Eye No Stuff

3 Good Reads Daily, January 2012

2012-01-26T13:33:00.003-05:00

01/27 GOP: Funniest stuff ever read
01/27 Greece: Toast in 12 to 18 months
01/27 It's time: For defaults and inflation

01/26 Rail traffic: Strong
01/26 ECRI: The recession debate
01/26 Economic collapse: Warnings

01/23 Dollar: To determine mkt direction
01/23 Euro crises: To end badly
01/23 China: Stock mkt rescue

01/19 Gold Standard: Makes no sense
01/19 US: Delever
01/19 The 1%: A detailed look

01/18 Interest rates: 1790 to present
01/18 The science of hiding your trades
01/18 Manufacturing: Its not wages, stupid

01/17 State Tax Revenue: Zooming
01/17 Capacity Utilization: Still too low
01/17 Electricity: Prices plunge

01/14 Saudis: Want oil at $100
01/14 Rail traffic: Plunge. Huge red flag
01/14 Global wealth: Report

01/12 Mortgage rates: Record low
01/12 Fed 2006: Clueless dolts
01/12 German banks: Going bust

01/11 E&P CapEx forecast: +11%
01/11 Unicredit: No write-offs lesson
01/11 Shale gas: Hot air?

01/10 $TLM: Cuts NatGas drilling CapEx
01/10 Europe 2012: Outlook
01/10 EM 2012: Outlook

01/09 Distressed Debt Investing
01/09 Germany: Choking on debt
01/09 SEC to Banks: Come clean

01/06 Wien: 2012 Predictions
01/06 IHS: 2012 Predictions
01/06 Astrology: 2012 Predictions

01/05 PIMCO: 2012 Predictions
01/05 Morgan Stanley: 2012 Outlook on Fed
01/05 Blackrock: 2012 Predictions

01/04 US Income Taxes: Too low
01/04 The 1%: What they do
01/04 FED: Doves to take over

01/03 David Collum: Brilliant 2011 review
01/03 Doctors: Going broke
01/03 GE: Idiots

DECEMBER

Romney will get obliterated in SC tomorrow. I know why, do you?

2012-01-20T20:01:00.002-05:00

A post just made in my other blog, Republican Against Burr:

Mitt Romney, up by 15 points in the polls just one week ago, is going to wind up getting obliterated tomorrow in SC. Do you know why? Our clueless Republican Senator, Richard Burr, doesn't know. Most Americans know. Middle class America absolutely knows. Why? Income Taxes.

Time and again, I've made a point on this blog about the inequity in our income tax code that greatly favors the super wealthy. I will make it again, and again, and again. Americans are tired of Congress racking up massive amounts of debt, while the super rich in our country pay income taxes at rates below the middle class. This is a problem created by Republicans. And its going to wind up being the issue that prevents our party from winning this election.

Mitt Romney admitted he paid less than 15% of his income in federal income taxes. Newt Gingrich released returns showing he paid well over 30%. But, Mitt makes SIGNIFICANTLY more money than Newt. And Mitt is SIGNIFICANTLY more wealthy. Yet, Mitt pays income taxes at a rate 50% lower than Newt?

Americans aren't stupid. They see the inequity, and care about nothing else. Mitt's support evaporated, overnight. And he will never recover from this income tax issue. It is the nail in his coffin, as it should be.

It all came down to income taxes. The inequity in our tax code became crystal clear. As a result, Mitt is a loser. Our GOP will get stuck with Newt, a real scumbag. And President Obama will kick the daylights out of Newt in the general election.

Republican lawmakers made their bed when they kissed the tails of the super wealthy, cutting their taxes to the bone, while kicking middle class America in the teeth, and shoving us over a cliff. And until Republicans wake up, and bring fairness back to the tax code, there will not be a GOP President in the White House.

Karma, Justice, and Common Sense.

Links to previous posts about tax inequity:

Triple threat

2012-01-12T23:59:00.010-05:00

There's a ton of bullishness around right now. But, my intuition tells me to lean the other direction. In particular, I am troubled by 3 signals that scream we are headed into a rough period for the financial markets:

1. Latest reported rail traffic indicates a plunge in activity
2. US Treasuries are signaling fear with yields going through the floor.
3. The Baltic Dry Freight rate is plunging.

Revisit this post in mid-Feb. Bet you my read of this mkt will be bang on. I've been building a nice position in SDS for downside protection. Its time to pick up the pace in that effort.

Superstition

2012-01-12T23:59:00.009-05:00

I'm going to come clean. I'm the most superstitious person in the whole world.

Years ago there was a black cat that would roam my neighborhood. Honest to gosh, every time I saw that cat, I'd lose $10 K at trading, in a day, at a minimum. Seriously. It was like clockwork. I'd go long and the market would tank. Or, I go short and the market would ramp. I even tried to balance the longs and shorts after seeing the cat. No good. I'd still get killed. That damn black cat almost sent me to the poor house one month. It showed up time and again, day after day. The thing was out to get me. I tried not looking out the window. I'd still wind up seeing the darn thing somehow. My accounts would tank.

On one particularly bad day in Feb 2004, I lost over $40 K in my accounts after seeing the black cat in the morning. I contemplated killing the cat. I reasoned that I could locate its owner and offer up a brand new Lexus and a dozen white cats as replacement. It would have been a cheaper alternative for my wallet. But, my heart's too big to take the life of any animal. And my research told me that killing a black cat would bring a life-long curse. It wasn't a viable alternative.

My wife and children constantly laughed about me and the cat. I'd see the black cat in the morning and then freak out. It would ruin my day and I'd lose money. They couldn't believe I took superstition so seriously. It got to the point though that if my children saw the cat, they'd run around the house closing the blinds, so I wouldn't see it. That helped.

Superstition rules my trading in other ways too. If I get on a roll and am having a great stretch, I won't shave, or change clothes. And there's another thing I simply won't do. I won't trade, or even watch my trading screens, on Friday the 13th. That's tomorrow. I won't be around. I'm especially in trouble if I see the black cat on Friday the 13th. That would make me dead man walking. My accounts would go to zero. I'd have to find another line of work. So, I'll be locked in my bedroom all day, with the blinds closed.

Superstition. Good traders respect it. Losers don't.

I'll post again on Saturday.

Currency Wars - Rickards book is a snoozer

2012-01-12T12:00:00.000-05:00

I do my best to stay abreast of all the current economics and business books on the market. And I usually do a pretty decent job of reading the top 10 or so best sellers each year. My latest read is Rickard's book ... Currency Wars. I really like Jim and always stop and listen to him when he's on the air. But, unfortunately, his book is a snore. It failed to pass my nightstand test.

What's my nightstand test? Easy. When I read in the evenings, I'll place the book on my nightstand until it gets read, then it goes on the bookshelf in my office. If a book sits on my nightstand for more than a week, its a loser. Rickard's book has been there for several weeks. It's just not worth reading. And it's likely not going to make it to my bookshelf. More than likely, it is trashcan bound.

So what went wrong? It's boring. It teaches me nothing. It spends far too much time reading like a history text. And the lessons it sums up are well known, don't plow new ground. Besides, I was livid at his explanation of the supposed high level, federal government "war" gaming exercise he participated in. My god, what a colossal waste of taxpayer money. That should have been the lesson he imparted about those pathetic, useless "war" games. The fact that he failed to even address the financial waste these "games" represented, made me lose respect for Jim. Our government pisses away money with ease. And when it happens, our $15 Trillion in debt dictates that we have a duty to rain down criticism. Jim failed on that front.

Currency Wars? Not worth the read. Rotate paper assets into hard assets. Move money into commodity based economies. Short the dollar. Go long gold. But, as always, timing this trade is the trick. With current panic in Europe, and a flood of European wealth flowing into the US, now is not the time. There, you've learned the common sense lessons from this book. No need to waste your $20. Take your spouse to McDonald's. It would be time better spent.

Do parents have a say in a child's college major? Duh ...

2012-01-12T10:06:00.005-05:00

Choosing a major in college: Do parents get a say? I read this naive article in the Washington Post last night and almost busted a gut laughing at the stupidity of even asking such a question. The simple answer in my house? If I pay for it, I determine the outcome. No debate. No discussion. Case closed.

I just recently finished paying for one child's college education, and here's the deal I structured. There's $160 K available to pay for your college education. There are strings attached to the money. You can select the college. You can draw on that pot of money only for Tuition/Fees, Room and Board. You pay for books, and all other costs. Provided your degree is in Accounting or Engineering, you keep any money left over after earning your degree. No Accounting or Engineering degree? Then I expect to be paid back every dime.

Harsh? Not at all. Think about what options I presented my college bound child.

Private vs. Public. I am not a big fan of private colleges. There is simply no justification for the gap in cost between private and public. And I speak from experience, having attended both private and public universities for undergraduate school, and gone to Harvard for a graduate degree. It does not make common sense to pay $40 K annual tuition when very good public schools only cost $7 to $10 K. It's money thrown out the window. But, I want my child to hear my opinion and make their own decision. In giving them enough money to pay for a private school, but allowing them to pocket the difference if they attend a public school, they have the incentive to put significant thought into this issue.

Choice of degree. Most parents have a negative reaction to my dictation of the type of degree my child will earn. Baloney. There's enough money there that if my children want to study basket weaving, it can happen. Get a minor. Go for two degrees. But a degree in either Accounting or Engineering ensures marketability to employers for the initial job. If they want to be a basket weaver later in life after getting their feet on the ground after college, that's their decision. But getting that first good job is the scary hurdle that must be cleared.

Outcome?

My first child chose wisely. He went to a public school and just recently earned an Accounting degree. Cost? Relatively inexpensive:

He graduated with ZERO debt and a little over $100 K of our college pot in his pocket. Teamed with earnings from numerous jobs he's held throughout high school and college, he has almost enough to plunk down cash for a nice starter home. More importantly, he has a marketable college degree, multiple job offers, a solid work ethic, and a head full of common sense when it comes to making financial decisions.

The question that naive article in the Washington Post should have asked? Why aren't parents using common sense in advising their children about the choice of college degrees?

Yahoo's Sector List

2012-01-11T10:37:00.002-05:00

I'm a big fan of taking a couple hours every few months and spending it just poking around Yahoo's sector list. One of the many benefits it delivers is a sense of which sectors are most valued in the market. At a peak, The Financial sector comprised 30 - 35% of the total mkt cap. Today? 18%:

One of the things that have always bugged me about this sector list is whether or not its comprehensive. According to the Fed's Flow of Funds report, Americans hold about $8 Trillion in stocks. Yahoo's sector listing rolls up to $5.1 Trillion. I guess the difference lies in holdings of foreign stocks and foreign holdings of US securities. Still though, this Yahoo service is a really nice way to see the forest from the trees as it pertains to US equities.

Just wondering, where are average people putting their money?

2012-01-10T15:14:00.001-05:00

I'm coming off a long flurry of trading activity.   Was extremely busy harvesting tax losses into year-end and loading up the other side with plays that looked to be forced sold by others who were doing the same. All the while, I was trying to steer clear of wash sale rules. That's not an easy task, and it put me in burn-out mode on trading, blogging and anything market related. But, I now find myself with some time on my hands. I can now breathe, and think, and read, and ponder my next trading moves.

The one issue bothering me the most right now?   Where the hell are average people putting their money? Thinking back to the holiday party conversations with friends and neighbors, no one wanted to talk about stocks. And if you mentioned real estate, a sadness came into the eyes of anyone within hearing distance. Bonds maybe? Not a chance. Bonds are paying such paltry rates that I didn't hear a single person bragging about their bond portfolio.   And banks? Give me a break. They pay nothing. So, where the hell are people investing?

I don't have a clue.   And I'm wondering, is that not the greatest buy signal of all time? When everyone and their mother is running for the exit, or standing the sidelines, is that not the best time to be levered up and long? I think so.   And although I have some unused buying power, I'm heavily leaning long, but with one eye on the exit.

3 Good Reads Daily, December 2011 $$

2011-12-31T14:40:00.002-05:00

12/31 Trading: Rules
12/31 Hedge Funds 2011: Suxed
12/31 Linkfest: 2012 Predictions

12/28 2012: Hmmmmmmm
12/28 Fly: 2012 Predictions, ouch
12/28 Fed: 2012, year of the Dove

12/27 Commodity stock: Overview
12/27 BRIC: Turn out the lights
12/27 Euro Banks: Selling $4.5 Trillion

12/22 The 1%: Composition
12/22 MERS: Trouble ahead for banks
12/22 Harrison: World Macro view

12/21 Homes: $700 B, poof, gone
12/21 Mtg Rates: Record low
12/21 Fidelity: 30 big ideas

Took a holiday break

12/12 Crises: Foreseeable
12/12 Euro: Stocks with Most/Lease exposure
12/12 Euro Banks: $4 to $5 T dump

12/09 States: Doing well
12/09 Hedge funds: Sucking wind
12/09 World: Debt to GDP

12/08 China: Crash within 2 yrs
12/08 US Debt Mkts: In charts
12/08 Mkt: Government Put

12/07 WTF: $700 Trillion mkt?
12/07 Meanwhile: Out in space
12/07 IPads: Used to fight wars

12/06 2012: 10 Economic Risks
12/06 2012: 10 Political Risks
12/06 Trading Tax: Gaining mo

12/05 Greece: Bank Runs
12/05 Financial Crises: 2007-11 Timeline
12/05 Liesman: ECB will not save EU

12/03 Hedge Funds: Terrible year
12/03 Hank Paulson: Was a crook
12/03 Merkel: Fork in the road

12/02 ECRI: Index History
12/02 Next year: Killers
12/02 Price Targets 2011: Who won?

12/01 Basis swaps: A Guide
12/01 HSBC: 2012 China
12/01 Goldman: 2012 Credit Outlook

November 2011

CE Fund Fire Sale in Leveraged RE and International Equity

2011-12-28T15:43:00.001-05:00

It's that time of year. Tax motivated sellers are throwing out the babies with the bath water to book their losses. And this year's losers appear to be in the Leveraged RE (ie AWP, IGR) and Leveraged International Equity (ie ETO, ETG, EVT) areas of the market:

On the other end of the spectrum, money is flowing into Utility and High Yield Bond funds to the point that their premiums to NAV are being pushed higher than their 2011 averages. If you want to go against this flow, buy the RE and International Equity. Sell the Utility and High Yield Bonds. These spreads should reverse into mid to late Jan.

Source for Info. - CEF Connect

2011

2011-12-28T11:14:00.000-05:00

S&P 500 Price Targets $$

2011-12-22T04:01:00.000-05:00

S&P 500

2011:

12/22 Barclays YE 2012 1330
12/12 S&P YE 2012 1400
12/07 Wells YE 2012 1360
12/07 UBS YE 2012 1325
12/07 DB YE 2012 1500
12/07 BAC YE 2012 1350
12/07 Nomura YE 2012 1400
12/02 Goldman YE 2012 1250
10/17 UBS YE 2011 1350

02/02 Grantham Oct '11 S&P 500 1500
01/07 Kostin Goldman YE '11 S&P 500 1500
01/07 Kostin Goldman Jul '11 S&P 500 1400
01/07 Kostin Goldman Apr '11 S&P 500 1325
01/04 Birinyi Sep '13 S&P 500 2854
01/03 Numora YE '11 S&P 500 1475

2010:
12/31 Fly YE '11 S&P 500 1005
12/18 Ryan UBS YE '11 S&P 500 1350
12/18 Paulsen Wells YE '11 S&P 500 1425
12/18 Knight Putnam YE '11 S&P 500 1350
12/18 Kelly JP Morgan YE '11 S&P 500 1400
12/18 Kostin Goldman YE '11 S&P 500 1450
12/18 Knapp Barclays YE '11 S&P 500 1420
12/18 Cliggott Credit Suisse YE '11 S&P 500 1250
12/18 Bianco Merrill Lynch YE '11 S&P 500 1400
12/18 Belski Oppenheimer YE '11 S&P 500 1325
12/08 Wein YE '11 S&P 500 to exceed 1565
12/02 Goldman YE '11 S&P 500 1450
11/30 Credit Suisse YE '11 S&P 500 1200
11/30 Citigroup YE '11 S&P 500 1300
11/30 HSBC YE '11 S&P 500 1320
11/30 Bank of America YE '11 S&P 500 1350
11/30 Oppenheimer YE '11 S&P 500 1300
11/30 Deutsche Bank YE '11 S&P 500 1550
11/16 Jim O'Neill S&P 500 will rise 20% in coming year
10/27 Amy Cohen (on CNBC) S&P 500 Fair Value 1275, now @ 1182

I hate Cisco. John Chambers? The most over-rated, incompetent CEO in the world.

2011-12-19T10:42:00.007-05:00

I just want to go on record here in saying that my disdain for Cisco systems is off the charts, surpassed only by Microsoft. These companies are absolutely pathetic at designing products that are easy to use. Their design shops are run by engineers, who excel in producing bloated, complex, terrible products that consumers would go out of their way to avoid if there were viable alternatives. Is it any surprise that the the stocks of these two sorry companies are getting steamrolled relative to Apple's performance? No, not at all.

Why do I hate Cisco? For hours now, I have been trying to determine how to assign a static local IP address to a device that sends traffic through my router. Without a static address, I can not bookmark a webpage to routinely access the device on my home network. It's not possible because of the frequent router reboots that are necessary to solve periodic problems with network freeze-ups. When you reboot power, local IP addresses get reset, and bookmarks to access the device are no longer valid.

There are numerous home products now coming to market where accessing a webpage to control the product on a home network is useful. But it can't be done with a Cisco router. You'd think that Cisco would wake the hell up and make their products work with this overwhelming trend. But no. These useless Cisco morons are asleep at the wheel, again, and again, and again.

I just wasted 2 hours of effort researching this issue and did not find a solution. Surprising? No. And, I'm not an idiot. I passed the CPA exam in a single sitting (accomplished by only 10 - 15% of those sitting for the exam), finished in the top 5% of my class in undergraduate business school (UVa - the #1 rated undergraduate business program in the nation), and hold an MBA from a top tier school. But I can't manage to work my way through CSCO technical literature. It's poorly written, overly complex, head spinning and jargon filled, JUNK.

Cisco is a POS, good for nothing company. It's stock is dead in the water and will remain so for years into the future. At some point, a viable competitor is going to eat their lunch and put them into bankruptcy. The sooner, the better.

LaGuardia in my home network

2011-12-19T09:34:00.003-05:00

I had some network issues to deal with this weekend. And in the process of trying to solve those problems, I woke up to the fact that Steve Jobs has turned my routers into LaGuardia airport. The number of devices in my home that are connected to our network has grown tremendously in the last year or two. It's going to reach a point soon where it will be next to impossible to solve connection issues.

We're now up to 24 individual MAC addresses sending traffic through the routers for our 4 person household:

2 Routers
6 Laptops
3 iPhones
2 Apple TVs
2 Desktops
2 iPads
1 iTouch
1 iPod
1 DVD Player
1 TIVO
1 Slingbox
1 WeatherStation
1 Home power controller

I don't have room in my budget to build a network control tower, but if the expansion pace continues, I may have to sign up for home construction classes at our local community college.

Note to manufacturers of products connected to the internet. Set a default "Client Host Name" that is unique and descriptive of your product. And if you don't do this, allow an easy way for the users to set their own description. It is annoying as hell to see MAC addresses accessing our routers and be put in a position of having to guess which device (or potential hacker or nosy neighbor) it belongs to. This becomes much more problematic as the number of device connections spirals out of control.

How does the math work on the Euro Bank Capital Needs?

2011-12-08T18:32:00.004-05:00

News out near the close indicates that Euro stress tests lead Banks there to being required to raise an additional $150 Billion in capital. They have until Jan 20 to inform their respective country regulators as to how they will meet the target.   And they'll have until June 30th next year to make it happen.

To meet these requirements, they could attempt to issue new securities. But given that their stocks have been trashed, and their survival is in question, I doubt that route will be available to many. More than likely, they will be forced to sell assets.   That has me scratching my head though in trying to figure out what this means in assets being dumped on the market over the next six months.   It all depends on capital ratio targets, and which of the assets they'll be selling. I keep reading that Euro banks are in sorry shape because they are leveraged 40 to 1. Presumably they are being required to bring that ratio down appreciably to meet new Basel requirements.   But, to what levels, and when?   That's what will determine the extent of the asset sales necessary.

Here's my matrix on asset sales needed to achieve given leverage ratios. And this assumes that the sales are being made to only meet the $150 B stress test requirements. There may be additional sales needed for Basel requirements, but likely the stress tests assumed also bringing ratios in line for Basel. I hope.

I hope this is a situation where we're only going to see somewhere between $1.80 - $3 Trillion in assets hitting the market. Not sure where the hell we're going to find that kind of capital to soak up the supply.   I can't even begin to imagine the pressure on the markets if significantly more than $3 Trillion must be shed over the next 6 months.

Wish I had a better handle on this issue. More importantly, wish I knew what kind of potential pools of capital were out there to absorb this selling.   Must keep in mind too all the sovereign debt hitting the markets in the coming year given the deficit spending that is happening worldwide.

I just don't see how the world financial markets are going to make it through 2012 without getting really clocked.   When supply exceeds demand, price must come down.

Then again, US banks are flush with excess deposits, and don't have enough outlets to put that money to use. As a result, they have Trillions sitting at the FED, earning next to nothing. If Ben were to push that money into the arms of assets being shed off the balance sheets of Euro banks, at favorable prices ... that could help tremendously, both Europe, and US Banks. AND, if Ben could also come in with Q3 to put another $500 B to $1 T in capital out there ... the world might slide by this major Euro Bank asset dump.

I can hear the uproar from the idiot Republicans in Congress though. Those clueless clowns are blind to the risks these assets dumps have to the net worth of American households. They'll stand in Ben's way, the world mkts will plummet, and Americans will see Trillions more of their savings go up in smoke. Watch it happen. And remember that I warned you about the idiocy of Republicans challenging the actions of our Federal Reserve Board.

I hope Ben has a plan to cushion the coming Euro Bank asset dump.   And I hope he has the strength to strong-arm Republican opposition.   If not, get liquid, get short, or you're going to kiss your capital good-bye.

Addendum - This article suggests that over the next 3 years, Euro banks will be forced to dump $4 - $5 Trillion in assets. (Estimate by UBS)

American's Net Worth down to $53.7 Trillion

2011-12-08T14:16:00.002-05:00

The Fed's Flow of Funds report is out today, for the quarter ended Sept '11. Our net worth dropped this last quarter. That drop was largely driven by a 17.2% decline in the value of equity securities. That's a head scratcher to me though. The S&P 500 only fell 13.1% from June 30 to Sept 30. Maybe Americans are big holders in foreign equities, which fell even more that quarter?

Another big component of the fall was the $1 Trillion loss in the value of our pension funds. Again, likely traced to equity prices falling, and bond yields rising too.

Anyway, flip to page 106 of the report to see the balance sheet of Americans.

Money Flows

2011-12-08T12:24:00.003-05:00

Data Source

Aero: EV/EBITDA Multiple Snapshot

2011-12-08T12:09:00.002-05:00

How I got out traded by a 10 year old girl

2011-12-07T13:16:00.005-05:00

Halloween at our house this year was a bust. It rained. There were very few trick-or-treaters. So we were in an oversupply situation when it came to candy going into early and mid-November.   One day, after a particularly tough day of trading, I decided to step outside and work in my yard. The neighborhood kids were out playing. I thought it would be nice to hand out treats. I grabbed our excess candy and headed out to join the melee of free play.

Offering up a wide selection, I told each child they could have one item. One 10 year old girl didn't hesitate and chose the largest of the candy bars. But, after considering her choice, she returned about 2 minutes later and asked if she could trade. Curious, I ask why. She explained that her dad really liked M&Ms, so she'd like to trade her candy bar for the M&Ms. Wow, I was thinking, here's a daughter who really loves her father. She's willing to give her candy to her father while all the other kids were munching out.

Obviously, I allowed her to exchange her candy.   But while I was in the midst of letting her know she could keep her candy bar and also take some M&Ms, she deposited the candy bar in the basket, grabbed the M&Ms, and sprinted for her front door. I was feeling guilty that she left so quickly.

Two minutes later, a smiling girl appears at the front door, waving $2 in her hand. "See, I told you my dad loves M&Ms. I got $2 for them".

Not only did I wind up losing a bundle of money in my accounts on the day, I also got out traded by a 10 year old on the playground.   But, watch out Harvard Business School. I know a young capitalist primed and ready to graduate in the HBS Class of 2027.

News from an American Mall $$

2011-12-07T06:47:00.001-05:00

Tuesday Evening, 7:45 p.m. Major Mall in Cary, North Carolina - white collar country in Research Triangle Park, IBM, Cisco, et al. Notice the throngs of shoppers? The American economy is so .... F ...ed.

The Black Cat buy signal $$

2011-12-02T12:33:00.007-05:00

I've got this black cat that roams my neighborhood. He scares the crap out of me. I am highly superstitious. I've written often about my experiences with the neighborhood black cat. That damn cat has cost me massive amounts of capital. He would show up and my accounts would get hosed. About a year ago, he just disappeared. I didn't see him anymore. Whew, I was thinking, the damn bad luck cat finally died.

Monday morning of this week, I stumbled down the stairs to get a 3rd cup of coffee around 7:30 am. There he was. That son of a bitch was sitting in my back yard. Just sitting there, staring at me. Freaked me out. I spent hours worrying about my accounts, worrying about the cat's impact on the market, worrying about how much that damn cat was going to cost me this time.

The market is up almost 1,000 points since Monday morning. My accounts have minted money. That damn cat is now my lucky charm. He gives buy signals, Black Cat buy signals.

I'm closing down my screens now. Going outside to spread dead mice around my backyard. I need my lucky cat to come around again, because I'm leveraged and long going into year-end.

Don't lose sight of the World GDP Math $$

2011-12-02T10:58:00.001-05:00

So many people I speak with don't stop and think when they are talking about world economics. They are amazed how China manages 8 - 10% annual growth rates, yet the US only grows at 2%.

STOP. THINK. COMPUTE.

China has a $5 Trillion economy. 10% growth means they are adding $500 Billion in annual economic activity. With 1.35 Billion people, that's only $370 per person in additional GDP per year.

We have a $14 Trillion economy. 2% growth means we add $280 Billion in annual economic activity. With 310 million people, we are adding $900 per person in additional GDP per year.

Why in the hell isn't China growing 30%+ per year? That's what I want to know. Maybe if the lazy Chinese would get off their tails and carry more weight in world economic growth, we'd not have the worldwide unemployment problem we now face?

It's China's fault. They're just too damn lazy. They need to be more productive over there in China. And they need to ramp up their poki-assed (an economics term taught at Harvard) growth rate.

World Economics $$

2011-12-02T10:26:00.002-05:00

3 Good Daily Reads, November 2011 $$

2011-12-02T09:00:00.007-05:00

11/29 Minsky: The big dump

11/22 China: To rescue EU?

11/21 Basel: History and Rules
11/21 Fracking: ESPH
11/21 Euro Banks: $2.5 T Asset Sales

11/18 Negativity: Off the charts
11/18 US Banks: Exposure to EU
11/18 Dollar: Toast, eventually

11/17 Trading the news: Road to loss
11/17 Construction materials: +7%
11/17 Housing: Bottom?

11/16 Delinquencies: Declining
11/16 Wall Street: McCoolah nails it
11/16 Europe: Its a mess

11/15 Europe: Print, or die
11/15 Good notes: MF Global
11/15 Even better notes: Milken views

11/14 Green energy: Source
11/14 BA: $18 Billion win
11/14 Goldman: Bullish on BRIC

11/13 Construction: Flat
11/13 US Economy: Overview
11/13 Euro Central Bank: Fires politicians

11/12 US: Workforce not aging
11/12 Euro Solution: Interest rate ceiling
11/12 Hi Yield Inflow: Highest in history

Oil Price Target $$

2011-12-02T09:00:00.004-05:00

Oil

2011:
12/02 Goldman 07/12 $120

02/22 Goldman 03/11 Oil $110
01/24 Standard Chartered YE 2030 $247 (Report Pg 80)
01/24 Standard Chartered YE 2020 $136 (Report Pg 80)
01/04 CNNMoney survey YE '11 Oil $100

2010:
12/31 Fly YE '11 Oil $80
12/02 Goldman YE '11 Oil $105
10/27 Goldman Oil to $100 by YE '10

$SPY Options out 3 months

2011-11-21T20:33:00.001-05:00

DEC SPY -4 weeks
Max-Pain Calculator: $120
Eyeball most likely strike:$125
Spy close today: $121.98
Suggested mkt action to expiration:+2.5%

Standoff is also around $125 where there are 208 K calls and 192 K puts. There are 496K calls thru 5 points above the 125 strike, with heavy resistance at the $128 strike. There are 989K puts thru 5 points below the 125 strike, with most of that sitting at the $120 strike.

DEC SPY -5 weeks
Max-Pain Calculator: $120
Eyeball most likely strike:$126
Spy close today: $126.66
Suggested mkt action to expiration: nil

Standoff is also around $126 where there are 66 K calls and 66 K puts. There are 445K calls thru 5 points above the 126 strike, with heavy resistance at the $130 strike. There are 499K puts thru 5 points below the 126 strike. This pattern also looks darn close to a Mexican standoff, flatish market thru mid-Dec.

DEC SPY -6 weeks
Max-Pain Calculator: $117
Eyeball most likely strike:$126
Spy close today: $125.48
Suggested mkt action to expiration: nil

Standoff is also around $126 where there are 33 K calls and 35 K puts. There are 390K calls thru 5 points above the 126 strike, with heavy resistance at the $130 strike. There are 384K puts thru 5 points below the 126 strike. This pattern also looks darn close to a Mexican standoff, flatish market thru mid-Dec.

JAN SPY -8 weeks
Max-Pain Calculator: $125
Eyeball most likely strike: $124
Spy close today: $121.98
Suggested mkt action to expiration:+1.6%

There's a fairly even match at the $124 strikes. 47 K calls to 54 K puts. There are 199 K calls thru 5 points above the 129 strike, 343 K puts thru 5 points below the 124 strike. There's a good put base of 149 K contracts at the 125 strike. This pattern could allow for some slight upside into Jan.

JAN SPY -9 weeks
Max-Pain Calculator: $125
Eyeball most likely strike: $126 - 129
Spy close today: $126.66
Suggested mkt action to expiration:+3%

There's a fairly even match at the $126 - $129 strikes. 87 K calls to 83 K puts. There are 176K calls thru 5 points above the 129 strike, 301K puts thru 5 points below the 126 strike. There's a good put base of 141 K contracts at the 125 strike. This pattern could allow for some slight upside into Jan.

JAN SPY -10 weeks
Max-Pain Calculator: $125
Eyeball most likely strike: $126 - 130
Spy close today: $125.48
Suggested mkt action to expiration:+3%

There's a fairly even match at the $126 - $130 strikes. 114 K calls to 111 K puts. There are 164K calls thru 5 points above the 130 strike, 237K puts thru 5 points below the 126 strike. There's a good put base of 130 K contracts at the 125 strike. This pattern could allow for some slight upside into Jan.

FEB SPY -13 weeks
Max-Pain Calculator: $124
Eyeball most likely strike: $NA
Spy close today: $121.98
Suggested mkt action to expiration:NA

There's just not enough options activity yet to get a good read.

Past Results:
November - Not even in the ball park. For the two weeks into expiration, expected a close that was 3.1% higher than where it went out.

NOV SPY -1 week
Max-Pain Calculator: $124
Eyeball most likely strike: $126
Spy close today: $126.66
Suggested mkt action to expiration: nil

Standoff is around $126 where there are 82 K calls and 59 K puts. There are 669 K calls thru 5 points above the 126 strike, 833 K puts thru 5 points below the 126 strike. This pattern looks darn close to a Mexican standoff, flatish market over the next 2 weeks.

NOV SPY -2 weeks
Max-Pain Calculator: $124
Eyeball most likely strike: $126
Spy close today: $125.48
Suggested mkt action to expiration: nil

Standoff is around $126 where there are 63 K calls and 55 K puts. There are 645 K calls thru 5 points above the 126 strike, 798 K puts thru 5 points below the 126 strike. This pattern looks darn close to a Mexican standoff, flatish market over the next 2 weeks.