This is from a good article in USNews by the author of Currency Wars which sums it up nicely and applies to all CBs and their pet Banksters: http://bit.ly/JfxbKV
What he does not explain is that J.P. Morgan's "earnings" are actually not earnings but are a form of theft from savers, retirees, and others pursuant to the Federal Reserve's zero interest rate policy.
The Fed has engineered a massive wealth transfer from everyday Americans to large banks. They do this by holding interest rates near zero. Savers get nothing for their hard earned savings. However, banks get free money because they pay almost no interest. Banks then invest the money in Treasury notes and earn the difference. The Fed permits this to rebuild the capital of the banks. The Fed doesn't mind hurting everyday Americans if they can prop up bank capital.
They are now trading below book value but the sector is very out of favor and it will be a long, long time before they come back (and bankruptcy is a possibility in between). We still like them and added today but just be aware of the risks - it's a speculative play at best.
Thanks Subtilisin - We haven't even put in a Buy List for Members yet on the Twice in a Lifetime list as we're not sure we have a bottom (or a top to the VIX) - at the moment, it's just a Watch List with very few we are pulling the trigger on so far and, even then, we're only at a 1x entry in our scales.
As I said above (and all week) - it's 1,360 or bust on the S&P for the week and, so far, it's looking very much like a bust and only Facebook can save us...
That's the point. They are doing a great and highly coincidental job of flushing people out ahead of what is likely to be the biggest IPO of all time. Scam or not, it's very likely FB will set off a buying frenzy in the space and we finish the week off with a bang. If that doesn't happen – I will be very, very bearish but from what I'm hearing and the way they are extending the offer and raising the price – it's way oversubscribed. Also, we have to consider that people are cashing out 1-5% of their holdings to raise cash for FB on Friday – sure it's moronic, but that's what people do.
This morning's note to Members (just the end):
So it's the usual madness this morning and still – there really is nowhere to put your money except Dollars, US Equities and TBills.
We will need a few disaster hedges because, if Facebook does fail – disaster will be a completely inadequate description of what is going to happen next week.
Of course FB could do well but the hyenas could succeed in taking down AAPL and the Nas anyway or possibly JPM could fail and wreck the Global markets or Greece could exit the EU and rip a $500Bn loss through the Financial sector anyway…
Remember the good old days when we used to only worry about Iran closing the Strait of Hormuz? What every happened to those wacky kids anyway?
It is very frustrating when you hear little positives and jackasses like that take the floor (although I see his comments have been removed, which does warm my heart!).
As to TEO - didn't I warn you that Argentina was dangerous because of the connections to Spain? If not, my bad...
CHK is killing everyone and, you know what? So was BP at $26.50 and so was BA at $30 in 2009 and AAPL at $85 - sometimes you have to put your foot down but you can be the greatest trader in the World and, if you don't know how to manage your portfolio - you're still going to get in trouble.
Take the time to learn good Portfolio Management Techniques (something we teach our Members and there are articles about it in our Education Section that may be available for free).
ANR is in the same trouble as all commodities. With nat gas this cheap, there's no reason for anyone who can possibly burn gas to burn coal. Construction is still in the dumps and ships aren't being built and China's electric demand is falling with their economy so coal demand is in the tank and won't recover soon.
The only coal company we like is BTU and we don't like them much at the moment either but we are willing to buy and hold at this level ($25) for the very long-term.
You should be careful though as you're not too diversified betting CHK and ANR at the same time.
By the way, a nice trick for CHK is - let's say you bought it for $18 and you are a dumb-ass who doesn't hedge or cover or enter by selling puts and now CHK is $14. You can sell the stock ($14) and sell the 2014 $10 puts for $3.30 and buy the 2014 $10/20 bull call spread for $4 and that means you are left in the $10 spread that's $4 in the money for net .70 so all CHK has to do is flatline at $14 and you make $3.30 back but you free up $13.30 in cash (using some margin for the short puts) and you get all of the upside to $20 with a max profit of $9.30 less the $4 you lost in the first place is still a respectable $5.30 if CHK gets back to $20, which is way better than you'd do with your $18 basis.
Meanwhile, your worst case to the downside is CHK is put to you at net $10.70, which is 23% lower than it is now so - FOR FREE - you are getting 23% of additional downside protection, drastically lowering your break-even and taking 90% of your cash off the table.
THIS is why people subscribe to Philstockworld - we teach you how to do this stuff!
ROFL! Are you seriously the same bigbaboon57 that said on April 25th, first quoting my statement: http://bit.ly/Jg4xIH
"How can we expect the markets to react when Uncle Ben tells us we're not getting our fix today? They will howl and they will scream and they will have a little tantrum and that's how we're going to play it this morning - taking the opportunity to add to our bearish bets - assuming they survive into the bell. "
And then YOU said:
Well, this was certainly a WRONG call on your part. Ben didn't announce a fix for the markets today, and yet they continued strong into the end. Why don't you write an article with regards to this wrong call on your part and how your "bearish bets" worked out into the end of the day? Oh, I know, when the markets finally correct again, you'll come on and claim all your "bearish bets" paid off big.
ROFL!!!!
That was what 500 Dow points ago? God bless you, man - we need the counterparties but how about get your head out of your ass and listen to someone's opinion other than your own once in a while and maybe you'll learn something.
Monday Market Meltdown: All Fall Down [View article]
Actually we're really bearish but playing for a bounce at the moment. If the bounce doesn't come, we're technically bearish too. The market dropped to the point where we expect intervention from the Central Banksters so it's now dangerous to play bearish since intervention is more likely than not.
I don't think we're confused, I think it's our policy makers that are confused as well as people like JPM, who are making massive bets on the wrong side of the market.
I have said for a very long time, the entirety of the bull case is the expectation of more stimulus/QE. This is not a premise on which to build a lasting rally. We need jobs - until we build jobs - there will be no lasting turnaround in the broader economy so we will continue to be skeptical of any rally that merely celebrates another cash dump on the top 1% that piles up more debts on the bottom 99% to "fix" things.
Monday Market Meltdown: All Fall Down [View article]
We lost interest in shorting USO and Gas (although generally we play gas bullish on Friday morning and out by 2:30) and, in fact, adjusted a long-term play to slightly bullish - in that we don't expect oil to fail $80.
Our tendency is to short things that are overpriced and go long on things that are underpriced. In the middle - we'd rather just wait. With oil, the range is roughly $85-$105 where we like to play it so $95 is the worst possible price for guessing but we figure $92.50 is likely to hold on this sell-off.
Monday Market Meltdown: All Fall Down [View article]
We're playing this to be a possible bottom until it breaks but we have some very aggressive downside hedges to cover our early bottom-fishing and, of course, we're playing with house money as we were very bearish at the top and are sitting on huge gains.
It would not be very surprising to see another 10% drop if Europe blows up but, as I mentioned above, we can sell puts against JPM, CHK, WFR, HOV - that give us 30% cushions so we're happy to dip our toes in here but we haven't gotten stopped out of our Long Put List either.
It was after the March crash, we began charting our expectations for the recovery (50% was our initial goal - S&P 1,200).
Here's a review I did a year after the crash - we went gung-ho bullish on Friday March 6th, 2009, when I called the bottom on TV and laid out 13 bullish trade ideas to take advantage of the panic (they went well).
Lines/Auto - We didn't use them until after the crash - then we drew up what we expected in the recovery. Been using the same system since then and it works pretty well. We have "must hold" levels and breakout levels and, when our breakout levels firm up as bottoms - they become the new must hold lines. Many, many detailed articles and discussions about using the 5% Rule in Member chat.
See Friday's post - what are our lines? Must Hold on the Dow is 13,600 and 5% line is 14,400 - where are we today? 2.5% line is 13,200. Same spot on S&P, right between our 1,360 must hold and 1,440 5% line. Nas 3,046 closer to testing the Must Hold at 3,000 as are the RUT and NYSE on their lines. Failing 3 of 5 of those Must Holds is bearish!
Tempting Tuesday: Baa, Baa To The Sheeple [View article]
If you look top left you'll see 1,707 published articles in date order that you can review.
If I had to guess, I'd say there must be at least 3,000 specific trade ideas - certainly a pretty good sample over the years.
We make plenty of bad bets but we generally work them out - it's one of the skills we teach people. The real "trick" is not to play all bull or all bear - we trade a range and, at the bottom of a range we get more bullish and, at the top of a range, we get more bearish and then we try to cash out our positions when they are ahead.
Tempting Tuesday: Baa, Baa To The Sheeple [View article]
It's all about earnings. We think down to $390 is about right but we're not playing the week more long-term bearish to be safe - in case they pop 10% the other way.
Monday Madness: G20 FinMins Set 2-Week Deadline [View article]
Well it's a simplification, of course. The point is that you increase the money supply by 50% and if we simply go back to the same level of consumption we had 3 years ago - then GDP expands by 50%. We're not consuming 33% less, there's a multiplying effect in between 0% and 50% and all sorts of numbers you can plug into a formula after spending a few years in grad school studying monetary theory but, the short story is - more money moving slower = steady GDP. More money moving faster = rising GDP. Rising GDP not keeping up with real gains in production/consumption = inflation. There's at least $35,000 worth of grad school for you!
Which Way Wednesday: Hurts So Good [View article]
What he does not explain is that J.P. Morgan's "earnings" are actually not earnings but are a form of theft from savers, retirees, and others pursuant to the Federal Reserve's zero interest rate policy.
The Fed has engineered a massive wealth transfer from everyday Americans to large banks. They do this by holding interest rates near zero. Savers get nothing for their hard earned savings. However, banks get free money because they pay almost no interest. Banks then invest the money in Treasury notes and earn the difference. The Fed permits this to rebuild the capital of the banks. The Fed doesn't mind hurting everyday Americans if they can prop up bank capital.
Which Way Wednesday: Hurts So Good [View article]
Which Way Wednesday: Hurts So Good [View article]
As I said above (and all week) - it's 1,360 or bust on the S&P for the week and, so far, it's looking very much like a bust and only Facebook can save us...
Which Way Wednesday: Hurts So Good [View article]
That's the point. They are doing a great and highly coincidental job of flushing people out ahead of what is likely to be the biggest IPO of all time. Scam or not, it's very likely FB will set off a buying frenzy in the space and we finish the week off with a bang. If that doesn't happen – I will be very, very bearish but from what I'm hearing and the way they are extending the offer and raising the price – it's way oversubscribed. Also, we have to consider that people are cashing out 1-5% of their holdings to raise cash for FB on Friday – sure it's moronic, but that's what people do.
This morning's note to Members (just the end):
So it's the usual madness this morning and still – there really is nowhere to put your money except Dollars, US Equities and TBills.
We will need a few disaster hedges because, if Facebook does fail – disaster will be a completely inadequate description of what is going to happen next week.
Of course FB could do well but the hyenas could succeed in taking down AAPL and the Nas anyway or possibly JPM could fail and wreck the Global markets or Greece could exit the EU and rip a $500Bn loss through the Financial sector anyway…
Remember the good old days when we used to only worry about Iran closing the Strait of Hormuz? What every happened to those wacky kids anyway?
Which Way Wednesday: Hurts So Good [View article]
It is very frustrating when you hear little positives and jackasses like that take the floor (although I see his comments have been removed, which does warm my heart!).
As to TEO - didn't I warn you that Argentina was dangerous because of the connections to Spain? If not, my bad...
CHK is killing everyone and, you know what? So was BP at $26.50 and so was BA at $30 in 2009 and AAPL at $85 - sometimes you have to put your foot down but you can be the greatest trader in the World and, if you don't know how to manage your portfolio - you're still going to get in trouble.
Take the time to learn good Portfolio Management Techniques (something we teach our Members and there are articles about it in our Education Section that may be available for free).
ANR is in the same trouble as all commodities. With nat gas this cheap, there's no reason for anyone who can possibly burn gas to burn coal. Construction is still in the dumps and ships aren't being built and China's electric demand is falling with their economy so coal demand is in the tank and won't recover soon.
The only coal company we like is BTU and we don't like them much at the moment either but we are willing to buy and hold at this level ($25) for the very long-term.
You should be careful though as you're not too diversified betting CHK and ANR at the same time.
By the way, a nice trick for CHK is - let's say you bought it for $18 and you are a dumb-ass who doesn't hedge or cover or enter by selling puts and now CHK is $14. You can sell the stock ($14) and sell the 2014 $10 puts for $3.30 and buy the 2014 $10/20 bull call spread for $4 and that means you are left in the $10 spread that's $4 in the money for net .70 so all CHK has to do is flatline at $14 and you make $3.30 back but you free up $13.30 in cash (using some margin for the short puts) and you get all of the upside to $20 with a max profit of $9.30 less the $4 you lost in the first place is still a respectable $5.30 if CHK gets back to $20, which is way better than you'd do with your $18 basis.
Meanwhile, your worst case to the downside is CHK is put to you at net $10.70, which is 23% lower than it is now so - FOR FREE - you are getting 23% of additional downside protection, drastically lowering your break-even and taking 90% of your cash off the table.
THIS is why people subscribe to Philstockworld - we teach you how to do this stuff!
Which Way Wednesday: Hurts So Good [View article]
"How can we expect the markets to react when Uncle Ben tells us we're not getting our fix today? They will howl and they will scream and they will have a little tantrum and that's how we're going to play it this morning - taking the opportunity to add to our bearish bets - assuming they survive into the bell. "
And then YOU said:
Well, this was certainly a WRONG call on your part. Ben didn't announce a fix for the markets today, and yet they continued strong into the end. Why don't you write an article with regards to this wrong call on your part and how your "bearish bets" worked out into the end of the day? Oh, I know, when the markets finally correct again, you'll come on and claim all your "bearish bets" paid off big.
ROFL!!!!
That was what 500 Dow points ago? God bless you, man - we need the counterparties but how about get your head out of your ass and listen to someone's opinion other than your own once in a while and maybe you'll learn something.
Monday Market Meltdown: All Fall Down [View article]
I don't think we're confused, I think it's our policy makers that are confused as well as people like JPM, who are making massive bets on the wrong side of the market.
I have said for a very long time, the entirety of the bull case is the expectation of more stimulus/QE. This is not a premise on which to build a lasting rally. We need jobs - until we build jobs - there will be no lasting turnaround in the broader economy so we will continue to be skeptical of any rally that merely celebrates another cash dump on the top 1% that piles up more debts on the bottom 99% to "fix" things.
Monday Market Meltdown: All Fall Down [View article]
Our tendency is to short things that are overpriced and go long on things that are underpriced. In the middle - we'd rather just wait. With oil, the range is roughly $85-$105 where we like to play it so $95 is the worst possible price for guessing but we figure $92.50 is likely to hold on this sell-off.
Monday Market Meltdown: All Fall Down [View article]
It would not be very surprising to see another 10% drop if Europe blows up but, as I mentioned above, we can sell puts against JPM, CHK, WFR, HOV - that give us 30% cushions so we're happy to dip our toes in here but we haven't gotten stopped out of our Long Put List either.
Money, Power And Wall Street [View article]
Here's a review I did a year after the crash - we went gung-ho bullish on Friday March 6th, 2009, when I called the bottom on TV and laid out 13 bullish trade ideas to take advantage of the panic (they went well).
http://bit.ly/R9OFn
Money, Power And Wall Street [View article]
See Friday's post - what are our lines? Must Hold on the Dow is 13,600 and 5% line is 14,400 - where are we today? 2.5% line is 13,200. Same spot on S&P, right between our 1,360 must hold and 1,440 5% line. Nas 3,046 closer to testing the Must Hold at 3,000 as are the RUT and NYSE on their lines. Failing 3 of 5 of those Must Holds is bearish!
Monday Market Meltdown: Global Wheeee Edition [View article]
Tempting Tuesday: Baa, Baa To The Sheeple [View article]
If I had to guess, I'd say there must be at least 3,000 specific trade ideas - certainly a pretty good sample over the years.
We make plenty of bad bets but we generally work them out - it's one of the skills we teach people. The real "trick" is not to play all bull or all bear - we trade a range and, at the bottom of a range we get more bullish and, at the top of a range, we get more bearish and then we try to cash out our positions when they are ahead.
I know it's a radical concept.
Tempting Tuesday: Baa, Baa To The Sheeple [View article]
Monday Madness: G20 FinMins Set 2-Week Deadline [View article]
Spark notes is good for this stuff: http://bit.ly/prNww9