by Phil Davis - August 29th, 2014 8:24 am
Saved by the bad news!
August has been a spectacular month in which we ignored the most bad news ever ignored by a species that is still not extinct. With any luck, an asteriod will head straight for us next month and we can rally the markets another 5% in anticipation of more Fed easing on impact. The asteriod struck the other side of the Earth this morning as Russia Invaded Ukraine and Euro Zone Inflation plunged to 0.3%, miles below the 2.0% target considered "healthy".
This is, of course, GREAT NEWS, because it means Super Mario is free to go ahead and do something – like he always says he will do but never does. That doesn't stop people from believing it because they WANT TO BELIEVE – they want to think someone is going to save them and make all their hardships go away. 11.5% of the people in Europe are still out of work, double the rate in the US. Over 25% of the people under 25 are out of work, about the same as the US. These are horrific figures – of course people are eager to hear the words of a potential savior.
Since it's Friday, we're not going to debate the merits or discuss what a farce it all is – we've done that this week. Today we'll talk about making money.
On Tuesday, in the morning post, I suggested the TNA Sept $72.50/76.50 bull call spread at $2, selling the Sept $68 puts for $2. 10 of those would not have cost you a penny (since it netted out to $0), though about $7,500 in margin on the short puts. Today the spread is $2.50 and the short puts are $1.15 for net $1.35 or +$1,350 in 3 days, which is an 18% gain on the committed margin despite the fact that TNA has essentially gone nowhere.
I don't point this out to brag, we have plenty of trade ideas that have done much better – I point this out because it was a free trade idea, right in the morning post which anyone could have done and it…
by Option Review - August 28th, 2014 3:11 pm
Buffalo Wild Wings Inc. (Ticker: BWLD) shares are in positive territory in early-afternoon trading on Thursday, reversing earlier losses to stand up 0.50% on the session at $148.50 as of 12:15 pm ET. Options volume on the restaurant chain is running approximately three times the daily average level due to heavy put activity in the October expiry contracts. It looks like one or more traders are buying the Oct 140/145 put spread at a net premium of roughly $1.45 per contract. As of the time of this writing, the spread has traded approximately 3,000 times against very little open interest at either striking price. The put spread may be a hedge to protect a long stock position against a roughly 6% pullback in the price of the underlying through October expiration, or an outright bearish play anticipating a dip in BWLD shares in the next couple of months. The spread makes money at expiration if shares in BWLD decline 3.3% from the current price of $148.50 to breach the breakeven point at $143.55, with maximum potential profits of $3.55 per contract available on the trade in the event that shares slump 5.7% to $140.00. Shares in Buffalo Wild Wings last traded below $140.00 back in May.
by Sabrient - August 28th, 2014 1:18 pm
Reminder: Sabrient is available to chat with Members, comments are found below each post.
Courtesy of Sabrient Systems and Gradient Analytics
Gradient Senior Analyst Nicholas Yee reports on six companies that are using a variety of techniques to shift pretax profits to lower-tax areas. Featured in this USA Today, article, the companies include CELG, ALTR, VMW, NVDA, LRCX, and SNPS.
Nobody likes to pay taxes. But some companies are taking cutting their tax bills to an art form that might be impossible to maintain long term, according to a report by Gradient Analytics.
Gradient Analytics’ analyst Nicholas Yee found six companies, including Celgene (CELG), Altera (ALTR), VMware (VMW), Nvidia (NVDA), Lam Research (LRCX) and Synopsys (SNPS) are using a variety of techniques to shift pretax profits to lower-tax areas, which are aggressive enough that they could attract attention from tax rule makers. Others have gotten tax benefits that are ending or already face Internal Revenue Service reviews.
There’s nothing necessarily nefarious about companies looking for ways to cut their taxes. But investors are growing increasingly interested in whether U.S. tax authorities will look to curb some of the techniques that are being used by companies. The fear is that some companies’ earnings could be at risk if tax policy makers invalidate tax-reduction techniques used, Yee says.
by Phil Davis - August 28th, 2014 8:12 am
The Futures are off a bit today and that's no surprise to those of us who have been paying attention to the volume, or lack thereof, as we made our final approach at the 2,000 line on the S&P 500. Jim Cramer was literally foaming at the mouth this week as he and his CNBC co-conspirators herded the sheeple into the markets to participate in the tail end of the rally, where the suckers could hold the bags for their Corporate Masters.
Why am I angry at Cramer today? Because yesterday he committed the same crime he commtted in 2008 that cost so many people their life's savings – he told people not to sell their stocks on a pullback. "Don't take profits" is the message for the viewing public. But, I would ask, if people don't take profits – when will they ever get profits? What kind of stupid message is that? Well, it's the message that leaves you holding the bag while his hedge fund buddies head for the exits. It's not much different than telling one group of people not to leave a burning building while you make sure all your friends are getting out safely.
"This is not just my opinion. I can prove it to you empirically. See, as I was preparing to write my book "Get Rich Carefully," I went over the previous five years of trades made by my charitable trust. And as I reviewed those trades I noticed that far too often, my good judgment would be overcome by excessive skepticism."
If the "proof" Jim is talking about is his Action Alerts Plus, then I'd say you really should think long and hard about following his advice here (via Kirk Lindstrom – who does compete with Cramer):
I guess, sure, Jim legitimately should regret that he wasn't more bullish from 2008 to 2013, when the market popped 200% and his trust gained about 100% but don't you think the lesson Cramer should be taking from that experience is to CUT YOUR LOSSES, not…
by ilene - August 27th, 2014 7:25 pm
By John Mauldin
Paul Krugman and other notables dismiss the notion of a skills gap, though employers continue to claim they’re having trouble finding workers with the skills they need. And if you look at the evidence one way, Krugman et al. are right. But this week an interesting post on the Harvard Business Review Blog Network by guest columnist James Bessen suggests that employers may not just be whining, they may really have a problem filling some kinds of jobs.
Unsurprisingly, the problem is with new technology and the seeming requirement that workers learn new skills on the job – you know, like when the student pilot has to take the helm of a 747 in a disaster movie. Perhaps there’s not quite the same pressure in the office or on the factory floor, but the challenges can be almost as complex. Most of us have had the experience of needing to learn completely new ways of doing things, sometimes over and over again as the technology for whatever we’re doing keeps changing.
The proverb about old dogs and new tricks is being reversed, as old dogs are required to learn new tricks to keep up with the rest of the old dogs, not to mention the new pups. It’s either that or go sit on the porch. What follows is not a very long Outside the Box, but it’s thought-provoking.
There hasn’t been much happening in Uptown Dallas chez Mauldin. Lots of reading, routine workouts, long phone conversations with friends, and the occasional appearance of offspring. The amount of material hitting my inbox has slowed down considerably as well, although I know that will change in a week as everyone comes back from holidays. And even if we’re not on vacation, there is a certain slack we seem to cut ourselves in late summer.
by Option Review - August 27th, 2014 3:12 pm