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Which Way Wednesday – Fed Edition

SPY 5 MINUTEFed Minutes Today (2pm).

That gives the bullish pundits another chance to read the tea leaves and promise MORE FREE MONEY to those who are silly enough not to be fully invested in stocks.  As you can see from Dave Fry's SPY chart, only 56.7M shares were transacted yesterday and nearly half of those people were selling.  

Perhaps 10% more buys than sells is 5.7M shares at $198.28 means it cost just $1.1Bn to move the $60Tn markets up 0.5% ($300Bn) – now that's leverage!  With a lack of participation, those few buyers can really shove the markets around.  Also, as Dave noted:

Hobson owned a livery stable and he rotated his horses to different stalls. He offered customers the choice of taking the horse in the first stable or none at all. Henry Ford also offered a variation of Hobson’s Choice since customers could buy a car in any color they liked, as long as it was black. The stock market offers many choices but only stocks are effective as bonds offer no yield while Fed policies have forced investors to stocks or nothing else.

This is basically the issue for investors in financial markets, buy stocks or nothing else. Farmland is admittedly in a bubble as Iowa farmland now goes for $8,500 per acre. If you can buy it right, some residential real estate offers a decent rental yield. Then there is the weird world of collectibles where you really need to know what you’re doing and have adequate cash.

So stock markets remain in play at least for most institutions. We’ve seen heavy volume sell-offs meaning most retail investors continue to loathe and leave markets. It remains a market for captive retirement money and institutions including financial and hedge funds.

SPX WEEKLYLack of choice has pushed our indexes up 1.5% in the first two days of the week, albeit on no volume, and now the S&P faces a big test of that 1,984 top we hit in mid-July – just before we plunged all the way back 5% to 1,900.  

Of course, the catalyst for the fall at the time was Putin moving into the Ukraine and ISIS attacking in Iraq and Hamas attacking Israel — thank goodness all those things are fixed, right?  Now we only have race riots in Ferguson to worry about, along with some anemic Economic Data – what, us worry?  

What I do worry about is how shallow this recovery really is.  Endless Free Money pumped out by the Fed doesn't trickle down to the bottom 90%, the money has generally gone to top 1% Corporatation, who use it to buy smaller Corporations (putting even more people out of work and decreasing competition) as well as their own stock (narrowing the ownership even more to the top 1%) and, of course, to buy politicians who vote to continue this madness.  

We've had $12 TRILLION worth of stimulus in the US economy since 2009, enogh to hand each of our 300M citizens $40,000 in cash yet the average worker's salary has gone up one-half of one percent over 5 years (and 90% of those gains went to the top 10%).  Over the past year, lower-wage industries such as retail, wait staff and home health aides accounted for 41 percent of the positions created.  Overall, since the recession lower-wage jobs have grown by 2.3 million while medium- and higher-wage jobs actually contracted by 1.2 million, the NELP said

This, of course, argues for the Fed to keep up their easy money policies in the HOPES that the top 1% will take the next Trillion or so they are given and spend a little of it to hire some workers.  But they are not – they are spending thier money, if at all, on robots to permanently get rid of those pesky money-wanting workers.  Check out these great examples (thanks Advill).  

The joke on the workers is (aside from being made obsolete) that they are the ones PAYING for all this stimulus as it generally ends up being Governement debt, which forces the Government to raise taxes (and I bet your lobbyist hasn't done a good job making sure tax increases don't affect you) and cut services – even when those "services" are entitlements that the workers have been contributing to, like Social Security and Medicare.  

This is a policy championed by GOP Strategist, Grover Norquist called "Starving the Beast" in which Conservatives in power run up the deficits (through wars and tax cuts) in order to back future administrations into a corner where austerity (and smaller Government with less of those pesky regulations) seems like the only option.  

Once upon a time in America and Europe, we solved economic hardships by funding big Government projects that put people to work building things that would have lasting benefits like railroads, highways, dams and bridges – things that would last and benefit future generations.  Now we have a Government that has cut spending while people are out of work while all the "stimulus" goes to those who need it the least.  

Do you really think this is the kind of economic "recovery" that will last?  

If not – be very careful out there!  

 


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  1. Oil Lines

    R3 – 95.68
    R2 – 95.02
    R1 – 93.93
    PP – 93.27
    S1 – 92.18
    S2 – 91.52
    S3 – 90.43


  2. Brad DeLong on the Shiller's CAPE – long article but DeLong is a top economist and not a cheerleader:

    http://delong.typepad.com/sdj/2014/08/under-what-circumstances-should-you-worry-that-the-stock-market-is-too-high-the-honest-broker-for-the-week-of-august-16.html

    Given the large number of investors and institutions in our economy with very long time horizons that thought to be in the stock market for the long-term--insurance companies, pension funds, rich individuals with grandchildren--for me the anomaly does not seem to be a CAPE of 25 (or, given historical real returns on other asset classes and very low current yields on investments naked to inflation risk, 33) but rather the CAPEs of 14-20 that we saw in the 1980s, 1960s, 1950s, 1900s, 1890s, and 1880s that Robert Shiller appears to think of as "normal" and to which today's CAPE should someday return. Those are associated with warranted real average returns of between 5 and 7%/year. Why ever were stocks so unpopular as to limit demand so much as to offer such returns? Is there no long-term money? And so we have arrived at the biggest mystery of macro finance: the premium return on equities.


  3. Interesting AAPL charts:

    http://qz.com/251977/investors-are-convinced-apples-iphone-6-is-going-to-be-a-smash-hit/

    It’s also worth noting that Apple has been buying back its own stock (in part to placate people like Icahn, who complained that the company was hoarding its massive cash pile). That reduces its share count and artificially increases its share value.

    But the latest stock price surge is probably more about the company’s fundamentals, not financial engineering.  Investors are anticipating the iPhone 6, which was scheduled to be released next month. As Morgan Stanley pointed out in a research note this morning, Apple’s share price tends to outperform in years when it releases new versions of the iPhone. (The exceptions being the iPhone 5 and iPhone 3G, which the investment bank puts down to one-off factors.)


  4. Here's the replay/download link for yesterday's webinar:

    http://bit.ly/081914PSWReplay


  5. August has been good except for commodities and foreign currencies:

    http://www.bespokeinvest.com/thinkbig/2014/8/19/sp-500-just-10-points-away.html


  6. stjeanlucCPI (chart pattern indicator) is Bulkowski's own creation. Here is a link to additional info regarding Bulkowski's CPI.  Interesting!


  7. Apple down a bit in pre-market.. I'm hoping for suggestions on how to hedge current gains..sell ITM covered calls… how far might be optimal? Bear call spread?


  8. looking at a new play on TWC  Buy Jan16 BCS 130/150 11.35 cost sell Jan16 130p @ 9.50 and sell 1/2 Sept 14 150c @ 1.65 long term play with planty of month to sell calls 


  9. Good morning!  

     

     

     

    Tea Party groups care far less about your ideals and far more about your money—taking it and making it their own. They’re an ideological Ponzi scheme; they use donations to generate more donations, by creating sensationalistic ad campaigns to persuade donors they’re getting value, and to scare or guilt them, and new donors, into sending more donations.

    Here are five very recognizable organizations that spend vastly more on fundraising efforts than on support for any candidate:

    140818-Dougherty-tea-party-groups-embed1

    Sarah PAC

    Total receipts were $2,068,666, with expenses of $2,120,019 and $106,000 benefiting candidates. That’s 95 percent on expenses and 5 percent to candidates. With just a measly one-hundred grand in candidate support, Sarah Palin’s PAC basically has taken a shotgun approach by doling out $5,000 cash contributions to eight senatorial candidates, and a half-dozen House candidates, most of which are notable for their primary losses.

    Yet no arrests will be made!  


  10. Joe Kernen looked like he was going to drop his pants and beg Paul Ryan to give it to him this morning.  He was all over him while Andrew Sorkin looked like network execs told him to be quiet and question nothing.


  11. McClellan is now 184, you only see a 200 once or twice a year, this is extremely high.


  12. Phil – we had a small move up in oil futures pre market and a small move down in the indexes, are we done or just getting started in your opinion?


  13. Palin / Phil – I wish the IRS would investigate these Tea Party groups! Oh wait…

    Kidding aside, how can these guy be taken seriously when in effect they are just built to enrich their founders and their cronies. They are like the worst charities out there who pay lavish salaries to their management and dole out 10% of the donations. Just ridiculous.


  14. CPI / Diamond – Thanks. For some reason the link seems very slow to open. I'll check that out later.


  15. Good gains on Futures shorts already reversing.  Oil (/CLV4) still going up, $93.33 now and a stop on the longs should be $93.25 but I feel good about getting back to $94.

    We'll see about reloading on Index shorts later, could be tough until the Fed but I think the pumping is out of gas and we have post-Fed depression. 

    If this rally is real (ie, we make new highs) then Germany must be cheap – our economies are not that disconnected.  

    AAPL/Sn0 – It depends on your position and what you are trying to accomplish but "down" is a strange way to describe a stock that's still over $100.  If you want to hedge AAPL, try SQQQ (in the STP) as AAPL will take the whole NAS with it if it fails and SQQQ gives you leverage without betting against your own AAPL position.  

    Bulkowski/Diamond – I think you crashed their site.  

    TWC/Yodi – I like CMCSA much better but nothing wrong with your set-up.  

    Autos/Diamond – Yep, that's been a huge driver for the economy as we created a whole new category of sub-prime auto loans.  What could possibly go wrong?  

    The surge in delinquencies and repossessions is being driven primarily by borrowers with subprime and deep subprime credit scores. Experian considers subprime borrowers as those with credit scores of 550 to 619 while deep subprime borrowers are those with credit scores lower than 550. Combined, the two categories accounted for more than 12 million of the open auto loans in the second quarter, which is 19.6 percent of all open auto loans.

    Total balances of auto loans in America in the second quarter climbed 11.7 percent to an all-time high of $839 billion, according to Experian.

    So about $160Bn worth of cars have been sold to sub-prime borrowers.  That's 1% of our GDP.  

    Sorkin/Rustle – That guy is CNBC's version of Colmes – they removed his spine and he just sits there so they can say they also have a "liberal" on the team.  

    Futures/Craigs – I'm for taking small profits.  Dow looks like it will give us a reload early on but let's not force a trade too early.  RUT under 1,155 is very bearish but I think we're still in the move higher on no volume pattern until the Fed (2pm).  

    LOL StJ, that's right, they attempted to look into it and were crucified.  It's not just Palin, of course, they are all doing it but she's noting more than a con-woman now, running around the country and scaring poor people into handing over their hard-earned money in exchange for phony promises.  Oh well, if she wasn't doing it, some preacher or weight-loss guru would come around and get them anyway…

    PNRA (Income Portfolio) upgraded by BCS.

    PNRA/Income Portfolio, Kevin – Thanks it is a $15 spread, not $25.  The $140s are $12.80 and the $155s are $6 for net $6.80 at the moment.  As to the short puts, the last sale on the 2016 $120 puts was $7.52, the BID is $7.20 and the ASK is $8.60 – you have to offer $7.50 and wait for a fill – NEVER accept the BS offers your broker throws at you, be aware of what things are actually trading for and offer to buy or sell accordingly.  Of course, if you can't get $9.50 for the 2016 $120 puts, It's not big deal to flip to the $125 puts, which last sold for $9.50.  SO – Let's call that the official trade since $9.50 did not fill on PNRA – it's going to be the Jan $140/155 bull call spread (now $6) with the short 2016 $125 puts at $9.50

    PNRA/Kinki – I still like them for a new entry, they simply went down with the market.


  16. DBC/Phil – support here? looks like just bounced off it's last swing low.


  17. DBC/Scott – DBC has energy and, more specifically, fossil fuels, which are being replaced while demand is dropping.  DBA is mostly food and, until I start seeing more hot bodies at Great Adventure, I'll assume people are still eating and we make more people every day, so I trust it more for a long-term position.  $24 is our magic number on DBA, the trend is still down so we're waiting PATIENTLY for a nice entry but I'll be very happy to put it back into our long-term portfolios if either DBA drops or the VIX goes up to give us better options to sell.  


  18. /YM Futures still very attractive under the 16,900 line (now 16,895).  We might test it, we might not but the Dow is not so bad to scale in on as it's just $5 per point, per contract.  


  19. PNRA/Phil – you commented was down with the market.. but it has been pretty dramatically underperforming the SP500 for the last year. Now, with concerns the market is going to 'ease' a bit, what is the support you see for PNRA?


  20. PNRA/Scott – As I said on 7/29:

    PNRA/Pat – That's a level at which (p/e 16ish) I'd be willing to put my foot down and buy, even if the market was in a 20% correction.  That's usually the basis of my short put targets – the fallback plan is to actually own the stock and become a long-term investor.  Of course, we can roll our puts or we can take an assignment and then sell calls and more puts so, really, we're usually able to net out to a 30-40% discount on a full position over time, which means the real trick is simply picking things that don't lose half of their price (not value!).  

    This is what we were talking about in yesterday's Webinar when we were discussing Levis – if you KNOW what the thing you are buying is worth, then you don't have to worry about arbitrary lines on a chart or what other people think or what the rest of the market is doing.  If you are an INVESTOR and intend to OWN the stock for 20 years, then your entry is not about what is happening now or next week or next month or next quarter, but whether the company is going to continue to grow over the coming years.  

    In PNRA's case, here's a good example of how news changed my target and ended up (2 months later) having me decide that $143 was a good bottom into earnings:

    Submitted on 2014/05/27 at 11:59 am

    PNRA/JMD – I like CAKE much better.  PNRA is in a good growth phase though and $150 is probably the bottom of the channel but I wouldn't expect a big move back up anytime soon.  You can sell the 2016 $130 puts for $10 for a net $120 entry on just $12 of margin – that's they way I'd play for an initial entry.  

    Panera +2.2% AH on new $600M buyback program

    Yesterday, 04:48 PM ET · PNRA

    • Panera’s (PNRAnew buyback programreplaces an existing program that was set to expire in August. It’s good for repurchasing 14% of shares at current levels.

    So the $600M buyback program was going to take out almost 15% of their stock and we had actually discussed getting in then but I felt that some people would not appreciate their use of funds for buybacks vs expansion but what it did do is raise the long-term floor enough for me to really like that play when the opportunity came up.  

    Again, it's about KNOWING what something is worth and then having the PATIENCE to wait for a good opportunity to buy it on sale (despite what the idiots in the MSM and the Blogs are saying or what the squiggly lines are telling you).  


  21. PNRA.DBC – thank you Phil. Very helpful answers.


  22. NFLX - you can sell the JAN 520 C here for $20 if you are one of those idiots like me that actually believe it will someday stop going up.


  23. TRIN is at .51….buy buy buy!!!!


  24. At the open

    09:31 AM ET

    • Dow -0.1% to 16,902.50. S&P -0.13% to 1,979. Nasdaq -0.22% to 4,517.47.
    • Treasurys: 30-year -0.04%. 10-yr -0.05%. 5-yr -0.03%.
    • Commodities: Crude +0.54% to $93.36. Gold +0.08% to $1,297.80.
    • Currencies: Euro +0.54% vs. dollar. Yen -0.48%. Pound -0.04%.


  25. On the hour

    10:00 AM ET

    • Dow 0.01%.
    • 10-yr -0.12%.
    • Euro -0.26% vs. dollar.
    • Crude +0.58% to $93.40.
    • Gold +0.09% to $1,296.50.


  26. Wednesday’s economic calendar

    12:00 AM ET


  27. Argentina CDS auction delayed until September

    02:42 AM ET · ARGT

    • The International Swaps and Derivatives Association has delayed Argentina’s CDS auction until September.
    • An issue arose yesterday regarding the addition of two Japanese-law restructured notes to be included at the auction, and needs to be resolved before the sale can take place.
    • The auction, run by Creditex and Markit, will establish the payout that holders of protection on Argentine bonds will receive as a result of the country’s recent default.
    • ETFs: ARGT
    • Previously: Argentina CDS auction set for Aug. 21


  28. Argentina calls for bond swap, attempts to dodge U.S. court

    03:41 AM ET · ARGT

    • Argentina is looking to push bondholders to swap defaulted debt for new notes, in order to dodge a U.S. ruling that prevents the government from paying creditors.
    • Argentina’s last interest payment of $539M was blocked by a NY court, resulting in the country’s sovereign default on July 30.
    • President Christina Fernandez has continued to argue that Argentina is not in default, and has called for a new bond swap as a result of the ruling.
    • ETFs: ARGT


  29. Glencore announces $1B buyback

    04:10 AM ET · GLNCY

    • Glencore (OTCPK:GLNCY) is launching a share buy-back program of up to $1B over the next six months, making it the first among the diversified miners to return extra cash to shareholders this year.
    • The mining giant said last week that it had received $6.5B from the sale of its Peruvian copper project Las Bambas earlier this year, triggering the possibility of a special dividend for shareholders or a buy-back.


  30. Ukraine’s energy sector continues to crumble

    04:36 AM ET · RSX

    • Vladimir Putin is set to meet face-to-face with his Ukrainian counterpart, Petro Poroshenko, in Belarus on Aug. 26 to discuss stabilizing the situation in Ukraine and the latter’s energy concerns.
    • Ukraine’s energy sector is crumbling with estimates that coal supplies to electricity producers can run out within the next 40 days, due to damaged rail lines by Russian separatists.
    • ETFs: RSX, RUSL, RSXJ, ERUS, RUSS, RBL, RUDR


  31. Cease-fire talks suspended following rocket strikes

    05:00 AM ET · EIS

    • The latest cease-fire in the Gaza Strip has collapsed, after Palestinian rocket fire resumed nearly eight hours before the cease-fire was due to expire.
    • Israel responded with airstrikes, and ordered its delegates back from Cairo saying it will not negotiate under fire.
    • Egyptian mediators have been struggling to end the 5-week-old conflict with several temporary cease-fires, but no permanent truce has yet emerged.
    • ETFs: EIS, ISRA


  32. Staples beats by $0.01, beats on revenue

    06:02 AM ET · SPLS

    • Staples (NASDAQ:SPLS): Q2 EPS of $0.12 beats by $0.01.
    • Revenue of $5.22B (-1.7% Y/Y) beats by $60M.
    • Press Release


  33. Lowe’s beats by $0.02, beats on revenue

    06:01 AM ET · LOW

    • Lowe’s (NYSE:LOW): Q2 EPS of $1.04 beats by $0.02.
    • Revenue of $16.6B (+5.7% Y/Y) beats by $50M.
    • Press Release


  34. More on Lowe’s Q2

    06:56 AM ET · LOW

    • Lowe’s (NYSE:LOW) reports comparable-store sales increased 4.4% in Q2.
    • Gross margin rate +20 bps to 34.55%.
    • SG&A expense ratio -40 bps to 21.33%.
    • Merchandise inventory +2.3% to $9.315B.
    • Guidance: FY14 sales growth of 4.5% is forecast. Comp sales are expected to rise 3.5%, a level which is below prior guidance.
    • LOW -4.2% premarket


  35. Well the news on NFLX is they are paying Time Warner so they don't lose customers from poor streaming.  Makes sense that they are up 40 points in the last two weeks on that.  Now's the time to write calls on them.


  36. MBA Mortgage Applications

    07:01 AM ET

    • MBA Mortgage Applications:
    • Composite Index: +1.4% vs. -2.7% last week.
    • Purchase Index: -0.4% vs. -1% last week.
    • Refinance Index: +3% vs. -4% last week.
    • Fixed 30-year mortgage rates declines to 4.29% from 4.35.


  37. Comp sales fall 5% at Staples

    07:02 AM ET · SPLS

    • Staples (NASDAQ:SPLS) reports comparable-store sales fell 5% in Q2 as sales fell off for computers and technology accessories.
    • Operating income rate -290 bps to 1.2%.
    • Staples.com revenue +8%.
    • International revenue -0.5% to $941M.
    • North American revenue +2.6% to $1.997B.
    • SPLS +1.6% premarket


  38. Janney: Upside for DreamWorks Animation

    07:07 AM ET · DWA

    • Janney Montgomery Scott reiterates its Buy rating on DreamWorks Animation (NASDAQ:DWA).
    • A strong global box office response to How to Train Your Dragons 2 bodes well for the future of the franchise.


  39. Goldman teams to buy 144 U.K. hotels

    07:17 AM ET · GS

    • Goldman Sachs (NYSE:GS) and Goldentree Asset Management acquired Travelodge Hotels in a debt restructuring in 2012, and today agree to buy 144 hotels leased to the company in a deal valued at about $830M. Among the owners is Lloyds (NYSE:LYG), which is busily shedding noncore assets.
    • The budget-hotel chain operates 500 hotels and 38K rooms in the U.K., Ireland, and Spain. It has been busily renovating its properties in hopes of improving profitability.


  40. Foreign automakers in South Korea could feel pressure on pricing

    07:20 AM ET · BAMXY

    • South Korea could be the next nation to crack down on foreign automakers and suppliers over pricing, warns Automotive News.
    • A broad probe in China has led to fines and pricing cuts by manufacturers.
    • The South Korean Fair Trade Commission has already probed BMW (OTCPK:BAMXY), Mercedes-Benz (OTCPK:DDAIF), and Volkswagen (OTCQX:VLKAY) over price fixing.


  41. Madison Square Garden beats by $0.02, beats on revenue

    07:35 AM ET · MSG

    • Madison Square Garden (NASDAQ:MSG): FQ4 EPS of $0.15 beats by $0.02.
    • Revenue of $371.7M (+10.5% Y/Y) beats by $22.92M.
    • Press Release


  42. Maxim Group warns on margins for Urban Outfitters

    07:25 AM ET · URBN

    • Maxim Group warns that margin rates at Urban Outfitters (NASDAQ:URBN) to decline in Q3.
    • The company’s namesake brand is expected to see the biggest struggle in improving profits even as the back-to-school season assortment rolls in.


  43. Lower coffee pricing clips profits at J.M. Smucker

    07:45 AM ET · SJM

    • J.M. Smucker (NYSE:SJM) reports net price realization accounted for a 3 percentage point drop in sales during FQ1.
    • Increased promotional activity in the U.S. Retail Coffee segment was a large factor in the sales drop.
    • Gross profit rate -30 bps to 36.2%.
    • Segment sales growth: U.S. Retail Coffee -2% to $502.7M; U.S. Retail Consumer Foods -3% to $522.8M; International, Foodservice, and Natural Foods -1% to $298.3M.


  44. Glencore reports higher net profit, shares flat despite buyback news

    07:52 AM ET · GLCNF

    • Glencore (OTCPK:GLCNF, OTCPK:GLNCY) reports H1 adjusted net profit of $2.01B, up 8% Y/Y vs. a restated $1.86B in the first six months of 2013, primarily due to higher production volumes and improved market conditions in grains, copper, zinc and coal.
    • The big news is the $1B share buyback, but shares are barely changed in London trading; the buyback plan is “refreshing,” says Tony Robson of BMO Capital, but he says the amount is small given the $6.5B obtained from the sale of the Las Bambas copper project in Peru, suggesting the company is keeping back most of the Las Bambas cash for future acquisitions, which should add to growth.


  45. Target misses by $0.01, beats on revenue

    08:01 AM ET · TGT

    • Target (NYSE:TGT): Q2 EPS of $0.78 misses by $0.01.
    • Revenue of $17.4B (+1.6% Y/Y) beats by $20M.
    • Press Release


  46. American Eagle Outfitters beats by $0.03, beats on revenue

    08:02 AM ET · AEO

    • American Eagle Outfitters (NYSE:AEO): Q2 EPS of $0.03 beats by $0.03.
    • Revenue of $711M (-2.2% Y/Y) beats by $21.05M.
    • Press Release


  47. Amazon makes progress in China

    08:03 AM ET · AMZN

    • Amazon (NASDAQ:AMZN) says it has signed deals in China which will pave the way for it to open Amazon.com in a new free-trade zone in Shanghai.
    • The company plans to open a logistics warehouse in Shanghai to help it export goods from local producers.
    • What to watch: The initiative should eventually help Chinese buyers make purchases on Amazon and shift the company a bit closer to a direct-selling model. It’s also a step in taking on Alibaba (Pending:BABA) – the “800-lb gorilla” in the region.


  48. Six Flags Entertainment declares $0.47 dividend

    08:05 AM ET · SIX

    • Six Flags Entertainment (NYSE:SIX) declares $0.47/share quarterly dividend, in line with previous.
    • Forward yield 4.96%
    • Payable Sept. 15; for shareholders of record Sept. 3; ex-div Aug. 29.


  49. Sharp cut in EPS guidance from Target

    08:24 AM ET · TGT

    • Target (NYSE:TGT) reports U.S. comparable-store sales were flat in Q2 on a 1.3% drop in transactions.
    • Comp sales fell 11.4% in Canada on a sharp decline in average transaction amount.
    • Gross margin rate -100 bps to 30.4% for the U.S. segment.
    • Gross margin rate -1320 bps to 18.4% for the Canadian segment.
    • U.S. REDcard penetration +210 bps to 20.8%.
    • Guidance: FY14 EPS slashed to $3.10-$3.30 vs. $3.60-$3.90 prior and $3.49 consensus.
    • TGT -1.7% premarket


  50. American Eagle Outfitters rallies after avoiding worst-case scenario

    08:31 AM ET · AEO

    • Shares of American Eagle Outfitters (NYSE:AEO) pop after the company tops earnings estimates with its Q2 report and avoids some of the worst-case scenarios pinned on the retailer.
    • Comparable-store sales fell 7% during the period.
    • Gross profit rate -40 bps to 33.4%.
    • SG&A expense ratio +110 bps to 26.7%.
    • Inventory -15% to $393M.
    • Guidance: Q3 EPS of $0.17-$0.19 vs. $0.18 consensus. Comp sales are expected to fall at a mid single-digit rate.
    • AEO +10.8% premarket.


  51. Germany borrows for free; euro to one-year low

    08:35 AM ET · FXE

    • Germany today raised just over €4B of two-year money, with the notes priced to yield 0.00%. Demand was strong, totaling nearly €8.3B.
    • The sale comes amid geopolitical risk and the slowdown in the European economy, bringing forth the possibility of further stimulus from the ECB.
    • This isn’t the first time two-year borrowing costs have fallen so far. Amid the debt crisis two years ago, investors paid Germany to lend it money, accepting a negative 0.06% yield at an auction.
    • The euro is down 0.25% to $1.3288, it lowest level in about a year.
    • ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR


  52. The Home Depot $100 PT club grows

    08:38 AM ET · HD

    • Argus boosts its price target on Home Depot (NYSE:HD) to $100 after the retailer showed sparkling comp growth in Q2.
    • The investment firm has shares rated as a Buy.
    • The Home Depot $100 PT club now has Argus and Barclays as members.


  53. More on Madison Square Garden’s FQ4

    09:04 AM ET · MSG

    • Profits fell for Madison Square Garden (NASDAQ:MSG) in FQ4 as higher costs took a toll.
    • Segment revenue growth: MSG Media flat at $176.4M; MSG Entertainment +62% to $56.5M; MSG Sports +11% to $156.8M.
    • AOCF -12% Y/Y to $312.8M.


  54. Wells Fargo to invest in tech finance companies

    09:14 AM ET · WFC

    • The Wells Fargo Startup Accelerator will be a semiannual “boot camp” for tech startups in the areas of payments, deposits, fraud, operations, and other financial services areas. Wells Fargo (NYSE:WFC) will make a direct equity investment of $50K to $500K in each selected startup.
    • Applications are being accepted through October 1. “We need to expand our access to new ideas at the edges of our industry,” says Steve Ellis, head of Wholesale Services at the bank. Three companies have already been selected and funded.
    • Press release


  55. GT Advanced -3.5% on 2-notch CLSA downgrade

    09:24 AM ET · GTAT

    • CLSA has downgraded GT Advanced (NASDAQ:GTAT) to Underperform from Outperform.
    • The downgrade comes a month after CLSA lowered its estimates for GT, citing potentially low sapphire yields at the company’s Mesa, AZ facility. It also arrives with shares up 111% YTD amid strong Apple-related hopes.
    • Previous: GT Advanced gains on iPhone screen production report


  56. Housing starts jump all about multifamily

    09:29 AM ET · EQR

    • “We will take what economic activity we can get, but our housing market model was designed in the U.S. to build a lot of single-family homes for owners, not multifamily homes for renters,” says Diane Swonk commenting on yesterday’s big jump in housing starts.
    • A big share of the gain came from multifamily starts – typically a volatile number – but a rolling 12-month total shows apartment construction at its highest level in 25 years. Single-family housing has a bigger multiplier effect for both consumer spending and employment, says Swonk.
    • As for apartment owners, a separate report showed rents up 3.3% Y/Y, their fastest pace of increase in five years. It’s little mystery why the stocks of companies like Equity Residential (NYSE:EQR) and AvalonBay (NYSE:AVB) are at all-time highs, but their owners may want to mull the fast pace of building.
    • Others of interest: ESS, PPS, UDR, AIV, CPT, HME, MAA, TSRE, AEC, IRET, APTS


  57. PETA buys the dip on SeaWorld

    10:05 AM ET · SEAS

    • PETA is a bargain buyer of SeaWorld (SEAS +0.9%) on the theme park operator’s swoon.
    • The animal right organization has picked up the bare minimum of shares required in order to allow it to submit shareholder resolutions and questions to management.
    • At SeaWorld’s last annual meeting, actress Jessica Biel peppered SeaWorld execs over when the company would confine its orcas in a natural sea pen.


  58. Novartis hands over TB drugs

    10:06 AM ET · NVS

    • Novartis (NVS -0.2%) signs a licensing agreement with the Global Alliance for TB Drug Development for its experimental tuberculosis drugs that have been discovered at the Novartis Institutes for Tropical Diseases. Among the product candidates is a class of meds called indolcarboxamides which target drug resistant and multi-resistant strains of TB. One of the compounds, NITD304, works by blocking a protein this is essential for the TB bacterium’s survival.
    • The company did not ask for an upfront or milestone payments.
    • The move reflects Novartis’ intent to concentrate its research on its core areas of cancer, respiratory, heart failure and dermatology.


  59. Analysis: Major fracture in Hertz bull case

    10:09 AM ET · HTZ

    • Deutsche Bank’s Chris Woronka hammers away at Hertz (HTZ -12.7%) after the company’s audit and operations failings continue to impact earnings and guidance.
    • The analyst says the most recent disclosure from Hertz is a “major fracture” in the bull case for the stock.


  60. EIA Petroleum Inventories

    10:31 AM ET

    • EIA Petroleum Inventories:
    • Crude -4.5M barrels vs. -1.1M expected, +1.4M last week.
    • Gasoline +0.6M barrels vs. -1.6M expected, -1.2M last week.
    • Distillates -1M barrels vs. -0.6M expected, -2.4M last week.
    • Futures +0.58% to $93.40.


  61. Report: P-E firms make offers for Shutterfly

    10:28 AM ET · SFLY

    • Bloomberg reports P-E firm Hellman & Friedman is among the P-E firms to have submitted offers for Shutterfly (SFLY +2.6%).
    • The news service adds Shutterfly may be been valued at ~$2B in a sale, and that Bain has also expressed interest. However, tech/Internet companies have shown little interest.
    • Shares have moved higher in response to Bloomberg’s report. Shutterfly’s market cap is currently right around $2B.
    • Previous: The Deal reports Shutterfly has received buyout offers


  62. Oil with a net 5Mb draw but still not enough to pop $93.50 - that's really pathetic and profits should be taken here for now, maybe get back in if we get over. 


  63. NFLX / Scottmi – As far as I understand, these deals actually don't cost them more money than what they actually pay now to Internet middle men so I don't think as negative as we would think.

    The danger would be when these ISP decide to raise their prices but NFLX probably assumes that by then they will have 50M hooked so they might have leverage then. Too many variable to play that long term!


  64. Pharm

    If      Allergan Inc. (AGN) does not buy   Salix Pharmaceuticals Ltd. (SLXP) who do you think they will buy? Thanks


  65. Pharmboy / TRIN

    Sorry Pharm, but I can’t find a TRIN ticker. Is this correct? What is it? Could you expand a little on why it is a buy? Thank you.


  66. You're welcome Scott. 

    NFLX/MrM – It is indeed a wonder to behold.  Still, we're only back to the previous silly high at the moment. 

    Writing calls/Rustle – Too late, I've moved to the "crossing fingers" stage of that trade already.  

    Here's another thing no one seems to care about (but I do like /NKD shorts below 15,500):

    That's a trade deficit since early 2011 and only popped recently on falling oil but, on the whole, demand for their stuff is way down.  

    On the terrible missing J-Curve (via Patrick Barron of the Ludwig von Mises Institute of Canada):

     

     

    Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yenMonetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.

     

    Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the few.

     

    Eventually the monetary debasement raises all costs and this initial benefit to exporters vanishes. Then the country is left with a depleted capital base and a higher price level. What a great policy!

     

    The good news is that Japan does know how to rebuild its economy. It did it the old-fashioned way seventy years ago–hard work and savings.

    Crazy ride on HTZ:

    As with many companies, expectations were completely unrealistic but, unlike most companies, HTZ issued guidance and smacked the bulls in the face with a bit of cold, hard reality.  

    Speaking of reality:

    Wall Street bankers won the battle and continue to pillage and loot the national wealth while impoverishing the masses.

    The arrogance, hubris and contempt for morality displayed by the ruling class is breathtaking to behold. They think they are untouchable and impervious to norms followed by the rest of society. They may have won the opening battle, but will lose the war. Discontent among the masses grows by the day. The critical thinking citizens are growing restless and angry. They are beginning to grasp the true enemy.

    The system has been captured by a few malevolent men. When the stock, bond and housing bubbles all implode simultaneously, all hell will break loose in this country. It will make Ferguson, Missouri look like a walk in the park. I wonder if the occupants of the Eccles building in Washington DC will get out alive.

    “It is well enough that people of the nation do not understand our banking and money system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford

    NFLX/StJ – Yes, I think it's the concept that they DO have to pay for access that will eat into their profits over time but HBO pays and SHO pays, etc, this is just making it fair but fair is a p/e of 20, not 200 – that's my issue with them.  They are no different than HBO in their ultimate model and, one day, people will see that (God knows when, though).

    TLSA/Rustle – And one day (God knows when) people will realize they are just a car maker, like thousands that have gone before them with p/e's under 20, not 2,000.  


  67. I think I am and have been at the mindset that the only way these momo's, in particular NFLX, TSLA, YELP, TWTR, Z, AMZN and LNKD will get major drops (40% or more) is from the next market crash.  Too many hedge funds and institutions are holding on to these names right now and have a vested interest to keep them up as long as redemptions aren't too bad.


  68. TSLA/Phil

    If you count the 3 point move from the announcement of the one TSLA dealership in Quebec, that dealership is worth 360mm.  Must be a really good dealership.


  69. Phil – /TF popping back to 1155.5, any play or still wait for 2pm to make any moves?


  70. Crash / Rustle – I guess high betas works both ways – up and down!


  71. phil.

    like to get your thoughts on my aapl position now that it has reached 100….and the thought of it pulling back etc……once it got to par….

    + 21 jan6 64.29 @ 19.00

    + 14 jan6 78.57 @ 9.65

    - 35 jan6 100 @ 3.20

    - 35 oct 89.29 @5.80

    + 21 jan5   92.14 @ 6.65

    - 6 jan 5 100 @ 3.70…

    orig a 21x bcs i added early june ….scaled out of 14x  100 calls w/aapl below 95…..fwiw tos showing my delta as -684….tks……


  72. TGT up 0.6% after lowering guidance. Not complaining, I am long with LEAPS but that seems strange. I guess I should not be surprised, losing money is highly valued in these markets! Making less is a notch below, but still better than making more which has no value whatsoever.


  73. what play do you have TGT StJ?  I was hoping for a slide after the report to get back in. 


  74. TGT / rpreri – Just long the Jan 16 45 calls for now. Uncovered as of last Friday. And waiting to see what happens before I cover again. I am hoping that they can go back to $62 but momentum is not that great.


  75. akademia – Since no one has yet answered your TRIN question …

    Arms Index (TRIN) DefinitionInvestopedia

    Arms Index - ChartSchool


  76. Pharm- when will the bloodbath in PLX stop!!?!?!? Why the heck is it going straight down? Is there any tests/data/new product development coming out on it between now and Feb? I have been rolling and doubling down for a while now and this one stock and now have all my options for Feb…. Anyways, love your contributions and I've made good money following your picks (my overallocation in PLX is MY FAULT), so not trying to complain too much – just wondering if you had any answers to the drastic fall it's had since I've seen nothing in the news.


  77. diamond / TRIN

    Thank you. I’m still a little green behind the ears. Now I get the logic of the “buy buy buy!!!!” by Pharmboy.


  78. akademia – One last thought: TRIN is considered so important to floor traders that it has a permanent place on the Big Board (NYSE).


  79. Must be POMO buying..? How else stocks like UNP, BBY press on upward with no news? And SPWR keep on going up while all the solars are reporting misses? (But not ABX, oh no, not them..)


  80. Phil/EXC – Thoughts on EXC down here?  I did a buy write earlier in the year on what I think was a recommendation of yours, and decided to close out somewhere near $37 after a huge rally.  Since then it has come back down to $32.  It pays a nice yield of 3.88%, and you can do a buy/write selling the 2016 $32 calls, and the $30 puts for net $26.8/$28.40 making the dividend 4.6% while you wait to hopefully be called away at $32 in 2016, for another 20% gain.  


  81. i suspect the fed minutes today will be more hawkish…then she comes in tomorrow making sure everyone doesn't forget how reckless they really are.

    bloomy says only 4% of naz at new 52 wk high…i dont understand how that is possible


  82. what time do the fed minutes come out today – anybody?


  83. I just did a podcast interview I forgot about – looks like I didn't miss much.  I picked CCJ short 2016 $17 puts at $1.45 for them.  For us I'd add the $20/27 bull call spread at $2.10 for net .65 on the $7 spread that's on the money at $20.60 as Japan should be restarting reactors next year and that will put demand back to normal(ish) for uranium. 

    /YM 16,925 is worth another poke on the short side.  

    When this Ice Bucket Challenge winds down, we should start a Taser Challenge for charity.  Apparently, you can get people to do almost anything these days.  


  84. Phil voting

    My plan to vote for new blood failed, looks like more bad red for Wyoming. So no medical care and bad air, buy coal.


  85. Structure of my biggest positions – courtesy of ideas by PD
    AAPL: essentially 2016 BCS which are now 100% ITM, two small deep OTM short puts (90% profit already but still enough to pay off a couple of years of PSW membership) partially covered by short March 2015 92.86 calls, now at $11.85 (sold for $7.90 so showing a significant loss) but these will be rolled along as necessary. As AAPL increased I was layering on 2016 BCS paying 50% of the strike deltas – recent example Jan 16 80/100 bought for $11.

    AMGN: 2016 $120/135 BCS ITM and covered with short Jan 15 $115 calls. Again the short calls are showing big losses (sold for $12.39, now $19.23) but as AMGN goes up I layer on more 2016 BCS and I know where I will roll the short 2015 calls to.

    BA: this is a good example where the Jan 16 130/150 BCS are obviously OTM , but over covered by short Jan 2015 $130 calls (showing a healthy profit). I opportunistically shorted some puts at favorable prices when BA slumped recently so they also act as a partial hedge.

    CAT: this one is more tricky as I started to get clever with long calls – selling too early but making significant profits. So I have Jan 15 short 95 & 100 calls for protection, but I was slow in layering on Jan 2016 BCS; 100/120 & 105/125. Again, I have been selling front month puts with a wide margin of risk to finance future rolls.

    GS: short Jan 2015 $160 calls partially covering the 2016 150/165 & 160/175 BCS. Selling front month OTM puts to pick up premium to finance the rolls.

    PCLN; core position is Jan 16 1200/1400 BCS, fully covered by Jan 15 $1300 short calls. Rolling fuel provided by short Jan 15 1195 puts (sold for $161 during a PCLN swoon and now $46 so showing serious profits) – but I'll be blowed if I am going to pony up and buy back those short pulls when they act as a cover and it is all premium to burn. I either win on the $1300 short calls (and risk losing on the short puts) and vice versa – or both sets expire worthless (please!!).

    TSLA – position mentioned earlier this week, Jan 16 160/240 BCS, but I have short Jan 15 240 calls as the cover. When TSLA crosses a round number then I look to add a spread.

    As mentioned in a previous post, I am not a fan of the ULTRA Bear ETFs, I much prefer a direct hedge on the underlying. Seems to work for me. The trigger for layering on additional 2016 BCS is when a significant price point is broken through, or when Phil thumps the table – as he recently did on AAPL, see above.

    Most of the positions were financed with Jan 2016 short puts. I love to get zero cost ABWs placed, but that is the exception rather than the rule. I figure if I can add on positions at net 20% of the price of the spread delta then I should be doing OK. 

    This approach only works in relatively large accounts, because as the Jan 2015 short calls go ITM the hit to buying power can be rather substantial, so you need to have plenty of buying power. That's why I do regular clean up operations on short calls or puts that are 80%+ profit. That is an area where I need to work on, as so often mentioned – taking profits earlier and choosing 'fresh horses'. But for my core positions, which equates to my big winners, I would rather stick with them – particularly when they are ITM, and make sure I have hedges directly in place. 

    There is one strategy that I have employed is that where a BCS is at 80% of total max profit, I will close it and then make up the opportunity cost by selling LEAP puts. That worked well for me on PCLN where the premiums are fat (but obviously risky). Probably applies to AAPL as well – must check it out.

    I am pretty direction agnostic at the moment. My current portfolio seems to do very well in flat to up market, and well in a moderately down market. It does not do well in a down down market. I don't believe anyone who tells me they know or believe which way the market is heading – of course it looks like there is more risk to the downside (obvious to most of us) so I hesitate to place large short put positions.

    Overall, famous last words discounted, I feel that I have found setups that I understand, that I know how to adjust (thanks to oodles of assistance from Phil) and satisfies my risk tolerance so I do not panic out of positions. But I know, that when it comes to managing a 20% down move in the markets I will be swimming like everyone else. Of course the major risk is that I will push it until that time arrives, and think why the hell didn't I cash out. Note to self: why the hell don't you cash out. But it seems that in current fine weather sailing the storms seem so far away, and my sails are set for fair weather. My fear is that I am sailing with out storm sails in the hold. Hopefully the end result is not man overboard :)


  86. Thanks for sharing Winston.  This is helpful.


  87. Speaking of Futures, Oil (/CLU4) gave us another bull entry at $93.  We keep taking them until they fail! 

    MoMos/Rustle – They'll likely be the last men standing but what a great play it will be if they ever do break with all those funds running for the exits at the same time.  Good point on dealership, they should open 5 more and make $1.8Bn.  Poor GM and F – this kind of stuff must drive them nuts…

    /TF/Ricbah – I'd wait for the cross back below.  I'm more comfortable poking at the Dow because it doesn't hurt so much when you're wrong.  We have 1,980 on /ES to watch and 4,040 on /NQ along with 16,925 on /YM so, if you have confirmation – then I like shorting any of those.   Dollar still 82.13 but could jam down on Fed Minutes and that will boost the markets – so VERY CAREFUL coming into the 2pm minutes.  

    AAPL/Mill – I'm guessing Jan6 is 2016 and Jan5 is 2015?  None of those seem to be puts so that means you have 56 longs and 76 shorts, which means you are generally bearish on AAPL so you know I don't like that right away.  In our Income Portfolio we were too bearish on AAPL so we doubled down on our longs – that was back in June, when it was much cheaper.  I can't help you until you explain to me what you are trying to accomplish with this position – do you want to be bearish on AAPL, do you want to be long?  Do you have more money to put in or do you need to take some off?  

    LOL StJ – I think you've got it! 

    POMO/Scott – Who needs POMO when you can borrow at 0.25%?  A bank can borrow $1Bn and lever it to $10Bn which they pay $25M a year in interest on and they can use that money on 5x margin to give themselves $50Bn in buying power and then all they have to do is accumulate a stock and schedule one of their analysts who's bullish on it to go on CNBC and Bloomberg tomorrow and talk it up.  It's not illegal, it's just good timing!  

    EXC/Palotay – As I said to Scott recently:

    Submitted on 2014/07/25 at 2:23 pm

    EXC/Scott – Looking good but kind of a falling knife at the moment.  Any reason you are unable to wait and see if it actually makes a bottom?  Some family emergency perhaps???  

    They just did a big dilution with 50M new shares issued, which was about 6% of the float and the dividend is $1.24 and I doubt they sold those shares to give back $60M in dividends so expect those to be lower along with earnings, of course, since the money they raised is for long-term projects.  So, down the road – sure it's a nice stock to be in but, short-term, I think the only reason they PAUSED going down is because they hit the 200 dma at $31 (yesterday).  

    From $37 to $29.60 is 20% and 15% would be $31.45 so those are the lines to watch.  They didn't complete the 20% move but blew through 10% and slowed but made 15% and a bit lower so 20% still a good target but, at the moment, held up by the 200 dma.  Figure the $7.40 move would have the 20% bounce and that's $1.50(ish) to $31.10, so that's weak bounce support and another $1.50 is $32.60 and THAT is when they start to look like they are recovering.  

    So, still in the range but I certainly do like them down here as a long-term play, now that they've had a month to form a base.  I'd stay conservative on them but not a bad time to begin a long-term position.

    Nas/Angel – It only takes AAPL and a few other guys.  

    Fed/Ging – 2pm.

    Wyoming/Shadow – If Dick Cheney didn't give you a clue 15 years ago that your state was f'd, I don't see why you are worried now.  blush

    Nice collection Winston, thanks for sharing!  

    Speaking of positions, STP is $140,464, LTP is $606,810 so $747K now and that means we will raise the stops (point at which we lighten up) to $735K now.  As long as we keep tacking on cash like this – no reason to change anything but we haven't had a good downside test in two weeks – so it's hard to say how we'll handle a pullback.  

    Income Portfolio finally had a good day, popping to 8.2%, $25KP sucking it at 12% (too bearish) and Butterfly Portfolio is still my favorite at 24.2%, as we haven't had to touch it for 6 weeks!  


  88. Winston,

    Thanks for sharing your portfolio…..Your last paragraph suggests you may be an "old salty". Anybody on our board with a nautical background. I'm a Licensed Master Mariner having served on Bulk carriers and Container ships. Communicate at dufferin70@gmail.com.

    Phil, seems the futures ran aground at the Europe close… haven't moved in a while!


  89. Pharm- just read that SNY got approval of its Gaucher drug. I guess this is the reason for the slide the past month or so. Do you know if this treatment is better, More cost effective, etc than PLX's treatment? If it is indeed better what else does PLX have? Is the plant technology used to produce the drugs a compelling enough argument for a higher valuation? 


  90. YHOO – not too late to join.. in addition to Phil's Jan bull call spread, I just added Jan/Oct 35/39 BCS @ 2.80. evaporates up while you wait for Alibaba and if they pop, you get a 45% return at minimum.


  91. jasu – yes, Winston sounds pretty salty.  I have never touched the helm of anything you would call a ship, although I crossed the Atlantic on the Constitution and the Independence [AmExport Lines] back in the day.  But I did spend much of the late '80s-early '90s on sailboards off the coast of Maui, which inspired levels of dread and spontaeneously prayer I have, thankfully, never surpassed since, and I am a member of an East coast yacht club, where I used to race Solings.  I still crank around on a boogie board on a windward Carib/Atlantic coast.


  92. Hi guys I was wondering if anyone had advice on how to hedge a portfolio in Australia against a currency decline against the USA $ I'ts my first day here so happy to be onboard….


  93. phil, thoughts on MCP?  i have some 2015 short $5 puts.  I am thinking of rolling them out to 2016 $2, converting the loss to all premium.  thx.


  94. Old Salty – I wish. I harboured a dream to learn to sail through the various stages of certification enough to gain my ocean master certificate. All toward the idea of buying an ocean going yacht and enjoying retirement with Mrs Winston. Unfortunately the discussion ended, as I remember, with words along the lines of 'over my dead body'. My answer was. well maybe one day then? But for those of you nautically inclined here's a nice tale to warm the cockles of your heart from the early sixties


  95. Taser challenge / Phil – These challenges don't achieve enough in my book. Today I am starting the "Jump of a bridge to save humanity". My first challenge is to the Koch brothers and Donald Trump!

    The only people who can issue the challenges are people having completed the challenge and myself. Well, mostly myself. At 3 a day, I am guessing the world will be a better place in 2015!


  96. phil

    i am bullish on aapl ……some short calls (started 540) got rolled to the oct's……….i had them covered with the bcs until 100 …we had spec;d that aapl would pull back from 100 ……….i guess im playing that pullback (if it comes) and hoping (i know) to cover / minimize the sht oct calls… i added addtl bcs i.e. the 21x  92.14,,,so net would like your thoughts as to

    wait to see what kind move post 100……..before roll or add more bcs or fine tune existing position…buy back the 6 jan 100s and look to add on a further up move in aapl……..not sure its wise to sell puts here (although we felt that way earlier.)

    im bullish aapl but at this level and with the market at this high….kind of watching and waiting and checking to see if / when change in trend ……….hope that answers your question……….tks…


  97. Low cost LEAP BCS example. Currently on offer BA 2016 115/125 @$5.80 BCS financed by sale of the 2016 105 put for $5.40 – so net $0.40 for the $10 spread which is 100% ITM with BA @$127 and a reasonable cushion on the downside.


  98. BA / Winston – That's a good example with BA moving up again and good support around 115 and 105!


  99. Nice on YHOO, Scott.  

    Dow popping to 16,945 – crazy up moves, great expectations ahead of the Fed.  Oil $93.26 so $93.25 is stop for another nice ride.  

    Welcome Triboy!  To some extent, it depends how you are investing your money but gold or gold miners (ABX is our favorite along with HMY and NAK as a speculative play) will keep you level to changing dollars in the very least.  HMY, for example, is at $3.11 and is moving up but not too fast yet.  You can buy the stock for $3.11 and sell the 2016 $3 puts for .65 and the $3 calls for $.70 and that drops your net to $1.76/2.38, which is shorthand for you are in 1x at net $1.76, with a call away at $3 with a 70% profit OR, if the stock is below $3, you will have another 1x assigned to you (because you sold the puts) for $3 and your average on 2/x would be ($1.76 + 3)/2 = $2.38.  

    So, your worst case is owning 2x of HMY at $2.38, which is .72 below the current $3.10 or 23% off the current price.  Your upside gain on committed cash is 70% if HMY simply stays over $3 so if, for example, you were $1M exposed to cash and your currency lost 10% to the Dollar, your HMY (as it's backed in gold) would likely hold it's value (or gain 10% as it's priced in dollars) and you can make back $50,000 by owning $70,000 worth of HMY or 40,000 shares at $3.10 ($124,000) less the sale of 400 2016 $3 calls at 0.70 ($28,000) and less the sale of 400 2016 $3 puts at .65 ($26,000) for net $70,000 out of pocket with an upside at $3 of $120,000.

    Of course, I'm not advocating putting all your eggs in a single hedge but HMY is the best deal at the moment, so that's the best example and, remember, you don't have to put on a whole hedge at once, you can hedge 1/4 and add to your hedge if your currency drops 2% and add more at 4% and 6%, etc.  That way, if it goes the other way – you don't get stung by a silly wrong-way bet!  

    Harmony Gold's (HMY) Q4 Earnings Reverse Year-ago Loss

    MCP/Lunar – Too much at the whim of China and what they decide to export.  I think the rare Earth market will be flooded in the future (is now) as new supply keeps coming on line in new countries.  Still, MCP is reasonable at $2 as long as they stay cash-positive. I'd just be careful not to over-commit and go for getting half back on MCP and find somewhere else to look for the other half you lost. 

    LOL, StJ!  Better make sure there are rules against bungee cords and height requirements for the bridges – you have to close all the loopholes with these guys.  Here's one sucker who'd probably do it:

    President George W. Bush

    AAPL/Mill – I'd see how the Fed is taken but you want to simplify the position so you have a clear 2016 bull call spread covering the short calls so you can manage the rolls effectively and add more longs (or short puts) as necessary.  

    BA/Winston – My only caution on them is you have to REALLY be prepared to own them in case there's an air disaster that drops them 20% overnight and 40% in quick succession.  It's something that would likely reverse over time but it's much more likely to happen to BA than IBM, for instance.  


  100. Bungee cords / Phil – They are allowed as long as they are longer than the bridge height and the bridge has to be one of NYC crossing! There…


  101. Fed Minutes will be out in minutes!  


  102. Greg / Replay

    I have just finished the replay and I found a couple of problems. The replay says it lasts for 03:46:22!!

    Then the actual seminar starts on 00:14:15. I actually thought there was something wrong with my setup! The seminar lasts up to 01:43:40 and then it keeps on rolling the presentation screen for another 2 hours.


  103. I'm still in /YM shorts (16,915 avg).  I think we get a nice sell-off here.  


  104. Minutes no surprise but hard to find language here that indicates rates aren't going up in the near future – so no boost for the markets.  Not sure how disappointed they'll be but I feel good about my bet.  

    During the interval between the June and July meetings, Chair Yellen appointed a subcommittee on communications issues chaired by Governor Fischer and including President Mester, Governor Powell, and President Williams. Governor Fischer indicated that the subcommittee would continue the work of previous subcommittees in helping the Committee frame and organize the discussion of a broad range of communications issues.

    Developments in Financial Markets and the Federal Reserve's Balance Sheet
    In a joint session of the Federal Open Market Committee (FOMC) and the Board of Governors of the Federal Reserve System, the manager of the System Open Market Account (SOMA) reported on developments in domestic and foreign financial markets. The manager also reported on the System open market operations conducted during the period since the Committee met on June 17-18, 2014, summarized the outcomes of recent test operations of the Term Deposit Facility (TDF), described the results from the fixed-rate overnight reverse repurchase agreement (ON RRP) operational exercise, and reviewed the ongoing effects of recent foreign central bank policy actions on yields on the international portion of the SOMA portfolio. In addition, the manager noted plans for a pilot program for increasing the number of the Open Market Desk's counterparties for agency mortgage-backed securities (MBS) operations to include a few firms that are too small to qualify as primary dealers. By unanimous vote, the Committee ratified the Desk's domestic transactions over the intermeeting period. There were no intervention operations in foreign currencies for the System's account over the intermeeting period.

    Monetary Policy Normalization
    Meeting participants continued their discussion of issues associated with the eventual normalization of the stance and conduct of monetary policy, consistent with the Committee's intention to provide additional information to the public later this year, well before most participants anticipate the first steps in reducing policy accommodation to become appropriate. The staff detailed a possible approach for implementing and communicating monetary policy once the Committee begins to tighten the stance of policy. The approach reflected the Committee's discussion of normalization strategies and policy tools during the previous two meetings.

    Participants expressed general support for the normalization approach outlined by the staff, though some noted reservations about one or more of its features. Almost all participants agreed that it would be appropriate to retain the federal funds rate as the key policy rate, and they supported continuing to target a range of 25 basis points for this rate at the time of liftoff and for some time thereafter. However, one participant preferred to use the range for the federal funds rate as a communication tool rather than as a hard target, and another preferred that policy communications during the normalization period focus on the rate of interest on excess reserves (IOER) and the ON RRP rate in addition to the federal funds rate. Participants agreed that adjustments in the IOER rate would be the primary tool used to move the federal funds rate into its target range and influence other money market rates. In addition, most thought that temporary use of a limited-scale ON RRP facility would help set a firmer floor under money market interest rates during normalization. Most participants anticipated that, at least initially, the IOER rate would be set at the top of the target range for the federal funds rate, and the ON RRP rate would be set at the bottom of the federal funds target range. Alternatively, some participants suggested the ON RRP rate could be set below the bottom of the federal funds target range, judging that it might be possible to begin the normalization process with minimal or no reliance on an ON RRP facility and increase its role only if necessary. However, many other participants thought that such a strategy might result in insufficient control of money market rates at liftoff, which could cause confusion about the likely path of monetary policy or raise questions about the Committee's ability to implement policy effectively.

    Participants generally agreed that the ON RRP facility should be only as large as needed for effective monetary policy implementation and should be phased out when it is no longer needed for that purpose. Participants expressed their desire to include features in the facility's design that would limit the Federal Reserve's role in financial intermediation and mitigate the risk that the facility might magnify strains in short-term funding markets during periods of financial stress. They discussed options to address these concerns, including methods for limiting the program's size. Many participants noted that further testing would provide additional information that could help determine the appropriate features to temper the risks that might be associated with an ON RRP facility.

    Participants also discussed approaches to normalizing the size and composition of the Federal Reserve's balance sheet. In general, they agreed that the size of the balance sheet should be reduced gradually and predictably. In addition, they believed that, in the long run, the balance sheet should be reduced to the smallest level consistent with efficient implementation of monetary policy and should consist primarily of Treasury securities in order to minimize the effect of the SOMA portfolio on the allocation of credit across sectors of the economy. A few participants noted that the appropriate size of the balance sheet would depend on the Committee's future decisions regarding its framework for monetary policy. Most participants supported reducing or ending re- investment sometime after the first increase in the target range for the federal funds rate. A few, however, believed that ceasing reinvestment before liftoff was a better approach because it would lead to an earlier reduction in the size of the portfolio. Most participants continued to anticipate that the Committee would not sell MBS, except perhaps to eliminate residual holdings. However, a couple of participants preferred to sell MBS in order to unwind the effect of the Federal Reserve's holdings on mortgage rates relative to other interest rates more rapidly than would occur as a result of repayments of principal alone. Some others noted that, given the uncertainties attending the normalization process and the outlook for the economy and financial markets, it could be helpful to retain the option to sell some assets.

    Participants agreed that the Committee should provide additional information to the public regarding the details of normalization well before most participants anticipate the first steps in reducing policy accommodation to become appropriate. They stressed the importance of communicating a clear plan while at the same time noting the importance of maintaining flexibility so that adjustments to the normalization approach could be made as the situation changed and in light of experience. Participants requested additional analysis from the staff on issues related to normalization as background for further discussion at their next meeting. A few participants also suggested that the Committee should solicit additional information from the public regarding the possible effects of an ON RRP facility, but some others pointed out that the Committee would continue to receive such feedback informally in response to its ongoing communications regarding normalization. The Board meeting concluded at the end of the discussion of approaches to policy normalization.

    Staff Review of the Economic Situation
    The information reviewed for the July 29-30 meeting indicated that real gross domestic product (GDP) rebounded in the second quarter following its first-quarter decline, but it expanded at only a modest pace, on balance, over the first half of the year. Consumer price inflation rose somewhat in the second quarter, but futures prices for energy and agricultural commodities generally were trending down over the next couple of years and longer-run measures of inflation expectations remained stable. The Bureau of Economic Analysis (BEA) released its advance estimate for second-quarter real GDP, along with revised data for earlier periods, on the second day of the FOMC meeting. The staff's assessment of economic activity and inflation in the first half of 2014, based on information available before the meeting began, was broadly consistent with the new information from the BEA.

    Measures of labor market conditions generally continued to improve during the intermeeting period. Total nonfarm payroll employment increased strongly in June, and the average monthly gain for the second quarter was the largest since the first quarter of 2012. The unemployment rate declined to 6.1 percent in June, the labor force participation rate was unchanged, and the employment-to-population ratio edged up. The rate of long-duration unemployment moved down, and the share of workers employed part time for economic reasons edged up; both measures remained elevated by historical standards. Initial claims for unemployment insurance declined further in recent weeks. The rate of job openings rose further in May, but the rate of hiring was unchanged and remained at a modest level.

    Industrial production increased in the second quarter, as higher output from manufacturers and mines more than offset a decline in the output of electric and natural gas utilities. Capacity utilization also moved higher in the second quarter. Automakers' production schedules indicated that light motor vehicle assemblies would increase in the third quarter, and readings on new orders from national and regional manufacturing surveys were consistent with moderate gains in factory output in the near term.

    Real personal consumption expenditures (PCE) rose more quickly in the second quarter than in the first, partly reflecting higher purchases of light motor vehicles. Key factors that tend to influence household spending remained positive in recent months. In particular, gains in equity values and home prices boosted household net worth, and real disposable personal income continued to rise in the second quarter. Consumer sentiment in the Thomson Reuters/University of Michigan Surveys of Consumers edged down in early July but was only slightly below its average over the first half of the year.

    Real expenditures for residential investment turned up in the second quarter after declining for two consecutive quarters. Starts of new single-family houses declined in June, but they rose for the quarter as a whole, and the level of permit issuance was consistent with increases in starts in subsequent months. In the multifamily sector, starts and permits also increased, on net, in the second quarter. Existing home sales moved up during the second quarter but remained below year-earlier levels, while new home sales declined. Home prices continued to rise through May, though the rate of increase was less rapid than earlier in the year.

    Real private expenditures for business equipment and intellectual property products increased in the second quarter. Nominal new orders for nondefense capital goods were little changed, on net, in May and June; however, the level of orders was above that for shipments, pointing to increases in shipments in subsequent months. Other forward-looking indicators, such as national and regional surveys of business conditions, also generally suggested moderate increases in business equipment spending in the near term. Real business expenditures for nonresidential construction also increased in the second quarter. Meanwhile, business inventories generally appeared well aligned with sales, apart from the energy sector, where inventories remained below year-earlier levels.

    Real federal government purchases decreased over the first half of the year, reflecting ongoing fiscal consolidation and continued declines in defense spending. In contrast, real state and local government purchases increased in the second quarter, as payrolls expanded at a faster pace than in the first quarter and outlays for construction moved higher.

    The U.S. international trade deficit narrowed in May as imports fell and exports rose. The rise in exports was concentrated in petroleum products and automotive parts. The fall in imports was led by declines in oil and consumer goods. For the second quarter overall, net exports exerted a moderate drag on the change in U.S. real GDP, compared with a more substantial negative contribution in the first quarter.

    U.S. consumer prices, as measured by the PCE price index, increased at a faster pace in the second quarter than in the first and were about 1-1/2 percent higher than a year earlier. Consumer energy price inflation rose in the second quarter, but retail gasoline prices, measured on a seasonally adjusted basis, subsequently moved lower through the fourth week of July. Consumer food price inflation also increased in the second quarter, reflecting the effects of drought and disease on crop and livestock production; however, spot prices for crops moved down in recent weeks, and futures prices pointed to lower prices for livestock in the year ahead. The PCE price index for items excluding food and energy also rose more quickly in the second quarter than in the first and was 1-1/2 percent higher than a year earlier. Near-term inflation expectations from the Michigan survey were little changed, on net, in June and early July, while longer-term expectations declined. Measures of labor compensation indicated that gains in nominal wages and employee benefits remained modest.

    Recent indicators suggested that foreign economic activity strengthened in the second quarter: Chinese GDP accelerated substantially, and Mexican data suggested a pickup there. Real GDP growth remained strong in the United Kingdom, and data for both Canada and the euro area showed improvement relative to the first quarter. By contrast, household spending in Japan dropped sharply following the country's April 1 consumption tax increase. In many advanced foreign economies, inflation picked up in the second quarter from very low rates in the first, although second-quarter inflation in the euro area remained well below the European Central Bank's objective.

    Staff Review of the Financial Situation
    Financial conditions eased somewhat, on balance, between the June and July FOMC meetings, although geopolitical risks weighed on investor sentiment at times. On net, yields on longer-term Treasury securities fell, equity prices rose, and the foreign exchange value of the dollar was little changed.

    Market participants characterized the Federal Reserve's monetary policy communications over the intermeeting period as suggesting a slightly more accommodative policy stance than had been expected. The anticipated path of the federal funds rate shifted down modestly following the June FOMC statement and the Chair's press conference. Policy expectations also edged down on the release of the minutes of the June FOMC meeting. Market participants took note of the discussion of monetary policy normalization in the minutes and, particularly, the discussion of the likely spread between the ON RRP rate and the IOER rate.

    Results from the Desk's July Survey of Primary Dealers, conducted shortly before the July FOMC meeting, indicated that market participants' expectations for the timing of the first increase in the federal funds rate and the subsequent policy path were largely unchanged from those reported in the survey taken just before the June meeting. The median dealer continued to see the third quarter of 2015 as the most likely time for the liftoff of the federal funds rate from the effective lower bound, although, relative to the June survey, the distribution of the modal expected time of liftoff became more concentrated around the third quarter of 2015.

    On balance, 10- and 30-year nominal Treasury yields both declined about 20 basis points over the intermeeting period. Concerns about tensions in Ukraine and the Middle East and the release of the June minutes appeared to contribute to the declines in longer-term Treasury yields. The decline in yields at the long end of the curve likely also reflected a continuation of a pattern that began last year, which some market participants attributed to a reduction in investors' expectations for longer-run economic growth and declines in term premiums. Measures of longer-horizon inflation compensation based on Treasury Inflation-Protected Securities were about unchanged.

    Conditions in unsecured short-term dollar funding markets remained stable over the intermeeting period. The Federal Reserve continued its ON RRP exercise and TDF testing. As a result of somewhat higher market rates on repurchase agreements, ON RRP take-up, on average, was a little lower than in the prior intermeeting period, although participation in the ON RRP exercise jumped to a record high at quarter-end on June 30. Moreover, the ON RRP exercise appeared to have continued to help firm the floor under money market interest rates. In TDF testing that ran from mid-May to early July, gradual increases in offer rates and in the maximum individual award amounts generally resulted in higher participation.

    The S&P 500 index rose about 1-1/2 percent over the intermeeting period, as earnings reports from a range of companies appeared to indicate that profits in the second quarter had increased modestly relative to the first quarter. The VIX, an index of option-implied volatility for one-month returns on the S&P 500 index, remained at low levels over the intermeeting period.

    Credit flows to nonfinancial corporations remained strong in the second quarter. Gross issuance of investment- and speculative-grade bonds stayed brisk. Commercial and industrial loans on banks' balance sheets continued to increase at a robust pace, consistent with reports in the July Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) of easier lending standards and terms as well as stronger loan demand from firms of all sizes. Issuance of leveraged loans by institutional investors also remained solid.

    Credit conditions in markets for commercial real estate (CRE) improved further in the second quarter. According to the July SLOOS, banks continued to ease their standards and report stronger demand for CRE loans during the second quarter on balance. CRE loans on banks' books continued to expand moderately, and issuance of commercial mortgage-backed securities remained solid.

    Credit conditions in residential mortgage markets generally remained tight over the intermeeting period. Mortgage interest rates held steady around 4 percent, and origination volumes continued to be low. According to the July SLOOS, underwriting standards on prime home-purchase loans appeared to have eased further at banks during the second quarter but, on net, standards on all types of residential real estate loans reportedly remained tighter than the midpoints of the respondent banks' longer-term ranges.

    In contrast to mortgage lending, consumer credit continued to expand robustly in May, largely on the strength of auto and student loans, though credit card debt picked up somewhat as well. Banks responding to the July SLOOS indicated that demand for auto loans strengthened further in the second quarter. In addition, demand for credit card loans increased, and a few large banks reported having eased lending policies for such loans.

    Benchmark yields on long-term sovereign bonds in the advanced foreign economies continued the downward trend that began at the start of the year, with rising tensions in the Middle East and Ukraine during the intermeeting period likely adding some to the downward pressure. Concerns about one of Portugal's largest banks and about litigation risks facing European banks weighed on European financial markets, prompting yield spreads on peripheral sovereign bonds in the euro area to widen and equity price indexes for European banks to decline. Intermeeting data releases on euro-area industrial production came in below market expectations, also weighing on headline equity markets in the region. Mixed news from emerging market economies, including better-than-expected GDP growth in China and concerns about Argentina's scheduled debt payments, generally had modest market effects. Changes in emerging market equity indexes were mixed over the period, and emerging market bond yields generally declined. The broad trade-weighted dollar was little changed, on net, over the intermeeting period.

    The staff's periodic report on potential risks to financial stability concluded that relatively strong capital positions of U.S. banks, subdued use of maturity transformation and leverage within the broader financial sector, and relatively low levels of leverage for the aggregate nonfinancial sector were important factors supporting overall financial stability. However, the staff report also highlighted that low and declining risk premiums, low levels of market volatility, and a loosening of underwriting standards in a number of markets raised somewhat the risk of an eventual correction in asset valuations.

    Staff Economic Outlook
    The data received since the staff prepared its forecast for the June FOMC meeting suggested that real GDP growth was even weaker in the first half of the year than had been anticipated.3 However, the staff left its forecast for real GDP growth in the second half of the year essentially unrevised because other indicators of economic activity appeared comparatively strong in relation to real GDP during the first half of the year. In particular, payroll employment continued to advance at a solid pace, the unemployment rate declined further, industrial production posted steady gains, and readings from business surveys were strong. The staff's medium-term forecast for real GDP growth was also little revised. The staff continued to project that real GDP would expand at a faster pace in the second half of this year and over the next two years than in 2013. This forecast was predicated on a further anticipated waning of the restraint on spending growth from changes in fiscal policy, continued improvement in credit availability, increases in consumer and business confidence, and a pickup in foreign economic growth. In response to a further downward surprise in the unemployment rate, the staff again lowered its forecast for the unemployment rate over the projection period. To reconcile the downward revision to real GDP growth for the first half of year with an unemployment rate that was now closer to the staff's estimate of its longer-run natural rate, the staff lowered its assumed pace of potential output growth this year by more than it marked down GDP growth. As a result, resource slack in this projection was anticipated to be somewhat narrower this year than in the previous forecast and to be taken up slowly over the projection period.

    The staff's near-term forecast for inflation was revised up a little, as recent data showed somewhat faster-than-anticipated increases that were judged to be only partly transitory. With a little less resource slack in this projection, the medium-term forecast for inflation was also revised up slightly. Nonetheless, as in the June projection, inflation was projected to step down in the second half of this year and to remain below the Committee's longer-run objective of 2 percent over the next few years. With longer-run inflation expectations assumed to remain stable, changes in commodity and import prices expected to be subdued, and slack in labor and product markets anticipated to diminish only slowly, inflation was forecast to rise gradually and to reach the Committee's objective in the longer run.

    The staff continued to view uncertainty around its projections for real GDP growth, inflation, and the unemployment rate as roughly in line with the average of the past 20 years. Although the risks to GDP growth were still seen as tilted a little to the downside, as neither monetary policy nor fiscal policy was viewed as well positioned to help the economy withstand adverse shocks, these risks were considered to be more nearly balanced than in the previous projection. The staff continued to view the risks around its outlook for the unemployment rate and for inflation as roughly balanced.

    Participants' Views on Current Conditions and the Economic Outlook
    In their discussion of the economic situation and the outlook, meeting participants generally viewed the rebound in real GDP in the second quarter and the ongoing improvement in labor market conditions as supporting their expectations for continued moderate economic expansion with labor market indicators and inflation moving toward levels the Committee judges consistent with its dual mandate. Although most participants continued to view the risks to the outlook for economic activity and the labor market as nearly balanced, some pointed to possible sources of downside risk, including persistent weakness in the housing sector, a continued slow rise in household income, or spillovers from developments in the Middle East and Ukraine. Participants noted that inflation had moved somewhat closer to the Committee's 2 percent longer-run objective and generally saw the risks of inflation running persistently below their objective as having diminished somewhat.

    Household spending appeared to be rising moderately and was expected to contribute to stronger economic growth in the second half of the year than in the first half. Business contacts in several Districts reported a pickup in consumer spending after the weakness in the first quarter. However, a few participants raised concerns that households might remain cautious, with the personal saving rate staying elevated, or that the slow rise in wages and income might be insufficient to support stronger consumer spending.

    The recovery in housing activity remained slow according to most participants. Although mortgage rates were still low and housing appeared to be relatively affordable, various factors were seen as restraining demand, including low expected income and high levels of student debt as well as difficulty in obtaining mortgage credit, particularly for younger, first-time homebuyers. It was also noted that the weakness in homebuilding along with the continued rise in house prices suggested that supply constraints were also weighing on construction activity. A couple of participants indicated that some demand appeared to have shifted to rental properties. The rising demand for rentals was in part being satisfied by investors buying homes for the rental market; it was also providing support for multifamily construction. Some participants noted their concern that a number of the factors restraining residential construction might persist, damping the housing recovery for some time.

    Many participants reported continued improvement in sentiment among their business contacts and noted positive readings from recent regional and national surveys of manufacturing and service-sector activity. In particular, participants cited strength in airlines, railroads, trucking firms, businesses supplying the motor vehicle and aerospace industries, and those in the high-tech sector. In addition, higher energy prices continued to provide support for activity in the energy sector. In the agriculture sector, favorable growing conditions for crops had lowered prices but increased the profitability of livestock producers. The reports from their business contacts provided support for participants' expectation of stronger economic growth in the second half of the year. In some cases, the information from businesses suggested increases in spending on capital equipment or a pickup in investment in commercial and industrial construction and transportation. Contacts in a number of areas indicated that credit was readily available, and reports from participants' business and financial contacts indicated a strengthening in demand for bank credit. However, several participants reported that businesses remained somewhat uncertain about the economic outlook and thus were still cautious about stepping up capital spending and hiring. Federal fiscal restraint reportedly continued to depress business activity in some areas dependent on federal spending.

    Labor market conditions improved in recent months according to participants' reports on developments in their Districts as well as a range of national indicators. The improvement was reflected not only in a pickup in payroll employment gains and a noticeable decline in the overall unemployment rate, but also in reductions in broader measures of underutilization such as long- duration joblessness and the number of workers with part-time jobs who would prefer full-time employment. The labor force participation rate was stable, and a couple of participants pointed out that the transition rate from long-duration unemployment to employment had moved up. Moreover, some participants cited positive signs of increased hiring and turnover in the labor market, including increases in job openings and hiring plans, higher quit rates, and apparent improvements in matching workers and jobs.

    Participants generally agreed that both the recent improvement in labor market conditions and the cumulative progress over the past year had been greater than anticipated and that labor market conditions had moved noticeably closer to those viewed as normal in the longer run. Participants differed, however, in their assessments of the remaining degree of labor market slack and how to measure it. A few argued that the unemployment rate continues to serve as a reliable summary statistic for the overall state of the labor market and thought that it should be the Committee's principal focus for evaluating labor market conditions. However, many participants continued to see a larger gap between current labor market conditions and those consistent with their assessments of normal levels of labor utilization than indicated by the difference between the unemployment rate and estimates of its longer-run normal level. These participants cited, for example, the still-elevated levels of long-term unemployment and workers employed part time for economic reasons as well as low labor force participation. Several participants pointed out that the recent drop in the unemployment rate had been associated with progress in reabsorbing the long-term unemployed into jobs and reducing part-time work, suggesting that slack was diminishing and could be reduced further as employment opportunities expanded.

    Labor compensation was still rising only modestly. Many participants continued to attribute the subdued rise in wages to the remaining slack in the labor market; it was noted that the elevated level of relatively low-paid part-time workers was holding down overall wage increases. Several other participants pointed to reports that wage pressures had increased in some regions and occupations that were experiencing labor shortages or relatively low unemployment. However, a couple of participants indicated that the pass-through of labor costs has been more attenuated since the mid-1980s and that wage pressures might not be a reliable leading indicator of higher inflation.

    Inflation firmed in recent months, and most participants anticipated that it would continue to move up toward the Committee's 2 percent objective. Many of them expected that inflation was likely to rise gradually over the medium term, as resource slack diminished and inflation expectations remained stable. In support of their assessments, several reported results from various statistical models of inflation and inflation expectations. Most now judged that the downside risks to inflation had diminished, but a few participants continued to see inflation as likely to persist below the Committee's objective over the medium term. Several commented that the upside risks had not increased. However, a few others argued that the recent tightening of the labor market had increased the upside risks to inflation and inflation expectations, particularly in an environment in which the economic expansion was expected to strengthen further.

    In their discussion of financial stability issues, participants noted evidence of valuation pressures in some particular asset markets, but those pressures did not appear to be widespread and other measures of vulnerability in the financial system were at low to moderate levels. As a result, they generally saw the vulnerabilities in the financial system as well contained. Some participants discussed how the Committee might better incorporate financial stability risks in its discussion of macroeconomic risks. They also suggested that the Committee consider how promptly various financial stability concerns could be addressed, if need be, and which tools, including monetary policy and regulatory responses, would be most timely and effective in doing so.

    With respect to monetary policy over the medium run, participants generally agreed that labor market conditions and inflation had moved closer to the Committee's longer-run objectives in recent months, and most anticipated that progress toward those goals would continue. Moreover, many participants noted that if convergence toward the Committee's objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated. Indeed, some participants viewed the actual and expected progress toward the Committee's goals as sufficient to call for a relatively prompt move toward reducing policy accommodation to avoid overshooting the Committee's unemployment and inflation objectives over the medium term. These participants were increasingly uncomfortable with the Committee's forward guidance. In their view, the guidance suggested a later initial increase in the target federal funds rate as well as lower future levels of the funds rate than they judged likely to be appropriate. They suggested that the guidance should more clearly communicate how policy-setting would respond to the evolution of economic data. However, most participants indicated that any change in their expectations for the appropriate timing of the first increase in the federal funds rate would depend on further information on the trajectories of economic activity, the labor market, and inflation. In particular, although participants generally saw the drop in real GDP in the first quarter as transitory, some noted that it increased uncertainty about the outlook, and they were looking to additional data on production, spending, and labor market developments to shed light on the underlying pace of economic growth. Moreover, despite recent inflation developments, several participants continued to believe that inflation was likely to move back to the Committee's objective very slowly, thereby warranting a continuation of highly accommodative policy as long as projected inflation remained below 2 percent and longer-term inflation expectations were well anchored.

    Committee Policy Action
    In their discussion of monetary policy in the period ahead, members judged that information received since the Federal Open Market Committee met in June indicated that economic activity rebounded in the second quarter. Household spending appeared to be rising moderately, and business fixed investment was advancing, while the recovery in the housing sector remained slow. Fiscal policy was restraining economic growth, al-though the extent of the restraint was diminishing. The Committee expected that, with appropriate policy accommodation, economic activity would expand at a moderate pace with labor market indicators and inflation moving toward levels that the Committee judges consistent with its dual mandate.

    With the incoming information broadly supporting the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back to the Committee's 2 percent objective, members generally agreed that a further measured reduction in the pace of asset purchases was appropriate at this meeting. Accordingly, the Committee agreed that, beginning in August, it would add to its holdings of agency MBS at a pace of $10 billion per month rather than $15 billion per month, and it would add to its holdings of Treasury securities at a pace of $15 billion per month rather than $20 billion per month. The Committee again judged that, if incoming data broadly supported its expectations that labor market indicators and inflation would continue to move toward mandate-consistent levels, the Committee would likely reduce the pace of asset purchases in further measured steps at future meetings. However, the Committee reiterated that asset purchases were not on a preset course and that its decisions remained contingent on the outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

    Members discussed their assessments of progress--both realized and expected--toward the Committee's objectives of maximum employment and 2 percent inflation and considered enhancements to the statement language that would more clearly communicate the Committee's view on such progress. Regarding the labor market, many members concluded that a range of indicators of labor market conditions--including the unemployment rate as well as a number of other measures of labor utilization--had improved more in recent months than they anticipated earlier. They judged it appropriate to replace the description of recent labor market conditions that mentioned solely the unemployment rate with a description of their assessment of the remaining underutilization of labor resources based on their evaluation of a range of labor market indicators. In their discussion, some members expressed reservations about describing the extent of underutilization in labor resources more broadly. In particular, they worried that the degree of labor market slack was difficult to characterize succinctly and that the statement language might prove difficult to adjust as labor market conditions continued to improve. Moreover, they were concerned that, despite the improvement in labor market conditions, the new language might be misinterpreted as indicating increased concern about underutilization of labor resources. At the conclusion of the discussion, the Committee agreed to state that labor market conditions had improved, with the unemployment rate declining further, while also stating that a range of labor market indicators suggested that there remained significant underutilization of labor resources. Many members noted, however, that the characterization of labor market underutilization might have to change before long, particularly if progress in the labor market continued to be faster than anticipated. Regarding inflation, members agreed to update the language in the statement to acknowledge that inflation had recently moved somewhat closer to the Committee's longer-run objective and to convey their judgment that the likelihood of inflation running persistently below 2 percent had diminished somewhat.

    After the discussion, all members but one voted to maintain the Committee's target range for the federal funds rate and to reiterate its forward guidance on how it would assess the appropriate timing of the first increase in the target rate and the anticipated behavior of the federal funds rate after it is raised. One member, however, objected to the guidance that it would likely be appropriate to maintain the current range for the federal funds rate for a considerable time after the asset purchase program ends because it was time dependent and did not recognize the implications for monetary policy of the considerable progress that had been made toward the Committee's goals.


  105. Wow, speaking of manipulation – check out the WSJ headline of the moment:

    Stocks Hold Gains After Fed Minutes


  106. This is a start a of nice 24 hours of economic numbers:

    China and Japan PMI tonight
    Europe PMI tomorrow
    US PMI and leading indicators tomorrow
    Philly Fed tomorrow as well

    Strap on your seatbelts!


  107. STJ/VXX – I've been having some luck trading in and out of short puts in the VXX, against my core long 2016 puts.  I'm currently holding the 2016 $25 puts, and just sold the 2016 $15 puts for $1.50.  When the VIX/VXX spikes, I will buy back my short put for around $1.10.  Rinse and repeat.  This worked a few weeks ago during the last VIX spike.  It is hard to see the downside.  I guess if the VXX never spike again, then I will have to settle for having my gains capped on my long puts at $10, which would be an acceptable outcome considering my current net of $5.50 on the position.  I hope to whittle down my basis like this throughout the next year.

     

    Thoughts?


  108. Gains / Phil – Technically the markets are still above where they were in 2008! They didn't specify which gains.


  109. We'll see how well the RUT does at 1,150 but that's still a good bounce play (/TF) and YM bounced off 16,900 so half out there insures a profit stopping the rest out at 16,915.

    Don't forget Jackson Hole, StJ.  Yellen gets the big speech on Friday.  


  110. VXX / Palotay – It's not a bad idea but then you fall more into swing trading than long term trading and your timing will matter more than just holding the long puts! And the spreads are wide in the Jan 16 options. Although capping your max gain at $10 is not the worst output since that would most likely be close to a double for you. 

    In essence, no huge risk, but requires more maintenance!


  111. Draghi also speaks in Jackson Hole on Friday Phil… 


  112. Low cost LEAP spreads on one of Phil's faves:

    RIG ($38.52) 2016 33/38 BCS @$2.85 (100% ITM) financed by the sale of short 2016 30 puts @$2.20; so $0.65 on the $5 spread. 


  113. SAINTY DRAG GEE who can take him seriously at this point…BRITS are looking pretty smug right now


  114. YELLEN YAPS MARKET GAPS


  115. Who can you take seriously in Europe anymore Angel?


  116. I'll have to remember that – short the market before the statement and go long once Yellen hits the podium!


  117. Phil – What are your thoughts on NE here? Over the years it has always been a good buy at this level. thx


  118. Phil:  Regarding the Dec 40/50 BCS on SQQQ.  My net cost (after the roll down of the original 43 longs to the 40s) is $2.43.  The spread is currently trading at about $1.37.  Do you suggest adding more or adjusting in any way, or just continuing to hold it as a hedge?  I have a large Apple position encompassing stock, conservative spreads (mostly Jan 15) and now way out-of-the-money short puts (also mostly Jan 15).  I am selling the stock slowly into strength but my position is still pretty massive.  Thank you for any thoughts.


  119. Replay/Akad – But you do have to admit that screen is fascinating!  

    Well, markets up and up as the minutes are digested – down is simply not an option for this market.  

    Draghi/StJ – Thanks, plus every other economist/banker has the press' ear.  

    Fed minutes key extracts:

    Investors are already looking to the September meeting of policymakers at the Federal Reserve, Wednesday marked the release of the minutes for July.

    The July 29-30 meeting of the Federal Open Market Committee (FOMC) was marked by a dissent from Charles Plosser, the president of the Philadelphia Fed.

    Here are some of the key extracts from the meeting.

    On inflation

    Participants noted that inflation had moved somewhat closer to the Committee's 2 per cent longer-rub objective and generally saw risks of inflation running persistently below their objective as having diminished somewhat.

    On the jobs market

    Participants generally agreed that both the recent improvement in the labor market conditions and the cumulative progress over the past year has been greater than anticipated and that labor market conditions had moved noticeably closer to those viewed as normal in the longer run.

    Labor compensation was still rising only modestly. Many participants contributed to attribute the subdued rise in wages to the remaining slack in the labor market.

    On risks to financial stability

    Participants noted evidence of valuation pressures in some particular asset markets, but those pressures did not appears to be widespread and other measures of vulnerability in the financial system were at low to moderate levels.

    As a result, they generally saw the vulnerabilities in the financial system as well contained.

    On raising rates

    Some participants viewed the actual and expected progress towards the Committee's goals as sufficient to call for a relative prompt move toward reducing policy accommodation to avoid overshooting the Committee's unemployment and inflation objectives over the medium term.

    These participants were increasingly uncomfortable with the Committee's forward guidance.

    In their view, the guidance suggested a later initial increase in the target federal funds rate as well as lower future levels of the funds rate than they judged likely to be appropriate.

    However, most participants indicated that any change in their expectations for the appropriate timing of the first increase in federal funds rate would depend on further information on the trajectories on the trajectories of economic activity, the labor market, and inflation.

     

    Source: Novel Investor

    NE/Cafords – I'm a little cool on the energy sector at the moment but, long-term, NE is a good company and a nice 4.4% dividend while you wait.  Nothing wrong with dipping a toe in with the short 2016 $25 puts at $2.70 and you can use that money to buy the $25/30 bull call spread at $2.20 for a net .50 credit so worst case is net $24.50 entry (10% off) and best case is $5.50 profit at $30.  

    S&P knock, knock, knockin' on 1,987…

    SQQQ/John – It's supposed to lose money if the market is doing well – I just hope you have the bullish bets to balance it out.  No sense throwing good money after bad just yet but yes, we'll want to make and adjustment, probably rolling the $40s out to March at some point.  Keep in mind the Dec $40s are still $2.40, that's about the net entry so, when you spend $2.50 to roll them to the March $35s ($4.90) you are picking up $5 in additional upside and buying 4 more months of insurance for $2.50 more – that's the running cost of our quarterly insurance – hopefully we'll never have a catastrophe that let's us collect!    


  120. Question for anybody who feels like commenting regarding my 401k and my allotments.

    I'm 26 years old for started so I'm obviously looking at very long time frames.  I have the option of 17 different funds for my 401k but I'll go ahead and exclude a couple of those such as my employer (RTN who I already get 90% of my income from and I don't have options on them) and all the fixed income funds which I'm not interested in at this point.  At present, I don't have brokeragelink so this is a strictly long-equity account until it gets big enough for me to more actively manage with options.  My choices are:

    Roughly SPY with a gross fee of 0.02%

    Roughly IWM with a gross fee of 0.05%

    Roughly MSCI World with a gross fee of 0.8%

    Roughly MSCI AC Wld ex US with a gross fee of 0.09%

    I can also hold the following securities/mutual funds

    VITPX, TRSSX, ODVIX, VGSNX, JABNX

    I'm currently allocated with 40% TRSSX, 30% MSCI AC Wld ex US, and 30% ODVIX.  My returns YTD have only been 4.5% but that's mostly courtesy of the small cap performance (TRSSX)


  121. Meanwhile, /ES testing 1,985 – very bullish over that line.  /YM 16,965 so good job taking the quick money earlier!   /NQ 4,045 and /TF 1,157 is still the laggard with NYSE at  10,953 and we want to see 11,000 to confirm a new leg higher for the indexes.  

    /CLV4 testing $93.50 again and that's another time we should be taking profits.  /CLU4 closed at $96.40.

    /YG $1,291, /SI $19.445, /HG $3.17 (big pop off $3.10, so I'd take that and run!), /NG $3.829 and /RB $2.715.

    Allotments/JPH – Don't forget SPY pays a 1.85% dividend, that's a nice plus.  0.8% is an ugly fee on MSCI – I'd avoid.  Keep in mind that, in 50 years, they are going to take 40% of your money – that's the only guarantee there!  If you want to play developing markets (maybe 20%), ODVIX is nice and I like VGSNX for the dividends (3%) and REITs are a nice hedge against inflation but, unfortunately, they already had a great year so maybe just a tiny bit and drip into them on any downturns.  


  122. Go USA! Markets up! Dollar up! Oil up!


  123. Go/Scott – As I said on Monday – America, F*ck Yeah!  We are definitely feeling good about ourselves this week…


  124. Can someone explain this for a newbie to selling puts. I sold the ARO $3 2016 puts for .70 when Phil recd it. Price was 3.17 at the time. Now 3.88 and the position is exactly flat. I’m sure it just has to do with the bid/ask or maybe something with premiums that I don’t understand.


  125. Speaking of the dollar, 82.60 to 82.70 or so looks like a nice S/R line based on last year's summer action. These last 2 days have been pretty impressive… Although that means that we are losing the race to the bottom!


  126. TGT is just silly today


  127. I've been selling puts in my IRA all year and haven't had anything put to me.  Running out of good IRA-type companies to sell puts on. 


  128. ARO / dforster – When did you sell that? That put went all the way to $0.90 the last 3 day or so and now is back to $0.70 or so. 


  129. Silly good rperi…


  130. Indexes/Phil – which will be next to be a "me too" new high? Dow?


  131. ARO/Dforster – The last sale on the 2016 $3 puts was .65 but you don't get immediate feedback from long-term put sales as it takes more than a brief move up to adjust the long-term volatility of an out of the money put.  That's why I stress NOT looking at your balance and concentrating on whether or not your positions are on or off track.  Over time, the options take care of themselves (as demonstrated in LTP and Income Portfolios) but, in the short-run, your portfolio doesn't look very pretty.  

    Dollar/StJ – Euro, Pound and Yen flying down this week and our Fed SEEMS to be in a tightening mood.  Even so, the taper is absolutely a tightening and we've been following through on that all year so I don't think we're going to get a strong reversal and that makes the market move up much more impressive this week.

    TGT/Rperi – Up 2.5% on those earnings – F Yeah!  


  132. I know for you StJ.  Time to cover soon.


  133. Speaking of silly, BTU up 1.6% today after a 2.8% day yesterday.


  134. Me too/Scott – Dow and RUT are now very laggy, Dow most so.  Over 17,000 we might want to play DDM instead of DXD. 


  135. Markets / Phil – It's been really interesting to see markets move in concert with the dollar over the last month or so! Although I don't know that the correlation is as strong as we think it is:

    Dollar pretty stable over the last 3 years in the face of a market up some 50%!


  136. STP down to 38% so a half-point gain in the market is costing us $2K.  LTP, however, is 21.4% now, up $1,000 since this morning so we're getting to the point where we may be too bearish in the STP if the market goes higher as there are upside caps to our LTP positions (they are almost all self-hedged).  We'll review our positions tomorrow.  

    Markets/StJ – Well there's a flight to safety in US Equities as well as our currency at the same time.  Doesn't invalidate the correlation, which only applies to short-term changes with other things being equal anyway.  The Dollar popped and we dropped but now we're recovering – all according to plan so far.  What I was saying above is that I don't expect the Dollar to drop and give us an extra boost in the short-run, as the money is still pouring in.  

    UUP WEEKLY

    SPX WEEKLY

    VIX 11.66 – can we get to 10? 


  137. Is Draghi going to juice the markets more or let a little air out? What's everyone's call?


  138. Jones Act.. I didn't know about this (re oil tankers)

    http://gcaptain.com/crazy-uncle-known-jones-act/


  139. Draghi/Scott – GOOSE!

    Here's a good example of how the short-term Dollar correlation works:


  140. Big negative stick at the Bell, I wonder what the relative volume was?  

    Closing on Futures looks like 16,955, 1,984, 4,040 and 1,155.


  141. Jones/Scott – Hadn't been much of an issue until we began exporting so much petroleum.  


  142. is nkd good for a short


  143. Not over 15,500 – we're up 0.5% and Japan didn't match our 0.5% yesterday so I think they may snap up first though our finish does make the short tempting.  I think I still prefer /YM (Dow) short overnight at 16,950.


  144. Sorkin was on Bill Maher and barely said anything, Maybe the conversation did not involve enough economics.

    Anyone see this stat. from CNBC ?

    http://www.cnbc.com/id/101933858


  145. The Yen is making a big move up here.  Maybe another visit up to 105 before the month is over.


  146. $TRIN = 0.50
    $TRINQ = 0.47
    $VIX = 11.80
    $TICK = 98.00
    $NYDNV:$NYUPV = 0.47


  147. Thanks phil and stj.

    I sold it for .70 on 7/21. It has gone up but back to pretty much flat. But I understand now.. the selling of puts takes some patience.


  148. Russell lagging and below its 50 DMA again. Nasdaq might be topping off a bit although so far ahead of the other indices!

    While we sleep we'll hear made up numbers from China, meddling numbers from Japan and probably bad news from Europe. Has to be bullish for US equities because everything is…


  149. dforster2 – Re: Jan16 ARO P3 …

    The Delta is -0.2305 and Theta is -0.0009 so at the current price, your put option will decay VERY SLOWLY (per day), and if/when for every dollar the underlying equity moves up, your put option will move in your favor approximately 23 cents. Of course, the other Greeks affect your option as well …


  150. akademia – I'll have to see if I can trim that file down and I'll let webex know that their "recording" feature is still not working properly. (Last week it took over 24 hours to be ready, this week… extra recording! Good stuff! Ha!)


  151. Replay/Phil

    Yes, it is like watching paint dry!! :-) )


  152. We have not had one of these word clouds in a while – Fed Minutes:


  153. Phil – If I didn't know better it looks like your GF is looking to run in 2016:

    http://talkingpointsmemo.com/livewire/warren-rescued-from-hillary-2016-question

    A reporter with Boston's Fox affiliate WFXT asked Warren point blank: “Do you believe Hillary Clinton is still best choice for your party coming up for 2016?"

    “You know, Hillary is terrific," Warren said, after a brief pause.

    “Is she still the best choice though?” the reporter asked. She then repeated the question once more after the senator appeared to have trouble hearing her.


  154. Hillary vs. Libby- can't wait !!!


  155. Rperi- I am curious how you have managed the loss of margin when selling puts for your IRA? This has been a problem for me, since TDAmeritrade requires maintaining the full amount required should the options get exercised at expiration. So if I sell a put at a $30 strike I am losing $3000 of buying power which alone isn't bad, but it adds up fast. I have been doing better with covered calls, spreads and in some cases buying stock outright and then trading options. 

    Salty dogs- I was certified to bareboat charter up to 100' yachts back the 80's and 90's and my wife and I had some of our most memorable vacations first on the Chesapeake for practice and later in the British Virgin Islands on a 55' catamaran that was absolutely beautiful with another couple. Unfortunately, that trip was marred by the craziness of other sailors who were not qualified to be out on their own. We were in a busy anchorage one night when at 4 AM we were hit by another boat that had come off its anchor and rammed us pulling us off ours and entangling the anchor lines as we careened about. I ended up with a huge gash on my back from stumbling around in the dark, then diving to separate the lines in the middle of the night. My poor wife was so shaken at the thought of my disappearing under water,  that I never got her to do this again. What a shame, because it was unbelievable to lay on the deck at night staring at stars under clear unpolluted skies. 


  156. More on food trucks:

    http://qz.com/251822/food-truck-nation-america-mapped-by-its-kati-rolls-bulgogi-tacos-and-artisanal-slushies/

    Two researchers—Todd Schifeling at the University of Michigan and Daphne Demetry from Northwestern University—took advantage of that social-media trail to conduct a quasi census of the new wave of US food trucks. Using Twitter, they counted 4,119 trucks—all of which served their first meals since 2008—in the 289 US cities with populations over 100,000. And they dug into the data to explain why food trucks have clustered in certain areas.

    Some of their conclusions are intuitive. Cities with more college graduates, more workers in creative industries, more diverse populations, and more craft breweries and farmer’s markets (institutions that align with what Schifeling and Demetry call “the new authenticity economy”) have more food trucks. As do urban areas that have fewer chain and fast food restaurants.

    That suggests food trucks aren’t simply an economic phenomenon—a result of the rising costs of brick-and-mortar stores—but a social one. So if you’re looking for a promising city to park your kati-roll-BBQ-fusion business, you might first check if there’s a place to buy kale nearby.


  157. Phil= Have you ever seen the movie that the song "America F*ck Yeah" is from? It is a brilliant satire from the South Park guys, Team America:World Police. I think it is one of the funniest movies ever made, spoofing every spy movie and pop culture as only those guys can, and for extra fun it was made using marionettes instead of actors. Of course, one of those marionettes is an amazing actor himself, who we first see in the Broadway show "LEASE" .


  158. There are 3 types of people in this world Craig…..


  159. Jro-one of the greatest motivational speeches ever on film. I quote it frequently, probably because it embarrasses my kids every time I deliver it as if it is a serious philosophy that I believe in deeply. It does make a lot of sense when you break it down! 


  160.  Not to sound overly Marxist, but I've heard it said that there are three types of people in the world — those who can count, those who can't count, and those who don't count.  And then there is the diatribe in "Team America, World Police", not reproducible in polite company!!


  161. March 15 options; I've only just noticed that the March 2015 series of options are now available on many stocks. Up until now, the only place to roll your January 2015 options was January 2016 – now there are nearer term alternatives.


  162. I read this tonight, and would guess that both the dollar and U.S. stocks can rise together, since that's probably where a good deal of the newly-purchased dollars are being stored:  "Is there a more consensus trade then being bullish on the US dollar? With a) the US economy outperforming those of Europe and Japan, with b) the Federal Reserve looking to withdraw some of the extra-ordinary stimulus that it has deployed in the past five years, just as the need for the European Central Bank, and possibly the Bank of Japan, to become a lot more aggressive becomes ever starker, with c) the Pentagon limiting its defense spending and its costly military involvements around the world… being bullish on the US dollar makes sense. And there are many more arguments one can make in hitching one’s wagon to the dollar."


  163. Good morning! 

    We got a huge pop in the Futures as more bad news pours in which, of course, is good news because – MORE FREE MONEY must be coming:

    Jackson Hole: 'Tremendous' Downside Risks If Yellen Doesn't Go Full-Dovish

    Euro-Area Shows Signs of Weakening as Surveys Miss Forecasts

    Draghi Gets Weaker Euro With Economy Needing It Most

    European Stocks Climb as Investors Weigh Fed, Data - European stocks advanced as bets the Federal Reserve will continue to support the economy outweighed a slowdown in manufacturing growth in China and the euro area. U.S. index futures were little changed, while Asian shares fell.

    Fed Optimism Spurs Record Bets Against Stock Voalitlity

    Alternative Measures Suggest Weaker Economy

    Norway’s Wealth Fund Slows Investment in Emerging Markets

    European Gas Reverses Biggest Drop Since 2009 on Ukraine

    Europe Investment Banking Fees Climb Faster Than Rest of World

    Asian Stocks Fall After HSBC China Manufacturing Drops

    China Manufacturing Gauge Drops as Growth Pickup Stalls

    Despite Collapsing Economy, Japanese PMI Surges To 5-Month High; China PMI Tumbles, Misses By Most On Record

    China Baby Boom Stock Bets Go Bust as Two Kids Cost Too Much

    Goldman(GS) Warns Additional Chinese Stimulus Risks Global Financial Stability

    China 2H Fiscal Spending May Grow About 5.7% Y/Y. China's fiscal spending growth in 2H may slow by 10.1 ppt from 1H, according to a joint report produced by the NDRC's State Information Center, China Development Bank and the Shanghai Securities News published today. 2H fiscal revenue growth may continue to slow due to relatively large downward pressure on the economy.

     

    French Manufacturing Activity Shrinks for Fourth Month in August

     

    Still awash with cash, world economies take turn for the worse. China's economy is slowing. The euro zone's is a flat line. Japan's sank in the second quarter. Britain has wage deflation. The U.S. economy is ticking over at best. In a world preoccupied by geopolitical crises – from Ukraine, Iraq and Gaza to the Ebola outbreak in West Africa – the global economy has taken something of a back seat. But there are increasing signs it is in trouble despite being awash with cash from record low interest rates.

    Retooled Hamas Bloodies Israel With Help From Hezbollah

    Israeli Strike Kills Wife, Daughter of Hamas Military Leader

    Samsung Told by Korean Tax Man to Use $60 Billion Cash Pile or Lose It

    Hewlett-Packard(HPQ) posts surprise revenue gain after PC sales jump. Hewlett-Packard Co posted a surprise increase in quarterly revenue after sales from its personal computer division climbed 12 percent, but a flat to declining performance from its other units underscored the company's uphill battle to revive growth. Shares of the company dipped 0.8 percent to $34.84 after-hours.

     

    FBI warns healthcare firms they are targeted by hackersThe FBI has warned that healthcare industry companies are being targeted by hackers, publicizing the issue following an attack on U.S. hospital group Community Health Systems Inc that resulted in the theft of millions of patient records. ?

    I'm sorry but I simply can't reconcile this news with what's going on in the markets so I'm going to continue to lose money hedging to make sure we keep what we have.  The alternative is going to cash but there is simply no way I can endorse getting more bullish on this market at this point.  


  164. We got 16,990 on /YM and, fortunately, it came after we took a nice dip to 16,940 so 16,950 stopped out the shorts on the way back up, now I like the big line (16,700) as a stop for more shorts.  We want to see /ES below 1,985, /NQ below 4,045 and /TF below 1,155 to confirm.  Russell (/TF) was 1,150 before the pop, still pulling us down as best it can but dragged up by its enthusiastic brothers.  

    Part of the pop came from the Dollar dropping from 82.42 to 82.20 (0.25%) and that's about how much pop we got out of the Futures.  That line is holding so far.  Oil got smacked down to $92.50 – this is why we aren't playing USO long, folks!  Gold spiked down to $1,272 but back to $1,282 now, Silver (/SI) hit $19.28 and now $19.33 but we only want to play bullish at $19.25 with very tight stops below or over the $19.50 line as silver is not a contract we like to mess around with at in between spots.  Copper is $3.15, Nat gas $3.87 might pop on Ukraine supplies but peace talks could send it lower so no play there.  Gasoline fell back to $2.70 but betting that line will hold into the weekend is a fun bull bet (/RB).