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Using Options to Pay Yourself Monthly Dividends up to 10%

Sometimes we forget the basics.

In our video series, there's a lesson called "The Secret to Consistent 20-40% Annual Returns on Stocks" and I hope you've seen it.  While the low implied volatility of the market has made it a rough year for option selling, we were still able to scratch out just under 30% profits in our long and short-term portfolios.  We also cashed out out Income Portfolio with a 20% profit earlier in the year and we did it by following the BASIC strategies we teach at Philstockworld, not by gambling! 

Not that we're adverse to gambling, gambling is fun – but fun means fun, which means it's a small part of our total investing portfolio while the vast bulk of our money is SENSIBLY INVESTED in safer strategies that are designed to grind out consistently good returns over many years.  Two weeks ago we discussed the long-term advantages of compounding annual growth in "How to Get Rich Slowly" and now we'll begin discussing some basic strategies that can generate those consistent annual returns.

In the "7 Steps" video, we're discussing a basic covered call strategy and we delve into the Fundamentals of stock selection.  At the time (Sept 2013), we were using ABX, which was trading at $19.15 and we sold the November $19 calls (45 days out) for $1.30.  The simple instructions were to wash, rinse and repeat to make up to 40% a year by simply selling calls against the stock.  

As you can see, ABX has dropped to $10.58 since then, down about 40% BUT, had you followed through and kept selling calls, we had a lovely 12-month period in which it stayed in our range and that would have given us 8 opportunities to collect at least $1 for $8 back before the stock turned down in September of this year.  That would have dropped the net outlay below $10 and stopping out at $15 would have been a 50% gain for the year – even as the stock dropped 22% (from $19.15 to $15).

You can't get more basic than that – just mindlessly selling covered calls every month or two and, even when the stock ends up being a dog – 50% returns!  There's nothing fancy here other than our selection of a range-bound stock which, of course, we stop playing when it falls out of our range.  

ANYONE can learn how to trade this way (and we go over all the strategies in our book, of course) yet, unfortunately, a lot of traders tend to FORGET how EASY it is to make money by just sticking to the basics.

As with the Dark Side, it is easy to be seduced by the allure of quick and "easy" money using options for leverage and trying to beat the market for a big win based on some "tip" you got, be it from a friend or a guy on TV or even someone like me.  THAT'S GAMBLING!!!  

Never forget that that's gambling and you will be OK.  Gambling is NOT investing.  Investing is what we should be doing with the vast bulk of our equity assets – gambling is not!  See our series on Smart Portfolio Management, which has examples for $10,000, $100,000 and $1M+ portfolios.  We demonstrate a lot of these trades for our Members during the year using 4 virtual portfolios with various sizes and trading styles.

BUT, as I said above, sometimes we just forget the basics – the reason we love options in the first place.  We can sell a put to give ourselves a discounted entry on a stock and we can sell a call to pay ourselves a dividend.  Year after year we demonstrate how these techniques can give you those consistent 20-40% annual returns WITHOUT taking huge risks and this coming year, our concentration is going to be on having our Members EMBRACE those long-term wealth building strategies.

If you believe investing is gambling, then you are doing it wrong and, if you believe investing is gambling – you are more likely to take the kind of risks that ARE gambling, which will then reinforce your misguided view that investing is gambling – get it?

There is no gambling in buying ABX TODAY, for $10.58 and selling the Feb $10 calls for $1.15.  Your net entry is $9.43 and, on Feb 20th (55 days), you will either be called away at $10 with a 0.57 profit (6%) if the stock is above $10 or, if ABX is below $10, you will own the stock for net $9.43 (a 10.8% discount) – at which point you will wash, rinse and repeat the trade by selling the April $9s for $1 or so.   

This is not an options class so I won't get into all the what-ifs down the road.  Suffice to say you can repeat the performance that gave us 50% on ABX last year with very little risk.  Now, our Members know there are fancier ways to go, so let's pick another example and see if we can make it more interesting than 6% in 55 days.  

Remember, we want to find stocks that are likely to stay in a channel.  Stocks that have decent volatility day to day (to boost the price of the options we sell) but are not too likely to stray from a trading range of maybe 20% up or down.  WMT comes to mind, MCD, VZ, T, F…  Blue chips are good when you are beginning, as they are less likely to go to zero. 

We'll start with F, because F is only $15.45 a share so anyone can play with it.  Option contracts trade in 100-share blocks so SELLING the 2017 $13 put for $1.40 obligates you to buy 100 shares of F for $13 ($1,300) and puts $140 in your pocket right away.  That nets you into the stock for $11.60, which is giving yourself a quick 25% discount.  

You can then conservatively buy 100 shares the stock for $15.45 ($1,545) as well and that would put you in at a net of $14.05 a share and, if F goes below $13 and the 100 shares are assigned to you, then you end up with 200 shares at an average of $13.525 ($2,750) – that's your maximum risk on the trade.  Now you can sell the Feb $15 calls for 0.83, putting another $83 in your pocket, so the total cash outlay drops to $1,322.

If you are called away in Feb at $15, you get paid $15 in cash, keep the $83 and the $140 from selling the puts and you are left with just the obligation to buy 100 shares again at $13 (if the stock goes below that price by Jan 2017).  That turns you initial net $1,322 into $1,583 (+$261 or 19.7%) in 55 days.  If you do end up having to buy 100 shares of F in 2017 for $1,300, the $261 you made reduces your net cost to just $1,039 or $10.39 per share – 33% off the current price!  

So clearly there is no reason to fear the upside and the downside is F goes lower and you keep the $261 you've collected and, in Feb, you sell another call for another 0.80 and now you have $341 in your pocket for April and $421 in June and $501 in August and $581 in October and $661 next December.  A year from now – if you are NOT called away with more than a 20% profit, you will have $661 in cash and the F stock you bought for $1,545 and that's net $884 on your first 100 shares + $13 for the next 100 would be $2,184 for 2,000 shares or $10.92 per share.

Of course, if F is lower than $10.92 (down 30%) in a year, you do lose money.  As I often say to our Members, these are not magic beans – there is some risk, BUT – by intelligently managing our risk, we have a much more likely upside than downside and MOST of the time, we can make some very nice returns.  

Now, there's a fancier way to play F and that's what we call an ARTIFICIAL buy/write where, instead of owning the stock (which pays a nice 3.3%, 0.50 dividend), we instead buy the 2017 $15/20 bull call spread for $1.45, selling the same $13 puts for $1.40.  That drops our net cash outlay to just a nickel and we're only obligated to buy 100 shares for net $13.05 ($1,305) but we can STILL sell those calls.

Since our cash outlay is now 0.05 tough (and margin required is $1.36 per contract) and since we don't have any stock to call away, our goal should be just to collect 10% per month of the $1.41 cash+margin we've committed to the trade – otherwise we are engaging in the great sins of greed and over-leveraging.  

Looking to make 0.14 per month is easy.  We can, for example, sell the Jan $16 calls for 0.15 or 1/3 of the March $16 puts for 0.45 and see how that goes before selling more, etc.  That's a very easy way to quickly generate 10% monthly returns while your upside risk doesn't kick in until F is over $20 (otherwise you just roll your short calls along on months you don't collect the cash).  

Again, not magic beans – some months you will win and some you will lose but, on the whole, when the potential is to make 120% per year if you have 12 winners – there's a HELL of a lot of ways you can end up making 20-40% returns with little trouble. 

As a rule of thumb, if a stock isn't paying 3.5% or better dividend, there's no point in tying up the cash required to own it – so we'll prefer the artificial buy/write to the traditional but both are valid and both are very powerful long-term wealth creation tools that form the basis of our Long-Term Portfolio.  

These are not the sexy trades, these are the slow, reliable trades that we put the bulk of our capital into while we allocate a smaller portion (generally around 20%) to more aggressive short-term trading BUT, even then, we use a lot of our short-term firepower to BALANCE out our long-term trade.  

This year (2014), our Long-Term Portfolio has been 100% bullish, so our Short-Term Portfolio has leaned bearish to protect it.  It remains to be seen if we'll be as long-term bullish in 2015 as we were in 2014, but that's a topic for another post…

For more content on Trading Education, check our our Archives at:  http://www.philstockworld.com/education/

 


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  1. From Bloomberg, Dec 27, 2014, 8:07:16 AM

     Anton Siluanov, Russia’s finance minister. Photographer: Andrey Rudakov/Bloomberg

    (Corrects story published yesterday to show reserves are in billions, not millions.)

    To read the entire article, go to http://bloom.bg/1Eq67V9

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  2. From Bloomberg, Dec 26, 2014, 4:03:19 PM


    A mix of ethnic groups makes everything stronger, including financial markets. (Photo: Adam Voorhes/Bloomberg Markets)

    Diversity safeguards populations from defective genes, stabilizes nature’s ecosystems and fosters innovation in business.

    To read the entire article, go to http://bloom.bg/1B1ynHi

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  3. From Bloomberg, Dec 26, 2014, 12:14:50 PM


    United Parcel Service Inc. (UPS) workers push a dollie of boxes for delivery in New York, U.S., on Nov. 12, 2014. Photographer: Michael Nagle/Bloomberg

    Amazon.com Inc. (AMZN) and other retailers are on pace to sell more products online than ever this holiday season, aided by early promotions and investments in delivery systems that helped avoid the widespread shipping delays of last year.

    To read the entire article, go to http://bloom.bg/1EpLqbK

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  4. From Bloomberg, Dec 25, 2014, 3:02:07 PM

      Former Florida Governor Jeb Bush waves to the audience at the Tampa Bay Times Forum in Tampa, Florida, on August 30, 2012 on the final day of the Republican National Convention (RNC). The RNC will culminate later today with the formal nomination of Mitt Romney and Paul Ryan as the GOP presidential and vice-presidential candidates in the US presidential election. AFP PHOTO Brendan SMIALOWSKI (Photo credit should read BRENDAN SMIALOWSKI/AFP/GettyImages)

    What a tangled web presidential candidates weave. 

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-12-25/jeb-bush-to-cut-ties-with-company-cashing-in-on-obamacare

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  5. From Bloomberg, Dec 23, 2014, 12:10:22 PM

     

    The day before Christmas Eve, in 2013, Kentucky Senator Rand Paul issued a series of tweets celebrating Festivus, the “airing of grievances” holiday invented on an episode of Seinfeld. Paul’s culture-jamming was so popular–1,000 retweets for his first joke–that he repeated the gag on Tuesday.

    To read the entire article, go to http://www.bloomberg.com/politics/articles/2014-12-23/rand-pauls-starstudded-festivus-celebration

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  6. From Bloomberg, Dec 27, 2014, 12:34:03 AM


    An employee monitors machinery used to adhere components to smartphone circuit boards in a manufacturing facility in the Nanshan district of Shenzhen, China. Photographer: Brent Lewin/Bloomberg

    China’s industrial profits fell the most in two years last month, the latest data to show a deepening slowdown in the world’s second-biggest economy as pressure grows on the nation’s central bank to ease monetary conditions.

    To read the entire article, go to http://bloom.bg/1zHCv2o

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  7. From Bloomberg, Dec 27, 2014, 6:24:03 AM


    Japan’s Prime Minister Shinzo Abe, second from right, poses for a group photograph with members of his new cabinet including Economy Minister Akira Amari, second from left, Finance Minister Taro Aso, right, at the prime minister’s official residence in Tokyo. Japan’s government approved a 3.5 trillion yen ($29 billion) fiscal stimulus package to boost the economy after April’s sales tax hike caused consumption to slump. Photographer: Kiyoshi Ota/Bloomberg

    Japan’s government approved a 3.5 trillion yen ($29 billion) fiscal stimulus package to boost the economy after April’s sales tax hike caused consumption to slump.

    To read the entire article, go to http://bloom.bg/1zZYH5w

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  8. From Bloomberg, Dec 27, 2014, 4:11:27 AM

     Traffic drives past commercial buildings in Hanoi, Vietnam. Photographer: Brent Lewin/Bloomberg

    Vietnam’s economic growth accelerated in the fourth quarter as banks increased lending and rising foreign investment boosted exports.

    To read the entire article, go to http://bloom.bg/1xnMnuS

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  9. From Bloomberg, Dec 26, 2014, 11:21:00 PM

    Mexico’s Finance Ministry took out 50 billion pesos ($3.4 billion) from the state oil company Petroleos Mexicanos, according to a statement sent to the Mexican Stock Exchange.

    To read the entire article, go to http://bloom.bg/13L6etF

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  10. http://www.nytimes.com/2014/12/28/technology/amazon-offers-all-you-can-eat-books-authors-turn-up-noses.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    Some self-published writers say their income has seen a large and rapid decrease under Amazon’s Kindle Unimited program, and argue that the system is unfair.


  11. http://www.nytimes.com/2014/12/28/business/entering-the-secret-garden-of-private-equity.html?smprod=nytcore-ipad&smid=nytcore-ipad-share

    It’s a rare shift in a long-opaque industry: A firm is letting investors hire an outside monitor to review a fund’s books and practices.


  12. 5 financial moves to make before New Year’s
    http://www.today.com/money/5-financial-moves-make-new-years-1D80392930



  13. Combatting Eurozone deflation: QE for the people
    http://www.voxeu.org/article/combatting-eurozone-deflation-qe-people



  14. Goldman’s Top Economist Just Answered The 8 Most Important Questions For 2015
    http://www.businessinsider.com/jan-hatzius-top-questions-for-2015-2014-12


  15. Uber Faces Class-Action Lawsuit Over $1 ‘Safe Rides Fee’
    http://www.forbes.com/sites/ellenhuet/2014/12/27/uber-class-action-lawsuit-safe-rides-fee/



  16. Stocks Have Never Been More Expensive Based On Long-Term Growth Forecasts
    http://www.zerohedge.com/news/2014-12-26/stocks-have-never-been-more-expensive-based-long-term-growth-forecasts


  17. Moody’s Downgrades Japan’s Credit Rating
    http://www.wsj.com/articles/moodys-downgrades-japan-debt-1417425248


  18. The Stock Market Bull Who Got 2014 Right Just Published This Fantastic Presentation
    http://www.businessinsider.com/oppenheimer-market-strategy-dec-2014-2014-12



  19. “Hookers & Blow” Lift Britain Over France As World’s 5th Largest Economy
    http://www.zerohedge.com/news/2014-12-27/hookers-blow-lift-britain-over-france-worlds-5th-largest-economy


  20. RadioShack’s Problem: So Many Stores, So Few Shoppers’
    http://www.wsj.com/articles/radioshacks-problem-so-many-stores-so-few-shoppers-1419534205



  21. The Destruction Of The Middle Class Is Nearing The Final Stages
    http://www.infowars.com/the-destruction-of-the-middle-class-is-nearing-the-final-stages/


  22. Germany plans electric car motorway charging stations: document
    http://www.reuters.com/article/2014/12/27/us-germany-electric-cars-idUSKBN0K50FI20141227


  23. The Worst Long Bets Made By Major Hedge Funds This Year
    http://www.valuewalk.com/2014/12/worst-hedge-funds-2014/?_escaped_fragment_?H2fE


  24. An oil-drilling executive on the plunge in oil prices: “Just sit back and watch the layoffs that will follow.”
    http://twitter.com/NickTimiraos/status/548901211483537411/photo/1





  25. No Christmas cheer for China’s industrial firms – profits continue to slide
    http://twitter.com/TomOrlik/status/548877133372608512/photo/1


  26. How to Save Like the Rich and the Upper Middle Class (Hint: It’s Not With Your House)
    http://www.wsj.com/articles/BL-REB-29827



  27. Official Chinese Website Posts An Economic Report With A Bunch Of Numbers And Then Erases All Of Those Numbers
    http://www.businessinsider.com/r-chinas-trade-growth-seen-falling-short-of-target-in-2014-2014-12


  28. The ABCs to being more persuasive [video]
    http://holykaw.alltop.com/abcs-persuasive-video?gk2



  29. 7 Smart Year-End Tax Moves To Prepare For 2015
    http://www.forbes.com/sites/nextavenue/2014/12/01/7-smart-year-end-tax-moves-to-prepare-for-2015/?linkId045017&utm_channel=Investing


  30. Will Household Deleveraging End Anytime Soon? – St. Louis Fed On the Economy
    http://www.stlouisfed.org/on-the-economy/will-household-deleveraging-end-anytime-soon/


  31. Over The Past 150 Years, There Has Been A Profound Shift In What Humans Do With Their Time
    http://www.businessinsider.com/how-humans-spend-their-time-2014-12


  32. China’s Industrial Profits Haven’t Dropped This Fast Since August 2012
    http://www.businessinsider.com/r-chinas-november-industrial-profits-suffer-sharpest-fall-in-27-months-2014-12



  33. Japan cabinet approves Y3.5tn stimulus spending
    http://www.ft.com/cms/s/0/0d1e1a78-8dce-11e4-86a3-00144feabdc0.html


  34. Here’s What The Pros Are Predicting For Oil Prices
    http://www.businessinsider.com/brent-oil-price-forecasts-2015-2014-12







  35. Electric Cars: A Review Of 2014
    http://www.forbes.com/sites/jackperkowski/2014/12/12/electric-cars-a-review-of-2014/?linkId163932&utm_channel=Business


  36. Check out this speech – FDR for 2016!  

    More than four years ago in accepting the Democratic nomination in Chicago, I said: "Give me your help not to win votes alone, but to win in this crusade to restore America to its own people."

    The banners of that crusade still fly in the van of a Nation that is on the march.

    It is needless to repeat the details of the program which this Administration has been hammering out on the anvils of experience. No amount of misrepresentation or statistical contortion can conceal or blur or smear that record. Neither the attacks of unscrupulous enemies nor the exaggerations of over-zealous friends will serve to mislead the American people.

    What was our hope in 1932? Above all other things the American people wanted peace. They wanted peace of mind instead of gnawing fear.

    First, they sought escape from the personal terror which had stalked them for three years. They wanted the peace that comes from security in their homes: safety for their savings, permanence in their jobs, a fair profit from their enterprise.

    Next, they wanted peace in the community, the peace that springs from the ability to meet the needs of community life: schools, playgrounds, parks, sanitation, highways--those things which are expected of solvent local government. They sought escape from disintegration and bankruptcy in local and state affairs.

    They also sought peace within the Nation: protection of their currency, fairer wages, the ending of long hours of toil, the abolition of child labor, the elimination of wild-cat speculation, the safety of their children from kidnappers…

    … For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.

    For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

    We had to struggle with the old enemies of peace--business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

    They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

    Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me--and I welcome their hatred.

    I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master…

    … Here is an amazing paradox! The very employers and politicians and publishers who talk most loudly of class antagonism and the destruction of the American system now undermine that system by this attempt to coerce the votes of the wage earners of this country. It is the 1936 version of the old threat to close down the factory or the office if a particular candidate does not win. It is an old strategy of tyrants to delude their victims into fighting their battles for them.

    On the one hand, it's sad how little things have really changed in the last 80 years (four score) but, on the other hand – it's inspirational to think how much of an effect one man could have to change the course of our country – at least for a little while…

     


  37. No wonder people vote they way they vote – they are being misinformed:

    http://www.dailykos.com/story/2014/12/27/1350559/-Voters-don-t-know-the-deficit-is-shrinking-or-that-deportations-have-soared

    A Bloomberg Politics poll shows that on two controversial issues, the budget deficit and deporting illegal immigrants, the public believes Obama's critics–even though reality favors the president.
    By 73 percent to 21 percent, the public says the federal budget deficit has gotten bigger during the Obama presidency.

    What's that? It's not true? It's not even a little bit true? You would think the great big super-important dispenser of all wisdom, the news shows, would feel a little embarrassed that the public cannot accurately describe the facts surrounding one of the most obsessed-over issues in all of politics. I suppose it would put a kink in the Reasonable Person plan to shred everyone's Social Security and give the money to Wall Street for (cough) safekeeping.

    By 53 percent to 29 percent, Americans believe that Obama has sent fewer undocumented immigrants home than were deported a decade earlier. That's a constant refrain of Obama's immigration critics.

    It also isn't true.


  38. I can think of a lot of things we could have done with this money:

    http://www.bloomberg.com/news/2014-12-19/wars-cost-to-the-u-s-since-the-sept-11-attacks-1-6-trillion.html

    The wars in Iraq and Afghanistan and counterterrorism operations have cost the U.S. a combined $1.6 trillion since the Sept. 11 terrorist attacks, according to a new Congressional Research Service analysis. [...]

    Unlike academic estimates, which have calculated total costs as much higher, the Congressional Research Service doesn’t include in its calculations the lifetime costs of medical care for disabled veterans, imputed interest on the deficit or potential increases to the base defense budget deemed to be a consequence of the war, according to Amy Belasco, author of the report.

    “Such costs are difficult to compute, subject to extensive caveats and often based on methodologies that may not be appropriate,” she wrote.

    A June cost-of-war assessment by Neta Crawford, a political science professor at Boston University, put the potential total cost of the Iraq and Afghanistan wars and assistance to Pakistan since 2001 at $4.4 trillion, including $316 billion in interest costs and $1 trillion through 2054 for veterans care.

    But hey, Obamacare is evil and 4 people died in Benghazi so we all make mistakes I guess!


  39. Quote of the day:

    "Despite the resilience, it is worth remembering that there is never an easy battle in the market. Gains are hard-fought and complacency is, ultimately, as big an enemy as you will face as a trader."
    (chessNwine)



  40. From Bloomberg, Dec 28, 2014, 7:00:47 PM


    Family members of passengers of missing Malaysian air carrier AirAsia flight QZ8501 gather at Juanda international airport in Surabaya in East Java on December 28, 2014 hours after the news the flight went missing. Photographer: Juni Kriswanto/AFP via Getty Images

    Searchers from Indonesia and other Southeast Asian nations resumed the hunt for a AirAsia Bhd. (AIRA) plane bound for Singapore that went missing off the coast of Borneo with 155 passengers and seven crew on board.

    To read the entire article, go to http://bloom.bg/1vjs6CC

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  41. From Bloomberg, Dec 28, 2014, 10:00:01 AM

     After winning a second term from voters earlier this month, Prime Minister Shinzo Abe’s initial focus in 2015 will be a fiscal-stimulus package and lower corporate taxes. Photographer: Tomohiro Ohsumi/Bloomberg

    Foreign investors have had just about enough of Abenomics.

    To read the entire article, go to http://bloom.bg/1JWK9cw

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  42. From Bloomberg, Dec 28, 2014, 10:58:19 PM

    A visitor looks at an electronic ticker above the trading pit at the Tokyo Stock Exchange in Tokyo, Japan, on Dec. 10, 2014. The yen has weakened 33 percent against the dollar since Prime Minister Shinzo Abe called for unlimited monetary easing in November 2012, a month before taking office. Photographer: Tomohiro Ohsumi/Bloomberg

    If your New Year’s wish is for more yen weakness, get ready to celebrate.

    To read the entire article, go to http://bloom.bg/13O0grN

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  43. From Bloomberg, Dec 28, 2014, 11:55:49 PM


    A trader is reflected in a monitor as he works on the floor of the New York Stock Exchange (NYSE) in New York, U.S. Photographer: Jin Lee/Bloomberg

    Emerging-market distressed debt losses are the worst this month since the global financial crisis.

    To read the entire article, go to http://bloom.bg/16ZjZXm

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  44. From Bloomberg, Dec 28, 2014, 11:26:32 PM

    China moved to cut oil company tax bills as crude prices headed for the biggest annual decline since 2008, sparking gains by producers led by PetroChina Co.

    To read the entire article, go to http://bloom.bg/1H9pkbm

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  45. From Bloomberg, Dec 29, 2014, 12:01:00 AM

     Ian McKellen as Gandalf and Luke Evans as Bard in “The Hobbit: The Battle of the Five Armies.” Photographer: Mark Pokorny/Warner Bros./MGM via Bloomberg

    “The Hobbit: The Battle of the Five Armies” retained the top spot in U.S. cinemas against four new wide releases in the final weekend of a year that produced the lowest sales since 2011.

    To read the entire article, go to http://bloom.bg/1Beenlo

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  46. From Bloomberg, Dec 29, 2014, 1:25:24 AM

     Sony Pictures “The Interview” began online showings today on websites including YouTube, helping the comedy reach a wider audience after terrorism threats led major theaters to abandon the film’s Christmas Day opening. Photographer: Tomohiro Ohsumi/Bloomberg

    “The Interview” earned more than $15 million in online sales in its first four days of distribution as Sony Corp. (6758) bypassed a wide theater release amid concerns from major cinema chains about threats of violence.

    To read the entire article, go to http://bloom.bg/1tchXaT

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  47. From Bloomberg, Dec 29, 2014, 1:55:20 AM

    The euro traded 0.2 percent from a two-year low as Greece’s prime minister attempts to get his presidential candidate confirmed and avoid an early parliamentary election that risks severing the nation’s international lifeline.

    To read the entire article, go to http://bloom.bg/13Dv6D5

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  48. From Bloomberg, Dec 29, 2014, 1:40:36 AM

    Japanese shares fell, reversing gains from the morning session, following a report a man is being tested for Ebola in Tokyo.

    To read the entire article, go to http://bloom.bg/1H8NqD5

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  49. From Bloomberg, Dec 29, 2014, 1:18:52 AM

    Oil advanced for the first time in three days amid speculation that an escalating conflict in Libya will help ease a global supply surplus that’s driven crude into a bear market.

    To read the entire article, go to http://bloom.bg/13Dvx0f

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  50. From Bloomberg, Dec 29, 2014, 12:01:14 AM

    Mark Fields remembers being treated like a Neanderthal when he joined Microsoft Corp. (MSFT) co-founder Bill Gates on stage at the Consumer Electronics Show in Las Vegas to introduce the Sync in-car infotainment system.

    To read the entire article, go to http://bloom.bg/1H9v2u0

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  51. From Bloomberg, Dec 28, 2014, 11:05:38 PM

    Commuters make their way through the Port Authority Bus Terminal during rush hour in New York. U.S. gross domestic product expanded at a 5 percent annual rate in the third quarter, the most since the same period in 2003, revised government data released last week showed. Photographer: Victor J. Blue/Bloomberg

    Get ready for a disastrous year for U.S. government bonds. That’s the message forecasters on Wall Street are sending.

    To read the entire article, go to http://bloom.bg/1xsJbBt

    Sent from the Bloomberg iPad application. Download the free application at http://itunes.apple.com/us/app/bloomberg-for-ipad/id364304764?mt=8


  52. From Bloomberg, Dec 28, 2014, 11:49:58 PM

    China’s central bank is joining the balancing act of developed-world counterparts as it moves to free up at least $800 billion in funds for lenders, seeking to support growth without further inflaming financial risk.

    To read the entire article, go to http://bloom.bg/1H9sH21

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  53. SPY  5  MINUTEGood morning!  

    Futures are down a bit but not too much damage so far.  It's going to be another dead week, so hard to read the tea leaves based on this action.  The TOTAL SPY volume of last week was 371M shares while the week before had 4 days with 250M shares, so when I say no volume, I mean NO volume…

    All the Asian indexes sold off into the close and, keep in mind, this is despite China just announcing essentially another $800Bn stimulus last week.

    Here's what wages look like in Japan:

    12-26-2014 6-23-51 PM cHART

    The 94% Plunge That Shows Abenomics Is Losing Global InvestorsForeign investors have had just about enough of Abenomics. After pumping record amounts of cash into Japanese shares last year, they’ve hardly added to holdings in 2014Inflows are down 94 percent this year to 898 billion yen ($7.5 billion), on pace for the smallest annual amount since the 2008 global financial crisis. The month of April 2013 alone registered almost three times as much foreign investment in the stock market as all of 2014.

    China’s Industrial Profits Drop Most in Two Years Amid Slowdown. China’s industrial profits fell the most in two years last month, the latest data to show a deepening slowdown in the world’s second-biggest economy as pressure grows on the nation’s central bank to ease monetary conditions. Total profits of China’s industrial enterprises in November dropped 4.2 percent from a year earlier, the National Bureau of Statistics said today in Beijing. That followed October’s 2.1 percent decline and a 0.4 percent increase in September. It’s the biggest slide since August 2012, when profits slumped 6.2 percent.

    China zombie factories kept open to give illusion of prosperity. “If you cut down the big tree, all the small trees around it will die,” says 69-year-old Wang Peiqing, referring to the collapse of Highsee Iron and Steel Group, which operated the foundries before its recent closure devastated the economy of a once-prosperous corner of Shanxi province in central China. “The entire region relied on the steel mill; now the young people have to go and look for work across China.” Highsee stopped paying its 10,000 employees six months ago. Local officials estimate the plant supported indirectly the livelihood of about a quarter of Wenxi county’s population of 400,000. Across the vast expanses of China, similar experiences are playing out, with thousands of companies in heavy industrial sectors plagued by chronic overcapacity that should be going bust instead being propped up by local ­governments.

     

    Copper Near Four-Year Low Amid Signs of Slowdown in China. Copper in London traded near a four-year low after Chinese industrial profits fell and before a manufacturing gauge for the country, the largest metals consumer. The London Metal Exchange resumed trading after the Christmas break. Copper dropped as much as 1.1 percent after closing at the lowest since June 2010 on Dec. 24.

     

    Iron?Ore Slump Failing to End Glut as Mines ExpandThe collapse in global iron-ore prices isn’t chasing Gina Rinehart away from the red soil of Western Australia that made her a billionaire. Like producers in Brazil and some in China, she can still profit from the metal.

    Meanwhile, Italy and Spain are leading Europe lower, but also low volume:

    Weidmann: ECB Mustn't Bow to Markets' Bond-Buying Pressure. ECB Governing Council member Jens Weidmann says in interview it shouldn't be decisive for the bank's decision-making that markets have been pushing for and expect ECB bond purchases. Weidmann, who's also Bundesbank President said: Cheap oil is acting like a stimulus package, "so why put monetary policy measures on top of that?" The euro region's central banks would be liable together for any losses from bond purchases, and in the end the taxpayers would foot the bill.

     

    Merkel Adviser Opposes ECB Govt Bond Purchases at Present. There is no reason for the ECB to currently buy government bonds, citing Christoph Schmidt, head of German Chancellor Angela Merkel's council of economic advisers, as saying in an interview. Points to high risk of buying government bonds; says France, Italy could postpone again necessary reforms.

    Russian ruble drops 7 percent as economy shrinks - The Russian currency extended its losses on Monday after a report showed the economy has started shrinking in annual terms for the first time since 2009 as the country is buffeted by falling oil prices …

    Pressure Is Intensifying On Russia's Banking Sector

    $800Bn kicked in by China is, in fact, good for 80 S&P points based on our very reliable formula of $10Bn of Global Stimulus per point but the effect only lasts a quarter at most – this one seems to be fading out in days and we're not likely to hear from the other Central Banksters this week.  On the other hand, that means there won't be a lot of reason to sell off either and the markets will be very easy to prop up for window-dressing into Wednesday's early close (1pm).  

    As you can see from StJ's chart above, the least data we've had in a year and no Fed speak so all we can do is just sit back and enjoy the show.  


  54. Phil – I was just reading your "Top Trades for Mon, 29 Dec 2014 10:18" email.  This got me to thinking how can I implement these in an IRA?  For example, I can't short puts (unless I have the cash to cover). 

    In the New Year, can you occasionally do IRA specific trades after your normal margin account trade suggestion.  Maybe put them in (IRA – trade idea) format like, "(IRA – Buy 5 ABX 2017 $10/15 bull call spread for $1.50 ($1,500) )" so it stands out.  Or how about an IRA Portfolio. 


  55. Phil – I reposted above comment in Today's 12-29-14 page.