Mid-day News Update

• Bail set at $750,000 for ex-Goldman Programmer (Reuters)
• U.S. ISM Service Industries Index Increased to 47 (Bloomberg)
• World Bank tells G8: 2009 remains a dangerous year (Reuters)
• Bank of America Writeoffs May Rise 10%, Analyst Says (Bloomberg)
• Earnings Drop Worldwide as Job Losses Hurt Consumers (Bloomberg)
• Microsoft Plans for Worst as U.S. Companies Show No End to Fear (Bloomberg)
• Florida Aided Allen Stanford, suspect in huge swindle (Miami Herald)

SRS

Looking for a naked or cash secured put position on SRS AUG18 PUT SAKTL. I have an open order at $1.10. I will update if filled.

SPY

Buy to open a position SPY SEP90 PUT SWGUL @ $4.85. Order filled.

Underlying Targets:
Target of $87.00 then re-evaluate
Stop of $90.50

I did this based on the weekly chart indicators as general downside protection and hedge for naked or cash secured positions (excluding SRS PUTS).

A Goldman Sachs trading Scandal?

Check out the links for a breaking news story on a possible Goldman Sachs trading scandal. This could reveal the Goldman's trading methods and programs.

Click one of the links below:

ZeroHedge.com
Reuters
CNBC

Related articles by Zemanta

• Goldman Sachs: The great American bubble machine (seattlepi.com)
• Taibbi: Impending Rule Change Means Goldman Sachs Stock Manipulations Can't Be Tracked (crooksandliars.com)

7 more banks fail as FDIC mulls rules for sales

7 more banks fail (AP)

Matt Taibbi interview after the Goldman Sachs article he wrote

Below is the link for the Matt Tiabbi interview conducted on BNN.ca

http://watch.bnn.ca/the-close/july-2009/the-close-july-2-2009/#clip189690

Extended Trading

NYSE extending trading until 4:15pm today.

Employment Data or should I say Unemployment Data

Today's unemployment numbers I think are going to look good compared to what the picture will look like down the road. Another 467,000 jobs cut and an unemployment rate of 9.5%.

There are many factors helping push the unemployment number higher:

• High gasoline prices
• High food prices
• High debt load costs
• Extremely high health care costs...which gets worse with more lay offs
• Higher property tax rates despite lower housing values. Mine went up over 30% in the last 2 years.
• High college tuition
  
• High utilities (electricity, water, etc). Some areas have experienced about a 100% increase in water costs.
• Higher sales tax rates
• Higher etc, etc, etc......

You ask how this will make things worse? The average American is getting squeezed to the limit. They are buying necessities only and have literally stopped buying the bubble creating items that started all this mess (housing, furniture, tvs, disposable cars, easy credit). An example: my trips to Sam's Club. I used to see at least 1 flat panel TV being pushed through the checkouts almost every time I went. Since the beginning of the year, I honestly don't think I have seen one being sold. I average about 1 trip a week.

Driving around Houston, I see many shopping center strips 100% empty and very dead mall parking lots. These are all signs of uncertainty by the consumer and business owners. Keep in mind, Houston has been relatively immune to the big downturn experienced by other major cities.

There are too many un-sustainable jobs. So many jobs that were created in the last 10 years are jobs that supported the bubble creation. Now that the consumer is retrenching, paying off the debt created by the bubble, and buying only the necessities, these jobs are in jeopardy.

This bubble is so big that it will take much more than a 'microwave' fix. The commercial real estate problem that is around the corner will not get the support from the government as the housing problem did. Fist of all, the Government is tapped out. Secondly, the public is sick of bailouts. Third, banks will have to adjust commercial mortgages down to reasonable levels or risk losing the whole mortgage. There will be large write-offs that could be devastating.

Many local municipalities based their budgets on the inflated property values. Well guess what, we are seeing many that could fold soon. Homeowner associations will feel the pinch as well.

I think all the problems will snowball until the average person gets their balance sheet in positive equity and we return to pre-bubble circa mid '90s. There will be a lot of pain, but that is the reality we face.

I don't think we should be fooled by the 'green shoots' touted all day long on the major media outlets. More layoffs (public and private), downsizing, and small business closures could get us to a 12% unemployment rate easily by mid 2010.

Follow up on the Joe Saluzzi post

Here is a little weekend reading for you to understand the program trading that is going on.

Toxic Trading - Saluzzi

FLR

Sold to close the remaining position in FLR FLRVJ @ $6.20 for a 10.7% GAIN. Not much, but I will look to for a better trade.

Joe Saluzzi - I saw this yesterday and he talks about the market manipulation

I saw this yesterday and could not believe it. I follow Joe Saluzzi on Twitter and found the clip on YouTube. He talks about market manipulation and principal program trading. Guess who he is pointing fingers at? Take the time to watch the whole thing.

http://www.themistrading.com/

WNR

Now that Goldman Sachs lowered estimates on the refiners, I feel better about keeping my WNR cash secured puts. On a bad tape yesterday, the refiners did well. So my take is Goldman was buying as they downgraded. I think we will be OK on the JUL7.50 puts.