven our debtors."

Hah – what a crock!  How many people who have recited that prayer have forgiven any debts?  How many have had debts forgiven?  Certainly none of the G20, who owe each other tens of Trillions of Dollars and certainly not Argentina's bondholders, who drove the nation to default and certainly not the bondholders of THREE Atlantic City Casinos that are on the verge of shutting down and putting 10,000+ people out of work in a county of 275,000 so about 5% of the working population.

Are casinos simply a bad business or is the economy not quite as strong as we are led to believe?  

In the past 14 years, we have more than tripled the debt of the first 224 years of our nation's existence and, in the next 7 years, we are on track to add 150% more (than the $5Bn we had when Clinton left office).  

The $2.4Bn Revel Casino opened in March of 2012 and was $1.5Bn in debt at the beginning of 2013 but did a pre-packaged bankruptcy last year that cut the debt to $272M but it's been hemorrhaging money since and the value of the casino has been slashed to $450M yet an auction scheduled for yesterday got ZERO bidders, which may now lead to yet another bankruptcy – making it an annual event.  

This is no run-down property, this is a beautiful, modern building that LOOKS like $2.4Bn was spent to build it.  It's a beautiful property with nice restaurants and great rooms and a nice beach and a swim out pool on the deck so you can use it even in the winter – no expense was spared but, like many grand projects, the cash flow isn't there to support the great dreams of the creators

Even at $450M, if you could sell the 1,400 rooms (57 floors) into condos and got $300,000 for 1 bedroom apartments, that's only $420M and wouldn't be worth the effort.  So, if you can't do that and you need 3,800 people to run the casino/hotel – that's a pretty big nut to cover each month.  The casino loses roughly $3M per week as it runs now and, in it's second bankruptcy, has now been looked at by every VC firm, Hedge Fund and Real Estate Developer in the country and NO ONE wants it.

Casino revenue July 13On it's own, you might say that says more about the execution of this particular casino than it does about the economy but no one wants Harrah's (CZR) Showboat Casino either, nor do they want the Trump Plaza, both down the street from Revel and both have been around for decades, making some money for the owners over the years but now deemed unbuyable as well. 

A combination of competition from other states and the Recession killed Atlantic City and the state is desperate to prevent the coming collapse of three hotels closing at once but Gov. Christie already put $260M of the state's money into Revel in an attempt to save it and that money is GONE!  If it were just Atlantic City, we could brush that off but, in 2012 alone revenues fell 15% from the previous year and, in 2013, another 4% was lost.     

This is during our "recovery".  Las Vegas dropped 10% in 2013 after dropping 15% in 2012 (we're short WYNN and long CZR).  If you are one of our American readers, you KNOW that, when we feel good about the economy, we go to Vegas.  If Vegas isn't doing well, then America isn't doing well – let's not fall for the MSM hype and start paying attention to the economic evidence we see every day!  

Speaking of hype, notice in the chart above that 2013 (green) comes BEFORE 2012 (red) on the bar chart?  That's so the casual observer (most people) will look at the official state graphic and get the impression that things are getting better, not worse.  Keep that in mind before you vote for Christie as President

This is just an example of how data can be manipulated by your trusted Government and the Corporate Media to twist the facts and influence your investing and voting decisions to suit their needs.  I don't want to be a downer but I do want you to be cautious as the markets merely BOUNCE off the lows – as we expected they would. 

Our strong bounce lines predicted since last week's drop were:  Dow 16,650 (-80), S&P 1,940 (-3), Nasdaq 4,385 (+16), NYSE 10,750 (-17) and Russell 1,150 (-8).  That means, out of 34,875 points worth of predictions, we are off by net 92 point on our 5% Rule™ or 0.2% – not bad for levels we predict a week in advance!  

Since we're off by an average of 2 points out of 1,000, perhaps it's a good idea to heed the RULE part of the 5% Rule™ which tells us that we need to hold OVER those strong bounce lines for 2 full days to break the downtrend.  So far, this is day zero – so DON'T GET EXCITED

We made some nice profits shorting the Index Futures in our Live Member Chat Room early this morning and we're looking for key failures like /TF 1,135 and /YM 16,500 and /ES 1,930 and /NQ 3,900 to short some more as we don't believe those strong bounce lines will hold once the volume picks up.  The only trades we added yesterday were market-neutral Butterflies for our Butterfly Portfolio – in general, we remain Cashy and Cautious.

Be careful out there!  


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  1. Oil Lines

    R3 – 99.53
    R2 – 99.05
    R1 – 98.41
    PP – 97.93
    S1 – 97.29
    S2 – 96.81
    S3 – 96.17

  2. Adding ways to lose money since apparently it supports a high stock price:

    Netflix may have had a big head start in streaming original series, but Amazon is quickly closing the gap. Amazon Studios launched in 2010 and produces original shows that can be streamed for free by the retail site’s more than 20 million Amazon Prime subscribers. It caught attention last year for releasing pilot episodes of its prospective shows online, and incorporating feedback from Amazon customers into decisions about which ones to pick up for a full season.

    The first batch of shows didn’t produce any standout hits like, say, Netflix’s Orange Is the New Black. But the second group of pilots, released in February, were much more enthusiastically received by audiences and critics alike. Amazon’s new comedy Transparent, which will debut next month, is already generating raves. And on August 28, Amazon will unveil a promising third group of pilots, including The Cosmopolitans, a drama by Whit Stillman, and Red Oaks, a comedy produced by Steven Soderburgh.

  3. Morning All! Here's the link to today's webinar:

    Today 1pm Eastern! If you have any trouble registering or getting in… just email me at:


  4. The problem with the casinos in AC and Vegas, which I believe will get worse, is that there seems like there is a casino popping up in every town now.  There used to be 3 main places in the USA to gamble, Vegas, AC and a cruise (and technically that was when you were off US jurisdiction).  Now you have casinos or casino boats everywhere coupled with online gambling.  Many people don't want to take the long drive or pay for a flight just to gamble.  And with more casinos opening up including in NJ, the dilution is going to bury them.

  5. Interesting technology chart:

    Hype Cycles Emerging Technologies 2014

  6. Optimism tempered by possible inflation:

    Despite an unemployment rate that remains high at 6.2%, good labor in America is in short supply.

    This is the message of the NFIB's July small business optimism survey.

    Forty-two percent of respondents say there are "few or no qualified applicants" for jobs. This number has been trending higher since 2009.

    Twenty-one percent of firms have reported actual compensation changes in the past three months; this number has also been trending only higher since 2009.

    While sales continues to be a bigger concern for small businesses, it continues to drop as the single most important problem. This is interesting because it suggests economic concerns are shifting from weak demand to tight supply.

    All of this points to higher wages for America's workers, which in turn should lead to higher inflation.

  7. Greg

    Will you provide a replay of the webinar later in the day? I can not make the 1pm start time. THX.

  8. Tesla–The Model S sedan is the subject of a new Consumer Reports review, in which the magazine said the car has "more than its share of problems." The publication praised the car for its design and smoothness, but is now also detailing various issues with a Model S that it has driven about 16,000 miles. Tesla points out that its warranty covered the issues mentioned and that Consumer Reports benefits, as any owner would, from its comprehensive warranty program.

  9. Rustle / AC

    I disagree.  Vegas has made itself into a destination.  Just look at the Airlines/destinations at the 2 ariports.  Podunk, Wisconsin has as much service as AC

  10. Numbers not looking so good for Germany:

  11. I sure will, Dan! I'll post the replay here later this afternoon and again in tomorrow's chat. 

  12. AMZN/StJ – This is why I'm long-term bearish on NFLX, all these people trying to create original content simply drives up the cost of original content at the same time as it dilutes the audience.  On top of that, they begin to compete for eyeballs on price.  For AMZN, it's a side business but for NFLX, it's their whole deal.  

    Thanks Greg! 

    Indexes bouncing back hard and fast off lows – we'll just have to see what sticks.  We'll be watching the same lines for re-shorts but now waiting for at least 2 to cross under and shorting the laggard.  

    Casinos/Rustle – I buy that logic for AC but not Vegas, which is a whole vacation spot.  If they can't get people to come there, then there are real problems.  Last time I was in AC, I checked out Trump Plaza - it was like an abandoned warehouse filled with slot machines – barely a soul in sight!  Trump is suing them to get his name off the building.

    Cool chart, StJ. 

    Inflation/StJ – That's the kind we do want – wage inflation!  

    ZEW/StJ – Wow that sucks!  That is falling off a cliff action!  

  13. Vegas/Phil,Newmexker

    I would say to that, that's why it's holding up much better than AC but fact is that revenues are still dropping and I remember talking to some people higher up in the casinos saying there are more people than ever before in Vegas but they are gambling much less (almost 50% less) and are there for the town.  This translated into revenue drops in these casinos.

  14. I agree with that, I like Vegas because it's a great town to visit and it happens to have gambling.  Even when I'm not with my family, I still spend more time doing stuff other than playing poker.  

  15. As far as AC goes, it's doomed.  Even though newer casinos are nicer, there's no main theme to each one like in Vegas.  Almost every hotel has it's own identity in Vegas.  Also the main part of AC is much slummier than Vegas.  You have to go outside the main strip to get to slummy sections of Vegas.  They should legalize pot in AC alone in NJ and you'd get people going there again.  Vegas is Sin City, AC is Slum City.

  16. Thank you Greg.

  17. Thomas Bulkowski regarding the Dow Jones Industrial Average: “The index is making a measured move up chart pattern, starting at A and ending at D. So far, the index has completed the corrective phase BC. If I'm right, the index will climb to D, hit overhead resistance and probably retrace back to BC. I'm looking for a 200 point move not necessarily tomorrow, but in the next day or two.”

  18. Wage inflation / Phil – But will it keep up with real inflation once that train leaves the station…

  19. Phil – What are your current thoughts on NUAN?  Thanks!

  20. AC/Rustle – They all deserve their fate down there because the casinos reneged on their promise 30 years ago to put money into rebuilding the town.   They did no such thing (other than token efforts) and created that situation where 2 blocks off the beach and one block behind the casinos, you are in a 3rd World country.  It could have been all done so much better but, in this economic environment, it's probably unfixable now.  If those casinos close, the whole county may tumble into bankruptcy and the state may not be far behind – unless they raise taxes and you know Christie can't do that if he wants to be Prez.  I'd go short on AC! 

    The U.S. and Germany remain in the mid-cycle stage, while Japan continues to face late-cycle pressures. The risks of a growth recession in China remain elevated, despite some stabilization from recent policy actions.

    Recession risks remain generally low, with China trying to prevent a growth recession from taking root.



    • July NFIB Small Business Optimism Index:+0.7. to 95.7 vs. consensus of 95.8, 95 prior.
    • "On the positive side expectations for business conditions and outlook for expansion accounted for virtually all of the net gain in July’s Index".


    • Germany's ZEW survey of economic expectations declined to 8.6 in August from 27.1 in July and vs. expectations for a print of 18. It's the eighth straight month of declines and the indicator has reached its lowest level since December 2012.
    • It's another data point painting a picture of a sharply slowing economy following an unusually strong Q1. Last month, the closely-watched Ifo survey indicator fell for the third consecutive month.
    • The euro (NYSEARCA:FXE) is lower by 0.3% to $1.3344, it's weakest level since November. It was just three months ago, the currency touched $1.40.
    • Germany's DAX is down 0.4%. EWG -0.5% premarket

    Prepare For Q3 GDP Collapse – Here Comes Polar Vortex 2.0

    With bulls like these, who needs bears? (Reformed Broker)

    You Should Be Happy When the Market Tumbles (MSN Money)

    The Credit Bubble's "Final Frontier" – Meet Goldman's FI(A)SCO

    The Unbelievable, Unknowable Wealth of the World’s Super-Rich (Slatesee also Corporate 1% in U.S. Gets Wealthier While Cash Piles Up (Bloomberg)

    Recent Owners’ Equivalent Rent Inflation Is Probably Not a Blip

    The Idiots of San Diego County’s Pension Investment Committee

    China’s Trust Asset Growth Slows Amid Shadow Banking Crackdown

    This can make a big mess fast!  Pakistan Coup Concerns Mount as Sharif Protests Planned

    Ukraine Says It Is Near End of Operation to Surround Rebels

    Video Of The Russian "Humanitarian Convoy" About To Enter Ukraine


    • Argentina's default has taken a new swing, following Judge Thomas Griesa's threat of a contempt order unless the government stops publicly claiming it has met its obligations and is not in default.
    • However, Argentina says that it has paid the holders of its restructured bonds when it deposited $539M into the account of intermediary BNY Mellon in June.
    • The South American country has now called on Washington to intervene, saying a contempt order would violate Argentina's sovereign immunity.
    • ETFs: ARGT


    The Fed's Systemic-Risk Balancing ActUsing 'macroprudential' tools means recognizing the breadth of the potential trouble in the financial system?

    U.S. Bank Profits Near Record LevelsIndustry Posts Second-Highest Profit in 23 Years in Quarter Ended June 30; Improved Credit Quality Helps.

    Oil declines as IEA talks gluts

    • “Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected, with an oil glut even reported in the Atlantic basin," says the International Energy Agency in its monthly report.
    • Alongside the bearish supply outlook, the IEA cut its global demand forecast for this year by 180K barrels per day to 1M. Demand is expected to rise to 1.3M barrels per day next year.
    • WTI crude is down 0.9% to $97.19, its lowest price since February. USO -0.6% premarket

    Keystone XL ruling not expected until 2015

    • Arguments over the planned route of TransCanada's (NYSE:TRP) Keystone XL $5.4B pipeline will soon be heard by the Nebraska Supreme Court, but a ruling regarding the controversial project is likely to be delayed until next year.
    • Now in its sixth year of debate, the pipeline continues to face opposition from politicians, landowners and regulators, and ultimately lies in the hands of President Obama to make a final decision on whether to approve or veto the project.

    Oil Rigs Hit Record as Drillers Move Outside Big Basins (Bloomberg)

    • ReneSola's (SOL +2.5%) gross margin rose to 14.7% in Q2 from 10.6% in Q1 and 8% a year ago, helping EPS beat estimates in spite of a revenue miss. A 1.3% Y/Y drop in opex to $46.3M also didn't hurt.
    • 498.7MW of solar modules were shipped in Q2, +14.9% Y/Y and near the high end of a 480MW-500MW guidance range. However, revenue was pressured by a 51.9% drop in wafer shipments to 199.6MW – ReneSola cites a "strategic business decision" to use its wafers for module production.
    • ReneSola expects module shipments to rise to 530MW-550MW in Q3, and gross margin to rise to 15%-17%. Notably, the company doesn't provide full-year guidance in its release; it previously forecast full-year module shipments of 2.3GW-2.5GW.
    • The company admits trade disputes have made life "more challenging" for Chinese solar firms, but adds its global footprint – 11 factories in 7 countries – will help it weather the storm. ReneSola ended Q2 with $218.8M in cash, $760.3M in debt, and $696.2M in short-term borrowings.
    • Q2 resultsPR

    Boeing to cut defense budget mostly from supply chain

    • Boeing (NYSE:BA) continues to face large spending cuts from the U.S. government, with the latter's defense budget falling nearly 24% due to sequestration.
    • The company has already cut $4B in costs from its defense unit and plans to cut an additional $2B.
    • "Out of the $6B, probably 66% of that will come out of the supply chain, maybe more," says Chris Chadwick, CEO of Boeing Defense, Space and Security.
    • Embraer (NYSE:ERJ) has raised its outlook for executive jet sales in North America over the next decade, and reduced its global sales forecast, marking the importance of the U.S. market for its business jet recovery.
    • The planemaker estimates 4,620 business jets to be sold for a total $120B in the North American market from 2015 to 2024, up from the 4,530 planes it announced during its 2014-2023 forecast.Embraer also trimmed its worldwide outlook to 9,235 aircraft sold in the next decade, from 9,250 in last year's ten-year estimate.

    Tesla Motors has 500M reasons to build the Gigafactory in California

    • A state senator in California says Tesla Motors (NASDAQ:TSLA) could be exempt from some of the harsher environment rules in the state as part of an incentive package that is being discussed in order to land the EV automaker's Gigafactory.
    • Tax breaks worth as much as $500M are also on the table.
    • California is competing with Nevada, Arizona, New Mexico, and Texas for the massive battery plant.
    • TSLA -0.7% premarket

    Analysis: Las Vegas picking up some lost Macau traffic

    • Telsey Advisory Group thinks the crackdown by the Chinese government on money laundering and lavish spending has turned some high-rollers and mass-market gamblers away from Macau casinos to Las Vegas casinos (CZRLVSWYNNMGM).
    • A drop in the average bets at baccarat tables in Macau has corresponded with a slight uptick in Vegas.
    • Shares of Kate Spade (KATE +7.3%) carve out a new multi-year high after a bustling Q2 reportand a bump in guidance.
    • The retailer almost doubled up the street estimate for comp growth with its 30.4% mark.
    • What to watch: Some retail analysts are wary of the heavy level of markdowns and margin compression that Kate Spade had to endure to achieve its sales pop. If the brand slips out of the affordable luxury category, they note that working its way back up could be difficult.

    Intercept's(ICPT) liver drug found effective; shares soar

    • Dendreon (DNDN -33.5%) Q2 results: Revenues: $82.2M (+12.1%); Operating Expenses: $83.9M (-34.7%); Net Loss: ($15.3M) (+77.8%); Loss Per Share: ($0.10) (+77.8%); Quick Assets: $127.3M (-29.1%); Cash Burn (1H): ($31.8M) (+77.2%).
    • No financial guidance given.

    Skullcandy +8% on Jefferies upgrade

    • "We are upgrading SKUL to Hold from Underperform as we see signs of sustained fundamental improvement and a cleaner foundation from an inventory, distribution and product perspective,"says Jefferies' Randal Konik. At the same time, he still thinks the headphone maker has a long road to recovery, and faces execution risk.
    • Konik's target has been raised by $1 to $8. Skullcandy is less than two weeks removed from soaring in response to a Q2 EPS beat and full-year guidance hike.

    Triple-digit price targets roll in on Disney

    • Argus Research reiterates its Buy rating on Disney on its view growth channels are still percolating for the media giant.
    • The investment firm adds $5 to its price target to take it to $101.
    • JP Morgan and Jefferies also have triple-digit PTs on Disney.
    • DIS +0.4% premarket

    Twitter gains after 10-Q hints at e-commerce push

    • Laws and regulations related to "credit card processing" are among the potential risks Twitter (TWTR +1.8%) names in its Q2 10-Q. That's fueling speculation the microblogging platform is set to make a bigger e-commerce/payments push.
    • As it is, Twitter has bought e-commerce startup CardSpring (offers a platform for offline deals lined to credit/debit cards), formed a partnership with Amazon, and hired a Google exec to be its director of commerce partnerships. The company has also been reported to be hatching a deal with PayPal rival Stripe to handle card payments.
    • Chinese peer Weibo already relies heavily on e-commerce/payments to monetize its platform. Facebook, meanwhile, has begun testing a Buy button that allows users to pay for items without leaving its site.
    • Also disclosed in the 10-Q: 1) Twitter paid $134.1M to buy social networking data/analytics provider Gnip. 2) 11% of Twitter's 271M MAUs access its service through a 3rd-party app, and thus don't see ads; the company previously estimated 14%. 3) Up to 8.5% of MAUs rely on apps that automatically ping Twitter's servers, potentially with no human interaction.

    Apple suppliers reportedly start producing new iPads

    • Bloomberg reports Apple (NASDAQ:AAPL) suppliers have begun manufacturing next-gen iPad Air and Mini models. The former is expected to launch near the end of Q3 or the beginning of Q4 - recent launch timings suggest October is a strong possibility – and the latter is expected to be available by year's end.
    • The news service adds the next-gen Air will have an anti-reflective coating, and that there have been "manufacturing complications" related to it. KGI's Ming-Chi Kuo has reported the next-gen Air and Mini will have an A8 CPU and fingerprint sensor, and that the former will get an 8MP rear camera (improved from the current 5MP).
    • The report comes amid weakening demand for both the iPad and the tablet market in general, thanks to phablet cannibalization and long upgrade cycles. iPad unit shipments fell 9% Y/Y in the June quarter to 13.3M; revenue fell 8% to $5.5B. IDC estimates global tablet shipments rose 11% in Q2, with Apple's unit share falling to 26.9% from 33% (revenue share is likely north of 40%).
    • To boost demand, and perhaps also bolster the IBM deal, Apple recently launched an ad campaign that emphasizes the iPad's value as a productivity tool. Both the iWork suite and Microsoft's Office iPad apps are highlighted.


    French Government Denies Report Of "Several Ebola Cases"; Outbreak Accelerates At Fastest Pace Yet

    Hello, Dave. I Control Your Thermostat. Google’s Nest Gets Hacked. (VentureBeat)

  21. Phil:- what is next for AAPL, and BIDU

  22. Bulkowski/Diamond – Now that's a useful chart (if it's right):

    Picture of the Dow industrials on the 5 minute scale.

    Unfortunately, the 5% Rule says 16,600 is the top of this bounce and we'll be back to A before D (in absence of stimulating news, which is doubtful with Japan GDP tomorrow night).  

    Wages/StJ – They never really keep up but the key to wage inflation is the help the borrowers pay off fixed debts.  It's the only time wealth transfers back from the top 1% to the bottom 99% as all those debts get paid back in Dollars that are worth less.  At the same time, the "middle class" finally sees some value appreciation in their homes and the saving class and fixed income people finally get some real returns from the money in the bank.  That's how we got this country out of trouble in the 70s and, as I have said for years, I see no other logical way to escape the mess we're in now other than wage inflation followed by near hyper-inflation (15%) for a good 5-years or so.  

    NUAN/Diamond – Mill asked me about adjusting a NUAN trade back in June, when they popped and I said: "..the logic is fine as you'll make that too but all these adjustments will bite you in the ass if, as with many Icahn deals, nothing comes of it."  My comment back in November (outside of buyout rumors) was:

    NUAN/Kinki – Ow that is ugly-looking!  NUAN doesn't seem to get paid very much per phone and, as I keep saying, holiday sales not looking too strong.  Face it, you own NUAN at $18 – now what are you going to do?  You can pull your $18 calls for $1.10 and drop your basis to $16.90 and roll the 2015 $18 puts ($6) to 1.5x the 2016 $15 puts ($4.40) and then the net is $13.30 with the naked short $25s and IF they get back over $15, THEN you may want to consider buying some longs but no reason to otherwise.  That's IF you want to stick with them, rather than just paying net $5,30 to walk.  

    Submitted on 2013/11/04 at 12:32 pm

    NUAN/Albo – That's because I don't see "head and shoulders" patterns when I look at NUAN – I see a stock that's fairly priced at $15+ based on the recent data so, when it's going down, I know where I want to buy and, when it's going up, I know where I want to sell.  The chart patterns are just noise that let's me see where others are likely to go out and come in but it doesn't affect the real value of the stock.

    Submitted on 2013/10/18 at 12:42 pm

    NUAN/Albo – I don't like them so it was an easy short.  The problem is I'd have to force myself to go long for nothing more than believing Icahn will pull some stunt to bump them up (he probably will).  I wouldn't tell you not to play it as I'd say it's better than 50/50, but it's not a pick I'd make for others.  Maybe let them form a base first – just one day when they aren't going down (especially AGAINST a bull market)?  

    So I'm not a big fan of the actual business and, as you know, I don't like to play the buyout game – especially when jokers like Ichan are involved.  

    AAPL/Abhish – They are good to go to $100 but that's solid resistance, at least until the new phones are out and they will hit $85 if the market drops again so I wouldn't jump in here.  BIDU we're short a spread in the STP as $220 was too much and the AliBaba IPO should drive money out of BIDU for funds that want to spread the risk (not to mention the risk of competition that just got IPO money).

  23. Springheel Jack: “ES has been weak overnight and has made a short term lower high and low. At the moment that is favoring the case for a fairly weak day today to form the right shoulders on those IHS patterns. Bigger picture I am leaning bullish here and expecting a retest of the late July high, though most likely that would be setting up a larger decline after that.”

  24. Phil-Thanks phil.  i wanna play Yahoo for Alibaba IPO play. I like your spread in yahoo.

  25. You're welcome Abhish. 

    I forgot to do our daily total:  LTP $593K, STP $133K for $726K, steady as she goes!  

  26. Phil – NUAN: Yeah, I cashed out near the top in June. I was just trying to find out if your opinion has changed. Thanks!

  27. Phil wage inflation

    There is already a build up of forces that you won't see in NJ. I watched my local bank loose every teller all at the same time. I hear people say why work if I loosing everything anyway. Jackson has more ads for help than ever but no one will take them because they can't live on them. I find the $24 average wage total BS because the 1% brings the $9 up to that. I remember in the early 80s the same situation of I can't live on that, then the 90s allowed debt to make it up. This time when it hits the pressure will be off the charts, I know someone who said FU to $19 per hour with great benefits, why? Rent and transportation.

  28. Pharm or Phil or anyone— any opinion on NVO???

  29. You might find that useful Phil:

    And done by a kid!

  30. Not the most encouraging daily candle on AAPL at the moment.

  31. Phil- Any thoughts on UA ( under Armour),  and BAC.

  32. TSLA… always being pumped..


    They should go higher because ….. fill in the blank.

    I wonder what that X car is going to cost?

    So much hype!

  33. Good Afternoon

    Phil—checked on the proposed  Nov dates for the LV Meeting— Vet day is Tuesday Nov 11th and the weekend for meeting will be Nov 8th 9th and 10th—I do not think 10th is a holiday—would this be a problem for attendees—-if not I will contact Greg and set it up to get an initial count

  34. Savi/LV Meeting:  Sounds great to me. Been looking forward to this since last years meeting!

  35. NUAN/Diamon – Unless the fundamentals have changed, my opinion usually doesn't.  wink

    Average wage/Wombat – Good point.  One guy making $10,000 an hour ($30M) brings the bottom 99.9%'s salaries up $10 per hour.  That's the joke of the whole thing, as disparity grows to the point where the top 1% make 1,000x more than the bottom 80%, all the averages seem to be improving because we've already moved past the point where the weighting goes to the bottom 80%.  

    That's the cause of wage inflation, it simply isn't worth it for people to work for minimum wage and they can't rack up anymore debt and, after 20 years of no raises, no one is falling for that "career path" BS anymore.  It's the quiet start to a workers revolution only, this time, the 1% plan to replace them all with robots.  

    NVO/Jabob – I don't know about their pipeline but it's a nice growth area (diabetes), so reasonable to play long-term though certainly not cheap just because they pulled back from an all-time high at $47.50 to $44.

    Greenhouse/StJ – I love it but how do we put up the boxes?

    I downloaded it but I can't figure it out – I wanted to put up Boehner by comparison (it's shocking).  

    UA/Abhish – Top of range, not interesting with a ridiculous p/e but too loved to short.  BAC was our stock of the year in 2012 but that was at $5 and our target was $15 and, as with NUAN, that's still our target, so not very interesting here.  

    I like my comment from that BAC post:

    This is a great time to thank my friendbuddypal Jim Cramer for chasing all his sheeple out of BAC this year with his SELLSELLSELL rating – without you and your half-assed opinions Jim, we'd have to work for a living!  

    Model X/Jabob – Since a base model S is $60K and we're talking more car and more battery, I'd say $80K minimum.  A lot of money for an SUV (as Porsche found out).  

    Vegas!!!/Savi – Veteran's day is not a "real" holiday but at least it's an excuse for people to take a 3-day weekend.  The bond markets are closed on the 11th but stocks and Futures are open.  The next weekend is too close to Thanksgiving (27th) and the weekend before is between Halloween and Election Day, so not good either, so that's going to have to be the weekend, I think.  

  36. Jabo -Just  cashed in a nice TSLA put..  I just wait for pause in its latest absurd pop upwards on elon hype, sell a very short put 10% higher still, and collect 60% or better w/i 24/48 hours.  Beats working – or thinking, 

  37. Pharm

    Any trades on these 4 companies



    Alnylam Pharmaceuticals Inc. (NASDAQ: ALNY)

    Amicus Therapeutics Inc. (NASDAQ: FOLD)

    BioCryst Pharmaceuticals Inc. (NASDAQ: BCRX)

    Neurocrine Biosciences Inc. (NASDAQ: NBIX) 

  38. Here is Boehner Phil:

  39. You'll have to show me how you do that, StJ.  Thanks.

    That's just crazy, Boehner gets $22M and Pelosi $2.3M?!?  How can you not be in people's pockets when you accept that kind of money?   We are so doomed….

  40. Per Cobra (SPY): “2nd test of day low, key time. no decisive breakdown the low was in for today.”

  41. Polticians boxes / Phil – After I installed the extension in Chrome, politician names now appear with a light green background in pages and when you hover over the name, the box with the donation appears. I then take a screenshot.

  42. zero—you are selling tsla puts.. smart i guess for now.. but I wouldn't want to own that drek when reality hits. If it ever hits. 

  43. And it's a bit buggy Phil – hit and miss on some pages. But informative for sure!

  44. jabo – did I say puts?  Sorry — calls.  You would think I could get that right by now.  No, selling TSLA calls to the true believers after a solid pop, which are frequent these days, which bumps the volatility/premium and puts the odds pretty solidly in my favor if you pick a price 7-10% above the latest spike with only a few days to run.

  45. LV Meeting

    Nov 8th, 9th and 10th   2014

    Will set up something where members can send indications of interest so that Greg, who will handling the meeting this year, can get an initial count

  46. But thanks for the warning.

  47. OMG:  Fox News’ Shep Smith: Robin Williams was “such a coward”.  

    Thanks, StJ.  It's like my idea to require politicians to wear jackets with stickers from all their sponsors on them – like Nascar drivers.  

    Hype/ZZ – Did someone say "Hyperloop"?  BUYBUYBUY!!!  devil

  48. TSLA growing pains…

    "Certainly wouldn't sell the stock" says the chicky on CNBC…

    Are you kidding me.

    If they have these "little" issues now, why would anyone assume it will not get worse when they have mass production???


  49. Brent is down 1.3%, oil prices really collapsing here.  Our oil at $97.33 and another 0.6% would be down at $96.50 if it follows Brent down but we have inventories tomorrow, so hope springs eternal.  

    Petrobras-linked money laundering probe spreads to banks

    • Brazil's money laundering probe linked to state-run Petrobras (PBR -1.2%) is spreading to financial institutions as prosecutors investigate whether they met compliance requirements.
    • Court documents cite units of banks including Citigroup (NYSE:C), Banco Santander (NYSE:SAN) and HSBC, as well as Brazil-based Itau Unibanco (NYSE:ITUB) and Banco Bradesco (NYSE:BBD) as holding accounts or executing operations linked to the alleged laundering of 10B reais.
    • The refining division at Petrobras already is under investigation for runaway spending including alleged inflated contracts to suppliers, and is cited as one of the possible sources of cash being laundered in the case dubbed “Car Wash” by police.

    LOL, finally catching on:   Oppenheimer: Buy gold miners, not gold

    • Oppenheimer technical analyst Ari Wald sees big upside in gold miners going forward, and is more bullish on the miners than the metal itself.
    • Wald thinks the Market Vectors Gold Miners ETF (GDX +1.6%) can soar more than 40% from current levels to his price objective of $38; GDX has finally broken out from a long-term downtrend, he says, suggesting a new trend of outperformance is underway.
    • The analyst considers GDX a top trade idea, and believe the ETF has a stronger floor and offers more upside opportunity than the SPDR Gold Shares (GLD +0.4%).
    • Among individual GDX components, Wald recommends Goldcorp (GG +2.5%), Randgold Resources (GOLD +0.4%) and Royal Gold (RGLD +2%).

    Tesla Motors updates Supercharger network progress

    • Tesla Motors (TSLA -1.6%) has updated its global Supercharger coverage map.
    • The automaker says it has 54 stations operating in Europe, 105 in North America, and 9 in Asia.
    • Coast to coast travel via Tesla's charging network will be available to 98% of the U.S. population by 2015.

    Earnings call ambiguity a factor in Kate Spade freefall

    • The bottom just fell out of Kate Spade (KATE -18.8%) this morning after shares had run up a tidy 7% post-earnings gain.
    • During the firm's earnings call, execs said they "might" push out long-term guidance by a year.
    • That ambiguity by management and the heavy hand of short-minded traders appear to be swinging momentum.
    • Volume on KATE is already 10X normal activity.
    • Earnings call webcast

    Rackspace dives as Street mulls margins, transparency, M&A

    • "Management provided no color with regard to the strategic alternatives the board is evaluating and did not provide a timeline for a decision," observes Piper's Andrew Nowinski, discussing Rackspace's (RAX -7.2%) cautious CC remarks (transcript) about its strategic review.
    • Nonetheless, Nowinski declares Rackspace's business to be "in good shape," as proven by "accelerating growth in the dedicated segment and better-than-expected revenue guidance."
    • Pac Crest's Michael Bowen isn't pleased management stated it's thinking of no longer providing guidance and/or breaking out Web hosting and public cloud revenue. "We believe now is not a good time to become less transparent due to uncertainties around an M&A deal and changes in the marketplace."
    • Multiple analysts have taken note of Rackspace's EBITDA margin decline. CFO Karl Picher suggested Rackspace's revamped pricing will eventually boost margins. "We expect that we will have fewer low-paying customers than we currently have … we are aiming for the high ARPU, high workloads, growing customer set that we serve exceptionally well."
    • Prior Rackspace earnings coverage

    Light upfront volume for TV networks

    • Upfront TV advertising volume fell 6.1% to $18.125B this year, according to Adweek.
    • The mark is inclusive of a 4.7% decline in cable upfront dollars.
    • Procter & Gamble and General Motors were two notable consumer product giants that took a cautious approach during the upfront period this year.
    • Though increased spending on digital advertising is responsible for part of the slower growth, industry insiders think a shift toward "real-time" advertising decision-making is also a factor

  50. phil

    your thoughts on a poss trade i am thinking of doing…..

    at present im long the csco 10x jan5 22 call @ 2.00

    im short 10x aug 24 calls @ 1.05

    im thinking of shorting the aug 25 put @ .50 as a hedge vs the call with exp on fri…

    if it goes up i keep the put money and on the way down im good till 23.50 or so…

    i feel im missing something and would like your thoughts….tks

  51. Wow, you know you are paying your analyst way too much money when they make WSM their "back to school" pick!

     How Will Williams-Sonoma (WSM) Stock Be Affected By …  -- Williams-Sonoma is Citigroup's top retailer for the back to school season, according to its consumer report released today.

    They're actually talking about Pottery Barn but still way high-end compared to the yard sales we used to drag up to our college dorms.  

    CSCO/Mill – I do like them long-term and the 200 dma is at $23 so not too worried about a downside.  Sounds good to me.  

    Webinar coming up!  

  52. Jon Boorman regarding RGLD: “… if I have to look at gold it's the first one I look at, like that it's not an actual miner, just has royalty interests."

  53. Interesting article that ties into what Phil has mentioned about how online media feeds articles/information that tie into what we like or what we already read instead of presenting a balance:

  54. ARWR is flying

  55. Phil – Re: WSM their "back to school" pick …

    Not so crazy when even you acknowledge that all but the privileged have been priced out of higher education. Nowadays, what “self-respecting” student would want to be seen with “yard sale” items in their dorm, apartment or rented house?

  56. Phil / SCO – I still hold an Oct 26 call I sold for $1.25. Any idea where I could roll this to? Thanks. 

  57. Phil – “Pottery Barn

  58. Even S&P is worried about inequality in the US:

    Not that they will lobby politicians to do the right thing though:

    What if the supply of educated workers picked up its pace, and, more or less, kept up with technological changes? The U.S. has been no stranger to this in the past. In the early part of this century, technological advancements were accompanied by an education boom (29). What would be the impact to the economy and to people's pocketbooks if the U.S. workforce's pace of education were to reach rates of education seen 50 years ago? That was when the American workforce gained a year of education from 1960 to 1965, which is a bit stronger than the period from 1950 to 1980, where they gained an average of about eight months of education every five years (30). In this scenario, the U.S. would add another year of education to the American workforce. U.S. potential GDP would likely be $525 billion, or 2.4% higher in five years than in the baseline (see chart 6). If education levels were increasing at the rate they were 15 years ago, the level of potential GDP would be 1%, or $185 billion higher in five years. A more educated workforce would benefit from higher wages. While the increased supply of people with advanced degrees may initially slow wage gains for jobs requiring an advanced degree, a stronger economy would help support higher incomes for all and help government budgets.


    Not gonna happen because an educated population is the enemy of the extremist in power now.

  59. Another good chart from that article:


    While the size of transfer payments rose by a small amount from 1979-2010, the distribution of transfers shifted away from households in the lower part of the income scale. The bottom 20% of households received only 36% of transfer payments in 2010, after receiving 54% in 1979 (18). This was largely because of the growth in spending on programs for the elderly (such as Social Security and Medicare), and benefits of these programs aren't limited to low-income households. Benefits for other programs that largely benefit the poor were also reduced (19). In addition, tax expenditures mostly benefit the affluent: Tax credits and tax deductions benefit those more at higher tax rates.

  60. SGEN taking off today… Of course because I covered my position just yesterday! Not complaining though, just have to roll!

  61. Euro:  From 1.37 in May down below 1.32 [almost 4%] in @ 4 months.  Since the U.S. imports more than it exports,  a stronger dollar should bump up national income. How that is distributed is another matter.

  62. LV Meeting Nov 8th—10th 2014 Please e-mail Greg at admin(AT) noting your interest in the meeting—-thanks

  63. phil……tks…….

  64. CREE – earnings tonight. can we infer anything from the market action today?

  65. Can you post the screenshot of the Butterfly Port?  I'm trying to make sure my tracking sheet is using the same strikes.

  66. Butterfly/Burr – Here you go:

  67. Phil,

    Your thgts please on a strategy question re the upcoming KMP/KMI conversion: I have both KMP and EPD MLP shares which will be exchanged for KMI common stock.  KMP exchange value at yesterday's prices is about $98, now 92. I'm considering selling KMP calls (100 strike) to generate some extra income to help defray the tax bite. A taxable event will be triggered by converting KMP to KMI, selling KMP outright or being called away should I sell KMP calls (100 thereabouts).  Any other alternatives?

    Thanks in advance

  68. Phil,

    I sold 5 OCN jan 2016 35 puts @6.98. stocks at 25. What adjustment should I make?  Do you think this will bounce back or is it a lost cause?

  69. zeroxzero TSLA

    Selling calls may be very smart. They can justify all repairs were under warranty but some day that is on you. Used is for complete fools especially the issues are motors, battery packs, and regenerative breaking.

    Most new cars don't have any problems for quite a while and the ones that do are labeled unreliable fixed free or not.

  70. Thanks.  I thought I had a wrong calc, but both the OIH and WMT were done for around 4.20debit to start.  Seemed like too much of a coincidence.  Anyway…. moving on.

  71. I am thinking of buying a Macbook Air for its light weight but not sure if ThinkorSwim will run well on it. I have been using windows and TOS works just fine. Any suggestions?

  72. Anyone holding ARWR into earnings?

  73. jophil – TOS runs fine on the macbook air

  74. RGLD/Diamond – I prefer ABX.  They have 140M ounces of proven reserves or about $170Bn at today's price.  You can buy the whole company for $22Bn.  Of course, it costs them money to pull it out of the ground but, if my inflation premise kicks in and it costs them $1,100 now and inflation is 50% over 5 years then cost rises to $1,650 to pull the gold out but gold will go from $1,300 to $1,950 and the spread goes from $200 an ounce to $300 and they make 50% more money x 20 pe = A LOT!!!  If gold gets ahead of inflation – huge bonus!  

    Great article Brill.  

    Good point Diamond.  I guess those that can still afford a college education are not shopping at the Dollar store for supplies.  Which is a shame.  We had a giant pencil (about 5 feet) at our house and we used to put the lyrics to party songs on the walls and, when we had parties, we would use it as a pointer to have everyone follow the bouncing "ball" and sing along.  That pencil came from a back to school display at a shoe store a friend of ours worked in – he bought it to our house when the display came down and we loved that free prop and got years of great use out of it.  You can't buy things like that at WSM!  

    SCO/Pfel – Ouch!  That is certainly the wrong side of the trade to be on.  I don't think oil is going much lower than this but you need to give up if $30 crosses.  Otherwise, I'd wait and see and only roll if you have to.  You are net $27.25 and SCO is $28.30 so really down just $1.05 if things expire here so it wouldn't make much sense to pay $2.90 now just because you are uncomfortable.  

    Education/StJ – Yes but, as you say, an educated populace doesn't tend to elect idiots to office. 


    CREE/Scott – Well, from today's action I'd say don't go long on anything at the moment as it's another day of failing to make strong bounces.  

    KMP/8800 – I think it will be a big mess if you start selling calls and the stocks are restructured.  You'll have a very hard time unwinding it all and getting a favorable price on the spreads.  Don't forget, a caller can force an exercise if he gets any sort of favorable move.  I assume it's a lot since you are asking so I'd say you should have your accountant speak to a specialist with the broker on this one to find a strategy that works best for you. 

    OCN/Jcrist – My comment last week was:

    Submitted on 2014/08/06 at 12:52 pm

    OCN/Palotay – I'd say the lesson here is – don't listen to Doug Kass!  I don't see how mortgage servicing can be doing well when there are less and less mortgages to service (we've been noting the decline in mortgage transactions all year) and this particular one is under investigation.  I'm sure the binary event of getting a big contract from WFC (biggest mortgage holder in the US) would be a big pop for them (if they are still interested post investigations and lawsuits), but then you have a stock that's very heavily dependent on a single client.  I think there's value here but you're citing an article telling you what a fantastic deal OCN was on July 9th, when it was at $37.  Now, at $26 it's a month and 30% later and this isn't some mistake made by uninformed sellers – not over 30 days.  I wouldn't be a hero, wait for someone else to see a bottom before you jump in and make a bottom call on a $3.5Bn company that was recently a $4.5Bn company.  

    Ocwen Financial Insurance Practices Put To Question By New York Department Of Financial Services

    EQUITY ALERT: The Rosen Law Firm Announces Investigation of Civil Securities Claims Against Ocwen Financial Corp. – OCN

    Ocwen's Mortgage Insurance Practice Under NY Review

    Shareholder Alert: Bronstein, Gewirtz & Grossman, LLC Announces Investigation of Ocwen Financial Corp.

    So my answer is not going to be that you should adjust it and risk more.  You have to decide whether or not you are willing to risk sticking this one out.  You are in for net $28 and they are at $25 so not too much of a crisis and the short puts are $12.50 so it boils down to whether or not you are so worried about them that you'd pay net $22.50 (+$2.50) to escape your obligation.  I'm sure today's spike down made you feel that way but, since it came on better volume and reversed, I'd be more inclined to give them a chance to stabilize.

    Coincidence/Burr – "Coincidence is the word we use when we can't see the levers and pulleys." – Emma Bull

    Macbook/Jophil – I have not tried TOS on it but my daughter LOVES her MacBook Air.  It is an incredible piece of engineering.  TOS does run fine on my IMac. 

    ARWR/Abhish – I don't know anyone who is playing that one.  Huge gamble into earnings (since they have none) – all depends on the CC and how people react to it.  

    Nice little push into the close keeps things from looking bad.  

  75. Phil,

    OK ES at 1930, TF at 1130, YM at 16515……thinking of going long/TF into the close….Question is with Japan numbers coming out bad, how do our futures react.Thanks as always 

  76. UN warning those people trapped on mountain in iraq face imminent genocide…they seem very worried about it….asking any nation with ability to help

    its even worse when you elect two consecutive idiots

  77. Macbook/Jophil

    I run TOS on Macbook Air and it runs fine.  I hve 8G RAM on it though

  78. Long Oil ?  If we don't think /CL is going to be below 96-97ish for the long term, why not make a play on long /CL far out in the futures months?  Or use our buddy USO with a short p, long bull call?

  79. jophil – TOS works great on the Macbook Air. If possible, get it configured with 8GB of memory and the fastest processor you can afford.

  80. FU TSLA!!!!!

  81. Or how about a variation on short SCO?  Since SCO will decay over time due to it's leverage, and it will crash if /CL does rise eventually, maybe a bear put spread, or just a long put, or something….

  82. I run TOS on an 3.4 GHz iMac with 32GB of RAM, and it is a hog. Still runs slow after a few hours.

  83. jophil – Also, AAPL tech support is outstanding!!!

  84. Futures/Jasu – I'd say they are in "Don't Touch" territory at the moment.  Japan GDP tomorrow night and things can go either way by a lot – that's the exact opposite of when you want to play the Futures.  

    Genocide/Angel – Aren't we misusing the term there?  Is the whole race up on the mountain, or a substantial portion of them?  Also, very tricky because, if we give aid to the Yazidis then how can we tell the Russians they can't aid their surrounded friends in the Ukraine?  The whole thing sucks, of course – this is who is trapped:

     A displaced Iraqi man from the Yazidi community carries his daughter as they cross the Iraqi-Syrian border (11/08/2014)

    Oil/Burr – I don't know where the bottom is and I don't see any immediate catalyst to send it higher so, like many things – no trade at the moment.  Let it form a new range and then we can bet again.  Brent may collapse and we'll follow it down if it does, with or without merit.  

  85. Shadow:  Hope you're right.  Had the chance to sell Aug 16 $270 puts just now, had to take a punt.  Beats working, and that new baby chews up a lot of diapers.

  86. Phil- any thoughts on ARWR, i have about 150 shares i bought at 13. It's going up post earnings.

  87. CREE! CREE! CREE! (Said in the voice of Kirk saying Khan!)

  88. Phil / water:  I've been looking a water stocks.  Bought a little AWK, hasn't done much.  The "water"stocks seems to be divided between fracking and drinking.  I won't recite my data, but it's bloody dry in the Caribbean.  We're on water restriction right now, within an island which has no desert regions and faces the Atlantic trade winds, green as the Amazon.  First time I've seen it, or anything close to it, in the almost ten years I've been there.  Is there a water portfolio I should be assembling?

  89. FU CREE!

  90. Genocide / Angel:

    God @TheTweetOfGod  ·  Jul 26
    All this killing in My name makes Me feel very loved.

  91. Thanks all for your inputs on Macbook Air

  92. Good article about the do-nothing Congress:

    In general, I'm actually reasonably skeptical about the long-term viability of America's democratic political institutions. But the impulse that's brought us to this particular crossroads has nothing to do with Julius Caesar and everything to do with a bizarre tic of the current crop of congressional Republicans — a refusal to accept a second-best outcome rather than a third-best outcome.

    In other words, conservative members of Congress keep willingly embracing courses of action that they know will lead to policy outcomes that they know are worse than the outcomes that could have been produced through other tactics. It is not surprising that conservatives end up displeased with the results of this strategy. The proper cure, however, is obvious. Republicans should should start attempting legislative tactics that will lead to policy outcomes they prefer, rather than giving an absolute priority to maintaining their right to whine about things.

  93. ARWR/Abhish – See above.  Looks like down 5% after hours.  

    CREE – Down she goes.  

    Genocide/Angel – It seems it's not defined as harshly as I was thinking it was:

    the deliberate killing of a large group of people, especially those of a particular ethnic group or nation.

    I guess it doesn't have to be on population levels – just the idea of killing people over ethnicity and in quantities that exceed a hate crime seems to qualify.  Gosh, the things you have to know to have intelligent conversations these days…  blush

    Water/ZZ – People keep asking but there's not really anything addressing the situation.  PNR seems like a good candidate and there's TTEK, XYL, PLL, WTS, ECL and ETFs like PHO and PIO but they aren't heavily traded or heavily followed.  Good topic for a weekend discussion though.  You have to be careful with stocks like CWCO because they are engaging in massive projects with huge upfront cost and their entire business plan can be washed out by a change in the weather.  Kind of like the companies who spent big on LNG ideas when nat gas was $14 – not looking so clever at $3.80.  In the macro trend – they are probably right, but that hasn't helped them stay solvent for the past 5 years.  

    LOL StJ.  

    Genocide/Griffin – That's my definition, the old-fashioned use:

    intent to destroy, in whole or in part, a national, ethnical, racial or religious group, as such

    Of course, given those rules, the term seems to apply to a lot more things and, as such, is a very serious term to use at the UN, who should, in theory, be forced to act.  

    CLF/Burr – I like that chart, nice triangle squeezy thingy pattern forming:

    Interesting Image

    Congress/StJ – I've been reading similar a lot, they are simply failing at game theory with their current strategy but he party is too broken to change their ways.  It will be tragic if they gain seats in the House or the Senate in November, this country can't take two more years of nothing.  

  94. Congress / Phil – I don't even know if the GOP is too broken. Why change when someone like Boehner can collect $12M based on the fact that you fan people's rage about the other party? It has worked well for Limbaugh, Hannity, Coulter and now Palin. It's just scary when it seems that we have only one party willing to legislate while the other is happy with a nihilistic attitude.

  95. This is very interesting!  

    Screen Shot 2014-08-12 at 9.59.53 AM

    It’s nearly impossible to spy on iPhones, according to top surveillance firm

    Boehner/StJ – $22M!  

  96. Phil:  Thanks, water comments.


    StJ:  The Republic approach is quite rational from their standpoint.  There is no game plan that has a chance of being adopted politically that will turn back the clock to the 1950s, during which the U.S. was the whitest [in absolute numbers] and wealthiest country in the world.  But holding on to the hope that the clock can at least be stopped dead in its track by systematic congressional obstructionism is the policy that will keep the most money flowing into Republican political coffers, as the last best choice for their impoverished and embittered Southern / Red State constituency.  If the car won't go — can't go — in the direct they want it to [into a distant and unattainable past], well then, just flatten the tires and pay off the Republican Party leaders to ensure the car can't go anywhere at all.  There is no better proof that the U.S. educational system has failed the country.

  97. Medicaid expansion / Phil – Another case where politics gets in the way of the better solution:

    The 24 states that have refused to expand Medicaid are losing out on some $423.6 billion between now and 2022, according to a new study [pdf] from the Urban Institute and Robert Wood Johnson Foundation. Using that data, Jonathon Cohn created an interactive map (click here to see the map actually interacting) to show how much each denying state was missing out on.

    Over the next ten years Florida will lose $66.1 billion. Texas, $65.6 billion. North Carolina, $39.6 billion. Even states with small populations, like Idaho ($3.3 billion) and Wyoming ($1.4 billion) are foregoing huge amounts of funding relative to state budgets. Most of the states argue that the eventual costs of expansion will be far too high, so they are being fiscally prudent in rejecting it. This study puts that argument to rest. Here's an example from Cohn.

    There's plenty else the states are missing out on, besides having a potentially healthier population. In 2015 alone, these 24 states could create 172,400 jobs and their hospitals would receive $168 billion in new reimbursements. The economic shot in the arm from Medicaid expansion could do wonders for some of these struggling states. But it's far more important to most of these Republican legislatures and governors to fight Obama.

    It's just sick! They are just endangering people's lives and livelihood at this point.

  98. Car / Zero – And blame the other party for the fact that the car is not moving after you slashed the tires!

    It was funny this morning on Morning Joe they showed an op-ed from the WaPost that basically blamed the current situation in Iraq in the 2003 invasion and Scarborough was just dismissing it as "here we go again, just blame Bush". Refusing to assume any responsibility is not a way to govern any country. Look at McCain on Sunday show – "We should have stayed in Iraq". No one asked him for how long! These guys can just rant on and no one dispute their assertion or the fact that they have been wrong for so long. And supposed a suicide bomber would have walked in a Marines barrack like in Lebanon in the 80's and kill 300 servicemen while we "stayed" in Iraq. What would McCain say then – blame Obama? 

  99. Pharm- I think I asked you about this company a while back and you were not real enthusiastic because it is definitely a speculative play with some unanswered questions, but this conference call has really begun to answer questions about timing of product launches and addressable markets for the first three items in the pipeline. Also they have a fourth product addressing a need in the Human Growth hormone field for pediatric patients that looks very promising. It really looks like Dr. Frost has once again put together a remarkable group of products addressing specific needs that should all be able to pull in a ton of revenue in the next year to two years if all goes well. So, while it is grossly overvalued today, it could be a tremendous company and perhaps this is right before share price goes up in anticipation of all that. I am attaching the transcript and curious if anyone else thinks this is a time to invest or if it is still too early. I have been following it for three years and have made good money going in and out on the spikes and dips.

  100. Phil  I sold some KMP  2016  $90 Ps for $9 today. Trying to figure out what negatives can work against me. They seem priced as if KMP will be around until then. I think the risk is if KMI drops in price such that the exchange of KMP for KMI causes the price of KMP to be worth less than 90. But I think the risk of the price of KMP falling below $81 before the transaction is small. Do the Ps survive the transaction or do they go away? Thanks

  101. I guess I should have mentioned the company name, which is Opko. I also should mention that the Chairman Dr. Philip Frost has been buying shares on the open market almost daily for two to three years which is how I became aware. Of course, the vast majority of his shares were acquired for pennies at the start, but even with that he has invested many millions which even for a billionaire, a few hundred million here and a few hundred million there, pretty soon you are talking about some real money! So, he must believe that it will pay off somewhere along the way, and I believe he is trying to leave this as his legacy, one final company that will address cancer treatment, human growth, and obesity down the road a bit if  all goes to plan. I would guess he will leave the company intact to cement his name into world consciousness and perform some philanthropic function in perpetuity once he passes. I believe this is very important to him and another reason it will not fail. That is the conclusion I have come to, and I wonder if you think the science is there based on what they say in this call. Also putting it out there for my fellow PSW people if anyone else sees what I see, I hope I am right and we can make a few bucks off this one in the next year or two. Of course, I could be wrong and the whole thing could collapse. 

  102. Phil / SCO – Thanks for the advice. I will keep it and see what happens. It's a left over call from the SCO spread earlier that I didn't buy back as I thought I could wait until SCO drops a bit and buy it back then. My inexperience at work. Whenever you have time, could you (or anyone) give some advice in properly legging out of a bull call spread.

  103. We talked about using the VIX for timing last week and StockCharts has a blog entry about that:

    Chart 10 shows the Percentage Price Oscillator (PPO) of the VIX in the main window, the S&P 500 in the first indicator window and the VIX in the bottom window. The PPO is set at (5,63,1), which measures the percentage difference between the 5-day EMA and the 63-day EMA. Five days is a week and sixty-three days is around three months. Fear is deemed excessive when the PPO surges above 20%, as it has done six times since 2011. While this denotes an extreme, note that the PPO of the VIX can move above 20 and keep going when the market remains weak. The signal to look for is a subsequent decline back below 20, which occurred this week. This suggest that fear is subsiding and the stock market bulls are finding their footing again. Chart 11 shows the Nasdaq 100 Volatility Index ($VXN) with similar characteristics. 

  104. The U.S. imported 7.17 million barrels a day of crude in May, a 26 percent drop from the same month in 2008, according to data compiled by the Energy Information Administration, the Energy Department’s statistical arm. Foreign deliveries will meet 22 percent of U.S. demand next year, the lowest level since 1970, the agency said yesterday.

  105. KING is candy crushed after hours. Someone called that,Probably Phil.I thought that was a worthwhile short. Coulda, Woulda.

  106. Wombat:  Good data.  I expect that the resulting trade balance improvement by the U.S. as a whole will [continue to] boost the dollar over the Euro and Yen.  The Yen mostly has a Japan demographic problem — there is probably no major country with less immigration — and the Eurozone, as I've expressed at various times, is trapped in the very dysfunctional one-size-doesn't-fit-all Euro which is wreaking absolute havoc in the Peripheral European countries.  I read an email no more than 10 minutes ago from friends in Spain, and their outlook is entirely bleak.  Without the ability to devalue/adjust their currency level, economic recovery is simply beyond reach, and an entire generation of their educated youth are losing the opportunity to work at a time critical to their skill building.  If I were in their position, I would withdraw from the Eurocurrency and simply default on my Eurodebt — I'd pay the Germans back in New Pesetas, and send them to hell.  Watch this space.

  107. Good morning!

    Turns out Japan's GDP was this morning, not tonight and it came in -6.8% but, surprisingly, no one seems concerned about that because, of course, it means MORE FREE MONEY!!!

    TOKYO—Japan's economy contracted sharply in the second quarter after a sales-tax increase in April sent household spending tumbling, which economists said could pressure the government to take additional stimulus measures.

    Real gross domestic product, the total value of all goods and services produced in the economy, shrank 6.8% in the three months through June on an annualized basis from the prior quarter.

    That was slightly less than a 7.1% contraction forecast by economists surveyed by The Wall Street Journal, but economists said a larger-than-expected drop in private consumption and a sharp increase in inventories raised concerns about the resilience of Japan's economic recovery.

    • Japan's economy contracted sharply in the second quarter after a national sales tax in April rose 3% and triggered a sharp decline in consumer spending.
    • Real gross domestic product shrank 6.8% in the three months through June on an annualized basis from the prior quarter.
    • Prime Minister Shinzo Abe will have to address the tax issue again soon. A sales tax increase (which will raise the rate to 10%) has been approved by the Japanese government and will take effect in October 2015.

    Japanese GDP Plunges 6.8% As Consumer Spending Collapses By Most On Record

    Also, China's Aggregate Financing (essentially the growth in money supply) only grew by $44Bn in July, not $400Bn expected.  That's is not a good sign at all – it's very hard to grow an economy if the money supply is unchanged.  

    China Credit Gauge Plunges as Expansion in Money Supply SlowsChina’s broadest measure of new credit unexpectedly plunged to the lowest level since the global financial crisis, adding risks to economic growth already headed for the weakest annual pace in 24 years. Aggregate financing was 273.1 billion yuan ($44.3 billion) in July, the People’s Bank of China said today in Beijing, compared with the 1.5 trillion yuan median estimate of analysts surveyed by Bloomberg News. New local-currency loans of 385.2 billion yuan were half of projections, while M2 money supply grew a less-than-anticipated 13.5 percent from a year earlier.

    China Should Move on Property Tax, PBOC Academic Writes. China should adopt a property tax as soon as possible, Wang Yong, professor at PBOC's Zhengzhou training institute, writes in an article.

    Asia Stocks Fluctuate on Earnings, Japan Economic Data

    Lack of actual production is keeping oil down along the $97.25 line after a brief attempt at $97.50 just after 3am.  API showed -2M in oil but +2.7M in gasoline with distillates dropping 2.6Mb so net -2.1M will be expected at 10:30's EIA report today.

    The EIA cut its 2014 price forecast for WTI after the U.S. reached its highest monthly production in 27 years last month. Futures will average $100.45 a barrel this year versus the July projection of $100.98, the Energy Department’s statistical arm said yesterday in its monthly Short-Term Energy Outlook. Oil output was 8.5 million barrels a day in July, the most since April 1987, the EIA said.

    Brent slid to the lowest in 13 months yesterday after the IEA said demand growth eased to its weakest since 2012 last quarter, while crude production in the Organization of Petroleum Exporting Countries increased.  

    China’s July implied oil demand fell 2 percent from a year earlier to 9.57 million bpd, according to Reuters’ calculations based on preliminary government data.

    September Brent crude fell 57 cents to $102.45 a barrel by 0649 GMT. The contract, which expires on Thursday, fell as low as $102.37, the weakest for a front-month since July 1, 2013.

    It was the fourth day of losses for the benchmark and comes after the International Energy Agency (IEA) pointed to well-supplied global markets and a glut in the Atlantic Basin.

    Output from the Organization of the Petroleum Exporting Countries (OPEC) rose to a five-month high of 30.44 million barrels per day (bpd) in July, as increased production from Saudi Arabia and Libya more than offset declines in Iraq, Iran and Nigeria.

    In its July monthly oil-market report released Tuesday, the International Energy Agency cut its global demand forecast for both 2014 and 2015, and said markets remain well supplied despite armed conflict in Libya, Iraq and Ukraine.

    Asia finished slightly higher with /NKD hitting 15,300, where it makes a nice short with tight stops in the Futures.  

    Europe is up 0.5-1% but topping out into lunch and our Futures are up about 0.4% and too high at Dow 16,575 (/YM), S&P 1,940 (/ES), Nas 3,920 (/NQ) and Russell 1,135 (/TF) and as usual, I prefer shorting the RUT as long as the others stay under their levels and, if you miss the Russell, then you can just short the laggard – as we discussed in yesterday's Webinar.  

    The Dollar had fallen to 81.55 but back to 81.68 but not a significant move until it breaks over 81.75 or under 81.50 – so we'll keep an eye on those.  

    Central Bank Post-Crisis Quasi-Coordination Has Broken Down

    Wall Street Stock Market Strategist Warns The Party's OverIn a new 34-page note titled "Transitioning To Lower Returns," Barclays' U.S. equity strategist Jonathan Glionna writes that those years of awesome returns are behind us for now.


    Las Vegas Will Go Dry If Water Levels Drop 7% Further – Lake Mead Hits Record Lows

    Ukraine to Block Russian Aid Trucks as It Tightens Noose Around Rebels

    U.S. Weighs Military Rescue Mission for Yazidi Refugees

    Things Aren't Looking Good In Australia

    JDS Uniphase(JDSU) 1st-qtr forecast falls short of expectationsNetwork equipment maker JDS Uniphase Corp forecast first-quarter adjusted revenue and profit below market expectations, sending the company's shares down as much as 7.6 percent in extended trading.

  108. John Oliver with a fantastic summary of PayDay Lending:

  109. Good morning Phil.  Thought you might find this interesting from Bill Moyers.

    This would lock in banking laws and limit the ability to regulate the financial industry, among other things.

  110. From Bloomberg, Aug 13, 2014, 6:08:44 AM

    European stocks advanced on better-than-forecast profit reports from EON SE and Swiss Life Holding
    AG. (SLHN)
    U.S. index futures and Asian shares also gained.

    To read the entire article, go to

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

  111. From Bloomberg, Aug 12, 2014, 5:57:56 PM

    Palestinian men sit near a makeshift tent in a street in Beit Hanun, northern Gaza Strip, on August 12, 2014. Photographer: Roberto Schmidt/AFP/Getty Images

    Israel’s defense minister rallied troops to prepare for fresh battles in the Gaza Strip as negotiators raced the clock to extend a cease-fire that expires at midnight.

    To read the entire article, go to

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

  112. From Bloomberg, Aug 13, 2014, 6:29:30 AM

    Aug. 13 (Bloomberg) — Former Bank of England Monetary Policy Committee member Andrew Sentance talks about BOE rates policy and U.K. unemployment ahead of this morning’s quarterly inflation report.
    He speaks with Jonathan Ferro on Bloomberg Television’s “On the Move.”(Source: Bloomberg)

    Aug. 13 (Bloomberg) -- U.K. unemployment fell further in the second quarter and wages declined for the first time since 2009 as the economy continued to create jobs without generating inflationary pressures.

    To read the entire article, go to

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

  113. From Bloomberg, Aug 13, 2014, 2:34:35 AM

    Aug. 13 (Bloomberg) — The dollar is poised for further outperformance, especially against some of the more volatile emerging-market currencies, according to Phyllis Papadavid, senior global foreign-exchange strategist at BNP Paribas.
    She discusses the outlook with Mark Barton and Manus Cranny on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

    Sentiment in the foreign-exchange
    market is so bearish toward the euro that it’s bullish.

    To read the entire article, go to

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

  114. From Bloomberg, Aug 12, 2014, 5:59:40 PM

    A former Massachusetts Institute of
    Technology professor and his son agreed to plead guilty to
    running a $500 million hedge-fund scam that was uncovered by
    investigators probing Bernard Madoff’s Ponzi scheme.

    To read the entire article, go to

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

  115. From Bloomberg, Aug 13, 2014, 6:50:07 AM

    Retail gasoline in the U.S. has dropped 22.2 cents a gallon since peaking in April at $3.696. Photographer: David Paul Morris/Bloomberg

    Fighting across Iraq, Libya, Ukraine and Gaza, and an accelerating economy, should mean higher oil prices. Yet crude is falling.

    To read the entire article, go to

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

  116. From Bloomberg, Aug 13, 2014, 12:01:00 AM

    A doctor for tropical medicine prepares a blood sample for analysis during a demonstration for the media of ebola treatment capabilities at Station 59 at Charite Hospital in Berlin, on Aug. 11, 2014. Photographer: Sean Gallup/Getty Images

    An experimental drug given to two U.S. health workers infected with Ebola may help raise the profile of an immune strategy that’s already shown promise against other diseases, including HIV.

    To read the entire article, go to

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

  117. Watch this video at

    Can Fed Maintain Rates With Massive Balance Sheet?

    Aug. 12 (Bloomberg) — John Herrmann, director of rates strategy at Mitsubishi UFJ Securities, examines the state of the U.S. economy and its implications for Federal Reserve monetary policy. He speaks with Mark Crumpton on “Bottom Line.” (Source: Bloomberg)

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

  118. Watch this video at

    Are Uber Employees Making Reservations at Lyft?

    Aug. 12 (Bloomberg) — Today’s “BWest Byte” is 5,000, for the amount of reservations Uber allegedly made at its crosstown rival Lyft before canceling them. Matt Miller reports on “Bloomberg West.” (Source: Bloomberg)

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

  119. Watch this video at

    Is Splitting Up Iraq Into 3 Regions the Solution?

    Aug. 12 (Bloomberg) — Bloomberg’s View’s Lisa Beyer discusses dealing with the dangers of Islamic State in Iraq and Prime Minister Nouri al-Maliki’s refusal to step down. She speaks on “Street Smart.” (Source: Bloomberg)

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

  120. From Bloomberg, Aug 12, 2014, 6:50:55 PM

    Photograph by Nick Dolding/Getty Images

    Old media vs. new media extends to leadership, too.

    To read the entire article, go to

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

  121. From Bloomberg, Aug 13, 2014, 6:28:54 AM

    Aug. 13 (Bloomberg) — Wayne Wilbanks, chief investment officer at Wilbanks, Smith & Thomas Asset Management, discusses the outlook for U.S. stocks and his investment strategy with John Dawson on “First Up.” (Source: Bloomberg)

    Stocks rose with U.S. equity-index
    futures, while government bonds dropped and the yen weakened.
    The U.K. pound declined after the Bank of England cut its
    forecast for wage growth.

    To read the entire article, go to

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

  122. From Bloomberg, Aug 13, 2014, 3:22:56 AM

    Aug. 13 (Bloomberg) –- Execution Nobile Head of Sales Trading Andrew Sullivan discusses China’s broadest measure of new credit plunging, it’s effect on the housing market and what it all means for the economy with David Ingles, Zeb Eckert, John Dawson and Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

    China’s broadest measure of new credit plunged to the lowest since the global financial crisis and industrial output unexpectedly slowed, adding risks to growth as the government grapples with a property slump.

    To read the entire article, go to

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

  123. From Bloomberg, Aug 13, 2014, 4:59:42 AM

    The scandals are undermining Barclays Chief Executive Officer Antony Jenkins’ attempts to reform the culture of a bank after it was fined 290 million pounds in 2012 for rigging the Libor benchmark interest rate. Photographer: Simon Dawson/Bloomberg

    Barclays Plc (BARC) faces costs of as much
    as 1.2 billion pounds ($2 billion) for its alleged rigging of
    currency markets, lying to clients about its U.S. dark pool and
    mis-selling interest-rate swaps, Sanford C. Bernstein Ltd. said.

    To read the entire article, go to

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

  124. From Bloomberg, Aug 13, 2014, 7:13:26 AM

    Aug. 13 (Bloomberg) –- With Russia testing the West’s resolve over Ukraine, many fear another cold war could be around the corner. One Professor of Economics tells Bloomberg why some other Eastern European countries are wary and explains the implications of Nato making the wrong strategic move. (Source: Bloomberg)

    Ukrainian officials said today they’d refuse entry to a truck convoy that Russia says is loaded with humanitarian assistance for rebel-held eastern areas, while pledging to send their own aid to the embattled region.

    To read the entire article, go to

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

  125. From Bloomberg, Aug 13, 2014, 6:33:01 AM

    A worker uses a raised platform to reach ripened tomatoes at the top of the vines inside a greenhouse at a wholesale vegetable production plant in Siechnice, Poland. The worst standoff in more than two decades between Russia and its former Cold War foes is curbing trade in the EU’s ex-communist members and threatening the euro region’s revival. Photographer: Bartek Sadowski/Bloomberg

    The European Union’s biggest eastern
    economies are flagging as escalating sanctions against Russia
    and retaliation from President Vladimir Putin exacerbate the
    euro area’s stuttering recovery from a record slump.

    To read the entire article, go to

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

  126. From Bloomberg, Aug 13, 2014, 6:11:59 AM

    Customers select fruit and vegetables from stalls at a weekly market in the Catalan town of Manresa. Photographer: David Ramos/Bloomberg

    Consumer prices in Spain fell at the
    fastest pace since the depths of the credit crunch in 2009 as
    declining wages curbed the pricing power of retailers.

    To read the entire article, go to

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

  127. From Bloomberg, Aug 13, 2014, 6:10:49 AM

    Visitors travel on an escalator as they pass the Patek Philippe SA display booth during the Baselworld luxury watch and jewelry fair in Basel, Switzerland, on Thursday, March 27, 2014. Photographer: Gianluca Colla/Bloomberg

    The mighty franc is undermining the “Made in Switzerland” label.

    To read the entire article, go to

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

  128. From Bloomberg, Aug 13, 2014, 3:24:03 AM

    Jack Ma, chairman of Alibaba Group Holding Ltd., speaks at SoftBank World 2014 in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg

    Two weeks, three continents, and 100 meetings. That — and founder Jack Ma celebrating his 50th birthday on the road — is what it will take for Alibaba Group Holding Ltd. to pull off the largest initial public offering in U.S. history.

    To read the entire article, go to

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

  129. From Bloomberg, Aug 12, 2014, 12:01:00 AM

    Late President Chavez is still celebrated by crowds, even as the economy slides into chaos. Photographer: Jorge Silva/Landov

    Retired Venezuelan Army Captain William Biancucci paces around his sparsely furnished Caracas office, clutching a red, bound copy of Hugo Chavez’s socialist constitution. He’s discussing his plans to buy a private jet to ease travel to and from his cattle ranch in Brazil’s Amazon rain forest. From a sprawling stretch of pastureland, he packs cows by the thousands on ships headed to Venezuela.

    To read the entire article, go to

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

  130. From Bloomberg, Aug 13, 2014, 1:41:22 AM

    China’s industrial-output and fixed-asset investment growth unexpectedly slowed last month, putting a recovery at risk as the government copes with a property slump and rising bad loans. Photographer: Brent Lewin/Bloomberg

    China’s industrial-output and fixed-asset investment growth unexpectedly slowed last month, putting a recovery at risk as the government copes with a property slump and rising bad loans.

    To read the entire article, go to

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

  131. Phil-can you post the formula/measure you use to determine which index is the laggard?

  132. There's no formula Craig, it's the one that is lagging behind the move of the others.  

    KMP/Tx – If the deal falls apart it could be a problem or if those puts are turned into some strange, untradeable derivative that has a very wide spread and then the whole entity goes into decline while you sit there…  So reasons for risk to be priced in but I agree it seems smaller than what's priced in.  

    Legging/Phel – The main trick is, once you fill one leg, you MUST have a tight stop on the other.  Also, keep in mind you don't have to get all out of one side first, you can offer to sell 1/3 or 1/2 and then make sure you even the other side up before creating one completely exposed leg.

    VIX/StJ – That's very interesting.  

    Big Chart – Still very bearish.  

     KING/Randers – We never liked them but stayed away from crazy stock. 

    TISA/Rev – They are going to keep throwing these things at the wall until one of them sticks.  Meanwhile, "THEY" buy another few key politicians in each cycle until they get the critical mass that can get one of these monstrosities passed.  If not for Wiki Leaks, we wouldn't know about this at all – no wonder they are hunted down like International Terrorists!  

    As of yet, that leaked chapter is the only piece of the agreement to go public. In contrast to the TPP or TTIP, US officials have not disclosed the dates or locations of talks ahead of time. (The secretive banking hub of Geneva has hosted all seven rounds.)

    “You only have to wonder what’s in there, if they’re so afraid of citizens and civil society and workers to actually see what they’re negotiating,” says Melinda St. Louis, international campaigns director with Public Citizen’s Global Trade Watch, a watchdog group.

    “It is astounding that at a time when we are still reeling from the devastating consequences of reckless financial deregulation, our governments are negotiating further deregulation of the financial sector, solely in the interests of large financial corporations,” says Daniel Bertossa, senior policy and advocacy officer at Public Services International (PSI), a global public-sector union federation based in France.

    Thanks for bringing this up – I read something about it but I felt it sounded a bit too conspiratorial (Bilderbergesque) to bring up without authoritative backing. 

  133. /TF still at 1135.7… what kind of stop should I set in this situation?