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Thrill-Ride Thursday – Here We Go Again

SPY 5 MINUTEWheeeeee!

We are just loving these crazy-assed market moves.  Every morning we have a pump job to short into and every afternoon there is a BS stick-save to re-establish our shorts.  It's merely a matter of time before those floors begin to crack.  I mean, really – how much of this abuse can they take?  

Notice, in Dave Fry's SPY chart, the high-volume selling followed by low-volume pumping – that's the very unhealthy pattern the "rally" was built on, which means there really aren't any buyers waiting to scoop up shares when they dip – just Trade Bots that tease the indexes higher so the IBanks can keep pulling in the bag-holders as the "smart money" stampedes for the exits. 

Yesterday was great fun.  As I noted in the morning post, we went short on the Oil Futures (/CL) at $104.50 in our morning Member Chat and even in the morning post there was still time to catch it at $104.  Oil sold off all the way to $102.60 at 2:10 and my 2:14 comment to Members nailed the turn as I said:  

Oil coming right to our goal at $102.50 ($38.50 USO) so let's not be greedy and look to take $1.20 off the table on those 1/2 USO positions in the $25KP and $5KP as it's better to get out while the gettin's good

USO WEEKLYThat's what we mean when we talk about taking non-greedy exits (I had set $38.50 as my USO target for our exit at 11:08 but it didn't look like we'd get it so we got out).  We caught the bottom and got out clean and this morning we got a chance to re-load our shorts at $103.50 on that predictable morning pump.  Sure, you can say the markets aren't fixed and maybe we just have amazingly good timing – either way we make the same money!

We did manage to find a few things we liked, one of which was CHK, as the stock plunged to $17.20 on much ado about not too much as people took issue with the CEO borrowing money to invest in their wells.  We didn't think it was such a big deal and our trade idea at at 10:23 in Member Chat gave us a good opportunity to buy right into the day's low at 10:50:

I do like selling the CHK May $18 puts for $1.30 and buying the May $15/18 bull call spread for $2 for net .70 on the $3 spread that's $2.65 in the money.  Let's do 3 of those in the $25KP. 

So that's net $210 on the $900 spread with a $690 upside (328%) if CHK can hold $18 for 29 days – not a bad ROI.  Keep in mind the $25KP is our aggressive virtual portfolio and we're pretty bearish overall so this is a nice gamble to offset our bear bets with.  CHK finished the day yesterday at $18.06 and the May $18 puts already fell back to $1.25 (still a good sale) and the spread jumped to $2.15 for net .90 – up 28% on the first day – not a bad start!  

That was our only trade during Chat yesterday.  We had already taken bullish pokes at BTU, FCX and TNA Tuesday morning as well as BA, ABX and FCX again later on in the day's session so it's not like we're all bearish – we just have more fun being bearish at the moment, while we wait to see if our 50% lines (see Monday's post) ever get crossed and give us an actual reason to be more bullish.  

As you can see from our Big Chart – we are barely holding 3 of 5 of our Must Hold lines – just enough to keep us making some bullish pokes but not enough to flip us bullish just yet.  

In fact, we're hoping PCLN contines to climb so we can short them again but this afternoon's star, for us, is going to be CMG's earnings, not MSFT, COF, SNKD or WYNN – as we're dying to see if people are still buying those $8.50 burritos.  CMG isn't just priced to perfection – they are priced to the anticipation of continued perfection for at least 5 more years plus about 20% on top of that – so we like the June $375 puts at $5 as a gamble on tonight's earnings and you can sell the May $475 calls for $4.75 to pay for them and they you're in the puts at net .25 and hoping CMG doesn't move 10% higher in 29 days (although that only forces you to establish a short position on CMG at net $474.75 so really not bad either way).  

8:30 Update:  The Dow Futures (/YM) are testing 13,000 and we love that spot for a short with a tight stop over the line as it makes for a strong bull/bear indicator and WHEEEEEEEEEEEE!, Unemployment is a whopping 386,000, which is a very bad number as it's more than last week (380,000), more than was expected (375,000) but NOT so bad that the Fed is more likely to step in.  Nope it's just a WEAK number that reflects the WEAK real economy we've been warning you about since March.  

It's 8:42 now and oil dropped to $102.85 and a stop at $103 locks in $500 per contract and pays for the morning McMuffins.  Hopefully we hit our next target at $102 later today but that's going to depend on the Euro ($1.3078) and the Dollar ($79.93) with the Pound holding $1.602 at the moment.  A breakdown in the Pound below that $1.60 line will be our first clue that the EU can't hold it together and the Euro blowing $1.30 would be catastrophic and not likely to happen until next week.  

EUMKTSGold (we're short) is back down to $1,635 and we'd love to see them fail $1,600 but it's not going to happen with the Dollar below 80 and that's going to be tough to beat with the Fed meeting next week (announcement Weds 12:30).  We also get our first look at Q1 GDP on Friday next week – that's going to be fun!   

As you can see from the graphic on the right, Europe is still in BIG TROUBLE and that's just Spain – Italy may be worse and who says France is any better?  "The market has been treating the LTRO as a panacea," said James Ferguson, head of strategy at Westhouse Securities in London. "It's absolutely better than what would have happened without it, but that doesn't mean it's a fix."  

I'll close on a positive note as earnings are actually coming in pretty good so far with 77% of the reporting companies beating low expectations.  If the rest of the World would just go away and leave us alone, that would be great but, no matter how many laws Arizona passes, we can't get those damned foreigners completely off the planet.  That means what happens there is going to continue to affect us here. 

So let's be careful out there!  


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  1. stjeanluc

    Oil Lines

    R3 – 106.78
    R2 – 105.86
    R1 – 104.47
    PP – 103.55
    S1 – 102.16
    S2 – 101.24
    S3 – 99.85

    These crazy moves are giving us wide lines again…

  2. Pharmboy

    PP for today…..and HGSI is here to play (GSK tender offer). 

  3. dpastramas

    Twitter / StJ – Sorry i didnt get back to you yesterday. Will have a look at the my list. put it in excel and comment on the most interesting to follow.  Then i'll email it to you and you can add. Sounds ok?

  4. Savi

    Pharm—I have some HGSI @ 13—would you get out or hold?
    Thanks

  5. newt

    What is r1-3netc? Thanks.

  6. stjeanluc

    Thanks Dpas… I subscribed to all 25 of the feeds on my list yesterday to analyse the value as well. I am guessing in 10 days or so I'll have an idea of which ones are worth following for me as well.

  7. stjeanluc

    Looks like Spain is down another 2% today and closing on lows going back over 5 years now. Not much confidence there!

  8. stjeanluc

    In fact Spain is closing on the lows of the 2009 crisis and they are back to prices from 2003! I guess it's technically oversold now.

  9. Pharmboy

    Savi – sell a cover into the excitement to juice it.  May or June most likely.  That should reduce your basis, and if called away, then you can wash your hands and say it was a good day!

  10. stjeanluc

    AH moves on FFIV after earning last night were interesting – the stock dropped from 125 to 110 and bounced back to 134. Looks to open around 132 this morning. These guys are volatile, but that's stomach churning there….

  11. Savi

    thanks Pharm

  12. stjeanluc

    Speaking of roller-coaster – look at gold this morning….

  13. scotbraze

    r1-r3/newt – PP is the Pivot Point, R1/2/3 are resistance (until they aren't) and S1/2/3 are support (until they aren't). :)

  14. rustle123

    Dirty Dozen

    Apr 19, 2012 | 7:47 AM EDT

    • Twelve events could take down the U.S. stock market.

    Below are 12 events that could crater the U.S. stock market:

    1. Politics over here. President Obama's Intrade odds of winning the presidential election in November exceeds 65% — it now stands at 60.5% — and growing evidence that the Democrats will lose control of the Senate. (On Intrade, the probability of a Republican-controlled Senate now stands at 62%) probability.)
    2. Politics over there. Eurozone tail risk reemerges. François Hollande wins French presidency and disrupts EU bailout efforts. (Current Ladbroke odds have Hollande at 1/8, Sarkozy is 9/2.)
    3. Interest rates. The 10-year U.S. note yield drops below 1.90%. (It now is at 1.99%.)
    4. Economic. High-frequency economic data deteriorate, and odds of a recession grow in the U.S. Signs emerge that China and India will land hard.
    5. Fiscal cliff. Actually experienced, a fiscal cliff dents the economy, threatens self-sustaining recovery and adversely impacts corporate profits and business/consumer confidence.
    6. Deflation. Commodities abruptly turn lower, more deflationary signals.
    7. Strategists grow more bullish. Perma-bulls Abby Joseph Cohen at Goldman Sachs (GS) and Binky Chadha at Deutsche Bank (DB) raise their year-end S&P 500 targets. (Remember their ridiculously optimistic prognostications of 2008 year-end S&P 500 targets of 1650/1675? They were off in their forecasts by a mere 700 S&P points!)
    8. Housing. Home prices and sales activity move lower over the balance of the year, negatively impacting consumer confidence and spending.
    9. Black swans. Any number of exogenous events — a Fed policy mistake, crude ramps in price, Middle East tensions escalate, China lands hard and pulls back from U.S. Treasury note and bond purchases (fueling a sharp rise in our interest rates), a large ETF blow up, another flash crash, Sears Holdings (SHLD) is forced to sell more stores (it employees 350,000 company-wide) and so on.
    10. Fund flows. Domestic equity mutual fund outflows accelerate.
    11. The NBA — nothing but Apple (AAPL) — market. Apple experiences a fundamental blip or misstep of execution.
    12. Technical deterioration in the markets. The S&P 500 takes out its 200-day moving average.

    Position: None

     

    Douglas A. Kass
    Seabreeze Partners Management Inc

  15. JRW III

    Good morning,

     

    IWM   78.59,  79.10,  79.29,  79.52,  79.84,  80.08,  80.33,  80.54,  80.91,  81.22,  81.47,  81.68  and  82.01

     

    I believe the target for today is IWM  80.91 or 81.68;  Good hunting !!

  16. angelcur

     SP 500 has the potential to move to 1400ish….underlying negatives are increasing.,…  I am comfortable being short this market clearly the biggest risk is to the downside…. may happen today…or stocks may make a run at 1400 first…. I'm sticking with the sub-1350 target for the SP ive been short futres since 1314..so all FWIW

  17. peedlew99

    morning phil
     
    im really intrigued by your billion $ cap on wealth idea… ive never heard that before .  problem is all the billionaires would park their money off shore… other problem is who decides how that money is used.  we would need an honest government … which looks like a pipedream sadly.

  18. stjeanluc

    FAS is already going down so this is getting even better… The Apr 100 calls roll even to next week's 103 right now. But we of course hope they expire worthless tomorrow.

  19. jthoma

    Tough market- IWM is down .22 and all my IWM puts are down- go figure!

  20. stjeanluc

    Also getting better as TNA is going down now. The calls roll even to next week 56 and 57 but as with FAS, we hope for better results tomorrow!

  21. stjeanluc

    Maybe we should have taken the money and run on that fake DMND rumor Monday….

  22. angelcur

    most billionaires have their money off shore now and have since the early 90s..corporations have no particular reason to be domiciled in the us any more as well..so it is a tricky game trying to impose new tax rules on the group present current code was essentially written by and for..

  23. angelcur

    re MIL its fine they purchased a multi billion dollar asset for 13 million dollars now they have to monetize it..i believe they will sell it for a nice npv number and a royalty stream before operating the mine becomes an issue

  24. jabobeast

    FU PCLN!!!!

  25. stjeanluc

  26. stjeanluc

    On the $25KP and the $5KP, we closed all the USO positions yesterday – 1/2 at $1.12 in the morning and the other 1/2 at $1.20 early afternoon.

  27. stjeanluc

    That worked this time Jabo… PCLN lost $4 in 5 minutes.

  28. dclark41

    Stjean:
    Was anyone really successful selling the USO's at $1.20? That trade was there for a few minutes and then gone. I ended up selling the other half at $1.14.

  29. exec

    Hi JR

     
    How did you arrive at your target theories?

  30. sagemm1

    Phil,
     
    How can (they) whomever that is just arbitrarily just drop the dollar at will every time they are looking for a rally? Seems it would take lots of dollars to do this, am I missing something…is it the CB's

  31. Phil

    Good morning! 

    Oil (/CL) kind enough to give us another shot at $103 but don't forget we often get a pump into nat gas inventories (10:30) and then they tend to sell off.

    Dollar was knocked back to 79.80 into the bell and that saved us from a really bad open.  Below 79.80 is bullish and that's up to the Euro holding $1.31 (just over now). 

    Not much to add to the above post – if we keep testing that floor at 1,384, it's going to break eventually and then we've got 1,372 and 1,360 as the next supports. 

    Of course, if those Must Hold lines begin to fail then things could go south very fast.  

    I hate not having PCLN puts so let's add back the July $560 puts at $8.50 – 3 in the $25KP and we'll see how that goes.  I'd rather have to roll those up than miss out on a nice dip.  

    At the open: Dow +0.06% to 13041. S&P +0.01% to 1385. Nasdaq -0.07% to 3029.

    Treasurys: 30-year +0.23%. 10-yr +0.09%. 5-yr +0.04%.

    Commodities: Crude -0.07% to $103.05. Gold +0.47% to $1647.35.

    Currencies: Euro -0.15% vs. dollar. Yen +0.34%. Pound -0.14%.

    Market preview: Stock futures are struggling to stay green and are well down from earlier highs after another disappointing set ofjobless claims, with the S&P benchmark +0.1%. Also pooping the party are yet more rumors of an impending Moody's downgrade for France, which has apparently caused much of Europe to turn tail as well. Following earnings, eBay is +9% and BofA is +3%, while Human Genome is +100% on a GSK takeover offer. Later: Philly Fed Business Outlook, Existing Home Sales, Microsoft earnings. 

    Initial Jobless Claims: 386K vs. 365K consensus (prior week revised to 388K from 380K). Continuing claims +26K to 3.27M.

    Christine Lagarde opens the IMF's Spring Meetings with a weather forecast: "(A) light recovery is blowing in a spring wind, with dark clouds on the horizon." She calls for a "Washington moment," i.e. more funds for bailouts, then throws it over to Dan for the sports.

    Yields again rise as Spain sells €2.54B ($3.33B) in 2- and 10-year bonds, although the Treasury did beat its goal of tendering up to €2.5B. The two-year paper was sold with a rate of 3.46% vs. 2.069% at an auction in March and the 10-year at 5.74% vs. 5.403% in January. A sale of short-term bills on Tuesday also saw yields surge.

    Spanish and Italian interest rates are already high enough to make both countries' borrowing costs unsustainable, says Enam Ahmed of Moody's. The longer debt maturity profile of the U.K. though, means 10-year rates could rise to 7.1% before that country faced a sustainability issue.

    The source of the French downgrade rumor looks to be a note from Citi's Mike Saunders saying it's likely Moody's will follow S&P and put the country under downgrade review, but not until later in the year (elections are upcoming). France's 10-year OATS +11 bps to $3.12%. Paris -0.5%.

    Bank of America (BAC): Q1 EPS of $0.03 may not be comparable wuth consensus of $0.11. Revenue of $22.5B (-10% Y/Y)misses by $500M. Shares +1.5% premarket. (PR)

    Freeport-McMoRan Copper & Gold(FCX): Q1 EPS of $0.80 misses by $0.05. Revenue of $4.61B (-19.3% Y/Y) beats by $70M. Shares +0.9% premarket. (PR)

    Peabody (BTU): Q1 EPS of $0.67 beats by $0.13. Revenue of $2.04B (+17% Y/Y) in-line. (PR)

    Union Pacific (UNP): Q1 EPS of $1.79 beats by $0.15. Revenue of $5.11B (+13.9% Y/Y) beats by $130M. Shares +1.3%premarket. (PR)

    eBay (EBAY+9.1% premarket after reporting Q1 sales and profit that topped estimates, spurred by growth in its PayPal online payments business. Benchmark upgrades shares to Buy from Hold, believing the market opportunity for PayPal is understated given the potential for a meaningful increase in merchant and consumer adoption rates.

    Apple (AAPL-1.3% after Canaccord's Mike Walkley, along-time bull, slashes his FQ3 iPhone sales estimate to 29.34M from 33.58M, and his FQ4 estimate to a mere 26.11M from 33.58M. Walkley, who is nonetheless raising his PT to $740, says recent checks indicate iPhone sales have "modestly declined in certain developed markets," and expects this trend to continue due to new Android launches, Verizon's LTE promos, and iPhone 5 anticipation. FQ2 results are due on Tuesday.

    Dollar slammed back to 79.60 – same script all week but if we're getting lower highs on the same Dollar dip – that's not a good sign.  

  32. morxlntway

    i had the 1.20 entered and it did trigger at one point but i dont think it was anything i could have "caught"

  33. stjeanluc

    USO / dclark – It was between $1.18 and $1.20 for a while, so some might have gotten that but I can't confirm.

  34. dclark41

    stjean:
    Fair enough.

  35. exec

    Momma Mia………nice red IWM candle.

  36. dclark41

    stjean
    Looks like it is at $1.20 now! :)

  37. 1020

    Good Morning!
     
    David Faber tweet: $HGSI 90% of shares held by 25 owners, many of which have a basis higher than the $13 Glaxo offered.

     
     

  38. 8800

    Phil,
    Lost post from this AM- would you sell TLT puts as a hedge,with a stop below recent consolidation, 115ish?
    Thanks

  39. aussie260

    PCLN July $560 puts just filled at $8.50

  40. morxlntway

    pharm – could you break out the dramamine

  41. Phil

    Interesting the TUMI just IPO'd and Bob's commentary on CNBC is "this is capital creation in motion".  That is such BS!  I have nothing against TUMI but they are offering 19M shares and if they get bought for $25 that's $475M and that's 1/3 of their stock so did we "create" $1.425Bn of capital?  Of course not – it's the same company it was yesterday and the fact that they got $475M worth of investors to move their money out of something else and into this new stock doesn't create a penny of new wealth except on paper.  This is the fallacy of the whole market and to hear a "professional" analyst on CNBC pushing this myth is, in a nutshell, everything that's wrong with modern investing.  

    Value is created when money is made by providing goods or services at a profit – NOT because a few shares of stock change hands!  

    And wheeeeeee!  Didn't fool us.

    Wow, oil flew back to $102.50 – the gift that keeps on giving and we still aren't up to inventories. 

    Kass/Rustle – Aren't most of those things already happening? 

    S&P/Angel – Without more, real, committed money coming in from the CBs, I'm very confident on the short side.  

    Billions/Peedle – That's what taxes are supposed to do.  We used to have 70% and 90% tax rates above certain incomes – it's effectively the same thing.  It's not just about saying one person shouldn't make so much money but also that, at a certain point, they should step back and give someone else a chance to make some.  As we can see from Iran sanctions and the investigations into Swiss Banks – as long as the major countries agree to enforce something – it can be done pretty effectively.  Here's another idea – the Government should charge a rental on money as a "use it or lose it" proposition.  All wealth (including Corporate) over $5M is taxed 1% a year so, if you sit on your money and collect interest, the Government takes 1% of it at the end of the year.  People who are in debt and have negative wealth should get a 1% rebate for spending above and beyond the call of duty.  That would automatically balance out the wealth between the rich and the poor over time so the gap doesn't become too disproportionate and again – this is what taxes and Government spending are supposed to do.  

    Offshore/Angel – Magazine writers are able to tell you where the money is – I'm sure the Government can figure it out if they are motivated.  

    Dollar/Sage – I don't get how the Dollar has become so easy to manipulate but clearly someone has figured it out.  Doesn't work over the long haul but short-term, they seem to be able to move it 1% pretty easily.  When you consider it's a $4Tn daily FOREX market with 75% of the trading in Dollars, 1% of $3Tn is still $30Bn – you would think that's a lot but I guess it doesn't buy what it used to….

    USO – It's $1.20 now!  

    And what StJ said!  :)

    TLT/8800 – If we get more easing, TLT will drop fast so I'm not too comfortable with that trade idea.  Generally, we have been playing it long around $111 when it gets that low and that's it.

    PCLN/Aussie – Thanks, I was getting worried it would get away from us.  Now we can go back to worrying it heads back to $750!  

  42. aussie260

    RUT climbing back up

  43. newt

    Aussie260:
    Did you buy the puts on PCLN?
    Thx.

  44. peedlew99

    Very good cliff notes on Spain.
    http://www.youtube.com/watch?v=mVgHnhryPIo&feature=uploademail
    End game there not going to be as easy as Greece… but can kicking could work for a long time.

  45. aussie260

    newt – yes

  46. rpme

    Phil, what has happened in the past with nationalized companies, been looking at YPF this morning after your comments, researching the company and trying to quantify the downside. Don't want YPF to stand for Your Probably F**ked.

  47. sagemm1

    this is from SA…whuck?? bounce back from bad data, so bad it is good??
     
    10:39 AM Stocks quickly bounce back from a sizable hit following a trio of worse-than-expected economic reports (I, II, III). The DJIA +0.2% after being down 70 and the Nasdaq +0.8%. [On the Move, U.S. Economy] 1 Comment

  48. yodi

    Boy AAPL is fighting the 600 line today

  49. dpastramas

    Ok guys.  Today is the C-day: Chipolte earnings After market.  Any bets?

  50. Phil

    Yawn:  

    EIA Natural Gas Inventory: +25 bcf vs. consensus of +8 bcf. Futures -0.59% to $1.93

     

    Click for
    Chart
    Current Session Prior Day Opt's
    Open High Low Last Time Set Chg Vol Set Op Int
    May'12 102.73 103.21 102.05 102.40 10:25
    Apr 19

    -

    -0.27 20235 102.67 45966 Call Put
    Jun'12 103.21 103.66 102.48 102.84 10:25
    Apr 19

    -

    -0.28 71929 103.12 280070 Call Put
    Jul'12 103.65 104.10 102.99 103.29 10:25
    Apr 19

    -

    -0.29 11887 103.58 141957 Call Put
    Aug'12 104.08 104.42 103.42 103.70 10:25
    Apr 19

    -

    -0.28 10074 103.98 92860 Call Put

    They did a good job of pairing down the May barrels (last day is tomorrow) with about 30M more to roll.  Still adding up to 560M barrels (was just under 600M) and we're not looking at longer months so pretty much all rolled forward so far but May is supposed to be the big demand month that kicks off the summer driving season and oil may not really break down hard until and unless the Holiday Weekend turns out to be a bust.  

    By the way, I just booked Vegas for the first week of May and I didn't want to overstay my welcome at Caesar's (where they comp me) so I'm hitting the Four Seasons (at Mandaly Bay) on the last few days and not only is it $199 a night but it comes with continental breakfast for two each day and dinner for two one night so don't tell me Vegas is busy when you can get deals like that!  

    Dollar failing 79.60 – good thing I'm not going to Europe or, even worse, Japan!  

    Holy crap what a turnaround!   Maybe news is so bad it's good again?  

    10:00 AM On the hour: Dow +0.14%. 10-yr +0.11%. Euro +0.08%vs. dollar. Crude -0.09% to $103.03. Gold +0.77% to $1652.25.

    10:21 AM Europe hits session lows, led again by Spain, whose IBEX 35 is less than 2% above the epic 2009 lows. Stoxx 50 -1.4%, Germany -0.5%, Spain -2.2%. Banco Santander (STD -3%), also less than 2% above its 2009 low. The days when this sort of action caused the euro to be dumped seem over, the common currency flat vs. the greenback at $1.3131

    March Existing Home Sales: -2.6 to 4.48M vs. 4.62M expected, 4.60M prior (revised from 4.59M). 

    More on Existing Home Sales: Total housing inventory declined 1.3% to 2.37M – repping a 6.3-month supply at current sales pace. Listed inventory now sits 21.8% below last year's level. The national median existing-home price was $163,800, up 2.5% Y/Y. Distressed home sales accounted for 29% of sales, down from 34% in February.

    March Leading Indicators: Leading Index +0.3% vs. +0.2% expected, +0.7% prior. Coincident Index +0.2% vs. +0.2% prior. Lagging Index +0.3% vs. +0.1% prior

    The Bloomberg Consumer Comfort Index improves to -31.4 from -32.8. The nice uptrend from the October lows stays intact, with the level at a 4-year high. Expectations deteriorate to -3 from 1.

    George Soros declares all-out war on the Bundesbank,writes Ambrose-Evans Pritchard, telling Le Monde he would "bet against the euro" were he still in the business. The salutary effect of the LTRO has been broken by the Buba's counterattack, Soros argues. Soros famously redoubled his pound shorts in 1992 when he concluded the Germans would not move to support the currency. (Bundesbank's Weidmann's interview here

    The widening of the yuan's trading ban – far from being a signal of Beijing's confidence in the economy – makes devaluationeven more likely, says SocGen's Al Edwards. China's vaunted current account surplus is essentially no more and even the IMF is no longer calling the currency overvalued.

    ZeroHedge cuts through BofA's (BAC) "accountant fudge heaven" in its Q1s, which is apparently bamboozling even analysts, to declare that only three things matter: 1) The approaching refi cliff, in terms of tens of billions in maturities; 2) sliding sales and trading revenues; 3) reserve release gimmicks. Shares are -0.3% after being higher earlier.

    BI's 21 Most Controversial Stocks listBBYGRPNCRM,GMCRSODAAPPDMNDLGFURBNNFLXRIMMLEN

    FSLR,YHOORSHTTWOBIDUSINARENNIOCAAPL.

    Luggage maker Tumi (TUMI) hits the ground running with its IPO. After pricing at $18, Tumi shares are changing hands at $26.29 – marking a 45.9% launch – although only 18.78M shares are up for offer.

  51. dclark41

    Phil
    My wife and I were in Vegas 10 days ago staying at her mother's house. We wanted at least one day by ourselves so we got a room for two nights at Caesar's (tower) for only $96 a night!

  52. aussie260

    FXE puts/ Pharm – You and Soros agree :)

  53. 1020

    Phil – Has the ipo market "jumped the shark" with TUMI? 

  54. sagemm1

    that leading indicator F is down will this pump job be lead , gasp….down
     
     
    So for shits and giggles I have been bidding a nickle on PCLN May 425puts, everytime I do about 15 to 30 bids jump in simultaneously, I pull my bid and theirs disapeear, wash rinse repeat…MY question would be isn't that somehow illegal? It prints their bid the exact same time as mine and they pull with a lag of about 2- seconds….this is on TOS BTW

  55. stjeanluc

  56. Pharmboy

    Insane.

  57. jromeha

    Phil – What do you think of FTE? I know Europe is going down the sh!tter but they have a decent business in Africa as well… Just looking at a long-term hold b/c I cnat do as much daytrading.

  58. jabobeast

    Phil— what do you think of selling the CMG May 450s for around $10.50-$11???

  59. jabobeast

    selling the cmg calls not buying them, of course ;-)

  60. Savi

    Phil—what is your opinion on going long /RB before the weekend--now at 3.185
    Thanks

  61. stjeanluc

    I thought you turned bullish on them Jabo….

  62. stjeanluc

    BTW Jabo, the post earning move for CMG is 7.25%. Currently options don't price that big of a move so that looks dangerous to me. At that price they could move $30 either way… 

  63. 1020

    Phil/IPO  Thinking about it, with Facebook coming up, I'm going long - IPO…. ;)

  64. stjeanluc

    Hey Jabo…

  65. jabobeast

    I would like to see it drop 7.25% before earnings stjean ;-)

  66. stjeanluc

    Well, the 7.25% post earnings is either way on average Jabo so you could still fish your wish…

  67. angelcur

    OFFSHORE that is true however they won't clawback to previous tax policy which made offshore domiciling possible..BUT going forward they could be v effective..although the entire offshore issue was a merging of corporate and treasury's interest..i can't believe the govvie will outsmart these guys any time soon
    volume decent today which has been a red flag for the market these days!

  68. jabobeast

    i did it stjean but you made me more nervous ;-)
    Hasn't already gone up enough!!!

  69. jthoma

    finest job of pump and dump on the sheeple that I have seen in a long time!

  70. Phil

    Spain/Peedle – Yep, if they can feed them $5-10Bn a month to keep extending and pretending, this can go on for a long time.  Delaying Greece was a $200M win for the bond-holders (see yesterday's post) and there's a lot more riding on keeping Spain alive long enough for the top 1% to dump their bad paper on the taxpayers through what are aptly called "schemes" in Europe.  

    Nationalized/RP – LOL!  We invest in nationalized companies all the time.  Many countries have them and it's no big deal – as long as you trust the country not to do anything stupid like dilute the stock or float some silly bonds to raise capital.  That's the problem with a "new owner" coming in – you don't really know what they're going to do and the markets hate uncertainty but clearly it was worth a gamble as I suggested last night, with the short Oct $15 puts at $4 (now $3.50) and the $15 calls long at $2.70 (now $2.90).  

    Whuck is right sage – that was a good one.  

    CMG/Dpast – Now I am hurt because I know you don't read my morning post!  8(  

    Caesar's/DC – They are putting me in a suite at the new Octavius Tower – haven't been there yet but I love Caesar's, my favorite pool and my favorite poker room all in one place!  

    TUMI/1020 – I don't think so.  They are an excellent company.  They get a bad rap for having expensive luggage but I've got some Tumi's I've had forever while we have a whole pile of broken crap luggage in the attic and I put a LOT of miles on my Tumis.  We were talking about that last week and it's one of those examples where poor people are forced to shop on price and buy things of poor quality that don't last while rich people get to buy one nice thing once and keep it as a long-term asset.  I think TUMI does about $350M in sales and drops $35M to the bottom line so I wouldn't pay $1.4Bn for them (20x) but I sure wouldn't short them there either.  This is a very bad stock to get in the way off as lots of people with money might want to own them since we KNOW it's good stuff and even 20 is a low p/e for luggage (COH is 24).  My worry for them is they begin to open their own stores – that would be silly.  I think they just need better brand awareness and to push the quality issue and the rest will take care of itself.  

    Illegal/Sage – Of course it is.  The same thing happens in the Futures.  Good luck getting enough new politicians elected to actually investigate that sort of thing though.  Elliott Spitzer began to look into those guys and look what happened to him.  I could tell you ways to use that to your advantage but that, too, would be illegal – unfortunately.  

    FTE/Jrom – Certainly I'd wait until after the elections – who know's what's going to happen over there?  I agree they look cheap at $13 but Revenues and Profits are declining.  FTR is a better long-term hold at $4.18, I think.  They pay a .40 dividend (10%) and you can sell 2014 $3 calls for $1.30 for net $2.89 and you can sell the 2014 $5 puts for $1.65 to drop it to net $1.24/3.12 so you're called away at $3 with a double if you're over $5 or you have them put to at net $3.12, which makes the .40 dividend 12.8% – although the most likely reason they would drop all the way to $3 is that they kill the dividend (not likely).  

    CMG/Jbob – As long as you are willing to hold the stock short at net $461ish.  If you're not, why risk it?  You can just buy puts or a bear put spread and control your margin and your potential losses.  I like CMG short because I'd be willing to commit 5% of an account to being short them long-term if they go the wrong way as EVENTUALLY, I feel their lack of real value will be recognized.  If you don't have room for that kind of play and might be forced to get out when you lose 100% or 200% on the short puts – it changes the equation because, once you are forced out – it no longer matters if your valuation was correct, does it?  

    Gasoline/Savi – I liked it at $3.15 yesterday but at $3.185 it's not only chasy to the upside but quite a weak drop from $3.225 at the top of the run.  With the Dollar this low (79.666) and likely to go higher – it's not at all the same trade set-up as I liked yesterday.  

    Facebook/1020 – That could, if they fail, finally be the straw that breaks the Nasdaq's back.  

    Speaking of fail – AAPL just failed $600 again. 

    France and Spain finished down 2% at the day's lows – did they mention that on CNBC?  DAX down 0.75%, FTSE flat.  

  71. Pharmboy

    Dramamine, morx…how about

  72. stjeanluc

    I think that you are addicted to the MoMo's Jabo… You know what the first step is?

  73. Pharmboy

    Aussie – and many, many others agree. 

    John Paulson, the billionaire hedge fund manager who foresaw the collapse of the US housing market, is shorting German government bonds

  74. Pharmboy

    GILD…..the spread for January is coming on strong. 

  75. jromeha

    Pharm – if PLX gets rejected, how far do you see them falling?

  76. rustle123

    Phil,
     
    A few weeks ago I disagreed that it was '99-'00 all over again but when I listen to CNBC now and they talk about market caps on internet companies are in the billions with no earnings and losing more money as they do more revenues, it is 1999-2000 all over again.

  77. 1020

    Phil – I only buy the "nice things" but only when they are on sale.
     
    Like the markets, it just requires a little patience…… :)

  78. 1020

    ….btw, my nondescript Kirkland baggage, 12 years……

  79. shadowfax

    FWIW The up moves are so thin money flow gets to even. The down is HUGE!

  80. dclark41

    Phil
    I have to agree. I have always liked Ceasar's. Your room looks fantastic. Ours was similar except I think you get a television in the bathroom.
    I am merely a small fish in Vegas (the restaurants should comp me!)  that loves to go out to eat with my "foodie" wife. By the way the Grouper (may have been special), or the NEW MEXICAN SPICED PORK TENDERLOIN SANDWICH on the lunch menu at Mesa Grill are excellent!

  81. cslanson2

    Phil,
    In keeping with our shared rule to sell naked Putters only if you would really like to own the underlying stock at the net price, I sold the Jan 2013 CHK $10.00 strike at a premium of $0.57 which if put to me would be a net price of $9.43. Believe me, I would be delighted to own Chesapeake Energy at that price (not likely to happen!). However the margin is only $160.00 per contract providing to me a 35% return in 9 months (47% annualized) on margin. This is a moderately conservative play and may be of interested to the rest of our members?

  82. peedlew99

    So is this distribution selling here? 

  83. samz3700

    Phil -
    Need some bullish upside plays to protect my very short portfolio - 
    Not a big fan of energy plays  - afraid we might do another moon shot – peabody and chk kind of out. although chk looks interesting.
    bullish xlf or fas play? 

  84. peedlew99

    The problem with the short side is there are a bunch of things that have already sold down… like FCX and miners, that seem like very good buys here.  Seems like the big money always has something to roll into when one trade turns.  For a while it was gold, then it was AAPL… Could they be looking back at metals while they let the indexes sell off?

  85. dpastramas

    CMG / Phil –  To be honest i did read half of the article as when it was fully published i was in a meeting.  But still wanted to capture the forum spirit on this interesting day. Anyway, i still hold 300 Jun Puts and would love to see em green again. 

  86. kustomz

    Markets display signs of fatigue. Crazy range today in short time span.

  87. jabobeast

    what is the first step stjeanluc???

  88. shadowfax

    Phil
    Do you think the Apple weakness is a reflection of flat earnings and that runup was gust another sheeple thing?

  89. rustle123

    You'd think today was option expiration from the market movement.

  90. shadowfax

    Kustomz
    What baffels me is the wild swings today mean nothing to the vix. Got any clues?

  91. Pharmboy

    PLX – will not be rejected.  The question is: How much is baked in?

  92. peedlew99

    Phil… i'd love your opinion on IBM.  
    I have a small position in the stock and have been following the options.  The Jan 2014 200 calls are 12.60.  That's expecting only a 6% move in over 18 months.  In the puts for the same month the 165's are about the same price.  Thats expecting a nearly 30% drop.
    Is this a bad sign… or an opportunity, in your opinion?

  93. jromeha

    Pharm – lol NICE! I hope not!

  94. kustomz

    shadow markets are broken nothing wrong with the VIX ;-)

  95. chasw

    JRW,
    What do your charts tell you?

  96. stjeanluc

    First step Jabo:

    1. We admitted we were powerless over MoMos —that our lives had become unmanageable.

  97. stjeanluc

    Analysts ratings on banks:

    http://www.bespokeinvest.com/thinkbig/2012/4/19/banks-rating-banks.html

  98. kustomz
    • UK FTSE 100 unchanged
    • DAX -0.8%
    • French CAC down 2%
    • Spain IBEX -2.2% (after a 4% fall yesterday)
    • Italy MIB -2%

      Well markets stayed above my lines most of the morning..Europe weak again…all about the EUR and stepping on the $ to stay flat today…/ES 1376 /YM 12898 important line there…hard to imagine we sell off hard during earnings…a very bad headline would take us lower.

  99. stjeanluc

    It's incredible how correlated things have become since 2005 – positively and negatively:

    http://ftalphaville.ft.com/blog/2012/04/19/966691/this-correlated-world/

    Two heat maps from HSBC.  The first is a typical correlation matrix across a range of assets in the world before Lehman collapsed. The second is post-Lehman. Red indicates strong positive correlation and blue indicates strong negative correlation. Greens and yellows appear when correlations are close to zero. Click each map to enlarge.

  100. Pharmboy

    Miners/peedle – there time will come, when the EU floods the world with more money……HUI and the miners will fly.

  101. angelcur

    sec to vote on charges against egan jones…hahaha…didnt they just downgrade US.

  102. shadowfax

    JRW
    Yesterday as posted my osc. predicted flat to down today and right now we are flat. your high of 80.92 was about perfect. I see the 81.68 up to 82 tomorrow. You think we are in a rising channel again? Also I have a line to about 79 today that would brake that. Hopeing you have some wisdom to help sort it out. Thanks

  103. shadowfax

    stjean
    What does that mean to you and or what is it supposed to mean?

  104. Pharmboy

    ARNA – if you have stock AND are showing a profit, I would take 1/2 off.  Our spread from yesterday is barely green, and was filled rather fast.   The stock bounced off the lower BB I noted, and could to up to touch the 5d MA.

  105. stjeanluc

    Correlation / Shadow – I think that it does confirm the market manipulation. Entire classes of assets moving in one direction or opposite direction is not a sign of a healthy market.

  106. Inkarri1982

    Hello All – If anyone can point me to the natural gas plays or if you have time Phil, any recs would be greatly appreciated.  TIA

  107. Pharmboy

    XCO/lnk – that is a natural gas play that 1020 keeps beating me over the head with, and W. Ross is 'all in'.  ;)

  108. shadowfax

    Stjean thanks I can see the pattern and now it makes sense but sometimes I just have no clue what to look for.

  109. morxlntway

    ratz. closed BTU at 31 a bit too soon

  110. Inkarri1982

    Thanks Pharm!

  111. Phil

    Volume/Angel – Good call. 

    Pump and dump/Jthom – Amazing isn't it?  

    Deja vu all over again/Rustle – Always listen to the Great Yogi.  

    Nice things/1020 – Another advantage we have – we can afford to wait.  

    Money flow/Shadow – When you see they gyrations get more intense like this, it usually means we're heading into an event.  I can't see us doing a violent swing into expirations but next week could be crazy.  

    Caesar's/DC – That better not be my room, that's a standard!  My mandatory Vegas food stops are Nobu at the Hard Rock and Rao's at Caesars (even though I have them both in NY – still my favorites).  I will probably hit the Foundation Room at Mandalay Bay and Masa at Aria and now I have a free diner at the 4 seasons and that would be silly to waste so I guess maybe add N9NE at the Palms for a steak and I'm done….  I'm going to have to walk to all those places or I'll gain 10 pounds on the trip!  

    CHK/CSL – Yes, I wholeheartedly endorse the sale of the CHK Jan $10 puts for .57 for those who get $1.60 or less margin and don't mind owning CHK for net $9.43 (47% off).  We don't usually talk about those kind of plays because they are a bit dull but they are excellent things to do with your money.  I would point out though that the 2014 $13 puts can be sold for $2.35 and that's net $10.65, which is still 40% off or, more conservatively, the 2014 $10 puts can be sold for $1.45 for net $8.55 so now we're right around 50% off AND we've sold 3x more premium for 2x more time so, in theory, it's going to make more than .47 in 9 months as $1.45/21 months is 6.9 cents/month so 9 months should drop the 2014 $10 puts by .62, which makes them an all-round better sale than the Jan puts.  

    Bullish/Samz – See above CHK but, shorter-term, I like selling FAS May $80 puts for $1.45 as that's down 21% which is down 7% on XLF ($15.30) to $14.23 and that's a reasonable place to go long on XLF since we love them at $13.50 anyway.  Using that base, you can grab the TNA May $50/55 bull call spread at $3.20 for net $1.75 on the $5 spread that's 110% in the money (TNA now $55.85) so you can't lose unless TNA drops 10%, which is 3.3% back on the RUT, which is 772.8 and 775 was our target anyway.   If you only want a HEDGE, just in case the RUT breaks 3.3% up, then it only costs $2.40 for the TNA $55/60 bull call spread and then your insurance cost is net .95 but you can see why I'd rather spend the extra .80 to have $5 better position, I'm sure…

    Good buys/Peedle – In 2008 there seemed like a lot of good buys several times.  Turned out, not so much.  I'm willing to put my foot down on FCX but that doesn't mean they can't sell off 40% in a panic – it's just that, 3 years later, I would expect them to be fully recovered, at least.  As Buffett says, never buy a stock that you wouldn't be perfectly happy to own if they closed the market tomorrow and didn't open back up for the next 3 years.  Like my Grandpa Max, Warren Buffett remembers the Great Depression but he was just a kid – my Grandfather sold dresses door to door in the 30s (in England) and saw things that would make you cry as people struggled with poverty and despair.  

    He NEVER thought that it couldn't happen again.   He had left home in 1919, when he was 16 and did various jobs and made a lot of money in the 20s and was smart enough to keep it in the 30s but he drilled this stuff into my head – you never know how bad things can get – it's just not possible for people to understand until it actually happens to them.  My big issue with the markets isn't just the valuation, which is a bit high – but it's the lack of risk premium placed against capital – these prices don't just reflect a good economy, which in itself is very questionable as the one we have is jacked up on so much stimulus, if it were a corpse you could get it to run around the block a few times.  These prices reflect a good economy that has no forward-looking risks and THAT'S where it becomes ridiculous.  

    Essentially, you are on a roller coaster where the safety bar system is broken and people are able to raise their bars or not and, just because everyone else on the car thinks it's really cool to raise their bars – do you do the same?  If you do – then go ahead and BUYBUYBUY but, if not – why not hang on for a few loops and see how many people fall out first?  

    That's OK Dpast – I'm over it now.  8)  

    AAPL/Shadow – There was a report today (which I heard but did not see), which indicated overall mobile subscriptions were slipping – indicating we've saturated the US market in the very least.  Now people have to rethink those growth projections which is, of course amazing since any responsible analyst – oh, silly me, there are no responsible analysts… 

    IBM/Peedle – Next to TASR, they are my favorite stock for the decade and certainly my top pick for the Century.  That being said, I'm waiting for them to dip to $160-$180 before getting back in.  They have too much anticipation of service revenues and I LOVE their pipeline but it's years and years of development before a lot of their stuff rolls out.  A company that big is tied to the Global economy and, as I noted above – there's not enough risk premium priced into the global economy by a long shot.  I would not buy naked calls (nor would I buy them at all at $200) but you can sell the 2014 $140 puts for $6.60 for a net $133.40 entry and the $200/220 bull call spread is $8.70 so net $2.10 on the $20 spread makes $18 if IBM hit's $220 and that's 13.5% even if you paid full margin on the short puts!  Your break-even is $202.10, much lower than buying the calls but again – I'd wait on the whole thing until IBM takes a nice dip.  

    Banks/StJ – Not one sell on JPM?  Wow.  No wonder we were long on them earlier in the year…   BK seems overly hated but not all that cheap, I still like BAC better than them if they get back to $8.50 or less.   

    Nat gas/Ink -CHK, CHK and CHK.  

    BTU/Morx – If you got out around here, I think it's a good call after that pop. 

  112. 1020

    Psst….Ink – don't tell Pharm, I sold that dog a while back….. ;)

  113. strether

    Phil
    Do you expect Sundays election in France to push markets down Monday if the Socialist challenger does well?
    Strether

  114. Inkarri1982

    1020 – That dog has fleas you say?

  115. Pharmboy

    Why the hell is the Euro up….must be expat'ing money back in and selling the dollar to keep things afloat.

  116. Phil

    Sorry about no portfolio moves but I loves our positions!  

  117. Pharmboy

    1020 – ah, but it is lower now, no? 

  118. Pharmboy

    Lot's 'O' puts moving on XCO in June (7 and 8 strikes).

  119. Pharmboy

    RIG! 

  120. 1020

    Pharm, just kidding, I'm holding at my original entry @ 6.96
     
    I'm looking for a price closer to the high 4's…..

  121. newt

    CMG:
    I followed this mornings recommendation on the 375 put and 475 call. I haven’t filled yet. Spread is 1.3 to 1.9. My net debit is set at 1.2. Should I raise the debit so it fills?
    Thanks.

  122. stjeanluc

    Portfolio / Phil – It's going our way right now… A little push and we'll collect another $5K on our FAS position in the $25KP.

    BTW would it make sense to keep the long October FAS BCS in this environment? If things go our way there won't be any short to protect and it looks to me like 105/115 might a tough nut in October especially with decay setting in.

  123. Pharmboy

    Well, P bar on SPY to 138.57.  Thx for the shot across the bow.

  124. 1020

    Ink – Unfortunately, many in my small portfolio of stocks has needed a flea dip from time to time….
     
    What can I say, I bring home the mutts nobody wants. :)
     
    This is why I trade futures – It's like window shopping! 

  125. stjeanluc

    $25KP – The May DIA 127 Puts are now up 25%

  126. 1020

    How much is that Nokia in the window?….  about 3.85….

  127. terrapin22

    Phil / SONC – i have the june 7.5 long call / short put.  It was looking good about a month ago and now down a smidge on the position.  any changes in your stance on this one?  Its from Jan 3rd. 

  128. Inkarri1982

    ZH reporting that Microsoft is looking to seel most of the patents bought from AOL…I think this calls for "whuck?!"

  129. Phil

    11:00 AM On the hour: Dow +0.27%. 10-yr +0.05%. Euro +0.16%vs. dollar. Crude +0.11% to $103.23. Gold +0.7% to $1651.15.

    11:46 AM European shares close sharply lower after a couple of failed late-day rally attempts. There's Spain of course, but today was notable for the steep, late slide in France as its 10-year Oat yield rises to 3.1%, the highest since January. Stoxx 50 -2%, Germany -0.9%, France -2%, Italy -2.1%, Spain -2.5%, U.K. flat (bodes well for the U.S.).

    12:00 PM On the hour: Dow +0.13%. 10-yr +0.06%. Euro +0.09%vs. dollar. Crude +0.14% to $103.27. Gold +0.45% to $1646.95.

    1:00 PM On the hour: Dow -0.29%. 10-yr +0.09%. Euro +0.02% vs. dollar. Crude -0.09% to $103.03. Gold +0.06% to $1640.65.

    I like this guy:  "I never was an automatic vote for more QE," says BoE uber dove Adam Posen of his "surprise" vote against further easing. He believes the risks are largely balanced around inflation at target (it's been well above for years) and continued GDP growth. "If I am basically wrong about the forecast, I will not seek reappointment." - Of course, this is the problem.  Good men of conscience resign while weasels stay in office forever.  

    Four trends in central bank-land (FT Alphaville)

    The ratio of debt service payments to disposable incomes falls to 10.9% the lowest level since 1994 and against 14% in 2007. A bullish sign, says Floyd Norris, who cites a McKinsey study saying this should pave the way for a rebound in economic growth. Another view: Fed Funds falls from 5% to near 0% and a 310 bp reduction in debt service is all we got? 

    Housing Data Disappoint … Again (Businessweek)

    Are you confused About Stocks? You are not alone. (A Dash of Insight)

    The Real Reasons Why You Buy (NYT)

    Leading indicators of a market top (Market Watch)

    Why the Wealthy Are Worried About the Economy (WSJ)

    China moves to allow domestic funds to introduce yuan-denominated equity ETFs in Hong Kong, affording offshore investors the opportunity to use yuan to invest in mainland markets. It's not the first move this year suggesting Beijing's interest in funneling investor dollars towards the country's stock markets.

    Deutsche Bank (DB -2.3%denies an earlier WSJ report saying it is considering a near $4B capital increase. A spokesman says the bank will reach Basel III targets by 2013 without resorting to a capital raise.

    Someone is very very angry Bank of America, and they have expressed it rather creatively:  YourBofA.com

    Bank of America Faces Bad Home-Equity Loans: Mortgages (Bloomberg)

    Derivatives Lobby Has U.S. Regulators on the Run (Bloomberg)

    Have gasoline prices peaked? AAA's Daily Fuel Gauge reports the latest average U.S. price for a gallon of regular is $3.891, down from $3.899 the day before, $3.907 a week ago and just 1.4% higher Y/Y. Prices of gasoline futures also have leveled out as oil prices have begun to fall and low refinery capacity has not caused the expected supply drop

    A Francois Hollande-led France will not be part of a U.S./U.K. plan to release strategic oil reserves, according to his energy adviser. "This could potentially be dangerous," he says. "Strategic stocks are here in case of a major supply crisis.

    stellar earnings report from Peabody Energy (BTU+6.9%) – fueled in part by production gains in Australia – spills over to help lift up other select names in the beat-up sector along with wordthat U.S. coal exports to China may double in 2012. Advancers: PCX+6.6%ANR +3.8%CNX +2.8%ACI +6.5%ARLP +4.9%.

    Something we were discussing earlier:  In the picture: a short history of nationalisations (FT)

    Nationalization in Argentina: We’ve seen this movie before (Setty’s Notebook)

    Yay!!!  The New York Times (NYT +6.7%) surges following its Q1earnings beat, which suggests restructuring efforts are bearing fruit. The rally comes even though the Times reported a 2.3% drop in digital ad revenue, as its paywall takes a toll on pageviews. Paid digital subscriptions totaled 472K as of March 18, up from 406K at the end of Q4, and the Times is trying to further boost subscriptions by reducing free access.

    Mmmmmmmm, crushed bugs….  Starbucks (SBUX -2.2%) plans to stop using crushed cochineal bugs to color some of its drinks and food items after the practice draws the attention of consumer groups. Though the FDA-approved extract is commonly used in juices, yogurts and other products, it was Starbucks that caught the attention of vegans.

    Wells Fargo weighs in on the collapse in shares of Achillion (ACHN -17.1%), calling the selling frenzy tied to Hepatitis-C news (III) an "overreaction." Separately, UBS clients woke up to find a less-than-timely Sell rating on ACHN out from the firm waiting for them in their inbox.

  130. Phil


    A common thread to the market-pleasing earnings reports delivered by F5 (
    FFIV +11.3%), VMware (VMW +4.4%), and Mellanox (MLNX +43.5%) is that bulls have predicted each company would benefit (III) from Intel's (INTCRomley launch. Thus the reports could indicate other enterprise IT names expected to benefit will also deliver solid reports. Certain peers are rallying: RVBD +3.6%RHT +2%.CTXS +1.9%.

    Polycom (PLCM -2.5%) makes fresh 52-week lows again after posting its Q1 report. The videoconferencing gear vendor, recently crushed by a warning suggesting share losses to Cisco are growing, is guiding for Q2 revenue of $367M-$377M and EPS of $0.20-$0.22, below a consensus of $387.6M and $0.25. During itsearnings call, Polycom blamed its woes on weak government demand, sales execution issues, and an industry shift to unified communications solutions.

    AAPL victims:  Qualcomm's light baseband chip guidance and iPhone worries (III) are pressuring shares of mobile RF component makers. Skyworks (SWKS -3.1%), which has rallied on iPhone 5 hopes, is selling off the most, but TriQuint (TQNT -1.7%), RF Micro Devices (RFMD -0.9%), and Avago (AVGO -1.4%) are also trading lower. 

    Cypress Semiconductor (CY +12.2%) is taking off following its Q1 beat, which was accompanied by a 1.33 book/bill and provides more evidence of a chip industry recovery, and is also giving a boost to rival touchscreen controller vendor Atmel (ATML +2.6%). During its earnings call, Cypress guided for Q2 revenue of $200M-$207M and EPS of $0.17-$0.20; the former is in-line, but the latter is above a consensus of $0.16.

    See, there will always be new things to short!  Splunk (SPLK) delivers one of 2012's best IPOs. Shares of the machine data analysis software vendor are currently trading at $32.13, up 89% from an IPO price of $17, which itself was revised higher a couple of times. (S-1

    More on Splunk: Though other big data software names sport high valuations, it looks as if Splunk's takes the cake. The company has a market cap of $2.97B, which means it trades at 24.6x its FY12 (ended Jan. 31) revenue of $120.9M (+82% Y/Y). No P/E exists, since Splunk had a net loss of $11M. For reference, Tibco (TIBX) trades at 5.8x sales, Informatica (INFA) at 7x, and Qlik Technologies (QLIK) at 8x. SPLK +88.8%. (S-1)

    eBay (EBAY +16%) is now making new 52-week highs on the back of its Q1 beat and strong PayPal data. Piper is joiningBenchmark in upgrading shares in response; though the firm doesn't see much earnings upside over the next 2 years, it expects bullishness about PayPal's mobile payments position to drive shares higher. PayPal expects to handle $7B worth of mobile payments in 2012, up from 2011's $4B. (transcript

    As Nokia (NOK -3%) makes fresh multi-decade lows following its Q1 report, investors can take a bit of solace in the fact Verizon (VZ) firmly threw its weight behind Windows Phone (MSFT) during its Q1 earnings call. Big Red noted its role in kickstarting Android's success, and says it wants to do the same with Windows Phone, which the carrier has provided only modest support for thus far relative to Lumia 900 seller AT&T (T).

    Another victim of AAPL:  Nokia (NOK -1.7%) CEO Stephen Elop says sales of its new Lumia smartphones have been mixed and he will "deeply" discount the devices to spur sales to compete with Asian rivals in emerging markets. The move is announced as NOK reported heavy Q1 losses and said the executive in charge of its worldwide sales force was leaving the company.

    The Lost Steve Jobs Tapes (Fast Company)

  131. Phil


    John Cleese on the 5 Factors to Make Your Life More Creative (
    Brain Pickings)

    Three lunchtime reads:

    1) Stocks are cheap? Logic says otherwise

    2) Paulson is right to short bunds: The pain will flow to Germany

    3) Sell in May? 9 trillion reasons to say no

    Looking at pay scales:

    …..-Workers’ Pay Divide Persists (WSJ)

    …..-Income of Rulers vs. the Ruled (Economix)

  132. Pharmboy

    SGEN – 17.5 and 22.5 puts and calls are active.  Sell the puts, buy the calls for 25c credit.  Just a few.

  133. kustomz

    Looks like a test of the support lines…great place to bounce

  134. palotay

    Wheee!!! on OIL

  135. angelcur

     breadth isnt good enough to cushion market from aapl

  136. 1020

    Yo Phil!  I think you spilt some gunk (splunk?) on your shoes…..
     
    What a awful name for a biz….

  137. jabobeast

    just got back—saw a barclays guy on CNBC talking about PCLN..
     
    what did he say? TIA

  138. stjeanluc

    $25KP Alert

    The DIA puts are now up almost 40%…..

    The SCO 31 calls are up 10% and the expire tomorrow.

  139. stjeanluc

    I have S1 on oil at 102.16 and there we are!

  140. stjeanluc

    In the $25KP, the DIA puts show close to a $1000 profit so we might want to protect that.

  141. stjeanluc

    The XRT short calls also up 15% now with one day to go and basically no premium. For now, they roll for a small credit to the May 57.

  142. chasw

    Angelcur,
    Thanks comment breadth.

  143. Inkarri1982

    I keep seeing thise "gas prices will fall soon" headlines.  I don't know about any other state but in CA, prices might come down some(they actually have by a few cents per gallon lately), but they find a bottom and overtime keep trending upwards.  I suspect we might hit high $3s if that and then just get back to the $4s in the summer.

  144. Phil

    France/Strether – I think his victory is priced in and it's only a preliminary election to decide who runs in the main election next month – kind of a multi-party primary to pick the top contenders so there's no surprise likely on Sunday on that Front but lack of action from the EU and the uncertainty in France could lead people to conclude it's time to take a break from stocks.  

    Mark Tracy - Las Vegas PenthouseCity Center/1020 – Last time I was there I visited someone in Veer and I loved those apartments.  $2,500 a month for a fantastic 2Br – I almost put money down… The poor people paid $1.5M for them!   I sure wouldn't buy one, even for $750K but to rent one for four years for $100K – that I like.  If the kids were in college, I would have done it – happy to spend a few months in Vegas each year – I'm sure it would be easy enough to trade or rent the empty weeks.  

    Nice dip on oil – paying for a few month's rent right there!  

    CMG/Newt – I hate chasing.  CMG was $10 higher earlier but I do like the spread – I would buy less and spend the same you intended.  

    FAS/StJ – I think they'll jam in more QE before things get too bad so I'd rather just keep aggressively selling calls with a goal to hopefully catch a good wave up (without our callers burying us) and then cashing out some long calls.  Otherwise, we can always roll the calls longer and leave the callers hanging out to dry.  As to the DIA's – As I've said, I think we can do a lot better.  

    OMG – What a BS jam-up of oil into the NYMEX close – YOU BASTARDS!!!  

  145. morxlntway

    any thoughts on MCD drop today?

  146. rehat

    Am I the only one enjoying the Nasdaq mini crash…

  147. jthoma

    or as JABO would say- FU ?CL

  148. stjeanluc

    Have to get on the road now… Gonna visit my kid in college this weekend.

    Phil, I'll post the lines later tonight and I'll be in tomorrow morning with the portfolio updates.

    See ya!

  149. Phil

    SONC/Terra – Still pretty much on target.  If you collected $1 then you have a net entry at $6.50 and, if you didn't want to take a profit when they were $8.50 earlier in the year – why take the loss now?  You have the $1 and you're just going to roll the losing position.  Assuming it's the June $7.50 puts, now .80, you can roll those to the Sept $7.50 puts at .95 for net .15 (more by the time you have to) and sell the Sept $7.50 calls, now .50 and then you have another .65+ in your pocket, which is 10% of the stock price.  If you want to get out of a position that's well on track to make you 10% per quarter – that's your call but I kind of like those trades. 

    Patents/Ink – Will be funny if they take a loss but very possible there were only a few they wanted and they might want to try to recoup on the rest while there is still "patent fever" in the markets. 

    $25KP/StJ – Keep in mind it's an aggressive portfolio BUT, in the $5KP, we're going to take $1.80 and run for the DIA $127 puts on the whole thing and 1/2 out in the $25KP.  The way oil is acting today, I'd like to give SCO it's last day.  

  150. kustomz

    Not much of a reaction from currencies. TLT with a bit of a bounce..

  151. 1020

    Phil/City Center  Two of the reasons we did not go to escrow on the units we secured for the Veer and Vdara was due to a large rental pool and your monthly fees can go up (and down?) based on MGM marketing for which you have no say…..
     
    Thankfully, we bailed in the spring of '07.  I do love the work of the Veer designer, Helmut Jahn.
    http://en.wikipedia.org/wiki/Helmut_Jahn

  152. Inkarri1982

    Good thing the PPT stopped the slide[sarc].

  153. bobhu

    Guess what is the cover story on the top business/stock market weekly magazine in Taiwan this week, "It's much easier to make money in the US stock market", subtitle "not only big players, now college students, office workers without good English are start to get insane to US stock market.".  They like AAPL, CMG, PCLN, MA, V, LULU…..
     
    I am plan to write something tonight to the top business newspaper to warn the sheeps.  I hope it helps.  GOD bless them.

  154. alik

    Hello Phil, what do you think about shorting CRM and WFM? Is not yet too late to short USO (or go long airlines)? Thanks

  155. kustomz

    Exposure to derivatives
    http://demonocracy.info/infographics/usa/derivatives/bank_exposure.html
     

  156. peedlew99

    stick today?

  157. Phil

    XRT/StJ – We were only going to roll those no matter what so we can wait and see if we catch a break tomorrow.  

    Gas prices/Ink – Not likely ahead of the Holiday (and then there's July 4th too).   What's spooking the oil pit is they cut refining capacity to 84%, lower than it was after Rita/Katrina actually knocked out refineries and we STILL have way too much refined production.  So they are jamming up gas prices effectively by refusing to refine the oil but that then backs up the oil and drives that price down.  Gasoline prices will probably lag that drop by a wide margin.  

    Speaking of which, we got our gasoline drop back to $3.15, as expected ($3.135 was the low) so it's game on for long on /RB again over that $3.15 line into the weekend.  

    MCD/Morx – Fully priced.  Back in the $80s they will get interesting again.  

    Enjoying/Rehat – Nope, I am pretty sure I could not be happier….

    Later StJ!  

    Veer/1020 – Like I said, I would never buy.  Any casino town is an insane place to buy an investment property as you're always competing against brand new casinos who practically give away the rooms – it's crazy.  Vegas had to be the stupidest place on the planet earth for people to buy investment properties.  I used to warn people about it all the time and between 2003 and 2006 a lot of people would call me and say "Ha ha – I'm making money in Vegas" – now their phones are disconnected…

    Volume still works out to 79M on the Dow at 3pm – really not that busy today.  

    You're a good man Bob – it needs to be done.  

    CRM/Alik – I do think they are over-priced at $160 but we're at such a trough in jobs that I wouldn't bet against them.

    WFM /Alik – is more like a religion but I think they make a good short into earnings because THEY ARE A FRIGGIN' SUPERMARKET WITH A P/E OF 40!!!   I think the Aug $70 puts at $1.95 are a nice way to play for a miss.  

    ROFL Kustomz – That is a must see image!  This image doesn't really capture the concept (how many stacks of $100s are outstanding in derivatives) – you guys have to read this:  

    Bank of New York Mellon - Derivative Exposure

     

    9 Biggest Banks' Derivative Exposure – $228.72 Trillion

    Note the little man standing in front of white house. The little worm next to lastfootball field is a truck with $2 billion dollars. 
    There is no government in the world that has this kind of money. This is roughly 3 times the entire world economy. The unregulated market presents a massive financial risk. The corruption and immorality of the banks makes the situation worse. 

    If you don't want to banks with these banks, but want to have access to free ATM's anywhere-- most Credit Unions in USA are in the CO-OP ATM network, where all ATM's are free to any COOP CU member and most support depositing checks. The Credit Unions are like banks, but invest all their profits to give members lower rates and better service. They don't have shareholders to worry about or have derivatives to purchase and sell. 

    Keep an eye out in the news for "derivative crisis", as the crisis is inevitable with current falling value of most real assets. 
    Derivative Data Source: ZeroHedge

    Good point Angel – some stats cannot be brushed off:

  158. Phil

    I like the fact that, for the sake of accuracy, that final stack of money in the front right only makes it about 1/3 up – as if people are going to count…

  159. williex

    Hey Phil
     
    got this afternoon off so I am looking for some positions.   do you still like your long put picks?  any better than others?
     
    some of my short puts look like i am going to end up owning the stocks although only AA is underwater at this time

  160. stjeanluc

    Suez Canal / Angel – It's more troubling for Europe if anything….

    I really gotta go now…

  161. 1020

    Phil/Vegas  Some of us did make money and still have the same number….. :)

  162. rainman

    WFM — I'd be careful with shorting WFM. Their customers are religious like Apple customers and there is a growing trend of people starting to pay attention to what is in their food. I'm long with short 77.50 calls. Got in on 1/26/11 at $51 and have worked my cost down to 38.88. I do agree they appear to be overpriced but so is CMG (which is also part of the same trend IMO).

  163. lflantheman

    Hello all! Still on vacation so don’t ask me any questions about AAPL. I doubt I know the correct answers anyway. I was in the water with a couple of dolphins today. Awesome! See ya!

  164. peedlew99

    I need to ask a question that might make me look stupid.  When buying index futures, right now junes on out are at a discount to the index… But IWM options have a decent premium.  Is this just the price people will pay to define their risk?  Wouldn't a stop do the same thing on a future's contract.  After all, It's a rare day when an index moves for than a percent or two.
    So if i want to go long between now and june, aren't I better off buying the index future, and define my risk with a stop… than buying calls and needing the index to move up beyond the premium before I make anything, just to define my risk to the price I'm paying?

  165. sagemm1

    dow down 90 vix barely higher…no worries

  166. Inkarri1982

    "Barack Obama has now increased the debt more than any other POTUS and the first 42 combined" CNS News via ZH

  167. Phil

    Long Puts/Willie – Great question, let's take a look (this is the last 3/30 full update with original comments – I'm just updating prices/positions:  

     

    Long Put List Update with my original 3/15 commentary(rather than rephrasing it – you get the idea) and possible roll suggestions (or new entries):

    Anyway, it doesn't matter WHY the market is going up, we just have to buy stuff and hold it until these levels crack (which may be tomorrow or Monday but still, we have to be patient).  Assuming no big collapse tomorrow, we will redraw the Big Chart over the weekend and the 10% lines will become the Must Hold lines with some possible adjustments and our top 10 list that has now run it's course for S&P over 1,360 will give way to a new top 10 list for S&P over 1,400 and, no matter how silly it seems – we need to follow the market.  

    HOWEVER, we can use that low VIX and insane attitudes to place a few outlying bearish bets, like yesterday's Long Put List.  I mentioned PCLN in the above post but here's the list and the idea is to buy things that are CHEAPER than they were when I picked them and to take profits when they work and then switch to a fresh horse of the ones that are CHEAPER again.  That way, we keep betting on the things that went up even further than where we felt they were overbought.  PCLN, CMG and LVS are tops on my list with PCLN and LVS both plays on China slowing while CMG is just annoying.  Here's the whole list: 

     

    • AXP (was $12, now $57) July $52.20 puts at $1.38, now $1.25 – down 9%
    • BIDU (was $11, now $145) June $115 puts at $2.10, now $1.20 – down 42% – roll to $125 puts ($1.75) for .55 
    • CAT (was $24, now $106) May $95 puts at .95, now .82 – down 13%
    • CMG (was $40, now $428) June $375 puts at net $7.05, now $5.40 – down 23%
    • FAS (was $8, now $99) July $60 puts at $2, still $2 – even 
    • GE (was $6, now $19) Sept $19 puts at $1, now $1.25 – up 25%
    • GOOG (was $250, now $600) Jun $540 puts at net $5.45, now $5 – down 8%
    • HD (was $18, now $51) Aug $46 puts at net $1.50, now $1 – down 33% – roll to $50 puts ($2) for $1
    • IBM (was $70, now $198) Jul $180 puts at net $2.05, now $2.30 – up 10% 
    • ISRG (was $80, now $579) July $430 puts at net $5.20, now $2.40 – down 54%
    • IWM (was $35, now $80) Aug $71 puts at net $2.10, now $2.12 – up 1%
    • KO (was $40, now $73) Aug $70 puts at net $1.70 now $1.12  – down 34%
    • LVS (was $2, now $58) June $55 puts at net $3.35, now $2.30 – down 34% 
    • MA (was $120, now $435) July $350 puts at net $5.80, now $3.40 – down 41% – roll to $370 puts ($5.60) for $2.20
    • MMM (was $42, now $87) July $82.50 puts at net $1.82, now $2.17 – up 19%
    • PCLN (New one, last out at $11.70) July $560 puts at $8.50, now $10 – up 17%
    • QQQ (was $26, now $66) July $61 puts at $1, now $1.25 – up 25% 
    • V (was $42, now $121) Sept $95 puts at $2, now $1.55 – down 22% – roll up to $100 puts (2.15) for .60 
    • XRT (was $15, now $61) June $62 puts at net $3.05, now $2.90 – down 3%

    We'll touch base on these on a regular basis but make sure you understand these are SPECULATIVE shorts.  We pick a few and the market goes up and we lose 50% and we pick a few more next month and we lose 50% and a few more next time and we lose 50% and then it's July and the S&P is at 1,500 and all we need is a nice 150% gain on something and we've got our losses back.  If we never win – then we'd damned well better have some bullish bets that are making good money to offset it because these are now the hedges as we are forced to be bullish until the Fed runs out of money or that asteroid hits the Earth – whichever comes first…

    Keep in mind the trick is to SCALE into shorts and DIVERSIFY the risk so that a winner can help fund your rolls on the losers.  Also keep in mind that when we roll or DD a position – our primary goal is to get 1/2 back out even.  That puts up back to a smaller entry with more cash on the side that we can put into the next roll – if necessary.  What we're doing is we keep putting ourselves "in the right place" and, eventually, if we catch it at the right time – we have very strong put positions that can catch a major sell-off.   

  168. sagemm1

    inkarri…that debt is previous obligation, so in other words the next president will most likely accomplish the same feat. I beleive, but could be wrong, that as for adding to the deficit he is not such an offender as his predecessor.

  169. sagemm1

    looks like a stick save setup but hoping for Mr anti stick!!!

  170. jabobeast

    FU mr stick!!!

  171. jthoma

    JABO- Guess which stocks did not participate on the stick?

  172. kustomz

    Mr Market is saving this from becoming a very ugly close..

  173. jabobeast

    AAPL?

  174. Pharmboy

    15K May $6 Calls have traded on XCO with 1420 OI.  Tell me something is not going on there?

    U be quiet 1020!

  175. shadowfax

    The same indicator that predicted today flat to lower is flat to higher tomorrrow.FWIW

  176. cslanson2

    Inkarri1982
    I believe it would be more accurate to say that the deficit has increased as you describe while the President has been in office rather than that he increased the deficit. A distinction with a definite difference unless you're partisan and cannot be objective.

  177. dpastramas

    Ok mr CMG lets see what you got.  Big vol selloff around 15:15, someone offloading ahead of earnings? 

  178. Phil

    GRPN $11.80!  

    Vegas/1020 – You are wiser than most.  I'll bet though, that you are not the type to tell others they are wrong.  When the prices went up, you knew it wouldn't last and you got out sensibly.  That's the mistake most people make, they flip until they get stuck with a loss that wipes out all the wins.  

    WFM/Rain – I agree and I shop there all the time but that doesn't mean they can't be short-term overbought.  The difference between WFM and CMG is WFM can't possibly project that kind of growth and I've noticed my local markets have done a pretty good job stepping up the competition – especially in fruits and veggies.  Their cheese prices have become so insane that I never see anyone buying them anymore – it's a waste of space now.   Meats are also getting competition as A&P and Shop Rite by me have gourmet meat sections and I can't justify the additional money WFM charges for theirs except for some prepared items, like kebabs, which are great but still so expensive that we may as well go out to eat – I think our kebab dinner on Monday must have cost about $75 to put together plus I spent a about an hour preparing other stuff and cooking on BBQ – other than the satisfaction of eating at home – we could have gone down the road and had the same meal for $75.  

    Dolphins/Iflan – Give my regards to Marino.  Have fun!  

    Stupid/Peedle – Don't be silly, nothing you say can make you look stupid.  Sound stupid, yes – look stupid, no…  As to the actual question – that's not stupid at all.  Although betting on the same thing, options and futures have their own investors that create their own supply and demand for product.  The Futures can gap up or down on you as badly as the indexes can although, in theory, if you are staring at them 24/7 with your finger on the trigger, you are more likely to be able to get out with the Futures.  Stops can be blown past in the Futures – you are looking for a buyer at S&P 1,360 after really bad news and maybe there is no buyer on the panic until 1,345 – then that triggers your stop and then they bounce back to 1,355 once the news is digested (you see this on individual earnings all the time) – That's a pretty big risk.  The thing about a call or a spread is you have a clearly defined risk – in the futures, you are long or short a highly-leveraged instrument and on the hook for whatever you get stuck with.  Can Sept 11 happen again?  Can you afford it if it does?  

    Nice little stick into the close, making things seem not so bad.  

    Debt/Ink – Wow, that's an amazing thing to blame him for.  Completely ignores the situation in the same way you would blame a fireman for using a lot of water because he showed up at a really big fire and did what had to be done.  I guess Obama should have let it all burn – then he could have been the hero, right?

  179. shadowfax

    Buying at and after close! Yesterday they just went home.

  180. jabobeast

    Phil--CMG???

  181. sagemm1

    markets down vix down seems a little odd to me…FOMC must be getting ready to make an announcement:)

  182. Pharmboy

    Wow….CMG…..those price increases did not hurt at all.

  183. dpastramas

    CMG going apeshit AF. Seems like they beat :-(

  184. Inkarri1982

    I was just posting that headline.  I personally realize it is not all his fault but as the POTUS, I can't honestly say he is not partially to blame for that number and if he is re-elected, a much bigger number. 

  185. bobhu

    CMG eps 1.97; sales $640.6 mil (est $1.93, sales $630.9 mil)

  186. Pharmboy

    MSFT…..well, aint that a fine howdy doo…..

  187. Phil

    CMG beats but not enough to bother the short calls.

     

    Chipotle Mexican Grill reported strong sales growth during the first few months of 2012, with revenue up 25.8 percent to $640.6 million.

    "We're delighted that our continuing efforts to serve the very best food made from high quality ingredients raised with respect for the animals, the environment, and the farmers are resonating with our customers, allowing us to deliver double digit comps and record earnings during the quarter,” said Steve Ells, Founder, Chairman and co-CEO of Chipotle.

    Earnings were $1.97 so 4x = $8 so the p/e is only 54 – oh yeah, what a deal….

  188. Jbur

    Hi Phil. I found your response to CSL on selling puts on CHK at 1:15 extremely interesting. I would normally just look at the daily theta on TOS and sell accordingly. So for the 2013 10 puts the daily theta is listed as .003, and for the 2014 10 puts it's listed as .002. So, I would have, before now, sold the 2013's. I had to read the response a couple of times to get it, but Damn that's slick. Thanks.

  189. peedlew99

    I'm so glad they respect the animals before they kill them!  It's like banking with Goldman Sachs.

  190. jabobeast

    FU CMG!!!!

  191. jabobeast

    Is there any hope that CMG drek is red tomorrow Phil?
    I really do hate that stock ;-(

  192. jabobeast

    Is there anybody out there????

  193. dpastramas

    Jabo, i think everybody is at Chipolte's enjoying a burrito. :-)

  194. jabobeast

    dpast—everyone who eats that drek will have terrible gas!!!

  195. Inkarri1982

    It's not really up that much Jabob…maybe you'll get lucky. 

  196. jabobeast

    thanks Ink!

  197. 1020

    Phil/Vegas  Yeah, against advice from my accountant and good friend, I wound down my business the second half of '06….without even trying to sell.
     
    Sometimes, it helps to have a little luck as well…..

  198. Phil

    At the close: Dow -0.54% to 12962. S&P -0.58% to 1377. Nasdaq -0.68% to 3011.

    Treasurys: 30-year +0.15%. 10-yr +0.05%. 5-yr +0.01%.

    Commodities: Crude -0.15% to $102.97. Gold +0.16% to $1642.25.

    Currencies: Euro +0.09% vs. dollar. Yen +0.4%. Pound -0.23%.

    Market recap: Stocks chopped along with modest losses for a second straight day, as a trio of disappointing economic readings (IIIIII) and European concerns (III) outweighed better-than-expected earnings from eBay, Travelers and others. Crude oil futures inched lower, while natural gas hit a 10-year low. Decliners led advancers on the NYSE three to two.

    A few investors return to the bullish camp after last week's rush out, according to the AAII Investor Sentiment Survey for the week ended yesterday. The percentage of bulls rises 3 points to 31.2%. Bears decline 7.7 points to 33.8%. The long-term average for bulls is 39%, for bears, 30%.

    Stocks Are Cheap vs Bonds? Logic Says Otherwise (Smart Money)

    Blackstone (BX -4.6%) shareholders probably aren’t the only ones feeling blue over lackluster Q1 results, as M&A bankers and PE rivals don't the firm's bleak talk about the dealmaking environment: “Emerging markets are slowing, Europe is weak… corporations want to sit on cash… fundraising is tough… most big funds are going to be much smaller than they were before." 

    The ECB's Asmussen and Canadian finmin Flaherty get into it on a panel, with Flaherty dismissing Asumussen's optimistic view on Europe. "We managed to stabilize the situation," says Asmussen, calling for just a mild recession. Counters Flaherty: the situation remains dangerous, the banking system is "woefully undercapitalized," and the firewall is not "adequately funded."

    This Crisis Cannot Be Resolved While Monetary Union Remains. "One has the feeling that at any moment, things could get very bad again.” With these words, Olivier Blanchard, the International Monetary Fund’s chief economist, has set the tone for this year’s spring meeting of the IMF.

    From the sidelines of the IMF's Spring Meeting.: Canadian finmin Flaherty proposes non-European countries should have a collective veto when EU states apply for aid. Both China's and Brazil's representatives say the countries have yet to make a decision on contributing towards the hoped-for $400B in additional resources.

    Election-year politics means the U.S. will not be part of $400B in additional funding for the IMF, writes Bruce Krasting, but Switzerland is of even more interest. Based on other countries' contributions, Switzerland might be expected to chip in $12B. However, the IMF has blasted the country for setting a floor on the euro/franc rate. If Switzerland writes a check for $25B or more, look for that criticism to go away.

    Fitch doubts Dutch AAA as property slump reaches 'coma'Fitch Ratings has issued the clearest warning to date that Holland faces losing its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management.

    Banks will have a full two years - until July 21, 2014 – "to conform all of their activities and investments" with the Volcker rule before regulators start enforcing it, the Fed says. At issue was a legal worry that final regulations almost certainly won't be ready for implementation by the July 21, 2012 deadline set out in the Dodd-Frank law.

    Louisiana sues banks for RICO, Wire Fraud Racketeering due to MERS (mattweidnerlaw)

    Anat Admati: More Bank Equity Is Needed (Institutional Investor)

    Moms: 'I can't afford to work'. After factoring in the rising cost of child care, the daily commute and other work-related expenses, a growing number of mothers are figuring out that having a job just doesn't pay. "It comes down to a cost analysis and I have several clients that have taken the route of quitting," said Anna Behnam, a financial advisor at Ameriprise Financial in Rockville, Md. "Factor in taxes, transportation costs, clothing and lunch — what is the true net that you bring home after salary?"

    Shares of First Horizon (FHN -8%) sink after the bank's Q1 earnings fell 24% as it set aside more money for loan losses. Wunderlich says although results fell short of expectations, FHN will continue to improve its bottom-line performance as it emerges from this credit cycle, suggesting share weakness offers an attractive entry point for investors.

    Jim Cramer's Ultimate Growth Stocks for 2012, which boast "the kind of rapid yet consistent growth that’s coveted in an environment where economies around the globe seem to be slowing." But buy only on a pullback: AAPLSBUXCMGROSTAGNCELG,LULUMNSTNKEMCD.

    Dividend stocks have grown so popular, warnings are beginning to come out cautioning investors to look before they leap. “Pursuing yield for the sake of yield can be a dangerous proposition, potentially leading to investment in weakening franchises,” a Loomis Sayles strategist says, especially since a wider range of sectors – even techs (thanks Apple) – has been boosting payouts.

    Chesapeake Energy (CHK -0.3%) trades flat a day after disclosure of the CEO's loan practices, and another analyst comes to its defense as BofA sees the news as “immaterial to the investment case” and yesterday's stock drop as “unfounded." Sterne Agee says the focus should be the “impact of prolonged weak gas prices on [CHK's] cash flow generation ability," hardly a ringing endorsement.

    Capital One (COF): Q1 EPS of $1.56 beats by $0.17. Revenue of $4.9B (+21% Y/Y) misses by $300M. Shares +2.2% AH. (PR)

    More on Capital One (COF): Domestic credit card profits +30.4% Q/Q, net charge-off rate -15 bps to 3.92%, delinquencies -41 bps to 3.25%. Credit card balances off $3.4B Q/Q to $53.2B. Nearly all other metrics skewed by ING Direct acquisition, which was completed during the quarter. Shares +1.3% AH.

    Chipotle Mexican Grill (CMG): Q1 EPS of $1.97 beats by $0.04. Revenue of $640.6M (+26% Y/Y) beats by $13M. Shares+0.7% AH. (PR)

    More on Chipotle's (CMG) Q1: Opened 32 restaurants to bring total to 1,262. Saw restaurant level operating margin of 27.4% during period, +220 bps from a year ago. Plans to open 155-160 new restaurants in 2012. Expects mid-single digit comparable restaurtant sales growth. Shares +1.1% AH. (PR)

  199. Phil


    Microsoft (MSFT):
     FQ3 EPS of $0.60 beats by $0.02. Revenue of $17.41B (+6% Y/Y) beats by $230M. Shares +1.8% AH. Company lowers FY12 operating expense guidance to  $28.3B-$28.7B ($28.5B-$28.9B prior). Establishes preliminary FY13 opex guidance of $30.3B-$30.9B. (PR)

    More on Microsoft's FQ3: Windows division revenue +4% Y/Y, a sharp turnaround from FQ2's 6% drop and a positive for the PC industry. Office division +9%, a notable pickup from FQ2's +3%. Server & Tools +14% (+11% prior), fueled by SQL Server and System Center. Entertainment & Devices -16% (+15% prior) due to soft console market, swings from a $210M profit to a $229M loss. Online Services (Bing) remains a cash sinkhole, losing $479M. MSFT +2.5%AH. (PR

    Ouch!  SanDisk (SNDKguides on its Q1 earnings call (webcast) for Q2 revenue of $950M-$1.05B, below a consensus of $1.31B. 2012 sales are expected to fall from 2011 levels (consensus is for 4.1% growth). SanDisk is also guiding for a Q2 gross margin of just 26%-30% (down from Q4's 42.9%), and says some phone OEMs are reducing memory card capacity. SanDisk's lack of exposure to Apple and Samsung appears to be hurting its market positionSNDK -7.3%AH. 

    More on SanDisk (SNDK): Q1 comes in line on revenue but misses on a per share basis due to a decline in revenue. Net income fell 49% Y/Y as its bottom line was negatively impacted by lower-than-expected pricing and demand weakness in certain segments. The company adds that it sees similar negative trends in Q2 as well. Shares -1.9% AH. 

    Research In Motion (RIMM +2.1%) outperforms as Bloomberg reports the company is leaning towards picking JPMorgan as its strategic adviser, and could make a final decision in days. RIM'sunwillingness to consider a sale as part of its strategic review, along with doubts about its ability to license BlackBerry 10 to leading OEMs, has limited investor enthusiasm.

    Gene Munster thinks Qualcomm (QCOM -6.6%) and TSMC's (TSM) 28nm chip supply issues suggest Apple (AAPL -3.4%) will introduce its next iPhone in October, given the device is expected to feature a 28nm Qualcomm modem and A6 chip. Qualcomm's chip guidance could be contributing to today's selloff in Apple (along with Canaccord's note and Verizon's iPhone data), though its worth noting the iPhone 4S and new iPad don't use 28nm parts.

    LOL Chris Christie Denies Falling Asleep at Springsteen Show (Bloomberg)

    David Kocieniewski's, series called “But Nobody Pays That,” showed how federal tax law takes with one hand but gives — generously — with the other.  At 35 percent, the corporate tax rate is nominally among the world’s highest. Yet because of “a bounty of subsidies, shelters and special breaks,” most companies actually pay less than competitors abroad — often far less.  In April 2012, the series was awarded a Pulitzer Prize for explanatory journalism. The Pulitzer jury said Mr. Kocieniewski’s work “penetrated a legal thicket to explain how the nation’s wealthiest citizens and corporations often exploited loopholes and avoided taxes.”  (Read the excellent series here

     

  200. Kwan

    Re: my liquimetal comment from yesterday, what I'm getting at is if apple is seeking out lighter materials is it not possible they'd be looking for something similar to replace the glass as well (which would result in GLW taking a hit). Relatively speaking that stuff is pretty heavy.
    Sorry for not being more transparent. (Ha!)

  201. Phil

    You're welcome JBur, glad it helped.  

    CMG/Jabob – I think we finish the week red and CMG has no reason to go higher.  Income went up from $46M to $62M (35%) but SO WHAT – their market cap is $13,500M – Even being super-generous and assuming another 35% next year to $83M x 4 = $252M which is still a forward p/e – if all goes not only perfectly but much better than single-digit growth guidance – of 53.5.  They have 1,230 stores and opened 32 more – 10% store growth.  Food costs were up 32.2% but they increased their prices OVER the increase in food cost – how many times will this work for them?  They forecast single-digit food inflation going forward so they better hope the economy collapses or that will be blown out.  The bottom line is they are not worth $13.5Bn.

    Liquid metal/Kwan – I'm betting on transparent aluminum:

  202. jabobeast

    Thanks Phil! Maybe, I'll luck out and one or more of those clowns will downgrade them tomorrow (I know-- wishful thinking)… 

  203. Inkarri1982

    Kwan/LQMT – at $0.27/share, I would think buying a few thousand shares might be worth a gamble.
    I think CYAN might be worth a look for some of you.  I have been watching/playing this one since it was in the $3s.  It's a microcap but overall, it looks like their business is growing. 

  204. diamond

    Kwan – GLW has a superior product: "Corning's Gorilla Glass 2 is now up to 20 percent thinner, enabling slimmer devices, better touch responsiveness, and brighter images without sacrificing the damage resistance consumers demand. The result is superior design flexibility for electronics' manufacturers as they develop high performing, touch sensitive, and durable mobile devices."
     
    Steve Jobs initially went to GLW because they are the best glass company in the world and he was actually responsible for GLW producing Gorilla Glass.
     
    So in short, Gorilla Glass will most likely continue to get thinner, lighter and stronger, and AAPL most likely will continue to have GLW in their iPhones for years to come.

  205. stjeanluc

  206. stjeanluc

    Looks like the earnings were fun tonight… Sorry no recap as I was driving through beautiful NY State…

  207. stjeanluc

    Another take on the correlation charts I posted earlier:

    http://motherjones.com/kevin-drum/2012/04/pretty-much-everything-now-bet-central-banks-world

     

    But take a look at the version on the right from April 2012. Practically everything in the top half is moving together. At the bottom right, bonds are moving together even more tightly than before. And stocks and bonds (bottom left) are moving tightly in opposite directions. There's a bit of stuff in the middle that's not correlated with anything else, but that's all.

    What this means is that it's hard to diversify a financial portfolio these days because everything is moving in sync. HSBC's view is that this is because the world economy is in such fragile shape that basically everything now depends on how well governments cope. If they cope well, the global economy will recover smartly and pretty much all asset classes will do well. If they cope poorly, everybody and everything is screwed. In other words, when you buy an asset these days — any asset — you're not really making a bet on the asset itself. You're making a bet on how well the governments and central banks of the world handle the current economic mess. No wonder everyone's so nervous. There's no escape from the Great Recession.

  208. zipla

    Some advice on a roll I need to do today Phil.
    I'm stuck with a short April VXX $21 put that I missed getting out of when everyone else did. What surprised me today was the spread — bid $2.11, ask $4.75 — since there's a lot of open interest and volume.
    i guess the obvious play would be to do an roll to may but the bid/ask on that was 3.55/3.85 today. 
    So two questions: How do you play it if the bid ask is so wide. Buy back the caller first and then see what one has to make on selling the May put to break even? Or is there another way?
    Should I even think about opening another May BCS if I can get a profit on the roll? Or should I just be content to get out even?
    Thanks in advance.

  209. jomptien

    Sportsbook Presidential odds 5:30am EST Friday
     

    ELECTIONS

    ELECTIONS – May 12 

    2012 USA ELECTIONS  $5000 

    Time

    #
    Teams
    Spread
    Total
    Odds

    1:48 PM

      TO WIN 2012 USA PRESIDENTIAL ELECTION

    85015
    BARACK OBAMA
     
     
    -230

    85016
    MITT ROMNEY
     
     
    +180

    85017
    RON PAUL
     
     
    +15000

    85018
    NEWT GINGRICH
     
     
    +30000

    1:48 PM

      2012 USA PRESIDENT ELECTION – WINNING PARTY

    85030
    DEMOCRATS
     
     
    -235

    85031
    REPUBLICANS
     
     
    +185

    85032
    INDEPENDENT
     
     
    +5000

  210. Phil

    Good morning!  

    Asia was interesting with the Hang Seng and Nikkei flat – although it took a 300-point stick save to get the Hang Seng flat into the close.  The Shanghai climbed all day on more stimulus talk and ended up 1.2% while the BSE fell 1.2%.  

    Europe is flattish but downish on the whole and our Futures are back to flat as the Dollar bounced off the lows of 79.50 at about 4:25 – now 79.60 again.  

    Oil $103.09 after failing $103.50, gold $1,642, silver $31.71, copper $3.63 (remember when below $3.85 was a bad sign?), Nat Gas $1.907 (sneaking down on us fast) and gasoline topped out at $3.18 and now back to $3.163 and, if you didn't stop out yet, I'd sure as hell get out if they fail $3.16 as this is all very weak.  

    Euro ran up to $1.318 but back to $1.315 now, Pound $1.6102, 81.72 Yen to the Dollar and EUR/CHF cannot catch a break at $1.2017, which really makes no sense as the Euro is up 1% so I have no idea what the mechanics are over there at the moment.  Generally, when things do not make sense – it's a good time to cash out of bullish positions and get to the sidelines but we're already there so we'll just call it interesting for now. 

    Notable earnings before Friday's open: AEPBPOPCP,GEHONIRJCIKMBMCDRCLSLB

    This could be one of the best earnings seasons ever, but as Europe staggers, U.S. markets appear destined to follow them down. Just how precarious is it? "Basically, we're mountain climbers," says S&P Capital's Sam Stovall. "The U.S. is in front, China is behind and Europe is tethered to us. But if Europe should fall, it could drag the rest of us down the mountain as well." 

    Sifting through the last 15 years and some insight from Jeremy Grantham's quarterly newsletter, Edward Harrison explains why missing a bull market is a dismissible offense.

    U.S. state tax revenue has finally returned to its pre-recession peak and likely continued growing at the beginning of this year, according to a Rockefeller Institute report. Overall state tax revenue increased 3.6% Y/Y in Q4 2011, and was 3% higher than in Q4 of 2007 and 7.4% better than in Q4 of 2008

    Fears Rise That Recovery May Falter in the SpringSome of the same spoilers that interrupted the recovery in 2010 and 2011 have emerged again, raising fears that the winter’s economic strength might dissipate in the spring. In recent weeks, European bond yields have started climbing. In the United States and elsewhere, high oil prices have sapped spending power. American employers remain skittish about hiring new workers, and new claims for unemployment insurance have risen. And stocks have declined. There is a “light recovery blowing in a spring wind” with “dark clouds on the horizon,” Christine Lagarde, managing director of the International Monetary Fund, said Thursday, at the start of meetings here that will focus on Europe’s troubles and global growth.

    This is not encouraging:  Europe Urged to Fix Crisis, G-20 Warns of StressEurope’s governments were told the onus for fixing their debt woes still lies with them as the Group of 20 warned the two-year crisis still threatens global growth. With finance chiefs from the G-20 meeting today in Washington, those from Canada and Australia joined the IMF and U.S. in pressing Europe to intensify efforts to quell the turmoil as it spreads to Spain. The G-20 cited “the situation in Europe” first in a list of drags on the world economy, according to a draft statement obtained by Bloomberg News. As she welcomed pledges of about $320 billion for the IMF’s crisis-fighting coffers, IMF Managing Director Christine Lagarde said the lender serves as an emergency backstop and that Europe must protect itself, boost economic growth and cut debt. Italian and Spanish bonds fell yesterday on speculation the crisis is worsening. “Countries have to take measures,” Lagarde told Bloomberg Television’s “InBusiness With Margaret Brennan” in Washington. “I am in charge of improving the stability and I need to have the umbrella in case the clouds break into a nasty rain.”

    China Vice Finance Minister: No Decision Yet On Increasing IMF Contributions.

    BRICS Demand Bigger IMF Role Before Giving It CashThe International Monetary Fund's bid to win a big boost in funding to handle the euro-zone debt crisis hit a speed bump on Thursday when Brazil demanded more power at the IMF for emerging economies as a condition for lending it extra cash.

    Investors to ECB: 1 Trillion Euros Is Not Enough.

    German Tempers Boil Over Back-Door Euro Rescues. Controversy is raging in Germany over soaring "payments" by the Bundesbank to shore up Europe's monetary system and cope with a tidal wave of capital flight from southern Europe. Professor Hans-Werner Sinn, head of Germany's IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. "The euro-system is near explosion," he told Austria's Economics Academy on Thursday. Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors – often by the back-door – that will saddle Germans with ruinous losses one day. "It is a horror scenario," he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped

    The Bank of Japan thinks protecting its own balance sheet is more important than ending deflation and spurring growth, says Heizo Takenaka, the former minister who led a clean-up of the nation’s banks. Economists have recently raised questions about the consistency of BOJ's policies.

    The euro is no longer at risk of imploding but the currency bloc remains convalescent, says France's Sarkozy, adding there can be no complacency in cutting debt and public spending.

    The Idiot's Guide To This Weekend's French Election.

    German PPI rose 3.3% in March vs. expectations for a 3.1% rise and following a 3.2% increase in February.

    Hog farmers in China face the slimmest profit margins since 2010, which could cut meat supplies and demand for animal feed in the world's largest pork-consuming nation. The hog-to-corn price ratio for Chinese farmers measures profitability. The measure was 6.22 times at April 4, a level not seen since September 2010, according to data compiled by Beijing Shennong Kexin Agribusiness Consulting Co. The ratio was 8.53 times in July 2011. The official break-even point is 6 times, below which the government may pay subsidies to producers.

    Bo Xilai 'responsible for two more deaths'In a bid to quash an investigation into his wife for the murder of Neil Heywood, Bo Xilai had at least seven people seized and tortured two to death, according to a document read out to Chinese government officials.

    Banks rating banks: JPMorgan Chase (JPM) is by far the most loved bank among Wall Street analysts, with 87.5% Buy ratings; next are WFCDFS and COF, earning Buys from 70% or more. Least loved, with fewer than 40% earning Buy ratings: BKBACBBT,TROWMS

    What a coincidence!  After a difficult search, struggling Japanese utility Tokyo Electric Power (TKECY.PK) says one of the officials in charge of their bailout has been selected to lead the company as chairman. The new chief, Kazuhiko Shimokobe, is one of seven board members running the fund backing Tepco, which has struggled near the brink of collapse from last year's catastrophe at its Fukushima Daiichi nuclear plant. Shares +11.5% AH.

    Best Buy's (BBY) low valuation isn't appealing to many value investors, not when few expect share losses to online retailers to end, and Brian Dunn's drama-filled resignation leaves major leadership questions. Also of concern is the favoritism being displayed by the company's board to relatives of founder Richard Schulze. (yesterday)

    Mentioned during Microsoft's FQ3 earnings call (webcast,live blog): PC market estimated to grow 2%-4% in Q1, led by 8% business growth (higher Windows license fees than consumers, and less piracy). Multi-year business license revenue now 40% of company's sales. Online ad revenue +9% (unimpressive relative topeers). Strong license and services growth forecast for Server & Tools. Entertainment & Devices expected to grow ~10% in FQ4, reversing FQ3's declineMSFT +3% AH.

  211. Phil

    Big Chat is simple to follow today, we are 3 of 5 bearish and need to get it back but, just like when we first cross bullish – we need a day or two on the other side of the line to confirm the move.  

    Twitter/StJ – I already have more guys than I have time to read.  I follow 64 guys and I do tend to knock off ones who waste my time but I'm loathe to add new people unless I have a really good reason.  I like guys who put up breaking news with links – not people who just tweet stuff but I got 1,771 tweets yesterday from those 64 people alone – who has time for this crap?  

    Then, sometimes, people show up as retweets who are useless and then I have to get rid of the person who has retweet fever.  

    Good chart showing very strong correlation between inversed initial jobless claims and S&P – note the very sharp dip we haven't matched yet.  

    chart

    $300 IPad Mini?  I would rather have an IPhone Maxi the same size….

    VXX/Zip – That's an insane spread of course, you shouldn't spend more than .10 over the actual value ($21-$18.38 at the moment), otherwise, you may as well just let them assign it to you and deal with it on Monday rather than pay that ridiculous spread.  Since the May puts are reasonably priced, you can just offer a reasonable net for the roll and see if it fills.  As to whether it's a good idea to roll – the VIX has not really been over 20 for long for quite a while, we were lucky to take the money and run on ours and we've lost interest in playing them since.  If the VIX goes back below 15 again, I'll probably like them long but betting in them to hit the mid 20s is not something I'd spend money on the way the Fed has been treating us. 

    Dollar back to 79.50 goosing the Futures up half a point.  Just the normal daily BS.  

    Iran cheating on sanctions?  Shocking!  

  212. angelcur

    ge beats by a penny…lol

  213. newt

    Hi-
    Any thoughts on shorting oil futures this morning?

    I know- oil shorting’ puttana. I just want my tasty breakfast sandwiches….

  214. stardawg

    morning PSW
    just returned from a trade show in Guangzhou, China.  Everything seemed busier than last time, more starbucks, more KFC, plenty of Iphones, plenty of IPADS, plenty of building cranes busy working (ie 30+ just on the way to the show from the hotel), wifi everywhere, malls busy, traffic crazy, politics the same, great service, efficient transport, dramatic wage inflation in SKILLED labour (10x in some fields), factories not complaining at all about commodity inflation this year although very firm on pricing, politics the same but the '10' year change is coming in power causing more power struggles than usual i guess……
    Seemed business as usual to me…….I think western media is over playing their 'soft landing' and concerns they might have a hard landing.  Especially if you take out 2004-2007 and compare it to median activity…..oh wait, thats just like most countries…..if we take out the bubble years and simply compare today with 2003 ish…things to me, seem not so bad on a regular joe type basis (unless of course you are tied to the real estate/finance segment).
     
    cheers,
     
    sd

  215. qcmike

    stardawg 

    I have been to that show a few times, What Hotel are you staying in ?

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