Wednesday Worries – Ireland “Fixed” – Who’s Next?
Courtesy of Phil at Phil's Stock World
So many things are pissing me off today.
I got my political outrage out of the way in my earlier post: "Thanks for the Gas Money, Mr. President," so we don't need to talk about that again. Ireland, as of 7:45, has not actually voted to accept the EU's deal, which will pull $20,000 per Irish family directly from national pension funds to pay for the speculative mistakes of Irish Banks. Additionally, the Irish people are being asked to borrow another $75,000 per family from the EU at about 6% interest, also to pay for the speculative mistakes made by the Irish Banks. While this may seem insane - it's only a drop in the bucket compared to what Americans are spending to bail out our own speculators so why shouldn't they join the club?
At least Ireland gets to vote for their obligations, we have a Federal Reserve System where a single man, known as "The Bernank" is able to spend what is now heading towards $3.5Tn of OUR MONEY to bail out his banking buddies. That's $31,818 per American family spent over two years IN ADDITION to the stuff I complained about Obama and our spineless Government spending in the last post. As I said, things are pissing me off today! I should be in a better mood - we had a fabulous day trading in Member Chat yesterday. In yesterday's post, I closed with "One last stab at making some bearish profits for us (see Morning Alert)" and you can click on that Alert, which was posted on Seeking Alpha and check out our trade ideas for the $10,000 to $50,000 Portfolio which included (at 7:22 am yesterday) QID Jan $10 calls, which opened at $1.80 and finished at $2 (up 11%), DIA Dec $114 puts, which opened at .80 and finished at $1.33 (up 66%), XRT Jan $44 puts, which opened at .35 and finished at .55 (up 57%), USO Jan $36 puts, which opened at .66 and finished at .90 (up 36%), PCLN weekly $400 puts, which opened at $.50 and finished at $1.40 (up 180%) and NFLX Jan $155 puts, which opened at $1.70 and finished at $2.30 (up 35%) but should look much better this morning, where we will exit. Of course I featured the idea to short NFLX last Thursday in the Morning Post (which you would get at 8:30 every morning in progress if you subscribed!) and we talked about shorting oil in the Weekend Post and I mentioned XRT last week as well so it's not like these are even our "super-secret" trade ideas - this is just the stuff that looked obvious enough to risk our small portfolio plays on (as you don't want to take too much risk in a small portfolio, even when it is aggressive like our virtual $10,000 Portfolio). Once we got into Member Chat for the morning we went with more aggressive trade ideas like PCLN weekly $410 puts at $1.60, which finished the day at $4.20 (up 162%) and 6 other plays that we're not done with yet plus shorts on the oil futures at $90 that worked out very well. So why am I angry? You can't really have a better day than we had yesterday. Yesterday is the reason we have sat patiently (well kind of patiently) in cash for a month as we finally got an opportunity to commit to a whole bunch of very obvious trades, the most trade ideas I've had in a single day since early September, when we jumped on Uncle Ben's bullish bandwagon. Sure we find things to trade every day but these are the opportunities we wait for. I guess I'm pissed because we had to pull our December short plays off the table because the cartoon bears have warned us that they will be "Buying the F'ing Dips" and we know better than to argue with cartoon bears because it's simplistic little BS premises like that that rule this market. Ah, that's why I'm angry! As I keep saying, I don't enjoy day trading - it's not satisfying but it's what we do while we wait for real investment opportunities to come along. While it may be exciting to make 100% on a trade in a single day - it's small money and a tedious (and stressful) way to build up a portfolio. I suppose at heart, I'm a long-term investing coupon-clipper but those kind of investors are being chewed up and spit out in this market and, while we found many, many things to buy earlier in the year, now we're down to one or two long-term opportunities a day while most of the rest of the market looks better as a short. But you can't even stay short past the closing bell. Even as I write this post our paranoia in taking the money and running (our usual strategy) on our quick gains is looking justified as the dollar is, as usual, being shoved off it's overnight highs (used to prop up the Nikkei in our famous "3am Trade") during the slower EU lunch break in order to now goose the US futures to give US markets the best possible open on the least possible amount of volume (ergo cost to the Gang of 12). Despite debasement efforts by Obama and The Bernank yesterday, the dollar still rose back to 80.81 in overnight trading and that sent the Dow futures all the way down to 11,285 but don't despair - they've already been goosed back to 11,350 - just 5 points shy of yesterday's weak close. See, in a "normal" market we would have simply stayed short because clearly the momentum was down and the fundamentals indicate that all the efforts of Obama, The Bernank, the BOJ, the BOC, the ECB... are "too little, too late" to put the Humpty Dumpty global economy back together again. Some of the fundamentals we're watching: These are just TODAY'S headlines and they all add up to RISK. Lack of risk recognition by the markets was the primary reason I called for cash in early November. We are approaching 2008 pre-crash market highs with many stock trading higher than they were then on LESS revenues than they had at the time. Meanwhile, 10% of our population is unemployed, consumer credit is down by over $1,000,000,000 (15%), household wealth is down 20% and income is down while the CPI, even by BS Government measures, is up 5% since then, effectively giving those people who still have jobs 5% less to spend anyway. And when you consider that discretionary income is just 20% of income - if the 80% they HAVE to spend went up 5%, then that's 4% of discretionary income gone, which is 20% of discretionary income out the window - FOR THE PEOPLE WHO ARE STILL WORKING. The other 10% have ZERO to spend and that's not good either. All of this is being ignored as "investors" buy stocks on the hopes that they will expand sales internationally and keep cutting costs despite the same inflation the speculators are using to justify their very high valuations. We're effectively writing off the US economy and placing all of our bullish eggs in the global basket - even though they have 20% unemployment "over there." - that's kind of nuts, don't you think? I'm not even going to ask if the above chart (from Calculated Risk) disturbs you . Clearly, from the results of the last election, it does not. We are over 6M jobs away from recovery and we added less than 40,000 last month. At least in Ireland, their population is shrinking, with 65,500 people (1.5%) abandoning the sinking ship as of April of this year. That's less likely to happen in America as Mexico is not that attractive and Canada doesn't want us and most people can't afford to move anyway as they are upside down on their mortgages so we, as a people, sit and wait. We sit and wait for something good to happen. Any minute now... Something good is bound to happen... NOW! OK, maybe not now but really soon - something good has got to happen, right? That pretty much sums up our national policy - we don't actually do anything to create jobs but if we sprinkle enough magical fairy money on the rich, we're sure they'll start hiring people real soon! Maybe as soon as they are done merging and acquiring smaller companies with all that money where they then create efficiencies by laying off 50,000 people a month (Challenger Job Cut Report) while more and more jobs are outsourced every day ($6Tn worth of jobs are currently outsourced). And why not? There are huge tax advantages to outsourcing US jobs - tax advantages that our President is perpetuating as he bends over and accepts the massive Republican tax cuts for the wealthy on behalf of the American people. Did I mention I was pissed? Good, then moving along... So we kept our Jan shorts and didn't add any longs because we expect a bounce on the usual opening nonsense but I don't see enough dry powder left for the bulls to take us over that critical Dow 11,500 mark. Meanwhile, CAT is way too high and they are a Dow component, as are XOM, CVX, IBM and MCD - all stocks that are major components in the price-weighted Dow and are more likely to pull back than move higher. EU money printing will not inflate our stocks - it may even boost the Buck and that would be bad for commodities, who had a pretty rough day yesterday (and we shorted a few). I wish it were easier and I wish we could just say "CAT is overbought so we're going short" but the fundamentals of the stock are trumped by rumors of infinite Chinese demand and inflation expectations that somehow ignore the negative impact of rising steel prices and increasing borrowing costs on the company. Of course the weak-dollar expectations have everyone moving into stocks, which are just another form of commodity to trade and, even as I write this, the dollar is being jammed back below 80.50 to goose the US open. At least we know how this game is rigged and we can have lots of fun betting the suckers never do find that red queen but what a shame that this is what the global economy has been reduced to - a shell game - and it's an empty shell at that!
A lot of people are surprised that George W. Bush’s book “Decision Points” is selling so well.
The next question, though, is how on earth sales have been this good. Or put another way, who’s actually buying the poorly-reviewed book of a failed former president?
[.....]
[C]onservative books nearly always outsell liberal books in large part because of bulk orders. A couple of months ago, for example, Mitt Romney boosted sales of his book by requiring various schools, think tanks, and institutions to buy thousands of copies in exchange for his speeches. Various conferences and Republican outlets do this all the time.
Without access to the data, it’s impossible to say just how much of this may have inflated “Decision Points” sales, but it seems like the most credible explanation. How else could it have sold so many copies?
I have no idea if conservative bulk orders are what’s going on here; I don’t have a good handle on how the right thinks of George W. Bush right now (failed RINO or Churchillian genius). I do think the media reaction to the book was a bit strange. There was a tendency to pretend the Bush presidency took place a long time ago, or never happened at all (that’s not so surprising, I think a lot in the media would like to forget that they fluffed the guy so much from 2001 to 2006). And this long ago, far away depiction of the book made it seem like something no one would want to read.
I personally would be interested in reading the book. I’m not going to buy it, because I don’t want to give my money to that clown and because I don’t have time, but given the choice between reading W’s book and reading memoirs by Obama or Clinton or Bush I, I’d go with W’s book in a heartbeat. With most recent presidents, the thought processes and political success make sense to me. George W. Bush’s do not. His presidency is Real Murkin mystery to me. Could he really have been as detached from reflective decision-making as he seemed to be? I’m sure the book is largely inaccurate but I wonder what you can learn from those inaccuracies.
The Bush presidency was a spectacular disaster that I hope someday to understand. There must be other people who feel the same way about it.
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Fox <b>News</b> Channel's Kimberly Guilfoyle: Ignore CPAC boycotters <b>...</b>
Former first lady of San Francisco tells groups boycotting February convention to participate if they want to be heard.
2010 <b>News</b> Quotes Quiz: Who Said It?
Here are 10 quotes that capture some of the spirit of 2010. Do you know who said each one?
Keith Olbermann: 'Fox <b>News</b> Is 100% Bullshit'
Keith Olbermann is anything but hesitant when it comes to a battle with Fox News, and the MSNBC anchor took to Twitter Wednesday to share his views on the TV network he probably wouldn't even call a rival.
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Alan Mairson
at 3:03 pm, December 15, 2010
Spot on, Mr. Winer.
My only question: Do you think the Groupon model would work only for *local* news organizations?
Since June 2009, I’ve been championing the idea that National Geographic magazine could organize an international Groupon-like buying club that would equip & empower an army of digital Davids — and give them a reason to join the National Geographic Society.
That is, instead of selling 5 million pairs of eyeballs to Nikon for a magazine advertisement, National Geographic should say to Nikon: “We just polled our members, who are fully networked, and 2,500 of them want to buy a new Nikon D-40 this month. How much per unit if we buy in bulk?”
Members would not only get a great deal. They’d be connected to other people learning to use the same gear AND they’d have a platform where they could contribute their work to the journal-ism of the organization.
You think that could work? Please see:
http://societymatters.org/2010/12/02/opportunity-awaits/
Ted
at 6:00 am, December 16, 2010
It all comes down to that last graf. But it occurs to me more and more that as news organizations still think of themselves as content creators, we’re ill-equipped to execute the next idea, no matter how simple, when going up against startups that take the best ideas and run with them from Step 1.
For example – the Groupon concept was out there before Groupon, and a lot of news organizations were offering half price discounts on any number of items – food, sporting goods, etc. They were on the cusp on executing exactly what Groupon has done.
Except for two things – they were outsourcing almost all of the execution to third parties, and because they were focused on their own localities, usually, they never really pondered the offerings on a larger scale. (Why would they? They were already outsourcing the parts they’d need to execute on a larger scale.)
Seems like we need to move from new business development to new business development. (Easy to say – hard to do.) And until we are more able to do that, we’ll continue to miss the opportunities that might be right in front of our noses.
Tom Crowl
at 10:36 am, December 16, 2010
RE “That’s the question news people never seem to ask. How can we create something that has a market? If they asked that question instead, they would restructure their activity. Because there are things similar to news that have generated huge wealth. Not hidden, in plain sight.”
The Market IS THERE! The problem is that the mechanism hasn’t been there to address the transaction problem.
This problem (which extends also into the political participation sphere especially) is directly linked to neglected scaling issues in this new landscape… and the capabilities required for Commons-oriented transactions in that space… and why that requires a viable, simple and secure MICRO-transaction.
The Commons-dedicated Account Network:
A self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contribution… which for fundamental reasons of scale must allow a viable micro-transaction (think x-box points for action in the Commons).
(I note that journalism is often a for-profit enterprise and that this presents a complicating factor. I believe this is an addressable issue.)
Re-Igniting the Enlightenment: On Building Landscapes for Decision
http://culturalengineer.blogspot.com/2010/12/re-igniting-enlightenment-on-building.html
LinkedIn http://www.linkedin.com/in/culturalengineer
At its root, a civilization (or any social organism) is a product of individual and group decisions (ideas+actions) operating within the confines of the physical environment and natural law. we then see culture as the expression of this “social energy”.
Money was developed originally as a technology for the allocation of excess social energy where complexity (and loss of various forms of proximity) required conventions beyond the less formalized methods of a hunter-gatherer group.
I believe this suggest some re-thinking about the nature of money and capital (and capital creation) but that’s another story…
The point here is that the nature of this “social energy” in a scaled organism requires that the exchange of this energy NOT be bound by transaction costs or other complications IN AREAS RELATED TO COMMONS-DEDICATED FUNCTIONS ESPECIALLY…
These particular areas of exchange actually pre-date the need for or existence of the commercial transaction and require special attention.
Paul Spence
at 4:17 pm, December 28, 2010
Most Internet users are way too young now to understand the analogy, but Winer makes a good point – the genie is already out of the bottle. Why isn’t NewsCorp doing due diligence on Groupon?