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Welcome Back My Friends

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"Welcome back my friends to the show that never ends
We're so glad you could attend, come inside, come inside

"Rest assured you'll get your money's worth
Greatest show in Heaven, Hell or Earth
" – ELP

As I said to our Members this morning, I was up at 3am and I did our usual pre-market skim of the news but I was so disgusted by the blatant manipulation going on at the Shanghai and in our own futures I decided to go back to sleep because it was simply too depressing to discuss.  

I want to start this article by apologizing to the Bottom 90% because we're about to steal your money again.  The way we (the Top 10%) do it is that we already own a lot of stocks because, well, because we have assets and you don't – because you are poor or, as Donald Trump calls it, "lazy".  

You have been too lazy to get a slice of "the pie" so, as you can see, we in the top 10% now have 78% of that pie (well mostly the top 1% because we have 38% but we like to pretend the next 9% are our friends to get them to do our bidding – even while the next 9%'s share of the pie shrinks as well).  If you had wanted some pie, surely you would have gone to an Ivy League School and started your own business and gone public by now – so we assume you don't like pie and we'll have some more thanks!  

Before the last crash, our slice of the pie in the top 10% was around 70% and you bottom 90% people had almost 1/3 of the wealth in your 401Ks and IRS and some of you even had businesses and equity in your homes (which we lend you money to buy).  We wanted more pie so we created the illusion that the pie was growing (on paper – in reality, there was no more pie) and that made the bottom 90% feel richer.  Then the top 10% sold some of their pie (mostly the stale bits) to the bottom 90% for very high prices and the bottom 90% went into debt to buy more pie, thinking the pie would inflate forever and they would get rich too.  Then the illusion faded and the pie began to shrink as the paper gains evaporated and the bottom 90% lost most of what they gained – except for the debts, of course.   Sorry about that.

Fortunately, we (top 10% Banksters) still had your money (and draconian changes in the Banktruptcy code made under Bush II assured us we'd get all of it) and we used that to buy all the pie you were forced to sell to service your debts.  We bought your homes, your businesses, your stocks,  your antiques – hell, we even contracted your future labor at very low prices as we cut benefits to the bone and THEN we cried for the Government to bail us (the top 10%) out – even going so far as to threaten to leave and go overseas with all our "job creator" skills – AND YOU FELL FOR IT!!! 

The Government does this by borrowing money on behalf of the people (the 100%) but, of course, when the Government borrows it does so on a per capita basis, so ALL of the people are borrowing the money but then the money is only distributed to the top 1% of us while the rest of you just get the debt.  Don't complain it's very fair – you don't even like pie and we LOVE it!   

I am very pleased to report that this program has been a HUGE success, growing the wealth of the top 0.01% by almost 100% since 2007 while everyone else lost ground).  So much so that we are going to do it again.  In fact, we are doing it again and pretty much the same way we did it last time – by suckering poorer people into betting on the assets we're dumping as we inflate their prices (mostly stocks at the moment) and dump them for cash – leaving the little people to hold the bag.  

This morning, for example, the Shanghai was pumped back up 2.5% after more than half of the stocks trading yesterday (some are still closed) were halted limit down (-10%).  See how "natural" that upslope looks.  It's just a government computer program running the market up 2.5% for the day and they'll do it again tomorrow to pretty things up into the weekend and then the rich people the government is bailing out will cash in again and then the Government will go more into debt on "the people's" behalf and drive the market back to where it can be sold off again or, as it says on the bottle "wash, rinse, repeat." 

That's BLATANT market manipulation.  We look down on that because, in the US, Europe and Japan, we practice SUBTLE market manipulation.  That's much more civilized.  Like today our Futures were lagging into Europe's open so, at 3am, the Dollar was dropped 0.5% and that repriced the Futures higher and even boosted gold back over $1,100 for a few minutes.  

It was all totally fake, of course and now that we're nearing the open the Dollar is rallying back to where it was (97.50) at yesterday's close so net nothing happened, other than a whole lot of suckers were fooled – again.  In reality, Caterpillar (CAT) had earnings last night and showed a 19% drop in Asia (on top of last year's 30% drop and the 21% drop in 2013) which was dwarfed by the 45% drop in Latin America (hey, isn't that near us somewhere?).  

These are the kind of numbers that should be sending off warning signals re. the Global Economy but you wouldn't know it from the MSM cheerleaders, who see every dip as an opportunity to tell suckers to buy more.  We like CAT, by the way, for the long-term, but if the company hadn't bought back 10% of their stock in the past year, earnings would be down 30%, not "just" 20%.  

Why do companies like CAT spend $4Bn buying their own stock back and just $1Bn on CapEx?  BECAUSE THERE IS NO DEMAND!  The Global Economy is in a Recession/Depression and the G7 and their Central Banksters are doing their best to paper over it and, so far, it's working.  Over the long run, however, you have to believe that WISHING for a good economy will eventually cause a good economy, rather than all that tedious investing in infrastructure, education and training that has always worked in the past.  

Of course, wishing and pretending lets the Government borrow money and transfer it up the line to their campaign contributors in the top 1% while spending on infrastructure, training and education sends money to people who need it.  What are we, Communists?  No way to that, right?  

'Merica – F Yeah!  

 


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  1. The master plan to help the Big Guys – why people don't get more angry beats the heck out of me:

    http://www.motherjones.com/kevin-drum/2015/07/cfpb-wins-700-million-deceptive-practices-case-against-citibank-so-ted-cruz-wants

    Steve Benen points out today that Ted Cruz wants to eliminate the Consumer Financial Protection Bureau because it "does little to protect consumers." Ironically, this comes on the same day that the CFPB won a case against Citibank for deceptive practices that resulted in a $700 million fine. But irony is not a Republican strong suit, and most of them not only want to eliminate the CFPB, they want to eliminate all of Dodd-Frank while they're at it.

    This is not a big surprise since (a) Republicans have hated Dodd-Frank all along and virtually all of them voted against it, (b) it's an Obama thing, nuff said, and (c) it forces big banks to treat consumers fairly, and Republicans don't like laws that force big banks—or any other big business—to treat consumers fairly.


  2. This could be good news in the long term regarding our budget:

    http://www.motherjones.com/kevin-drum/2015/07/medicare-cost-projections-are-down-stunningly-2015-report

    Ten years ago, Medicare was a runaway freight train. Spending was projected to increase indefinitely, rising to 13 percent of GDP by 2080. This year, spending is projected to slow down around 2040, and reaches only 6 percent of GDP by 2090.

    Six percent! That's half what we thought a mere decade ago. If that isn't spectacular, I don't know what is.

    The 2005 projection was based on past performance, which showed costs rising ceaselessly every year. That turned out to be wrong. This year's projection is also based on past performance, which shows that costs have flattened substantially since 2008. Will it turn out to be wrong too? Come back in 2025 and I'll tell you.


  3. The latest oil news:

    http://qz.com/461369/here-are-the-25-iranian-oil-tankers-waiting-to-ship-out-somewhere-in-the-world/

    But Iran’s oil isn’t only in the ground. While the country has been under stern sanctions for more than two years, it’s been pumping oil and storing it in humongous tankers known as Very Large Crude Carriers (VLCCs) in various places.

    Iran hasn’t disclosed how much oil is in these tankers, but it’s been variously estimated between 30 million and 50 million barrels. If parceled into the already-saturated market in, say, 250,000-barrel-a-day dollops, that would make oil prices even softer for the four to five months until it was all sold.


  4. I love that very technical nomenclature for those oil tankers. Very large crude carriers. It just barely beat out BAOB, which of course is Big Ass Oil Boats.

    Silver taking its daily dive now too! 


  5. ~~GM Doubles Profit in North America to Record on Truck SurgeBloomberg(Thu 8:50AM EDT)

    GM Sees Better Second Half Than First: CFO StevensBloomberg(Thu 8:46AM EDT)
     


  6. Good Morning!


  7. ~~SNDK – Up big in pre-market following earnings.  Not even a beat, but stock was very oversold.

    QCOM – Disappoints, cuts workforce.


  8. UA – What a great growth stock/MoMo :

    ~~7:19 am Under Armour beats by $0.02, beats on revs; raises FY15 revs above consensus and updates 2015 operating income inclusive of the impact of the Connected Fitness acquisitionsBriefing.com


  9. Crazy number – must be some blip!

    https://www.bespokepremium.com/think-big-blog/jobless-claims-fall-through-the-floor/

    After trending slightly higher for the last few weeks, jobless claims absolutely cratered this week, falling to their lowest levels in over forty years!  While economists were expecting first-time claims to see a slight decline by just 3k down to 278k, the actual reading came in at 255K.  This was the largest weekly drop since April and the lowest weekly reading since November 1973.  That’s right.  Most people reading this weren’t even alive the last time claims were this low, and if they were, they were probably too young to remember.


  10. UA / Albo – Tough to justify on valuation but they just keep on going. Incredible!


  11. Phil, how about your thoughts on Ford?


  12. stjeanluc, that's very interesting information about the Iranian oil tankers' oil storage.  Looks like the news was available since July 20 but I don't see any news coverage in general new websites/publications.  Wonder if this is already factored into the current oil price?  Maybe that's another reason why oil price tanked, no pun intended.


  13. From WSE (Lee Adler):  Well, the fewest Americans in four decades filed applications for unemployment benefits last week. Unfortunately, other indicators are declining as well since 2007 such as M2 Money Velocity, average wage growth YoY, real median household income and labor force participation.


  14. UA – Very smart people and a well run company.  Had the foresight to sign up Jordan Spieth several years ago.  Haven't even used him in commercials yet.  Stock obviously over priced.  Have been in option spreads and had to roll a couple of times.  Gave up some of the profits because of the spreads, but it's been a good one.

    /CL – Anyone else think crude looks heavy here ?  So far hasn't been able to break the $49.50 level. 


  15. So LLY CEO sees a 'bit' of a bubble in Biotech….hummmm….. look in the mirror my little buddy.  Your pipeline blows, and has for some time.  I do not understand how the stock is up where it is.  Oh wait, Phil posted a reason above…and LLY bought back loads of stock


  16. Phil / QCOM – From the latest news, it looks like JANA is having a bigger impact here than i thought it would.    A split of the company may value the Chip business at 70B, and Patent at 100B , vs. the current 100B.  Do you think there is a play on this? Thanks


  17. More on QCOM

    Robert Lynch blogs.barrons.com/techtraderdaily/2015/07/23/qualcomm-slips-jana-plan-creates-value-say-bulls-bears-astonished-at-collapse-of-biz/?mod=yahoobarrons&ru=yahoo


  18. ~~Natural gas futures pop higher following inventory data, which showed a smaller-than-expected build.


  19. Good morning! 

    I feel better for having vented – now let's make some money…

    As we expected, the pre-market run-up was BS and now we'll see what kind of unwind we get.  

    CFPB/StJ – We are just one Republican President away from total Corporate control of this country. 

    Medicare/StJ – All of the GOP candidates have vowed to put a stop to that.  

    Valuations/StJ – That's all not accounting for the fact that the underlying economic data and current performance may be already based on false assumptions that may quickly unwind.  The biggest mistake made in 2006-7 was the assumption that there was no risk ahead while, in fact, it was already there – just being ignored. 

    Where in all these projections does it account for $2Tn the US needs to spend on infrastructure over the next decade or so (otherwise things will literally begin to fall apart).  Where are the costs of either preventing climate change or dealing with the consequences?  

    Iran is another good reason not to bet too heavily on oil. That's more oil than all of Cushing can hold in Iranian tankers alone.  Think how many other tankers are out there.

    GM/Albo – I am blown away by how quickly we've gone right back to trucks and SUVs in the US.  I parked at the movies yesterday and it was literally 80% large cars in the lot.  We learn nothing from a crisis, nothing at all…

    QCOM/Albo – Well, I hope this finally puts to rest the great QCOM vs BRCM debate…  wink

    Submitted on 2015/03/09 at 9:58 pm

    QCOM/Batman – You're new so I'll spare you my usual "why would you buy QCOM when BRCM is out there?" speech.  

    To me, spending $10Bn to buy back 10% of the company in a single year and push out another $3Bn in dividends is like a big neon sign that says "We're out of ideas and we're gonna milk this puppy now."  At least QCOM has the cash and they can afford to do it and buying back 10% of their stock will boost earnings 10% so if they were flatlining at $70, now they should flatline at $80 so sure, your spread makes sense, but I still bet BRCM (now $44.50) outperforms over the rest of the year.  

    QCOM/Batman – Turns out it's $15Bn in buybacks!  As to BRCM, they tore the cover off the ball in Q4, earning 0.90 per $40 share (at the time).  That puts them on pace for a p/e of 15 at $45 ($3+/share), which is ridiculously low for a company that's growing revenue over 10% and investing in new products for the next cycle.  The "Internet of things" can be explosive for them as more and more devices get connected and that's right where they are focused.  You seem to focus on whether or not QCOM has technical superiority in this or that but BRCM doesn't need to be better because QCOM is 5x their size and BRCM just has to make good headway and find their niches while QCOM has to grow their #1 spot to succeed.  

    And now BRCM is at $42.15 (down 5%) and QCOM is at $67.16 (down 6.7%) and you STILL would rather buy QCOM?  I don't know what you want me to say?  Clearly you want me to bless QCOM but nothing has changed – they have been tested in a crash and performed worse than BRCM and my overall logic still stands that BRCM is better-placed to succeed than QCOM.  

    Also, I don't see support, I see QCOM failed the 50 dma at $70 and dropped a very quick $4 (5.7%) from there and is in a long-term descending pattern that was only interrupted by their decision to spend all their cash to buy back their own stock because they can't think of anything else to do with it and, if it falls any further – people will start getting fired.  This is not an "investment" you'll be getting me to change my mind on until they are down in the $50s – maybe.  

    Not to mention we're possibly in the middle of a market correction so what a silly time to buy a weak stock!  

    UA becoming a monster:

    Jobless claims/StJ – Some guy just interviewed me on that.  I told him that, aside from seasonal factors, the result is more from less layoffs due to a tight labor market but that's due to 40% of the people dropping out of the labor force.  Also, the quality of jobs has gone way downhill and what's funny is they keep saying this is the lowest claims number since Nov 1973 but wasn't that the start of a huge recession with massive inflation?  

    Perhaps low jobless claims aren't the best predictor of future economic conditions?  And, of course, they put the Fed on the table. 

    I love how Bespoke thinks most of their audience is under 42…

    F/Jeff – I've always like F.  $15 was were we took our money off the last time we entered them (below $10).  Now I'd want to see $15 tested but I think they've had a good consolidation and are ready to go higher.  

    The 2017 $15 puts can be sold for $2.10 and that's net $12.90 for an entry, which is the bottom of the chart.  If I had $25,000 to allocate to owning F I'd sell 10 for $2,100 and, if F fell to $10 (33%), I'd be down just $2,900 and very happy to DD by selling 2019 $10 puts for $2 ($2,000) and 2019 $10 calls for $2 ($2,000) with my stock assignment at net $12,900 and then I'd be in a 1,000 share buy/write at net $8.90/9.45 so my worst case would be owning 2,000 shares of F at $18,900.  

    Since that's the worst-case and since $18,900 worth of F is only $9,450 in ordinary margin – there is literally no reason not to sell 10 of the 2017 $15 puts for $2.10 in the LTP to collect $2,100.  

    Tanked/Cjji – Yes it was known and discussed (but not in the MSM) and it is why oil has been so weak.  Still, now the news is making it to the retail investors and they will panic but then I think oil will find a good floor into the end of Aug. 

    Submitted on 2015/07/07 at 7:47 am

    Oil/Craigs – You're having trouble with that 90% Rule (90% of the time you look at the Futures, you should be deciding NOT to play).  So far, $52.50 is holding, even with the Dollar up 1%, so there's a little hope it comes back but $55 is doubtful.  Look for a pop today in anticipation of APi and EIA showing a nice holiday draw-down but, after that is probably the end of any bullish news for oil unless the Iran deal falls apart (probably $5 riding on that). 

    $55 is still fair value, maybe $52.50 with Iran added to the mix but Iran is more likely to dip us to the $40s again before recovering.  

    Remember, I can only tell you what is going to happen in the future and how to profit from it – what you do with that information is up to you!  

    Good chart, Pharm.  

    Oil/Albo – Still retailers panicking it down but I think pros are buying at this point.

    LLY/Pharm – "Only" 5% in last 3 years isn't even shocking for buybacks these days.  

    QCOM/Batman – I like those articles that compare various analysts.  

    /NG/Albo – Wasn't all that great:


  20. AAPL behaving today as planned :)


  21. Phil / GLD – August is a sessionally high month for GLD.  Will the FED Increase / or expected rate increase taper this?  And if so how much from the 5 year avg 5.7% gain for this ETF.  Would like your view and thoughts on this.  Thanks.


  22. Scott – who did you recommend for buying Pd and Au coins?


  23. I am short SCO calls so I've been playing CL down at 49.48 and covering at 49.30, small but + $2.80 so far. Just a hedge


  24. Made a nice 65% on my short calls on Apple, and stopped them out today.  Hoping for a move back into the 130's for a reload.  


  25. CMG – possibly blow off top ??


  26. Cat/ Phil   Have (20) $90  CAT Nov '15 puts that are killing me, do you think price is a bottom now? 


  27. It'll be interesting to see how TM's FC cars play out in the long run against TSLA. 

    TSLA actually has a lot of sales (relatively to TM's FC car sales that is!), but articles like this really make you wonder how it'll all shake out over the next 10 years.

    It's good for the rest of us that these companies compete so bitterly against each other to make the best product and "be right." Capitalism at work!


  28. Coins/BDC – any bullion have been happy with http://www.golddealer.com , and http://www.sprottmoney.com/ in Canada.  A friend who is a very regular / most active purchaser I know, currently deals with, http://schiffgold.com/ — and is very happy with the service.


  29. some serious selling on FCX… waterfall on the 5 minute chart.


  30. Anyone else having a formatting issue on iPhone? One of Phils posts is coming across all screwy…one word down the right margin. 


  31. FCX – Starting to look interesting.


  32. scott thanks. Deciding now between real coins and JNUG (3X paper versus something real … LOL!)

    100 oz Ag bar: buy for $1460 and sell for $1555 = 6.5% spread. Maybe we're in the wrong business!


  33. Miners/Palotay – pretty funny to see an ETF, which is an extra-layer middle-man product, referred to as a 'less expensive, more efficient investment vehicle'..


  34. anyone calling a bottom on this crap????

    Either there's massive opportunity at hand or someone invented Mr Fusion.


  35. GLD/Batman – Unlike oil, gold doesn't have any real value.  No one NEEDS to have gold today while about 4-5Bn people NEED oil to get through their daily lives.  That means you can't make accurate predictions on oil the way you can on gold/silver and they can swing wildly against you one way or the other.  I think the extraction threshold is about $1,050 but that may have gotten lower as miners cut costs (and oil is a big cost for them) so I like it long here but that doesn't mean it can't swing 20% below $1,050 before recovering ($800) even if my premise is sound.  

    You can't stop people from panicking and people are panicking out of commodities at the moment.   When people panic out of oil or lumber, they don't take the gas back to the gas station and they don't tear their homes apart and sell the wood but when people panic out of gold or silver, it creates new supply as people sell what they have to compete with the miners, which puts more supply on the market even where a bottom should be forming.  

    AAPL/Palotay – Very nice, congrats.  

    CMG/DM – Well, we hit $10 on the button on the short Aug $750s and went over $15 for Sept so hopefully I was right with my targets from yesterday:


     

     

    CMG/Rustle – I'm still hoping for $750 but those shorts are getting very tempting. 

    If we weren't already burned on NFLX (though only $111.83 now), I'd take a poke at selling the CMG Sept $750s for $10.50 at $15 I think they will become irresistible – unless the Aug $750s hit $10, in which case those will be more fun to sell (faster pay-off).

    Higher wages and finding a top (finally) on what people will pay for a burrito spell the beginning of the end for CMGs 46x p/e.  It's a friggin' restaurant people!  Restaurants get 20-25 p/es at best – even when they are growing…

    CAT/Advill – 20, ouch!  CAT went to $25 in 2009, so, if $75 breaks, I don't think you should try to be a hero.  They spent $4Bn buying their own stock last year at $100 and now it's $70 so there's $1Bn flushed down the toilet that could have been spent building the company.  Last year they made $6.38, in 2012 they made $8.90 and now they hope to make $5 in 2015 – that's not a good trend.  

    Still it's $5 per $77 share so p/e 15.4 reflects the damage but not really a "bargain" until they hit $50 at which point, even if they are only making $2.50 a share, I'd argue that their potential to make $8 a share makes them a buy.  So call $50 a very rough floor and, if you are not willing to stick that out – then watch that $75 line closely.  You sold the Nov $90 puts and they are now $14 and I've already said I like the 2017 $65 puts, now $4.50 so you can always roll your loss ($9,000?) to those and then 2018s will come out and we'll be looking at net low-$50s entries and I know I'll be THRILLED to own 2,000 shares for $50ish in 2018 but, if you won't – you really need to think about where your stops are going to be.

    Again, I will say this because I have decided to stress this for the rest of July and Aug.

    If your intent was to own $170,000 worth of CAT at $85 (max allocation), that's 2,000 shares.

    • Step 1 sell 10 Nov $90 puts for $5 ($5,000), not 20
    • Step 2 the Delta was about .45 and that means each $1 CAT dropped would cost you 10%.  Therefore, just a $2 dip in CAT would cost you 20% and, of course, with a $100 stock, that can happen intra-day so that's not a place you stop out but at 40% (-$7 on the puts) CAT would be at $86 and you need to strongly consider taking the $2,000 loss and getting out. 
    • Step 3 – you decide not to take a $2,000 loss and see what happens.  That means that you are planning to either stop out below $85 ($2.50, $2,500 loss) or roll or DD at about $80.
    • Step 4 – now we're at $80 and, as expected, the short puts are now down over 100% so you have to decide whether to DD or roll.  Obviously, you are already committed to buying 1,000 shares of CAT at net $85 so you need to be REALLY sure you want to keep going to DD, much better to roll at this point.  

    And that's where we are.  Taking a $9,000 loss now is only 5% of the intended commitment, so it should not be a big deal to you and, if it is – then you massively over-committed and that's how people get "trapped" in positions – because the position was way too big in the first place.  

    The bad part about scaling in is that, if CAT takes off, then you "only" make $5,000 without ever buying the stock but that's why I don't sell short-term puts anyway.  If I'm going to sell CAT $75s (because now they are $77 and I REALLY want to own CAT), then I would sell the 2017 $75s for $8.50 because that's $8,500 and that's 12.7% of my $66,500 commitment and, since I REALLY want to own 1,000 shares of CAT at $66,500, I'm only putting aside the $33,250 in margin I need and that means my "worst case" to the upside is I make 25.4% on margin and I have to look for another stock to buy with the $100K in margin I never touched.  

    That's what scaling in is all about – you have so much control over your position when you control your allocations and yes, a lot of the time you never get to buy the stock but it is MORE than made up for by the hundreds of times you don't get burned by a bad entry.  

    TSLA/BDC – I think the problem TSLA will have is that FC cars can be refilled at thousands of service stations very quickly (assuming they adapt the systems) while they need a major advance in batteries to get the same level of comfort. 

    FCX/Jbur – All of them are collapsing and taking the markets with them.

    IPhone/Jeff – I'll let Scott know.

    RIG/BDC – There's no bottom if these markets start failing.  Just make sure you have cash to begin buying when the dust clears.  

    On that note – I have a lunch meeting.  Back about 1pm.


  36. every day that massive opportunity becomes more massive for those dogs with fleas names!


  37. Phil – I think that's excellent advice on CAT.  Closed out most of my short trade today, but will look to get back into some more on a strong bounce.  Don't think the bottom has been reached yet.


  38. Advill this is possible the worse day to buy back Cat puts. I would just wait till the dust settles Phil paints here a very negative picture hope it will not be as bade.


  39. DE took a sympathizing knock on CAT as well 


  40. IBM climbing out of the wood shed again


  41. Phil thanks for the  lesson, I took the stock buying as a bottom and….as you say it´s flushed money for them.

    Yes, my loss is over 12k ( bought at 5.66) as my statement shows this morning so, will evaluate it rereading your comment and will decide,  but if your morning comment about a general economic depression is so, then is right to assume a $50 price level before a change in trend….not in time for november.

    Yodi, agree with you but  I think is wise to take the loss and move on….not today but in a small bounce.


  42. IBB – Aug 380/375 BPS for 1.20.  Is it going to roll over hard?  Just a few and out if the index moves back to $400.


  43. Phil leaves for lunch and the market starts giving it up. He always warns for us not to let that happen….


  44. Phil, I like to read the evolution (for me) of your recommendations, insights, and concepts.  I feel this is a post graduate program in investment and life in general. So, many Thanks!!  Is there a search program that brings up specific topics within PSW on a chronological frame work ?  I tried the search bar and it doesn't—that I know.  Best Regards, Newt.


  45. Heard a comment today by Jeff Sault of Raymond James.  He thinks much of the recent downturn in gold prices is due to the fact that some brokerage firms in China were allowing gold to be used as collateral to buy stocks.  When the stocks had that sharp drop, it created margin calls and resulted in gold being liquidated.  Haven't heard that before, but it is interesting.


  46. Albo  Got out of BAC $18.50 puts at .39 this morning. 


  47. Quote from Jim Grant:

    “The price of gold is the reciprocal of the world’s faith in central bankers.”


  48. Denlundy – Very good.  14cents a good entry !


  49. BAC looked toppy (along with the market in general) and the news that there CFO resigned this morning didn't hurt either 


  50. Closed 1 /CL short up 105 ticks.


  51. NYAD went from +669 in this mornings pump to -1,187 currently. 


  52. NRF at a 52 week low???

    I guess it is contagious?


  53. vix still under 13…wow


  54. Phil / GLD – thanks for the feedback on GLD – I am looking to roll down my positions on gold from 110 / 130 BCS to a 100 115 BCS – just breaking even with the new position.  did the same with ABX ( from 10 / 15 to 8/13 ( as you suggested earlier).  

    We'll see – i agree with you that the cost of GLD to extract may have come down a bit off the 1050 mark – but not significantly.  


  55. Damn, every time I walk away the market falls!  

    CAT/Yodi – Just looking at worst case, I don't think they go to $50 but $65 likely.

    CAT/Advil – As above, that's worst case but only if you are prepared for the worst case should you consider staying in if they can't hold $75. Also, you are down $12K on 20 you agreed to buy at $90 but you can sell 20 of the 2017 $70 puts for $6.30 and that's $12,600 and now you are agreeing to buy for net $64.04 (as you still have your $5.66 + the extra 0.30 from the new sale) and, if you don't REALLY want to own 2,000 shares of CAT at $65, then why on Earth would you be hanging on at $76?

    Letting it happen/Jeff – That kind of stuff does make me think that PSW Members are making up a significant portion of this low-volume market… cool

    Topics/Newt – Kind of that's what the Wiki is supposed to do but it needs people like you to contribute.  Deano and I are working on a book that will capture some of it but again, needs a lot of work as it's a huge project, since I say lots of things….

    Gold/Albo – Interesting but how would that actually work.  Are they saying that someone in china has gold but not cash and opens a brokerage account and pushes 8 ounces at a broker in a dark room and the broker pulls it off the table and drops it into a little compartment and then, when that person's account goes underwater, the broker unlocks the 8 ounces of gold and sells them at whatever the day's open is?  Seems like one of those fairy tales that people believe because China is far away but makes no sense when you think about it.

    17,650, 2,095, 4,600 and 1,240 for the Futures lows so far.  

    GLD/Batman – I agree, good to roll down but only when it's a bargain and only if you don't mind doing it again as it goes lower.  


  56. Phil/GLD – I am naked on my Sept 110 calls you said not to sell any unless we broke 1100. What do you recommend doing at this point as the 110s are trading. 0.86 now. Thanks once again 


  57. Phil, I'm short the market, why don't you take the rest of the day off…  :)


  58. GLD/Eddie – Same as every other rule, we weant to see a couple of closes below the line before we call it a a day.  We make these calls and then something goes to the top (like $1,300) or bottom (like $1,150 the last two times) and sure it pokes through but the people who treat those like lines in the sand and capitulate right away are the ones who lose the most money in the end. 

    The Sept $110s are 0.82  and GLD is at $104.50 and we really think $1,050 will hold and that's probably $100 on GLD, which SHOULD be bouncy.  The Delta on the $110s is 0.22 so they will be worthless at $100 but, on the other hand, they will double at $108.50 and the Jan $105s are $4.90 and the Jan $110s are $2.80 so net $2 which means we can either spend $2 to roll to the naked Jan $110s or we can spend $2 to go into the Jan $105/110 bull call spread – either choice is net $1.20, which we can easily make up with short call selling (the Aug $110s are 0.30) so there's no pressure to do it now.  

    If we chose the Jan $110s and sold the Aug $110s, 0.30 isn't much protection and the Jan $110s have a 0.35 delta so we're not really worse off keeping the Sept $110s and rolling if it goes lower – so why spend $1.20 now when we don't have to?  That's a short summary of my thoughts that lead me to conclude…. wait a few days and see what happens.

    LOL Mkucs!  It really is so predictable we should bet on it.


  59. Unreal !

    ~~Chipotle Mexican Grill target raised to $810 at Argus.


  60. Thanks again Phil I'm new here and also new to options so your advice and recommendations are appreciated!


  61. From Briefing Trader :

    ~~ Copper crash continuing here… down now about 3% on the day, and about 20% in the past 2 months

    Now hitting lowest levels since mid-year 2009.


  62. CM broke 70 now at 69.55 


  63. Financial Times sells out to Nikkei!  Soon PSW will be the only independent Financial news source left. 

    CMG/Albo – Why stop there?  

    You're welcome Eddie.

    Copper/Albo – That's my huge concern for the global economy, all the base metals and materials are in the crapper so how can the economy be doing well, no matter what they are saying?

    CM/Eddie – Their currency is crashing and their assets are in CAD so not good.  Plus Canada's economy in big trouble, especially banks that lend in the oil patch (not a huge issue for CM, which is why we like them).  

    Canada's TD Bank Shaves Prime Rate to Match Rivals

    Majority of Canadians say a rate cut unlikely to prompt them to borrow more: CIBC Poll

    It's tempting to call longs on the commodities, especially oil at $48.50 but these markets are looking very, very weak so watching and waiting continues. 


  64. The World’s Biggest “Hedge Fund”, $30 Billion Bigger Than Bridgewater, Remains Mysterious As Ever

    The World's Biggest "Hedge Fund", $30 Billion Bigger Than Bridgewater, Remains Mysterious As Ever


    zerohedge.com

    Few things are as misunderstood as Apple’s $203 billion cash hoard, first and foremost because of this amount $168 billion is not cash at all but actu…


  65. Phil, I read today that one of the biggest problems, is not so much the global economy weakness, but the massive oversupply capability built in the commodity space a few years ago.  According to that article, the bet was that the huge QE program of the Fed would weaken the dollar and thus, raise commodity prices.  Obviously, that didn't happen and now we're seeing the unwinding of those actions.


  66. Annoying Euro Apologetics

    Annoying Euro Apologetics


    nytimes.com / PAUL KRUGMAN

    Are there good arguments against the proposition that the creation of the euro was an epic mistake? Maybe. But the arguments I’ve been hearing lately ar…


  67. Banks still trump citizens in the minds of regulators

    Banks still trump citizens in the minds of regulators


    fortune.com / BY ELEANOR BLOXHAM

    Federal watchdogs have plenty to say about the well-being of big banks, but very little about the financial health of regular Americans. The Dodd-Frank …


  68. The Fundamental Way That Universities Are an Illusion

    The Fundamental Way That Universities Are an Illusion


    nytimes.com / KEVIN CAREY

    To understand the failures of the modern American college system — from admissions marketing to graduation rates — you can begin with a notorious univer…


  69. Donald Trump Threatens Third-Party Candidacy

    Donald Trump Threatens Third-Party Candidacy


    nytimes.com / ALAN RAPPEPORT

    Donald J. Trump has been roiling Republicans by attacking his rivals on their weak poll numbers and questioning their energy (Jeb Bush) and intelligence…


  70. Emerging market unemployment rises sharply

    Emerging market unemployment rises sharply


    ft.com

    Brazil and Russia lead spike, even as joblessness continues to fall in developed markets Markets, Global Economy, Opinion


  71. The 21 Best Raymond Chandler Quotes

    The 21 Best Raymond Chandler Quotes


    esquire.com / Tom Ward

    We mark the great writer’s milestone 126th birthday with his finest hard-boiled lines. Throughout his decades at the typewriter, Raymond Chandler almost…


  72. Phil,

    Regarding CM which did have a good qtr but is in a tough macro environment, I was looking at alternatives to taking a small loss on sht puts (Sep 70s in 1.25 now 2.15) as a trdg lesson. Your  thoughts on selling Aug 70  calls (1.25) with a stop, under the assumption that the macro environment CAD or oil ) doesn't improve in the near future and holding on to CM which would appear to be a well run bank

    Thanks.


  73. LOL pstas….“The price of gold is the reciprocal of the world’s faith in central bankers.”

    Then gold better get a move on, cause I have no faith in those quacks.


  74. CAT Aug 85 short puts I sold the same for 7.45 now 8.25 rolled the same to Sep 75 p taking advantage of the as well higher Sep put price price and paid 6.56 leaving me still with a net credit of .89 cents. Dropping  my put position by 10$. Obviously one could go further out to reduce the rolling cost, but in this case I am not to greedy. Buying the putter back today is not an option for me. By rolling the putter the price of the option increases or decreases some what proportional. Even that the Aug. put with a higher  delta will lose or gain more than the Sep put option.


  75. This is what they are doing to gold……in a smelly moment….


  76. Oversupply/Albo – There's certainly some oversupply but lack of demand is the real issue.  China was buying 2x what their economy could sustain and stockpiling – that's unwinding now.  Others are just not spending money – end of story. 

    CM/LTP, 8800 – The puts go out to March now so the roll would be from the Sept $70 puts (now $2.25) to the March $65 puts ($2.40).  As to selling calls, we sold Sept $75 puts and calls for $7.75 in the LTP and we'll sell March $70 puts and calls ($8 at the moment) when the time comes because our job is not to guess which way CM will go but to sell as much premium as possible.  If every 6 months, we have to pay back $5 on the $7.50 we sold, we will pay off the entire stock in 12 years plus the $3.50 dividend x 12 years is $42 more so $117 back on our $74.50 entry over 12 years is about 5% a year on our money but then we also get to keep getting that 5% forever after that on our free stock and the remaining value of the stock is just a bonus.  That's the main plan…

    VIX finally waking up:


  77. I am showing VIX at 13.02?


  78. Jabo VIX right 13.02



  79. Phil,'

    Thx for the strategy plan reminder on CM.


  80. take a look at ITEK…..drug for glaucoma, on standard of care in P2 data.  P3 has not started.  Float traded today…. 3X…… No options.  That is RE-dic-u-lous!


  81. BMRN…..trying to get an Aug BCS 150/155 for 1.70 or so.  Sumpin' is up.


  82. Remember 11,500 was the must hold line for the DAX?

    Uh-oh, could be the logic for someone to raise NFLX to $1,000:

    NASA finds new Earth-like planet

    Embedded image permalink

    Embedded image permalink

    Embedded image permalink

    LOL – You would think that the party with a 50% advantage in Honesty and Ethics a 66% advantage in being in touch with people's needs and seen as being nearly half as extreme would have more than a minority in Congress…

    News channel that lets viewers toggle between different looking holographic anchors. Fox will have 95 variations of Caucasian blond.

    Embedded image permalink

    Greece wasn't quite Greece either until the ECB started to "fix" them.  

    A global super-rich elite had at least $21 trillion (£13tn) hidden in secret tax havens by the end of 2010, according to a major study.

    The figure is equivalent to the size of the US and Japanese economies combined.


  83. VIX – Blame Finviz, that's supposedly their live chart.   Maybe the contracts are rolling.


  84. Wow that ITEK stock is jumping around like crazy, up 200% on the day! 

    AAPL- Was there some news today or did it just get caught up in all the selling which intensified at the end of the day. Gave up quite a bit over the last couple of hours of trading.


  85. Look at AMZN +$65.98 after the earnings


  86. How do stocks like TRIP and CTRP not get caught up in China's problems? Don't these guys make a lot of their revenue from China? Isn't there some worry about a slow down on travel if that economy tanks? I got out of TRIP worrying that they would be affected by that, but it looks like I was premature. I guess AMZN had a good report?


  87. Wow!  Just wow.  First NFLX, then CMG, and now AMZN.  My strangles are still looking decent (I was short September $575's on Amzn, so I have a little breathing room), but the amount that all of these have moved up in the last couple months is breathtaking.  Next up is BIDU, assuming all of my strangles get challenged on the upside in the same month!


  88. The fact that the headline at one point that "Amazon stuns with a profit" says it all about this market.  I covered the 570 calls I wrote yesterday at a 50% profit, thank god.


  89. I hope they squeeze the crap out of AMZN so I can go short again tomorrow at a price over 600.


  90. LOL, AMZN up $76 on 0.19 TOTAL in earnings.  If it were a $76 stock, that would be ridiculous!  Cloud business is huge growth though, 82% but so was MSFT.  At this pace, AMZN may earn $1 this year!!! 


  91. Palotay- hope your "margin bucket" is full :)


  92. AMZN- I recall an interview of Bezos where he said "your margin is my opportunity". So, you need to get on board with his master plan of driving all other retailers out of business. So far, so good. 

    Paging Mr. Barnum!


  93. I hope no one will be talking about shorting AMZN on this board… Oh wait!

    But seriously, up 80% this year. It's irrational to a point where it's actually dangerous now.


  94. VIX / Phil – Finviz shows the VIX futures not the actual VIX so there will be differences. StockCharts is probably better for that.


  95. Phil-with the market down today and /NKD hitting a low this afternoon of 20535, do you have any interest in shorting into the open tonight at 20615? I know you have the EWJ trade, but if you didn't might you take a poke here? I made $600 today starting at 20675 and going in and out down to 20550. I feel like it has further to fall, but I guess it could bounce tonight and tomorrow first before resuming the drop next week. I keep reading about tough times for Japanese companies and the economy due to the problems in China so it seems ripe for a fall just like US. 

    Also, I watched CNBC for a little while in the gym today and they seem to be trying very hard to avoid the criticism they got in 2008 by telling the world that there could be a steep drop due to bubbles in the markets. This is contrary to what they usually do to pump up the market before a fall as you write about so often. What is going on, are they developing a collective conscience?


  96. Pharm-ITEK is being given a price target of $40 by one analyst after this phase 2,result but do you know if all of this is legit or just another big jump on a rumor followed by a fall after the news gets clarified? Seems worth a poke if it is legit, but do you know if it is? 


  97. Phil – Look what I found in the archives. 8-)    What a dummy I am ! 

    ~~albo
    July 12th, 2013 at 9:42 am | Permalink | Tweet thisIgnore this user 
    Two years ago I predicted that within 10 years Jeff Bezos would be the richest man in the U.S.  He's gettiing there.  If I'm so smart, why didn't I just buy the stock two years ago.  DUH ! ! !

    BTW – Mr. Bezos added almost 6 1/2 billion more to his net worth after the market closed !

    What a juggernaut .   ARGGH !  
     


  98. If Bezos was so smart he would hedge his massive position post haste.  These momos will come back to earth down an elevator shaft in overdue correction.


  99. A very interesting look at the correlation between the JPY and Gold and a bullish case for Gold and other hard commodities for the coming year:

    " - and although a rate hike in September may further roil gold over the short-term, similar to 1999, it delineates that the economy has arrived in the late expansion phase of the cycle, where commodities typically outperform equities as inflation finds a foothold and the virtuous disinflationary cycle exhausts. "

    http://www.marketanthropology.com/2015/07/gold-is-dead-long-live-gold.html


  100. TRIP- Ok, so there's my answer about TRIP. they reported earnings and are being taken down as I write this as I expected when I sold it.


  101. Albo – Don't feel bad… How many people here are long AMZN! I think that we have all been waiting for them to crash for 10 years now.

    This proves again that fundamentals can take a very long time to work. Patience is key. On the other hand, if you wait long enough, fundamentals can sometimes catch up to the technicals. Look what happened to GOOG for example. Admittedly, with AMZN, it might be 30 years.


  102. Thanks, STJ for your kind words.  I'm still a doofus.


  103. Maybe Albo, but I'm currently short NFLX, AMZN, and CMG.   So if you are a doofus, I don't know what that makes me.  :)


  104. Palotay – A reasoned approach.  These MoMos are totally out of control and not to be believed.  But as has been said on this site, "The market can stay irrational longer than most of us can stay solvent."  To be truthful, I thought TSLA and others were shorts for the last couple of years.  You are not alone in your thinking. 


  105. Didn't someone try to do a MOMO portfolio a few years back with stocks like NFLX, AMZN, and TSLA, etc… that person would be doing pretty well right now.  I wonder what happened to that?


  106. We had a couple of portfolios with NFLX, AMZN and TSLA Kinki – but with shorts though! angry


  107. TUMI – down 5% today – I did not see any news on this…. 


  108. Private Jet Travel For The Simply Very Rich Takes Off With Two Startups

    Private Jet Travel For The Simply Very Rich Takes Off With Two Startups


    forbes.com / Kerry A. Dolan

    Two startups are betting that more of the very wealthy set want to travel like the megawealthy do: in private jets. The companies – JetSmarter and Beaco…


  109. Thousands of Apps Secretly Run Ads That Users Can’t See

    Thousands of Apps Secretly Run Ads That Users Can't See


    bloomberg.com / by Joshua Brustein

    There may be much more advertising in apps than it seems. Thousands of mobile applications are secretly running ads that can’t be seen by users, defraud…


  110. Bernie Sanders Introduces $15 Minimum Wage Bill As Federal Contract Workers Strike

    Bernie Sanders Introduces $15 Minimum Wage Bill As Federal Contract Workers Strike


    occupy.com / noah

    The bill, proposed by the presidential candidate and Democrats in the House, goes far beyond the current federal minimum wage of $7.25 an hour and makes…


  111. Boy if AAPL posted 0.19 earnings maybe the stock would be at 1000 !!! 


  112. Giant Fund Flips View on China: Steer Clear

    Giant Fund Flips View on China: Steer Clear


    wsj.com / Rob Copeland, Mia Lamar

    The world’s biggest hedge fund has turned on the world’s fastest-growing economy. Bridgewater Associates LP, one of Wall Street’s more outspoken bulls o…


  113. Nasdaq and S&P holding out best so far!


  114. BTW, Albo if that makes you feel better, back in 2013 I thought about adding TSLA to my IRA portfolio when it was around 40 but held back because we all thought that it was just a flash in the pan. Actually, that year we shorted TSLA in a portfolio (not mine – I am not that brave) and that took off on us. Of course today I would be looking at a 7-bagger (or more with options). I don't have regrets in life, but that comes close….


  115. gold even weaker…

    someone on this board predicted it correctly..albo?


  116. StJ / Life,

    There is always a next move to do as Phil says ( well, something like that), why not trying to choose a new one in the many IPOs or companies like MMM  coming down $·10 in the month.

    Ferrari is a IPO that could be interesting to watch ( they sale  8x more in merchandising worldwide that total value of production of cars) is any "Phil style" to play IPOs?.


  117. From Bloomberg, Jul 23, 2015, 5:28:19 PM
      Christine Lagarde, managing director of the IMF, ahead of a meeting of European finance ministers in Brussels, on July 11, 2015.

    Now that Greece is eligible again for loans from the IMF, getting any more money from the fund may hinge on a test of wills between Christine Lagarde and Angela Merkel.


  118. From Bloomberg, Jul 23, 2015, 9:45:00 PM

    A private gauge of Chinese manufacturing unexpectedly fell to the lowest in 15 months, reinforcing the need for further policy support in an economy that had seen signs of stabilization recently. Regional stocks fell.


  119. From Bloomberg, Jul 23, 2015, 6:58:53 PM
      Newmont Mining’s Boddington Gold mine in Western Australia. Photographer: Carla Gottgens/Bloomberg

    As gold prices have sunk to the lowest level since 2010, canny investors are seeking refuge in Australian gold mining stocks.


  120. From Bloomberg, Jul 24, 2015, 12:29:54 AM
      This July 6, 2014 photo shows picturesque windmills on the island of Mykonos in the Cyclades, a Greek island chain in the Aegean Sea. The tradition of building windmills on the island dates back centuries. The Cyclades are known for panoramic views of the sea, homes tucked into cliffsides and waterfronts, black-sand beaches and dramatic sunsets. (AP Photo/Kristi Eaton)

    Greeks may be fleeing their crisis-ridden country in droves, but it is still a favorite destination for luxury tourists.


  121. From Bloomberg, Jul 24, 2015, 2:12:05 AM

    European stocks rose, paring their first weekly drop in three, after companies including Vodafone Group Plc and Air France-KLM Group gained on results.


  122. From Bloomberg, Jul 24, 2015, 4:00:00 AM

    Robots work on the assembly of Seat Leon automobiles at the headquarters of Seat SA in Martorell, Spain, on Tuesday July 15, 2014.

    The euro-area economy maintained a steady pace of growth at the start of the third quarter, weathering strains on confidence from the debt crisis in Greece.


  123. From Bloomberg, Jul 23, 2015, 1:00:02 PM

    The central banks of New Zealand and South Africa, both commodity-producing countries, oversee economies under pressure from the weakest raw-material prices in 13 years.


  124. From Bloomberg, Jul 23, 2015, 9:52:07 PM
     July 24 — Japan’s biggest financial news publisher has surprised the media world by bagging the Financial Times and doing so at quite a premium to recent newspaper deals. Nikkei Inc., whose flagship Nihon Keizai Shimbun is Japan’s leading business daily, is paying $1.3 billion to Pearson Plc to buy the FT Group, which owns the salmon-hued paper with an editorial team of roughly 500 journalists in more than 50 locations around the world.

    Japan’s biggest financial news publisher has surprised the media world by bagging the Financial Times and doing so at quite a premium to recent newspaper deals. Now what?


  125. From Bloomberg, Jul 23, 2015, 7:00:00 PM
     

    Petroleos Mexicanos seems to have misplaced 2.7 million barrels of oil.


  126. From Bloomberg, Jul 23, 2015, 3:55:04 PM
      The CurrentC app.

    After almost three years in development, the retail industry’s answer to Apple Pay is finally getting off the ground.


  127. From Bloomberg, Jul 23, 2015, 2:31:01 PM

    The tumult in China’s stock markets has turned into a blessing for Indian shareholders.


  128. From Bloomberg, Jul 23, 2015, 3:01:57 PM

    Beijing’s Zhongguancun high-tech district, known as China’s Silicon Valley.

    “Ignite the innovative drive of hundreds of millions of people.” That’s what China’s Premier Li Keqiang called on all levels of government to do in a March address. With its industrial complex losing steam, the country must rely on innovation, especially of the digital kind, for new sources of growth. “You can see there are two Chinas. One is the old China that is slowing down in growth; there’s a new China that is driven by the Internet,” says Hans Tung, managing partner at GGV Capital, a venture capital firm in Menlo Park, Calif. “You know they need to grow the new China to offset the slowing down of the old China.”


  129. From Bloomberg, Jul 23, 2015, 6:00:00 PM
      A statue similiar to the Atlas at the Rockefeller Center outside a building, at the CBD area of Tianjin’s pilot free trade zone. Photographer: Sim Chi Yin/Bloomberg

    Tianjin city’s replica of New York’s Manhattan, still mostly deserted, is set to double output this year and quadruple it by 2017 as a new free-trade zone and high-speed rail link boost business, said a city official.


  130. From Bloomberg, Jul 24, 2015, 2:41:04 AM
      LeBron James, a member of the U.S. Olympic men’s basketball team, speaks to the media in Beijing on Aug. 7, 2008.

    Among the talent scouts in Las Vegas this week hunting for rising stars at the National Basketball Association’s summer league, Roe Stimler was trying to get people to sign up for his website. The Israeli entrepreneur runs a social network called SportJobz that hopes to one day do to sports agents what LinkedIn did for business recruitment.


  131. From Bloomberg, Jul 23, 2015, 4:16:27 PM
    An employee pushes a cart past bays of merchandise as she processes customer orders at the Amazon.com Inc. fulfillment center in Poznan, Poland, on Friday, June 12, 2014.

    Amazon.com Inc. reported a surprise second-quarter profit on top of sales that beat analysts’ estimates, showing investors — as it has done before — that the Web retailer can make money when it puts the brakes on investments.


  132. From Bloomberg, Jul 23, 2015, 4:00:00 PM
      Tourists pose for photos at the Sydney Opera House. Photographer: Brendon Thorne/Bloomberg

    “Crocodile Dundee” star Paul Hogan enticed Americans to holiday Down Under 30 years ago by promising to throw another shrimp on the barbie for them. Not much has changed since then.


  133. From Bloomberg, Jul 23, 2015, 1:42:12 PM

    The spectacle of the stock market meltdown in China has led many analysts and investors to see an upside to the downturn. The slump is “the most serious crisis” facing President Xi Jinping “since he came to power,” China commentator Willy Lam told an audience of academics in Vancouver on July 10. “It will require a lot to restore people’s confidence in the regime.” Volatility might force the state to clean up the unregulated loans fueling stock purchases and to intervene less in equity markets and the broader economy. The drop might even foster massive discontent with the Communist Party and support for real political reform. That’s because in China, unlike other major nations where large institutions dominate the markets, retail investors—90 million or so individuals, most of them belonging to the urban elite—do most of the investing.


  134. From Bloomberg, Jul 23, 2015, 10:20:47 AM
     

    Gold’s recent dramatic descent began shortly after China revealed its gold reserves for the first time in six years.


  135. From Bloomberg, Jul 23, 2015, 5:00:11 AM
     

    The inspectors could hardly believe what they were seeing. Summoned from their headquarters near Munich, the team of logistics, safety, and aviation experts had arrived at newly constructed Berlin Brandenburg International Willy Brandt Airport in the fall of 2011 to begin a lengthy series of checks and approvals for the €600 million ($656 million) terminal on the outskirts of the German capital. Expected to open the following June, the airport, billed as Europe’s “most modern,” was intended to handle 27 million passengers a year and crown Berlin as the continent’s 21st century crossroads.


  136. From Bloomberg, Jul 24, 2015, 4:04:20 AM

    U.K. stocks snapped a three-day losing streak as gains in Vodafone Plc offset a decline in mining stocks.


  137. From Bloomberg, Jul 24, 2015, 3:30:00 AM

    German manufacturing growth unexpectedly cooled in July as exports fell for the first time in six months.


  138. From Bloomberg, Jul 24, 2015, 3:20:39 AM

    Talk about mind the gap. While Citigroup Inc. says copper will probably rebound to more than $6,000 a metric ton by year-end, Goldman Sachs Group Inc. predicts the metal may only be at back at $5,500 by 2020 after a seven-year bear market.


  139. From Bloomberg, Jul 24, 2015, 2:28:00 AM

    A two-year rally in Singapore’s office rents has come to a halt.


  140. From Bloomberg, Jul 24, 2015, 2:00:35 AM

    India’s rupee headed for its biggest weekly drop since May on speculation importers stepped up dollar purchases to pay month-end bills and as U.S. economic data backed the case for higher interest rates.


  141. From Bloomberg, Jul 24, 2015, 1:48:42 AM

    Emerging-market stocks headed for a weekly loss and currencies weakened as an unexpected drop in a private gauge of Chinese manufacturing risked deepening a commodities rout. Russia’s ruble declined for a third day.


  142. From Bloomberg, Jul 24, 2015, 1:23:27 AM

    In most stock markets, data showing weak economic growth is bad news for investors.


  143. From Bloomberg, Jul 24, 2015, 12:52:57 AM

    Chinese stock investors increased leveraged positions in Shanghai by the most in almost two months as the benchmark equity index extended a rebound.


  144. From Bloomberg, Jul 24, 2015, 1:15:01 AM

    Air France-KLM Group will drop routes, curb winter-season seating capacity and deepen other cost-cutting measures after second-quarter profit fell 22 percent.


  145. Batman- I am guessing Tumi is tumbling on news from Trip Advisor earnings and the general belief that we are headed for economic hard times, which will limit travel, perhaps. I was wondering out loud yesterday how travel related stocks could be doing well in the current climate. 


  146.  albo, great call yesterday on the oil short…….only wish I had followed you in. Good call. 


  147. Good morning!  

    I will say about the MoMos that I've simply stopped playing them because they are silly.  Everyone talks about AMZN like it was some "can't miss" bet but, like any stock, timing is everything.  AMZN dropped from $400 to $275 (31%) just last year but Albo is pining away for his July 2013 entry ($307).  So how would he have actually played it?  

    Nothing against Albo, he just happened to be a concrete example.  StJ mentions us being short on TSLA but actually we were long on TSLA at $40 but we sold a 1/2 cover of short calls and, when they popped to $80 (almost overnight) we decided (fatally) to cash in our longs and let the short calls ride and the stupid thing kept going up and up and up.  To date, they have still not made a profit but now $267.

    These are the same regrets people had in 1999 when they wondered how they missed Yahoo at $100 or Pets.com, which IPOd at $11, ran to $14 and then crashed to $1 almost immediately or Webvan (delivering groceries), which raised $375M, IPO'd at $30 with a $1.2Bn valuation and was gone a year later.  So there is no "Phil way" to buy IPOs because IPO buying is nothing but gambling and often overpaying for things.

    I can only relate my experience in 1999 and I've said since last year that this market was just like that but I also reminded people that in 1999 the market doubled before it collapsed – the people (like me) who were value investors and sat out the 1999 rally were very happy in 2000 – but not so much in 1999, while everyone else was telling us how wrong we were and how clever they were for backing the latest MoMo.

    There's nothing wrong with that kind of investing if you are smart enough to get out at the top.  Unfortunately, there were very few smart people in 1999 or 2008 but there were, however, an endless supply of suckers who bought in near the top, paying ridiculous prices out of fear of missing out on something, who lost their shirts in the crashes (the ones that were supposed to be once in a lifetime but actually came less than 10 years apart).  

    Submitted on 2013/10/22 at 5:19 am

    Dot Com Bubble/Rookie – Yes but early 1999 was still a good time to invest – you just have to take a hint to get out when the top finally begins to break (tough to call while it's happening).  That's why we like to have disaster hedges in place, generally, once we're rallying like this, it's a good idea to put about 1/4-1/3 of your weekly upside gains into downside hedges.

    Asset Bubble/Rookie – Asset bubbles are the Fed's goal.  If you turn on a fire hose and aim it at a house that's on fire, you are generally just trying to get things wet, not any particular thing.  That's what the Fed does.  If they wanted to directly affect one thing or another, they have other tools but this is simply putting more water in the pool and seeing what floats to the top.  Unfortunately, we have a lot of things with holes (the bottom 80%, for one thing) that are simply drowning.  Rising tides don't lift the Titanic after it's sunk…

    From the Fed's perspective, they think of asset bubbles like balloons and they hope one gets so big that it lifts the entire economy with it.  The problem is that a bubble like we have in stocks breaks free of the economy and leaves the rest behind – so all the effort to lift the economy ends up going to one thing (Financials and the markets) and that one thing decouples from the dead weight and now the Fed spent all that money (our money in Future Debt) and we're still left with the dead weight like a crying child while the beautiful market balloon floats off into the sky.

    Submitted on 2014/06/05 at 7:53 am

    Rally/Brit – They can go on a lot longer than you'd think.  I saw the same signs in early 2007 but nothing significant happened until the summer of 2008.  Same in 1998, where the markets went up another 40% in 1999 – that's why we're not shorting much – just in cash – these things are just too hard to time properly but, once they get going – there are plenty of opportunities to play! 

    Submitted on 2014/07/18 at 4:13 pm

    Bonds/ZZ – I wouldn't go near those either.  Cash is king and all we can do is buy those bargains and keep alert for those macros to finally come home to roost.  As I mentioned in yesterday's post, I spent the better part of 2007 and 2008 telling people I didn't trust the market, much as I did in 1998 and 1999 – it sucks to be "wrong" about the timing but, as is our theme for this year, I'd rather make 20% and get out and do that consistently than chase crazy gains until the market explodes.  

    Submitted on 2014/09/04 at 11:11 am

    Shoes/Pirate – Hey, I sat on my hands from mid 1998 to 2000 waiting for the market to get sane – it's very hard to be a rational person in an irrational market.  

    Submitted on 2015/02/26 at 12:25 am

     

    Good article, Pstas.  This does feel so much like 1999 but, in 1999, the Nasdaq doubled before finally coming back down.  The question is, are we in early 1999 or late 1999?

    Click to View

    Don't forget, in early 1999, when we crossed 88%, there were plenty of people saying that the last time this happened was 1929 and it was a disaster and a lot of people went short and then market proceeded to go up another 100%(ish) to the 3rd and almost 4th standard deviation.  Also, don't forget, in 1999, not only wasn't the Fed pumping money into the economy, but Greenspan had already "taken away the punch bowl" at the end of 1996, when he said:

    Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?

    AAPL/Craigs – It popped at the open and then people took profits.  Lots of day-traders in it now with all the high option premiums to milk.

    TRIP/Craigs – They just had disappointing earnings, down about 10% after hours.  CTRP I pay no attention to as it's a silly Chinese company, probably overvalued but who can tell?  

    If all goes well, in a couple of years, CTRP hopes to earn $1 per share for a 75 p/e (then).  At the moment, if they make a penny this Q, people will be happy, even though they made 0.14 last year's Q2.  Logically, they'd be a short into earnings (next week) but who the Hell can predict this nonsense.  

    Strangles/Palotay – Not the best time for those. 

    $600/Rustle – May get there. 

    Bezos/Pstas – I think when Bezos said "your margin is my opportunity" I think he may have been talking about squeezing the shorts…  cheeky

    If you look closely at AMZN earnings – web services had a profit of $397M out of $464M in total income (85%).  So what AMZN has done is they have started a business that is profitable that has little to do with their main business (but does cleverly use existing infrastructure, which makes them more profitable) and THAT has given them earnings but investors are wrongfully extrapolating those profits (on $1.8Bn in revenues) as if it applies to the other $22Bn in revenues.  Also completely ignored is Q3 guidance of -$480M-$70M (pretty wide estimate).  

    VIX/StJ – Well, it's still a representation of direction, right?  StockCharts may be better for the current VIX but Finviz has the benefit of being live.  

    /NKD/Craigs – 20,600 was our first shorting line with tight stops above.  We try again at 20,700 with tight stops and 20,800 we begin to have conviction as 21,000 hasn't broken yet.  That means we can go 1x at 20,800, 2x at 20,900 for 20,850 avg on 2 and add 2 more at 20,950 for 4 short at 20,900 and 4 more (getting expensive) at 20,990 for 8 with an average of 20,945 and a loss (at that moment, of $1,800) and then maybe a capped loss over 21,000 for about -$2,000.  That's the risk to having conviction but, meanwhile, nice rejections at 20,600 since last night.  

    The strong Dollar is good for /NKD and Japan just put up some decent export numbers thanks to the weak Yen (but imports were down 2.9%).  On the other hand, the IMF just warned Japan they need to get their debt under control as it's on path for 300% of GDP by the end of the decade.  

    Japan's debt is already at about 245% of its annual gross domestic product — or more than 1 quadrillion yen ($11 trillion).

    "Japan's public debt is unsustainable under current policies," the IMF said in a report issued Thursday. "A credible medium-term fiscal consolidation plan is needed … [it] should aim to put debt on a downward path."

    Don't worry though, the Nikkei just bought the FT so criticism from the EU will quickly be halted and everything will be awesome again!

    And it's not going to get better:

    CNBC/Criags – They are more sensitive to criticism these days.  Sometimes I write something about them and they change their tune by mid-day. 

    Dummy/Albo – Well we sold FAS Aug calls in the main post that day and they made 100% in 30 days – that was as good as AMZN, who haven't even doubled yet.  My trade idea for AMZN that morning was:

    STP Play – Buy 3 AMZN Aug $310/330 bull call spread for $6 and sell 3 July $300 calls for $5 70 for a net .30 on the spread and AMZN has lots of weeklies to roll to and eanings not until 25th (after expiration) so we should get good rolls. 

    We also picked the FXI Aug $33 puts, which were quickly a big winner, we sold BA Aug $95 puts for $3.30 while they dropped over that battery fire (another winner) we shorted USO at $106 and we had a winning TSLA spread.  

    There are plenty of ways to make money in the market and there are always going to be stocks you look back on and wish you had gone with knowing now what you didn't know two years ago.  When stocks are hard to predict – I've learned not to play them.  It's a much easier path…

    Gold/Kinki – As I've said, we are looking only at gold priced in Dollars – it doesn't tell the real story.  

    Meanwhile, /YG at $1,078 this morning.  We may get our $1,050 test. 

    TUMI/Batman – Maybe due to airline disappointments?  Quite a correction off their run:

    They didn't make the cut when we cashed in the LTP (thank goodness) but now getting interesting again. 

    ABX/Jabob – Wow, that one was a fire sale for $550M as the mine produced 250,000 ounces a year so $2,200 an ounce / 10 years life (avg) is about $220/ounce they sold the gold for.  Still, goes to my premise that their 100M ounces of gold (10M/10 years) is worth a lot more than their $8Bn market cap – even in the ground – $22Bn if sold at the same price as Cowal, which is considered a huge bargain for the buyer and ABX only selling because they are focusing geographically to cut costs.  This is the 6th Aussie mine they've dumped in 3 years, they only have one 50% partnership left and they are already closing all Aussie offices.  


  148. Gold down sharply again.

    Phil, the only problem I see with your thesis on ABX is that it doesn't really matter how much gold they have in the ground.  If they are an operating company with a huge debt load, and can't service that debt, they will, most likely, be thrown into bankruptcy.  Yes, the value is there, but it doesn't belong to the shareholders at that point it belongs to their creditors.


  149. IS anyone betting on gold and silver down here? Silver has not been this low except for a brief spike down Dec 1, 2014 in many years. I think it is worth a poke even if you need to wait a few days to get at least back up to $15 soon. Maybe futures isn't the way to play it, but as Phil said, when everyone is writing about how gold and silver are collapsing it usually signals an opportunity as they are trying to scare us away.


  150. C´mon Phil, don´t get angry at 3:00 am………. that is bad for heath, anyway a good point your comment about Momos…


  151. I'm never angry, Advill, I'm a New York Jew (and getting to be an old, cranky one at that!), this is how we talk…


  152. Sold 5 CAT Jan/17 $80p as suggested. Did get $8.40 for 'em.

    Would you perhaps suggest selling 5 $70p's for $6.30 and perhaps buying back the 80's at a later bounce?