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TGIF – 2 Tons of Physical Gold Snapped Up As Traders Panic

63,500 ounces.  

That's how much physical gold the US Mint alone sold on Wednesday, as gold fell to $1,350.  For the month, 147,000 ounces (4.5 tons) have been removed from the mint at a 20% discount to last year's $1,650 average price.  Don't worry about the mint – they have an average purchase price of about $90 and the US has 8,000 tons of it sitting around so, if someone wants to buy $200M worth in a month – that's fine with us but consider that the guy(s) buying 4.5 tons of gold for $200M might not be stupid.  

We were discussing a great article in the Daily Bell (thanks Scott) that summed up my take on the recent gold move quite succinctly:

Following the wikipedia.org definition, the PSYOPS war on gold is intended to influence the target audience's value system, belief system, emotions, motives, reasoning and behavior. I would add, especially this last, which is what directly affects the price of gold.

The latest stage of the war began many weeks ago, with regular takedowns of the price of gold in waterfall fashion, at set times of the day.  More recently, there appeared a series of planned announcements of oncoming doom from individuals prominent in finance and from bank analysts. The scenario painted for gold was one of a sky darkened by approaching thunderstorms.

The purpose of the 4-12 PSYOPS was to instill fear in the minds of the "target audience" – investors in gold. If you shoot a crow, and hang it up in your field, the crows – your "target audience" – will avoid the field. The same principle applies to investors in gold.

The identity of the target audience of the PSYOPS War on Gold is clearly revealed in the front-page article of the Financial Times, American edition, on Tuesday April 16, 2013.  Under the main headline, "Investors in rush to dump gold," is a graph of the performance of the gold price from January 3, 2011 to date, showing essentially no gain at all.

Notice the wording: "Investors… rush… dump gold."

This is a classic example of PSYOPS.

It was most certainly not "investors" who caused the huge, historic collapse in the price of gold. It was a very few banks, working in cooperation with each other, in a pre-planned fashion. They sold, in huge amounts of tens of billions of dollars, not physical gold, but futures contracts – the infamous "paper gold." It was the banks who rushed to "dump" the gold and not investors.

We've been playing gold by scooping up miners like ABX but so far, so wrong on that one, although they did bounce nicely off $17.51 on Wednesday and back over $18.50 on very heavy volume – playing right into my premise (and Price's) that what we're witnessing is simply a Bankster takeover of the gold market as they first scare the sheeple out of the market and then scoop up physical gold and the miners and, before you know it, Cramer and co. will seamlessly flip-flop and tell you to BUYBUYBUY gold before it's too late as they begin to bang the inflation drums once again.

As you can see from this ShadowStats chart, inflation is already here – just not "officially" as the Government's definition of inflation is constantly being adjusted so as not to measure it.  ShadowStats simply applies the same inflation measures we used in 1980 without the official fiddling and it's showing inflation at just under 10% for the last few years – EACH.  

That makes sense because, if you look at a chart of the US Dollar – it's down over 50% during that time so that's 100% inflation since 1993, around 5% a year without compounding.  Of course, as we know, the Dollar is artificially supported (from zero?) by the BOJ and the PBOC and the Euro has also crashed to help the Dollar stay off the worthless line but I'm sure – with another few years of Fed easing – we can break right through that floor!  

Does that mean gold is the ultimate investment?  No, it's just shiny bits of metal and generally does not outperform the stock market over time.  But, it does have SOME value as a means of exchange and it's not at all likely that that value has dropped 20% since January, nor is it likely that it will stay this low over the long run.  That's what a good investment is all about – buying things now that will be worth more in the future.  

Unfortunately, for many "investors" who start at the 1-minute chart all day, the future means 15 minutes or, for those who think they are long-term because they look at day charts – months.  Real investments make returns over years based on long-term macro trends that firm up over time.  Very few people have the patience for that these days

As you can see from this Dow/Gold chart, gold has flatlined and now fallen since QE2 and QE3 were put in place and stocks are outperforming gold by a mile now.  We figured, given this trend, that buying gold stocks (miners) might make sense but, so far (after a few weeks), no.  

So, plenty of inflation and, so far, it's NOT pushing up commodity prices – that's gotta be great for the Dow, who are primarily users of commodities and sellers of finished goods.  Even XOM and CVX have refining and chemical operations that benefit from lower petroleum input costs that mitigate the downside effect of falling oil prices.  AA is too small to hurt the Dow and CAT  would be the only other component negatively impacted by sliding commodities but, otherwise, things are looking up for our senior index.  

clip_image00291_zpsad862de1.jpgWe're short the Dow (and XOM) at the moment because moves like this rarely come without corrections but we're also not expecting a big correction because the real story is that 10% inflation which, for the most part, has been squeezed first into equity prices and hopefully, next into home prices and then, still hopefully, into wages before it creeps back into commodities again.  

Any inflationary rally that doesn't include wage inflation (and hiring) is ultimately doomed to failure.  Unfortunately, that's been the case for the last 30 years as wages for the bottom 80% have fallen as a percentage of GDP, with more and more money trickling up to the top 10%

For many years, US Corporations have been able to ignore the plight of US Citizens as they plied their goods in foreign markets but, now that they've reached saturation points abroad (and those economies are feeling the strain) it is hoped that they do something to revive the home markets – before they are irrevocably damaged.  Hopefully our "leaders" will wake up and at least get up enough courage to SUGGEST to their Corporate Masters that we need a better path forward than the one we've been stumbling down.  

Have a great weekend, 

- Phil


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  1. nicha

    Good Morning!

  2. jasu1

    Phil,
    USD/JPY at 99.28, /NKD at 13525; Is this a good place to short /NKD? Thanks

  3. terrapin22

    anyone / goldmoney.com – anybody use this site or another one to purchase physical and store it overseas?

  4. shadowfax

    Go get him Boston!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  5. Gingbaum

    stjeanluc,.
    Do you have gold technical numbers you can post?
    Thanks

  6. jabobeast

    Does anyone know how you can find out if new options will start trading on Monday?
     
    For example, if options only go to Sep 2013 will there be later dated options that come out on Monday?

  7. stjeanluc

    Oil Lines

    R3 – 91.34
    R2 – 90.06
    R1 – 89.15
    PP – 87.87
    S1 – 86.96
    S2 – 85.68
    S3 – 84.77

    Yesterday's high and low – 88.78 / 86.59

  8. stjeanluc

    Gold / Ginbaum – What are you looking for? Right now I have Fib lines at 1453, 1519, 1572, 1624 and 1700. They are based on the move from the highs of last year and the lows we just made. If you look at a long term chart, these are confluence lines as well.

  9. phil

    Good morning!

    /NKD at 13,500 and that's always a good spot to short of it breaks below (with tight stops above). 

    Yen holding on to 99.13 but if it fails 99 (stronger) the Nikkei could fall hard and fast.  

    Dollar 82.57 so you want to see it going down to make this a good bet.

    Dow Futures right on 14,440 – that's also a good pass/fail line to watch (and we got a clean 100-point run on last night's /YM bullish trade of 14,400!) 

    S&P (/ES) Futures at 1,540 – another line that gives a clear indication and Nas (/NQ) at 2,750 so another good line there and the RUT (/TF) is at 903.

    We've lost more than half of the pre-market gains with less than an hour to open.  GE was good, though not exciting and MCD was disappointing and carries more weight in the Dow due to price differential.  On the whole, no ones earnings this morning are very exciting but that doesn't really matter as it's expiration day so we may just keep going higher – I would not use that Nikkei short unless the US indexes break first or the Yen falls below 99.  

  10. 1020

    Good Morning!

  11. jasu1

    Thanks on /NKD.

  12. 1020

    Boston – The U.S. has it's issues, but our law enforcement/military kicks ass….

  13. Gingbaum

    Thanks stjeanluc – thats what I was looking for.  Do you have support lines?

  14. microflux

    Buy gold: Kitco

  15. jabobeast

    ?? microflux

  16. stjeanluc

    Gold / Ginbaum – The first line has to be the bounce line around 1350. Looking at a 5 year chart, you would look at 1300 and then 1150 but I doubt we get there. If the All-in-cost of mining is around $1200 you have to believe that miners would shut down mines before that and shortage is a good remedy to low prices!

  17. stjeanluc

    Law enforcement / 1020 – True. That's an amazing show of force in Boston! 

  18. stjeanluc

    Get the FU ready Jabo… AAPL looks to open below 390 now!

  19. jerconn

    Wow, they're peeling the AAPL today…

  20. phil

    Indexes falling, game on for /NKD shorts!  

    RUT can also be shorted below 900 (/TF). TNA $38.50s dropped to .17 and dead in the water.  

  21. newt

    Hedges/ Phil: I was not properly hedged coming into this correction. And would like to add some. Suggestions? I was thinking of adding additional DIAs to the Income port…maybe its too late for this round.

  22. stjeanluc

  23. stjeanluc

  24. Pharmboy

    AAPL =

  25. stjeanluc

    Maybe we keep this portfolio AAPL free!

  26. Pharmboy

    AVEO – Clear out the STO Puts.  I am out of the Apr 10s for 2.50.  May do better, but i cannot babysit them.

  27. phil

     

    Dollar right on the 82.50 line – if they can fail that, then we can hold up the markets.  

    I would think we'd be doing better with bombers in custody but I think main guy still on the loose.  

    Hedges/Newt – Ah, we were going to look at SQQQ as some AAPL insurance and the May $35/40 bull call spread is just $1.10 with a $3.90 upside if the Nas drops around 5%.  Figure we can hedge $40,000 worth of AAPL losses with $10,000 and we probably lose about 1/2 of it if AAPL has good earnings and the market pops so, in AAPL Money and the $25KP, let's add 100 of those spreads and, obviously, we will be thrilled even if we lose the whole $10K on an AAPL pop.  

    Another way to hedge in general would be good old TZA, short-term, the May $40/47 bull call spread is just $2.35 and is $2.15 in the money with TZA currently $42.15 at RUT 903 so the bet is the RUT goes below 900 and you collect pretty much every penny of that drop but, after the weekend and AAPL earnings, we'll have to at least roll out the long calls if not successful.  

  28. dclark41

     
    NYPD WARNS OF WHITE MALE IN HONDA CRV HEADED TO MANHATTAN WHO MAY BE WEARING SUICIDE VEST
    http://www.zerohedge.com/news/2013-04-19/nypd-warns-white-male-honda-crv-headed-manhattan-who-may-be-wearing-suicide-vest

  29. dawnr

    Wowza in Boston today.  Woke up early to get my market fix but glued to the news instead.  Just incredible these brothers so stupid to think we would not hunt them down like the dogs they are.  something like 9000 law enforcement on the hunt.
    travel day today. hope when I land they got him!!
    happy weekend all!
    Dawn

  30. stjeanluc

    Nice crush of the May GOOG options – good for about $6500. Not so much luck with AAPL…

  31. newt

    Phil: Thanks.
    http://www.youtube.com/watch?v=orgWG3clWlo
    Pretty good and if anyone has access or can make intros for front row or backstage passes, Id love to know.

  32. phil

    FAS Money – $52 – threading the needle!    Long calls losing a bit but just backstops for our short sales anyway (and we already took profits from our original $13 calls off the table – wasn't that clever?  

    AAPL Money – Holy crap, how low can this thing go.  Now that we have a hedge, it can go lower if it wants to.  

    $25KPM – Gotta buy another round of AAPL at $28.50 ($2,850).  Note we actually gained ground from yesterday even though the AAPL calls fell $14, so we're well-balanced enough to take a chance.  IBM short calls stop out at .05 – just in case.  NKE we're supposed to be rolling, DIA we might need, AMZN is fine…

    $25KPA – Watching and waiting on AAPL now.  GOOG right on target, same on IBM short calls.  

  33. dawnr

    I think on AAPL $350 will find some good support.  Some institutions I heard are looking at that area.  If AAPL severely disappoints It may blow right through that.   Hope Cook has some tricks up his sleeve.
     
    SQQQ a great hedge and I am holding that now.  Note it was hitting some resistance late yesterday so if the market bounces some today you may be able to get it on a retrace/lower price.

  34. stjeanluc

    Amazing what a lower VIX does in 2 days to the calls…

  35. phil

    14,400 still holding on the Dow so far.  Dollar 82.48 is helping a bit.  

    Oil bounced off $88, gold holding $1,400.  

    Looks like people still buying the dip.  

    Dow volume 80M already so actually a good sign that we held it together here.  

    Quick money is good money on the short Futures and let's wait for proper signs before going back to that well. 

  36. Opesbridge

    Phil/AAPL – Good morning. Is the SQQQ hedge the official hedge into earnings, or do you foresee us covering with short AAPL calls as well. Thanks.

  37. stjeanluc

    Sorry, my bad on the 25KPM – I had pushed NKE in the closed positions but forgot to remove it from the open ones. Here is a new update.

  38. Investwizard

    Good morning!

  39. 1020

    On Sale:  ZLCS…..

  40. jabobeast

    10:11 AM Credit Suisse raises its price target on Chipotle Mexican Grill (CMG +7.6%) after the company announced Q1 earnings Thursday. Comps growth of 1% Y/Y demonstrated that the company "weathered headwinds better than some had feared," and "excluding all the noise" comps on a one- and two-year basis "remain stable" showing the consumer "remains in the sluggish but stable trajectory." In a separate report, Northcoast Research upgrades the shares to Buy from Neutral. Price targets are now $360 for CS and $400 for NR

  41. scottmi

    CCJ/Dawnr – i see it has been dipping into the 'kill zone.'  Can you describe again what to look for here?

  42. phil

    Let's contemplate the news.  They killed one brother, the other brother AND two accomplices seem to be on the loose.  That's not terribly encouraging and, of course, we're going to be subject to wild rumors.  

    This is interesting:

    When Warren Buffett declared that housing was on the rebound last summer, he immediately put his money where his mouth is. His company, Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) partnered with Brookfield AssetManagement (NYSE: BAM  ) to create HomeServices of America last fall, which has been busily scooping up real estate brokerages — and recently revealed its new logo as the rebranded Berkshire Hathaway HomeServices.

    DISH making new highs despite silly offer for S.  This is still a bull market folks…

    Safe travels, Dawn.  I'd say expect delays would be an understatement.  

    You're welcome Newt.  

    Does anyone here have backstage access for any bands?  My girls are of an age (11.5 and 13) where it would be a cool experience for them.  

    SQQQ/Opes – I think that's better than short AAPL calls, which can lead to trouble.  If you have an AAPL position that could lose $40,000 on a drop to $350, then $10K on the hedge likely mitigates most of that loss and then that money can be used for a roll.  If AAPL goes up $40,000 the other way – then, at most, $10K is lost but it's only out of $40K earned and, of course, it's the price of a good nights sleep into earnings.  Of course, if  AAPL pops back to $450, I'd love to cover it but not this low if they are going to earn $10 for a $400 share in their lowest quarter.  

    NKE/StJ – Ah, much better.  

    Sluggish/Jabob – Yep, and MCD down 1% not a big deal (weather was bad) so sounds like an accurate take on things.  Surprisingly, Europe was only down 1% for MCD – better than I would have thought with 25% unemployment.  

  43. jabobeast

    ABX what a tease…Please make that stock move higher and stay higher!!!!

  44. 1020

    Phil – You want a cool experience for the girls?….
    http://www.sfoutsidelands.com/home/
     
    Cool lives in San Francisco…. :)

  45. dawnr

    sorry scott my internet today not strong enough to keep my trading screens open (stormy here 8-9ft seas). 
    Will look at over weekend…
     
    FWIW SLW-this may(?) be a similar bet as ABX as they got stuck with the same political issue with their activities in same country.  If looking for a pure Silver play SLV or PSLV.  SLV at attractive levels but if the market can't hold the $22 area on spot then the next strong zone is as low as $18.  Monday this is a trade I am going to look at scaling in where my break even will be $18 or lower (just in case).
     
    Wombat-sorry out of pocket yesterday on trading.  I do know that all the indices were hitting/approaching some good demand where if you run your fibs (both from recent swing hi to low as well as from the full move from Nov, or maybe even Feb) I recall one close to the kill zone (77.6-88.6) and one close to a 50% retracement.  These are also consistent with what STJ and Phil has been posting.  Russell still weak from what I can see on web.
     
    FWIW my school's view is once price breaches the 20ema daily that each bounce is a bearish bounce where they will initiate shorts again with tight stops.  Again consistent with what boss says on weak bounce.

  46. Turning1

    Phil/ABX
     
    I think someone mentioned rolling down the ABX Jan 2015 $25 Short Puts. I am holding -20 in one account  and -10 in another. Do you recommend staying as is or rolling down? 
     
    Thanks

  47. dclark41

    PHIL
    WOULD YOU CONSIDER ROLLING THE ABX (bcs 25/33/INCOME PORTFOLIO) AT THIS POINT?  YOU MENTIONED SOMETHING EARLIER IN THE WEEK ABOUT ROLLING TO THE JAN'15, 15/25.  ON A LONG TERM PLAY WHAT DO YOU LOOK FOR TO INDICATE A TREND HAS REVERSED? THX.

  48. dclark41

    stjean
    Not sure, but I think this (via Phil yesterday) was a directive to add TZA the portfolios?
    Before anything else, it was my intention to REPLACE the old TZA bull call spread with the May $42/47 bull call spread at $1.35 so let's make sure we have the same amount of those as we had with the old ones.  Also, in all portfolios (and pretty much all the time) if we DD on a position like DIA because it goes against us and then when it goes our way – we ABSOLUTELY stop out even on any retrace – that's the whole point to doubling down, to lower our basis, but it defeats the purpose if we then simply ride out double the risk if it goes against us again

  49. wombat

    Turning, dclark // ABX
    Heres my notes ==
    Meanwhile, we don't have ABX in our current Income Portfolio and that's a mistake.  I'd like to sell the 2015 $25 puts for $3.50 and buy the $25/$33 bull call spread for $2.90 for a net .60 credit on let's say 15 contracts ($900 credit).  That makes $12,900 at $33 and very margin-efficient as TOS says just $250 per contract ($3,750) not on the put side plus $4,350 in cash for the spread and that's not a bad thing to do with $8,100 over two years, is it?  
    /Wombat – I wouldn't do anything unless you were determined to add to the position.  It's either going to come back over the next 20 months or, if not, then maybe it gets worse and you get better prices but you own ABX at $25 and it's at $24.50 and you have 20 months to make 20% target – does that seem impossible?  I think the most efficient way to adjust your spread is to spend $2.30 to roll the $25 calls down to the $20s and leave the $30s ($2.35) and, if ABX gets worse, then you can roll the $30s down $5 and the $20s down another $5 for not much more money.  The $25 puts are only $5.30 and almost all premium and you can roll those to 2x the $20 puts ($2.55) but better to wait for 2016s to print and then you can just do an even roll to those $20 puts (assuming ABX is still a disaster in July).  No reason to over-commit so soon into a trade.
     
    Buy, Hey – take it with a grain of salt, apparently I'm a rogue cowboy trader.

  50. newt

    Phil/ Off topic but gotta post before I forget- Last fall Red Hot Chilli Peppers came to town- great show.  These guys are 50 and are still rockin' it.  I had the idea that I'll load the pickup up with the kids and find a good band to follow for a few weeks. Sad thing is that the number of bands one would follow are getting slim.  Great experience for the kids though.

  51. phil

    CNBC interviews and recommends you follow a guy tweeting from his dorm room "if you want to know what's going on" – pathetic!

    CCJ/Scott, Dawn – Logical value is the only thing that's being "killed" there.  Same as gold miner logic but much harder to quantify what uranium is "worth".  Bottom line for CCJ is they don't seem to be discovering much more of it and it's not as likely new competitors will pop up AND people actually use what they produce and destroy it.  

    Germany went red – the rest of Europe is still green.  Maybe they're finally kicking Germany out…

    At the open: Dow -0.3% to 14494. S&P +0.2% to 1545. Nasdaq +0.14% to 3171.

    Treasurys: 30-year -0.22%. 10-yr -0.11%. 5-yr -0.04%.

    Commodities: Crude +0.16% to $88.14. Gold +0.85% to $1404.35.

    Currencies: Euro +0.44% vs. dollar. Yen +1.04%. Pound -0.27%.

    Market preview: Stock futures rise after mixed earnings results from blue-chip companies, helped by broad gains in overseas markets and a rebound in commodities prices. S&P +0.4%, after the benchmark closed yesterday below its 50-day moving average for the first time this year. IBM -4.9% after disappointing Q1 results. Among other Dow stocks reporting: Microsoft +3%, Google +1%, GE -3%, McDonald's -1.8%.

    Most stocks are higher in early trade, but big moves in big names are dragging key indexes. IBM -6.4%, GE -3.9%, McDonald's-2.2% are hurting the Dow (DIA -0.3%) following earnings. H-P -5.5%as Blackstone looked under the hood of the PC business and said "no thank you." Down 1.3%, Apple is capping the Nasdaq 100 (QQQ+0.4%).

    Shanghai posted its biggest gain in a month, +2.1% as regulators look to lure more money into stocksmulling plans to allow A shares to be added to well-known international indexes, including the MSCI Emerging Markets Index (EEMVWO). FXI +2.9%, Morgan Stanley China A Share Fund (CAF+5% premarket.

    China's anticipated widening of the yuan bank could comewtihin the next 72 hours, say UBS analysts. If so, it would coincide with G-20 meetings next week, and come nearly one year to the day from the last widening. "(The) economy must be operating to the government's satisfaction," says UBS. CYB +1.2% YTD. 

    It's the dreaded "impossible trinity." Commodities, stocks, and bonds are all giving conflicting signals on the global economy, says BAML's David Woo, and their resolution could be a source of a "major realignment" of prices. Commodities (DBC) signal slow down, stocks (VTI) price in strong consumer spending, and bonds have completely lost it – government paper (TLT) says run for the hills, while credit spreads (LQDHYGJNK) say things are rosy.

    ISI upgrades E-Trade (ETFC) to Neutral from Cautious after Thursday's earnings. ETFC's "results were encouraging," analyst Brian Bedell says, adding that credit and earnings quality have improved while customer metrics and brokerage revenue were "reasonably good." Separately, Keefe, Bruyette upgrades the shares to Market Perform from Underperform. Price targets are $10 from ISIS and $9.50 for KB.

    Capital One (COFrises 5.3% following its earnings beat last night. Perhaps exciting investors is management's plan (CC transcript) to aggressively increase share repurchases in 2014, bringing its payout ratio well above industry norms of about 50%. "We expect significant planned runoff to continue through 2014 … purchasing our own stock is a particularly compelling alternative at the current time."

    China's Sinopec (SNP +1.2%), Asia's biggest oil refiner, sold $3.5B in U.S. dollar bonds yesterday in Asia's biggest bond offering in a decade. Demand was strong, as investors submitted bids totaling more than 4x the debt on offer; SNP is attractive to Western investors partly because it's deemed a proxy for exposure to the world's second-largest economy.

    Barrick Gold (ABX +3.5%) is working with BofA and UBS on a possible sale of three gold mines in Australia, Bloomberg reports. ABX is said to be considering the sale of the Darlot, Granny Smith and Lawlers mines in Western Australia, which together produced 452K oz. of gold in 2012 at a cash cost of $768/oz.

    A little more from GE: Immelt "always anticipated Q1 would be tough comparison." GE Capital revenue up 1.7% to $11.54B, around a third of total revenue, as profits in the unit rose nearly 9%. That's a far cry from the industrials business where revenue and profits fell 5.7% and 11% respectively, even as Immelt attempts to scale back the company's dependence on GE Capital as a driver of profits. (Earlier: GE beatsmarkets mixed) 

    More on McDonald's (MCD) Q1 earnings: U.S. comparable store sales off 1.2% – "challenging eating-out environment." Global comparable sales off 1%, European comparable sales off 1.1%. Margins decline, with total revenues up 1% Y/Y, but operating income off 1%. Shares -1.6% premarket. Earnings call at 11 ET. (PR)

    Credit Suisse raises its price target on Chipotle Mexican Grill (CMG +7.6%) after the company announced Q1 earnings Thursday. Comps growth of 1% Y/Y demonstrated that the company "weathered headwinds better than some had feared," and "excluding all the noise" comps on a one- and two-year basis "remain stable" showing the consumer "remains in the sluggish but stable trajectory." In a separate report, Northcoast Research upgrades the shares to Buyfrom Neutral. Price targets are now $360 for CS and $400 for NR.

    Anheuser-Busch (BUD +1.7%) has reached a deal with the DOJ regarding its acquisition of Mexican beer giant Grupo Modelo, Bloomberg reports. A consent decree will reportedly be filed today. The deal requires Modelo to sell its U.S. brands, as well as a Mexican brewery, to Constellation Brands (STZ +1.7%). Anheuser also gives up an option to buy back a stake in U.S. Modelo distributor Crown Imports, leaving Crown fully owned by Constellation. Constellation says it will invest $400M to expand the Mexican brewery. (previous)

    Investors are lapping up SeaWorld's (SEAS) IPO. Afterpricing its 26M-share offering at $27 (the high end of its range), shares opened at $30.56 and are now at $30.90, up 14.4%. That gives the aquatic park owner a market cap of $2.86B. 10M new shares were issued, and 16M were sold by P-E owner Blackstone. SeaWorld posted 2012 revenue of $1.42B (+7% Y/Y), and net income of $77.4M. The company had $1.82B in debt on its balance sheet, and just $45.7M in cash, at the end of 2012. (prospectus) 

    Old favorite:  Six Flags (SIX +2.7%) trades higher after Credit Suisse initiates with an Outperform rating. "Upgraded parks, improved marketing, renewed focus on pricing, operating efficiencies, and a healthier balance sheet," are all positive factors cited in the report which also notes that SIX is "an undiscovered story." Price target: $87.

    Textbook downwards spiral – now they will pay interest against inventory they're holding to free up some cash! - J.C. Penney (JCP) has reportedly engaged Goldman Sachs and JPMorgan to explore a deal to raise at least $1B by pledging land assets as collateral. Maybe more likely is a $500M loan secured by the company's inventory – this one supposedly led by Wells Fargo. "It would seem to me that at all costs they will postpone putting any kind of lien on their real estate," says a corporate restructuring attorney.

    As long as we can stick it to the consumers harder than our suppliers are sticking it to us, we'll be fine - More on Under Armour's (UAQ1 results: High costs for apparel in North America send gross margins higher despite higher input and SGA expenses. UA raises guidance for FY13 revenue to $2.23B from $2.21B. Revenue in the core apparel business climbs 22%. Shares +3.3% premarket.

    Coach (COHslides 1.5% premarket after a downgrade to Hold and lowering of price target to $59 (from $61) at Baird. "Our annual handbag survey suggests continued market share pressure." - This may be faulty logic as they sell shoes now so some customers are walking out with shoes instead of bags.

    Shares of Manpower (MAN +6.2%) are sharply higher after the company guides above analyst estimates for Q2 saying EPS will come in between $0.84-0.92 (the Street sees $0.77). CEO Jeffrey Joerres says Q1's results were the result of "slightly stronger than anticipated revenue and tax credits." The company's European operations were negatively impacted by weakness in France. 

    SAP -3% following a Q1 revenue miss highlighted by by a drop in software license growth to 5% Y/Y from Q4's 9%. Likewise, high-margin support revenue grew 8%, down from Q4's 12%. On the bright side, Hana sales (a part of license revenue) rose 3x to €86M, and cloud subscription/support sales (boosted by acquisitions) rose to €167M from a mere €35M a year ago, with backlog up to €800M. Consulting revenue -7%. Asia-Pac license/cloud subscription sales declined Y/Y, with SAP hinting China/Japan were responsible. The report follows weak software numbers from OracleRed Hat, and IBM.

    IBM's (IBM -6.5%would've missed Q1 EPS estimates by $0.34, rather than $0.05, if not for a lower tax rate, says BMO's Keith Bachman. Like others, Bachman is skeptical Big Blue's woes are solely due to execution, given weak results from peers (one can now add SAP to t

  52. phil


    IBM's (
    IBM -6.5%would've missed
     Q1 EPS estimates by $0.34, rather than $0.05, if not for a lower tax rate, says BMO's Keith Bachman. Like others, Bachman is skeptical Big Blue's woes are solely due to execution, given weak results from peers (one can now add SAP to the list). "We think demand was perhaps weaker than we and the companies thought." Sterne Agee, however, is staying bullish precisely because it doesn't consider IBM's issues company-specific. Meanwhile, the WSJ is backing up CRN's report about the relatively low-margin x86 server unit being on sale. Morgan Stanley estimates the unit had 2012 sales of $4.9B. (previous) (transcript)

    Wow!  Overstock (OSTK +18.1%) adds to yesterday's giant post-earnings gains following a 2-notch upgrade to Buy from BofA/Merrill. "We believe strong Q1 results are not just a head fake (something Overstock has been notorious at doing in the past) but believe the company is turning the corner," says analyst Nat Schindler. He notes the Q1 beat was fueled by 22% Y/Y partner sales growth (above a 9% estimate) and lower-than-expected opex. Altogether, shares are up 62% over the last 2 days.


  53. wombat

    dclark // TZA
    Yes, I have the same.
    Again, from notes
     
    Another way to hedge in general would be good old TZA, short-term, the May $40/47 bull call spread is just $2.35 and is $2.15 in the money with TZA currently $42.15 at RUT 903 so the bet is the RUT goes below 900 and you collect pretty much every penny of that drop but, after the weekend and AAPL earnings, we'll have to at least roll out the long calls if not successful. 
    Before anything else, it was my intention to REPLACE the old TZA bull call spread with the May $42/47 bull call spread at $1.35 so let's make sure we have the same amount of those as we had with the old ones.  Also, in all portfolios (and pretty much all the time) if we DD on a position like DIA because it goes against us and then when it goes our way – we ABSOLUTELY stop out even on any retrace – that's the whole point to doubling down, to lower our basis, but it defeats the purpose if we then simply ride out double the risk if it goes against us again.

  54. rperi

    At what point today do we roll the short AA $8 Apr calls to May $8 calls in the Income Portfolio? Threading the needle there with AA at $8.01  Also, do we still double down, or do we take take the $.20 credit to roll 1x?
    I have the same short call cover with my BA Apr $82.50 calls sold for $3.21, now $4.32.  I can roll to the May $85 caller for $1.13, which still gives me a net sale of $2.08, and that should be fine with $.01 of premium left in the Apr caller.

  55. phil

    Lands/1020 – Sounds like fun but I think we're heading to UK this summer.  

    Bounce/Dawn – Yes, very hard to determine which way we're heading until we see how we perform at the top or bottom of the ranges.  

    Dollar heading up again (82.67) – /NKD just failed 13,500 but, if they bring in the bomber – I think we'll pop so very dangerous trading today.  

  56. stjeanluc

    Options seem to price a $30 move in AAPL next week right now. I am guessing IV will rise some more before Thursday. Historically, AAPL moves about 6% on earnings so we should expect $25 either way. On the other, expectations are so high either way that we could have a larger move this time. Short interest is only 2.1% so a short squeeze with a big beat should not be a big factor! And I don't know that a lot of people are waiting to jump in now. That was a crowded trade to begin with and I don't know how uncrowded it has become now. 

    The guy at Fast Money was saying that it might actually be healthier to have a miss and blow out the weak hands – that might uncrowd that trade! That might be one of the most watch earning day ever…

  57. samz3700

    Arghh! Watch out on AAPL – Just mistakenly traded those damn mini options – forgot they were both displayed on my screen. At least I did it for both legs of the trade.

  58. stjeanluc

    Thanks DC, I'll update the affected portfolios!

  59. stjeanluc

    ABX / Phil – It seems that they are making the smart move to sell these 3 Australian mines first. They have some of the higher cost out of their portfolios. Of course, they are also probably selling close to the lows as far as value is concerned. But positioning themselves for lower gold prices.

  60. 1020

    Pretty amazing live interview with the two brothers uncle…"the boys were losers!"….. WoW…

  61. phil

    ABX/Turning – I don't think $25 is out of the question and the 2015 $25 puts are $9.40 (net $15.60) with ABX at $18.40 so $3 in premium.  Why would you pay this guy a $3 premium not to own ABX at net $15.60?  If you don't REALLY want to own ABX for net $15.60, then you have a problem and I assume you lost about $4 on the short puts but really on $1 other than the premium and, if you wait long enough, there will be 2016 and 2017s to roll to as well. 

    ABX/DC – Not until we get a clearer picture.  We have the ABX 2015 $25/33 bull call spread at $3.37 and we sold the $25 puts for $3.30 so net .07 at $25.  As noted above, ABX was at $30 30 days ago so it's not too crazy to think they can get back to 30 over the next 637 days, right?  We only need them to get back to $25.07 – they were there 2 weeks ago.  If ABX goes down, then our roll gets cheaper and, if ABX goes up, we don't need the roll – so very little reason for us to rush a decision 5% into our time-line on the trade.  

    You know what this is like?  This is like betting $20 that 100 coin flips will come up 50 heads and 50 tails and after 5 flips, which came up 4 heads and one tail, you are willing to pay $7 to get out of the bet because the flips are going against you.  You KNOW that doesn't make sense with coin flips – why then would you feel forced to make early decisions when a stock moves against you out of the gate?

    It's also not a good idea to double down on tails just because 4 heads came up – the odds are always 50/50 on the next flip but, over the long run, statistics tend to win out and the larger the sample, the closer to 50/50 we get.  When we take 2015 position – we are paying for a whole lot of flips – it's a shame not to let things play out just because we catch a bad run early on.  

    And what Wombat (Rogue Cowboy) said I said.  

    TZA/DC – Yes, I wanted those put back in the $25KPs and Income Portfolio (assuming we had stopped out the other one, of course.  

    AAPL $399 baby!  

    Chilis/Newt – Yep saw them back in the days, great performers.  They did a show on top of the World Trade Center (in the restaurant, not the roof) at was epic but the best show I saw of them was at the Nassau Coliseum in an epic snow storm – I forget what year but we were young and fortunately, had plenty of ski gear in the car.  

    AA/Income Porftfolio, Rperi – Oh any time today is good.  If you can buy the calls back for less than .05 then why wait?  The May $8s are .25 and there's your roll.  

    BA/Rperi – Same thing – it's a crap shoot on the last day and the net roll is the same, the best you can do is finagle a nickel or a dime trying to be fancy – often not worth the bother unless you have a very strong feeling a beneficial strike will pin by the end of the day.   It's really all about waiting until the last day to squeeze that last drop of premium out of the caller – the direction isn't as important as you're only rolling.   

    AAPL/StJ – I just keep thinking of PCLN's Nov earnings – gapping up almost $100 on a 5% beat.  Looked a lot like AAPL – down from $680 to $560 with a horrific chart and low expectations coming into earnings.  

    Uncle of bombers doing a very good job standing up for his family (the non-crazy part).  Much smarter than "no comment" only not everyone can handle reporters like that.  

    ABX/StJ – Really just the same strategy they've been pursuing – selling off the underperformers.  They have plenty of cash so I don't think it's a fire sale.  It would be interesting to see the comps on those mines.  

    Gotta take a break and deliver some asprin to Jackie at school – what idiocy that the school nurse can't even give a kid an asprin!   She had her braces adjusted yesterday and they hurt…

  62. dclark41

    1020
    Where did you see that?

  63. kustomz

    UK FTSE +0.7%
    German DAX -0.3%
    French CAC +1.3%
    Spain IBEX +1.1%
    Italy MIB +1.8%

    Germany weak, again

  64. 1020

    dclark – CNBC. It was a compelling moment with reporters that I'm sure they'll re-run….
     
     
    BTW – Lets not forget the 'preventable disaster' in Texas…..

  65. stjeanluc

    PCLN / Phil – That's true. That's why I said that expectations could create a bigger than average move for AAPL. Also, PCLN had a bigger short interest than AAPL then so that probably was good for another couple of percent.

  66. dclark41

    1020
    Just saw it. Wow. There Uncle was not pleased.

  67. stjeanluc

    I agree 1020, the uncle did a great job! It's on again on MSNBC now…

    As far as Texas is concerned, once again, we have regulations but we defund the regulators and we are surprised to see a drama unfold!

  68. dclark41

    Their=There! :(

  69. jabobeast

    FU GDX!!!
     
    FU ABX!!!

  70. 1020

    stjean – No doubt and in Texas no less – Land of the free, home of the lame (politicians, that is)…..

  71. Pharmboy

    Biotech portfolio is up to date….and up almost 20% on closed positions.  I think I will close it out now and go on vacation.  Good luck all!  :)  

     

    ZLCS.  Worrisome, but this one is a $1500 bet that I think still goes up to $4500….

  72. wavecounter

    Phil,
    Just to clarify your recent post:
    TZA/DC – Yes, I wanted those put back in the $25KPs and Income Portfolio (assuming we had stopped out the other one, of course.
    You're recomending to put 50 TZA 47/42 BCS positions on in the Income Portfolio now, correct?

  73. dclark41

    Phil
    Is it interesting to see the QQQ down 2.7%, the SQQQ down 4.3%, and the NAS up 1.3?  I thought the SQQQ was the inverse of the QQQ, and that the QQQ was a proxy for the NASDAQ?

  74. stjeanluc

    A quick update on some positions I have been tracking with others here:

    QCOM – I had sold the Apr 67.5 and that worked out well although QCOM took a hit this week and I added to my position. They report on Wednesday and I expect them to beat. I might take a flyer on a cover with a weekly next week before earnings depending on prices. It was good for $0.29 in one day last time. Not huge, but lowers my cost basis by that much! After that I'll sell a May call at whatever we see after the earnings.

    AKAM – They also report on Wednesday. I had covered with the Apr 36 and they are now dead. They are expected to beat as well and they usually move by around 10% but no weeklies to sell. We'll see on Thursday what we can sell in May. I didn't add to my position yet as I don't want to build a big position on them.

    CSCO – I had sold the Apr 21 to cover. They report on 5/15 so technically I could cover with May calls now but not on a down day… We'll see next week. 

  75. scottmi

    Silver – street price much higher than spot – above $31/oz.
    http://www.kitco.com/ind/Hamlin/20130418.html

  76. nicha

    Pharm/SGEN – I am thinking abt selling the May 35 calls for 2.50 against Sep 30 long calls. Would you do that or pick another strike? Thanks.

  77. stjeanluc

    DC – I have the QQQ up 1.37% now and the Nasdaq up 1.23% so close enough. SQQQ down 4.07% so tracks OK. Of course QQQ is only the Nasdaq 100 so it might be more sensitive to the big cap moves like AAPL.

  78. dclark41

    stjean
    I thought that was weird. I am on Yahoo, and every time I enter QQQ it shows it down?

  79. scottmi

    QQQ/dclark – is the up/down you are looking at the price of the underlying or your position? the ETF is up, but my option position is down due to the falling VIX.

  80. dclark41

    stjean
    That certainly makes more sense than what I am seeing. Must be something with Yahoo; the day chart shows what you say.
    On another note, what long position do you hold on AKAM?

  81. jabobeast

    WTF??? Can't these POS ABX and GDX go up two days in a row? Gold is inching higher and the gold miners remain dogs with fleas!

  82. 8800

    Phil,
    Any thgts on selling a few YUM puts (May longest dated: 62.50s@1.25 vs 60s @.65). YUM now 65,  1 yr spike low 60. Taking advantage of higher VIX and Avian flu scare in China – both of which should not last?
    Thanks

  83. dclark41

    scott
    No, just looking at what is listed on Yahoo Finance quote. Put in QQQ and it shows it down 1.96. It is clearly wrong.

  84. stockbern

    Eerie photos of Boston  looking like a ghost town:    http://www.businessinsider.com/eerie-photos-of-boston-looking-like-a-ghost-town-2013-4

  85. 8800

    Phil, – YUM (above)
    Sorry didn't see the 1/14 60s for 3.85 or 1/15s for 7.45 (senior moment)

  86. qcmike

    Phil
    When you see something like this and you are thinking it’s possible
    Would a BCS like Jan 14   32/35  for  1$ be a way to trade?
    Thanks
     
    From:  CNBC http://www.cnbc.com/id/100655828
    In a regulatory filing,
    MDLZ  Mondelez International,
     PEP  PepsiCo
    Trian Fund Management, run by activist investor Nelson Peltz, has amassed large stakes in both PepsiCo and Mondelez International, sources told CNBC on Friday, which total a combined $2.7 billion

  87. millcreek

    stj,
    if i remember are you still long qcom with the jan14 50's and if you add would you go with the same or different… tks

  88. Pharmboy

    SGEN/nicha – I am in the May 40s. 

    I think you will get buried if they move up.  Not sure what your basis is for the Sept 30s, I would make it a 30/35 BCS if you are way up on the Sept for a free trade now, or roll the Sept 30s to the 40s and sell the 45s or 50s.  I have sold the 50s against the 40s.  All Sept options.

  89. rpme

    Scottmi, that is very interesting on Silver, dont know what to make of it, maybe Phil has some insight.

  90. stjeanluc

    AKAM / DC – Jan 15 25 calls. Like I said, not in love with these guys so a small position but I believe they are worth more than today. In any case, selling about $0.80 a month against it will bring my cost basis to -$7 or so. So they would have to be below $20 to start hurting. And if they stick around $35, a nice gain.

  91. stjeanluc

    QCOM / Mill – Yes, Jan 15 50 and I am sticking to that now. I believe they are worth at least $70 so same as with AKAM selling about $0.60 a month (premiums are better on AKAM), my cost basis will be around zero by then so anything over 50 is gravy!

  92. rj_jarboe

    stj
    Do you follow BRCM? I noticed the Income Port puts can now be sold for $4.35

  93. 1020

    Pharm/ZLCS  Delisting notice from Nasdaq. Reverse split coming……

  94. rpme

    Qcmike, the Peltz merger news was previously announced on March 24th and MDLZ rallied hard, now rallying again on the same news….perplexing.

  95. phil

    Doesn't look like I missed to much.

    What a scam they have going at that school – it's a "day of silence" – some kind of support thing for gay rights and whatever else it said on the sign and they've got all the kids sitting around dead quiet all day – it's like vacation for the teachers!  

    How do they close Boston for a day?  I know you need to catch the guys but that's an expensive way to go about it.

    Europe got away in good shape except for Germany.  Toss the bums out, I say!

    Preventable disaster/1020 – Oh come on, let's not have any of that Liberal nonsense.  You want to "prevent" disasters?  The only disaster will be the impact on consumers (the ones who are still alive) when the poor manufacturers have to pass on the cost of your "regulations."  Do you think people would rather pay 10 cents a bag less for fertilizer or be alive with all their limbs in houses that are still standing?  And if you don't allow American workers to risk their lives for minimum wage then we'll just go manufacture in China, where they're BEGGING us to kill them for 50 cents an hour!  I rest my case…  8)

    Of course, who needs China when you have Texas?  Speaking of which – bitter irony of the day:  

    Rick Perry asks Obama for a 'quick turnaround' on federal aid after 

    Perry endorses broader business tax cut

    Rick Perry wants Connecticut gun maker to move to Texas

    A%20print%20ad%20featuring%20an%20open%20letter%20from%20Texas%20Governor%20Rick%20Perry.

    TZA/Income Portfolio, Wave – Yes, or whatever amount we had before 30, I think but 50 is good as we cut our DIA puts in half – didn't we?   Well, if we did ditch half our DIA puts, then 50 TZA and, if we still have 200 DIA puts, then 30 TZA bull call spreads is plenty.  

    QQQ/DC – I see up 1.21%, about the same as the Nas.  SQQQ down at $34.14 makes for a nice, cheap entry on our new spread.

    Speaking of PCLN – I knew we should have taken those shorts!  $685 now, down $50 in a week. 

    Silver/Scott – Interesting.  I wonder how often we get that kind of discrepancy?   Of course those are coins – you really want to see what bars are selling for. 

    Silver Futures barely holding $23.  

    82.76 on the Dollar is keeping a lid on things.   Euro flops to $1.306, Pound $1.523 and 99.12 Yen to the Dollar.  

    YUM/8800 – YUM goes through these little food safety issues on a regular basis and it usually takes them a while to recover.  I don't think they are particularly attractive at $65 when the high was $72 and last summer they were at $62 and the summer before that $50 (so that's the low season, in the very least).  Earnings certainly aren't up 30% from 2011 ($2.90 then, $3.09 now).   In fact, they missed the current Q by 48% (.41 vs .79 expected) and guided flat for the rest of the year and MCD just showed global declines so, no, I don't like YUM at all here.  

    Boston/Stock – Good time to film a zombie movie over there.  

    MDLZ/QC – Sure, perfectly valid way to play for a buy/out.  I'd go 2015 $30/35 for $2.10 because it makes $3 from a lower base than your potential $2 and it's in the money by $1.63 and it should, with a net Delta of .19 and half the Theta, lose less money than the Jan $32/35 spread (Delta .22) if you're wrong.  If MDLZ does get bought, the 2015s lose all their premium the same as the 2014s.  

  96. stjeanluc

    BRCM / Rj – They also report next week so maybe we take a look after. I would structure a calendar like the others so that it can be played in an IRA. But selling puts are OK as well in a margin account. I am short QCOM Jan 15 50 puts in my margin account for example. Remind me next week!

  97. Pharmboy

    ZLCS – they have now until October.  We should know by the end of May early June.  Phase 2 data are due out then.  I still think they get to 1.50 easily if it is positive. 

  98. 8800

    Phil/Yum,
    Thanks, esp for the analysis.

  99. scottmi

    JNJ/Phil – didn't quite touch wednesday's high, but back up there. Kill today or keep?

  100. phil

    Both Texas Senators voted to block aid to hurricane Sandy victims as it was "unfunded".  The same argument Bill Flores (R/Waco) used to vote against it in the House.  

    This is how Corporations get us to subsidize their businesses.  Fight regulations, shave costs, run sub-standard operations and then scream for a bailout when things go wrong that the taxpayers have to pay.  So, rather than eat into their profits by running a safer business that they MIGHT pass some of down to the taxpayers – they prefer to book unrealistic profits until something breaks and then have the taxpayers pay ALL of the costs that they "saved" but, as anyone living in the Gulf can tell you – they'd really have been a lot better off if the disaster didn't happen at all – no matter how much money the Government pays to rebuild things after the fact.  

    I dread when they begin to capture asteroids and attempt to "soft land" them on Earth for mining.  Cut a few corners and eventually you wipe out a city but "oops" – someone else will pay to clean it up…   

    You're welcome 8800.  

    JNJ/Scott – Just in case we have a massive crash, let's give them until Weds.  

  101. Pharmboy

    CLDX – Nov 12/17 BCS, selling the 10 Ps for net 60c debit.  Just a few for a starter position.  Someone bought (or sold) 500 Nov 16s for $1.

  102. escohen5

    Silver — 100oz bars selling on eBay in the neighborhood of $28 per ounce, about 15-20% over spot.

  103. stjeanluc

    Regulations / Phil – I think that it's even worse…. You fight existing regulations and you defund the regulators. Then you claim that regulations don't work (of course, there is no one to enforce them) and you make political hay with it. And you use the outrage to defund regulators even more. And then we end with Texas or on the financial side Maddoff!

    People that are against regulations should go live in countries where there are few of them – I have been there. I might be picky, but I like my water drinkable, my food eatable, my medications safe and my air clean. I also like it better when my plane doesn't crash and my house doesn't catch fire or crumbles down. 

  104. 1020

    Phil/silence  You should have sent the kids to a good Catholic school.
    I present to you, Sister…Mary…Elephant…. :)
    http://www.youtube.com/watch?v=Aa3HXdqNWIM

  105. jabobeast

    1:49 PM Deutsche Bank ads to the positive sell-side calls on Chipotle Mexican Grill (CMG +10.6%), raising its price target to $345 from $330. Deutsche says CMG's Q1 margins were a "solid beat" but noted that the company seemed "more hesitant about raising prices" on this quarter's call, as management is apparently concerned with the "choppy macro" environment. DB's commentary is less sanguine than that of Credit Suisse and Northcoast which may explain why DB's price target hike is the lowest of the group

  106. jophil

    Phil, 
    I had CMG Jan 2014 235/315 BCS and 225P at net credit $1.85. I also sold Apr 330 Calls at 7.81 which I rolled to May 330 calls for a net credit of 3.5. Now CMG is up to $363. Should I roll or wait?
    thanks

  107. ban2

    suppose to have dinner with my son this eve in southie (s. boston) where he lives.
    says streets there are also crawling with police and they are encouraged to limit movement so probably will have trouble getting thru.
    He works in Kendal Sq. Cambridge right behind where the MIT officer was shot. Everything closed down.
    They want desperately to take this guy alive – but are doubtful he will let it happen
    What a mess to a great Boston tradition — I always watch the race run through my hometown Framingham

  108. Pharmboy

    TOS really did a doozie on this last upgrade.  I used to have my historical Gain/Loss on a position for the year, now it is only for the current ones, and If I exit and re-enter the stock/options/etc. it is reset to 0.

  109. rperi

    Thanks Phil, on rolling of the short calls. 
    I had an Apr $47/50 SDS hedge for net $1.00 where I rolled the long $47 call to June $47 for net $1.08.  Once the $50 caller is set to expire worthless (sold at net $.85) I will sell calls to cover.  Question is,  should I sell front month premium or recreate the spread selling June calls?  The June $47 call is at $1.42, so I am currently net $1.61 on the spread.  The May $50 puts are $.33 which would put me in the $3 spread at net $1.28 with a roll to June at expiration, or the June $50 call is $.90 for net $.71 on the $3 spread.  I could also sell the $52 for $.68 for net $.93 and be in a $5 spread for less money than my original hedge.  I am leaning towards the wider June spread. 
    I have the DIA July $144 puts plus this.  I am hoping this spread compensates for not having the TZA hedge.

  110. rainman

    Phil / day of silence — Hmmm, I wonder who gets to decide the things your silent over? Seems like another indoctrination mechanism.
    I think Boston knows more than they're letting on. City under lock down? House by house searching? They're worried about something.

  111. scottmi

    1020 – if you've never seen it, you gotta go to A Late Night Catechism.

  112. 1020

    scottmi – The Sister sounds like she's from Sheboygan, aye?…. :)

  113. scottmi

    SLW – even today iwth the vix off a bit, you can sell a the May 24 Puts for 2.20 or better. TOS ties up just $619 regT margin giving a 35% return on margin in a month. If put to you, is a very nice $21.80 entry on SLW.

  114. yodi

    GOOG up 33$  AAPL up mini .18 cents what a joke!!!

  115. jabobeast

    Yodi--the rumor is CMG will be buying AAPL, ABX, and CLF…

  116. shadowfax

    Phil
    Do you have a serious concern for a crash by next Wednesday or was the message to generally maintain hedges?
    I have none because all cash. Last Friday I was over 50% sure the market was going down and bought puts, today has missed my marks for the correction is done but not as sure.

  117. scottmi

    AAPL,GOOG/yodi – and looking at the float, GOOG has 4.7million shares traded today giving about $375 million traded. AAPL with 17.9 million shares trades gives about $7 BILLION dollars traded so far today.

  118. zeroxzero

    Given all the U.S. news distractions, I had to force myself to read one of the main Spanish newspapers [La Vanguardia, Catalan, less apt to toe the govt. line] .  Economic news in Spain and Europe is unrelentingly bad. But ABX not so bad: read on.
     
    One rating agency [Egan Jones] dropped Germany’s credit rating today from A+ to A based on exposure to banks and weaker Euro members,  pointing out that German public debt has risen from 80% in 2011 to 100% of PIB [equiv. to GDP],but complimented Merkel on resisting “Eurobonds.”  Merkel announced that European public well being can no longer be supported with more debt. Christine Lagarde asks for more time for Spain to make fiscal adjustment in order to prevent even more unemployment. Spanish tax authorities are pressing for disclosure of foreign income.   Portugal announced EUR 800m in cuts to public services.
     
    The princi­­­­pal economic institutes in Austria, Germany and Switzerland lowered German PIB estimates from 1% to .06% in 2013, expecting it to rise to 1.9% in 2014, and expect German unemployment to drop from 6.7% in 2012 to 6.4% in 2014.  That’s about all the good news.
     
     Empty Spanish houses have risen to 3.4 million, and the Spanish Economic Commission has just approved language for a law to prevent further evictions for the most vulnerable residents – the incapacitated, highly populated households, single parents with multiple children, unemployed who have exhausted benefits, etc.  Headlines:  "Who will be saved from eviction by the new draft?"
     
    The Spanish service sector revenues dropped 7.8% in February, industrial sector revenues 6.9% month on month.  The Spanish airline sector as a whole is operating at a loss, even though 80% of Spanish tourists arrive by air.  The state welfare system is breaking down, with no benefits being paid to ¼ of those eligible due to a failure of contribution from the provinces.  And, in response to the Spanish Economic Minister’s suggestion that the provincial deficit allowance be raised from 0.7% to 2%, to be covered by the central government, Catalonia’s Economy Minister responded that, notwithstanding the increased allowance, the government was not going to like at all the actual deficits with which they are likely to be confronted going forward.
     
    The Spanish telephone company lost 250,000 mobile customers in February, the seventh consecutive monthly fall.  And Spain's conservative party leader, Rajoy, who swept the elections and became president in November 2011, has accused the previously-empowered Socialist Party of applying "the medicine that killed Spain" and vowed to better the dire IMF predictions for Spain.
     
    Bottom Line:  "Austerity" has run its course politically in Europe.  Reversing it at this weak point will not be either quick nor easy, however.  Inflation?  Oh, yeah — it may take a few years to gather some steam, but ABX will be looking good in 2015.

  119. phil

    EBAY/Esco – Selling or being offered? 

    Regs/StJ – Caveat Emptor is what they used to love saying.  It seems to escape their attention that the most prosperous nations tend to be the best-regulated.  In fact, what is the Rosetta Stone but a bunch of regulations?  To get away from regulations – we truly have to go back to caves – which is where Rick Perry and his followers seem most comfortable.  

            

    Wow, 1020, you are old!

    CMG/Jabob – But they are already at $365.  

    CMG/Jophil – I'd wait for it to calm down.  Consider that you're $80 in the money on the longs and up $78.15 and the loss on the $330s, even at $365 is only net about $25 (as you collected $10+).  Of course those things went from $16 to $37 TODAY so a good example of why stops are a good idea.  Anyway, the June $360s are $18 so no tragedy if you roll your loss to those and, of course, you could add a 2015 spread and do a 2x roll as well – so many ways to play is a good reason to do nothing on a one-day move (now that it's too late to stop out with a small loss, of course). 

    Speaking of losses – friggin' AAPL back to $392 despite the Nas up 1%.   GOOG back to $800 while we weren't looking too.  That's keeping the Nas up with a 4.4% gain on the day after opening at $766.  

    On the other end, IBM is costing the Dow 120 points – keep that in mind – we'd be explosively higher without them.  This is very bullish actually. 

    Boston/Ban – I really love that city.  As a New Yorker, I can tell you – time does heal all wounds…

    TOS/Pharm – TDA not as careful as the old guys used to be.  

    SDS/Rperi – That's the correct way to reposition it.  I prefer selling the front-months if they pay enough.  It seems to me you're in the June $47s for net $2.08 (net $1 plus $1.08 for the roll) and they are now $1.40 so you need to sell something for .70 to get back to a reasonable spread.  That would be the May $47s though – so the answer is you have to sell June as May doesn't do enough for you.  You can sell the June $50 calls for .88 and you're as well off as you were before, more or less but this kind of hedge is only useful if the S&P goes down and stays down, which means you damned well better be working off short premium you sold on the long side or you're just burning cash.  If you really are on for net $1.40, then you're making progress with the spread and that's good but, either way, when you buy out of the money spreads – it really is disaster insurance that only kicks in in a pretty big fall (15% on SDS) that doesn't rebound.  To that end, if you want to put more money into the spread, I'd invest in a lower set of strikes rather than looking for a 20% move up in SDS for your phantom extra $2.  

    GOOG $790 calls opened today at .20, now $10.50.  

    Indoctrination/Rain – Yes but, then again, I want the children in my neighborhood to be indoctrinated to be against stereotyping and bullying and whatever other Liberal crap today was about.  This is how we TEACH people to be loving and tolerant (sadly, it doesn't seem to come naturally to most).  When you don't allow this kind of teaching in the schools then you end up with the kind of kids that tie another kid up to the back of a truck and drag him around.  

  120. zeroxzero

    And good luck to those European officials:…..Flaws in Study Used in Austerity Push
     
    "European officials are standing behind their policy medicine despite a new paper that has undermined a study frequently brandished as a reason why governments must cut their budget deficits now."

  121. kustomz

    If global growth continues slowing, they will keep printing, buy stocks. Volume seems low for OPEX today?

  122. Pharmboy

    Those TNAs from yesterday at 33c.  Now 48c.  Bastards.

  123. yodi

    scottmi
    You trade in millions or billions the bottom line is the stock is frozen to the floor!!!!!

  124. Pharmboy

    CLDX rockin' now.

  125. phil

    Crash/Shadow – If AAPL goes down, all bets are off.  Much more likely, of course, AAPL does what GOOG did and shakes off the last of the shorts and then re-asserts itself.   All cash much more relaxing.  The fact that IBM is down $16 and the Dow is up 66 points with IBM costing the Dow 8 points per $1 is an indication that things are much stronger than they look – same with AAPL, PCLN, ISRG, EBAY holding the Nas back but it's still up 1.25%.  Look at AXP – up another 3%, V up 1.5%, VIX back to 15 – this is not a market preparing for a sell-off.  That means, we could get a surprisingly big one or it could mean that this was our big correction and it's up, up and away from here. 

    AAPL/Scott – This week, about 20% of the stock turned over.  

    Good rundown ZZ. 

    Market also impressive with Dollar at 82.86. 

  126. millcreek

    zz,

    tks for the info from spain …..i have been short the euro  and sterling and am amazed how the currencies hold up with what has got to be a goat rodeo over there. 
    didnt realize how bad until i read your note which validates my thinking re the overall malaise and the currency bet….i for one dont see how it gets better as the people with the money dont want to part with it………….so something has to give and i believe its a devaluation…………..or default………..

  127. Pharmboy

    TRIN still above 1.  Selling is happening even though we are moving…up.

  128. shadowfax

    PHil
    Cash for the weekend, you talked me into it besides my overnight $375 gamble was a double been saying TGIF, relax,  just do nothing. Last night that same sub said never on OEX, still OEX.
     
    Have a good weekend all.

  129. zeroxzero

    millcreek:  I keep on a FXE short just to cover my "hope-based" materials & gold position.  It's hard to believe that FXE won't have a really bad day eventually, but you can burn a lot of paper waiting for it.  Germany won't let it go until there's blood in the streets.  Ironically, that historical tendency is what the Euro was designed to alleviate.  Either that, or it really was the scam some people think it is.  The jury's out on that one…..

  130. qcmike

    rpme 
     
    Thank you for the info
    April 19th, 2013 at 1:14 pm 
    Qcmike, the Peltz merger news 

  131. phil

    Wow, 3:45 already?

    Dow volume 156M so very strong (pretty normal on OpEx day).  

    VRTX $84! 

    11:57 AM Europe closes mostly higher, notching gains to end a tough week, the Stoxx 50 (FEZ+0.8%, but down more than 3% for the last 5 sessions. The hardest hit market is Germany, which couldn't managed a gain today (-0.2%) and fell nearly 5% on the week. Reasons are easy to make up after the fact, but the sharp devaluation of the yen isn't great news for European industry as a whole and the German export machine in particular. The German ETF (EWG) is now off 2.6%YTD.

    3:05 PM The yen weakens further as the G-20 statement (word doc) shows the gang agrees Japan's stimulus efforts are necessary and not aimed at devaluing the yen. Speaking to reporters, however, Canadian finmin Flahery says the yen wasn't discussed. Go figure.FXY -1.4%, with the dollar threatening to push over ¥100Y, now at ¥99.58.

    BlackRock fixed-income chief Rick Rieder tells the WSJ hewas a big buyer of the long bond (TLT) in early April, believing the BOJ's massive easing and weak U.S. economic data would ensure a firm bid for the paper. Bonds, of course, have rallied strongly since then. Well played? In an April 8 interview with the FT, Rieder said he was worried about higher rates and favoring shorter durations. Check.

    Bill Gross takes advantage of the recent selloff in TIPS (TIP) to add to his holdings, noting the break-even rate for longer-dated paper has fallen to 2.35% (if inflation comes in above this number, TIPS outperform Treasurys). Yesterday's Treasury auction of TIPS was a mess, with one trader calling the action a "get me out" trade. Gross is getting in.

    The U.K. loses its AAA credit rating from Fitch, the agency downgrading to AA+ with stable outlook. The move is somewhat expected given Fitch had placed the country on negative watch a month ago. "The downgrade … primarily reflects a weaker economic and fiscal outlook." Already lower on the session, cable sheds a few more pips, FXB -0.2%. 

    "This is a stark reminder that the U.K. cannot simply run away from its problems," says the U.K. Treasury, responding to the Fitch downgrade. "Though it is taking time, we are fixing this country's economic problems." Cable's (FXB -0.3%) taking on a little more water now vs. the greenback, but the slide vs. the euro (FXE) today is a bit more dramatic. 

    Domestic buyers accounted for 82% of the demand for a €1B Slovenian T-bill issue this week according to WSJ. Throughout the eurozone debt crisis, domestic financial institutions have played a major role in funding their governments when foreign demand dries up, a scenario which some say has contributed to the pernicious link between banks and sovereigns in the currency bloc. Non-performing loans at state-owned Slovenian banks amount to 20% of GDP.

    First Niagara Financial (FNFG +3.2%) gains following its first earnings report of the post-John Koelmel era. Management has gotten the message (transcript) about too many acquisitions. "I want to be very clear that our focus is on leveraging the footprint and franchise that we have built," says interim CEO Gary Crosby, promising laser-vision on organic growth. He gives little detail on the search for a permanent CEO other to say it's well on its way. 

    Mexico-based homebuilder Desarrolladora Homex (HXM+34.4%) ramps higher midday after saying it is selling its stakes in some Mexican penitentiaries to Carlos Slim for $327M. The sale could markedly improve the company's liquidity situation — it has $250M in senior notes coming due in two years and has been suffering through "challenging times," to quote the firm's CEO.

    Argentina creates a fund of up to $2B to help develop the country's 7.4M-acre Vaca Muerta shale field, which may hold one of the world's biggest unconventional energy resources. State-controlledYPF, as well as Apache (APA), Exxon Mobil (XOM) and Canada's Americas Petrogas hold exploration rights on nearly 80% of the site

    Schlumberger's (SLB -2%) Paal Kibsgaard says during today's conference call he's "not overly concerned" about the drop in oil prices, and prices are still high enough to support drilling in North America and around the world. The CEO says he still expects SLB to grow international operations by ~10% this year, with "strong and consistent growth" in sub-Saharan Africa, Russia, China and Australia. (earnings)

    Hercules Offshore (HERO -0.4%) shares slip despite a positive article in Barron's, which says the jack-up rig provider is set to make sizable medium-term gains as companies return to drilling in the Gulf and day-rates head higher. The article says HERO has a strong management team, has leading technology to find new deposits, and controls about half the Gulf market.

    Seven of Canada’s largest pension funds are up in arm sagainst an $11.9M signing bonus Barrick Gold (ABX) gave co-chairman John Thornton last year, saying they will vote against members of ABX’s compensation committee at next week’s annual meeting. ABX paid Thornton a total $17M even though its stock price fell nearly 25% last year; shares have done even worse YTD, plunging almost 50%.

    Peabody Energy (BTU -4.8%gives back most of yesterday's 7.7% gain from better-than-expected Q1 results. Coal shares rallied broadly on the news as the modestly positive data was a relief for investors fearing the worst, but today the realization is that challenges remain for the coal markets. WLT -6.4%ANR -3.9%CLD-3.6%CNX -2.8%ACI -2.6%CLF -1.9%.

    Rentech Nitrogen Partners (RNF +12.3%) powers ahead for a second day after it said its $320M debt offering fully financesestimated costs of its announced expansion and maintenance projects. David White sees the news, combined with the explosion of the Texas nitrogenous fertilizer producing plant, as positive for RNF, also a nitrogenous fertilizer producer

    Caterpillar (CAT +0.5%) reports global sales of its construction and mining equipment fell 11% in the three months through March, ahead of its Q1 report Monday. March sales in North America, CAT's largest geographic market, fell 11%; sales tumbled 24% in Asia. Sales turned negative during the December three-month period for the first time in 30 months and have remained lower ever since.

    The FAA approves Boeing's (BA +1.8%) battery fix, clearing the way for the 787 to return to the skies on flights up to 180 minutes from an airport.

    Struggling shipping company Excel Maritime Carriers (EXM-47.2%) is nearing a restructuring deal with its lenders but could still file for Chapter 11 in the U.S., WSJ reports. EXM responds that its policy is not to comment on market rumors or press reports.

    Analysts, who earlier in the day hailed GE's (GE -3.8%) better-than-expected Q1 revenueturn negative as Jeff Immelt says GE will try to boost earnings by cutting $1B in costs this year rather than relying primarily on sales growth (conference call). "The level of uncertainty in terms of their ability to meet their goals has risen," says one. Nomura calls the quarter "broadly disappointing."

    Way to re-brand!  Raytheon (RTN +1.8%) says its subsidiary, Raytheon Professional Services, has delivered the launch training program for the Chevrolet Trax Urban Life Vehicle, its first training event in its contract to manage dealer training for General Motors (GM +0.4%) Korea Company. As part of the contract, RTN will manage content development and training administration services for GM Korea's sales, nontechnical after sales and technical dealer personnel, as well as sales and nontechnical training for GM Korea's Chevrolet dealer training program in the RoK. 

    PRGX falls 14% on more than 10 times its 10-day average volume after saying Q1 revenues fell 12-14% and will likely come in below the Street's estimates. Sales cratered thanks to "delays in claims processing" and a generally poor macro environment in Europe.

    Lululemon (LULU -0.5%) founder/chairman Dennis Wilson plans to unload 5.4M shares. The disclosure follows an April rally for the yoga apparel retailer, in which it has recouped most of March's luon pants-driven losses.

    Who says gold-plated bathrooms aren't selling?  Restoration Hardware (RH +18.1%) tops the percentage gainers list after its Q4 beat and raise. On its call, the company says its upbeat outlook results from "very strong consumer demand" for all products but especially for its "new furniture offering, lighting assortment, and Baby & Child products." CFO Karen Boone also says inventory growth should be inline with sales growth by the end of the year and notes that Q2 and Q3 results will benefit "in a meaningful way" from Spring Source books. (transcript)

    Goldman Sachs thinks today's weakness in Intuitive Surgical (ISRG -4.7%) is a buying opportunity, on the back of what it calls a "solid" Q1 report. Procedure growth may have fallen short of expectations, but Goldman thinks the slowdown looks consistent with trends across the space (seasonality, declines in hospital admissions), and the impact from negative headlines, while unclear and will take time to prove out, are not material.

  132. scottmi

    AAPL/yodi – i certainly hope that it IS the floor! Cook is going to be rivaling Ballmer for most reviled CEO if they don't shake this malaise off.

  133. phil


    Humana (
    HUM +0.8%) says it's fired its lobbying firm andlaunched an internal probe into the circumstances surrounding the leak of a significant change in Medicare Advantage rates earlier this month. The probe will focus on determining whether the company's interests were harmed by the ties between an outside lobbyist employed by HUM and an investment firm that received a 'heads-up' and sent out early word of the policy shift to its clients. That alert set off a surge in shares of HUM and other insurers just prior to the session's close.

    TSMC (TSM +4.4%) has staged a strong two-day rally in the wake of its Q1 beat, above-consensus Q2 guidance, and capex budget hike, and is close to its 52-week high of $19.25. On its earnings call, the world's top chip foundry said 28nm chips accounted for 24% of Q1 wafer revenue, up from Q4's 22%, predicted full-year 28nm sales will triple Y/Y, and raised its forecast for 2013 foundry industry growth to 10% from a prior 7%. TSMC also stated its 16nm process will enter volume production just a year after its 20nm process; the latter could happen as soon as late 2013. 

    AMD (AMD -3.8%) has re-hired Raja Koduri, who until recently was Apple's director of graphics architecture, CNET reports. It might not be a coincidence the report comes 8 months after AMD hired Apple mobile processor chief Jim Keller. AMD is selling off after delivering a Q1 beat and above-consensus Q2 guidance. On theearnings call, AMD claimed to have regained desktop GPU share, and that server CPU revenue rose Q/Q due to higher ASPs. There were some pointed questions about gross margin, particularly whether it can return to past levels given PC weakness and a mix shift towards embedded products. Nvidia (NVDA -0.3%) is underperforming.

    Rambus (RMBS -10.4%) gives back a large chunk of its April gains after missing Q1 estimates and guiding on its earnings callfor Q2 revenue of $53M-$58M, below the $61M forecast by the one analyst providing estimates. Customer license income is expected to fall to $56M-$61M from Q1's $72.1M. The guidance is blamed on seasonality and a lack of one-time payments recognized in Q1. A 6% Q/Q increase in operating costs/expenses pressured Q1 results; they nonetheless fell 19% Y/Y, thanks to lower R&D, legal, and M&A-related expenses.

    An upgrade to Accumulate from National Alliance Capital helps Netflix (NFLX +1.9%) add to this year's big gains. The firm predicts Netflix "will continue to grow subscribers at an accelerated rate." National Alliance upgraded LinkedIn, another Internet high-flyer, earlier this week. 

    Enterprise IT names continue to underperform following a 1-2 earnings punch from IBM and SAP. Storage-related names are among the decliners, perhaps thanks to the 11% Y/Y drop IBM reported for its storage hardware sales. FIO -2.7%EMC -2.3%.NTAP -2%. H-P (HPQ -1.4%) could be affected not only by the earnings reports, but by Blackstone's decision to abandon its bid for Dell. 

    The next shoe drops: the WSJ reports Carl Icahn is unlikely to go through with his preliminary bid for Dell (DELL -4%). With Dell trading below Silver Lake's offer price of $13.65 in the wake of Blackstone's about-face, shares had already priced this in.

    Cost controls, Office/Server & Tools strength, and perhaps the news of CFO's Peter Klein's pending departure are helping Microsoft (MSFT +3.2%) trade near $30 again following its FQ3 report. Bernstein, encouraged by the Office 365 disclosure, thinks "Microsoft is already the 2nd largest enterprise cloud vendor," with a $1.4B-$1.6B/year run rate (ed: Microsoft's estimated FY13 revenue is $79B). ReadWrite's Mark Hachman, however, doesn't like the fact no fresh details are provided on Win. 8 licenses. If Klein was pushed out, he doesn't suggest it in a memo. (CC transcript)

    Google (GOOG +2.7%) rallies yet again following a mixed Q1 report, as the Street focuses on healthy paid click growth (boosted by mobile) and better-than-expected margins more than (moderate) ad price weakness (hurt by mobile) and Motorola's woes. "Google can grow its core search business in the low teens over the next few years at high incremental margins," and thereby keep margins stable even as it makes big investments, Morgan Stanley declares. Though still bullish, Needham notes EPS would've been roughly in-line if not for a tax credit. (CC transcript) 

    SoftBank (SFTBF.PKdoesn't plan to up its bid for Sprint (S) to top Dish's (DISH +2.1%), a company exec states. Is the Japanese carrier set on keeping its current offer, or is this a hardball negotiating tactic? Either way, SoftBank seems to be betting the advantages of its bid – a lower debt load, the ability to leverage SoftBank's resources to take on AT&T/Verizon – will lead Sprint to stay loyal in spite of shareholder pressure and the superior up-front value of Dish's offer.

    Fresh images of Nokia's (NOK -3.3%) Lumia 928 (reportedly due to hit Verizon this month) indicate the presence of a PureView camera (relative to the 920). Nokia is counting on the 928 to lift flagging U.S. sales – while Lumia sales rose in Q1 in most international markets, Nokia's U.S. device sales (Lumia-driven) fell to 400K, down 33% Y/Y and also below Q4's 700K. The images arrive shortly after the FT reported Nokia plans to launch a phablet and (backing up a prior report) a Lumia with a 40MP PureView sensor. Separately, images of Nokia's rumored "Catwalk" aluminum Lumia phone have leaked in China. 

    Bitcoin combines Ph.D-level computer science with kindergarten-level money 


  134. phil

    Well that was a very interesting week. 

    Have a great weekend everyone!

    - Phil

  135. yodi

    scottmi
    At least Ballmer shows a credit of 1$ for today.
    All have a nice weekend!

  136. zeroxzero

    Phil, Pharm, thanks for all the work this week, gents.  Pharm: 45.7%, 14 weeks, :)

  137. phil

    Wow, Nikkei ran up to 13,665 with Yen at 99.55 after G20 gives Japan the green light to keep going.  This is why we don't mess around with Futures once our lines break!  100 is back in reach for the BOJ.

    You're welcome ZZ, thanks for great contributions as well.  

    Dow volume hit 207M and most of it was short at the close but still we finished at about the day's highs.  

    130498 600 Gun bill cartoons

  138. rpme

    FWIW, we still have not had 3 down Dow days in a row this year, longest streak ever.

  139. biodieselchris

    Bitcoin showing badly needed price stabilization. Still up 800% on the year though.
     
    Boston – how did they let him get away last night? Honestly, that is absolutely pathetic.
     
    What the FRICK is wrong with AAPL?!?! Either this company is going to snap back 100 points or it's the end of the world (pretty easy to choose from those too options). They have $140B in cash for crying out loud!! That's $150 PER SHARE. Subtract cash and their TTM P/E ratio is 5.9….  Nauseating! 

  140. scottmi

    Boston – now we're hiring mercs for domestic security

  141. stjeanluc

    Since when do P/E matter BDC…. I can't believe you rely on fundamentals such as earnings to make an investment decision. It's so 1990!    :-)

  142. Pharmboy

    Zero – yeah!  UR welcome.  And maybe cash is now good!

  143. stjeanluc

    Actually, it's amazing how much cash all these big tech companies have and their valuation. CSCO has about $5.50 per share. If you subtract the cash, they trade at big discount to their growth rate – P/E of 8.5 ex-cash for CSCO. CSCO is estimated to grow earnings close to 11% in 2013. That looks like a buy to me…

  144. phil

     

    Barry's Succinct Summations week ending April 19, 2013.

    Positives:

    1. No inflation visible, as CPI month-over-month drops 0.2%
    2. Bloomberg consumer comfort index jumps to five year high.
    3. Energy prices fell 2.6% in March, gasoline down 4.4% (cheapest since Feb 2) helping consumers & retailers.
    4. Housing starts rose 7% month-over-month. 47% year-over-year is the largest increase since 1992.
    4. With 70 S&P 500 firms reporting earnings, 67.3% beating EPS estimates
    6. Q1 Earnings are at a y/o/y growth of 1.6% vs .5% entering the season.
    7. Weekly mortgage applications increase 4.8%.
    8. Gold slide suggests the end of world trade is over
    9. Beige book comments point to a moderately expanding economy.
    10. Industrial production rises 0.4%, doubles expectations.
    11. Germany 10-year bond hits record low of 1.28%.

    Negatives:

    1. Two idiots launched terrorist attack at Boston marathon, injuring more than 170 with 3 casualties.
    2. Stocks had their worst single day in 9 months.
    3. Apple breaks under $400 for the first time since 2011.
    4. Revenue data for S&P500 companies are on the light side — only 36% beating and 39% missing; Rev growth just 2.1% y/o/y and 3.1% ex financials.
    5. Since only the second time since November, there were more 52 week lows than highs.
    6. The Vix had a one day surge of 43.2%, 5th largest single day since 1990.
    7. IBM reports first EPS miss since 2005
    8. U.S. initial jobless claims rose 4,000 last week to 352,000, last 348,000.
    9. NAHB home-builder sentiment declines third consecutive month to 42 in April
    10. Philly fed index drops to 1.3 in April v expectations of 4.0, last 2.0.
    11. China’s economy slows to 7.7% growth in Q1 vs the est of 8%.
    12. Fitch strips UK of its AAA rating, downgrading to AA+ (stable outlook)
    13. Q2 guidance moving lower.
    14. U.S. building permits for March fall 3.9%, missing expectations of a 0.3% rise.
    15. IMF slashes growth forecasts all around the world.
    16. Empire manufacturing index comes in at 3.05 v expectations of 7.
    17. The Dax hit a 4-month low.

  145. phil

     

    One Key Trait Driving Performance

    Clients and regular readers of this site know that we have had a longstanding preference for US stocks with domestic exposure over stocks that generate the bulk of their revenues outside of the United States.  A look at the chart below shows just how well that strategy has been working over the last year.  In the chart, we compare the one-year performance of all ten S&P 500 sectors (y-axis) to the percentage of domestic revenues for the average stock in the sector (x-axis).

    As shown, Technology is the only S&P 500 sector that is down over the last year, and it also happens to be the only sector where the average stock generates less than half of its revenues in the United States.  On the opposite end of the spectrum, stocks in the Telecom Services sector generate the largest percentage of their revenues in the United States, and Telecom has seen the best performance over the last year.  Besides these two sectors, if you look at the rest of the sectors in the S&P 500, there is a clear trend between percentage of domestic revenues and performance over the last year; the more the better.

    Looking to find out which stocks have the most international and domestic revenue exposure? Annual subscribers to our Bespoke Premium service receive complimentary access to ourInternational Revenues Database, which shows the geographic revenue breakdown for stocks in the S&P 500 and Russell 1000.  To access this database, sign up for an annual subscription today!

  146. biodieselchris

    Scott, there was quite a bit of military training going on at the race and go easy on the conspiracy theories, this is pretty typical. They use these large crowd events to help train recruits in such scenarios (probably never thinking this would be the one where something went off). IN the Athletes Village (the staging area before the start at Hopkinton High School that temporarily holds 27,00 people), they had bomb-sniffing dogs. I really doubt the conspiracy theories that they had "credible evidence" of an attack, and were taking extra measures. It is much more likely simply a great place for training. Dogs are naturally scared of in large crowds. It is important to train them how to behave.
     
    Along the race course there were formations of troops (probably national guard), running in full regalia and in formation along the side of the course. This is standard training procedure. Those special ops guys in those pictures look scared and confused out of their minds. You never expect something like this to happen. That is why you train in the first place.

  147. biodieselchris

    We also have boneyard at work with lots of equipment and random debris lying around. The local City K-9 units come here to train all the time. It's good quid pro quo with us and the City, too. 

  148. scottmi

    Boston/BDC – thanks for the info. Not too much for the conspiracies myself, but was interesting to see the info about the "Craft" group  (http://www.thecraft.com/)…another Blackwater-type outfit, but with a more juvenile attitude? (See their logo and motto "violence does solve problems") There may be a place for these guys, but working in US cities and domestic law enforcement is, for me, a bit concerning. Read their literature on their site, and "cult" comes to mind.

  149. 1020

    With the show of force that the Boston police and others showed this past week, the anti-government types better pick up their game and find something better then the obviously 'inadequate' assault weapons many are clambering for…..
    http://www.nbcnews.com/id/51557715/displaymode/1247?beginSlide=1
     
    Wake up Mr. Nugent!  Looks like it's back to squirrels and beer cans…..

  150. 1020

    Oh yeah, Happy 420 day to all!   :)

  151. stjeanluc

    They has some strange zoning laws in Texas:

    Satellite map of West, Texas, showing two schools immediately adjacent to fertilizer plant that blew.

    Just unreal…. Who needs regulations!

  152. stjeanluc

  153. stjeanluc

    PMI and GDP next week.

  154. denlundy

     Don 't recall if this article was linked to earlier in week. Adds to discussion of austerity vs. stimulus.
    http://www.nytimes.com/2013/04/19/opinion/krugman-the-excel-depression.html

  155. 1020

    stjeanluc/West – I can barely hear the apologists whispers…..
    …."but, we built the town of West"….

  156. stjeanluc

    West / 1020 – Maybe they should rebuild a chemical warfare lab there or a nuclear missile silo. That will create jobs… Idiots!

  157. phil

    CSCO/StJ – Yes, that cash is very overlooked.  

    $800/Scott – That is much more in-line with where I think production costs should be (also based on my earnings to sales analysis from last week).  

    Craft/Scott – Well, when you cut Government spending in all the wrong places – this is what happens.  Boston's a great example, this is what Swat etc are for only the budgets for local police have been slashed in favor of the War Machine so we end up having to send in the army but then they army relies on Mercs and – hey – is this Rwanda?  Holy crap, what has happened to America???

    130522 600 Boston Terror cartoons

  158. phil

    Big Chart – Very interesting.  As noted yesterday, Dow was amazingly strong in the face of IBMs fall.  Unfortunately, only the S&P held the 50 dma with the Dow but, still, no new breaks of our 10% line and only the NYSE is close, so we'll keep an eye on them but, if they get back over their 50 (9,000) – nothing to be bearish about.  

    When you look at charts, think about HOW and WHY the lines are drawn.  Think ahead of the chart, not behind it.  So, for example, the RUT has put 4 bars (days) deep below the 50 dma and it's only just now curving over from an uptrend.  The NYSE is also in danger of bending down but their candles are way higher so there won't be as much pull on that line exerted as long as the index stays up around there and, if the 50 dma crosses over that 12.5% line – it's going to firm up as serious support (assuming the NYSE gets back over).  If NOT – then it will become serious resistance instead.  Same for the Nas while the Dow and SPX are still in uptrending 50 dmas AND their candles are over the lines so only a move below the line could be considered a bearish turn and it would have to be more than a little (look how slowly the RUT turns).  

    Getting back to the RUT, If they don't get back over 920 fast, they are in danger of bending the 50 dma down and, once that happens – only a sharp move above it will fix it and then it's flat first and then up – that would be a significantly bad event then.  So our key watches Mon and Tues are going to be those RUT and NYSE levels.  See how easy it is to see the future?  

    Next week's data for the US is pretty big with Durables and Home Sales and GDP on Friday.  Of course, earnings are going to be even bigger so prepare for a wild week of trading.  Chicago Fed probably sucks Monday morning but Home Sales will hopefully soften that blow.  Euro-Zone Consumer Confidence will also suck but is that 10am their time or ours?  China Manufacturing is presumably down so it's going to be very hard to put a good day together on Monday, that's for sure.  

    Krugman/Den – I love that guy.  I use that Mars example on my girls all the time when they try to brush off mistakes.  Classic quote: 

    So, did an Excel coding error destroy the economies of the Western world?

    Texas/1020 – The key to Texas is the state is essentially big and empty, with just 98 people per sq mile, vs 1,200 in NJ or 852 in Mass or 415 in NY (also a really big state) so they kind of have this mentality that they can sweep things under the rug, which would be fine if they didn't try to enforce their crap-hole lack of regulation on people who do care and may have to actually live with the consequences of their environmental actions.  

    In fact, it's a common denominator that "Red States" tend to be less populated.  When people live closer to each other they tend to learn to be more tolerant and they tend to look after the space they do have.  Check out the bottom 10 in population density:

     

    40  Kansas 35.09 inhabitants per square mile (13.55 /km2)
    41  Utah 34.30 inhabitants per square mile (13.24 /km2)
    42  Nevada 24.80 inhabitants per square mile (9.58 /km2)
    43  Nebraska 23.97 inhabitants per square mile (9.25 /km2)
    44  Idaho 19.15 inhabitants per square mile (7.39 /km2)
    45  New Mexico 17.16 inhabitants per square mile (6.63 /km2)
    46  South Dakota 10.86 inhabitants per square mile (4.19 /km2)
    47  North Dakota 9.916 inhabitants per square mile (3.829 /km2)
    48  Montana 6.858 inhabitants per square mile (2.648 /km2)
    49  Wyoming 5.851 inhabitants per square mile (2.259 /km2)
    50  Alaska 1.264 inhabitants per square mile (0.488 /km2)

    And the top 10:  

     

    --  District of Columbia[4] 10,357 inhabitants per square mile (3,999 /km2)
    01  New Jersey 1,205 inhabitants per square mile (465 /km2)
    --  Puerto Rico 1,082 inhabitants per square mile (418 /km2)
    02  Rhode Island 1,016 inhabitants per square mile (392 /km2)
    --  U.S. Virgin Islands 916.9 inhabitants per square mile (354.0 /km2)
    --  American Samoa 914.0 inhabitants per square mile (352.9 /km2)
    03  Massachusetts 852.1 inhabitants per square mile (329.0 /km2)
    --  Guam 830.0 inhabitants per square mile (320.5 /km2)
    04  Connecticut 741.4 inhabitants per square mile (286.3 /km2)
    05  Maryland 606.2 inhabitants per square mile (234.1 /km2)
    06  Delaware 470.7 inhabitants per square mile (181.7 /km2)
    07  New York 415.3 inhabitants per square mile (160.3 /km2)
    08  Florida 360.2 inhabitants per square mile (139.1 /km2)
    09  Pennsylvania 285.3 inhabitants per square mile (110.2 /km2)
    10  Ohio 282.5 inhabitants per square mile (109.1 /km2)

    Bill Maher made and excellent point this weekend about how the Senate now grossly misrepresents the will of the American people as we need 60 votes to get anything done (with juvenile GOP filibustering on every bill) and that those votes come from Senators like the ones in Wyoming that represent 100,000 people who carry as much weight as the ones in California, who represent 8M people (who voted for them).  

    His point was that the original 13 colonies had SLIGHT discrepancies in population and the House/Senate thing was meant to address that but surely they didn't envision one state having 10,000 times more people than another.  Nor did the Founding Fathers intend the 3 branches of Government to be overwhelmed by the Senate – who could grind the whole process to a halt, even though both the House and the President agreed on legislation.  It's a perversion of the Constitution and we do, as a nation, need to change the constitution to put an end to this abuse.  

  159. phil

    OK, moving new comments on to the new post or it will get confusing.  

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