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  • Weekend Reading – Mopping Up Liquidity Already?

    Is it time to tighten already?

    Volker Kauder, the head of Germany's leading Parliamentary group thinks so, saying: "I hope that the ECB acknowledges its limits and quickly rakes in the money later." Mr. Kauder's warning follows similar comments made by Ms. Merkel at the most recent summit of European leaders on March 2. Responding to warnings by Brazil about a "tsunami of cheap money" flooding global markets, Merkel said during a news conference that she was certain that the ECB had now ended its program of issuing cheap 3-year loans to banks. Merkel also reassured critics that the ECB would not repeat such measures again.

    The ECB's balance sheet is now nearly 1/3 of the Euro-Zone economy, 50% worse than the Fed's 19% stake in the US and even the Bank of England has "only" pumped their balance sheet to 21% of the UK GDP. On Friday, through some interesting number juggling, Germany's Federal Statistics Office announced that the country's deficit plunged in 2011 and, at 1 percent, is now well within EU limits. They are now ratcheting up the pressure for other nations to follow suit. As pointed out by Mish:

    Spanish prime minister Mariano Rajoy has already announced his own budget target of 5.8% of GDP in 2012, ignoring the EMU mandate of 4.4% on the way to an alleged 3% in 2013. Rest assured 4.4% will not be met, nor will 5.8%. Last year's deficit was 8.5% and with Spain heading into a monster recession, 7.0% might be a more reasonable expectation for 2012.

    This may all be just internal noise to placate the hawks in Germany or it may be stage one of panic over the 2.5% plunge in the Euro last week - despite Greece being "fixed" again. The bottom line is, without similar balance sheet inflation from the BOE and the Fed next week, the Euro still has a long way to fall and we know how a bouncing Dollar plays havoc with the markets.

    Portugal is already showing a 2.8% CONTRACTION in GDP for the final 3 months of 2011, 1.3% worse than Q3 and no one thinks it's getting better in Q1. Their statistics agency said domestic demand and investment fell sharply, while growth in exports slowed. Portugal's largest export partner is Spain, who are just beginning…
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    Mar 12 8:27 AM | Link | Comment!
  • Fixed Markets Friday – Greece All Better – Next!

    The Greek debt crisis is over!

    Again. Well, for now. Despite the "voluntary" participation of 85% of the debt-holders, collective action clauses (NASDAQ:CAC)will be triggered to force other bondholders and a similar action in Argentina led to 10 years of lawsuits - so we have that to look forward to. "The rule of law has been treated with contempt," said Marc Ostwald from Monument Securities. "This will lead to litigation for the next ten years. It has become a massive impediment for long-term investors, and people will now be very wary about Spain and Portugal."

    "Even if we band aid this Greek situation right now, they're going to default down the road or write down 100 percent of the debt," said Scott Wren, senior equity strategist at Wells Fargo Advisors.

    Now the European Commission has sent a team of experts to Spain to check its budget deficit data, according to Spanish website Expansion, and they will be greeted by a National Strike,scheduled for March 29th, to protest the austerity measures the EU is trying to enforce. Greek bonds are already passing the 20% mark again so this "fix" has lasted all of a few hours and already we're seeing rates creep up in Italy, Spain and Portugal (Ireland can't even borrow money - at any price) and part of the reason is they just blatantly screwed over the last batch of bondholders and Credit Default Swaps have now been revealed as completely useless tools to protect bond investments - and part of the reason is Uncle Sam needs to borrow a record $227Bn to pay the bills for February alone:

    While the above chart may look like a catastrophe to a casual observer, especially considering February is the shortest month of the year - others may be cheered by the thought that the US will never actually have to pay this money back, as Greece has now shown us all that the path to default is celebrated by global markets climbing to record highs. So, if Greece's $450Bn default can get us to Dow 13,000 - imagine what the US's $16Tn default will do - I can't wait!

    We are waiting for the jobs report this morning but according to the Gallup poll, there aren't any. Gallup sees 9.1% unemployment in February, up
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    Tags: AAPL, CMG, FSLR, GMCR, Greece, QQQ, SBUX, SQQQ, TLT, unemployment

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    Mar 09 9:36 AM | Link | Comment!
  • Fake-Out Thursday – Dollar Sacrificed On An Altar Of Lies

    The Dollar is down 1%.

    That makes the markets go up 1%. Mostly, the Dollar is downbased on a FABRICATION in Uncle Rupert's Wall Street Journal - the most widely read financial publication in the World (next to Philstockworld, of course!). Although Jon Hilsenrath, the WSJ chief economist who started this nonsense made it VERY CLEAR that the story was predicated on IF they decide to do more "capital I, capital F," Jon says - THEN this is the kind of bond buying that might happen.

    That's all it took yesterday to send the S&P up 1% but, if there were a volume measure, you'd see that, on the Dow, 25M shares were traded before 11, and just 35M shares between 11 and 3:30 and then 50M shares were traded between 3:30 and 4pm, almost 100% down volume. The only people that are fooled by these word games are the beautiful sheeple who are so well-trained to buy the F'ing dips that even a misstatement like this sends them into a buying frenzy.

    Ah, fresh meat - we love it! Oil (/CL) was back at $107 this morning and we already caught a nice dip off our favorite sell spot in Member Chat and gold is giving us a good short entry at $1,700 (/YG) as well. All we have to do is watch the Dollar and see if it can hold 79.40 once real trading begins. The Euro is up at $1.324, off the $1.31 line yesterday so up 1% and the Pound is up from $1.57 yesterday to $1.58 this morning and the Yen is loving it at 81.71 (weaker) as they've been solidly backing the Euro over at the BOJ this month and the Nikkei futures (/NKD) shot up from 9,500 yesterday to 9,835 this morning (3.5%) on a 1% drop in their currency so this would be a great spot (below 9.850) to short the Nikkei.

    SPY DAILYFor the Futures impaired, the EWJ April $10 puts at .20 should be a fun way to play the Nikkei reversing, assuming reality sets in at some point. It's 8:25 now and oil just hit $106.50 and that's our take the money and run spot in the futures as we pick up $500 per contract off my 4:56 comment in Member Chat this morning:


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    Tags: EWJ, GLD, IWM, QQQ, SCO, SPY, USO

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    Tags: EWJ, GLD, IWM, QQQ, SCO, SPY, USO
    Mar 08 9:24 AM | Link | 14 Comments
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