SP Futures and Options Expiration

It's that time of month again, when the option players are gamed by the broker dealers and the hedge funds.

Volumes are light, and the market is range bound.

It needs to break out decisively from the area of resistance, otherwise the formation of a distribution top starts to look compelling.

Why the 'Trickle Down' Approach Is Not Working in the US

The approach taken by the last two administrations to the financial crisis has been to pack liquidity into the big Wall Street banks, certainly not the regional and local banks, without serious reform.

The notion is that by 'saving the banks' they will be able to support the real economy with loans to spur economic activity. It is the same mindset that provides for huge tax cuts to the top end of the income chain, the very group that benefited from the latest bubble. Its a variant of the 'trickle down' theory popularized by the Republicans under Reagan.

The banks prefer to take the Fed and Treasury money and guarantees at near zero percent cost, and loan it back to the public (after all it is their money) in revolving credit (credit cards) at 18%. It's a sweet setup, provided by the Fed and the Congress. Long term loans and leases? Why bother.

If they want risk, they shove the speculative markets around and make side bets on the failure of companies and now, even nations. Failures, we should add, that are intimately tied into various frauds marketed by the banks themselves.

This is the fatal policy error at the heart of the failure of the Obama Administration and the Fed to intervene effectively in the collapse caused by the Fed's heavy handed manipulation over the past fifteen years.

In fact, one could easily make the case that their intervention does much more harm than good, placing additional debt burdens that are strangling the productive economy, serving only to support and perpetuate a distorted and outsized financial sector concentrated in a few elite corporations that are heavy contributors to the Washington politicians of both parties.

It's trickling down all right. But not in the form of productive allocation of capital.

Soros More Than Doubled His Gold Position in 4Q '09

Regulatory filings disclose that Soros more than doubled the gold position in his Soros Fund Management LLC at the end of 2009. There is a lag in official reporting in regulatory filings, so he *could* have sold his entire position before he called gold 'a bubble' at Davos last month.

Then again, he might not have. In which case what would that make him?

We will have to wait for the next round of filings to see.

Certainly not a man of serious intent, regardless of his positions, since he is buying the Gold ETF rather than something more --- substantial.

How are the mighty fallen.

And speaking of the fallen, Dennis Gartman advised that he was selling out his gold position last week, near the lows for the correction around $1060, at least so far, and just in time to miss a rather sharp rally to the upside of $1100. Of course, no one is always right; we all make bad calls. But then again, not everyone goes on financial television and makes a prat of themselves by talking trash about those who have been mostly right about a market while he has been so often wrong.

"When your heart is covered with the snows of pessimism and the ice of cynicism, then, and then only, are you grown old. And then, indeed as the ballad says, you just fade away.” Douglas MacArthur

A fade indeed.

Bloomberg
Soros More Than Doubles Gold ETF Holding in Fourth Quarter
By Katherine Burton

Feb. 17 (Bloomberg) -- Billionaire George Soros’s Soros Fund Management LLC more than doubled its holding in the SPDR Gold Trust exchange-traded fund in the fourth quarter, according to a regulatory filing.

The $25 billion New York-based firm added shares valued at $421 million in the SPDR Gold Trust, the biggest ETF backed by the metal, according to yesterday’s filing with the U.S. Securities and Exchange Commission. Its holding in the fund was worth about $663 million as of Dec. 31.

The filings are done quarterly with a 45 day lag, so Soros could have sold some or all of the position since then. Soros, while speaking last month at the World Economic Forum in Davos, called gold the “ultimate asset bubble” and said the price could tumble, according to a report in the Daily Telegraph...