Phill Davis on QE, POMO and Hyperinflation

Stock-Markets / Stock Markets 2011
Apr 25, 2011 - 03:28 AM

By: PhilStockWorld

John Nyaradi: Philip R. Davis is an options trading expert and founder of Phil’s Stock World, a stock and options trading site that teaches the art of options trading to newcomers and advanced trading strategies for expert traders. His articles and references have appeared in the Wall Street Journal, Google Finance, Business Week, CNN Money.com, Trader Planet, and iStockAnalyst.

Phil is also a marketing partner of Wall Street Sector Selector, and at the end of this interview, I’ll tell you about how you can advantage of a special offer from Phil’s Stock World.

Phil, welcome to Wall Street Sector Selector.

Philip R. Davis: Hi, thanks, John.

John Nyaradi: Today, we’re going to talk a little about your view of the economy, the current state of the markets, then dive into some of the specifics of your option trading strategies and Phil’s Stock World itself. Let’s start with your big picture of the economy today.

Philip R. Davis: My big picture, we call this The Meatball Marketplace. There’s a scene in the movie, Meatballs, where Bill Murray gives a speech and he talks about how it just doesn’t matter. You know, no matter how horrible everything is, it just doesn’t matter.

John Nyaradi: Yeah.

Philip R. Davis: And that’s what this market’s like. It doesn’t, you know, you’ve got nuclear reactors blowing up in Japan. You’ve got countries in revolution in the Middle East. You’ve got countries falling apart in Europe. I think it’s ridiculous. And to see the bid on the VIX – Hang on, I’ve got to check my number. The bid today finished at what? 17.91. I mean that’s just insane. You know, it just makes no sense. 17.91 indicates extreme calm.

John Nyaradi: Right.

Philip R. Davis: No problem. Nobody’s worried.

John Nyaradi: Is this all Bernanke and POMO? What do you think this is?

Philip R. Davis: Yeah, absolutely. I mean, look, you don’t want to overemphasize POMO. Everyone says POMO, POMO, POMO. Is it POMO day or whatever? You know, it’s just the way they’re injecting money. The fact of the matter is though Japan just threw $550 billion into the market. We’re throwing $120 billion monthly to the market nonstop. Europe just doubled the size of their bail-out funds to $300 billion more than it was.

John Nyaradi: Yes

Philip R.Davis: So you know, we inject a trillion dollars in one month into the global economy. If the stock market doesn’t go up, we all need to leave the planet. And that’s the thing. When you look at it and say, “That’s all we got for a trillion dollars?â€