California State Controller John Chiang announced on January 26 that California’s bills exceed its tax revenues and credit line and that the state is going to print its own money known as IOUs. The template is already designed.
Instead of receiving their state tax refunds in dollars, California residents will receive IOUs. Student aid and payments to disabled and needy will also come in the form of IOUs. California is negotiating with banks to get them to accept the IOUs as deposits.
California is often identified as the world’s eighth largest economy, and it is broke.
A person might think that California’s plight would introduce some realism into Washington, DC, but it has not. President Obama is taking steps to intensify the war in Afghanistan and, perhaps, to expand it to Pakistan.
Obama has retained the Republican warmongers in the Pentagon, and the US continues to illegally bomb Pakistan and to murder its civilians. At the World Economic Forum at Davos this week, Pakistan’s prime minister, Y. R. Gilani, said that the American attacks on Pakistan are counterproductive and done without Pakistan’s permission. In an interview with CNN, Gilani said: “I want to put on record that we do not have any agreement between the government of the United States and the government of Pakistan.”
How long before Washington will be printing money?
On January 28 Obama announced his $825 billion bailout plan. This comes on top of President Bush’s $700 billion bailout of just a few months ago.
Obama says his plan will be more transparent than Bush’s and will do more good for the economy.
As large as the bailouts are--a total of $1.5 trillion in four months--the amount is small in relation to the reported size of troubled assets that are in the tens of trillions of dollars. How do we know that by June there won’t be another bailout, say $950 billion?
Where will the money come from?
Obama’s bailout plan, added to the FY 2009 budget deficit he has inherited from Bush, opens a gaping expenditure hole of about $3 trillion.
Who is going to purchase $3 trillion of US Treasury…
That’s the message from author Michael Panzner, who has contributed many excellent articles to Phil’s Favorites and now has a new book out on the shelves of your local book store, or Amazon. – Ilene
My latest book, When Giants Fall: An Economic Roadmap for the End of the American Era, has just been published by John Wiley & Sons. It is already on the shelves at Barnes & Noble, and will soon be in stock at Amazon.com, Borders, and many other booksellers around the country.
For a taste of what it’s all about, here is the Introduction:
In late 2007, a Chinese submarine suddenly “popped up” in the middle of U.S. military exercises taking place in the Pacific Ocean. According to Matthew Hickley of the United Kingdom’s Daily Mail, the 160-foot Song class diesel-electric attack submarine “sailed within viable range for launching torpedoes or missiles ” at the USS Kitty Hawk, a 1,000-foot aircraft carrier with 4,500 personnel on board that was being guarded by a dozen warships and at least two submarines. The newspaper added—in a report that received scant U.S. media attention—that American military chiefs “were left dumbstruck.” One North Atlantic Treaty Organization (NATO) official said that “the effect was ‘as big a shock as the Russians launching Sputnik ’—a reference to the Soviet Union’s first orbiting satellite in 1957 which marked the start of the space age.”
But it isn’t only in the military arena where there are signs that the United States is not quite in a league of its own. An August 2007 New York Times editorial, “World’s Best Medical Care?” highlighted two studies that revealed the U.S. health care system, contrary to popular belief, had fallen significantly behind those of other nations. The first, published by the World Health Organization seven years earlier, ranked the United States 37th out of 191 countries worldwide. The second, detailed in May by the well-regarded Commonwealth Fund, rated the United States “last or next-to-last compared with five other nations—Australia, Canada, Germany, New Zealand, and the United Kingdom—on most measures of performance, including quality of
How did Robin do this week with the market call? Comments from the weekly blog posted 1/24/2009:
“The INDU is trying to break resistance at 8348. The index has shown me that it wants to go higher as evidenced by a “Tweezer like” candlestick formation on Thursday and Friday. The DOW will have significant difficulty breaking below 7900 [...]
-7900-8000 has exhibited remarkable support. Once again, there does not appear to be strong conviction to drive the INDU below support as evidenced by decreasing volume. We are in a trading range between 7900-8405. We may linger briefly at this level and confirm support before once again making another attempt to breach immediate resistance at 8340-8405. [...]
The Bear put is the mirror image of the Bull Call. It is a debit spread which means that the trader must pay to initiate the trade. The strategy optimizes a bearish trend and is comprised of two trading instruments. 1) the long put and 2) the short put. Each [...]
In (partial) defense of Peter Schiff, he made some correct calls, but unfortunately did not turn these calls into profits for his clients. True, it was a particularly vicious year for being only part right!
Geez…. Mish’s post from Sunday night, “Peter Schiff Was Wrong”, has sure generated a lot of interest and controversy. That’s because Peter Schiff is a polarizing figure. People tend to either love him or hate him and have a hard time coming to a balanced, realistic assesment of him.
Today, The Wall Street Journal weighed in with a piece on the front of their Money & Investing section: “Right Forecast By Schiff, Wrong Plan?” (subscription required – [but see excerpt below]). In it, they mainly rehash criticisms from Mish’s piece. Schiff was wrong about decoupling, wrong about commodities, wrong about the dollar in 2008.
They provide a couple of specific examples of how this played out for specific Euro Pacific clients. Richard De Gennaro, an 83-year-old retired Harvard University librarian, put $100,000 into a Euro Pacific account early in 2008. The account is now worth $37,000 – a 63% plunge.
Similarly, Brian Kullberg, a design engineer in Portland, Ore, put $70,000 into a Euro Pacific account early last year. That account is now worth about $25,000 – a similar 64% drop.
Schiff has put up a piece defending himself: “Peter Schiff Answers His Critics”. The main defense is that short term market fluctuations don’t disprove his longer term investment theses: “[Mish] is confusing short term market fluctuations with long term economic trends……I never held myself out to be a market timer. My advice was always geared to long term investors.”
The truth, as usual, lies somewhere in the middle. Peter Schiff deserves a lot of credit for the correct calls he made about the housing bubble, the financial system and the US economy – not only for the calls but the intransigent way in which…
What a way to start the year! I’ve decided to delve into the bear case this weekend to see if I can talk myself out of thinking we’ve suffered enough at the 8,000 line. I’ll be posting as I read in a Weekend Reading section but I thought it would be a good idea to first review what worked and what did not work in a choppy week.
After a solid and active week of picks last week, we went into this week with a much more cautious attitude. Monday morning I warned that the VIX would fall and it was time to start grabbing those March premiums. The VIX did drop 20% (and spiked all the way to 34 on Wednesday) but recovered nicely into Friday, which is why I was up all night Thursday working on our Buy List, as it was once again a good time to enter some hedged plays. But on Monday Morning, I was in no mood to buy anything and my comment that morning was: "XOM and CVX together on Friday (15% of the Dow weighting) have me really, really, REALLY worried that we’ll get a -5% GDP along with poor earnings from them and people are going to act like the world is ending so it’s going to be a tricky play this week but lots of fun playing the ultras."
In the end, XOM and CVX did not kill us but the 33% decline in XOM profits didn’t inspire a lot of confidence in the XLE, which fell 6% from Wednesday’s silly high and finished at the low for the week. The bottom-line takeaway from XOM’s report is that revenues are way off and even the best companies are getting hit very hard – what chance do the little guys have? I pointed out on Monday that January is supposed to be THE BEST month of the year for the markets – let’s hope not! Of course I mentioned gold again, stating: "investors look for REAL safety as opposed to the very imaginary safety of fiat currency, no matter what country is issuing the paper" and the January chart really emphasises why I do, indeed, like gold.
Rolling CAT puts we sold to the March $30 puts at $2 is not helping so far as CAT fell another…
No need to debate whether science has been held hostage for eight years, but we can ask what areas of science suffered the most and what can we do about it now? This article discusses one of the greatest harms flowing from a combination of failed policies in medical science tainted by greed, willful blindness (or worse), and political collusion, to the detriment of a generation of our children. – Ilene
Even as the evidence connecting America’s autism epidemic to vaccines mounts, dead-enders at the Centers for Disease Control (CDC) — many of whom promoted the current vaccine schedule and others with strong ties to the vaccine industry — are trying to delay the day of reckoning by creating questionable studies designed to discredit any potential vaccine-autism link and by derailing authentic studies.
On January 12, a cadre of mid-level health bureaucrats left over from the Bush administration ignored Federal requirements for advance notice in order to vote to quietly strip vaccine research studies from funding allocated by Congress in the Combating Autism Act (CAA) of 2006. Members of Congress had said that this money should be used to study the vaccine-autism connection.
These rogue bureaucrats — members of the Interagency Autism Coordinating Committee — held an unannounced vote to remove previously approved vaccine studies from funding under the CAA. Nearly all of the "Federal" members of the panel voted to remove the two studies, whose estimated cost was $16 million – or 1.6% of the billion dollars authorized by Congress for autism. The panel’s civilian members, in contrast, voted nearly unanimously to retain the funding.
IACC’s action to halt vaccine-autism research flies in the face of congressional intent. The bill’s authors clearly stated that vaccine research should be funded. Even the esteemed Institute of Medicine has condemned CDC’s methods. In 2005, an IOM panel condemned CDC for its "lack of transparency" in vaccine-autism research.
The bureaucrats responsible for this scandal are on the wrong side of history and it’s hard to not attribute an obstructionist motive to their act since vaccine-autism research has already entered the realm of mainstream science. Serious scientists (except those tied to the vaccine industry)…
It was the worst January ever for the Dow industrials and S&P 500, according to Stock Trader’s Almanac data.
The Dow lost 8.8% and the S&P 500 lost 8.6% in the month.
The Nasdaq’s loss of 6.4% was eclipsed by last January’s loss of 9.9%. That 2008 loss was the worst in the tech average’s history, going back to its inception in 1971.
The International Air Transport Association (IATA) released international scheduled traffic results for both December 2008 and the full-year.
In the month of December global international cargo traffic plummeted by 22.6% compared to December 2007. The same comparison for international passenger traffic showed a 4.6% drop. The international load factor stood at 73.8%.
For the full-year 2008, international cargo traffic was down 4.0%, passenger traffic showed a modest increase of 1.6%, and the international load factor stood at 75.9%.
“The 22.6% free fall in global cargo is unprecedented and shocking. There is no clearer description of the slowdown in world trade. Even in September 2001, when much of the global fleet was grounded, the decline was only 13.9%,” said Giovanni Bisignani, IATA’s Director General and CEO.” Air cargo carries 35% of the value of goods traded internationally.
The number of containerships laid up is growing very fast. According to French maritime consultant AXS-Alphaliner, 255 ships, equivalent to 675,000 teu in capacity (5.5% of the global containership fleet), were laid up as of January 19 this year. It projects that the volume of containerships on standby will jump to the equivalent of 750,000 teu in early February this year, accounting for 6% of the entire global boxship fleet.
Since the week before Christmas – just one month ago – the number of ships idling has grown
Jobless claims improve while leading indicators decline in today’s economic report card
by Wall Street Sector Selector Staff
Weekly jobless claims declined to 424,000 from last week’s 432, 000 but stubbornly stayed above the all important 400,000 level for another week.
August Leading Indicators came in at +0.3% compared to 0.5% for July, as the economy continues registering weakness.
Good news came from July Home Prices which rose to +0.8% from the previously reported +0.7%.
But the biggest economic news of the week came yesterday when the Federal Reserve said it saw “significant downside risks to the economic outlook, including strains in global financial markets.”
Global stock markets responded negatively yesterday an...
Shares of Priceline.com Incorporated (NASDAQ: PCLN) are trading higher in the after-hours following the release of its Q1 earnings results. Currently, shares are up 2.74%, trading at $548.60; they closed the regular session down 0.67 %, at $533.97.
The company said that its Q1 EPS came in at $2.66 on revenues of $809.3 million; this compares to the Street's estimate of $2.46 per share on revenues of $779.5 million. Revenues rose 38.6% year over year.
"In the 1st quarter, the Group benefited from strong growth in our global hotel business, particularly at Booking.com and Agoda," said Jeffery H. Boyd, Priceline President and Chief Executive Officer.
He added, "Room nights booked grew by 55.8% and our international gross bookings grew by 79% compared to prior year...
The damage control to the Fukushima explosion reported earlier is coming fast and furious. According to CNN, "the explosion at an earthquake-damaged nuclear plant was not caused by damage to the nuclear reactor but by a pumping system that failed as crews tried to bring the reactor's temperature down, Chief Cabinet Secretary Yukio Edano said Saturday. The next step for workers at the Fukushima Daiichi plant will be to flood the reactor containment structure with sea water to bring the reactor's temperature down to safe levels, he said. The effort is expected to take two days." While the government is trying to play down the threat from the explosion, it has nonetheless double the evacuation zone radius from 10 to 20 kilometers: "Radiation levels have fallen since the explosion and there is no immediate danger, Edano said. But authorities were nevertheless expanding the evacuation ...
Note from dshort: I retired this chart series last summer in deference to my prefered inflation-adjusted series that aligns the S&P 500 2000 high with the Nikkei peak in 1989. However, I continue to receive requests for this version, despite the "V" shape of the the recovery since the March 2009 low. This chart series overlays the current S&P 500 with the L-shaped "recoveries" after the Dow Crash of 1929, the Nikkei 225 after Japan's 1989 bubble, and the post Tech Bubble NASDAQ. Click the chart below for a larger version and use the links to see various comparisons.
Top 5 RisersStockRatingAnalysisVLOSTRONGBUYAn increasingly positive growth rate of past earnings, along with improving expectations for long term growth, make Valero a good prospect for high returns.KROSTRONGBUYKronos Worldwide has been gaining recognition from analysts as a good canditate for achieving higher than expected earnings along with higher overall projected valuation.SFIBUYiStar is one of the top candidates projected to achieve both higher than previously projected earnings in the short run and a higher earnings growth rate in the long run.AMATSTRONGBUYApplied Materials has been...
This post is for live trades and daily comments. Please click on "comments" below to follow our live discussion. All of our current virtual trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).
We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options.
Please feel free to participate in the discussion and ask any questions you might have about this portfolio, by clicking on the "comments" link right below.
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February is now past, and the Biotech Porfolio is loaded with winners and a miss (PLX). MRK is down a bit, but I expect that trade to recover, and one could be more agressive and double down on it, or play another round at the Jan13 $30 options for roughly the same price. Below is the summary, and note the grey boxes are ones that did not fill. I am still a fan of BMRN, and like DEPO as well. Now let's look at a few others.
Table 1. PSW Biotech Plays Since January 2011
 
Our newest play is Momenta Pharmaceuticals (MNTA), who is pursuing a three-part business model which includes complex generic equivalents in partnership with the Sandoz division of Novartis, proprietary compounds, and follow-on- biologics (FOB). It seems that this company is tied up in competition/litigation wit...
Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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who has contributed many excellent articles to Phil’s Favorites and now has a new book out on the shelves of your local book store, or Amazon
They provide a couple of specific examples of how this played out for specific Euro Pacific clients. Richard De Gennaro, an 83-year-old retired Harvard University librarian, put $100,000 into a Euro Pacific account early in 2008. The account is now worth $37,000 – a 63% plunge.
Worst January EVER!
In the end, XOM and CVX did not kill us but the 33% decline in XOM profits didn’t inspire a lot of confidence in the XLE, 
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
(