SteveK

Options Trader Friday Outlook: Will We Finish the Week Over Target Levels?

Phil, hold on. New Orleans was a disaster waiting to happen and still is ... let N.O. and La rebuild it if they want to throw their own money away! As regards Detroit ... it's silly to think it would attract Canadian tourists ... let Michiganers throw their money away on Detroit!! Your comments on China show just how false their supposed boom really is ... what they really need is exports to the US and Europe not ghost-towns.

The Housing Market Continues to Improve

Actually the new home numbers are fairly good (i.e. not too bad) considering where we are in this recovery. Why you ask? Here are a few of the major reasons (list goes on ad infinitum).

First, we don't need a lot of new homes with the massive overhang of existing home inventory. Second, people who want a new home at this juncture in the recovery need to be flush with cash (i.e. NINJA does not apply here). Since having lots of cash does not apply to many people, the alternative of buying an existing home makes more sense. Third, guess what, besides the $8K down-payment handout going away, we are heading out of the prime time buying season (Spring-Summer) and headed into the slower Fall-Winter housing season. Fourth, the real problem with new homes is that there's not enough lower-end supply and too much high-end! The builders need to "giveaway" (i.e. big problem here) their high inventory and start building more moderate homes that will sell more easily.

What's Wrong with Market Speculation?

Empty logic, no facts, not my position on speculators/bubbles, just GREED!!!


On Sep 02 12:24 PM Baboon wrote:

>
> On Sep 02 11:31 AM SteveK wrote:

What's Wrong with Market Speculation?

You make a great point. There can be no question that house buyer speculators took physical possession of a house whereas non-physical oil speculators never did and never will take physical possession of barrels of oil! No doubt bubbles can still happen but when speculators add froth without any physical skin in the game it only exacerbates the problem (Note $147 to $32 oil swing in less than 6 months). If ALL traders had to take possession, store, transport, deliver barrels of oil this massive up-swing AND down-swing would NEVER have happened! Unregulated, non-physical speculators distort the free market and add no benefit except GREED!!!


On Sep 02 09:18 AM Baboon wrote:

> Bubbles in all asset classes are unavoidable. The latest real estate
> bubble was caused by speculators. Were they 'physical' or 'non-physical'
> investors? How can you tell them apart? Or how can you prohibit some
> people from buying a house? And why 'non-physical' investors now
> have no power to drive the price of oil to $200?
> Somehow the free markets always work themselves out in the end.<br/>
>
> On Sep 02 08:57 AM SteveK wrote:

What's Wrong with Market Speculation?

Craig is consistent in his diatribe for free enterprise. However, he totally ignores consumers of commodities and emerging news that "non"-physical traders have grossly distorted physical supply and demand commodity markets particularly the oil market. Recent news indicates that post-Enron rules changes have allowed many financial entities and their offspring to go off the reservation to promote non-physical speculation with little or no regulation.

It doesn't take a rocket scientist to figure out that if you take a $100B physical marketplace and then add a $500B+ non-physical trading marketplace to the equation that a lot of price volatility and speculative activity will drive the overall and physical marketplace. Consumers do NOT need non-physical speculators manipulate prices at the gas station! Non-physical investment is okay to the extent that it adds appropriate liquidity but does NOT distort the marketplace. Our government, in conjunction with other "global" governments, needs to establish regulations that support adequate liquidity, both physical and non-physical, for the marketplace and minimize speculative excesses! GREED under the guise of free enterprise should not be allowed to override the greater public good.

Initial Jobless Claims: 584K, up 25K from a week ago (revised), and worse than the 575K consensus. Continuing claims fell 54K to 6.197M.

CNBC is spinning this week's number as good. The Chicago guy says they were expecting worse (despite 575K estimate and worse than last week)! Wiesman says this number is "clean" and looks good. What are these guys smoking????? These guys need to report the news not what they think or hope (to influence the markets). Investors can evaluate the news and make their own decisions without blatant misrepresentations by the media.

Why It's Crucial to Reduce Leverage in Oil

Great perspective. Minimizing the participation of "non-possession or non-delivery" speculators in the oil commodity market will be quite a challenge. Perhaps a rule change, ala 50%+ margin requirements for "non"-participants, is a step in the right direction.

Surely a reasonable argument can be made that market participants who either have possession of or are able to take possession of oil are less risky than those who cannot. Why should "non" participants enjoy the same risk profile as those with a tangible stake in the marketplace. More regulation along these lines can help minimize the price gyrations of GROUP THINK speculators whose actions only disrupt demand/supply dynamics and negatively impact consumers in an artificial yoyo market.

Roubini says the recent rally may soon fizzle "as worse-than-expected earnings and financial news take their toll."

CNBC is spinning these comments as postive (i.e. "the worst is behind us") to justify this afternoon's 1:30-3:00PM rally. This is pure bs! Roubini is confirming the recession is winding down but the main thrust of his comments is that the current rally is bogus. Unbelievable how bearish comments are spun into bullish euphoria!

Why Mandated Health Insurance Is a Bad Idea

C'mon, small businesses may not want to pay for health care for their citizen employees but they have no problem paying for healthcare for themselves and their own families. It's high time that healthcare becomes "part of the job" for all employees and all companies, not just the large ones. Healthcare is a cost of doing business and should be mandated like our social security and retirement health programs and paid for by both employer/employee.

Once every business is put on the same footing things will normalize. Those businesses who want to squeeze an extra nickel of profit by not paying their fair share will be found and punished by the government and/or by disgruntled employees! Part-timers and self-employed contractors should not be excluded from this health initiative.

Is Excessive Speculation in Oil and Commodities Markets Actually Occurring?

This article is unadulterated bs. There should be a rule that whoever buys,sells, owns oil futures MUST register themselves and be in a position to put-up full monetary value oil trades and be able to take 100% delivery of oil futures they trade! And I don't mean taking delivery via a third-party! We need to stop enabling speculator gamblers from throwing hordes of money into oil futures, manipulating prices via artificial demand/supply machinations, and then rolling-over, closing-out, or selling their positions to eliminate taking delivery.

These speculators are nothing more than gamblers ... their activities have no legitimate bearing on any facet of global demand or supply for oil ... and they do nothing but distort prices in the oil marketplace. The government should regulate oil traders and eliminate blatant speculative activities!

Assuming crude prices can stabilize anywhere near current levels, major oil stocks still look very cheap.

C'mon, maybe not XOM and CVX, but oil services which follow oil more closely are up more than 50% since March lows (OIH, DO, RIG, SLB to name a few) are NOT cheap anymore.

Obama advisor Christina Romer says she's not worried populist outrage at AIG's (AIG) bonuses will derail private sector participation in the Treasury's bank backstop plan. "They are firms that are being the good guys here," she tells Fox News Sunday.

Consider this ... Wall Street has its bailout and it still continues ... those firms that have failed or been sold-off have deserved their fates ... those who have overspent, over-reached or cheated on their mortgages are getting their bailout ... isn't it time for some punishment to be delivered to those who have commanded "unscrupulous" bonus compensation for lousy performance!

The House has passed a very poor tax clawback bill (.pdf), Steve Waldman writes. "Retrospective for just long enough to clawback the politically fetishized AIG (AIG) bonuses - while leaving those who made out during the thick of the toxic credit bubble completely untouched."

BTW the clawback is constitutional .... not many people who make more than $250K whose companies accepted $5B or more from the taxpayer's TARP would likely survive the public humiliation of making the legal challenge!

If AIG's (AIG) Financial Products staff, "the majority of whom never lost a dime for AIG," did walk out the door, "who would volunteer to work at the Chernobyl of the financial world? And what would become of the mammoth portfolio that remains? 'It would become the biggest naked position on Wall Street, and everybody would exploit it.'" (WaPo)

What a crock! Although some of these people may not have made many of the bad decisions ... most of them did go along for the ride! If they don't continue to work for AIG to help recover from the mess they most likely would be unemployed with the stigma of AIG on their foreheads. Who would hire any of these leftovers unless they can claim to have helped clean up the mess?

"It has produced numerous unintended consequences, and it has exacerbated the ongoing crisis. If the regulators and standard setters do not act now to improve the standards, then the Congress will have no other option than to act itself." - Rep. Paul Kanjorski today at a hearing on mark-to-market accounting

OMG the last thing we need is knee-jerk congressional action! However, as Bernanke and others indicated, we do need "adjustments" to M-to-M accounting rules for vulture or NO markets. Surely Obama and Geithner can step-up to this clear need ... I hope!