Markets today..

[cashmcall]

Hedge funds​

held the market captive for the last week thanks to the options. This is how the hedge funds play when there is nobody else around. They feed shares to sell at a price just below the call strike so its out of the money. And they feed the puts buys at just above the money. So each hedge fund has its own game and they just stick with it creating nothing more than a churn that accomplishes nothing. Usually this is hidden from view but with volumes this low and no traders, it becomes the game. ​

I am still encouraged because we are seeing housing moving up. Foreclosures are being bought fast by cash buyers. Conventional buyers are having qualification issues. So unless bernanke punches in with QE III on mortgages this will not improve very much. That is why I think it is inevitable.​

 

[Gipper]

Hedge funds​

held the market captive for the last week thanks to the options. This is how the hedge funds play when there is nobody else around. They feed shares to sell at a price just below the call strike so its out of the money. And they feed the puts buys at just above the money. So each hedge fund has its own game and they just stick with it creating nothing more than a churn that accomplishes nothing. Usually this is hidden from view but with volumes this low and no traders, it becomes the game. ​

I am still encouraged because we are seeing housing moving up. Foreclosures are being bought fast by cash buyers. Conventional buyers are having qualification issues. So unless bernanke punches in with QE III on mortgages this will not improve very much. That is why I think it is inevitable.​

The market and the economy are about to crash and crash big. We have a debt bomb and a demographic bomb about to explode. With the baby boomers heading for retirement and representing about 1/3 of the total population, consumption is not coming back. The boomers are not consuming to the Feds dismay and are trying to save for a retirement realizing that social security may not be there.

 

[cashmcall]

Good article about obamanomics ​

http://www.usnews.com/opinion/mzuckerman/articles/2012/04/20/mort-zuckerman-president-obamas-economic-programs-have-failed​

​

 

[Gipper]

Good article about obamanomics ​

http://www.usnews.com/opinion/mzuckerman/articles/2012/04/20/mort-zuckerman-president-obamas-economic-programs-have-failed​

​

That is a sad article. It outlines the horrendous consequences of progressive/Keynesian economic policies. Imagine if an R were POTUS with all this bad economic news. It would be plastered all over the news, but since a socialist is in office, hardly a word in the mainstream lib media. If Romney wins in November, we will see an avalanche of bad economic news from the lib media.

I thought the two most telling comments in the are article are:

According to the Heritage Foundation, private sector hiring through June 2011 was 10 times slower following the passage of President Obama's healthcare bill compared to the prior 16 months. Economists at Stanford University and the University of Chicago estimated in the fall of 2011 that policy uncertainty has cost more than 2 million jobs since early 2010. These estimates reflect the small business community's reluctance to make new hires until employers know exactly what the law means in practice. The high level of temporary employment is a reflection of the same uncertainty. Businesses hedge their bets with short-term help.

We are still in an era of deleveraging, rising savings rates, home price deflation, and squeezed real income, all of which will continue to affect consumer spending.

With the high levels of debt in government, business, and personal along with the pending retirement of 1/3 of the population and high unemployment across all age groups, consumption is not coming back any time soon, which further hinders any chance of improving employment. It is a vicious circle only made worse by the leftist policies of this government.

If Obamacare is found constitutional, we likely will see the economy take another step down as employers have no choice but to accept the horrors of 3,000 pages of socialist dictates.

 

[cashmcall]

So if you think you are having a bad day getting shoved around by hedge ​

funds​

, think about sambo. Here he is getting a look at exactly what he doesn't want to see... Romney and Rubio on the front page of Drudge campaigning together in Pennsylvania. ​

I have said it before; it is mathematically IMPOSSIBLE for Obama to win re-usurpation if he can't win FL. More simply if Rubio is on the ​

Ticket​

, Obama is finished. ​

I think the hedge fund​

propaganda and all the old refried European stories pale against this story because in the scope of things nobody is going to turn european socialism into capitalism but in the USA, things will get much better in the USA minus Obama and Joe Bite me. ​

Conservatives will strongly embrace the ticket with Rubio on it. So just imagine being Obama today. Your "signature" legislation is getting ripped by the Supreme Court, the administration has its hands in the Secret Service Scandal, Obama the fire starter got involved in the Trayvon thing which has backfired, then today the soc sec CZAR says the system will be broke three years earlier than originally thought, then the buffett "rule" got killed in the demoncratic controlled senate. So you see.. Obama's having a real bad day today and worse he works at home. ​

 

[cashmcall]

Cramer gave a pep talk tonight about the hedge fund media complex. I agree with him in large part that the hedge funds are pushing the negative buttons for more QEIII. ​

The trouble is that this economy is too fragile to sustain itself. To hear obama and geitner talk the recession is an old story, debt is a meaningless story and the job market is improving. ​

Cramer pointed out that jobs are the missing ingredient in the economy. But then he had no clue how jobs come about. I have said it many time that Obamacare was the largest jobs killer in history. It made many countries flee the Untied States. It has many other companies threatening to leave including Microsoft over Obama's plan to tax foreign profits. Small businesses thanks to both Bush II and Obama are so regulated by every layer of gov, they can't get a foothold. And Boeing is a victim of the most aggressive unions on earth. The unions tried to shut down the right to work plant in South Carolina. ​

These are policies adored by obama and abhorred by business. There will not be ANY significant hiring until the Supreme Court drives a stake through the heart of obamacare. Its just that bad. ​

So if you connect the lines in terms of jobs, basically there is not enough time to get anything big going before the election. No large company or small is going to hire until we know what is coming next year and if it is Obama, get ready for a big recession in 2013 and some of the catastrophic things that hedge funds talk about. ​

Hedge funds run a lot of money and they can't have a good visual of jobs. Without jobs, no economy can flourish. We have been losing jobs for a long time. Gov. regulation has been a layered problem that is now entrenched. You couldn't get through them with TNT. It is coming from all directions. Then you have all this gender krap and all this animosity building between males and females. The workplace is unpleasant. The family has disintegrated; people who might marry and make it aren't getting married. Nobody except losers want to have a kid in this uncertain economy. ​

So the pressures are real and it is in fact really about jobs. But when the gov presents you with their phony numbers that don't just count people out of work, but base it on filing claims you know they are not being honest with the people. ​

Anybody that thinks obama has done a great job with the economy is out of their minds. Essentially we are just deeper in the hole and virtually no improvement in jobs. You don't win elections with a record like obama's. Ask Carter. ​

Where do jobs come from? They come from the hamstringed private sector NOT THE GOV! The GOV is just overhead. ​

Bottom line... there were some job available in oil and nat gas. Gov policies to destroy these businesses with regulation foot dragging have prevented jobs from forming. A few standouts have been North Dakota and Montana. These oil jobs create demand for building, banking, retail, medical care. Yet Obama made a concerted effort to block it all especially the red state of Texas and the keystone pipeline. So now obama is scrambling but there is no time left to build these economic communities and cut back the EPA. ​

Do you realize that the EPA intends to mandate that all coal fired power plants convert to Nat Gas? Think about the power the EPA has taken on its own!!!!! This is clearly unconstitutional but it also kills jobs. ​

My prediction is that nothing changes. Our big caps will grow the emerging markets but the USA will flounder until the election and Obama is going to be thrown out with a landslide. There simply is nothing left to do. Bush II damaged the republicans in so many ways that people are not voting for something as much as against. Bush with Sarbox destroyed public companies. You can't get IPO money. Homeland Security is now in everybody's face. It has destroyed the airlines. All of our airlines are broke. Remember than when the plane starts rattling and think about how they are saving costs with maintenance. ​

So I think we are going to be for rough markets this year. Nothing will happen in an election year. Obama will do what he always does, keep the country on edge. That is a stupid thing to do with tax policy even IRS is repeating this. ​

So get ready for the hedge fund press and the negativity to start up in a few days. I don't buy into the collapse of markets because bernanke will flood them with QEIII but political policy is in ruins under obama that we are forced to answer Col Kurt's question: "Are my methods unsound?" Captain Willard: "I don't see any method at all, sir." ? ​

One thing I have a morbid fascination with is France flirting with Socialism first with DSK "Mr. Bazooka in his pants" and now the new nut. I love the idea of the Socialist negotiating with Merkel. ​

My market strategy continues. Buy super high quality companies with low book using Ben Graham's criteria and the real growth companies. Keep plenty of cash on hand. The country is not coming out of this funk without total regime change and an immediate cut down of gov regulation and gov. size otherwise it will just be skeleton crews selling to the emerging markets and growth that is snail-like. ​

 

[cashmcall]

The Shorts got killed in the last week. Will they have the nerve to come back tomorrow for the "Fun With GDP" numbers. So what will the GDP be? ​

I think it will be inline but under 3. It is always hard to say how much is stimulus and how much is real. So I think real GDP is 2 and the rest is fed float. ​

Is a blowout number possible? I doubt it. Gas has put the consumer in a bad mood and if people weren't so sick of Obama's recession there probably would be zero GDP. Everybody just wants this thing to go away... just like you feel five minutes after you have invited the obamas to dinner. Could you imagine a white liberal family trying to explain to the Obamas why they don't have any racially mixed children. If they were coming to my house, I would have at least one kid in blackface just to avoid the inside gesturing of the Obamas. ​

So now we are swinging again to some euphoria or is it just a blind dislike of negativism? Is is really worth it to get in a huff over europe? They are socialists; the take home message is don't turn the USA into another socialist european nightmare. Americans understand this so not much else can be learned from Europe except don't follow them into the abyss. ​

Some have said that europes recession is our good fortune for manufacturing. A recession is not good for anyone. They will find a way to work cheaper just to keep the doors opened. Even though we don't buy much or sell much to europe, indirectly they may have some effect through Asia. ​

There is nothing wrong with austerity unless you couple it with low interest rates. Savers and frugal persons should be rewarded not punished ala the bernanke method. Encouraging debtors is not good for long term stability. So any time Gov spends money it doesn't have it creates enormous debt into a monetary system that accrues new overhead in the form of interest. So its great for the Fed private corporation but bad for you. I think of the Fed as a Rent to Own place. You rent the money and your own the debt. It is the perfect business model for them. ​

But I better be careful about talking about currency or I will be bombarded by the gold bugs and their discussion of stored value in currency, which is completely off point. ​

Anyway we needed a little bull euphoria to kill the bear and their bull and the technical analysis guys and their endless bull. As I have said sooner or later the trading range was bound to take place and it has. So the TAs can now throw out their old charts and start all over. ​

I suspect we will hear more about europe droning on and the hedges still trying to take down the markets but from this vantage point, I figure the bears are lost on the sidelines and got beat at their own game. Because in the scope of things the US has its own situation and europe has its own and its not unified since we do not have the new world order that Obama would like where all nations are under the flag of the Obama Socialist Utopia with one currency and cradle to grave handouts for all, not just black folks and the greeks like we have today. The best part is that it ain't gonna happen. Obama's "signature achievement" is going to be Constitutionally torpedoed. So much for signature achievements of the backstabbing liberals. Obama has in fact accomplished nothing. He is the most ineffective and polarizing occupant of the white house....​

 

[cashmcall]

The trouble is that these talking heads like CNBC and Bloomberg are the hedge fund press. And what they have been reporting has been false especially in tech and China. ​

Every two years now the hedge funds get wildly irrational. The SEC has given the a free hand. Only this year has the SEC sent out a warning about high frequency traders. But they still have no rules about offshore traders who have direct market access even in the overnight in some case. Its unbelievable. ​

So yes, some of the best investors got hurt badly in 2011. Everything was churning. OK but what was learned? ​

1) typical hedging strategies failed. There was no way to protect against the wolf attack sector smashing. ​

2) Markets were not trading by fundamentals. Great stocks were brought to their knees on the thinnest of rationales. All Asian stocks were destroyed. Industrials were getting killed. Tech was getting gutted. This caused more redemptions from mutual and hedge funds.Bernanke was asleep the whole time. ​

3) traditional safety areas were killed. Event the Gold bugs got hammered. Commodities got hammered. There was no "stores of value" as you put it. Even though Goldman was pushing up oil, the oil sector and Nat Gas were collapsing. ​

4) this was a fire drill to see if they could launch a second recession. ​

5) Housing was dropping like a rock and Obama the ***** practically had picked for ineptness, was slowing down the foreclosures guaranteeing a huge delay in clearing inventory. ​

The same hedge funds that tried to wreck the economy in 2011 and push us into a second recession are still around and for the last three weeks they have been pounding away. But they have gotten their backs broken this time. ​

Apple earnings not that idiot bernanke woke the markets up. Investors realized that that there are some companies that are doing much better that well, Apple has become dominant and not just locally but globally. And for the first time, we are seeing what happens when USA driven tech muscle hit a growing emerging market. It is spectacular. ​

This stuff is driving global employment. It won't drive much employment here because of cheap labor overseas but it still creates plenty of wealth in America. This time I will call them the good hedge funds, broke the back of the foul players. So things are vastly different. That is not to say they won't try. ​

The idiots out there that do TA continues to push for market corrections based on nothing. We have been stuck in this trading ranges for over ten years. So eventually it has to break out. Now is a good time. ​

One the plus side, Romeny is sending all the right signals to conservatives. He is staying on point and he has Obama and Geitner and Axlerod gettign defensive. If the use of Rubio is for real, then Obama can't win. He can't win without FL PERIOD. There is no number scheme that would work. If Rubio is on the ticket, FL is gone. ​

I have talked to many Democrats and they can't stand obama. So this is good news. The lashing of obamacare is great news. So people are starting to see some light at the end of the tunnel. No doubt that Obama is going to be crushed in a landslide. The economy isn't celebrating the economy, it is celebrating Apple's innovation that has opened up global markets in ways that nothing has ever done before. People believe in businesses when they see success like this. Obama is antibusiness. So Last year people just looked into the abyss and obama didn't care he and the baboon took vacation after vacation, didn't bother with D-Day or Memorial day. He is the first to miss Memorial day at Arlington. He had to play basketball or something. The guy is bad for morale but Romeny is going to beat him. The Republican money machine is pouring in money and they like Rubio. So Romeny went for the right target. ​

So I know you are negative but I am telling you that there is light at the end of the tunnel, these dark ages brought on by obama are going to come to an end. No more racebating, no more race card, Romeny will go right after gov regulation and the EPA will be snipped like a sheep. People in this country can hang on for 8 more months. Last year they didn't think they could hang on. ​

Obama has damaged this country and had wrecked the morale. Thank God it is coming to an end. ​

The thing about Apple is unlike the Obama Administration, knows how to get things done. Apple isn't out blaming China for the US recession. They are busy proving what everyone knows. If you build a better mousetrap the world will beat a path to your doorway. So Apple has done wonders for cheering up Americans and other businesses are going to do this as well. It is not because of Sambo but in spite of his obstruction and impediments. ​

So I agree with you on the brutality of the 2011 markets in which 70% of hedge funds got nearly destroyed but conditions are better now in spite of obama.​

 

[Cruella]

Cashcall - I keep seeing/hearing about the great possibility of a global economic collapse. Can you explain better what a derivative is?

22 Red Flags That Indicate That Very Serious Doom Is Coming For Global Financial Markets

#22 The 9 largest U.S. banks have a total of 228.72 trillion dollars of exposure to derivatives. That is approximately 3 times the size of the entire global economy. It is a financial bubble so immense in size that it is nearly impossible to fully comprehend how large it is.

The financial crisis of 2008 was just a warm up act for what is coming. The too big to fail banks are larger than ever, the governments of the western world are in far more debt than they were back then, and the entire global financial system is more unstable and more vulnerable than ever before.

 

[cashmcall]

Cashcall - I keep seeing/hearing about the great possibility of a global economic collapse. Can you explain better what a derivative is?

22 Red Flags That Indicate That Very Serious Doom Is Coming For Global Financial Markets

#22 The 9 largest U.S. banks have a total of 228.72 trillion dollars of exposure to derivatives. That is approximately 3 times the size of the entire global economy. It is a financial bubble so immense in size that it is nearly impossible to fully comprehend how large it is.

The financial crisis of 2008 was just a warm up act for what is coming. The too big to fail banks are larger than ever, the governments of the western world are in far more debt than they were back then, and the entire global financial system is more unstable and more vulnerable than ever before.

Watch this ..very east to understand..(not that you need easy)..I will be back when I have a little more tme..

 

[Cruella]

Watch this ..very east to understand..(not that you need easy)..I will be back when I have a little more tme..

Thanks CC, that helps. But what did he mean by "there are a lot more dominos to fall"? What are those dominos?

 

[cashmcall]

Thanks CC, that helps. But what did he mean by "there are a lot more dominos to fall"? What are those dominos?

​

Derivatives in and of themselves are not dangerous unless they are over leveraged. ​

For example if you buy a stock​

option that entitles you to the "Right" to buy 100 shares of a stock in the future at today's price. This is a derivative but one that limits risk entirely to the value of the option. But the money at risk in an option trade can rise or fall very very robustly. That is the leverage. ​

But suppose you had real risk of all your assets in a derivative that was multiplied at 40 to 1. So you invest​

1000 and the derivative rises and you could make 40K on your 1K investment. If it goes down, then you could lose $40K on a 1K investment. ​

Banks through the federal reserve have a fractional multiplier which is a derivative. When they get money from the fed they lend it at 10 to one. When bank depositors put in money they lend it at 10 to 1. So banks always have derivative risk which is limited because the Fed can always open the discount window and flood the banks with more money. So the risk here is not to the bank but to the dollar and taxpayers. ​

With JP Morgan, the value of derivatives can be easily seen. Three years ago they had net assets of 77 Billion. Through derivatives in a recession they now have 380 billion in assets all tied to ongoing derivatives. They are so big and holding so much risk, they represent a huge danger all by themselves. If their derivatives went south, they could not get out without taking the entire global market with them. They are Lehman on steroids. ​

A lot of the JP Morgan bets came from buying oil futures​

and mortgage backed securities at the market bottom. So these "Whale" trades while risky are not exceptionally risky now. Because the Fed was backstopping the banks, this was easy money.​

​

So now JP Morgan has massive capital to lend to conventional loans which are not derivatives. A way to think of it is they went to the race track bet on a 1:20 swayback that somehow won. So the exposure to derivatives is fed money leveraged in the marketplace that raised oil from $35 a bbl to $115, at a ratio of about 20 to 1. The cost was absorbed by the global oil consumer. ​

As for mortgage backed securities. Lending standards are so tight now that they represent very low risk. In a simple sense the Banks through the Fed, robbed the world by controlling commodity necessities and gouging as well as floating real estate losses to the taxpayers while skimming the cherry mortgages for themselves. ​

Banks are dirt cheap because of their capacity to engage capital at the Fed Discount window when assets had deflated. They got the windfall and taxpayers and citizens got the bill. Banks are not unstable at all. They are laughing all the way to the bank. They pulled off the greatest asset heist in history and are now free to invest in the emerging markets.​

​

Hope this helps

Dylan

 

[cashmcall]

April will end up being the yearly low in 2012. May will be up. Bears got destroyed in April. Despite the wall of Worry, the Dow still gained thought Nasdaq and S&P dropped slightly. I am calling that the SteveZ1 correction. I know Steve was prepared to buy Apple back at 450 dollars a share but clearly that is not going to happen in his lifetime. Valuations are simply too low. The bond markets are chocked full and the hedge fund media is too focused on trivia in Spain or their EU country de jure. EU has no power to hurt the USA at this point. Their banks are not going under and the hysterics about Austerity have no bearing on good EU businesses it is just the ramblings of socialism as it withers on the vine. Socialism got them where they are today and Socialism will die a long painful death. There has never been a successful socialist economy. ​

On the political front, Romney makes every blunder on earth and is even up in the polls and his money donations are soaring. So very much like the markets that ignore Europe now, Romney's negatives are being overlooked compared to Obama. Even when Obama spikes the football over the Bin Laden killing, the Seals are now swiftboating him. Obama has no respect in the Military. The Marines call him the Commander in Chump. ​

May will be good. Then June will see a big surge in home sales. I believe the Fed will apply QE III to direct purchase of mortgage backed securities. This will unleash the liquidity; it will still be sluggish but vastly improved. Then July when Obamacare get the stake driven through its black heart. This defeat will see a surge by Romney. Hopefully by then Romey will have Rubio sealed on the ticket so August will be a big unified party party in Tampa. ​

There will be the typical threat of the Sept Correction and there will be discussion the 2009 March lows. October will see a collapse of the bond bubble. November is the election and markets will Roar through December. And tax matters will be made retroactive in January for 2012 so capital gains will remain at 15% for ALL Americans. Class warfare will end and 2013 will be booming. ​

Meanwhile the Gold bubble will burst as will the bond markets bubble. Social Sec will be converted to a Chili styled system and that entitlement problem will be solved. ​

A good jobs makret will follow getting every one except Obama's lazy aunt and Uncle off welfare. ​

 

[Richard Savage]

What is needed is to curb undisclosed speculation on the financial markets and provide more transparency to commercial transactions. The problem with regulating banking and the stock market can be easily solved with a single piece of legislation. Congress should repeal the safe-harbor provisions of title 11 that exempt financial derivative contracts from bankruptcy. (Derivatives are really secret liens that conceal leveraged borrowing carried "off balance sheet" - this was the lesson learned from the Lehman Brothers bankruptcy, and why AIG was "too big to fail" necessitating the government "bail-out.") Without that exemption for "anonymous creditors," the derivative counterparties will be forced to disclose their contracts in order to preserve the priority of their security interest.

 

[cashmcall]

JPMorgan's net worth has increased from 77 billion in 2009 to over 380 billion. It did so by using Whale trades as if it was a hedge fund. I promise the two billion is much worse than this. ​

The synthetic derivatives in which Morgan is loaded to the gills make it a potential for thermonuclear meltdown of the financials. The fact that they can't get out of these massive holdings means that if there is a shock, they take the whole system down. ​

This is too big to fail on steroids. This is what hasn't changed about wall street. The idiotic "volker rule" has no teeth and why should it; it was designed by liberals to be a walk around. Obama lives off JPMorgan and Goldman. ​

I am sure Goldman is in on it too. Both act like a tag team. I am shorting Goldman in the after hours and I have a bid in on FAZ and I bought some UVXY. ​

I brought this matter up when the Morgan earnings​

came in and was astonished at how well they did during a recession with free fed money. Well didn't bernanke say he was encouraging risk? Sure he did. And Morgan and Goldman gave it to him in spades. ​

They were the ones that ran up oil and when they heard the screams of their white house sock puppet, they shorted the oil markets and down they came. They did what ever whale does, they got greedy an now they have 380 billion tied up in risk that they can't escape without tearing the floor out of the derivatives. ​

As long as nobody moves things will remain stable. Think of it as Goldman and Morgan driving a truck full of nitro, the bottles are clanking against each other, the road is getting more bumpy as they head downhill and the brakes are failing. I am sure you remember the movie with Brian Keith called Violent Road. His character was named Mitch Barton. ​

And now you know why the market has been so rough for the last several weeks. Morgan has been selling to shore up its risk.​