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Just Another Manic Monday

Up we go again!

In the end, the S&P 500 only made a weak retracement of the rally, back to the 3,800 line on the button, per our 5% Rule as we noted on Friday morning.  Since then we bounced back but it's a fall from 3,900 so those bounces then should be 20 points so 3,820 (weak) and 3,840 (strong) and we don't pay much attention to the Futures but a fail to hold a strong bounce today means we are still more likely to be consolidating for a move down to 3,700 this week.  

Bonds finally stopped falling (which indicates rates are rising) but they too are likely just bouncing after falling 5% from 140 to 133 so we're not very impressed with that move either until we see a strong bounce – which would be 2 points back to 135 – where you can see we paused on the way down.

Pausing here is certainly nothing to get excited about as the US just held a TERRIBLE 7-year note auction that got very little interest (the lowest demand in history) and the 10-year note yield is still about 1.5% – back to where it was pre-Covid and miles above the Feds 0.25% target rate – a gap that shows how far away from reality the Fed really is at the moment.  

Almost everything that mattered was red on Thursday. Treasuries sank, driving the yield on 10-year notes up as many as 23 basis points to 1.61%. Stock losses were most pronounced in Nasdaq-100 and small-cap shares that, with help from frenzied speculators and economic optimists alike, had led equities higher. Corporate bonds continued to rack up the biggest losses since the pandemic began as companies scramble to sell debt before yields go up even more. The dollar surged in a classic haven trade.

A return to pre-pandemic yield levels didn't calm anyone

So, what's gotten better over the weekend?  Nothing really.  “I was surprised to see the almost complacency from Fed officials, with naive comments about U.S. bond yields reflecting a stronger outlook,” said Thomas Costerg of Pictet Wealth Management in Geneva.  What sounds like reassurance to US investors sounds like idiocy to Global Traders – that's why no one is buying our bonds anymore – no faith in our Fed is a dangerous thing because faith is all we have holding this monetary system together at 200% debt levels.

“‘Trouble ahead’ is signaled by a rare combination of low-quality securities, staggering valuation metrics, overleveraged capital structures, a scarcity of honest profits, a desperate dearth of understanding evinced by the most active traders, and economic macro prospects that are not as thrilling as the mobs braying ‘Buy! Buy! Buy!’ seem to think,” wrote Paul Singer in his recent Fund letter.

Token witnesses worst weekly decline since MarchEven BitCoin did not escape last week's sell-off, dropping 22% from the record high of $57,000.  We'll be watching for bounces in BitCoin as well but the last time we had a splike like this in March – it was the first week of a much greater sell-off.

In fact, in case anyone is interested, I was offered this weekend a chance to broker some large blocks of BitCoins for Cash Discounts.  250,000 BitCoins can be yours at an 8% discount (2 blocks) and there are 2 blocks of 500,000, a 1M and a 1.3M between 4% and 8% off available as well.  

No one ever offers to sell me Dollars at an 8% discount – or Euros or Yen or even Yaun for that matter.  What does that say about BitCoin?  Keep in mind that's 3.8M BitCoin that people are trying to unload out of 21M total BitCoin in the World.  They can't sell them on exchanges – it would crash the market – hence the cash discount if you happen to have $23Bn sitting around to buy 500,000 with (just $21.16Bn with the discount!).  You would think BitCoin would be doing better with 2021's debt levels forecast to be even greater than 2020's were:

Led by Europe, of course:

ECB balance sheet grew more under Lagarde than Draghi

What could possibly go wrong? 

Speaking of borrowing massive sums of money that can never be repaid – Biden's $1.9Tn Stimulus Bill passed the House (without the minimum wage increase) and heads to the Senate for approval, where the Republicans will suddenly become concerned about debt again.  As I've said before, that money is already baked into the markets and it can only be a disaster if we fail to execute this program at this point.  

Fortunately, there are only a few short-term note auctions this week and not too much data leading up to Friday's Non-Farm Payroll Report.  We have PMI, ISM and Construction Spending this morning, Motor Vehicle Sales tomorrow, Beige Book Wednesday, Productivity Thursday and then the Big Kahuna on Friday – all surrounded by 10 Fed Speeches:

Image

Also there are still PLENTY of Earnings Reports coming in.  Berkshire Hathaway (BRK.A) had a great Q4, boosted by Rail, Utility and Energy units while Consumer Products were dragging a bit.  The company bought back $9Bn of it's own stock in Q4 on $5Bn in earnings so Buffet thinks his stock is so cheap that he's borrowing money to buy it!   In 2020, Buffett bought $24.7Bn worth of his own stock, 5% of the market cap.  Don't worry, they still have $138.3Bn in CASH!!! reamining – that's about 1/4 of their market cap right there.

Of course, a deeper reader will notice that Investment Gains were $30.4Bn vs $24.5Bn a year ago so that's $6Bn(ish) of the $5Bn in earnings (120%) coming from market gains that Buffett himself considers frothy – including the gains he made buying his own stock below $300,000, which is up 20% since!  So I don't think we can think what's good for Berkshire must be good for the S&P 500 and those Investment Gains can reverse very quickly so to you and Mr. Buffett I say:

Be careful out there!

 


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  1. Good morning!

    Thanks for notes on TSM, Ted – just seems like way too much money to be making.  

    Pstas had a nice summary of Berkshire earnings:

    Berkshire Hathaway 2020 Shareholder letter – Selected Highlights

     

    Berkshire earned $42.5 billion in 2020 according to generally accepted accounting principles (commonly called “GAAP”). The four components of that figure are $21.9 billion of operating earnings, $4.9 billion of realized capital gains, a $26.7 billion gain from an increase in the amount of net unrealized capital gains that exist in the stocks we hold and, finally, an $11 billion loss from a write-down in the value of a few subsidiary and affiliate businesses that we own. All items are stated on an after-tax basis. Operating earnings are what count most, even during periods when they are not the largest item in our GAAP total. Our focus at Berkshire is both to increase this segment of our income and to acquire large and favorably-situated businesses. Last year, however, we met neither goal: Berkshire made no sizable acquisitions and operating earnings fell 9%. We did, though, increase Berkshire’s per-share intrinsic value by both retaining earnings and repurchasing about 5% of our shares. 

    The final component in our GAAP figure – that ugly $11 billion write-down – is almost entirely the quantification of a mistake I made in 2016. That year, Berkshire purchased Precision Castparts (“PCC”), and I paid too much for the company. 

    Investing illusions can continue for a surprisingly long time. Wall Street loves the fees that deal-making generates, and the press loves the stories that colorful promoters provide. At a point, also, the soaring price of a promoted stock can itself become the “proof” that an illusion is reality. 

    And bonds are not the place to be these days. Can you believe that the income recently available from a 10-year U.S. Treasury bond – the yield was 0.93% at yearend – had fallen 94% from the 15.8% yield available in September 1981? In certain large and important countries, such as Germany and Japan, investors earn a negative return on trillions of dollars of sovereign debt. Fixed-income investors worldwide – whether pension funds, insurance companies or retirees – face a bleak future. 

    Last year we demonstrated our enthusiasm for Berkshire’s spread of properties by repurchasing the equivalent of 80,998 “A” shares, spending $24.7 billion in the process. That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet. 

    In no way do we think that Berkshire shares should be repurchased at simply any price. I emphasize that point because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse. 

    This agreeable dynamic continues. Berkshire has repurchased more shares since yearend and is likely to further reduce its share count in the future 

    When you next fly over Knoxville or Omaha, tip your hat to the Claytons, Haslams and Blumkins as well as to the army of successful entrepreneurs who populate every part of our country. These builders needed America’s framework for prosperity – a unique experiment when it was crafted in 1789 – to achieve their potential. In turn, America needed citizens like Jim C., Jim H., Mrs. B and Louie to accomplish the miracles our founding fathers sought. Today, many people forge similar miracles throughout the world, creating a spread of prosperity that benefits all of humanity. In its brief 232 years of existence, however, there has been no incubator for unleashing human potential like America. Despite some severe interruptions, our country’s economic progress has been breathtaking. Beyond that, we retain our constitutional aspiration of becoming “a more perfect union.” Progress on that front has been slow, uneven and often discouraging. We have, however, moved forward and will continue to do so. Our unwavering conclusion: Never bet against America. 

    The tens of millions of other investors and speculators in the United States and elsewhere have a wide variety of equity choices to fit their tastes. They will find CEOs and market gurus with enticing ideas. If they want price targets, managed earnings and “stories,” they will not lack suitors. “Technicians” will confidently instruct them as to what some wiggles on a chart portend for a stock’s next move. The calls for action will never stop. Many of those investors, I should add, will do quite well. After all, ownership of stocks is very much a “positive-sum” game. Indeed, a patient and level-headed monkey, who constructs a portfolio by throwing 50 darts at a board listing all of the S&P 500, will – over time – enjoy dividends and capital gains, just as long as it never gets tempted to make changes in its original “selections.”

     

    Once again, the annual meeting will be virtual, streamed by Yahoo – May 1st. This year , from Los Angeles to include Charlie in the Q&A.

    And Gundlach's comment is very on-point:

    The ratio of the price of copper to the price of gold is a great inflation indicator. Copper has rallied a great deal while gold is slightly down. This tells us the U.S. 10-Year Treasury should be at 2.25% right now.”

     

    – Jeffrey Gundlach,

    Founder, DoubleLine Capital LP


  2. Good Morning.


  3. Phil,

    Given the interest rate environment/projections, would you consider selling calls (145ish) on TLT-  to benefit from decay – or selling puts (18ish) on the pariah from yesteryear, TBT ?

    Thanks


  4. Asian shares rise on hopes for US stimulus package



  5. Fact check: Trump delivers lie-filled CPAC speech


  6. Yikes, up 600 – amazing.

    TLT/8800 – Usually we short at 140 but this is a completely artificial environment so we haven't played in years.

    Good reports adding to the mood from Stimulus Bill:

    • February ISM Manufacturing Index60.8 vs. 58.7 consensus, 58.7 prior.
    • New Orders Index 64.8 vs. 61.1 in January.
    • Production Index of 63.2 falls from 60.7 prior.
    • Backlog of Orders Index 64.0 vs. 59.7 prior.
    • Employment Index 54.4 vs. 52.6 prior.
    • Supplier Deliveries Index 72.0 vs. 68.2 prior.
    • Prices Index 86.0 vs. 82.1 prior.
    • January Construction Spending+1.7% M/M to $1,521.5B vs. +0.8% consensus, +0.7% prior (revised from +1%)
    • Construction spending +5.8% Y/Y vs. +5.7% prior
    • February PMI Manufacturing Index 58.6 vs. 58.5 consensus, 59.2 prior.
    • "Although the rate of overall growth eased, it was the second-fastest since April 2010 and was supported by sharp increases in output and new orders," IHS Markit says.
    • Employment grew at the steepest rate since September 2014, as business confidence also increased, the company said.
    • Supply chain disruption was still apparent with supplier shortages and transportation delays fueling a substantial rise in input costs.
    • "Output expectations regarding the year ahead among manufacturers strengthened in February. The degree of optimism was the highest for three months amid hopes of an end to the pandemic and a reduction in restrictions as 2021 progresses," according to the report.
    • Citigroup (NYSE:C) stock advances 4.2% in early trading as Jane Fraser takes over as the bank's CEO even as she faces challenges in gaining regulators' confidence.
    • Wells Fargo analyst Mike Mayo considers Citi's parts are worth more than its whole, according to a Barron's report on Saturday.
    • In his analysis of the bank's divisions, Citi could trade at 1.5x tangible book value, or $111 per share, "reflecting significant hidden value and trapped capital," Mayo said.
    • By comparison, Citi closed at $65.88 on Friday.
    • Recapping on Citi's regulatory challenges, in 2012 and 2013, the Office of the Comptroller of the Currency and the Federal Reserve had hit the bank with a consent order for Bank Secrecy Act violations and weaknesses in anti-money-laundering compliance. Further regulatory actions led to another consent order and a $400M find for risk management-related deficiencies and compliance in 2020.
    • On top of that, a federal judge ruled that Revlon creditors didn't have to return the amounts they received when Citi accidentally wired $900M to them last summer.
    • On Friday, Citi revised its earnings downward after writing down down the Revlon loan.
    • Calling the initial inventory test "successful," JPMorgan upgrades  Groupon (NASDAQ:GRPN) from Underweight to Neutral with a $48 price target, an 11% upside to the last close.
    • Analyst Douglas Anmuth highlights key takeaways from last week's Q4 earnings report and management calls, including solid EBITDA and upside gross profit of $179M.
    • Anmuth notes that local results were choppy, but he expects Groupon's growth to resume in Q2 with a stronger recovery in H2.
    • The analyst says the six-month inventory test was successful "both on the supply and demand side" with inventory up 65%.
    • Anmuth expects Groupon to scale inventory by removing repeat deal restrictions, rolling out Offers across NA Beauty and Wellness merchants, and developing more self-serve tools like sponsored listings for merchants.
    • Key quote: "Overall, we are encouraged by GRPN’s efforts here as it looks to build inventory and modernize the marketplace."
    • Groupon shares are up 1.8%.
    • Last week, Groupon reported a surprise Q4 profit.
    • United Airlines (NASDAQ:UAL) says it is adding 25 planes to its order for Boeing's (NYSE:BA) 737 MAX jet, and is speeding up the delivery timeline as it seeks to position itself for the expected recovery in travel; UAL +5.1%, BA +3.5% pre-market.
    • United plans to use the jet throughout North America, including Hawaii, replacing smaller planes as demand returns, and will help restart the company's strategy of strengthening connections at hub airports in the middle of the country in Houston, Chicago and Denver, COO Andrew Nocella says.
    • The plane also is more fuel efficient than its predecessors, an important benefit for the airline as it seeks to reduce its carbon footprint.
    • United, which has 30 MAX planes in its fleet, expects to receive 24 this year, followed by 40 next year and 54 in 2023; it started using the plane again only a few weeks ago
    • Treasury bond yields are stabilizing today after last week's breakneck run and late plunge.
    • The 10-year Treasury yield is down 1 basis point to 1.45%, putting it back down below the dividend yield of the S&P (NYSEARCA:SPY).
    • Among bond ETFs premarket: (NYSEARCA:TBT) +4%(NASDAQ:TLT) -2%(NYSEARCA:TIP) flat, (NASDAQ:IEF) -0.4%(NASDAQ:BND) -0.3%(NASDAQ:VGLT) -1.7%(NASDAQ:IEI) +0.5%.
    • Goldman Sachs thiks the pause is justified and then will move to a further selloff in bonds and rise in rates.
    • "Recent yield increases reflect repricing of both expectations and real risk premia; expect near-term consolidation, but resumption of selloff on growth and inflation strength," analysts led by Praveen Korapaty wrote.
    • "On the whole, the improved backdrop and upgrades to our economic views should  translate to higher yields than our current forecasts. Yields have closed in on our year-end forecasts (1.5% for UST 10s) much earlier than we anticipated; we see upside risks from here, and are therefore placing the forecasts under review."
    • The savings built up by Americans could be a big trigger for another rise in rates.
    • Plug Power (NASDAQ:PLUG) +9.4% pre-market after J.P. Morgan upgrades shares to Overweight from Neutral with a $65 price target, saying the stock is attractively priced in the context of the company's "many long-term growth opportunities."
    • Plug shares have shed a third of their market value since closing at $73.18 on Jan. 26, which was the highest close since September 2005.
    • JPM's Paul Coster views Plug as a "story" stock that appeals to investors looking for exposure to growth in renewable energy, particularly hydrogen, and he expects the company to announce at least one additional "pedestal" customer, probably in Europe, in the coming months.
    • Plug shares have cratered on likely confusion over the impact of warrant charges, Henrik Alex writes in a neutral analysis newly published on Seeking Alpha.
    • Bitcoin rises 6% on Monday to $48.2K as risk assets resurge and Citi considers the crypto asset at a "tipping point" between mainstream adoption or "speculative implosion."
    • With Tesla's recent $1.5B investment in Bitcoin and companies like Mastercard and PayPal accepting payments, the crypto could be at the start of a "massive transformation" into the mainstream, Citi analysts said.
    • If businesses and individuals get access through digital wallets to planned central bank digital currency and stablecoins, Bitcoin's global reach, traceability, and potential for quick payments would make it "optimally positioned" to be a preferred currency for international trade, they said.
    • They still acknowledged that there are "host of risks and obstacles" to the everyday use of Bitcoin as a currency, they said.
    • See why SA contributor Zvi Bar sees Bitcoin becoming a meaningful form of collateral.
    • In premarket trading, Marathon Patent (NASDAQ:MARA) jumps 16%, Riot Blockchain climbs 11%, and MicroStrategy (NASDAQ:MSTR) gains 6.7%. Other tickers to watch: Grayscale Bitcoin Trust and Osprey Bitcoin Trust (OTCPK:OBTC)

  7. This was one of the more rational speeches at CPAC – you can imagine how the other ones were:


  8. Here's one we forget is cheap, GILD.  $62.42 is just $78Bn and they broke even last year but make more like $5.5Bn in a normal year and are projecting much better than that this year and next (more like $8-9Bn), which makes them a real bargain.  Our LTP trade is still valid, of course:

    GILD Short Put 2022 21-JAN 62.50 PUT [GILD @ $62.26 $0.71] -10 2/5/2020 (326) $-9,000 $9.00 $-0.88 $-9.60     $8.13 $-0.28 $875 9.7% $-8,125
    GILD Long Call 2023 20-JAN 45.00 CALL [GILD @ $62.26 $0.71] 50 11/17/2020 (690) $86,000 $17.20 $1.10     $18.30 - $5,500 6.4% $91,500
    GILD Short Call 2023 20-JAN 65.00 CALL [GILD @ $62.26 $0.71] -50 11/18/2020 (690) $-37,250 $7.45 $-0.23     $7.23 $-0.26 $1,125 3.0% $-36,125

    That's net $47,250 on the $100,000 spread that's pretty much in the money.  We did an aggressive put sale at the time and I'd still do that.

    As a new trade, I like:

    • Buy 1,000 Shares of GILD at $62.22 ($62,220)
    • Sell 10 GILD 2023 $55 calls for $12 ($12,000) 
    • Sell 10 GILD 2023 $60 puts for $10.50 ($10,500)

    That's net $39,720 and you get called away at $55,000 if all goes well with a $15,280 profit (38.5%) plus $2,840 in dividends each year while you wait for another $5,680 (14.3%) so 52.8% profit in two years on a fairly conservative play and the worst-case is owning 2,000 shares at an average cost of $47.02 ($94,040 assuming the dividend continues).

    To lay out less money:

    • Sell 10 GILD 2023 $60 puts for $10.50 ($10,500)
    • Buy 25 GILD 2023 $60 calls for $9.30 ($23,250) 
    • Sell 25 GILD 2023 $72.50 calls for $5.00 ($12,500)

    That one is net $250 on the $31,250 spread so $31,000 (12,400%) of upside potential at $72.50 seems very reasonable and the worst case is owning 1,000 shares at net $60.025 – a bit less than it is now and then we flip to the ownership plan above.


  9. I have a couple high yield tickers I'm looking at once there is a pullback.  Any thoughts?  I'm looking to sell some near ITM puts to open the position and acquire some discounted shares to sell calls against.  All have high yield and seemingly decent premiums.  The other tickers I'm doing this with are T and TOT.

    AB, APAM, JHG


  10. Jan22 GLD 190 calls


  11. AB/JPH – Good, solid business.  I like them for the long-term.   APAM I don't follow but they seem OK.  JGH I have no clue what they should be worth.  

    Oil totally collapsed – Take $60 and run!  

    Of course it's going to bounce so we'll how the bounce goes before re-entering.

    That was worth holding over the weekend!  




  12. New member questions about the two GILD trade options. I see the mechanics but I'd like to understand better the thinking behind them. I have three questions.

    1) For the first trade option, I'm very familiar with what I call covered strangles.  However, I've always thought about both shorts as being OTM.  
    A) For the call side, why do you go ITM to $55 vs OTM to a $65 or $67.5 strike?
    B) Once you decided to go ITM, why $55 versus say $50 or $60?

    2) For the second trade option, when you calculate the 12,400% of upside potential, why do you include the credit from the short put but not the buying power reduction of the short put?

    Thanks!


  13. Welcome SteveZ!    There's no rule that short puts or calls have to be out of the money.  The real question is, what is our price target?   With IMAX, for example, when it was trading at $15, we sold the $20 puts because over $20 was our target so we got much more money selling those – so why not?  Same goes for short calls, we can drastically lower our cash outlay, still collect the dividends and if we get called away on the $55 calls, we're being called away for net $67, since we sold them for $12 – if we are buying them for $62 – there's no downside and what's left then are the short $60 puts we sell for $10.50 for a re-entry (if assigned) at net $49.50 less the $5 we make if called away at $55 is net $44.50(ish) for the 2nd 500 – that's your short put commitment.  

    A trade like that is more to capture the dividends, which are a substantial 14.3% a year against our cash outlay.  At some point in 2022, we can even roll the short calls out to 2025's at a higher strike – so we continue to make the dividends while remaining well-protected.  As to why one strike over the other – it's all about protection and targeting.  We are expecting a 20% correction at some point and under no illusion GILD will be spared so it's nice to have a good cover – which we'll very likely buy back if it gets cheap enough – leaving us with a much more aggressive long.

    And yes, it's 12,400% against the cash outlay.  The way we run our portfolios, there's always plenty of cash on the sidelines (obviously with these set-ups) so the buying power effect is not a concern.  Also, it varies depending on your broker and what kind of trading account you have – not the same for everyone.  ThinkOrSwim wants to charge me $4,477.36 of Portfolio Margin.  In an IRA it's $50,000 for 10 short $60s.  Either way for us, it's within our allocated allocation block for the trade.


  14. Phil, thanks for the thorough response.  This will give me something to wrap my mind around.  :-)


  15. Oil did not even make a weak bounce:

    $63.50 to $60 is down $3.50 but $63.50 was likely an overshoot of $63 (5% over $60) so we'll use that and call it a $3 drop with an 0.60 bounce to $60.60 as weak and you can see that was flash-rejected so not good for the oil bulls at the moment.

    Wrapping/Steve – Keep in mind we're not options strategists here – we're Fundamental investors who use options for hedging an leverage.  The trades revolve around value and our goal is to buy value stocks and sell premium against them to collect money while we wait for the rest of the market to figure out how undervalued the stock is.  Since premium always expires worthless, we gain our "house advantage" by selling it while if we pick positions of good value – we always have an asset to fall back on.


  16. Phil, re your “Wrapping/Steve” comment, again, here’s another question to help me understand your thinking. I do understand the goal of buying value stocks and selling premium.  However, when I look at your LTP and other portfolios, it seems like the majority of positions are a short call with a bull call spread rather than a stock with short calls/puts.  Is this because most of the trades/positions are still in the process of trying to get the stock at your target price and they just haven’t come to fruition yet?


  17. FRO is cheap enough that I'd like to give it a toss.  $7 is only $1.4Bn and they made $413M last year though this year is projected much, much lower ($40M) and should settle down back around $200M going forward.  Tankers were being used for storage last year and that's not likely to be the case in 2021 and rates are down too.  The dividend is a ridiculous $2 (30%) and that's bound to be cut and they last paid 0.50 on Sept 10th.  I think they are worth watching and there's no harm in selling 50 of the 2023 $5 puts in the LTP for $1.50 ($7,500) to net in for $3.50 at worst.  

    NRG is another fun one though not as cheap as I'd like at $40.50 ($9Bn), I wish we had bought them at $25 on the move down.  They still made $1Bn in 2020 and no reason they won't make $1Bn in 2021 as they are a nice, boring energy company in the Northeast.  There's no need for regrets when we have options and we can sell 10 of the 2023 $28 puts for $4.50 ($4,500) in the LTP to keep an eye on them.


  18. W    oops


  19. Positions/Steve – No, if a stock doesn't pay a big dividend, what's the point of owning it?  Especially for people with Portfolio Margin accounts, if I can tie up $4,447 of margin and $250 of cash to make $31,000 in two years on GILD or I can spend $39.720 to make $21,000 – which is preferable?  In that case we have a lower goal on the stock play so that comes into effect but, functionally, I'd rather have 10 trades with $40,000 than one, right?  More to the point, I'd rather have 90% of my cash on the sidelines while the GILD option play makes me as much money as I would have made with the tied up $35,000 additional dollars.  That then gives me more buying power for more short puts (like the two above) where we will probably never own the stocks but we'll make $12,000 for not owning them.


  20. stevez I think to answer your question with the BCS the play is much cheaper than buying the stock. I only buy higher div, paying stock with my armchair plays.


  21. Phil, aha, got it.  Thanks.

    Yodi, “armchair plays?"


  22. Sit back and relax.


  23. stevez Gild is some what an armchair play. There is a complete write up about the play, dont ask where to find it, only Phil knows !!!!!!


  24. Sit back and relax: I like it!


  25. I don't know what happened to those articles, Yodi.  Maybe Ilene does.

    More than a Year Later, Americans Have No Idea Where $9 Trillion of Fed Money Went

     

    Within a span of six months, the Fed had pumped out a cumulative $9 trillion in loans to Wall Street’s trading houses, according to its own spread sheets, with no peep as to which Wall Street firms were getting the bulk of that money. It’s more than a year later and the American people still have no idea what triggered that so-called “repo loan crisis” or which Wall Street firms were in trouble or remain in trouble.

    The Federal Reserve, as is typical, outsourced this money spigot to the New York Fed, which is literally owned by some of the largest banks on Wall Street. We wrote at the time the New York Fed was making these massive repo loans that this action was unprecedented in Federal Reserve history for the following reasons:

    No Wall Street crisis has been announced to the public to explain these massive loans and Treasury buybacks;

    Not one hearing has been held by Congress on the matter;

    Not one official elected by the American people has authorized these loans;

    The loans are not being made to commercial banks (which could re-loan the money to stimulate the U.S. economy). The loans are going to the New York Fed’s primary dealers, which are stock and bond trading houses on Wall Street who count hedge funds among their largest borrowers; (See list below. There is only one bank among the 24 primary dealers.)

    Many of the primary dealers are units of foreign banks whose share prices have been in freefall. The Fed is making these loans at approximately 2 percent interest – an interest rate these firms could not come anywhere close to obtaining in the open market;

    These same foreign banks are counterparties to mega U.S. banks’ derivative trades – raising the suggestion that this is another bailout of Wall Street’s derivatives mess as occurred in 2008;

    The Dodd-Frank financial reform legislation of 2010 was supposed to rein in this exact type of abuse by the New York Fed and, in fact, it states that Congress must be informed as to which banks are receiving the money to be sure it’s not going, once again, to failing financial institutions as happened in the last crisis;

    The Government Accountability Office (GAO), when it released its audit of the Fed’s bailout programs of 2007 to 2010 chastised the Fed for failing to document the reasons it was flinging trillions of dollars to Wall Street and foreign banks. Notwithstanding the GAO’s report, the New York Fed is back to its old tricks again;

    The New York Fed is owned by its members banks in its region. Representatives of these banks sit on its Board of Directors. It is thus too conflicted to be in charge of this bailout money spigot which is ultimately backstopped by the U.S. taxpayer if the New York Fed fails;

    The New York Fed is the regulator of the largest bank holding companies in the U.S. But its failure as a regulator is why these same banks needed to be massively bailed out in 2008 and, apparently, again now. This system lacks any semblance of checks and balances;

    The parent organizations of five of its primary dealers have admitted to criminal felony counts brought by the U.S. Department of Justice for frauds against the investing public. Bailing out felons and Wall Street firms with serial histories of wrongdoing perpetuates moral hazard and, thus, more wrongdoing and bailouts.

    The House Financial Services Committee has announced that it will hold a hearing on March 23 titled: “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response.”


  26. Yes Phil she might, if really needed I will have a write up in my old compu.