Testy Tuesday – 1,975 or BUST!
by phil - October 7th, 2014 8:28 am
I told you it was going to be a wild week!
Not that you can draw any conclusions from yesterday's low-volume action. The Fed doves have their say for the next two days and then we go into a hawkish nosedive on Thursday and Friday, so this little drama is just getting started. All went according to plan yesterday – per our set-up in the morning post:
As a hedge, for our Member Portfolios, we're favoring SQQQ (now $36.55) and DXD (now $24.52) to protect us from another slide but the real tilt to hawkish doesn't start until Thursday, after the Fed minutes, so we can assume they will be spun bearish from there into the weekend and we'll look to take nice, short positions against any run-up that comes from doveish Fed statements early in the week.
As you can see from yesterday's action, that was the perfect way to play it and our short positions on the Futures gave us several quick victories as it was all downhill from the open until 1pm. Even our oil short gave us a nice $600 win – the one that was right there in the morning post at $89.60 and oil was below $89 by 10:45, less than 3 hours for that trade idea to play out!
That's good because we REALLY needed the money because GTAT, one of our good-sized positions in two of our portfolios, declared a surprise bankruptcy yesterday. Bankruptcies are not supposed to be surprising but this one was and GTAT dropped 90%, essentially wiping out a $25,000 position and costing us 1/4 of our year's profits in the Long-Term Portfolio.
There's an excellent article in Bloomberg and another one from Seeking Alpha outlining what happened and where it stands so I'll spare you the gory details other than to say that this is why we stress diversification and portion control in investing. Even so, GTAT happened to be a stock that got weak and, because management promised a turn-around, we added to our losing position on the initial dip and maxed our allocation and then got burned so quickly that we had…
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TLP: Just This Once, I Swear
by ilene - December 7th, 2010 8:24 pm
Courtesy of Jr. Deputy Accountant
That didn’t take long.
After Francisco "Quico" Canseco beat Rep. Ciro Rodriguez (D-Tex.) as part of the Republican wave on Nov. 2, the tea party favorite declared: "It’s going to be a new day in Washington."
Two weeks later, Canseco was in the heart of Washington for a $1,000-a-head fundraiser at the Capitol Hill Club. The event--hosted by Reps. Pete Sessions (R-Tex.) and Jeb Hensarling (R-Tex.)--was aimed at paying off more than $1.1 million in campaign debts racked up by Canseco, much of it from his own pocket.
After winning election with an anti-Washington battle cry, Canseco and other incoming Republican freshmen have rapidly embraced the capital’s culture of big-money fundraisers, according to new campaign-finance reports and other records.
Dozens of freshmen lawmakers have held receptions at Capitol Hill bistros and corporate townhouses in recent weeks, taking money from K Street lobbyists and other powerbrokers within days of their victories. Newly elected House members have raised at least $2 million since the election, according to preliminary Federal Election Commission records filed last week, and many more contributions have yet to be tallied.
OK, so this is not surprising. Politics takes money if you want to win. And it doesn’t matter if you’re an old school Democrat like Charlie Rangel, a Tea Party upstart like Rand Paul or a relative unknown like Quico Canseco.
The part that’s incredible when you read stories like this is that voters get taken in, over and over. Wave after wave, from the post-Watergate Democrats to the Reaganauts to Blue Dogs and the Republican Revolution in ’94. It’s a rare case when someone comes to Congress vowing change and is able to resist the influence of the permanent political class.
Quico fell fast. Plenty more still have a chance.
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Rogoff: Beware of Wounded Lions
by ilene - November 2nd, 2010 10:02 pm
Rogoff: Beware of Wounded Lions
Courtesy of Mark Thoma, Economist’s View
Kenneth Rogoff says the rest of the world should not ignore the recent threats of protectionist measures coming from the US:
Beware of Wounded Lions, by Kenneth Rogoff, Commentary, Project Syndicate: G-20 leaders who scoff at the United States’ proposal for numerical trade-balance limits should know that they are playing with fire. …
According to a recent … report…, fully 25% of the rise in unemployment since 2007, totaling 30 million people worldwide, has occurred in the US. If this situation persists, as I have long warned it might, it will lay the foundations for huge global trade frictions. The voter anger expressed in the US mid-term elections could prove to be only the tip of the iceberg…, the ground for populist economics is becoming more fertile by the day. …
True, today’s trade imbalances are partly a manifestation of broader long-term economic trends, such as Germany’s aging population, China’s weak social safety net, and legitimate concerns in the Middle East over eventual loss of oil revenues. And, to be sure, it would very difficult for countries to cap their trade surpluses in practice: there are simply too many macroeconomic and measurement uncertainties.
Moreover, it is hard to see how anyone – even the IMF, as the US proposal envisions – could enforce caps on trade surpluses. The Fund has little leverage over the big countries that are at the heart of the problem.
Still,… world leaders … must recognize the pain that the US is suffering in the name of free trade. Somehow, they must find ways to help the US expand its exports. Fortunately, emerging markets have a great deal of scope for action.
India, Brazil, and China, for example, continue to exploit World Trade Organization rules that allow long phase-in periods for fully opening up their domestic markets to developed-country imports… A determined effort by emerging-market countries that have external surpluses to expand imports from the US (and Europe) would do far more to address the global trade imbalances … than changes to their exchange rates or fiscal policies. …
American hegemony over the global economy is perhaps in its final decades. China, India, Brazil, and other emerging markets are in ascendancy. Will the transition will go smoothly and lead to a global economy that is both fairer and more prosperous?
However much we
…
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EXTEND & PRETEND: Stage I Comes to an End!
by ilene - July 30th, 2010 12:58 am
EXTEND & PRETEND: Stage I Comes to an End!
The Dog Ate my Report Card
Courtesy of Gordon T. Long
Both came to an end at the same time: the administration’s policy to Extend & Pretend has run out of time as has the patience of the US electorate with the government’s Keynesian economic policy responses. Desperate last gasp attempts are to be fully expected, but any chance of success is rapidly diminishing.
Whether an unimpressed and insufficiently loyal army general, a fleeing cabinet budget chief or G20 peers going the austerity route, all are non-confidence votes for the Obama administration’s present policies. A day after the courts slapped down President Obama’s six month gulf drilling moratorium, the markets were unpatriotically signaling a classic head and shoulders topping pattern. With an employment rebound still a non-starter, President Obama as expected was found to be asking for yet another $50B in unemployment extensions and state budget assistance to avoid teacher layoffs. However, the gig is up: the policy of Extend and Pretend has no time left on the shot clock nor for another round of unemployment benefit extensions. A congress that is now clearly frightened of what it sees looming in the fall midterm elections is running for cover on any further spending initiatives. The US electorate has been sending an unmistakable message in all elections nationwide.
The housing market is rolling over as fully expected and predicted by almost everyone except the White House and its lap-dog press corp. Noted analyst Meredith Whitney says a double dip in housing is a ‘no brainer’ with the government’s HAMP program clearly a bust as one third of participants are now dropping out. The leading economic indicator (ECRI) has abruptly turned lower, signaling the economy is slowing rapidly without the $1T per month stimulus addiction, which has kept the extend and pretend economy on life support.
The gulf oil spill that was initially stated as 1000 barrels per day has been revised upwards faster than the oil can reach the surface. It now appears to be north of 100,000 barrels per day. A 100 percent miss is about in line with the miss on how many jobs the American Recovery and Reinvestment Act of 2009 (ARRA) was going to create. Also, it appears the administration can’t even get its hands around the basics of administration management during any crisis event. Teleprompter politics…
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Venezuelan Tyrant to Debase Currency Ahead of Make Believe Elections
by ilene - January 11th, 2010 1:19 am
Venezuelan Tyrant to Debase Currency Ahead of Make Believe Elections
Courtesy of Joshua M Brown, The Reformed Broker
a recent photo of Venzuelan tyrant Hugo Chavez
The fat, foolish and dangerously ignorant dictator Hugo Chavez* has sent consumers in his Papaya Republic racing to the shops this weekend as the government has decided to "adjust" the local currency lower in a bid to kickstart economic growth.
From Reuters:
CARACAS, Jan 9 (Reuters) – Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.
In a bid to jump-start the recession-hit economy of South America’s top oil exporter, Chavez on Friday announced a dual system for the fixed rate bolivar.
It devalues the currency to 4.3 and 2.6 against the dollar, from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to limit the impact of the measure on consumer prices.
The opposition seized on fears that prices for imported goods will double as shoppers formed lines of more than a hundred people outside some stores in the capital Caracas.
Ah so. It appears that the signature Bernanke Boogie, which has already spread to Japan, will now be featured prominently by some of the most primitve Oil-ocracies in Latin America. Which country will the Debasement Fairy be visiting next?
Why don’t we all blow up our currencies and go back to getting by on our ability to hunt mammoths and drag ovulating women into secluded fissures in the rocks? Abolish central bankers and fiat currency, go back to farming and clubbing and spearing. I feel like I would do pretty well in an economic sitch like that.
* I bet you loved my Chavez descriptors in my opening paragraph…one of the benefits of not being an actual journalist is that I get to call ‘em like we all see ‘em without being called into the editor’s office.
Source:
Devaluation Ups Stakes in Venezuela Election Year (Reuters)
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW.