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Wednesday, August 17, 2022

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Friday Morning – Yipee for Yahoo!

This will be a short post because we have a lot of work to do today!

The jobs report was TERRIBLE, down 17,000 in January.  December, however was revised UP 64,000 jobs, from 18,000 to 82,000 jobs so that's a 355% margin of error in government reporting of what is considered a VITAL economic statistic.  Like I said, I'll take those ADP reports anytime.

Asia did some stuff, Europe did some stuff – who cares – MSFT just offered $44.6Bn for YHOO!  This is so fantastic for us I can't begin to tell you.  Anyone who's been following the $10KP and $25KP on the free site knows that YHOO was one of our key positions and yesterday we followed our trading rules and took out the $20 caller for just .42, a very nice profit off the $1.85 we sold them for just a week earler!

There is no better way to start the year over at PSW than to double up our smaller players in the first month.  Thanks to our very aggressive moves yesterday, the STP is also close to a double and should be well over as there was plenty of YHOO in there as well.  This is just way too much fun.

On the dark side, Google was going to be our focus play of the morning but this news should put a damper on their recovery off what were actually fantastic earnings by any rational measure.  We are still in Google of course and will take out our caller, roll down our longs to $520 or lower and give sanity a chance to reassert itself as Microsoft just told us Yahoo was 60% undervalued and Google is certainly better than Yahoo and was, even yesterday, trading at a significantly lower multiple.

Wake up people, do you really think the creators of Zune will suddenly blow Google out of the water by buying the competitor Google has been tearing to shreds for 5 years?  I'm not saying it's a bad deal for Microsoft, they need to do something on the Web and Yahoo is a totally underperforming asset but it's no Google killer.  Also, this bid is HOSTILE, which means it's possible Google themselves could turn around and make an offer (Microsoft's is cash and stock), which is why Ballmer waited for Google to be at a low value to make the offer – it's a lot harder for GOOG to match now than it would have been when they had an extra $60Bn in market cap.

Did MSFT work behind the scenes to tank the markets in order to close a deal they've been desperately after for almost a year or did things just align perfectly for them and they siezed the opportunity?  We may never know but we do know one thing – who will Steve Ballmer lay off to pay for this aquistion after spending over $1Bn in R&D to make MSN competitive?  Click here for the answer.

Our play on all this is TWX, who still have a small asset called AOL that Google already owns 5% of (probably with options for more) that company is way down from last year's high of $22 so we're going to grab the Jul $15s for $2 and wait for the rumors to start flying.

The jobs numbers destroyed a 150-point rally in pre-markets and dropped our indexes back to flat but I put no faith in those numbers and will consider this a great opportunity to get out of those QQQQ puts we picked up after hours.  The dollar is hitting new lows so gold is back up and oil will fly and it's going to be back to $500Bn for XOM as that company made $11.66Bn in Q4.  That should give us a nice rally to short into as it's probably the last hurrah for XOM as OPEC left oil production unchanged, which will add downward pressure to oil prices. 

Busy, busy, busy today.  Europe is holding up well and I expect our markets to recover.  Those DIA $125s we picked up yesterday need to be sold if we can't break 12,700 but they are already more than a double so let's hope XOM gets the Dow moving early on.  They should get help from BA, who may also get bought out if they don't get back over $100 soon – what a bargain!

Have a great weekend.

 

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Geez, not used to posting. Feels like a first date!

Thank you Phil! I’ll get to work rolling COH this week…

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